Transcripts For CNBC Squawk 20240703

The s p and dow. Nasdaq gains which it saw on friday. For the nasdaq and s p and russell 2000, it was the worst month in the year. For the s p and nasdaq with the dow slumping 3 . Nasdaq down 5. 8 for the month. Treasuries is the big picture. This is why we see the weakening. Treasury markets are picking up. 10year is now 4. 74 . The 2year treasury is up at 5. 11 . Mortgage prices are ticking higher. If you want a 30year fixed mortgage, you are looking at 8 . Check out the price of crude oil. Crude oil prices with energy back on the rise. Up to 91. 50 for wti. Brent at 93 a barrel. Joe talked about bitcoin. Picking up to 28,300. Up 4. 4 . Joe, the reason behind this is because gary gensler etf comments. I saw any Government Shutdown would delay any consideration for the spot etfs that everyone wants. Because the s. E. C. Staff would have been out and nothing gets approved. Does that mean i think they are thinking about it. They have been thinking about it check your watch. Thats a big move. Andrew has asked why is it at 26. It could be 30. Talking about the Government Shutdown. It was averted over the weekend. The bill provides temporary relief. Emily wilkins has been working the phones all weekend. Whats going on . Reporter andrew, congress was able to keep the government funded over the weekend after Kevin Mccarthy did a 180 agreeing to work with democrats to pass a stop gap measure in te 11th hour. This continues the funding at current levels until november 17th and has 16 billion in Disaster Relief funding. It doesnt include ukraine or funding for the southern border. Chuck schumer took to the senate floor and vowed that he would be trying to move forward on funding for ukraine. This is a bridge cr. Temporary solution. Not the final destination. We will not stop fighting for more economic and Security Assistance for ukraine. Majorities in both parties support ukraine aid and doing more is vital for americas security and democracy around the world. Reporter mccarthy said any funding for ukraine in the house needs to be paired with policies that limit immigration at the border. Further complicating this debate, mccarthy is facing a treat to the speakership. Representative gaetz is frustrated that mccarthy turned to democrats for the stopgap bill for the funding. Democratic house leaders have not said if they will back the republican counterpart, but in a statement this weekend, they encourages them to vote on the aid for ukraine. A lot of dynamics here. Emily, thank you. What are you thinking . Im thinking we need to talk before we talk about who is going to be on. Heres what im thinking. Mccarthy wanted to pass something that the republicans had no chance in the senate. Like the last, he could say i passed. This come to the table. Guess who blocked any possibility of that . The same guys. The same guys blocked that. Then when thats blocked, he has no other choice. He does this. Then they are mad about this. They say you cant do this. We know what these guys are doing. Bidens number one issue calling gaetz his favorite republican. The speaker has to promise something for a vote. That weakens his stance and the Republican Party. The journal calls these guys jacovins. I looked it up. These are people during the french revolution. The most radical group that isi ushered in the theres about eight of them. I dont know how this happens. They would say were principled and this and that. Were spending too much. It is all true. Matt gaetz doesnt like Kevin Mccarthy. For a lot of reasons. Thats neither here nor there. In divided government, you have to figure out a way to do something. If some compromise as distasteful as it is, for republicans who want to cut spending, that is the way it is if you dont have the white house or senate. Do you want a government or not . Im going to hold my breath or blow the whole place up. There is this movement to potentially oust gaetz. Ethics committee. Mccarthy will probably lose four. The question becomes are eight or nine. Andy biggs and matt rose. Ricky gervais Hakeem Jeffrie important person. Call off the impeachment hearings . Ukraine. Ukraine funding. It was pointed out by Congress Member from florida and it helps democrats by weakening mccarthy further. The question is who would replace mccarthy . A year ago, steve scalise. He is fighting illness. You have the impeachment thing or another budget. I dont know. The reason you see yields higher this morning on the tenyear is because this gets us down to november 17th. There are a lot of questions as to what happens. It is a huge surprise that Kevin Mccarthy was able to avert a shutdown. I talked to him last week with. I knew it was the only choice. The only thing. Andrew, there is a Company Royal a. Spelled differently . You dont know. I think you can say it. How about asshat . That is code word for the full. It doesnt mean anything. You use it in place. Thats why i dont think you can use it. Its cable. Its cable. I know. We got bernstein coming. Exactly. From the white house. We have that. 8 00 hour. Bottoms up. Middle out. Repeat after me. Bottoms up. Middle out. Right. California governor gavin newsom will appointed Laphonza Butler to fill the seat of senator feinstein. In california, the governor has the power to appointed a senator to serve until the next regularly scheduled statewide general election in 2024. He said he was going to appoint a black woman. That is in keeping with that promise. The United Auto Workers and big three are still talking following the expansion of targeted strikes. Uaw president shawn fain telling members on saturday not to let messages from ford, gm and stellantis get them to give up the fight for justice. Fain making the comments while meeting with workers outside the stellantis plant in ohio. The auto workers are trying to create doubt with the carmakers. Bill ackman gettin apprppror s sparc. It is not clear that elon musk is alolooking for a deal with h. Other companies that would work with sparc is mature unicorns. We will speak with bill ackman at 8 00 a. M. It is the return of the spac. This is a different model. This came after the spac. The spac that would merge are universal and blocked by the s. E. C. He ended up buying that universal stake for his own fund. There were the rights that came with that which were different than the previous generation of spacs. This is approve by the s. E. C. We will see what he buys. He has a lot of money burning a hole in his pocket. Did he get to save that or give it back . He gave the money back. There were interesting warrants which we will talking about which lead to this moment and can he go buy a big business. The question is what business does he buy . Pe company . He threw out the idea that one day could elon musk take x public without going through the public issues . That was the benefit of spac. I argue the problem with spac and they didnt go through the issues and this is worthy because we learned so many went public and probably shouldnt have. We will talk more about that. The comments he made about x. You do a deal with x and the question is the price. Is that more or less than elon purchased . We should discuss with bill. There is a vote that has to happen. You have to vote in to the whole thing. I dont think at this moment that anybody is buying x for 44 billion. The question is are you buying for 22 billion or 11 billion or 5 billion . You do a deal with anybody and it is a question of price. This is him throwing out the idea. No elon. Nobody is talking to each other. It would be illegal for them to be talking to each other at this point. No discussions. When you see the headlines about ackman interested in x. He is interested. Dont get excited yet. Maybe well get excited about talking to bill about it. We talked so long. We cant talk about beyonce. That started what could be a trend. I was watching last night. The jets game . Taylor swift . Watching travis kelce. Afterwards. Maybe i could. It comes naturally. Did you see the ads for the movie . Phenomenal. Smart marketing placement. 2 45 for taylor. Movie chains can now make movies, but also studios can now own right. The antitrust department guy from the Trump Administration and he pushed for more competition and more competition like this. I cant believe amc is in the drivers seat with beyonce. Amazing. You can talk about it. You want to tell people what you are talking about . Beyonce is not going to let taylor be the only box office queen. The makers of the concert film of beyonces renaissance world is in talk with amc. They are not commenting and taylor swifts movie is hitting screens on october 13th. The film is expected to top 100 million the weekend it opens. Nobody wants to run against movies. Its crazy. It is crazy. Crazy that taylors father im like forrest gump. Rick brings up a question. Thats in the history book. Very strange. More squawk box in just a moment. Announcer this cnbc program is sponsored by baird. Visit bairddifference. Com. What do you see on the horizon . Uncertainty . Or opportunity. Whatever you see, at pgim we can help you rise to the challenges of today, when active investing and disciplined Risk Management are needed most. Drawing on deep expertise across the worlds public and private markets in pursuit of longterm returns. Pgim. Our investments shape tomorrow today. Rated m for mature. An xfinity rewards special offer. Xfinity customers, join xfinity rewards and get your early access code to the play the call of duty modern warfare iii open beta. Early Access Begins on october 6th. First on playstation. Visit xfinity. Com rewards. Futures right now indicated in the red on the dow. The nasdaq and s p continue to move higher. Initially there is a warm and fuzzy feeling for the government to stay open. It didnt last long. Lets bring in our next guest. This is out of the way. Temporarily. Now we can back door the other things we have been worrying about. One thing we can none of us live forever. You can avoid death for a while, but it is eventually coming. If you have a soft landing, it doesnt mean there is not recession. Soft landings only last until the next recession. That is a point you make. Thats right. We are releasing our guidance to talk to clients. The main topic we are getting is can the u. S. Avoid recession forever . The answer is no. The good news, it seems to us, the higher odds of the soft landing the next 12 months doesnt mean there are recession risks. It is elevated with 20 recession odds. That means to us that the Third Quarter is the high watermark for growth. From here we slow down and see risks building. The shutdown, it seems, has been avoided for 45 days. We are still talking about it this month. We go back to paying Student Loans and elevated Interest Rates. We do expect a softening of the growth pace. Eventually for a recession to happen, be it 2025 or 2026. And you point out were at the sticky phase, maybe, of inflation. It gets harder and that means why would anyone think if there is a recession, why would they cut rates . That is where we would fade the concerns that inflation is sticky around 3 . We actually think the fed can hit the 2 objective. Really . Faster than they think they can. By the end of next year. It will take until 2026 to do so. That is because we expect the normalization of spending and normalize service prices. Then the lag effect is coming through for recent and autorelated prices. Auto leases and auto repairs. That is why we are watching the risk of the uaw ultimately, we no longer expect the rate cut to happen in the first quarter. We expect it to start by the middle of next year. Most importantly to be faster than the fed expects once it begins. Do you think there is a chance we go up a point higher as far as rate hikes in the next year . Based on the data of slowdown in growth and the water mark of 2 . Do we stay here or go down . We hope we stay here this year and we dont do an additional hike. There is a nearly 50 chance it could happen in november or december. Most importantly, were almost done higher for longer now . I think it is high for longer. Not necessarily higher than we already are. In terms of how high is the conversation. 5. 4 is not sustainable. When you say you look forward to rate cuts. What is the scenario for them to cut rates . Will they be smart and say well cut before there is pain because we want to prevent a hard landing . I have a feeling the fed will not cut until there is a need for it. I agree. I think based on the latest press conference in september, they would be okay being behind the curve. What they want to see is inflation coming down and being sure it is on track to the 2 target before they begin to cut rates. That is the beginning or middle of next year. It also means if you are late, you have to cut faster than you project. More damage in the meantime. Perhaps. Thats where, for us, one of the Asset Allocation questions we get is why not stay in cash . We have 5. 5 cash rates nearly. For us, thats a dangerous place to be having too much cash. Especially because yields are forward looking to the growth slowdown and inflation coming down and faster rate cuts. We really look to take opportunity of the tenyear at 4. 6 because yields peak at three months after the last hike. We can lock in the yields now and benefit from the price appreciation and you could talk about double digit returns from core fixed income. It is a unique opportunity. Unless they hego higher. We are at the high water mark. They wont come down too much. We have to keep an eye on the value. Gabriela, thank you. What do you think the Mortgage Rates are going to look like . Im not trying to buy a home. Im trying to buy a home. We mentioned 5. 