Transcripts For CNBC Squawk 20240703

If you want to look at what is happening in the u. S. Equities this morning, you will see green arrows dow up 25 points right now you have the nasdaq up 1 the s p is up 4 points it is a complicated month. You have most of the major averages on track for the worst. Dow down the last six of seven sessions a lot of questions about what comes next and comes from the fed. Is a recession coming . Will they land softly . It is an interesting use of the word interesting above 4 6 the inversion widened a bit. We will see what happens today crude Oil Prices Surging to the highest level in over a year we are talking above 93 brent at 96 a barrel. All of these questions mean what does it mean for inflation with energy picking up . The crude is off the highs of the session. Above 95 here. Not brent. It is a tricky time. Do you think it is always tricky. Sometimes we feel calm about things i would say investors have more sense of unease lately that is why you have the pullback in the major averages i look at the Financial Press and it was the fear back in the market and they had a picture of someone absolutely being stalked by an axe murderer were not quite there yet. If you look at the vix, were not 20 we are down for the last six weeks significantly. It is starting to add up you know what else adds up 16 years since that high yeah. In yields 2007 thats you have a kid and he or she is driving at this point thats a long time thats the system shock it is not that rates are historically high level. This is not what most people would bat an eye at. It is an entire generation who havent seen levels like this before it is a system shock to see you paying 7 for a mortgage. We have paper today, which is cool, at delivering alpha. Petco had 1. 5 billion loan. It was 2. 5 . It is now 9 . Wow if it is not fixed, whoa you do this every year. Just keep people on their toes you base the Business Decisions to remain at the low levels y seelevel see levels like that again lets talk about the news making headlines right now the uaw planning to announce expanding its strikes at gm and ford and stellantis if the sides dont make significant progress by 10 00 a. M. Tomorrow Union President shawn fain is expected to host a Facebook Live event to announce which plants will walk out. The union expanded to 38 centers for gm and stellantis, but did not expand at ford citing progress in those talks. We will see where those go we had well, we had interesting uninterviews coming up we have the debates coming up i answered a poll that said you are, a, definitely going to watch the debate, b, not going to watch the debate or, c, theres a debate tonight if there is a smart alec answer i understand california you have to get to bed to get to the Grocery Store in the morning. 9 00. I did look at the synopsis of things i dont think a lot went on. Can we divulge hard to do when the leading candidate is not on stage. Can we divulge the offset conversation remind me oh, yeah. Government shutdown is looking more likely as saturdays deadline approaches with no deal in sight. Later this morning, we will get a update on negotiations from speaker Kevin Mccarthy he will join us live at 8 00 the question is who is the leader of the Republican Party that is my question former President Trump or House Speaker Kevin Mccarthy it is not mcconnell i dont think there is one. Thats the problem. Mccarthy is third in line to the presidency. How tenuous is the speakership . Is he he is having trouble wrangling guys you are saying leader in terms of de facto. The de facto leader is trump right now. That is my question i dont know the answer. You can sway me. The fraud decision. He could theoretically lose all his properties thats what is crazy about it that is part of the discussion folks you are back to 33 of these deplorables. I would not call them whackos . No, i try to meet people where they are. No. When thank god she is here between us. Can i talk about Something Else we dont know maybe Brian Moynihan is the leader. I dont think he considers himself a republican. No, leader of something leader of bank of america Brian Moynihan doesnt believe recession is imminent. We spoke to him yesterday at the Economic Club of new york. He is the head of the nations second largest bank. He talked about bank of america scrapping its call last month for a recession. Our strategists are no recession. Slow growth. 50 gdp growth second and third quarter. Slows down trough and comes back up to above 1 the end of next year then finally back to 2 at the end of 2025. Would you call it a soft landing . Soft landing by definition. The interesting thing is what changed that the consumer earlier on. If you are in 2022 and in the fall and heading into the rate structure and they push it in and they have to with the consumer who kept going. Now the consumer slowed down you have to have more risk to push the other way i asked moynihan what worries him most the answer was the ability to compete and banking regulations in america we need businesses to continue to prosper and continue to hire people and continue to spend money on innovation. A. I. Doesnt do any good if we are not there to pay the bill to build it i think thats where we have to be careful with the Bank Regulatory rules or other rules. The spirit thats what makes america different. European economy and American Economy with the financial crisis nearly the same size. You think the eu economy is bigger than the u. S. Its grown by 15 to 20 u. S. Has grown a lot more. Thats what makes america. We figured it out. We took off. Anything gets in the way of that, from whenever side of the aisle . Thats not a good thing. Businesses out there do the work guys, he did say geo politics a big issue. I said jamie dimon spoke earlier and geopolitical issues is the thing he worries about he is very worried about the requirements that will be put on banks that will require the big banks to hold additional 10 in capital on the books banks from 100 billion to 250 billion in assets to keep extra 5 in reserves that is money that would go out and be lent to american businesses and consumers that we not only wont be able to make those loans and grow our economy as much, but put us at a severe d d disadvantage with european banks and what they can do say you make a widget for the manufacturing line that will cost you and we will lose as a result he pointed out we have done better than europe over the last 15 years in terms of growing g dwgd and he thinks this s s this is that would hurt. We are onshoring. What is labor cost for employee byd in china is 7 an hour we are 65 an hour more. For everything were bringing back here. Not just cars. If we are truly onshoring, because one of the things that helped keep inflation low for 25 years friend shoring situation. All exporting of jobs was a problem. It did keep labor costs down there are all kinds. We ran into that with the supply chain there are issues that are not going away maybe we have stagflation. That was what Larry Summers argument was. It doesnt beat inflation worst of both worlds. Coming up, we talk oil strategy with the prices at the highest level in years it was up t 95 overnight and 8 00 a. M. , dont miss our interview with House Speaker Kevin Mccarthy we will run out of money on saturday things may happen over the weekend. You are watching squawk box here on cnbc announcer this cnbc program is sponsored by baird. Visit bairddifference. Com. 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Our next guest says there are parts of the market that are relatively cheap joining us is matt miskin from john hancock matt, i saw you earlier. I thought you were the landlord as you were standing over by the glass. You have to work for a living. You heard our conversation about onshoring. That goes into your thesis on why midcaps are trading. Midcaps are trading with the onshore trend and fiscal stimulus we are seeing the build up in the midwest. The industrial sector is the largest Sector Companies with 20 roe trading at nice multiples. They are seeing nice pipeline in demand to build out the capability in the midwest. That is one of our favorite parts of the market. You point out and not saying deficit spending is great, but it is what it is the deals are already signed. It is coming in the next several years. That is where the money is flowing. There is wage growth and potential inflation. These companies have high operating leverage they dont mind higher operating inflation. If you are looking for the hedge on the portfolio, high quality industrials in the midwest is one of the best places to look if you look at the end stages of the cyclical recovery from the pandemic or end stages because of the fed we have gone from the biggest easing in the country and most fiscal stimulus and easing from the fed to the tightest policy we have seen in the country. Biggest whip sawing in the history in the threeyear window it is tough because were in the tightening period. You have to look for things on sale and high quality businesses with good Balance Sheets that is the midcap value spot. The top heavy the magnificent seven or magnificent eight is expensiexp . It hasnt grown much except for nvidia nvidia. We have it. Tomato. Tomato it is a n. Thats what happens when you have a stupid consultant figure out your name and no one knows what the hell it is. Venator that one i know. Verizon verizon i do that from time to time your biggest worry you have two we all do. Interest rates and oil right now, those are fighting the consumer gas prices are coming up higher borrowing costs by the day. Powell in the press conference wanted to see where restrictive rates would be the bond market will tell them soon we will run into problems. For us with the equity side, we are underweight in pockets which are expensive. We are trying to allocate to places which priced in the softness from tighter Interest Rates. You know how great things were when we had low inflation and low Interest Rates we had a Strong Economy and low inflation. We wonder why Financial Assets did so well. Thats the perfect elixir. W what about 70s and 80s is it possible we are not entering, not a secular, but not shortterm period of that environment . It is tough to see this sustained. The fed is going to be coming into this and they will try to put it down. They will be successful, but it will be painful. The oil prices and onshoring. There are a lot of inflationary. Things are not transitory. It seems like organic inflation is here to stay. In our view, it is more cyclical if we didnt do 5 trillion in stimulus, we would not have this conversation about inflation that was once in a century event. From the pandemic what we are seeing now is the fed raising rates and eventually we think it will slow down the economy and inflation. It is unfortunate we are in this position as you are saying we do think it is cyclical we come out weith a lower inflationary regime. It will create volatility. We have to go we have breaking news. Matt, thank you. Lets bring you the breaking news gamestops board officially electing ryan cohen as the new ceo Effective Immediately. He had been serving as executive chairman while the companyducte. Cohen will not receive c compensation for running the company. He owns 12 of the company through his rc ventures. Worth noting, the s. E. C. Investigating cohen for his sale of bed bath a beyond shares. He had Board Members on that call before folks understood what was happened, he sold out of those shares the s. E. C. Looking at that and the ceo of this company. Going public. Was that on twitter . Im trying to remember the details. He spoke about it. It was back in march of last year he had announced his ownership stake in bed bath. I believe quickly afterwards. Afterwards, he turned around and sold the shares. S. E. C. Is looking at that. The board, clearly, is feeling confident enough in whatever that case is unless they want to take the risk to make him ceo of this company. Im glad we got this on quickly. Far being it from us to not report gamestop news immediately with the gamestopers out there you know how they are antiall of the meme stocks stock is up 8 sdp i had expressions they can read and they can tell im conflicted or someone has me you have seen those . I dont want to give you any more today. joesquawk. A big morning still ahead. We are live from the delivering alpha conference here in new york city. The headliner is House Speaker Kevin Mccarthy days before the potential Government Shutdown will join us at 8 00 a. M. Eastern time squawk box will be right back. One of my most profound mentors was justice mayor. I was able to clerk for her. I her all she taught me not only from academic how to be a good lawyer stabbed point, but from a human empathy standpoint really paying it forward is an important part of how we all par take in the community. Is it possible to fall in love with your home. Before you even step inside . Discover the Magnolia Home james hardie collection. Available now in siding colors, styles and textures. Curated by joanna gaines. After the great recession, hispanic americans lost as much as 2 3 of the Household Wealth much of that caused by the value in home foreclosforeclosurefore. Contessa brewer is at the conference in miami beach this morning. Contessa, that was ten years ago. Has that goal been reached reporter becky, very close there has been incredible progress for instance in 2013, the net worth has now doubled. In a new report, the hispanic wealth project reports that to homeownership and mortgage rates. Savings and investment and latinos investment in the stock market and Retirement Savings at a lower rate entrepreneurship