Transcripts For CNBC Squawk 20240703

Inflation had markets wondering what comes next. What comes next is the cpi at 8 30. Crude oil prices are slightly higher. Up. 80 . Now to the latest headlines in israel. The minister of energy and infrastructure saying overnight the siege of gaza will not be lifted until the hostages taken by hamas are returned home. In the meantime, u. S. Secretary of state blinken arrived in tel aviv today. He is meeting with Prime Minister benjamin netanyahu. The Palestinian Organization posted on x that blinken will meet with abbas tomorrow. That is coming up tomorrow and the expectation is any invasion of gaza will not happen while blinken is there. That is in the next sixtoeight hours. White house officials saying they arie leaving open the possibility of refreezing the 6 billion after the prisoner swap with the support of hamas attacks on saturday. U. S. Spy agencies have obtained intelligence that shows iranian leaders were surprised by the attack. A second source describing intelligence that iranian officials were high enough that they would usually be informed about the tehran support before the attack. White house officials said there is no evidence that iran directed or ordered the assault. Jake sullivan said iran was complicit because it armed and financed and trained hamas militants for decades. That debate continues this morning. Powerful words from u. S. Officials on this issue. It pushes back on some of the others. This is an important point. The point. Determined by the u. S. And netanyahu and what they decide and how they see it was determined and whether the war expands in ways to draw in more and more. The ceo of apollo is urging alumni to halt donations to the school of wharton business over antisemitic remarks. Rowan said it is bringing in hate. Rowan said the University President failed to condemn the rhetoric. He is calling on people to close their checkbooks unless the president step down. He saw similar issues at penn a and harvard. The university did not respond to the demand, but addressed the controversy in a Statement Last month. This is what it said last month. We emphatically condemn antisemitism and we fiercely support the Free Exchange ideas which includes the expression of views that are controversial to our values. Ma marc rowan will join us at 8 30 a. M. To talk about the letter he sent and efforts he is making. We have seen this play out at universities across the country. Bl blackmon out with another letter overnight. Well talk about that in a bit over the disgraceful rhetoric and terrible the whole thing is diabolical to think these organizations were signing these letters. In this similar vain, marc rowan is seeing this situation with a major benefactor of the university saying im not giving you money and all of the people who with who have been giving penn money for years stopped giving them money. Scott bok, by the way, a longtime wall streeter for years, on that board. We will see. You are seeing the battle playing out. Bill ackman, talking about the individuals. He said you need to condemn this. First, he wanted them to be identified. And make sure he doesnt want to hire them. The powerful incentive you can give a student is to say the entire network of harvard is about going to find a job. If there are people who will say im not going to hire you because you are part of the organization and you didnt step out and say that was a mistake immediately, that may be a reason reasonable thing. If you are a university and you need benefactors to continue to fund the budget and people on the board who are allowing these types of things to take place in the university, thats an interesting thing. Larry summers, the former president of harvard, who kicked this off, spoke out. He is not stepping back from anything he said about the university or administration and not condemning this enough. He said some of the kids made a mistake. The point that bill ackman made and im closer to the ackman side of this, personally, where i feel about it. Larry said they made a mistake. Let it go. I think ackmans argument is if you made a mistake, raise your hand and said you made a mistake. You cant say im a kid and i made a mistake and im not going to say anything about it. Harvard lawsuits say they did not read what they signed. It is a concern. You should. In washington, House Republicans voted to nominate Steve Scalise of louisiana to become the next speaker, but postponed the vote. A majority of republicans voted in a closeddoor meeting to select him. Several gop lawmakers would not back him without concessions. Republican leaders delayed a vote planned for yesterday and scheduled another for noon today. Scalise met with some of them who said they would not vote for them. Including chip roy of texas. Roy said he wanted to see scalise commit to changes demanded by hardline conservatives. There is not an easy solution or end in sight to any of this. We will see what today brings. In the meantime, the United Auto Workers changing the day for the industry and ford, in particular, stepped up the strike in what has been a price move. Uaw saying it shutdown fords kentucky truck plant and that is the companys biggest plant blo gl globally. Fords kentucky truck plant is the most profitable operation generating 25 billion in annual revenue from the production of super duty pickup trucks and large suvs and including the navigator. We will have more reaction from phil lebeau later this hour. Ford was supposedly one of the big three which was closest to being in alignment with the uaw. They held off additional strikes at ford. Ford Canadian Auto workers signed a deal. Fords last offer was 23 for a wage increase. Were 28 days in. This is stepping up the pressure. Thats the Profit Center for all of the companies and big trucks. A new report from semafor that says adam aron was a victim of the blackmail plot in 2022. Aron sent sexually explicit images during a communication with a woman who