6. All of the discussions of the shutdown and dysfunction in congress are important because it means were not going to solve the high deficit issue. It means there is a higher term premium. We dont think the tenyear comes down farther than 2. 75. It is 80 basis points. Thats where it has been for a long time. For a while. Until we get a recession and the fed is forced to cut below neutral. Good news. Im certainly not looking forward to it. Nice to see you. Thank you. Coming up, a high profile tech ceo about to take the stand in the antitrust google trial. And ftx Sam Bankmanfried about to get his day in court and those victims are speaking out. Thats next on squawk box. Powering Sustainable Growth in a changing world. Powering Financial Solutions that transform industries. Powering innovation with access to capital. 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Golo is the only thing that will let you lose weight and keep it off. Who loses 138 pounds in nine months . I did golos a lifestyle change and you make the change and it stays off. soft music microsoft Ceo Satya Nadella is expected to testify at the antitrust google trial today. It is stating that google paid millions of dollars a year to apple to be the default Search Engine. He will be asked to expand the reach of its edge browser and the hurdles posed by the google dominance. There are questions if it could have gotten on apple if it offered more money. It will play into a lot of things we are watching closely. We are going to talk about Sam Bankmanfried with kate rooney in the room on her bir birthday. You will be here . Ill be here six weeks for the trial depending on the testimony. Lets talk about the next chapter in the failed exchange ftx is starting tomorrow. Sbfs trial is getting under way and now some are telling their story to kate rooney. Great to see you. Harrison resigned from his position at ftx two months before the implosion. He krdescribed a tense relationship with sbf. I asked to describe the companys Financial Health when he left. I had no reason to suspect that ftx wasnt anything other than profitable and in great shape. Sam was, you know, embarking on fund raising again. He said both on some internal all hands and extensionally that ftx. Com had 2 billion in excess capital with the result of the raises. Ftx had 600 million and in amazing shape. You think ftx is going to eat the world. Some of the top employees at the time at ftx didnt have a sense of the actual Financial Health of the company . I can only speak for the people on the u. S. Side. We had absolutely no clue. How is that possible . Look, imagine yourself in our position. You are in a high ranking position, but not the ceo, do you think sam has made all of the public and private reporting of the finances of the company. I should get all of the Bank Statements or access to all of those and run through those and see if i agree with the accounting. Sam testified in front of congress he is getting public accolades from the top firms. Should i distrust everything he is saying in those forums . I think everyone in that position would be a time to suspect something is wrong . If anybody knew the real Financial Health of ftx, who would that have been . I would have to think the closest inner circle, the people in the bahamas, and other founders had to know. We now know four people in that inner circle harrison describes have pled guilty to the chance of ftx. Sbf has pleaded not guilty. You can understand how the warning signs went unnoticed. Harrison was in the dark. Harrison is also one of the only ftx executives who pushed back on the leadership style of sam. A lot more on that in the documentary the collapse of ftx insiders tell all. You can watch it on cnbc. Com. He pushed back. What bothered him . The insular nature. Sam had a group that lived with him in the bahamas. He felt like an outsider. He did not have access to sam and he felt he could not push back. When he did, he was silenced. He was one of the only vocal executives and left the company a couple of months before the collapse. I get it. This is fascinating stuff. We will watch this week. Kate, thank you. Thanks. Ill watch. Thank you. Coming up, kicking the can down the road at the end of the day. Government shutdown may have been averted, but well be in the same situation a few weeks from now. Whats next for capitol hill . A big lineup today for squawk box. Peter orszag and bill ackman and mohamed elerian. As we head to break, here is a look at yesterdays winners and losers. Announcer executive edge is sponsored by at t business. Next level moments need the next level network. And more business 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. Im so glad we did this. Im so glad we did this. Im so glad we did this. Im so glad we did this. Im so. Glad we did this. [kid plays drums] life is for living. Lets partner for all of it. Im so glad we did this. Edward jones with gold bond. You can age on your own terms. Retinol overnight means. The smoothing benefits of retinol. Are now for your whole body. Plus, fastworking crepe corrector diminishes wrinkled skin in just two days. Gold bond. Champion your skin. All right. The Government Shutdown crisis is averted for now. The snenate passed a bill on saturday night to keep the government funding for 45 days. We have jake sherman with the latest here from punch bowl. Jake, we left on friday and thought it was a foregone cl conclusion. This is a habit out of a hat that Kevin Mccarthy could do this. We are looking at yields which are higher and that is because this is a 45day reprieve. We dont know what happens to the speakership or a lot of the questions in the meantime. How are you positioning all of it . A few things to think about. Number one, mccarthy said he could not pass a funding bill without something on the importborder and spending cuts. He passed a bill without anything on the border and no spending cuts. Leaving spending for the next 45 days flat at 2023 spending levels. Thats how he avoided the shutdown. Over the next 45 days, or so, there is a lot of uncertainty around government funding. Whether it is funding the war in ukraine or general Government Spending, it will be incredibly difficult for congress to come up with some sort of agreement with the senate. Now, this all ties into mccar tys future. Mccarthy probably cannot stay speaker with republican votes only. He will need democratic votes to keep him in the job. How that impacts the next 45 days and government funding Going Forward remains to be seen. It could pave the way for some bipartisan agreement between republicans and democrats leaving aside the more fringe members of mccarthys party to make sure government funding is extended in 45 days without much fuss. Hakeem jeffries is going to have a deciding he will would be the decider, so to speak. If they dont support mccarthy who finally told the extremists in his party to forget it and he is the adult in the room, what happens with all this . What do you think the democrats are thinking about this . The conventional wisdom for months is the democrats would help mccarthy taccidly look at the other side. Whatever comes on the other side of mccarthy is not as good for democrats as mccarthy. That is the general consensus. All that said, mccarthy doesnt have a lot of trust with democrats. He has built a good rapport with jeffries. Among our sources, and the people we talk to, mccarthy has to give something up to earn democratic support. Whether it is changes in the rules or Something Like that to make sure democrats have his back. There are a lot of ways for democrats to have his back without actually voting for him. They can vote to table the motion and procedural stuff which is not interesting. Jeffriess has the biggest decision of his leadership. One of the biggest decisions of his career. Democrats are split. They dont need every democrat. They need 20 or 40 to take a walk or vote to table a motion to get rid of mccarthy. Gaetz and the hardliners have said if democrats do that, mccarthy will be a speaker propped up by democrats. That is a sign theres not much cooperation in the republican ranks for the next year or so. Are we going to be looking at bipartisan moves to get things done . I think part of the reason mccarthy reneged on the early the deal is because he could not get anything done with the caucus. I understand why he got to the position he did along the way. Mccarthy has 200 people he can count on any day of the week. You need 218 to pass anything. He can work with the hard right or democrats. He has tried to work with the hard right. It hasnt worked. They passed some the strict in congress because the hard right did not like it. He has to work with democrats or them. He tried the right. It hasnt worked. He can try moderate democrats. I dont know about bipartisanship. That is the chaoices faces. It is classic. They wouldnt let him pass the republicans version. When they blocked that and he does the only thing left, they say what are you doing . It is a catch22. Tough position to be in. It took 15 votes, jake, to get the speakership in the first place. Maybe it makes him stronger. Matt gaetz said when was the last strong gop speaker . Gingrich . It wasnt paul ryan. It wasnt boehner. Gingrich had his problems. Gingrich shifted with the winds. That, too. Jake, thank you. Thanks, becky. Side note. Guitarist al di meola from return to for offforever, is reg after suffering a heart attack on stage. H he expressed thanks for his fans for their support. He has been my idol since high school. Almost since 50 years. I went to a Russian Federation party where he was performing in davos. He grew up outside inglewood cliffs outside cnbc. He lives in new jersey. I spoke to his wife over the weekend. He is doing well. As well as expected. It is good he was on stage. He got help immediately. It was a serious heart attack. 69 years old. Hes a young guy. The way he plays guitar, theres a lot going into it. We hope he is touring again. You were in davos sdplc. You introduced me to him. We were all there. A shocker when i saw that. We ran into him in munich with the family. Liesman and i saw him. Steves a guitar player. He is a phenom. Good luck. All the best. Quick recovery. Coming up, the irs found that leak that exposed tax returns of the thousands of wealthy taxpayers and a suspect has been charged. Details coming up next. Well be right back. To earn me more cash back in my top eligible category. Suddenly lifes feeling a little more automatic. Like doors opening wherever i go. [sound of airplane overhead] even the ground is moving for me yall seeing this . Wild and i dont even have to activate anything. Oooooohhh. Automatic sashimi earn cash back that automatically adjusts to how you spend with the citi custom cash® card. [mind blown explosion noise] fresh, warm hot dogs when im not selling hot dogs, i invest in a fund that advances innovations like robotics. Fresh, warm hot dogs, straight out of my torso one for you, one for you. Oh, youre a messy one. Cool, right . So cool. Anyone can become an agent of innovation with invesco qqq, a fund that gives you access to nasdaq100 innovations. Hot dogs fresh, warm hot dogs before investing carefully read and consider Fund Investment objectives, risks, charges, expenses and more in prospectus at invesco. Com. After a twoyear investigation, a suspect has been charged with leaking tax returns of wealthy tax returns. Robert frank joins us with more. People are too much . The leak in the article has a lot of attention. Federal prosecutors charging the irs contractor with leaking tax returns of thousands of wealthy tax taxpayers. Charles littlejohn of washington, d. C. Faces five years in prison after unauthorized disclosure of tax information. He stole returns between 2018 and 2020 while working on a contract. Names were not released in the filings, but propublica field a st filed a story as well as the New York Times. Ken griffin, the ceo of citadel, sued the irs after his taxes appeared in one article. That suit is still active. Griffin is saying, quote, he continues to be frustrated by the irs failure to protect personal data. The irs saying in a statement late friday any disclosure of taxpayer information is unacceptable and it is improving its technology and data protections with the new money from congress. Does this change that suit . Does it make it stronger for ken griffin . What ken said is the irs had been named for years as having inadequate protections for taxpayer data. That fact stands. By default, his information was disclosed, as were all of the others. Do the other people bring cases as well . Thats the lead case. You know, the question now is what is the irs do with the 80 billion they are getting from congress to better protect the technology . This is an agency that still uses microfilm. They have over 10,000 contractors. He worked for an independent contractor. Not a lot of good data protection. How do they improve that . A leaky couldrin. The trial of Sam Bankmanfried starts tomorrow and we will bring you the latest on the role of his parents. When squawk box returns. the first law of thermodynamics states that energy cannot be created or destroyed. but it can be passed on to the next generation. carbon foot fingerprint print there in times square. U. S. Equity futures at this hour are a mix. The dows now down, the two others up about 26 points or so. The s p is flat. Well take a look at treasuries, which i guess if the Government Shutdown is you could see that either way, it means the economy doesnt slow. So maybe rates stay high. 61 on the tenyear, and 5. 1 on the twoyear. Oil was right around 90, last i looked. 