latinos are starting businesses at a faster pace than anyone else they mostly do it with the investment of family or friends. They run into challenges growing and scaling businesses because of access to capital sol trujillo founded latitude ventures he created a technology that assists with autonomous driving. I dont have the Good Old Boy Club to knock on peoples doors and say, hey, i went to this school and have this background. Sol has that network that he has built from the ground up were able to leverage that and im able to leverage that to open the hard doors that i would otherwise not have access to reporter well, who you know matters and whether you are hiring a director for the board or investing in a new venture. If you move forward with those people you know, you leave money on the table expanding that Network Matters whether it is access to capital or funding a director for the board. The gap between the latino families and white families, white families have five times greater Household Wealth according to the latest information, becky. I guess most of that tied to housing in particular. Reporter absolutely. The biggest portion of most families net worth contessa, thank you. We will watch more coming up, were going to look at some of the big take aways from the last nights gop president ial debate and rebuttal from former President Trump. He did not take part in that that is next. And then Brian Armstrong from coinbase will talk crypto and bitcoin. He will speak with us at 8 40 a. M. Eastern time. Dont miss it. As we head to break, look at yesterdays s p 500s winners and losers announcer executive edge is sponsored by at t business next level moments need the next level network. Move to the cloud. So, the question is. Cyber attack as cyber criminals expand their toolkit, we must expand as well. We need to rethink. Next level moments, need the next level network. [speaker continues in the background] the network with 24 7 builtin security. Chip . At t business. Rich, velvety. Coffee. Cafequality. Espresso. One highpressure system. That can do both. Brew to your hearts desire. With the lor barista system. Now brewing peets coffee. Good morning welcome back to squawk box. We are live from the cnbc annual delivering alpha conference in new york city. Were watching the markets this morning. So far, things are relatively quiet. Dow futures up 20 points s p futures up 3 the nasdaq down by 5. 5 it has been not just a fraught week, but several weeks for the markets at this point. Dow has been down six of the last seven session the big decliners with the nasdaq and s p and the dow industrials. We will continue to watch yields this morning as well. In the meantime, seven republicans hoping to catch up to donald trump in the gop president ial race spared last night in the second primary debate here are a few of the highlights congress has only delivered a budget on time four times in 40 years. If they dont keep the government open, they should not get paid no pay, no budget. Thats the way you are not here tonight because youre afraid of being on the stage and defending your record you are ducking these things let me tell you, you keep doing that and no one will call you donald trump we will call you donald duck he said we were all bought and paid for i thought about that i cant imagine how you can say that knowing were you just in business with the Chinese Communist party and the same people that funded hunter biden millions of dollars was a partner of yours as well. I want to respond these are good people who are tainted by a broken system it is not the fault of anybody involved that was the tone of much of the debate with candidates talking over each other. Meantime, former President Trump was in michigan speaking to auto workers at a nonunion plant he blasted the push by President Biden for the ev industry. He called other president ial hopefuls calling them job candidates looking for a secretary position joining us to talk about all of this is the political reporter with the Washington Post good morning to you. Your take on what we saw last night. Who was the winner or loser . We are doing our poll over here. I dont think there were winners last night i think, if anything, the moderator lost control of the debate quickly i think most of them on stage spent two hours amounting to no big moment and nothing to take home and make ads with definitely a chaotic debate anand nothing strong on policy it came down to more attacks on trump, but nothing more than the first debate, i would say. You know, last debate, i dont know if he was the winner, but he clearly got the most attention with Vivek Ramaswamy a lot of people looking at nikki haley as the winner of this debate or the last debate. How did you see those candidates in all this . Well, last debate, they bickered a lot between the two of them, we saw a lot of that. I think haley has a really good control of the debate stage compared to the other men on it. She definitely came forward with a lot of issues with a specific moment where she and tim scott went headtohead she did as ambassador she said that wasnt me, that was the other administration i would say she had the ability to turn the situation and make the good and pointed clap backs. I would say other than that, it was less energy compared to the first debate. Mariana, mike pence and joe biden with bidenomics barely got a mention. Eiteither bickering or attacking donald trump that doesnt move the ball down the field. They will go after joe biden and then very few mention of biden and his agenda this was a bit of talk of the picket lines and he should not be on the picket lines he should be on the unemployment lines or focus on the border a lot of deflection and not a lot of, you know, meat on the policy side. This is how we would do it different from biden or the other republicans on the tage. I think when all this happens, it is important to remember that the frontrunners in the race are biden and former President Trump. For them to not take the opportunity to go stronger after both of them is a missed chance. Do you think that something can happen in any of the early primary states when we ask the candidates running against former President Trump what wis the cutoff date to make a move yeah, i would say chances of the early primary stages even then, if you look at the polling right now, and we made this point yesterday if you put the candidates together and made one person, they would still lose to trump by 20 points as ron desantis said yesterday, the polls dont win elections, it is the people who go and vote it is all running behind right now. I would say we will see a lot of the folks on the debate stage next time. It is starting to become obvious that if they want to get through the polls and primaries, then they have to mount a challenge and it needs to happen now. Do you believe the polls . I had conversations with people who say polls are getting worse and worse and worse because the way the polls reach out to people it is a self defining group of people who answer the phone call or respond to some of the polls to begin with. Maybe the polls are not what they used to be 10 or 15 years ago. I do agree with that. We had a situation at the post where we had the outlier poll. We noted in the story. This doesnt match what we are seeing in the polls from the past this is much larger than other polls. There is something to be said if we should change methods i dont know how much we learned from 2016. Polls back then helped intensify momentum that trump had. I think it is worth looking into i would be open to that. We want to thank you. We will see what happens as this Campaign Continues coming up, Delta Airlines back tracking on some changes that it made with sky miles plan after a backlash from customers. Later, dont miss the interview with House Speaker Kevin Mccarthy he will join us live at 8 00 a. M. Eastern squawk box is coming right back announcer currency check is sponsored by Interactive Brokers. The best informed investors choose Interactive Brokers upbeat music awww. Awww. Awww. Nope. Constant Contact delivers the Marketing Tools your Small Business needs to keep up, excel, and grow. Constant contact. Helping the small stand tall. Explore endless design possibilities. To find your personal style. Endless hardie® siding colors. Textures and styles. Its possible. With james hardie™. Icy hot. Ice works fast. Heat makes it last. Feel the power of contrast therapy. So you can rise from pain. Icy hot. Weil welcome back to squawk box. Delta airlines is back tracking on the overall to the frequent flyer sky miles. The company Ceo Ed Bastian saying we went too far with the changes and modifications would be made. What those are we dont know yet. The company overhauling the rewards program because of the swale of high status members allowed to rollover during the pandemic delta said the demand for products and services exceeded the ability and assets bastian said they will announce the changes in the coming weeks. A lot of road warriors are waiting to find out what will happen kudos to ed bastian for doing this i can point to reward programs that have gotten worse during the pandemic you cannot use your points for a year in advance because everybody who rolled over points did the same thing bob iger, i hope you are listening. Watch out for what you are doing with your loyal customers. You cant get a seat. It is preferable to go out the hoypaloy peasants . My favorite or the Little Things pretzels. Cinnamon bun . Yeah. Thats a winner the minis those dont have calories. Yeah. They dont have those in the lounges. They have the flakes and cardboard eggs you like hard boiledin ed eg. I dont like them in airports. When we come back, what will happen with the government with the potential shutdown we will talk to former senator pat toomey about this and more. And at 8 00 a. M. , dont miss our interview with House Speaker Kevin Mccarthy squawk box will be right back. Well come back a Government Shutdown is looking more likely as saturdays deadline approaches. Emily wilkins joeins us from c. Emily, good morning. Reporter becky, a shutdown is looking us fromwith wh d. C. With where things stant. A shutdown is looking almost all but inevitable and the latest draft is between senate house and republicans. Over in the house, Kevin Mccarthy is pushing to make sure Border Security provisions are included on any sort of stopgap solution but a handful of republicans in his own party have told us theyre going to oppose any shortterm measure that is brought to the floor now, mccarthy is hoping he can change some of their minds hes going to move forward today for votes on four longterm spending bills but even if the house can pass those bills, and their stopgap, that stopgap is dead on arrival in the senate. The senators there are completely focused on moving forward with a bipartisan bill and Mitch Mcconnell even criticized the house plan on the floor yesterday, saying that it is just going to hurt Border Agents because they would go without pay if a shutdown was to occur. Now, a small group of senators are considering adding some funding for Border Security to the senate bill. But mccarthy said last night that thats not good enough. He doesnt want to see more money, he actually wants to see policy changes i dont think money solves the problem because what has happened here is it has been the president s policies that has made the border wide open. There are democratelected members who want the border secure as well they see what is happening to their own states. Washington is braced to enter a shutdown this weekend and Goldman Sachs is estimating that that shutdown could be as long as three weeks guys, that could wind up having a pretty Significant Impact on the economy. This might wind up being our longest shutdown yet emily, thank you. For more on this, we want to bring in former u. S. Senator pat toomey, he is now a coinbase Senior Adviser and, senator toomey, you lived through some of the Government Shutdowns. What do you think happened here . And by the way, we should note for people who arent familiar, most people know youre a republican, but what could you think happened with all of this . Well, actually, pretty much what usually happens, becky. This is not terribly out of the ordinary the big challenge for Kevin Mccarthy and the House Republicans is can they hold together and actually pass something, a continuing resolution that would fund the entire government for some limited period of time if you recall, back a few months ago when there was a big battle over whether or not and under what circumstances to raise the debt ceiling, President Bidens position was categorical, he was absolutely not going to negotiate under any circumstances, period. And he held that position for exactly as long as it took for republicans to pass a debt ceiling increase, with conditions, and then he was immediately at the table negotiating. Its, first of all, there is a little bit of movement in the goal post because there was a spending agreement that was embedded in that debt ceiling increase and now there is a discussion about a different spending level and by the way, im very sympathetic with those who would like to have less spending but i think you have to acknowledge, if republicans cant come together and pass something, bargaining, negotiating power is absolutely minimized. The way this ends is the way it has usually ended, which is going to be virtually all the democrats, some subset of republicans, from Kevin Mccarthys point of view, hopefully a majority and the question will be does his conference as a whole believe he did the best he could under the circumstances