tried to extort hundreds of thousands of dollars from him using fake identity. Aron never compromised Company Information and did not pay the blackmail and reported events to the fbi. A bronx woman pleaded guilty this week. Amcs board retained independent counsel. They considered the issue resolved. We will talk to the reporter who broke the story which is liz h hoffman later this morning. We will get you ready for septembers cpi report. We will see if this follows through from ppi which reported yesterday. And we will bring you the earnings and reaction from Ceo Ed Bastian. That is the cnbc exclusive isterview. Th is squawk box and this is cnbc. Announcer this cnbc program is sponsored by baird. Visit bairddifference. Com. Opportunity is using data to create a competitive advantage. Its raising capital to help companies change the world. Opportunity is making the dream of Home Ownership a reality. And driving the world forward to a Greener Energy future. [applause] sometimes the only thing standing between you and opportunity is someone who can make the connection. At ice, we connect people to opportunity. The power goes out and we still have wifi and opportunity is someone who to do our homework. Tion. 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. The power goes out and we still have wifi 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. Are awaiting key inflation data due at 8 30 a. M. Eastern time. Cpi is expected to show a pullback in inflation. Minutes from the fed meeting last month showed that officials judged one more rate hike would be appropriate. A lot has happened since the last meeting. Well talk about that, too. For more on this, we billwill b in andrew hollingworth. Andrew, why dont we start with what the fmoc minutes showed yest yesterday. One more hike and a lot of fed officials said the market did the work for them. This is interesting. This was three weeks ago we had the meeting. 12 of 19 thought we should hike another 25 basis points in the cycle. We had the minutes and that move in treasury yields concerned them. That changed the tone from the fmoc. I think they will not proceed with the hike. Strong jobs report. I think we will get a slower, but still hot inflation reading this morning. The move in tenyear yields is behind it. On pause and wait and see what happens even if the cpi is hotter . If we he ave a surprise in c. There is still time. Jay powell will speak before the november meeting. There is december where they could hike in december. It is possible they come back and hike. It seems the bar to the hike is higher after the move in yields. That might explain why you have clients feeling more confident about jumping in equity markets . I think so. I think after the equity draw yawn we saw, people were more willing to get involved as Interest Rates risen. Generally speaking, were still calling for the s p to be back at alltime highs next year. Encouraging folks to add exposure to equities. What happened . Was the pullback in equities entirely reellated to the jump yields . We think a lot of it was and what came from the last fed meeting means people are grappling with a soft landing. To us, especially given a lot of the pullback was driven by valuations, it seems to be transmission mechanism from the rise in rates . How do you look at what is happening in israel and the continued war in ukraine . We have been doing a lot of work on this. This is about isolating the impact of the conflict. This could potentially have implications for the energy markets. Maybe it puts a floor in oil and increases the upside risk. Zooming out and thinking through the implications for the u. S. Economy and dpglobal economy at large where we dont think it will have a sustained impact. That is something you have seen from prior conflicts. Andrew, one question is what happens with inflation from here . We have gone through a soft patch, but you have oil prices that are picking up potentially. You have potential wage increases with a number of organized labor say they are walking off unless they get big wages. That has to play through to other jobs that are not union, too. Some things that brought inflation down are rolling over. You hear about the uaw with the strikes extending which will push car prices back up. This is a tight car market. We have seen some slower and softer wage growth, but you look at the atlanta fed wage tracker. It is still above 5 . If you have 5 wage growth, that is consistent with 4 inflation. That is what we will see in the numbers today. Inflation coming in at 3. 5 or 3. 6 on headline and 4 on the core. That is well above target. I think there is a little bit of relief here with this soft patch in the inflation data. To your point, we have upside risk. What do you hear from your clients, elyse . I think the biggest question people are dealing with is whether or not it is worth taking additional risk to pick up a few extra Percentage Points when cash is giving you compelling yields. Folks are still coming around to the fact that these elevated yields wont last forever. Reinvestment risk is on the short end of the curve. People are dealing with whether or not it makes sense to go all the way out to the spectrum to equities or reach their goals sticking to core bonds. We are working through it. It seems sentiment is improving. Our data shows our clients were net buyers within equities. What would change your mind that the s p would hit a new high by the middle of next year . The ongoing conversation if inflation cools and rates stay positive and gets increasingly positive is your expectation for equities tied to the idea that rates will be cut by the middle of next year . Not predicated on that. Valuations could help a little bit. For us, it will be driven by earnings upside. It is the consumer that were watching closely and macroeconomics conditions on the whole to get us to the ultimate highs by middle of next year. Elyse and andrew, thank you. When we come back on squawk