91, its up a little now. Up a percentage point, and then bitcoin started yesterday during the day, it was down in the low 27s now, and you can see above 28,000, up almost 4. 5 this morning. Nbitcoin, the criminal triem of Sam Bankmanfried set to kick off tomorrow. The former ceo facing seven counts of fraud. The next guest has been following the fallout closely. It covers the unique relationship between bankman freeds parents and how they played a role in all of this. A preview of what to expect when the trial begins. Good morning to you. Hi, good morning. It was a fun story. You talk about the role of the family and you talk about the role of these parents. They have not been charged in this case. Ive always been curious, do you think that they would be, or what do you think their real role was in this . There was a suggestion in the piece that they had some kind of role but not necessarily that youve put it all the way there . Well, i think their role, their most Important Role regarding sam was the way they raised him, which was pretty unique and interesting. He was treated as a genius, very special intellectually precocious kid from the beginning, and they are both very accomplished themselves. Theyre professors at stanford law school, huge bodies of Academic Work that both of them have produced. And they really went out of their way to cultivate his intellectual gifts as a kid. He ended up growing up in an environment where he felt that he was very smart, the world would care a lot about what he had to say, what his contributions would be. To be perfectly honest, i dont think they intervened too much with what he was doing, certainly at the beginning of his career, they really felt confident that he was going to find some very important calling and pursue it. So i think you could make the argument that maybe they should have intervened more early on, and well, the question is should they have known to intervene and could have they. You went on a walk or a hike with his mother. If i remember theres a quote in the piece that suggests that she could never really see him doing anything wrong. In some ways you describe the way you like a lot of parents to make their kids feel in terms of making them feel special, everybodimy wants to feel speci. Sound familiar . When does it go too far. That was one of the most powerful moments i experienced with his parents. Im a parent, probably most of us are parents. Weve all been shocked by things our kids have done. I certainly remember as a teenager my parents being startled to discover certain things i was doing. Yeah, when i first read about this i was stunned. I went to my son, and i said, you know, like, sam, is any of this true and you know, it was remarkable to me that she told me she never even had to do that. She never confronted him and said, did you do any of these things . She told me but they also benefitted financially, which is the other issue. All of may have been surprised by thing ours kids have done. None of us has benefitted enormously financially from those same mistakes or outright fraud. You are right. They certainly did benefit financially and socially and in their other activities. Barbara had a Political Action committee that was very successful. That received support from sam and his coworkers. Joe was directly working for the company at the time. To go back and time, i do think at that time they felt that their son was this incredibly successful multibillion dollar tech mogul and the idea of taking certain things from him was perhaps not completely outrageous. Were going to have to run. Its a great piece. My question to you is do you anticipate either sam and or the parents testifying in the trial . I think theres a strong chance sam himself will testify. I mean, hes in a little bit of a losing situation either way. If he doesnt testify, his cooperators are going to testify for him. And if he does, we can imagine things getting very spicy. What about the parents . I certainly have heard no indication that they will be called to testify, but they are not out of legal peril themselves. Sheila, its a great piece. Ns last weeks new yorker. You can get it online and anywhere you buy new yorker. Thanks. Coming up this morning, peter orszag taking the helm of lazard as the ceo. He will join us for an exclusive interview. Thats next right here on squawk box. Discover the Magnolia Home james hardie collection. Available now in siding colors, styles and textures. Curated by joanna gaines. When you automate sales tax with avalara, you dont have to worry about things like changing tax rates or filing returns. Avalarahhh ahhh good morning, everybody, stocks set to kick off a new month and a new quarter after the s p 500 notches its worst month of 2023. Well hear from lazard ceo peter orr sa. Whats next for washington, the 2024 president ial race and much more. And the united autoworkers and the big three are still talking following the expansion of targeted strikes. Shawn fains new message for those on the picket line is coming up. The second hour of squawk box begins right now. Good morning, and welcome back to squawk box right here on cnbc. Were live at the Nasdaq Market site in times square. Im Andrew Ross Sorkin show you u. S. Equity futures at this hour. If we opened up, wed open down on the dow off about 15 points. The s p 500 up marginally, nasdaq up about 27 points. Lets talk treasuries right now. We were talking about Mortgage Rates a bit ago. The tenyear sitting at 4. 633, the twoyear at 5. 106. Most of the mortgages ive seen have been over 7 these days. I saw l8 . Even for people with a decent credit score you can land at 8 for a 30year fixed. Energy complex, wti at 91. 57. And a fire alarm going off notwithstanding, congress was able to pass a stopgap funding bill to avert a Government Shutdown. Em em Emily Wilkins joins us now with more. Absolutely crazy weekend at congress, the fire drill, the s shutdown. At least for now, the government is funded, but this is only going to go until november 17th, and so congressional leaders now have to race to pass those 12 bills that fund various sections of the government. Right now the house has only passed four of those spending bills, and of the remaining eight, one failed in the house last week, and two have yet to finish clearing committee, which is kbbasically the first step f any of these bills. All the bills in the house are packed with a lot of conservative priorities meaning that speaker Kevin Mccarthy is going to have to keep his Conference United to pass these pieces of legislation. In the senate, all 12 spending bills are bipartisan. Theyve all passed committee, but none have passed the floor. Going back to the house, progress on the bills could be delayed as congressman matt gaetz has vowed that hes going to move to oust Kevin Mccarthy from leadership. Now, we know about a dozen republicans have indicated that they will also move move to remove mccarthy, but theyre only going to be successful if Democrats Join them, and we dont know yet what democrats are going to do. Mind you, mccarthy still has the support of the bulk of his conference, and lawmakers like Republican Congressman Brian Fitzpatrick told nbc over the weekend, that spending time fighting over whether mccarthy should be speaker takes lawmakers attention away from bigger priorities. Its going to grind operations here to a halt. We have a lot of threats. China, russia, iran, we have internal challenges here in the United States with our border, with inflation, with crime. Thats who we should be focusing on, not this. It remains to be seen what happens with mccarthys speakership and government funding, but there is a real possibility that come midnovember were going to be right back to where we were last week with lawmakers needing to move another shortterm funding bill. Guys. Yeah, unscheduled fire drill, emily. Heres the posts take on it. Does this look like a door handle . Congressman from the bronx said he thought that would open a door. He was a high School Principal, a School Principal that actually did have fire drills. So he probably that probably isnt a real light, not exactly what he was trying to do, i dont think. Terrible. Its atrocious, its disgraceful. Against the law. Just say it, its disgraceful, it it is what it is, what it looks like, disgraceful. Right. Coming up in just a few minutes. Maybe well ask Governor Hogan about it, former governor larry hogan joins us to wow. Joins us with whats next for congress and much more. He has a different hair style, shall we say at this point, but well introduce him as larry hogan so you know who he is. He doesnt really look like that now. Well talk about whats next for congress and much more. Lets get to Frank Holland with a look at this mornings premarket movers. Good morning, becky, good morning andrew and joe. Were going to start with rivian getting an upgrade from evercore. It has the vertical integration to potentially compete with tesla. They combine hold about 40 of the global ev market. Shares are up 40 right now. A price target 30, about a 20 upside from where its trading r right now. Nvidia called the top shovel supplier by analysts and goldman sachs. Theyre adding the chip maker to its conviction list and saying Data Center Demand is a major tailwind. It also says nvidia has a wide mote with ai chips. Shares are up more than 200 yeartodate. Were also looking at fedex getting an upgrade to positive by susquehanna. Analysts are bullish on cost cutting efforts and save Pricing Power for ecommerce remains strong. You can see fedex shares are up almost a half a percent in the premarket. Theyre up 2 since u. P. S. Announce add tentative deal with the teamsters. Becky, back over to you. Frank, thank you very much. Well see you a little later this morning. Thank you. Hedge Fund Billionaire bill ackman getting approval for his special purpose acquisition rights company. Its called spark, and hes looking for a deal. According to the wall street journal, Ackmans Pershing Square showing some interest in an investment deal with elon musks x corp. , formerly twitter to take that public. Well see. Other companies that would work for spark include private equityowned businesses and mature unicorns and we should say there have been no talks. This is just bill saying aloud that thats the kind of company he would like to buy. Well ask him directly about all of it is and more when he joins us at 8 00 a. M. Eastern time. He could give a quick yes or no response for any company. The benefit of any spac or the old spac was that you could say, yes, no, we can just do this, and in fact, the way this is structured, not only can you say yes or not, the whole thing either happens or doesnt happen, and we can talk about sort of the specifics of it. But thats ostensibly the benefit of the program. Do you need a certain percentage of the rights holders to vote . Thats the thing some people run into trouble with, getting people to vote, not just vote yes but vote. We got to talk to him directly about specifically how it works. Its a little bit more complicated than just that, i think, but i dont want to misspeak. When we come back, lazard ceo peter orszag joins us to talk market, fed, and so much more. Squawk returning from times square after this. Announcer this cnbc program is sponsored by baird, visit bairddifference. Com. [soldier] take a look at this theyve left us a gift. [soldier] i think we misjudged them. I love horses. birds chirping [soldier] we should open the gate. Lets see what charlotte thinks. [narrator] at crowdstrike, we monitor trillions of cyber events to detect threats and prevent breaches before they happen to keep your business from becoming history. We stop cyberattacks. We stop breaches. We stop a lot of bad things from happening. Crowdstrike. Protection that powers you. Rated m for mature. An xfinity rewards special offer. Xfinity customers, join xfinity rewards and get your early access code to the play the call of duty modern warfare iii open beta. Early Access Begins on october 6th. First on playstation. Visit xfinity. Com rewards. Seven years after joining lazard, our next guest will now head the firm, hes promising to double the companys revenues in the next seven years. Details of which he laid out in a public memo to employees a couple of weeks ago. Here now with an exclusive interview to discuss his new role, the state of government, the markets, the new ceo of lazard. And former director of the office of management and budget of president obama. Will you always have that as a title or we should just call you head of lazard . We can do it either way, but im the head of lazard, and thats exciting Going Forward. Immediately did the rule of 72 in doubling it in seven years. 