and is therefore able to retain his speakership i think thats what were going to see play out over the next few weeks. That was where i was going to go, senator. Lets say the senate bill goes with the with the notion that senator sinema is going to introduce an amendment that does something for Border Security, so mccarthy brings it to a vote, gets democratic help, it goes to the senate, they do the amendment, it all gets done, lets say the speaker decides to do that and then someone like matt gaetz will challenge him for the speakership. Does he retain his speakership or lose enough republicans or would any democrats vote for him in that case so that is a few sort of iterations down the road, joe. It is unprecedented in my recollection, in my knowledge of history to have members of the other party vote to confirm a speaker. But, look, i think one lesson we learned is dont count Kevin Mccarthy out he is very, very adept at dealing with this very difficult set of circumstances honestly, i didnt think he could pass a debt ceiling increase with just republicans, but he did it changed the dynamics, they were able to negotiate, actually a reduction in nondefense spending joe biden did not want to do that he wants to spend much, much more than what he agreed to. So, we dont know exactly all the iterations along the way but i sure wouldnt count Kevin Mccarthy out senator, wanted to switch gears on you for a moment. I know we introduced you as a Senior Adviser now to coinbase we got an interview coming up in the 8 00 hour with Brian Armstrong. Hes been in washington trying to change the dynamic around regulating cryptocurrency. Hes doing it specifically on the eve of this Sam Bankmanfried trial, which begins next week, and given both the sort of dichotomy between an excitement that somehow an etf because black rock and others are seeking one and some of the results of lawsuits that seemed to have gone more in the crypto way than others, at the same time this news that were all going to be, i assume, tracking and following for the next four, six weeks if not longer, do you have any expectation that there is going to be regulation of any sort around crypto in the next, call it 12 months . Look, well, you said regulation, we have regulation by enforcement we have an s. E. C. That simply asserts jurisdiction with a very weak case and goes and takes people to Court Without specifying how and why and under what criteria they deem so many tokens to be securities, for instance that is an ongoing major problem. There is im glad you alluded to the interest and adoption by mainstream traditional finance i would add to the list it is not just the big Asset Managers that would like to do spot bitcoin etfs, but you have visa announcing a significant expansion of its use of stable coins for International Payment settlements, paypal announcing it is going to issue its own stable coin for payment settlements. There is adoption taking place it would be so much better for all american consumers, developers, this whole ecosystem if we could pass legislation, provide clear guardrails, and then the regulators could enforce according to that legislation. The house took a big important step, the House Financial Services committee, passed legislation out of the committee, it was bipartisan, had all the republicans, good handful of democrats, Patrick Mchenry has been leading that effort i know he wants a vote on the house floor. I think hes got a good chance of passing actually one or two laws, bills that would create those guardrails, provide that regulatory clarity i dont see a prospect in the senate and i dont think the administration is supportive, but the differences are bridgeable it is a long shot to get this done in this congress, andrew. But it is long overdue i would like to see the house pass something this fall and set itself for finally passing something in the next congress if it has to wait that long. Im sure were going to continue this conversation senator toomey, thank you for joining us this morning. Thanks for having me, guys. You bet. When we come back, a lot more from cnbcs delivering alpha conference and our headlineofher t morning, House Speaker Kevin Mccarthy, hes going to join us from washington at 8 00 a. M. Eastern time. Post debate. Squawk box coming right back with two big hours that first time you take a step back. I made that. With your very own online store. I sold that. And you can manage it all in one place. I built this. And it was easy, with a partner that puts you first. Godaddy. Is it possible to fall in love with your home. Before you even step inside . Discover the Magnolia Home james hardie collection. Available now in siding colors, styles and textures. Curated by joanna gaines. Here in hawaii there is always time. Theres time to spend with family, time to enjoy with friends. Theres always time to listen or lend a helping hand. Here we have all the time in the world, but no time to waste. Good morning, everybody. Stocks on track for their worst month of the year as september looks to live up to its Bad Reputation today, more Economic Data to digest, we have jobless claims, gdp and home sales all on tap. The uaw threatening more strikes, while the big three try to keep up with supplies and parts. We have got the latest from the picket lines. And chinas property woes are growing and so is the threat to taiwan. We will speak to kyle bass about what it could mean for the markets as the second hour of squawk box begins right now. Good morning and welcome back to squawk box right here on cnbc. Were live at cnbcs delivering alpha Conference Im Andrew Ross Sorkin with joe kernen and becky quick this morning. There you go going to wave. Were here. Lets show you u. S. Equity futures at this hour were going to be talking a lot about investing, where the markets are going, both in the equity world, bond world and more the nasdaq looks like it is going to open down the dow is up, the s p 500 up as well 33 points on the dow right about now. Treasury yields, we got mr. Liesman on hand in just a moment, but lets show you the tenyear, and the twoyear, the tenyear, now at 4. 647 . And then the twoyear at 5. 135 . So a lot to talk about with liesman, before we get to you, real quickly if you got a tenyear at 4. 64 and 30year at 37 and change, where does that get the mortgage many. It is going to be towards it is a longer answer than you want at this want, but mortgages are rich relative to treasuries. The mortgage the yields are higher than they ought to be, relative to treasuries there is room for it to come down and it is an interesting story as to why that may or may not come down. At the moment, the spread has been what almost, 3 Percentage Points it is probably up in the 770 what is the historic . Historic is 2 if you look at the treasury, money is expensive relative to it already being expensive. Can i order up a story on that for tomorrow . I did a little bit of that a couple of months ago and probably worth hitting again and diana olick also has been following this idea that mortgages are expensive relative to where they ought to be. Yes, they are high and ought to be higher, but there is an argument theyre too high relative to treasuries it has to do with the inherent risk in there right now. The dow is up all yesterday morning. And then the yields cant go up when the yields so were at 4. 5 yesterday on the tenyear and went well above 4. 6. 4. 49 yesterday morning and then you went home and went to bed at 3 00. Not 3 00. I mean, nap, but it is not in bed. But, joe, it has been a pretty rough couple of months in the bond market. You have rising bond yields and falling prices and thats pummeled some investors who have been holding on the long end but analysts think this run, guys, to higher rates, it could have further to go since early july heres whats been happening yields up from, remember, 3. 75, now 4. 64 at this level, what do you quantity to call it, spitting distance to 5 or higher tenyear is all of a sudden within reason here i talked yesterday to bruno verzina at bank of america, he said the tenyear could be driven up 5 you got this hawkish fed and higher neutral rate. That hawkish fed that took away cuts next year, by extension, also extended quantitative tightening a double u. S. Downgrade of the debt, better economic fundamentals, higher neutral rate and then the big thing here, the massive supply much more supply than ant anticipated by markets it is supply more than anything that looks to be driving rates now, in fact, much of the increase in yields, it has come with little or no repricing of Inflation Expectations, or even better Economic Data these are real rate rises here rick reeder from black rock, ill talk to him later on the stage at delivering alpha, he says of the 500 billion of issuances, it is an extraordinary amount and it is going to continue. Now, verzina says get used d to it the bond market is more like it was in 08 with higher yields and higher volatility as well and that means higher yields, that means the challenge of bonds to the stock market. You saw it yesterday and it could be here to stay i just i dont think the fed going on hold or even cutting is enough to change the dynamic here i think the treasury is going to have to the administration is going to have to get in front of what is happening with issuance here usually you dont see issuance having this big an impact, but it is now. Remember we heard the bond market was disconnected because it is a Global Market and people are still buying our bonds and there is technical reasons they caught up. Who is going to buy i took to a bunch of people, i do every day, especially for this story, nobody is telling me that the long end is a screaming buy. They all want in they all want to know, i want to lock in these long rates, i dont want to miss the train here, but when do i get on the train, it is the catch a falling knife, i decided, guys, the bond mixing metaphors there. Yes the bond vigilante is not a guy wearing a red cap and holding a baseball bat he straps his kids in the back seat with a seat belt, puts his own seat belt on, two hands on the Steering Wheel and abides the speed limit and looks out at the weather and says im not driving today. Theyre not thats a good point. Theyre not angry, violent people theyre risk averse, theyre cautious. Cautious rule followers. Talking to a lot of people, they would love to do a trade like to borrow short and buy long the red hat, was that a maga guy or you remember i dont like the eyes. Looking back at you i dont like the eyes. A nice, smart guy i dont want to make fun of his name bruno. Verzina are you going to use my steak analogy. That was good yesterday but the nadia coamanechie sticking the landing, that was one for the ages how do you value stocks or should you be valuing stocks with a 5 tenyear is that the way i wasnt going to talk about inflation inflation. You got to throw that into the mix. What is interesting, yes, you do, especially with the way oil the way it is. The whole increase in yields has been with Inflation Expectations pretty much flat so it is a real yield increase of 20, 30 basis points in the blink of an eye. You talked about what is in spitting distance today. You know what else is . You. Were on top of each other on the set and i like it. Did i spit . No, no. I do that, you know i wont challenge you andrew is like, please dont the first the first signal looking for is for the fed to say it is on hold. That could give you a little bit of confidence to borrow long, buy into buy short, buy into the long end and cuts when the fed said were cutting less next year, the bond market heard, oh, longer qt which means more right . I didnt put that together until i talked to bruno. Thank you i have to thank you. We got to go on theyre yelling at me. I dont have an ifb, so it is his fault, so in the meantime, shawn fain is set to address Union Members tomorrow morning fain could potentially announce new strike targets if there is no progress with ford, gm or stellantis phil lebeau joins us now with more on that front what can you tell us theyre still talking, becky, we know that they have been having regular discussions. Yesterday, a meeting but we have seen this script before as you mentioned, uaw president shawn fain is scheduled to give an update on the state of negotiations we will get that tomorrow morning. So, it is just like last week. Theyll give us an update on negotiations, the announcement of whether or not there are strikes or not comes at 10 00 a. M. Eastern time. And the determining factor here is whether or not they believe there is serious progress. If they dont believe there is, then we could see new strike locations announced and those workers walk off the job at 12 00 p. M. Tomorrow afternoon. So, it brings up the question, how much production might we lose remember the last round of strike locations were parts and Distribution Centers so, final assembly continued for all of the automakers, but overall there are 41 strike locations scattered across about 20, 21 states in the United States the bulk of these are gm and stellantis parts and Distribution Centers just three final Assembly Plants have been put on strike so far that could change tomorrow yesterday, as you look at shares of general motors, there was a meeting between negotiators for gm and the united autoworkers. We reached out to both the union as well as the automaker, neither of them wanted to talk about the meeting or characterize it. Meanwhile, when you look at ford, they were spared more strikes last friday. Does that change tomorrow . Do we see the uaw say, okay, ford Distribution Centers, parts and Distribution Centers go on strike and as you look at stellantis, keep in mind what were looking at right now is roughly 12 of all big three uaw members who are on strike right now, guys. So the uaw has a lot more room to go, if it wants to continue adding strike locations and putting more members on strike all right, phil, thank you very much. We will check in with you again and make sure were monitoring this closely phil lebeau. Okay. Coming up, well talk market pressures and excuse me where you should be putting your money to work. Take a look at futures you got the dow up 23 points, the s p 500 looking open, just marginally higher. The nasdaq off marginally, 11 ints and kyle bass, hes going to join us live from the delivering alpha conference this morning. Stick around youre watching squawk box and this is cnbc this cnbc program is sponsored by baird visit bairddifference. Com. 