box, birkenstock we have been talking about birkenstock for the last 48 hours. Slipping on the first day. Im trying to get something with a kick or foot. From one high profile billionaire. We will tell you about that. Robert frank will not wear his birkenstock, but he will join us at the table. And actors strike. Negoatnsersuentiio we spded as they were playing the blame game. We will tell you more about that story as squawk box rolls on. You got this. Lets go. Gobble gobble. Ive seen bigger legs on a turkey rude. Who are you . Im an investor in a fund that helps advance innovative sports tech like this Smart Fitness mirror. Im also mr. Leg day. 1989 anyone can become an agent of innovation with invesco qqq, a fund that gives you access to nasdaq100 innovations. I go through a lot of pants. Before investing carefully read and consider Fund Investment objectives, risks, charges, expenses and more in prospectus at invesco. Com. swords clashing investment objectives, risks, charges, expenses had enough . No. Arthritis. Here. Aspercreme arthritis. Full prescriptionstrength . Reduces inflammation . Thank the gods. Dont thank them too soon. Kick pain in the aspercreme. Our future will demand more energy than ever. And with innovations in natural gas and oil, america can deliver. But washington keeps pushing extreme policies that limit americas energy. Their plan . Restrict oil and natural gas produced in america. Government mandates for how we fuel our cars and cook our food. A future where energy could be less reliable and more expensive. Tell washington stop the extreme policies and let American Energy deliver. Welcome back to squawk box. Shares of birkenstock sliding 12 in the ipo. It opened at 41 and closed at 40. 20. Right now, we want to get a closer look at one of the backers of the german footwear company. The king of luxury. Bernard arnault. Robert frank joins us now. It stumbled at the open down 13 from the opening price. The second richest man is bullish. Arnault owns a stake in birkenstock through lvmh. It is a partner in the private equity firm which acquired birkenstock two years ago. His Family Business was part of the buying group. They paid 4. 88 billion at the time. After the close yesterday, andrew mentioned over 7 billion. They doubled this investment in two years. Bernard arnault is doubling down. Planning to buy 325 million of stock at the ipo price. Arn arn arn arnaults son is on the board. When he acquired the company, he said birkenstock is one of the few iconic brands in the footwear industry. We appreciate brands with the long heritage. They go back to the 1700s. That is a long heritage. Arnault is expected to expand in china. When wie see beyonce with birkenstock they look like they have been around since the 1700s. I didnt know it was true. Still comfortable. With all of the great technology, between then and now, and still a classic. Birkenstock was a f familyowned company and the next generation did not want to own it and it was sold. His Family Office states no one can sell family shares for 30 years. He has learned his lesson from all of the brands he acquired because the next generation doesnt want them. Robert frank, thank you. What do you have on your feet . Standard dress shoes. Nice to see you. Thanks. Whe when we come back, Delta Airlines is set to report and the latest from capitol hill on the odds that Steve Scalise can secure enough votes to become the next speaker of the house. That is next. Right now, as we head to break, lets look at yesterdays s p 500s winners and losers. Announcer executive edge is sponsored by at t business. Next level moments need the next level network. More and more buss 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. Good morning. Welcome back to squawk box. We are live from the Nasdaq Market site in times square. If you look at the futures this morning, things are on a roll again with green arrows. This comes after four days in a row of gains for all three averages. The dow futures are indicated up 123 points. S p up 17 and nasdaq up 25. Yields are down this morning. Tenyear is 4. 56 . Twoyear at 4. 99 . Delta Delta Airlines is getting ready to report quarterly results. Phil lebeau. Becky, the company earning 2. 03 a share. Above estimates of 1. 95. Those estimates have come down since september 1st. The street was expecting leaver eps. Delta did beat with 2. 03 for the quarter. Revenue in line at 14. 55 billion. The numbers within the numbers are operating in the Third Quarter of 13. 5 . Passenger per seat mile down 1. 5 in the quarter. Cost per seat mile up 1. 3 in the Third Quarter. Nonfuel cost below estimates. Jet fuel costs down 21 in the Third Quarter. They got 11 cent benefit in the Third Quarter from the trainer facility that they own. That is one reason why the jet fuel costs are coming in down 21 year over year. Now guidance. Fourth quarter eps of 1. 05. Revenue expected to be up 9 . Street expecting 10. 6 . They were expecting robust domestic and International Travel in the Fourth Quarter. They are not changing dguidance in terms of bookings and consumer. They are, however, expecting fuel costs to increase. 290 to 320 a gallon. That compares to 278 a gallon. They will expect more in the Fourth Quarter. The fullyear guidance. Two changes here. Delta is narrowing its 2023 fullyear Earnings Guidance to be between 6 and 6. 25. A few months ago, they raised expectation to be between 6 and 7 a share. Now 6 to 6. 25. Revenue up 20 for the year and delta lowering the 2023 Free Cash Flow guidance to 2 billion. Previously, they said it would be 3 billion. Now it will be 2 billion. That is a reflection of the higher jet fuel costs and impact of the Fourth Quarter and higher maintenance costs here at delta in the third and Fourth Quarter. Lots to discuss with ed bastian coming up in a half hour. You dont want to miss it. Especially what they are noticing in terms of bookings. They made it clear they see a robust consumer continuing as they head into the holiday season. Lets talk about this for a minute. Delta, everything you said, sounded like it was a disappointment in terms of fuel costs higher and cash flow below estimates. Earnings at the low end of the guidance. The stock is up by more than 2 . Now it is up 1. 