10 a year growth in revenue. Hes got the math thing. Hes got the math thing. That sounds good. I dont know if thats aggressive. I think thats doable for you with your smarts. How doable do you think it is in the next what do you think the next two or three years are going to look like given where we are in the economy and what seems like a challenge ahead . Or do you think actually not . Well, were obviously in a quiet period for immediate quarter, but looking forward, we picked 2030 on purpose because it will take some time for the market to come back, but we do think i was on this channel maybe a month ago saying that we think that m a market is bottoming out. There will be a lag before theres more announcements, and then theres another lag before the announcement becomes revenue. Whats the biggest shift youre making . Were upping our ambition and so on both sides of the business, more of a focus on growth including relevance, revenue, and returns, and i think theres a lot of opportunity on both sides, both what does that mean in terms of fundamentally changing the company. First focus on culture, being commercial and collegial is the key, but it means that we are looking for opportunities on both sides of the business to expand what we do. And who do you think your biggest competitor is . It depends on the Asset Management side of the business. There is no one else that is like lazard. On the advisory side of the business, we compete not only against the top tier, but there are, as you know a searies of nw independent firms. Theres no one who has our combination. So or our history for that matter. Weve been talking a lot this morning about the Government Shutdown. That didnt happen, youve spent a lot of time with government thinking about that. Did you think we were going into a shutdown this weekend . I did. I think this is a gutsy move by mccarthy to i think it must have been that he judged that he wouldnt be any better off after a week or ten days of a shutdown and may as well bite the bullet. Whats interesting here is theres at least the potential i dont say likelihood but the potential for a bit of a new era of depolarization if he has to rely on democrats to keep his job. You may see a bit more of the middle governing. That would be nice. Could he be a speaker of the house instead of a speaker of the gop . What a concept. I think he needs to be i have a personal relationship and he thinks long and hard about things, but that took a great personal risk to do it that way. It was a gutsy move. But it had to be done. Yes, yeah. And look, coming back to the point, lets hope the country obviously has i just saw paul ryan last week and reminded him he introduced me at my confirmation hearing as budget director. Can you imagine that happening today . Not him personally but a Republican Congress what do you think the chances are that mccarthy gets voted out, though is this. Again, its hard to tell. What i hope happens, though, just to be blunt is i do hope this democrats step forward and keep him as speaker because both because i dont think theres a better alternative right now, and because theres at least the potential he doesnt want to be their lackey. This is what moodies says, they may downgrade the debt rating for the United States if we cant have some sort of cooperation in a government that actually governs, you know. This would go a long way if you can actually get things done towards appeasing some of the Credit Rating agencies and the problems they see with us. Would you would you advise the democrats not to just rake him over the coals with concessions for what they want, or fish got to swim, birds got to fly, they got to do that, right . Personally, i think im not in government anymore, its their job, not mine. From my perspective, i think this is a moment to be bigger and not demand that will never happen. Let me ask you a serious question, how would you think about funding on the ukraine issue . Because thats sort of a fundamental or the border. Sort of at the middle. Or the border, both. By the way, theres more bipartisan support for the border than ukraine at this moment. On both issues, lets talk about ukraine for the moment. Crucially important, our standing in the world in my opinion, relies in part on our continued support for the effort there, and i am hopeful that as part of the machinations again, im one step removed now there were also discussions as i think there were about how to get funding for ukraine done over the, you know in the next 45 days. The next 45 days. What about at the border . Im not as sure on the border but well see. Jay powell at this point, what is the house view at lazard about what hes going to do over the next 12 months . I dont think its the house view. I think hes said pretty clearly hes not hes going higher for longer. As i think you may know, i think thats a mistake myself, but i think hes been very clear and the markets are now only only now starting to believe him. Hes just going to stay there. If he stays there, by wait, doesnt this make your job, now that youre running lazard, that much harder . This is where i was going about what the next year or two looks like. If he really is that high, its going to impact equity prices. It will impact the confidence issue you deal with when it comes to m a, ipos, the whole sort of gamut. Agreed, although, i think the bigger headwind has been the uncertainty over the rate path as opposed to the level. If rates were high but steady, its not as good for deal activity and other forces as if rates are low. But if theyre steady, thats actually but if theyre steady and they stay high, do they ever break something . Thats the other component part. Weve had a number of guests come on and say at some point, even if theyre steady, if they remain at these level offs on a persistent basis. Were talking mortgages this morning, the commercial real estate deals. Holding maturities. The tenyear that all of a sudden roll off. This is what we need to worry about with regard to the economy. The consumer has held up to date. The impact of the lagged impact of all the rate increases that are still yet to kind of hit the economy because that takes some time is what we need to be watching for. In addition to what youve identified, you are seeing an increase in delinquency rates across a variety of different credit classes, and thats something to watch for, and the savings rate, that covid savings buffer for the bottom 80 of the population, thats gone. So the real question becomes over the next year or two is how well does the consumer hold up . So what do Financial Services Companies Look like in a president ial election year, historically, im sure youve looked at stuff like this before. Im sure theres some people who say im going to wait this out. I was thinking about doing a deal. I dont like this regulatory environment. Maybe i get lucky and somebody else is in this office a year from now, or maybe ill take my chances, do a deal now, see what happens in court, et cetera, et cetera. How do you feel about that and just the confidence talking about urn cencertainty, are we moment of uncertainty . Is a second term different than when theres the potential of a full rollover. The historical precedents arent necessarily that infor informative. Todays political environment is much different than what weve seen in recent history or at least postwar history. On the regulatory front, i think theres at least the potential that what were seeing is a more targeted approach. Its not necessarily that much less aggressive, but its more targeted, and i think boards and ceos are starting to realize that many of the previous deals that would have been approved that have been challenged in recent years either the authorities are now kind of more focused in letting these go or theyre going to litigate them and win because if you look at microsoft act vivision, if you look at the amgen horizon case, et cetera, theres at least a little bit more clarity that some of the vertical deals that have been challenged in the past are either not going to be challenged or youre going to litigate and win. What do you tell clients, should they approach this, like, microsoft who said were going to do whatever it takes to get this deal done. We will make any concessions to the regulators, or do you approach it like amazon is now approaching things with their case. Were not making any concessions because that just weakens our hands. I think it depends on the facts and circumstances, obviously. There are i think theres a growing willingness to litigate given the track record now ftc doesnt sound like you can make any concession. It doesnt sound like its going to matter to them. Is the private sector do you think that lina khan and her appointment has been a positive thing for humanity longterm . That is a big philosophical question. What do you think . Guilty until proven innocent, but for every its a new way of thinking about things. Throw so much up against the wall, maybe someday you win a case. I think again, what needs to happen, i think it is happening, that deterrence effect if thats what you want to call it gets weakened if you bring too many cases and lose them. A negative, even though shes so i think were at one of those moments. I think were at one of those moments where the deterrence effect is changing. Peter orszag and the new head of were not even talking about omb anymore, its over. Lazard is it. There we go and you want to Pay Attention to this next store y, peter, youra birken stock guy. You owned a pair, right . By the way, theyre now fashionable. When i owned them they werent. When i owned them they were not fashi fashionable. They are fashionable in boulder in the 70s. Breaking news, yep, ive given it away, about bier birken stock. Are you wearing them with socks or not . That is the question. Oh, yeah, im a big sock birken stock wearer. The moral of the story is dont throw anything away. The early 2000s are cool again, im not a passion person. Im an ipo person and this company has moved ahead with its ipo with an amended that kicks off its road show. These new documents reveal that birken stock and its selling shareholder will raise as much as 1. 6 billion by selling 32 million shares between 44 and 49 apiece and more than 600 million of that deal is already claimed by cornerstone investors who have indicated theyll buy in at the ipo price. At these levels birkenstocks valuation will be as high as 9. 2 billion in an ipo on a nondiluted basis. Todays road show was almost th thwarted by the Government Shutdown. When the process of an sbc closure looked like it would happen over the weekend, they tried to move it up to friday but werent able to get those final ts crossed in time. Thats according to sources familiar with the matter. But when congress averted the s shutdown birkenstock was able to move forward with its original plans. The company traces its roots back nearly 250 years, but only two years ago birkenstock was acquired by the private equity firm el catterton and the family office, the founder and billionaire of lvmh birkenstock showed top line growth of 21 for the first nine months of the year, although proftds did decline, i am told the company is targeting a listing day in the middle of next week from the nysc under the symbol birk, birk. Thank you very much. When we come back, microsofts ceo sasha nadella is set to testify as a witness in the google antitrust trial. We have the details after this break. Stick around if the 8 00 hour, we have Hedge Fund Titan bill ackman, he will be our guest. Hes looking to do a deal with privately Held Companies telling the wall street journal that he would consider a transaction with elon musks x. Kind of threw that out. Andrews going to push deeper into what he means with all of that. Were going to hear all about it at the top of the hour. Squawk box will be right back. Every day, businesses everywhere are asking is it possible . With comcast business. It is. Is it possible to help keep our Online Platform safe from cyberthreats . Absolutely. Can we provide health care virtually anywhere . We can help with that. Is it possible to use predictive monitoring to address operations issues . We can help with that, too. With the advanced connectivity and intelligence of global secure networking from comcast business. Its not just possible. Its happening. I wouldnt have my business if it wasnt for my website. Once i decided to go with godaddy, the process was seamless. I was able to create my website on my own. To have it be exactly what i want it to be. Be able to integrate my appointment app. Godaddy was able to provide everything that i needed. The whole image of who i am and what empire is is presented through my godaddy website. Microsofts ceo saasha nadella set to testify. Good morning, joe, we dont know what microsofts ceo zach ya nadella will say today, but we do know what the u. S. Government hopes he will say that google is edging out Search Engine competitors like Microsofts Bing to make the case that google has come to dominate the Search Department illegally. The department of justice is going to need nadella to have a good outcome. Google is arguing their search product is better than the one microsoft offers. The ceo of duck duck go hes already testified in the case arguing that google is, in fact, a monopoly and that duck duck go was unable to negotiate with companies to make its Search Engine a default because of the enormous payments from google to the companies duck duck go was trying to negotiate with. Now, one of the biggest points of contention in this trial so far has just been the enormous amount of secrecy in all of this with much of the testimony and many of the exhibits being kept out of public view. The New York Times reported that before Opening Statements began on september 12th, google filed 35 motions and responses in the case and nearly twothirds of them were l not public. The biggest and most important number in this case, the exact number of billions of dollars that google pays apple to be the default Search Engine is going to be kept secret too. Its hard for the public outside looking in to get a sense of whats really going on here. Pay attention of course to the irony of a microsoft ceo testifying in an antitrust case. Remember the big Microsoft Case from the 90s, now microsoft testifying on behalf of the u. S. Government. Back over to you. You know, we heard recently from Steve Ballmer who thinks he hes still the largest shareholder in microsoft, lived through when microsoft was being investigated for antitrust. He said he thinks theres a very good case on some of these issues. Do you think