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Now you can stay reliably connected through Power Outages with unlimited cellular data and up to 4 hours of battery backup to keep you online. Only from xfinity. Home of the xfinity 10g network. Welcome back to our coverage of the delivering alpha conference right here in new york city. Yesterday we got the chance to speak with bank of americas ceo Brian Moynihan at the Economic Club of new york moynihan says hes looking for a soft landing of the economy but Interest Rates are likely to remain higher for longer as the fed fights inflation theyre winning the fight right now. By their own admission and this isnt they knew they came late they caught up fast. But now they got equal amounts of problems, they have to be careful they dont go too far. If you try to engineer a soft landing which people have or something close to that, in balance, when you look at the current data, they have won they have won against the american consumer. The activity slowed down now it has to work through the system thats why the rates have to stay up longer now, bank of america expects the Federal Reserve to raise Interest Rates one more time in november, followed by three rate cuts in 2024 and four in 2025. The only weird thing about that is if youre looking for no recession, but you think theyre going to cut rates so significantly, that really assumes that the fed completely maneuvers things, start cutting at the right time before a recession sets in. Why they would cut at all. Right there is no recession, why do it yeah for a closer look at other market pressures, want to bring in to this conversation aziz shah here at delivering alpha this morning he does this for public investing. Good morning good morning. So im curious, what do you think talking about public investing, what do you think the rate of return, youre telling your clients you can actually get in this market like, you dont have to take any risk and youre getting 6 in the front end of fixed income markets, and, you know, equities have to deliver you a lot more than that. And are they . Is it worth the risk will they . Will they look, i think youre about to set up a really interesting buying opportunity, given the backup we had in yields as well as in equities you have a lot of really good things going on across the globe in equities and i think thats one of the most important things for investors to be thinking about is looking globally for those opportunities. Buying opportunities and fixed income and stocks. Is that what youre seeing really in stocks. The fixed income backup is global you know and, you know you look at the runup we have seen in the u. S. , it really kind of allows you to diversify your portfolio and get into markets like japan, like india, that have secular growth stories and are benefiting from the reflation story. You think the back stop is 6 you say to yourself, that should be the minimum you can make in a given year yeah. What do you think you can make with equities today double that . I think you can get ten. You can get ten yeah. Only internationally. I think youre better off looking internationally because i think in the near term, you know, youre going to have a real headwind in u. S. Dollar assets look at what is going on in the dollar, look at the tightness of u. S. Balance sheets, and u. S. Shortterm rates, and just like a nice setup for cheap Assets Abroad and into a secular story where you have investments going on in india, you have investment and supply chain diversification going on in japan, those are fantastic opportunities and the valuations are a lot better than in the u. S. Specifically, though, beyond just saying india, japan, are there specific companies, and or sectors you think are the play and how would you invest in them yeah, so, i would say that you want to look for infrastructure there are basically three themes going on globally that set up fantastic opportunities. Right, the first is a. I. The u. S. Priced that out, right, and in the near term were going to see a backup. But this is a secular story, were in the early innings the second is going to be so youre saying there is no play on a. I. In the u. S. Right now . You think the multiples are too high. I think the multiples priced in a lot and will back up. Theyre going to back up. They are going to back up but it opens up the opportunity because, like, again, were in early innings there. And they are those same opportunities if you look abroad that are setting up really give us some examples of those things. So, im not a single stock guy. Bond investor but, what i would say is if you want to look at the chips sector, looking in japan looks really interesting if you want to look at kind of infrastructure when it comes to, you know, india has to put in place data centers like a lot of the a. I. Development is actually going on there a lot of the data work is going to go on in india and we just dont have the capacity here in the u. S. To do it. You didnt mention the c word, china, did you i did not. We had a gentleman on a couple of days ago, said it is outperformed even with recent troubles outperformed Everything Else in emerging markets i think that anyone that is an investor will understand that it hasnt outperformed but, you know, are there values developing in china . Absolutely but you have to take that with a lot of kind of you went back how many years did he go back a lon geopolitically, is it just not worth the risk i think a lot of people have exposure to china through u. S. Stocks if you own apple, if you own microsoft, you have exposure so why are you doubling down most people dont have that same type of exposure in places like india and japan. You mean exposure, but not a benefit to being there, you mean a risk to being there . You dont see any benefit to being in china i think were all there right . I suppose, but are we participating in we may be i dont know, bottoming in china, some people think i think either way youre going to benefit if you own u. S. Companies and so if you want to play for where the new investments are being made, you want to look outside of china. I guess the question i was going to ask you is you talk about india or talk about japan, talk about a. I. Happening in those places, the infrastructure piece youre talking about, is that an investment or even from a bond perspective, a multinational that is going into those places and thats still buying a u. S. Company or buying companies that are local i think it is combination of the two, but it, like, locally they have to build out the infrastructure and so those are going to be opportunities and stock markets that really do benefit and they have been. If you look at both of those markets, theyre faring much better than the u. S. Has been through this volatility in the bond market. Okay. Great to see you appreciate you being here. A lot coming up. Right now, though, lina khan, what does she have against amazon jon fortt is going to join us. Im sure hell say it is a strong case. And it is not so strong of a case well have that breakdown next. Later in the program, House Speaker Kevin Mccarthy is hoping that he can gain more support by voting on four longterm spending bills as early as today or tomorrow. Hes going to be joining us in the 8 00 hour. Squawk box will be right back. Time now for todays aflac trivia question. Who ishe t mostfollowed person on tiktok . The answer when cnbcs squawk box continues gaaaaap did you just say gap . hes talking about Expenses Health insurance doesnt cover. Good thing coach prime knows about. Say it one time aflac because aflac gets you money to help close that gap now how do we get this goat outta here . whistles aflac meet one of my new homies gaaaaap get help with Expenses Health insurance doesnt cover at aflac. Com. Elephant wouldve been scarier. Upbeat music upbeat music thanks to avalara, we can calculate sales tax automatically. Avalarahhhhhh what if tax rates change . Ahhhhhh filing sales tax returns . Ahhhhhh business license guidance . Ahhhhhh crossborder sales . Ahhhhhh item classification . Ahhhhhh does it connect with acc. . Ahhhhhh ahhhhhh ahhhhhh now the answer to todays aflac trivia question. Who is the most followed person on tiktok . The answer, khaby lame, he has 162 million followers and his videos have more than 2. 4 billion likes. Welcome back to squawk box. The federal trade commission and 17 state attorneys general this week suing amazon in a headlinegrabbing lawsuit claiming it is abusing monopoly power in its Online Retail business how strong a case . Jon fortt is here this morning to weigh in. Which is it, strong or not go back to apmazon again, andrew a convincing case that amazon is using its scale and Online Shopping to force businesses to use its advertising and Fulfillment Services the result is that amazon keeps merchants from lowering prices on other platforms so consumers end up paying more than they should i know, this isnt your traditional antitrust scenario where a Company Becomes the dominant provider in a category and hikes prices on consumers without fear of competition. This is the digital economy, where amazon is a superstore, a marketplace operator, and advertising platform and Logistics Provider and the ftc builds a case that amazon is using its dominance as a superstore and marketplace operator along with its other strengths to stifle competition, protect its share. Among the four top retailers, amazon, walmart, ebay and target, amazon now captures about 80 of total online sales. For the health of the online economy, the ftc needed to call amazon out way to go, lina khan so is it really fair for the ftc to define the market of u. S. Online superstores and declare amazon a monopoly . I think the sort of market sized question is the central one, no . Well, andrew, on the other hand, that is the problem. Amazon isnt a monopoly because the online superstore market, the ftc says amazon dominates, doesnt exist. Nobody says i think ill buy toothpaste at an online superstore today but the ftc imagines a world where the internet is made price discovery harder, not easier they believe amazon has singlehandedly hacked free market capitalism, turning consumes near web shopping zombies,s subscriptions they dont want. They also argue this online universe exists completely separate from the rest of retail a Goldman Sachs note last month said 85 of retail purchases still happen in physical stores. Buy online, pick up in store is a growing trend. If all that is true, and amazons price gouging, wouldnt we go back to the mall inflation is high. People want deals. This lawsuit is a joke okay. So, jon, this seems more complicated than the Microsoft Case from the 1990s, dont you think . I think it is in a way because this isnt all existing sort of in one clearly defined market of operating systems on pcs with perhaps other things bundled in amazon stretches across all of these different categories and offering its own goods and being a marketplace and delivering stuff. But this is the most lopsided youve ever been, fortt, your heart wasnt in the first one. You dont think so . I know. It was clear to me how you felt on this one. First time ive thought that first time ive thought that all right great second case are you going to admit to it . Are you copping to that, jon ill let everybody else read both arguments when i put out the on the other hand newsletter tomorrow the qr code is on the screen. Im going to ask you a market power question. Okay. If your favorite toothpaste went up by 7, 5, 4, on amazon, would you think do you think you would buy it elsewhere . Absolutely. You think that should be the measure of the situation i would absolutely buy it elsewhere, andrew. Price discovery is easier in this economy i think the ftc is arguing that amazon isnt just raising prices on amazon. Theyre raising prices across the entire economy it is quite an argument. I look forward to seeing how that goes in court and the questions the judge asks but once again, there was a qr code on the screen you can type in cnbc. Com otoh, easy access to the easy poll on linkedin, weigh in, let me know which side you agree with more, results from the most recent topic, also amazon, should the ftc sue amazon for making prime hard to quit 56 said yes 44 no well see what happens with this one. I think jon just tipped his hand tipped his hand. Jon, great to see you. Thanks why isnt it teeth paste . Good question. Why drive on a parkway and park on a driveway unless youre 100, you have still to come, aerial investment ceo les brunn will join us and kyle bass on the real estate crisis and economic slowdown slowdown dont miss ours like you can make this work. Interviewwe can make this work. Looks so good there, dont miss our interview with Kevin Mccarthy on cnbc that seems to be universal. I can make