1 . Should i read into this that this is all news that was anticipated with the higher fuel costs . The nicest house in the neighborhood, becky. Thats the easiest way to say it. If you were looking at the airline performing in the difficult environment, Delta Airlines is doing that. Yes, they have brought down earnings expectations or narrowed narrow ed guidance for fullyear earnings. If you look at where delta is right now compared to the competitors, that is the reason why the stock is up 1 . No doubt all of the Airline Stocks are under pressure right now. Even with consumers continuing to travel and no signs of a crack in consumer demand for travel . They are not seeing it here. They are also starting to see Corporate Travel. The expectation is Corporate Travel will continue to improve. We talk to ed every quarter. They are to the seeing a slowdown in the consumer domestically. They are not seeing it in the international route. Transatlantic remains very strong. They are starting to ramp up in terms of the pacific region. They are not noticing it yet. Phil, there is another major story on your beat this morning that we are talking about. Uaw expanding that strike on the big three. This time they are hitting ford where it counts. Kentucky truck plant. The largest plant ford has in the world. It has the most profitable of any automaker in the united states. 19. 7 of the volume comes out of the kentucky truck plant. By the way, the stamping facility and parts that come from the kentucky truck plant feed into 13 other facilities upstream from that plant. Phil, i thought ford they are telling us to wrap. Ford was making the most progress. Why the big hit . Becky, that narrative has been there for a few weeks. We have done a number of stories saying this narrative about ford being wfarther along than others im not sure where this is going. There is nobody farther along than anybody else. The uaw will keep everybody guessing. Im sorry. This narrative that is out there that ford is close to agreement and they are farther along than other people. They had the Canadian Auto workers sign something up. They are offering a higher incentive. General motors locked in agreement. I understand what youre saying. I dont know. I thought they were the ones who were potentially closest to a deal. I would say there are elements of what they are offering that you would look at and say they are farther along than others. Lets be clear here. The uaw wants the battery plants planned and organized under of the same master contract and thats not happening at this point according to ford, gm and stellantis. Thats is the dividing line between whether or not we see agreement or not. Thank you very much, phil. We are looking forward to the interview with ed bastian in a little bit. In the meantime, Steve Scalise was nominated for House Speaker. Unclear if he has the votes. The house is scheduled to reconvene at noon today. No timeline for a vote. Joining us is Heidi Heitkamp who is our cnbc contributor. We have Texas Congress member here with us. He served as chair of the House Republican conference. Thank you for joining us. I get the opportunity to sit across from you. Usually it doesnt happen this way. It is like jeb. Jeb, nice to see you. Ladies first. Heidi is in the house. Ill goo to her first. Do you think Steve Scalise can do this job . I say that because of the Health Issues he has. Do you think the democrats will support this . I think scateve scalise can the job. I think hes always wanted to be speaker. This is his chance. I thought he would see more support. I think there are 20 holdouts. We will see how good of a leader he is because the last thing the house repreublicans conference n handle is another january debacle where you have vote after vote after vote. Every time this happens, when the republicans are trying to persuade the American People were the party to lead you and they cant lead themselves is not a good look. We will see what steves made of. As a cancer survivor and somebody who ran a campaign and had cancer, we say dont put yourself in the hole of go home and take care of yourself. Jeb, speak to what heidi said. If he doesnt get the votes, will they not bring this to the sfloor . Is that your shot ththought the bring this to the floor unless it is a lock . Andrew, that is the plan. There was enough National Embarrassment last time on 15 ballots. Ing some something i have nev seen before. This is a hard job to get and apparently a hard job to keep. There was no doubt in a twoperson race for a number of reasons that steve would win that race. I agree with everything i heard heidi say. Im not a doctor. Im not Steve Scalises doctor. I know a number of members did have concern about this. I think largely those concerns were worked through. There are now about a dozen holdouts. If you look closely, a lot of the members did not paint themselves into a corner, andrew. Thomas massey of kentucky, somebody i served with. Very principled member if you agree with him or not and he said im not voting for mccarthy because i see no plan to avoid an omnibus. This is where the wheeling and dealing and agreements take place. Maybe that vote is gettable if steve puts forward a plan. Andrew, it would not be unheard of to go ahead and give mchenry or assume he is a speaker pro tem. We are operating under a rule that has never been interpreted or make him a speaker pro tem to process Something Like an p prop appropriations supplemental to help israel. Is this a similar situation to what mccarthy had to give on or the side deals of what will happen later, especially if it comes to budget reconciliation or another Government Shutdown . In situations like this, it is always lets make a deal. The things that members may be asking for may be very unique to their local jurisdiction or district. You dont know what the negotiations are and certainly holding out puts you in a spot where you can make the bargains. I think there has to be intense pressure within the conference to try to look like you can govern. I think jordan took a run at it and did not get the majority vote. Now it is time to think about how do you basically reflect to the public that you can lead. Okay. We have to run, but i have one final question you have to answer with one word. We had people come on the set a million times and say there is a 90 chance of a Government Shutdown in less than 45 days. What percent . Heidi . 