nadella is going to be outspoken or do you think ballmer is always more outspoken because hes very clear about telling his perspective. Hes not in a position of running things in a management position so he has the freedom to do that. Ballmer is obviously an outspoken guy, just his personality, thats how he is, and hes got the freedom to do that now. Nadella, hes going to have to be a little more cautious. A lot of corporate lawyers have pored over everything hes about to say. I would expect an approach a little more cautious. Well have to wait and see. We dont have any sort of inside headsup from microsoft as to where theyre going to go with this. Well wait and see. Were going to be down at the courthouse later this morning. Well try to talk to him as he arrives. Well try to talk to him as he departs and get a sense of what his thinking is, imagine microsofts position here. They definitely want to open up the google monopoly if it is that. At the same time, you know, you dont want to empower the government too much on these things. Then, of course, you could face the consequences as well as microsoft already has a couple of decades ago. Eamon, thank you. Well be watching later today. Still to come today, Congress Passing a lastminute shortterm funding bill to avoid a Government Shutdown. We will talk the latest out of washington with former governor larry hogan. Dont miss our interview with bill ackman coming up in the next hour. Stay tuned, youre watching squawk box and this is cnbc. If you think you have dupuytrens contracture, theres a simple test you can take from anywhere. Try to lay your hand flat against a surface. If you cant, you may have dupuytrens contracture. Talk to a hand specialist about your options, including nonsurgical treatments. Congress taking it down the wire sending a government funding bill to the president late saturday just before the midnight deadline, but the agreement only providing temporary relief. Joining us now, former Maryland Governor larry hogan. Governor, its good to see you. Great to be here. If we spent all our time talking about shutdowns, i guess we sort of missed the bigger point, and that is the environment that we find ourselves in right now. What did you make of the solution that Speaker Mccarthy came one, and what does it mean for his future as speaker do you think . I was really pleased that Speaker Mccarthy actually showed some leadership and worked hard to try to avoid the Government Shutdown and worked across the aisle with democrats in both the house and the senate. You know, these kind of handful of renegade republicans led by matt gaetz, were really trying to, you know, drive the car off the road, and its not great for the Republican Party or for the country. I mean, this is something that happens seemingly over and over and over again, republicans and democrats cant get their act together, but theyre threatening to get rid of him if he works with kdemocrats its ludicrous. 70 majority of democrats in both houses, we balance the budget every single year. You have to work across the aisle and try to reach a compromise. So i thought mccarthy did a good job. Its only temporary for 45 days. It took us away from the brink, but were still dealing with the underlying problem, and you know, you got this kind of lackey guy that seems to want to ruin the Republican Party and the country. Theres some personal animus there, you talk about matt gaetz, obviously, theres some personal things there too, but the other gentleman can always fall back on the high minded principle that were at 33 trillion and my constituents elected me to do whatever i can to stop the what they view as just out of control spending. Its absurd that we havent passed the budget in so long that we continue to kick the can down the road. This is no way to run a railroad. However, its better than the alternative of shutting down the government. I agree, the underlying problem needs to be fixed, and somehow, some way weve got to actually have honest, real discussions about what we do about this deficit. You know, i came into my stay with a 5 billion deficit, turned it into a 5 billion surplus working with democrats. How . We had to make some really tough choices on the budget, cut back on some things that were not that comfortable to do, but also we generated more revenue. How . By growing businesses. By raising taxes. We cut taxes eight years in a row. How can you cut taxes and raise revenue thats called trickle down and that doesnt work. It worked really well. All the businesses, jobs, and taxpayers that were fleeing the state started coming in. Im devils advocating. I got the sarcasm. By the way, it works on a state basis. Doesnt always work on a National Basis because you can thats all we got. Entitlemented. You got trickle down in the private sector or trickle up. What we really have right now is divided, divisive toxic politics in washington where nobody ever seems to get anything done, and most americans are fed up with it and theyre concerned about this election coming up. They dont really think republicans or democrats are working to solve problems. Whats the fix, though . Does this have to be done in the primaries before hand . How would you send a different message . One of the most strange and interesting political processes ive ever seen, but both parties seem to be losing touch with the average american, you know. For example, joe bidens messaging about bidenomics and there really is no inflation problem, the average american doesnt feel that. They feel like, hey, housing costs are up. The cost of groceries is up 25 . People are now saying theyre telling them everything is great. They hate the fact that nobody will Work Together to even try to come up with bipartisan common sense solutions. Theres no easy answers. But theyve got to you know, they elect people to go down there and do the hard work ask theyre not doing hard work. Theyre playing politics. Can you explain the popularity of President Trump . You know, its hard to explain. People come up to me, can you explain why this is that your partys off the rails . And i say, no, i really cant explain it. Its about half of the Republican Base that still likes trump. 35 are completely locked in on trump, wont even consider anyone else. What do you think thats about . I think its about, you know, trump they like the fact that he rails against, you know, the swamp and the deep state and he doesnt talk like other politicians. They think hes standing up for them, but about more than half of the republicans want to move on and find another candidate. The problem is theyve got 11 choices. It was unfortunate in the last election, unfortunate in the midterms that the door is open for conservatism and republican policies because of bidens weaknesses across the board, and the democrats had the same problem. They had bernie in the lead, cliburn decided thats never going to work. So they marry this elderly gentleman at this point, and theyre stuck with him without and kamala is waiting in the wuings. Biden and trump are the two least popular president s in american history. 70 of people do not want either one to be president. They do not want a rematch, and that appears at this point to be the likely scenario. I dont frankly think that democrats should nominate biden and i dont think the republicans should nominate trump. Supposedly Glenn Youngkin is meeting with big donors. If he its a weird election down in virginia on an off year, but if he secures the state legislatures for the republicans, does that open up hes only been in office hes only been in that business for two years. Is that good or bad . Weve got 11 candidates to choose from, six of my former gubernatorial colleagues. I dont know that a seventh governor or a 12th candidate is going to make a dudifference. Im hoping hes going to be successful, but i dont think theres any chance that he runs. The filing deadline for the first state is october 9th. A lot of talk about after the election or this and that, im not sure him getting in the race will make a difference. The question is whether the republicans could run another candidate that could win in a general election if you lose all the trump supporters. Same for biden, if somebody else runs, both of them have kind of taken extremes and tried to marry them together to have a coalition. Thats why i didnt run for president , even though i had the highest Approval Rating of any governor in america and successfully won over independents and democrats and republicans, i didnt want to be part of this multicar pileup. And i didnt think one person could take on the trump numbers. Im hoping we can narrow the field down to who do you like . A couple. I think governors have the best Training Ground for being president. There are six of them in the race. But i think i want to see somebody stand up and show me something. Do you like the bergum. Hes a Smart Business guy that made a billion dollars. Nikki haley . I dont think he could win. Nick do you think nikki haley could win . Nikki haley had a really strong first debate, and she looked good. Stumbled a little bit in the second debate. Shes dropped rather than gone up. She started to go up, came back down. Ron desantis, possibly . I think delawareesantis hes five or six reboots of his campaign. He started with the advantage, name i. D. , 24 hour fox coverage and hes continued to stumble. I think its getting to be close to over for i imagine youd like Chris Christie even though his numbers christies a great friend. I like him a lot. I like it that hes throwing out the punches. Hes the only one prosecuting the case against trump. Its reflected in the numbers. None of them are really getting traction and thats frustratiin to me. Were just hurdling towards that those two candidates, we really are. Im just hopeful that something happens. I cant tell you what its going to be. If you look back in history, six months is an eternity in politics. Hillary clinton was going to be president at this point and barack obama won iowa. Almost up to that night it seemed like. Youre talking about on the primary. Barack obama and hillary clinton. Its not looking great. Governor, thanks. Thank you. But youre out. Whatd you call it . A multicar pileup. Multicar pileup. Thats what happened in 2016. People wouldnt get out we felt got to get some people out. Thanks for being here today. Thank you very much. Great to be with you guys. When we come back, talks between the uaw and detroits big three automakers continued over the weekend. Weve got the latest from the ck lines. Thats next. Squawk box will be right back. vo while you may not be running an architectural firm, tending hives of honeybees, and mentoring a teenager your life is just as unique. 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Day 18 of the uaw strike against the big three. Phil lebeau joins us now with more. Times flying by, phil. And i think its going to continue, joe. I dont think we see a resolution anytime soon. What we saw on friday was just how far apart the big three are relative to the united autoworkers. So you had gm and ford both having new plants that the uaw said, you know what . Walk off the job, which is what workers did at noon. There are now five u. S. Final assembly plants. Two for gm, two for ford, one for stellantis. Keep in mind, the most profitable lines in terms of the vehicles being produced, those continue. Right now there are approximately 25,000 uaw workers who are now on strike. Theyre spread out across the country. Most of these facilities that you see aside from the final assembly plants, they might have 100, 200 people at Parts Distribution centers. Use look at the shares of the big three automakers, stellantis, the parent of jeep and ram and dodge, you look at them right now, they have averted or avoided another strike. That happened on friday when they came to the table at the last minute with an offer that included adding cost of living adjustments to any deal thats ultimately reached doesnt mean that were going to see a deal anytime soon. They avoided being called out on friday. Gm and ford, oh, man, friday was a day of gm and ford saying these guys, theyre not in this right now to solve this. The implication is that this is premeditated, that the uaw has dragged this out, theyre not at the table, and what happened when the uaw leadership turned around and commented on it friday afternoonm, shawn fain said jim farley is a liar. Were at a point where theyre calling each other out publicly. Were nowhere close to this being resolved. Yeah, its i guess its never nice, goes back and forth in these situations. That seemed to be descending into into some, i dont know, acrimony as you said, liar, huh, phil . Yeah, he said hes lying. He called him a liar. Thats basically it, and he didnt flinch on that. I mean, he basically said jim farley wasnt at these negotiations after jim farley said, hey, ive been here. So you know, thats where we are right now. Does not sound like room for a deal when youve got them calling each side liars. No. Becky, ive said this for some time, i dont think were close to a deal anytime soon. And thats not a reflection on the desire of some of the big three executives. I think they want to get a deal done. I think shawn fain realizes he has leverage right now. He can push them further. He now has stellantis saying, okay, well do cost of living adjustments. Why is shawn fain saying dont let the big three come between us, between the membership and the union. He must be feeling some pressure from some of the workers saying hey, this is a pretty good deal. Why are we continuing to push . He also said that on the line in toledo. Some of those people have been walking the line now for three weeks. You would say that. They want a deal, they want to go back to work. A 30 raise would get back to work. Yeah. All right, thats where were at. Where we are. All right, thanks, phil. Coming up, bitwise launching two regulated Ethereum Etfs today, well speak to the chief Investment Officer about the new products in the Digital Currency market next. And then at the top of the hour, pershing squares bill ackman joins us in the loosest sense of the word, squawk box will be right back. Explore endless design possibilities. To find your personal style. Endless hardie® siding colors. Textures and styles. Its possible. With james hardie™. The power goes out and we still have wifi its possible. To do our homework. And thats a good thing . Great in my book who are you . No power . No problem. Introducing stormready wifi. 