this work. I can make this work. No wonder more than 9 out of 10 clients are likely to recommend us. Because advice worth listening to is advice worth talking about. Ameriprise financial. Welcome back, everybody despite the Federal Reserve signaling higher for longer Interest Rates, the private equity market is showing strong potential for 2024 at least according to our next guest. Joining us right now with his outlook is chairman and ceo les brun les, lets talk about this i love your thought process on this the outlook for the markets for private equity really depends on where you stand right now. You have cash on hand or looking to unload assets a different story . Absolutely. Very reminiscent of the 20082009 crisis, where those with money made a lot more money in the balance subsequent to the crisis and those who had assets they were holding, their returns were substantially lower because there were no buyers that werent sufficient pool buyers for those assets. Prices have come down prices are coming down. Does that mean there is a lot of bargains right now, you think the prices have i think there is still a bit of a mismatch between seller and buyer expectations sellers always want the top dollar, obviously. Buyers want to fish the bottom of the market. I think that given the current Interest Rate environment, valuations will continue to come down, as people run out of cash and need to do a transaction or continue their growth, theyre going to have to find ways to do those transactions and valuations which are lower than they might otherwise have expected. Part of that is what you could get in the equity markets, maybe below what people had thought before not a lot of certainty there, but also, if you got any assets that need to be renegotiated in terms of existing loans you have out or anything, that all puts some pressure on. Yeah, look, Traditional Companies are having a difficult time finding financing at rates which are attractive or that allow them to execute their plans. And so as a consequence, transactions are getting done either with greater amounts of equity or at lower valuations. One or the other Brian Moynihan was talking yesterday about how right now the ipo market we have seen a few companies that have come out, but still a lot of hesitation with other people being able to roll out companies at this point and until you basically see the end of rising rates, nobody wants to move. You want to see where that lands first. Same with private equity or is there Something Else yes and no. I think the differentiator is that it is larger enterprises, larger valuation enterprises that have the opportunity to drive into the ipo market. Less valuable companies dont have that opportunity, dont have that option they have to find a way to continue to get the capital they need to get their growth and development. I can imagine there will be some stress in a lot of companies, which might always be an opportunity for pe, i guess it is tough. Inflation, tough with margins. Look at all the strikes and all these wage gains there is going to be companies that are dealing with higher Interest Rates, maybe a slowing economy, a higher cost structure, and youre going to have to come in and restructure and lay people off, probably. Maybe, maybe not. Im an old guy ive seen one or two cycles. Im sure you all have. We all know that things run in those cycles if you are a buyer of assets, with a view to holding those assets for a period of time, making your money on compounding as opposed to flipping, you can ride those cycles. And this environment, now is a good time to be buying. Really . Even before everything hits the fan . Things could be hitting the fan in the next few you would know better than me i wish i were smart enough to prognosticate that clearly, but why does it seem of the m a market, i dont know if the stats are right, the m a market up until about a year ago was about 40 of all transaction volume and now down to 22 Something Like that . Isnt that indicative of a marketplace where the pe world is saying something bad is about to happen because im waiting, im going to sit on my hands as long as i can . You got pe asset owners that are waiting because many of them are fortunate enough to benefit from covenant life financing theyre not at risk of defaulting on their financing loans, they can make their interest payments. But there are other folks who arent necessarily sponsored back currently who need to do a transaction in order to execute on their strategy to take advantage of what they see as a Market Opportunity thats where we love to play thats where other private equity firms love to play. Lets talk about project black. What is that and what is your investment thesis. Ours is a unique investment thesis were looking to acquire enterprises, midmarket size enterprises that serve as fortune 500 tier suppliers and transfer them to other enterprises. There are five blackowned companies with revenues of a billion dollars or more in the United States. We would like to double that number over the course of the next five, ten years you have a couple of deals that you put to place. One of them is a Company Called sorenson i havent heard of that before sounds interesting. Sorenson communications is a company in the business of providing video relay and closed captioning Communication Services for the deaf and hard of hearing, headquartered in salt lake city, utah, of all places but the opportunity that we saw there was to take a company that was essentially relying on the ftc to pay its freight, generate its revenues, and transfer that into a b to b opportunity and capture what we thought was a great market share so people like amazon, people like microsoft, who want to on board deaf and hard of hearing employees or engage with deaf and hard of hearing people to expand their market share find us an attractive opportunity to play with. It does closed caption but not on television, real life interactions how does that work youre asking the wrong guy i just buy them, i dont run them and if you have other targets, like, what other types of targets maybe the other project youre working on were looking at a variety of Different Enterprises in a variety of different spaces. We narrowed our verticals, areas of interest to about eight and those areas are driven by conversations we have been having with the fortune 500 procurement folks in terms of where it is that they see increasing their spend, who they would like to have as a better provider, and some instances there are companies theyre already dealing with they think would be vantaged with greater access to capital or better management talent that represent opportunities for us to acquire and grow les, thank you very much for joining us today it has been a delight thank you for giving me the opportunity. Thanks. Still to come, from cnbcs delivering alpha conference, kyle bass is going to join us to talk u. S. China relations. Kyle, lookat that picture. Look at that huh you are looking hes here lbe here. Hel on set in a second. At the top of the hour, House Speaker Kevin Mccarthy going to be our special guest squawk box will be right back. Welcome back to squawk box this morning lets take a quick check on the markets now. We were in the green for the s p and the dow. Things have reversed a little bit. S p 500 now off 7 points, dow looking to open down about 20 points youre looking at the naz sdaq f 43 points. Treasuries as well, the tenyear at 4. 651 . The twoyear at 5. 144 gamestops board elected brian cohen as its new ceo and chairman thats Effective Immediately had been seveni serving as exece chairman of gamestop the search ended with him. They said cohen will not receive compensation for running the company, however, though he owns about 12 of the company through his ventures there is an s. E. C. Investigation taking place into ryan cohen and trading around bed, b bad beyond interesting to have been in the board room during some of these discussions. When we come back, kyle bass is going to join us. Hes live right here at delivering alpha just off set right now some other very big interviews coming up in the next hour we kick things off with House Speaker Kevin Mccarthy and then later, ndot miss an extended interview with coinbase ceo Brian Armstrong. All that in just a little bit. Were coming right back. Kyle bass is here. Were going to talk china. And with hayman capital. Welcome. Great. Did you see the journal piece today . I havent. Let me tell you what it says. We have been hearing that china can run tiktok independently, nothing to see here. Employees have been noticing a string of bytedance executives have taken over key positions at tiktok, moving to the United States to run tiktok here. That plays right into so there is something to see here, no i think onething we never talk about with tiktok is the reason the ftc is in place and the reason that foreigners have a hard time getting licenses for tv or radio is the ftc has to approve who gets licenses to broadcast to americans and into our homes and households tiktok broadcasts straight into our kids bedrooms and has never had to obtain an ftc license i find that to be super interesting. I think the ftc should be forced to review what is going on at tiktok, how do they broadcast to americans, to our kids, how does their algorithm play into our daily lives and how can it change our daily lives would you say the same about instagram and facebook and twitter and the rest anything that is broadcast. Look, im not the ftc. Thats the reason we put them in place. I feel like the Tech Companies didnt end around to broadcast directly to our kids and i think it is a problem. It doesnt surprise you that bytedance is taking an even more hands on role at what people are seeing on i think i actually think it is insane that tiktok is still operating in the United States i mean, just think back to prior adversarial relationships with countries we deem to be impediments to u. S. National security imagine if we loueallowed that propaganda to be pushed in from russia can i ask about your view, if we were to decouple from china, or frankly if we had lets do it this way. If we hadnt done what we did over the last 30 years, whatever the relationship was over the last 30 years didnt get us where we want it to be, but if we hadnt approached it that way, where would we be would we be in a much worse place . Well, trump wouldnt have been president we exported 4 million jobs when we allowed china in the wto. 4 million jobs gone in six years. Were having this debate now at the uaw over wages, but were talking about implementing evs all over the country, and evs require 40 less workers and theyre nonunionized. So we have these issues where if all were doing is looking for the cheapest labor and were looking for the cheapest labor with counterparties that are adversarial to our way of life and our values system. Inevitably, andrew, i dont think our values are compatible with theirs. Theyre not. They dont care about things we hold dear to ourselves and the only reason we overlook those is greed and trying to get something cheaper. We can our country and our companies can source things cheaply, maybe not as cheaply as being over there in china, but our relationship were talking about Chinas Nuclear buildup, were talking about a potential war with china and we on this channel sit here and talk about, well, maybe we should economically integrate some more. I think part of that is if you want to prevent a war, having a relationship is better than not having a relationship, no absolutely. Look, we have been begging china to set up military t weve been asking china to set up military to military and they wont. Who is acting responsibly and who is not acting responsibly. Youre talking about Cutting Communications altogether, a cold war versus a hot war . Were in a cold war now what were trying to do is protect ourselves a little bit were not doing a great job but were starting to protect ourselves. There are certain things we should allow and certain things we shouldnt allow if we entered a reciprocal relationship with china, they dont allow us to broadcast into china. I bet you were not on right now. You know what they do with us they put the color screen up they do, depending on what were talking about. But handing those all of those asymmetries is not a good idea you can take the race card out of it if you just say we will allow you to do whatever you allow us to do over there. If that happened, andrew, its over we were going to talk about it at the top. What are you hearing about on the ground bottomed out more to go we know whether its 30, 32, 33 33 of their economy is real estate, and real estate is down 39 . Xi realized its what collapsed their birth rate because men cant afford to buy a house, theyre not married, not having kids, theyre living in their parents basements hes only been at this capitalism for about 20 years and thats about it. Are you of the view that a challenged economy in china makes xi less likely to deal with, try to take over taiwan because hes dealing with economic challenges or that he would be more likely to act out in response . Some people say putin would act out in an economically challenging environment but xi wouldnt one thing that i dont think has been covered you know what it takes to be on the rolls, consideredemployed in china one hour a week. They still have unemployment at 20 and growing. We saw evergram was halted by hong kong. Evergrand and china garden together or country garden, have 500 billion worth of debt. Our financial crisis, we lost 800 billion in our Banking System of a trillion and we recapped our Banking System and their system is four