990 . Jeb . 80 . 82. 6 . Were a numbers show. We appreciate the handicaps. Heidi and jeb, thank you. I appreciate it. Thank you. When we come back, another interesting day of testimony in the trial against Sam Bankmanfried. Kate rooney was there. She will join us next. Squawk box will be right back. Announcer currency check is sponsored by interactive brokers. The best informed investors chosen after active brokers. Icy hot. Ice works fast. Heat makes it last. Feel the power of contrast therapy. So you can rise from pain. Icy hot. Welcome back to squawk box. Another day of testimony from the highest ranking testimony in the Sam Bankmanfried trial. Caroline ellison. We have kate rooney with more. I was there. It was like the super bowl of the case. It was, andrew. Caroline ellison had been calm and collected, but yesterday was the breaking point. She broke down crying talking about alameda and ftx. She said she felt a sense of relief that she did not have it lie and live in a constant state of dread. Sam bankmanfried was aware he was siphoning money from alameda and ftx. Alameda executives paid a 150 million bribe to the Chinese Government to unlock some accounts in foreign crypto exchange. We heard sbf confrontations. Ellison said he blamed her for the mess they were in. We heard they were unhappy in the relationship and felt like an unequal partner and awkward tension in the courtroom. The defense will get a chance to cr cross examine ellison. Im curious what will happen today with the crosse crossexamination. They will try to poke holes in the story. Big day for the defense. She was the key witness in all of this. Their defense from the beginning and what he said publicly has been to shift blame to other executives, including ellison. She ran the hedge fund as they said in opening statements. You were the ceo and how did you not know if sam was busy doing tv appearances and a figure head. Thats the defense . I knew nothing . He was delegating to other executives and so busy doing other things that he did not know. The fascinating part, it was true. Even what she said yesterday where she would be asked who transferred the money or who wrote this document and she would say i wrote the document. I transferred the money. I did this. I did that. Then they would follow with and she would try to say he told me to do it or he directed me to do it or Something Like that. In almost every instance, she was the principal actor that did the thing. She sent the bribes. The whole thing was a fascinating. Anything to back up what she said that he told me to do it . Anything in the documents that show it . The interesting part is they did a lot of communication through the encrypted messages signal. A lot of evidence directing her and others has disappeared. He is pretty smart. She plead guilty. The defense has tried to talk to the jury and say, by the way, she pleaded guilty. She is looking for a lesser sentence. That is the strategy. Screen shots show it before it disappeared . There are. A few screen shots that are not dated. They showed the internal documents and these were updates she he she gave to Sam Bankmanfried. She said here are the financials and they are written clearly and she shared this with him. He would have known about it. A lot of evidence of the conversations is based on her word. They dont exist anymore. The messages are gone. Kate rooney, looking forward to hearing more. Thank you. Squawk box is coming back right after this. The lor barista coffee and espresso system. Now brewing peets coffee. 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. Only the new sleep number smart beds let you both sleep at your ideal level of comfort. Fund investment objectives, risks, charges, expenses your sleep number setting. And now, all of our new next gen smart beds have temperature benefits. The allnew queen sleep number® c2 smart bed is only 880. Sleep next level. Shop now only at sleep number. Welcome back, everybody. The federal trade commissions antitrust lawsuit accusing amazon for being anticompetitive is rolling along. However, our next guest argues that the ftc faces an uphill battle when it comes with limiting Funding Limited funding and a staff that is spread very thin. Joining us now is alex cantrowitz, cnbc contributor. You think they just dont have the big guns . The government is huge. They can have any amount of resources and they can hound you for forever because it is not on their dime. Im just going to disagree with you off the bat here. The government is on track to spend more than 6 trillion this year. Only 334 million of that is going to the ftc. Think about how much money amazon makes. Amazon makes that in the afternoon, they have more than 6 billion of profit last quarter. So, if you think about, like, is it a david and goliath situation . Yeah. Look at the u. S. Government versus amazon, maybe, but were talking about a Single Agency that is prosecuting this case, and when you think about the agencys budget, which is designated by congress, just doesnt come close to the amount of resources that amazon has. I can understand that. Maybe not thinking that theyre going to be up to the task of legally beating the other side. But when lina khan wants to come after you, when the ftc wants to come after