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. Cmon, were right there. Cmon baby. Its the only we need. Go, go, go, go ah touchdown baby touchdown are your neighbors watching the same game . Yeah, my 5g Home Internet delays the game a bit. But you get used to it. Try these. Theyre noise cancelling earmuffs. I stole them from an airport. Its always something with you, man. Great solid greek salad . Exactly dont delay the game with verizon or tmobile 5g Home Internet. Catch it on the xfinity 10g network. Welcome back, everybody. The largest fund in america has two etfs that will start trading today. They are an equalweight strategy etf. Joining me is matt hogan. This is a huge shift for the sec. Theyve been pretty hostile to any offerings that come along with Digital Assets like this but they lost the case and this is a result of that. It may be the result of that, it may be the result of the passage of time butch its absolutely true that theyve changed their tune. Weve had really constructive dialogue with the sec, giving investors their first ever access to ethey reum. The beautiful things about futures exposure, a, its regulated, and its highly correlated with spot designations. Its really a great tool for getting exposure today. Why would somebody own this instead of owning bitcoin or ethereum straight out . A lot of people want the convenience of buying it in their brokerage account right next to their stocks and bonds. Its particularly important for financial advisers, ira and investment officials. An ira cant buy it for a client but they can buy it in a wrapper. Its a major unlock for those people money. What about the bitcoin etf . There are at least Ten Companies who have applications pending. Who is going to get it first . The first mover advantage is expected to be pretty significant. It is massive. Bitwise has a filing but i do think were making progress. I expect well see a spot this calendar year. Thats not a guarantee, not a promise but the dialogue with the sec is improving. Two years ago we had no crypto atf. The next stop is spot bitcoin. Were going to get there and the progress is accelerating. Theres only a few months left in the year. Do you really think its that soon . Im hopeful. I think theres a real chance. If not this year, then next year. We just submitted 40 pages of research to the ftc answering their questions. This is an opportunity for investors to invest today. Youre going to being going up against some very wellknown names, companies that have lots of client assets. I think its great those big players are coming into the market. The thing thats different about bitwise, not only are we the Largest Crypto Fund in america, but every day 60 Million People wake up and just think about crypto. Maybe they have a new person from college who got really excited about crypto in school but we cover it every moment. The trial, is it good news or bad news, the fraudulent claims against him . I think its old news. There was a lot of chat are until the day black rock announced it was trying to launch a spot bitcoin etf. Would they go with the black rock instead of a company that sounds like ftx, a new company thats supposed to be an expert. We have an incredible track record. We never invested in ftx, we never invested in luna. I welcome black rock in the market. I think theyll get their share and were in the market today launching these Ethereum Etfs. Its exciting. Were about to talk to bill ackman. And Jared Bernstein will join us live for the latest out of washington. Bug hour ahead in just men aomt. With powerful, easytouse tools, power e trade makes complex trading easier. 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And bill ackman says call him if you want a less risky path to a public listing. Well talk about his just app approved squeak. The final hour of squawk box begins right now. Good morning and welcome back to squawk box here on cnbc live from the Nasdaq Market site in times square. U. S. Equity futures at this hour are down. Almost across the board. Nasdaq is up a little bit. We did have tripledigit gains in the dow when we first arrived this morning based on keeping the government open, that deal that Speaker Mccarthy struck on saturday but slowly some of our other issues maybe seeped back into the consciousness of us, the Interest Rates, inflation, all of our normal worries. I mean, keeping the government open isnt going to solve those. It might make it worse. Im kidding. 10year 4. 62 and the 2year 5. 1. U. S. Regulators approving a unique acquisition from big ackman. Instead of a spack its become called a sparc. And dill ackman made a lot of news over the weekend. He is founder and ceo of captain management floating possibly taking x, former i twitter. This structure was approved. One of the names thats been floated i believe by you we talked about in the 6 00 hour was the possibility that you might want to take x public via this fund. Maybe we should back up a little. Okay. If you think of a typical ipo, youve got to expose yourself to the world with a perspectus, stars align, you raise your money. You dont know what the price is, it gets done. Thats the typical deal. But we reversed the process. Imagine you sit down with an investor, investors likes your business and likes the management and says ill invest a balance and a half dollars regardless of what the market does by the time we file with the sec. What do you say . Every ipo investor would say that sounds like a pretty good deal. Well guarantee you a balance and a half dollar and a fixed price and if you need more, we have a whole lot of other investors and theyre going to get to invest at the same price. Thats what were call persian square holdings. You call it a structure. Yes. Lets talk about the history of the structure because it really came out of a spac, dare i say a challenged or failed spac, an effort to buy universal music, effectively blocked, you ended up still buying that stake in your fund itself, which i believe has been a successful investment. It has been. Explain the spac to sparc because its got a bad name. Yes. We set out to make a much better version of spac. We had 12 million demand and we had a whos who of investors. Two years later we were not able to deliver because the sec did not approve the somewhat usual structure of the universal music transaction. We said, look, apologies, not a great outcome to us but were going to give you a ticket to a new party, we have a much better idea you returned all the money. Returned the money. And gave them a ticket. A ticket. And it said when we get this approved, what were calling sparc, you are get to be the first in loon. The approval that happened on friday enabled us to distribute these rights to shareholder. And we commit persian square fund commits 5 billion, want to raise another 4 billion, we set the price at say 35 a share. The company now knows theyre going public, they now know the price so the first Public Disclosure is were going public, we know the price, were raising the minimal amount of capital we need. We file with the sec, get the p prospectus approved and there are no underwriting fees and risks of a typical ipo. You told the wall street journal you would be open absolutely to using this vehicle, if you will, to take x, formerly twitter public. They had been running an article about my tweets. They asked me would we use this vehicle to take x how interested are you in taking x public . You invested in twitter when elon musk bought it, correct in. The persian square made a very small investment. Would you like to buy it in. I have a lot of respect for musk. I think twitter is a really important platform, hes made tremendous improvements in the platform and i think its a unique, very difficult to disrupt kind of asset and one that could grow into different lines of business. So i think it quite interesting. I dont have information on how the business is doing. I have no idea whether he has any interest in doing something. Have you spoken to him about it . I have not. This is just you asked me a question, would you consider it . The answer is absolutely. I like musk, i think its important. Hes got a lot of debt. Yes. 13 billion. We could commit persian square 2 billion to a transaction, set the rights price at 100 a share and announce a transaction. He knows hes going public and rauzing 2 billion, which certainly helps and then we tell the sorry and then the rights holders have a chance to decide whether to invest. As long as the rights have positive value, theyre all going to get exercised and the ipo raises 13 billion and the investors, if you go back and look at the people they raise capital from, its a whos who of institutions, Family Offices as well a retail musk paid 34 billion for the asset. What do you think its worth today . I dont know. I have no information. I know but would you buy it at 22 billion, 10 billion, 5 billion . You are a user in a peter lynch form of investing. The product is vastly better than it was before. The cost structure is vastly improved versus what it was before obviously. The rate of innovation, the pace of i ovation is much better than before. Where theyve been harmed is theyve lost a lot of advertisers and i think the advertisers are likely to return. Ive actually bought stuff that ive seen advertised on twitter. So it actually sort of works. It also an audience thats quite difficult to reach. I dont really watch tv. I read perhaps ft journal, those kind of newspapers. But its a unique way to reach a lot of very good answers. If not x, you would buy a classic sort of business owned by private equity firms. I think thats the easiest transaction. A lot of private equity firms would like to ring the bell, return capital to their investors, show progress on a business outcome. Were kind of a very simple solution. But they dont want to file a prospectus, get the employees all excited, distracted and a deal not happen. The or problem is, fine, you sell 10 of the business. We could buy an entire company, 100 of the company with this structure. I mentioned one of the difference of this structure is you dont have to go through the quote rigmarole of the process. But theres some value insofar and we look at a lot of the transactions and the spac deals that went through and say they didnt get the spotlight they should have where people could see what was really happening . Why do you think that all of these spacks were such deals . Only the worst of the companies would interact with a spack. No frictional costs of a spack. So the qualities of the companies that we can transact with is much higher. The fact that they get us as an anchor investors. If you think about a typical ipo, the call the Goldman Sacks of the world underwriters. But theyre not underwriters. Were an investor that takes an anchor position in the company, does Due Diligence and then offers it to the public. Part of the problem with the spac structure was you had these sponsors, promoters and they were collecting 20 of the company and they could get out of the stock within six months to a year yet they were relying on projections that were based on four and five years out but they didnt have to hold for that kind of period. Of course. What about you . The opposite of here. One were going to buy something that were going to have basically forever. We want something we can own for a decade. Thats number one. Number two, were going to invest a billion and a half dollars. Were likely to join the board of the business. This is not a trade where we get someone excited about something and then we dump it. The only differential security we see is a warrant on 5 of the company if the people we distribute the rights to youre going to get 5 of the company to be clear . 