times more leveraged than we are. We all know their banks are insolvent but xi can just fix them when we get back to the cold war ideology, we need to be serious and say if you do take taiwan, we will take you off the system. I cant imagine that happening, well take you off the dollar system. Did you imagine putin invading ukraine i didnt i realize this is the one issue that may be bipartisan in washington still, but i think what happens next and that question of what happens next probably scares people in washington to thepoint of do w really want to pull that lever again, but closing our eyes doesnt help either. I think its very important. I think the China Select Committee is doing a great job, its a Bipartisan Committee and theyre doing what they can do to educate america on this if you think back to the cold war, we all knew who the bad guy was in the cold war. Today we dont have a president willing to call them an adversary. Theyre a strategic competitor if you cant define who your adversary is and prepare the people for some negative outcome you cant even define the battle space. We are so far behind on our force projection side and chinas hooks on wall street are so deep into us we have ceos of Carlisle Group all of the big players keep saying we need more integration, not less and theyre not interested in our national security, theyre interested in making another dollar and one day were going to wake up and realize that was the wrong bet. And this unholy alliance with russia and a lot of our budget has to do with ukraine i dont know how that finally plays out if theyre truly partners in all these things its an unholy alliance with india. Think about where all this oil is being pumped. We know russia and china would probably be on the opposite side of us. We know that. They have a Limitless Partnership between xi jinping and the Number One World criminal in the world today and we just overlook that. Indias entire military relies on Russian Military equipment and theyre buying all of the oil. And so india is a friend, theyre the Worlds Largest democracy and we are trying to become even more friendly with them and yet india is in a real pickle here. What do you say to republicans who want to stop funding ukraine now . I think its insane its an existential fight. Theres a party in the Republican Party that is, as you know, pushing isolationism, allowing europe to deal with that problem, i think it would be a big mistake is there an end in sight . Does the u. S. Have to somehow try to create an off ramp in this situation, an acceptable off ramp thats anything but pure independence and putting things back to where they were before this began. Both sides are saying we need a full win i dont see an off ramp, which is what worries me about this situation. Kyle bass well continue Kevin Mccarthy is ready and waiting. His idea on getting border concessions is the right idea. I dont know if you have been to the border ive been therwh tats been hap in the markets s p has also turned negative, dow is down about 3. Squawk box will be right back. Rich, velvety. Coffee. Cafequality. Espresso. One highpressure system. That can do both. Brew to your hearts desire. With the lor barista system. Now brewing peets coffee. Good morning countdown to shutdown. Congress nearly out of time to pass a spending bill House Speaker Kevin Mccarthy will be joining us live with an update in just moments from now. Meantime, the autoworkers strikes set to expand. And crypto in focus this morning. This hour an extended interview with coinboys ceo Brian Armstrong. The final hour of squawk box begins right now good morning, everybody. Welcome back to squawk box right here on cnbc this morning we are live from the 13th annual cnbc delivering alpha conference its a place where we are waiting for the crowds to show up its going to be an allday conference where we dig into whats really happening in the markets and where you can expect to make money. This morning as we await everything thats going to be happening on stage, weve been watching whats been happening with the markets the dow futures up by about 17 but we have seen those gains whittled away during the morning. Were coming off a relatively difficult period over the last several weeks for the market the dow was down for six out of seven sessions treasury yields have been on the rise the 10year is well above 4. 6 at 4. 632 and the 2year still above 5. 1 , 5. 13 is the latest tick there the government can should down as early as sunday if congress doesnt act quickly to pass a spending agreement. Speaker of the house Kevin Mccarthy meanwhile telling the republican conference he wont allow a vote on the Senate Version of a stopgap and the speaker of the house Kevin Mccarthy joins us this morning. Mr. Speaker, thanks for speaking the time we appreciate it looks like it must be a very important meeting. You have your jacket on. It is very, very solemn, very important, as is what were going to talk about right now. Do you think it would be overstating it to say that youre fighting basically a twofront war, one with the democrats and one with members of your own party . Is that overstating it look, we are stronger as a republican conference when we work as one. We watch that through all the battles we had at the beginning of this year, especially when we came to the debt ceiling schumer and the president believed they couldnt meet with us, that we couldnt do anything once we were able to pass a bill, the negotiations started weve been struggling all summer trying to pass the appropriations bill. Let me first put it in Congress Text we are in a much stronger place as a country normally we dont move these bills through senate the senate never does that they wait till christmas and write an omnibus in the background the senate has now moved them through committee but they havent moved one bill off the senate floor we will by the end of this week have taken up 73 of the Discretionary Spending so what we really need to do is put that stopgap measure that gives us more time to finish the work on both sides but were in a better place than we have been in other years. We want to solve this problem once and for all if you are able to get your plan you need four different votes i think. Lets say that goes through. Probably im sure it would not pass the senate. We know that is there any chance that you would reconsider the Senate Version, pass it, maybe with some help from democrats, have an amendment that does something for Border Security and them come what may try and hang on for dear life if theres some type of challenge to your speakership . Or are we headed for a sunday shutdown the senate is their own body and the house is its own body. When they pass a bill and we pass a bill we look for differences. Dont take my word for it. The governor of massachusetts has declared a state of emergency. The mayor of new york city says its destroying his city the governor of new york is telling people to go someplace else new york is spending more than 1 billion just on hotel rooms el paso mayor. So this is really something that i hear from democrats and republicans that want to have something done i think focusing something along that border would put us in a really good position that we could get a stopgap measure to move forward speaker mccarthy, we spoke to one of the heads of the problem solving caucus in the house, 32 republicans, 32 democrats who are trying to find consensus they said they are putting forth a bill like that, they have a bill that they have support for from both sides of the aisle that would take care of some of those border issues and move things ahead but that they cant get you to take that to the floor. Would you consider that . I dont understand. I havent seen that in the senate the question is would i accept and surrender to what the senate decide no, im sorry, im talking about we actually passed a bill that dealt with early on the border and the senates done nothing on that. The senate has done nothing when it comes to energy and now we have 100 a barrel oil listen, i believe this is an opportunity. Its an opportunity to deal with the border, deal with our funding and put us on a path that this country is stronger. I will listen, just as i said yesterday. I think another commission we can deal with is a debt commission, like the old Brac Commission which the problem solvers agree with you on that i had a very good bipartisan meeting yesterday. Its something we have in our continuing resolution, something i advocated with the president early in this year, something i talkedg to happen by sunday oh, dont give up oh, listen, i know sundays football day if people had this type of attitude, theyd quit in the third quarter. One thing i hope you realize about me is i never give up. If we have to play into overtime to get it right, i will do just that how will that work . E to pass that and then what would be the next step youd have to send it over to the senate theyd say no or mov california to michigan, fuel 100 a barrel ani say care about your nation, lets get togeer, weve been able to do it before when we sat down we can solve this problem. This is actually an opportunity to put the country on a better path, to secure our borders. Dont do it because republicans are concerned about it youve got the leading democrats in the nation. Massachusetts, theres not one republican congressman from massachusetts and the governor has declared a state of emergency. Elizabeth Warren Schumer comes from new york. Youve got his governor, youve got his mayor crying, can you please help us on this this is the opportunity we have to do the right thing. Remember, it seems it was just yesterday we were talking about the debt ceiling and you were able against all odds and peoples expectations to get a bill passed. Thats what forced President Biden, it seems like, to the negotiating table. Maybe it all hinges on you being able to pass thing today and tomorrow instead of talking about where the president is and whats he doing . What are the chances youre able to pass something in. I have challenge inside this conference i have members holding us up, otherwise wed have them all done i have members who will not vote for a stopgap measure. They wont do any of that. Every challenge i have is an opportunity. For all you sitting out there in business, you have the ability to hire and fire who works with you. Somebody else hires and fires who comes here i only get the opportunity to inspire them so i dont give up on any single one of them and i try to find a place where we can bring it all together. Theres many times before i would sit on this show and youd say theres no possibility, you would have fold in a debt ceiling. I dont view it as a fold. It cant be one side wins and one side loses why cant we have america win . Our government has to commonw compromise i do not one thing democrats and republicans across the nation want is the border to change lets sit down, pull that element in it, finish our Appropriations Bills and look towards things that we can start looking at that are challenges 10 and 20 years from now stopogge where we can put ourselves in a place to make sure the next century is ours. You wont give me odd on whether we shut down people are like at 80 now i understand you want markets to roll and do whatever you cant. If i was on draft kings, where should i put my money on whether the government shuts or not . I wont make any i wake up every day optimistic id say put your money on me were going to get this done im not counting out. Thats one thing people say, dont count you out. Im just talking about whether youre able to wrangle those crazy cats, that sounds like beatnik but those crazy wrangling cats youre trying to accomplish what are the chances that finally happens . I dont know if you want to do it by a clock, i dont know what to give you. At the end of the day do we get this done . Yes. We will get this done and well be better and stronger i dont give up if the clock runs out im okay playing in overtime yeah, you played what do you call that, 15 innings . Im irish i dont care if you have to fight. Ill go 15 rounds. You dont give up. Every web site this morning is running a poll on who won the debate last night. Im sure you watched it intently do you have a view first of all, im not going to criticize anybody thats on there because thats a very tough place to be and to describe something in one minute i think nikki haley continues to rise i think tim scott had a very good night i thought he started strong. I thought those two good points. But for everybody on that stage, i think theyre still so far behind with donald trump is, its a pretty tough place to be. But i admire the governor of north dakota getting in different policies. I like the idea that republicans have a lot of people talking, but i watched your show this week and barry diller being a very strong democrat saying an incumbent president shouldnt run for office, liberal newspaper columnists saying President Biden should not run i think republicans are in a much stronger position i am always going to be excited when something is held at the Reagan Library if reagan was here today, what would he tell us believer in the exceptionalism of america it doesnt matter what party youre in. Lets be happy conservatives we dont have to be angry to prove were more liberal or more conservative believe in your principles, be happy about it and solve the problems and even Barry Dillers comments on our program earlier this week were reflective of supporting somebody who was against trump. His support for Chris Christie is because Chris Christie is actively in the fight against trump. Youre not thats