you, they can slow down again and again and again and make it so frustrating and drag it out for a longer period of time. Why he was forced to take his o eye off things and lost some focus at microsoft when the doj was going after him. Absolutely. They have a lot of time and time might be on amazons side here because as we start spending more time with this case, amazon can make more and more arguments that the Actual Foundation of the case is not what the ftc alleges. For instance, the ftc is saying amazon has this monopoly in online superstores. Now were seeing this chinese ecommerce apps and websites like temu come up and theyre not in the same ballpark, not even close. I saw new data from octopia that says 40 of amazon users have been on temu in august. Thats not an insignificant number. You think about what it takes to prove monopoly, youre going to have a much harder case. Is it going to be annoying for amazon . Absolutely. Is it going to be this earthshattering case that a lot of people expected when lina khan into the ftc in 2021 . I dont think thats whats going to happen. You think shes taken on too many Different Cases and going after too many things and as a result none of them will be done well . Definitely. I was talking to ftc, a former commissioner, he called this amazon case a bet the agency case, and you have too many bet the agency cases and then 430 million budget, which is okay, a lot of money, but nothing compared to what amazon has and when you start spreading that across so many Different Cases, you take your most experienced lawyers and you put them some on this case, some on that case and what are you left with, you got rookies coming up against amazon, just not a recipe for success. So, amazon to this point basically said were not going to make any concessions . You think they maintain that posture, theyll say, yeah, fight this to the end . Depends what the concessions are. If they are left with a small amount that they have to do to get the ftc off their back, i can see them doing that. They made concessions in other areas. But i think at the start of this case, they see whats going on and they know theyre in a position of strength and not going to give up their hand at this point. Of all the cases that you watch with the ftc right now, which one do you think is the strongest . Of all the people you talked to, which is the one they think the ftc has the best case with . Thats a good question. I mean, i think, you know, theyre going to struggle against meta and amazon for sure there are things theyre doing that are having an impact. They brought this complaint against amazon, amazon makes it so difficult to cancel prime. And that seems like small potatoes. Like the dumbest of the things they have come up against. You ask the strongest case, it is the small potatoes things that are having an impact. It is much easier to cancel prime now than it was before the complaint. Unfortunately for the ftc, it is the small wins. Thats what were used to. Maybe thats what the u. S. Government intends. Theyre funded by congress. Doesnt amazon and other Companies May be counting down the clock thinking if there is a change in the election next year, they can deal with a Different Administration and will it be any different . They think theyre going to outlast lina khan and theyre tnkably right. Has for coming in. Thanks for having me. Squawk box will be right back. This cnbc program is sponsored by truist securities. Experience expertise execution. Meet gold bond daily healing. A powerhouse lotion that moisturizes, heals, and smooths dry skin. With 7 moisturizers 3 vitamins. And. New gold bond healing sensitive. Clinically shown to heal moisturize dry, sensitive skin. Gold bond. Ever since she was a little ki, all maria wanted to do was bak. Im maria alvarez, owner of marias cakes. And im axel, proud 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. Good morning. Futures in the green so far. The countdown is on for the next big report on inflation. The Consumer Price index. Well get that data, what will it mean for the fed . Well discuss all of that and more. Shares of Delta Airlines on the move after reporting results. We have an exclusive interview with ed bastian just ahead. And it sounds like a movie caper drama, but it is real life. Amc ceo adam aaron found himself in the middle of a blackmail plot. Spoilers just ahead on that story as the second hour of squawk box begins right now. Good morning and welcome back to squawk box right here on cnbc live from the Nasdaq Market site in times square. Im Andrew Ross Sorkin with becky quick. Joe is off today. We got so much going on, though. U. S. Equity futures at this hour, some green on the screen. The dow up 111 points. Nasdaq up 63 points. S p up about 16 points. Lets show you treasuries. They have been the story of i was going to say the day, the week, the month, the year. Tenyear, 4. 567. Walgreens releasing its quarterly results. Straight over to bertha koocoom who joins us now with those numbers. Walgreens earnings 67 cents a share, 2 cents below consensus. The second straight quarterly miss. Even as revenues once again beat at 35. 4 billion. International, including boots uk saw double digit sales growth, in line. U. S. Pharmacy sales beat driven by higher brand drug prices, which offset lower Covid Vaccine volumes and front of store comps that were lower. The u. S. Healthcare unit saw sales up 19 , driven by the shields and care centric acquisitions. But topline actually missed expectations. Ginger graham says in the release that the Company Plans about a billion dollars in cost reductions and also plans to cut expenditures by 600 million over the next two quarters. Guidance is going to be lower for fiscal 2024. 