20 of the money. Were just buying common stock in a company. How much do you worry as somebody who is not on twit are a twitter and we have a following, people loved you during your spack. How much do you worry about investors, frankly you just had a lot of complicated stuff. Do you think that they even understand . I think theyll have plenty of time to understand. The simplicity of this is no shareholder warrants so it common stocks, they understand that. They understand were going to buy a billion dollars at 25 a share. Were going to do that in front of them. Time will pass. It going to receive the same scrutiny as any ipo. We have to get approved by the sec. Then the rights trade for 20 days. So people can say, oh, the rights are trading for a penny, this is a bad deal, if trading for 3, 4 for a share, okay, the market likes that transaction. I want to pivot before woo leav we leave you or you leave us, i want to talk about Interest Rates. Youve made provocative statements about where you think the 10year is going to go. What do you think that ultimately means to equities . We were speaking downstairs about Mortgage Rates and whether they stay the 7, 8 level and do things start to break as a result. Two things. One, i think the fed is probably done. I think the economy is starting to slow. I think the level of real Interest Rates is high enough to slow things down. High Mortgage Rates, high car rate, high credit card rates. The economy is still solid but it definitely weakening, seeing lots of evidence of weakening in the economy. Our belief when the 2year treasury was 12 basis points was going to 5. We no longer have that bet on. The only bet, if you will, and it really a hedge at this point is that longterm rates, the 30year treasury is likely to go higher, go into the mid 5s is our expectation of what happens there. I dont know that the 10year has to go meaningfully of 5 . We think structural inflation is consistently higher. In a world like that the government shouldnt able to borrow at 4 3 4 fixed for 30 years. I think longterm rates go higher. The spread between the 10your treasury and the Mortgage Rate is about the widest it been. You can see and at some point these seven to tenyear arms are going to roll over and people are going to have some problems and what happens to regional banks . A big portion of the country has mortgages at 3, 4 or less, a lot of companies have fixed rate debt extended for a long period of time. People who have borrowed short term at a low fixed rate and are going to get repriced and you look at a lot of commercial Real Estate Investors that are going to have a very challenging period, thats really the big threat, a very targeted threat that rates will have. President ial election, youve been talking a lot about how you want jamie dimon to run. Hes not going to run i dont think. Ive given up on that. Youve been money to i think a bidentrump is not good for the country. Id like a candidate that the world can get behind. Who do you like the most . You know the options. Well, i dont know them all. I havent met nikki haley. Im going to do that soon andi met with Chris Christie. Will he have the widespread appeal in order to rise . An early test will be new hampshire. You met with zelenskyy. Youre a supporter of ukraine. Big supporter. Would you have liked the government this weekend to support ukraine . I dont know that musk has a negative opinion of zelenskyy. I think his view that a forever war is not good for america, nod good for ukraine or anyone. I agree. Id like to see that war end. Its a black swan risk for the world. Thousands of young people and innocent people dying. Id like to see the war end soon are than later. Bill ackman, let me know in theres a spark of interest from elon musk and others. Where there as a spark, hopefully there wont be a fire. Becky quick. We can stick with that a little longer but i like it so far. When we come back, one of the top economic voices in the Biden Administration brings us his take on the u. S. Scramble to keep the u. S. Open. Aijacil of economic advisers, chr red bernstein will join us. This is squawk box. This is cnbc and well be right back. And. New gold bond healing sensitive. Clinically shown to heal moisturize dry, sensitive skin. Gold bond. 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 cmon, were right there. Cmon baby. With a partner thaits the only we need. T. Go, go, go, go ah touchdown baby touchdown are your neighbors watching the same game . Yeah, my 5g Home Internet delays the game a bit. But you get used to it. Try these. Theyre noise cancelling earmuffs. I stole them from an airport. Its always something with you, man. Great solid greek salad . Exactly dont delay the game with verizon or tmobile 5g Home Internet. Catch it on the xfinity 10g network. Youre probably not easily persuaded to switch mobile providers for your business. But what if we told you its possible that comcast business mobile can save you up to 75 a year on your wireless bill versus the big three carriers . Its true. Plus, when you buy your first line of mobile, you get a second line free. There are no Term Contracts or line activation fees. And you can bring your own device. Oh, and all on the most reliable 5g mobile network nationwide. Wireless that works for you. Its not just possible. Its happening. Over the weekend, President Biden putting his signature on a deal to avoid a Government Shutdown. Things came down to the wire with speaker of the house Kevin Mccarthy who helped get a bill to fund the government for 45 days. Heres the president yesterday. Enough is enough is enough. This is not that complicated. This has to end. There shouldnt be another crisis. Theres no excuse for another crisis. Joining us is Jared Bernstein, the chair of the president s council of economic advisers. Jared, let talk about this. We have a deal that nobody really expected wed see so we made it through this weekend but what happens in the next 45 days . First of all, good to see you, becky. This is good news for the American People in the sense that an unnecessary crisis that would have inflicted pretty deep and a wholly unnecessary pain on millions of americans has been averted. Thats good news for over 1 million active duty troops, over 7 million women and kids who risk lacking nutritional support, for travelers because of the reauthorization in this bill of the faa and Disaster Relief also in this continuing resolution, but it did not have to happen. I think what you just played from the president is of course exactly right. He shook hands. He had a deal. In fact there was a law passed with mccarthy back in june, in early june at the end of the debt ceiling debate. That was designed specifically to avoid this. Senate republicans, senate democrats, over a hundred republicans in the house and of course House Democrats all supported this c. R. Well before the crisis that occurred this weekend. So completely unnecessary and we really need to learn a lesson exactly as the president just said to avoid this in the future, to answer your question. The former omb head and the former Congressional Budget Office director under president obama, as you know, was with us earlier this morning. He said he thought that was a bold move by mccarthy to kind of say, no, forget it to a contingency of his party that has been pushing for more. He thinks perhaps theres a way to get no, sir necessarily bipartisan but cooperative agreements that go back and forth. Do you think that the House Democrats are going to be able to work and support with mccarthy and the republicans . How do you see this playing out . First of all, let look at the numbers that underpin that question, what peter was saying. For the continuing resolution, 209 democrats in the house voted for it, 126 republicans. So there were 83 more democrats who got this bill over the line than republicans and of course you had 90 republicans voting no. So, you know, those numbers kind of speak for themselves and weve been here before and, again, completely redistrictable. Weve seen this rodeo way too many times. The numbers arent there for an extreme minority against a large majorities that actually has continuously at the last minute gotten together and overwhelmingly passed bipartisan agreements, whether it was the fiscal responsibility act ending the debt or the continuing resolution this weekend. I might as well let just cut to the chase on this. The reason that mccarthy did this is because and didnt do it in the past is because he thought he was going to lose his job if he didnt do this. Will democrats now support him in this job or are they going to let her flim flounder . If thats the case, who comes next . Im not going to speculate. Joe biden said thats up to the house to figure out how theyre going to vote this. I think the numbers speak for themselves. The point i was trying to make is that we tend to think we live in such a partisan era that nothing can be accomplished. Well, in fact, after a long and unnecessary conflict here, the last minute this c. R. Was accomplished. It far from complete. The president said yesterday we cannot under any circumstances allow american support for ukraine to be interrupted. You just heard bill ackman say the same thing. Youve got Speaker Mccarthy, minority leader oconnell in the senate so that has to be next. Ukrainian support funding and what happens at the u. S. Border, what comes next . Well have to see about that. The point about ukraine is its similar to the c. R. And that you have a very large majority both in the house and senate supporting the funding for ukraine. Youve got a murderous regime that is actively doing what theyre doing in ukraine and its clear we have to support that funding. Again, a widely shared view in congress and we cant let a small group block this support in not just security for ukraine but for all free nations. Weve been watching the yields in treasuries this morning. They picked back up after a little bit of a relief. People are saying thats because it has to get harkd out. Sound like you share that same concern. Well, i think probably if anyone expected a relief rally this morning, i cant imagine theyre going to see much of it in the sense that the view is that this would either be resolved in a few weeks or not happen at all. So i think we are where we are in terms of that. I think that the Interest Rates reflecting a lot of the dynamics that you were talking about with bill, we have what he called a solid economy. We still have strong consumers, we still have a very tight labor market and thats driving growth rates that are estimated to be quite significant in the Third Quarter. So we like the solid momentum we have. We like the fact that we have wages have real wages rising and pricing coming down. All those dynamics along strong to me and Interest Rates reflect much of what is going on there. Im sure you saw axios over the weekend, they called it the bidenomics blunder. Im saying tying the president to the economy maybe wasnt the best idea when so Many Americans dont feel like that he have gotten ahead and so many of them feeling they feel better with republicans in terms of the economy than democrats at this point. Trying to keep up with pretty high Inflation Numbers over the last several years. What do you thinkthat . We think bidenomics is clearly working. Its not just about the here and now but its about that, too. We have real wage gains over the past few months and that consistently supports strong Consumer Spending, which is leading to a and if you have a healthy consumer and 70 Consumer Spending economy, we had and the head lines down by more than half in the cpi and poor inflation close to 2 , the feds target so we really like the progress there. But bidenomics is also about the future, cheap Energy Production on our soil, electric vehicles and batteries, domestic, here on our soil. Were pulling in capital at a breakneck pace. Jared bernstein, thank you very much. Thanks, becky. Coming up, a squawk box exclusive with tech investor ann winblad. Winblad. Squawk box will be right back. To verizon and trade in any iphone and get the new iphone 15 pro on them. sean what . jason yup, and on an Amazing Network sean and i dont have to ruin anymore birthday parties jason yeah, that ship has sailed. Lets go get you the iphone. Here we go, come on hon. vo trade in any iphone in any condition for a new iphone 15 pro on us. Only on verizon. birds chirping go. And go and go and go. but what if you. Stop . You work hard, its time for a bank thatll work hard for you. Everbank brings security and a guarantee that youll ea a yield in the top 5 of competitive accounts. Going, thats what got you where you want to be. Were the partners for your next move. Everbank. Advantage, you. Ever since she was a little ki, all maria wanted to do was bak. Im maria alvarez, owner of marias cakes. And im axel, prd to be her state farm agent. Her baking superpowers have brought sweetness to our community. I make delicious cakes to make special occasions even better. Maria doesnt just bake; she also creates opportunities. Small businesses like marias, open doors for communities to thrive. Support your community. Support small business. Welcome back to box, everybody. The futures are now in the red. We started the show two and a half hours ago with green arrows. Now youre looking at the s p down by about 7 points, dow futures down by 37, the nasdaq down by about 5 points and a lot of that has to be tied by whats happening in the treasury markets. If you look now, the 10year is 4. 63 , almost 4. 