true im not but i dont think thats a position that barry diller has because hes conservative. I think he has a trump syndrome, that he personally dislikes trump. Thats his right but dont miss principles from just personalities. You never would have thought sitting here right now with the latest poll from the Washington Post that donald trump is leading joe biden by ten points. You know as you sit in your cocktail parties or any other meetings around a lot of democrats theyre all saying the same thing they do not believe biden should run again. And youre worried about what happens next mr. Speaker, apparently you got to go somewhere, so were going to let you go. Thank you i appreciate you wearing jackets when im on, the full suit, it looks good thank you its for you youre welcome its slimming when we come back, were going to talk strategy ahead of the opening bell we have lots more coming this morning. Also some Economic Data on deck. Were going to be getting jobless claims now the dow future is up by about 40 squawk box will be right back. R trading to help sharpen your skills, you can stay on top of the market from wherever you are. E trade from morgan stanley. The two most important things in golf are your swing and your style. Dicks Sporting Goods has everything you need to upgrade both. Find toprated drivers and irons from callaway, taylormade, titleist and ping. Tour balls from your favorite brands. And the most dapper styles from travismathew and walter hagen to calia and lady hagen. You handsome devil. Select the best golf shoes like footjoy, nike and more. And get back on the course with onehour pick up. Look good and play great with gear from dicks Sporting Goods. The first time you made a sale online with godaddy was also the first time you heard of a town named dinosaur, colorado. We just got an order from dinosaur, colorado. Start an easy to build, powerful website for free with a partner that always puts you first. Start for free at godaddy. Com welcome back, everybody. Our next guest says that there are signs of weakness that are quietly creeping into the markets that feel like a series of paper cuts. Thats a pretty good description of what weve seen so far. Joining us is the head of Investment Strategy at sofi. Paper cuts can hurt, right, liz . They can. So far its been pretty orderly but its happening under the surface. The vix has climbed over the last still under 20 i was going to say still under 20 it was hovering between 13 and 14 and now its at 20. But at average rolling over on the s p 500 industrials a lot weaker. Industrials a lot weaker and things like the relative strength index which tells us whether or not things are oversold it doesnt scream oversold but the number showing oversold has increased. You can make a lot of money by parking it in a money market, 5 or north of that. Those investors are kind of waiting to say if theres a pullback, do i actually jump in. Were not in correction territory yet. Youre close to it and maybe people are starting to think, okay, is this the pullback ive been waiting for what would you tell them thats really the biggest question is it a head fake . Were down 7 from the high in july i dont think theres much further to go, especially if yields continue to rise on the long end of the curve. Weve seen a resteepening and thats usually what inflicts pain on stocks i think theres probably more of a risk to the down side still. I dont think this is an entry period but to your point, youre getting paid to wait theres really no rush to get in at these levels. You get paid 5 to sit in treasuries or in money markets so why not just wait it out and get a decent return in the meantime people will say whats the catalyst and weve been pointing to that Earnings Seasons is coming up again. What would you expect to hear from these companies and what would you need to hear to say i think things are getting better. Into 2024 expecting about 9 growth year over year in 2024, that seems high to me. If youre expecting margins to continue expanding somehow without cutting a bunch of costs, i dont think the math quite jives yet. There could be a catalyst in earnings season but we wont hear a lot of that until three, four weeks from now. Inflation data is coming out, the fed is on pause for october because of the way the calendar works but a lot of Economic Data could come out between now and then if we start to hear earnings revision down or theyre going to hit those targets in 2024, you get a deeper hit to multiples. Coming up, a new competitor on the scene in the data history. Alphasense getting a new round of funding the ceo will be joining us take a look at shares of workday plunging this morning. Well talk about that and more when squawk box returns. Welcome back to squawk box. Were at delivering alpha this morning. Alphabets capital g is announcing 100 million series efunding. The company has cemented its place against bloomberg and with us is jack kokko, the founder of alphasense what is this for those who are uninitiated. It helps 400,000 people find critical insights. How is it different than bloomberg or its tech information by and large. Its the unstructured information that we built. Every one of the billings have data points. We semantically know the difference how does that differ from what is offered . People used to call it google for business so its really helping you find the inside sorry within large masses of text documents and give you back just the right results. Rileealtime, not like what w were talking about with chatgtp. Exactly, realtime everything has its happening. That requires a huge amount of computing a fair amount, yes. Its realtime processing but its looking at the database of going back ten years and comparing whats been said today and whats been said quarters before, years before and compare what a company does say now and what does the competitor say and get a better all around picture. What do you charge for a subscription its a sass platform. Customers pay from the millions of dollars down to a small fraction so its a land and expand model. Bloombergs 10,000 a month for its less than that 5,000, 2,000 . Its probably close to the bloomberg end of it for the full platform weve added proprietary content. So what kind of content, data expert interviews all meaning full Public Companies have coverage by analysts, and former executives getting to kind of the keefe insights of whats happening in the trenches with their company. Maybe analysts have missed some key thing for the company hasnhasnt disclosed something that an expert is able to chime in on and we provide insights. We provide that full picture who are your customers and are they using you instead of bloomberg or in addition to in. In addition to. This is solving a problem that we saw in the market where it was not being addressed and customers are everybody from the corporate role, any company with any complexity to their business, anybody making Million Dollar decisions or bigger needs this kind of platform, hedge funds, investment banks, private equity firms. Is there a large language model youre using or an open source model youve taken and adapted towards this . Its a large language model that we built and defined to understand business language, financial language and bring you results, and also not make mistakes, not hallucinate so you can validate yourself as a user, to evaluate what was said by an analyst, by a company and compare that to what a. I. Is summarizing. Simply for research, not for trading. Correct. Some people are pulling data and making trades. Before you make that trade, you need to understand what is going on and what is happening in the ecosystem and to be able to connect the dots and make a better decision on that trade that may happen later. Congratulations. We are seconds away from the latest job data and revision to the gdp report. Rick santelli will have those numbers for us. We wait every thursday, rick. We never know with jobless claims. One of these days they might portend a weakening economy. Is it happening today . No, joe, not happening today. 204,000 on initial claims. So 204,000 is comparable to whats in the rear view mirror, 201,000. These numbers are getting quite small. As a matter of fact, maybe we need to Pay Attention to the fact that the last time we were under 200,000 was the end of january of this year because were getting awfully close. On continuing claims, same story, 1,670,000. In the rear view mirror is 1,662, just downgraded. Officially were down a whatting whopping 2,000 on initial claims. Maybe the gdp will have surprises and i think they do. 2. 2 is the estimate. 2. 1 remains the final look at the Second Quarter, which is the same look as last time and theres going to be a lot of revisions to this data and ill have to go back and see how history may have changed. Consumption now, thats the surprise. Cut in half. Consumption cut in half, which makes it a bit of a head scratcher for the third time around the block. 0. 8. 0. 8 versus 1. 7 in the rear view mirror. 0. 8 is the lightest number going back. The distortions of covid make this a bit of a useless comparison. Milepe minus 32. 1 is what it will comp to. And if we look at the price indices, we are looking at 1. 7 on the price index, another major move from 2 to 1. 7, thats a 0. 3 drop and distorted by covid, the comp would be minus 1. 3 in the Second Quarter of 2020 and finally the personal Consumption Expenditure core, thats a quarteroverquarter number, remains at 3. 7. We did have some surprises. Let the markets define this, joe. Yields moving just a smidge lower. Were right around 460. Today we traded up to a new intra da cycle high of 465. Yesterday was 464. We see the 2year note yields, 5year and 7year note yields and now 10s are lower on the day. Were now under minus 50 points in 2s to 10s. Back to you and good luck on a big day today out there, guys. Great, rick. Thanks. Steve liesman joins us now with more. Weve been using that expression things happen gradually and then all at once. Theyre not even happening gradually at thispoint in terms of a slow double play. Consumer confidence, where do we see the effect of higher rates . Boats. My buddy who sells boats is having trouble selling boats. He said boats under 100,000 where people need the loan, theyre hurting. Boats over 200,000 where the loan is a choice, those are doing well. Thanks, nathan, for that by the way. The real estate people, people cant get into that starter home. That hurts. Were not seeing the continuing claims numbers. Its not there. Were seeing credit card default levels are rising again. Were rising up to levels a little past where we were before the pandemic. The question is does it level out there or keep getting this 3020 in my head here. Im not seeing much. They kwaeweakened the first qua in the prior revisions but theyre not seeing the sense of the economy in the gdp was dramatically different. Austin surprised us on monday by being as hawkish as he was. We thought he would come on and redirect. You guys were surprised, too, right . Yeah. Were going to listen to austin to see if hes going to be a little more comfortable. Austan goolsbee for those at home. Mr. President. He insists on that. Have a great day. Join base just announcing it is expanding internationally. Next weve got an interview with mson wmpanys ceo, brian artrg,ho wants washington and the world to stand with crypto. Well talk to brian right after the break. Rich, velvety. Coffee. Cafequality. Espresso. One highpressure system. That can do both. Brew to your hearts desire. With the lor barista system. Now brewing peets coffee. Welcome back to squawk box this morning. Coinbase ceo has been talking to washington officials. I spoke to armstrong yesterday and asked him about the event he organized called stand with crypto day. Yeah, stand with crypto day. What this is really about is theres 52 million americans in the u. S. Who have used crypto now. Thats 3x as many that own an electric vehicle. Many are frustrated th u. S. Does not have clear rules on the books yet and its pushing a lot of this industry offshore. Im here in d. C. With 40 founders of other crypto companies. Its exciting to get the members of congress to meet people in their own districts starting companies and that are trying to build innovation and jobs in their own districts. It is on the eve, if you will, of the trial of sam b bankmanfried, which starts next week. Unfortunately the trial is so salacious it does keep getting headlines. I think if you go back in time, this reminds me a little bit about the mount gawks issue that happened. There have been some negative, bad people attracted to this industry. Theres 40 founders that are here with me in d. C. Who are building this in a trusted and responsible way. They may not get the same salacious headlines but they are here if we can create regulation that avoids things like ftx but preserves the innovation potential. I know youve been critical of critics of crypto. Do you see anything shifting as youre there in d. C. . Yeah, from our perspective, there has been a pretty positive development. We yosaw two bills earlier this year that got bipartisan support in the house committees. We also saw the Judicial Branch of our government send a clear signal in three separate Court Rulings by three separate judges that the secs approach was not working. It was arbitrary and capricious and unlawful in some cases. That sent a clear message to congress as well that theyre going to have to step in here and act by creating new legislation. What is the state of play with the sec case versus coinbase . Well, we feel very confident about the case. I mentioned theres been