320 to 350 a share, below consensus. A kitchen sink quarter here as new Ceo Tim Wentworth will start on october 23rd. Becky . Bertha, thank you very much. We have seen that stock down pretty significantly, down about 42 year to date. Expectations for ty have a lot to rein in the costs. Think about the fact theyre going to be lapping now, you know, a lot of those big payments as well for opioid litigation. That also ate into operating profits. So, they are trying to sort of right size their costs. But when it comes to labor, theyre going to have to really look at that. They cant afford to at this point make cuts on that end. Theyre talking more about the health unit, where theyre trying to rein in the costs to get that to break even. Their expectation is theyll get that to break even sometime this year, fiscal 2024. Bertha, thanks. Right now over to dom chu, hes got a look at this mornings stocks to watch. Dom, good morning. We got an interesting theme here, becky. The stocks to watch this morning is going to focus on the consumer. Starting with the drop right now and shares of dominos pizza, lower on thinner trading volumes. Now swinging to upside, gain of just about. 1 . Very thin volumes. The pizza chain reported mix ed results, but revenues were slightly below expectations. Sales growth at established u. S. Restaurant locations at same store sales growth actually fell by. 6 . So were seeing a more volatile trade, albeit on thinner volumes. Dominos down 2. 5 . You see where things are swinging now. On the Big Box Store side of things, target, higher by around 3 , roughly 8,000 shares of volume. This retailer is getting upgraded to buy over at bank of america. It was neutral. The target price goes up to 135 bucks, it was 120 before. They like the riskreward at current levels given the pullback we have seen. Certainly over the course of the last couple of years and right now here just in the last four or five months or so. They expect profit margin upside opportunities and better customer traffic trends in the coming months and quarters. Target shares getting a bit of a boost on that move by bank of america. And well cap off our consumer check with a look at a couple of brand name companies. Clorox, thinly traded, kimberlyclark as well, higher by half a percent. Couple hundred shares of volume so far. Both companies are getting upgraded to market perform from underperform over at bernstein. A valuation call after both shares of underperformed the Broader Market in the industry. Becky, keep an eye on the consumer focused ops in the trade this morning. Back over to you. Dom, clorox is in a different situation than kimberlyclark. They have all the issues with the cybersecurity breach as well. Thats part of the reason it has been under so much pressure when they said that is going to continue to be an issue. It is. It will be an issue. But the valuations that we have seen so far have been reflecting that right now. Kimberlyclark for sure has not had the kind of supply chain issues that rippled out of the cybersecurity breach and issues that clorox has had. But more broadly, i think, speaking what youre seeing is a Consumer Trend that has been discounted quite a bit based upon these consumer staple stocks. Many of them outperformed. The bernstein analysts say this is not a broader call, just by every staple stock outperforming. They this there is relative value in certain ones and this is two of them given where their stocks have fallen in relation to the rest of the industry. Dom, thank you. As the markets await the september inflation report, in just 90 minutes time, a little less than that, investors are pondering whether the fed at long last might finally be done. Senior economics reporter Steve Liesman joins us on this question. What do you think, steve . Well, you know, wi was thinking about the phrase, ladies and gentlemen this is your pilot and we have reached cruising altitude. The fed hasnt said that yet, but the minutes from september meeting suggest the fed is on a tentative hold from hiking rates. Thats the cruising altitude. The minutes said yesterday, several participants commented that with the policy rate likely at or near its peak, the focus of Monetary Policy decisions and communication should shift from how high the rates, how long to hold the policy rate at restrictive levels. They also noted more concern about two sided risk, doing too much and doing too little. And while minutes showed most fed officials three weeks ago wanted to hike again, comments since then have suggested that that may no longer be the case. They emphasize the surge in treasury yields doing the work for the fed and the need to maintain a restrictive rate, not hike further. As a result, markets have priced in a very slim chance of a november hike and even reduced the chance for a december hike, just 10 for november and under 30 for december. All those numbers have been quite a bit higher in the past. The feds pivot, however, is unstable and highly dependent on data, like todays cpi. Lets see what were looking for here. 0. 3 down from 0. 6 in august. That will bring down the headline number by a tick to 3. 6, hopefully en route to 3 over time here. The core unchanged. That will bring down the year over year rate to 4. 1 . Well look at the annualized rate. Most fed officials expect the economy to slow and inflation to come down gradually over the next several months. But they now seem willing to tolerate some ups and downs to get to that 2 target over time. Amid all the the comments, none of the most hawkish fed officials ive heard have strongly argued that the market is making a mistake to price out the last hike. And, andrew, maybe now were going to start debating the cuts, but i think thats too soon just yet. Thats right, steve. Thanks so much for that. Meantime, we have a couple of other very big headlines we want to bring you out of israel this morning. The siege of gaza will not be lifted until the countrys hostages taken by hamas are returned home. U. S. Secretary of state Antony Blinken arrived in tel aviv, meeting today with Prime Minister benjamin netanyahu. Separately the Palestinian Liberation Organization posting on x that blinken will meet with the Palestinian