64. The 2year is above 5 . When we come back, allianz adviser will join us. We want to bring you todays big consumer stat. A new report from retail finding that 64 of u. S. Consumers will kick off Holiday Shopping this month. Thats up from 63 in october of last year. Youre watching squawk box. This is cnbc. Not only our customers but those who matter most to them. Just like our company does for us. We have great benefits from principal. So i know im taken care of. And pause not just me. But the ones who matter most to me. upbeat music upbeat music. Our next guest says the recent Government Shutdown drama narrows the scope for the type of legislation needed to maintain High Economic growth and genuine financial stability. Joining us to talk about this in a big week of Economic Data culminating with fridays job report, mohamed like entitlement reform, mohamed or more keynesian programs . What is it precluding, the gridlock in washington . Its precluding a laserlike focus on the supply side, on getting the supply side to be more flexible, joe, and getting the supply side to continue to embrace. Very important innovations in technology and Life Sciences and the energy transition. This is a time when you need the supply side to be more flexible. We have an inflexible supply side. If we dont get there without government facilitating that transition. How . I mean, i can see how the government can muck things up in terms of what you just mentioned, the industries that you said need to be, i dont know, more nimble. But doesnt the market force that . Isnt it in the best interest of the private sector to do all the things you just mentioned . What do they need the government for . So we have a detail analysis in a book that was published by mike spence who often is on cnbc and gordon brown. Look, there are government failures and there are market failures. And when the two come together, then externalities do not get priced into the system. Look at our supply chain as an example of that. You need operative solutions to comment problems. There as a lot that the private sector continues doing. And it not just government. I think the fed has a role to plau in this. We have to embrace the notion, which we havent done yet sufficiently that were no longer in a world where it insufficient demand and you just throw money at. Thats the old world. The new world is inflexible supply and youve got to work hard to fix it. Would you exceed that, red tape permitting some of these projects . All the things that the fwcht you wanted. Most of the private sector failures probably come or at least are informed by the government getting involved. No . Joe, theres undoubtedly government failures, what economists call overreach by the government. But having said that, the private sector itself fails by not pricing in. The global the lack of resilience in supply chain was fabricated by the private sector. So, yes, both fail and the argument is there is a middle way. I always point to the vaccine, joe, as a perfect experience sector came together and did what do well. And the private sector came in and did what it does very well, which is innovate. Once you take catastrophic risk out of the way, your riskreturn looks different and incentive goes up. Its not just the government, its the fed as well, to recognize we are living in a durch economic paradigm. So what type of bieft would you like to so that would address the you so infrastructure becomes really important and that has to be done in partnership. The government cannot afford the one thing we havent talked enough about is what the high Interest Rates are doing to the government budget. The scope for Government Spending other than on Interest Rates is coming down day by day. Youre going to be forced to loo being more imagine any tifl. We have to be very clear what regulations is trying to do. We spent two years thinking about this with Michael Spence and gordon brown. There as a whole list inform actions that we think are feasible. If we dont do it, joe, things are going to get worse. This notion of cascading crises, where we go from one crisis to another, that is not just a human resilience but a financial resilience. Hope springs eternal. Maybe thats a start. It was 170 at the end of the first quarter. It was 2020 in the fourth quarter. I did see Aaron Rodgers walking better than you would have anticipated on the sidelines. Is that your hope, mohamed, hes going to be better. Wow, Aaron Rodgers was there, too . I know taylor swift was there. Yeah, we got lots of clips of that. There should have been abet on draftkings. I got suckered into a bet feeling 22. All Travis Kelsey had to do was catch a patch of whenever they have the special, they never have it. Homd. When we come back, we have much more on the markets and technology with investor ann winblad. And rivian delivered over 15,000 vehicles. That is in line with the companys expectations and says it is now on track to deliver on that 52,000 production guides and that was previously given. Stay tuned, youre watching squawk box and this is cnbc. By the way, rivian shares now down by just over 3 . Together, we built something truly beautiful. It takes years of dedication to get to this milestone. The New York Stock Exchange is a symbol of what america is all about, the potential of an american dream. It is day one. A lot of work has happened to lead to this historic moment. The only way you can move a Society Forward is a true expression of freedom. This is Spring Semester at over 13,000 us school districts, which have become top targets for Ransomware Attacks. But theres never been a reported Ransomware Attack on a chromebook. Which is why thousands of schools like the fairfieldsuisun Unified School District switched to google tools for education. So they can focus on teaching and 22,000 students can focus on learning, knowing that their data is secure. when we come back, right here on squawk box, a conversation you do not want to miss with tech venture capitalist anne winblad. Youre watching cnbc. In the u. S. We see millions of Cyber Threats each year. That rate is increasing as more and more businesses 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. Welcome back, everybody. The biggest tech stocks were major drivers in the market rally in the first half of 2023 but things did take a downturn for many in the Third Quarter. Heres how far theyre off their highs of the year. Tesla off by about 16 . Microsoft down by just over 13 , same for nvidia, apple the same and alphabet down by about 5. 8 . Joining us for an exclusive look at technology is annwinblatt. Lets talk about things. I always think of you as someone who does bottomsup work. You look at private companies, Public Companies and judging those companies what you think their success likelihood is. At a time like this where things have changed and the outlook overall Interest Rates are up, the fed, do you Pay Attention to some of those changing factors, too, when you start thinking about where you put your money . Its hard to ignore them. Our job is to be optimists. We really have to look at the glass as half full and find opportunities. Its important for us at the same time to realize were not immune to the same headwinds as the customers of these companies. We look at market value and thats price to value and priced how the customers will pay. When there are headwinds for the customers, theres headwinds for the companies. At the same time we look to find opportunities to deliver value. Thats probably why these companies that youre now calling the magnificent seven are doing so well year to date, maybe not just in september. Theyre delivering extraordinary value to customers. Thats what were looking for. Dis that Value Proposition tougher given the Interest Rate situation . Do you see fewer opportunities now than a year ago . Is that just not the case because theres new stuff popping up everywhere . I think there are more opportunities. Im on a university board. Im on a foundation board. I live outside of the tech world occasionally. I see how Hard Technology istor people to use. The ai boom is real in that it delivers much more productivity. Were seeing that in the dev ops for developers. One of our companies did a poll of 800 developers in major corporations. 97 of them are using generative ai. Theyre also able to quantify that on average theyre saving 6 to 8 hours of work week time by using these new generative ai tools. Well see that bubble up into the productivity tools as well. Ai penetrating these companies is not new for us as investors. We have to invest at the almost bleeding edge when we do earlystage investing which is what our funds do. I do see more opportunity. The expansion of technology into space tech is another example. Doing experiments at the microgravity level, were seeing quite a few opportunities. It will take time to build new companies from scratch, but the existing companies that are embracing these technologies in the right places are delivering extraordinary new value. How big of a limiting factor is just the talent factor, having aitrained engineers and computer programs who can do this . These companies are about people. Theyre not really about capital. People make the difference here. You see like in major sports that major people are traded between companies. We have been seeing in the last month that the job boards are increasing in job openings for Enterprise Software companies as well. That means were going to be entering a new war for talent. Its a big deal. Its were not graduating enough engineers. Its a real specialty. It means that youre not just a Computer Programmer but youre a data scientist. Then at the lower level, you can just merely be a prompt engineer. Can i ask this question, the companies we just listed that you would imagine would be the beneficiaries of this, i wonder if all this Ai Technology ultimately comes to commodity and ultimately its built into these companies and its almost defensive for them from a market share perspective to have that technology. Not that it necessarily if everyone has similar stuff, how it fundamentally changes. I understand how it can change employment in other businesses that use these technologies, maybe that gives all these companies the opportunity to charge more over time. If it really actually works like that. Well, its the next week in denmark theyre celebrating the 25th anniversary of bluetooth. Thats just present everywhere. Right. You cant imagine going into your car without bluetooth. So who is the beneficiary of bluetooth . Bluetooth was developed by seven founders and goes to a. Org. Effectively its patent profits there. Things do become ubiquitous. Right now it really is the companies lets use microsoft as an example. They have 47 of the productivity market. 325 million paid users of those productivity apps. Some of those are really hard to use. Im an expert excel user but i hate doing powerpoint. With copilot its suddenly easy with the ai stuff. Im a developer, who benefits from that . Get hub, thats a big beneficiary. Of time some of this benefit might become less valuable. Can microsoft now charge 30 a user for the copilot . Probably. Just the same as openai can charge me 20 a month to use the current stuff versus the old stuff. I think over time it becomes an ingredient but it also transforms things. Things are built from scratch, this is a Core Technology versus just a copilot. Let me ask you about the department of justice antitrust investigation into google. Satya mandela will be giving his testimony today. Its interesting behind the scenes to think about whats happening. What do you think about the fact that google pays apple and other places to make sure its the primary one displayed for its search. Has that meant anticompetitive behavior . Is that anticompetitive behavior to try to be the biggest . What does it mean for apple . Its hard to parse an antitrust case for me. Its complicated what is normal behavior when you own the platform, which is the goal in big companies, you become a platform that others participate and you cause those people to participate. The weave of partnerships in the Tech Industry is very complex. No one goes it alone. You only go it alone by building your mote with those with even frenemies versus competitors who are cooperating with you. I think its going to be challenging to pursue this antitrust case without unraveling how the Tech Industry really works. Does it change any investments you may make, if you see not on the the department of justice but the ftc take these aggressive stances . It makes it harder to evaluate what a company can and cannot do. At the early stage, you have to look at these companies as to can they address a large market . Can that market be fairly unique to them . Which, of course, says can i own it all . No, you never own it all, but you can create the market in the beginning and become the lead player in that market. Even in search, the dynamics of search is changing with bing, openai, and the ability of search to use things like cookies. How advertising works on these platforms. We are seeing both innovation and regulation change things. At the same time, when we look at new companies, there are open new spaces that may be hard to anticipate that youll be in an antitrust case. Ultimately, the ipo market right now, thats something you have to watch closely, too. Does it feel like there are signs of life there or will it take more stabilization before you see other companies willing to come out . Well, our job as venture capitalists is to create liquidity as investors. Either the companies are acquired or they go public. We are hopeful that the Public Market does take on great companies. We dont have enough evidence that thats a possibility now. It is very challenging for companies that took an overvalued last round. We take care with our companies to coach them that the value of your round is only a step to the next valuation, which hopefully is an ipo. I think one of the reasons that the ipo market is so thin right now is theres a lot of navigation going on behind the scenes on these last rounds which are priced way above what a Public Offering is and who gets what, how the how the proceeds would really benefit everybody. Thank you for coming in. Always good to have you. Lovehaving you in person, too. Thanks. We are just about wrapping things up here. It looks like the dow is still under pressure, down about 80 points that does it for us today. Make sure you join us tomorrow. Right now time for squawk on the street. Good monday morning. Im Carl Quintanilla with david faber and sara eisen. Cramer has the morning off. We kick off the month of october in q4 with a Government Shutdown averted for now. Tons of fed speak this week, a lot of eco beta. Our roadmap begins with the beginning of q4, all major indices coming off their first negative quarter of the year. Well keep an eye on a lot of the ev