three judges that have ruled in other cases around crypto, and some of those facts are relevant in our case. For instance, in the teraform case the judge ruled the underlying assets were not securities. Thats an important fact in our case as well. It would have been better if the regulator had accomplished clear rules and engaged in a rule making process as theyre required to do and that way we could all follow it. In the absence of that, it appears the courts will have to come in and create that clarity for now and ultimately i think it will end up being congress. You are expanding internationally and doing so aggressively, i imagine as a function of the regulatory or tight regulatory body in the United States. Is that whats happening . Well, coinbase is based in the u. S. And were not leaving the u. S. This is the biggest market for us and were the leader in it. But we also want to be an International Company that allows us to help many people aroundthe world from this technology. We do have a pretty exciting announcement about that. Today were announcing our International Exchange got Regulatory Approval to offer professional futures and trading to retail customers. Were excited about that because its a way to bring in a whole other set of people around the world who can start to participate in this more open and free and fair financial system. When you look across the globe, do you say to yourself that other parts of the world are now much more favorable toward crypto . Youve made the argument historically from an american perspective, you dont want to see American Companies effectively move abroad. Unfortunately, i would have to agree with that, that at this point the u. S. Is behind, severely behind actually. If you look at the other g20 countries, 83 of them now either already have Crypto Legislation on the books or its in progress. Its being drafted, implemented. The u. S. Is behind here and weve seen the share of the u. S. Job market around crypto shrink from about 40 to now its about 29 and its due to this lack of regulatory clarity. When i speak with members of congress, i had a great meeting this morning with nancy pelosi and a number of other meetings later today, the general broad consensus view is common sense. Its let get clear rules on the books and protect consumers and preserve the innovation potential of this industry. What do you think has to become the inflexion point for that to happen in the United States . I know you talked about laumt looking more favorably upon what youre doing and the crypto industry. But there still seems to be this resistance and worry that its almost too hard to regulate some of these crypto currencies that even if you could regulate them here in the u. S. , that you cant regulate them properly outside the u. S. And that unto itself creates the conundrum. Im not sure id agree with that. The was and weve seen that in singapore, hong kong, the u. K. , brazil, australia. Its really just the u. S. That is somewhat of an outlier here. Id say its a security issue. Its really imperative that we get this right. I saw you took to twitter or i should say x now, in regard to Jpmorgan Chase limiting the way theyre allowing customers in the u. K. To interact with crypto currencies. What do you thinks going on there . You know what, im not sure. I hope to find out more information on that. But once in a while we do see a bank somewhere in the world that decides they want to deplatform this whole industry. I dont think thats okay. I dont think thats the role of banks in society. I think the government should decide whats okay and whats not. And the city minister in london has made it very clear they want the u. K. To be a crypto hub. They are trying to attract businesses there. I was disappointed to see chase u. K. s stance on that. I hope it was a misunderstanding that will be cleared up in a couple weeks. One firm that definitively look likes they want to platform crypto is black rock with its etf. Where do you think that goes . I think a lot of people are pinning a lot of hopes on that. Black rock is a huge financial institution. By the way, theres been about eight different etos filed by fid eld. So thats been a huge endorsement. Those firm would not be pushing those forward. My sense is that will draw new pools of capital into crypto. I think its going to be a very good thing. The sec has been rejecting its application and the judge ruled in that gray scale case that the secs actions were arbitrary and capricious and unlawful. Thats about the worst thing a judge can say about a regulator other than outright fraud. I think theyre going to have to approve these applications. And a lot of people are pinning their hopes on those etfs and obviously they have not happened. Well, thats a question for the lawyers. It may be a little above my pay grade. I dont know how that will happen but the trajectory seems pretty clear in my mind. Are you surprised that bitcoin has been quite stable or some said should have moved higher, especially if you believe that the bitcoin etfs are in the offing . Ive been pleasantly pr surprised at how resilient bitcoin has been. Any time bitcoin is above 20,000, that would have been an incredible outcome a few years ago. People have to look out more than a few quarters or a few years even. What is this trend over a cycle. So im pretty happy with how resilient the crypto prices have been and i think bitcoin is up at least 50 year to date. The Court Rulings, well see what happens. Nobody can predict the future. I know its hard to predict the futures but youve seen the winters and summers and alike, theres been so many predictions from kathy woods and other who is said its going to go to 500,000, its going to go to a million. Those are some of the shootthemoon type of numbers, that that why they get excited about Something Like a bitcoin. Are you in those camps . Im very the reason are the fundamentals. Theres not going to be more than 21 million bitcoin. Its increasingly becoming more digitized, more is happening over the internet and especially in this environment where most of the major countries around the world have high inflation, theyre putting up big deficit numbers, i think that bitcoin is the new gold standard. Its a digital form that much. If you believe all these things that more of the economy is going to be happening on the internet and people are going to be looking for a haven. One final question related to all this, the Federal Reserve from where you are today, what have you made about what theyve been doing and how does that impact the price of crypto today . Hmm. Well, the Federal Reserve is kind of engaged in a number of different areas. Im not sure which one youre referring to. But if you want to just talk about Interest Rates Interest Rates. Well, so thats obviously brought down Growth Stocks and crypto sort of has been treated almost like a growth stock oddly enough, even though it isnt one, but that brought the prices down quite a bit in 2021 and 2022 along with everybody else. The most exciting thing the Federal Reserve is doing is theyre starring to look into this idea of a u. S. Dollar backed stable coin. How we get regulation around that could allow the u. S. To preserve its status in the crypto economy. A lot said by Brian Armstrong and a lot of folks in the world of crypto paying attention. Well see whether washington is paying attention as well. Meantime,well. When we come back, meta unveiling its new vr headset as apple prepares to release its own next year. We will talk more about the big tech competition in just a little bit. You can see the best of squawk box in our daily podcast. Were coming rightac bk from delivering alpha in manhattan new york we are live at the 13th annual delivering alpha conference in new york city. Among the stories we are watching right now, the new iphone may be too hot to handle. Owners complaining on social media the phones becoming too hot physically, this is, to touch when they make a call or face time or while charging. Apple hasnt commented on it yet. Well take a look at the stock. Down marginally. There has also been several reports that it may be less durable. So that. That sounds like a bigger problem than a software fix you can go through. The battery piece of it might very well be a Software Issue because they have update it. They have fixed the battery hot issues before. Software is a way easier fix than a hardware problem so that is very true. Meta announcing new products at its annual connect developers conference. Adding Artificial Intelligence features to its social media app. Also unveiling the ray ban smart glasses. Joining us is a private market investor, but obviously you pay a lot of attention to whats happening to the public markets, too. What did you think about what you heard from meta yesterday . Well, it was interesting to see the continued push towards the Virtual Reality, mixed reality because if we think about it, meta is in a position similar to google, alphabet. They need to make sure they have future products that can drive revenue. But the difference between the two when you look at the new products meta is going after, which are all in on Virtual Reality and you look at google, i mean, meta is spending 15. 7 billion, right, over the past 12 months that ended this past june, which is about 35 of their operating profit. Compared to what alphabet is spending, which is only about 7 of their operating profit. So itreally shows the importance. I think it also reflects the fact that when we think about the Core Products for meta, facebook, instagram, a lot of younger users to migrating to tiktok. So i think meta is taking this seriously which is why they want the push. They need to make sure they have the ad revenue, rather than seeing that migrate off the platform, too. I think thats a good point and a subtle point that maybe sometimes get missed in those announcements. I think sometimes people look at the glitz andglamour of the headset, having snoop in there, but it is actually a point on ad revenue. Why are they introducing these ai chatbots . Unlike a business like microsoft that might focus more on the enterprise needs around ai, the chatbots from meta ultimately are geared toward entertainment. Which is why you have the celebrity chatbots. Exactly. Okay. So lets talk about whether you think the Major Investments they have made are worth it. Chatbots with celebrities, does that make sense . Well see. They really need to scale. Again, if we look at this time period of the last 12 months ending in june, these new ai and mixed reality products only generated oneandahalf percent of the revenue. I think the hook is there in terms of gets peoples attention, but well have to see. Yeah. Google never really took off. The ray ban, do you think thats a different story . Part of the problem was the price point. And they were kind of ugly. Right. I think the ray bans, well see. I think it is a better opportunity right now. Sometimes new product launches are about timing. But is the ray ban glass, could it ever be the equivalent of the apple watch . Could it actually become part of everybodys life . Everyone got a pair of sung sunglasses. Theyre powered by effectively facebook and meta. Theyre partnering with ray ban so there is some margin theyre giving up because they are not manufacturing them as well. Thats right. We continually wait for this next device paradigm shift, right . Ai is the Software Paradigm shift for the new platform. But we continue to wait to see what is that new hardware platform . Will it be this . I dont know. I dont know if i could see my mom ever putting on a pair of ray ban glasses and pointing at objects and asking the ai chatbot about them. But who knows . Well have to wait and see. I know that you are not either a buyer of this stock or a seller of this stock. What would be the Tipping Point that would make you say, okay, this makes sense as an investment. It is tricky. I think there are many other opportunities out there if one was looking for an ability to ride on the ai bandwagon, i think there are other plays that are more pure and dont have to go back to the fickleness of the consumer to make or break the company. Look, there are very smart people at meta, and they are very determined to figure it out as evident by the over 15 billion that theyre spending. But from an investors point of view, there are other names if someone is looking at the new trends on the platform shifts with ai. Like what . I would look at microsoft and alphabet. Nvidia might be one of the plays. But i think longterm, all of these plays will make sense because of all of the necessary components, the cplatform, the hardware, the software. All of those things are very important. And thinking about the use cases where people can actually profpr profitablebly make one. If facebook was banned would meta will the biggest benefactor of that . For now. A final check on the markets before we kick off delivering alpha. We were up earlier. Were not anymore, at least not in the dow. The yields are on everyones mind. You can see the nasdaq on a relative basis is even weaker. Lets get to what were talking about. 4. 67. That didnt last very long, did it . No. 5. 15 basically on the twoyear. Obviously oil plays into all these things as well. We will be back in time square tomorrow. But for now, make sure you join us. Squawk on the street delivering alpha, more coverage. Good thursday morning. Welcome to squawk on the street. Futures are down in front of a packed session. Four fed speakers today, including powell. Cnbc is delivering alpha conference. Tenyear yield. 4. 67 is a fresh cycle. Investors on edge. Stocks searching for some