Authority president tomorrow. So were going to be watching the number of these meetings taking place over the next 24 hours. Meanwhile, back here at home, mark rowan, the ceo of Apollo Global management and a graduate of the university of pennsylvania also the chairman of the board of advisers of penns Wharton Business School sending a very provocative letter urging alumni to halt donations to the school until two key leaders resign. At issue the university hosted an event called the palestine rights literature festival, which rowan said featured well known antisemites and forementors of hate and racism. In a letter he says hes calling on donors to close their checkbooks until the universitys president , Elizabeth Mcgill and the board of Trustees Chair scott back, step down from their roles. He said he saw sickening parallels between events at penn and harvard where some students blamed israel after Hamas Terrorists killed more than 1,000 people last weekend. The university did not respond to the demand. Were going to be talking about this live with marc rowan, sitting at our table this morning, to discuss the letter that he sent, the calls he has been making on this very issue. Looking forward to thatting conversation and much more. When we come back, Delta Airlines reporting results in the last hour. Stock right now up about by 1. 75 , even though the company said that is cash flow is going to be lower than anticipated because of higher fuel costs and lowered its earnings expectations for the full year to the lower end of the earlier guidance they have given. Still looking like a strong performer, relative to the rest of the group. The Ceo Ed Bastian will join us after this break in an exclusive interview. Amc ceo adam aaron in the middle of a blackmailing scheme and to extort hundreds of thousands of dollars from him. More details of that sdid or story coming up. Squawk box will be right back. Stocks to watch is sponsored by voya, well planned, well invested, well protected. Salad. Thank you like your Workplace Benefits and retirement savings. With voya, considering all your financial choices together. Can help you make smarter decisions. For a more confident financial future. Hey, a tandem bicycle. You cant do that by yourself. Voya. Well planned. Well invested. Well protected. Cmon, were right there. Cmon baby. Voya. Well planned. 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. Quarterly results in the last hour. Phil lebeau joins us now with a special guest. Hi, phil. Becky, let me bring in ed bastian, ceo of delta. We were talking as we were going over the numbers, you beat on the bottom line. And your stock is moving higher here. Becky brought up an interesting point. Some are looking at the airlines and saying, yeah, but youre narrowing your fwiguidance for full year, you see it differently. Right. We had a strong quarter. Really great quarter. Im pleased with the progress our team is making over the course of this last few months. It has been a hard quarter. The volatility youve seen, the environment, fuel prices up, the demand has been really strong. Another recordbreaking set of revenues for the Third Quarter, which drove a 35 increase in profits. I dont think that was disappointing. I understand the fact that fuel prices have moved up. We had to narrow the guide down to the lower end of the range. But we started our year expecting and the guidance we gave was for our eps to be between 5 and 6 a share as we got to the middle of the year, fuel prices have come way off, we updated it to 6 to 7. Fuel prices have gone back up again. Were now in the lower end of the 6 range. Were at the top end of the guidance we gave at the start of the year. This game is a long game in the airline business. You have to kind of play for the longterm. We dont look at the fuel prices quarter to quarter and beat our brains about it. We know we have to recalibrate and the fuel prices have to find their way into pricing. And thats what were working on doing. You know how people will look at headlines. Theyll say, look, they narrowed their guidance, are they worried about the consumer . What are you seeing in terms of consumer now in Fourth Quarter demand . We had recordbreaking revenues in the Third Quarter. Revenues were up 13 . Were expecting revenues to be up 10 in the Fourth Quarter. In the industry, we do see it in certain parts of our industry. On the lower fare side of the business. But were a very different carrier than those. We got premium, which is continuing to drive the strength of the business. We have international which is gang busters. International revenues were up 35 themselves in the quarter. We got a tremendous amount of business that is starting to return. We talked about post labor day we would see a tick up. Were seeing a lot of it starting to come back. How much is that Corporate Travel coming back . Coming back meaningfully. At least 10 more points of share have come back to us in the last 30 to 40 days. And is that primarily the traditional large corporations or smaller business continuing to expand. Small businesses always has been growing. It is the traditional businesses. It being driven by the return to office mandates. Got to ask you about whats happening over in israel right now. You suspended your flights into tel aviv through the end of october. Any concern that this is there is a spillover effect and it may make people think twice about International Travel. We havent seen it at this point. I think it is way too early to draw any conclusions there. It is a horrific situation and tragedy that is unfolding in front of our eyes. We have suspended our flights through the end of october and were going to monitor it very closely. The sky miles backlash. You said at the rotary club here in atlanta after you announced the change to the program, okay, ive heard from our members. What changes will you have to make to modify making it tougher for people to get the benefits in sky miles . I did say that we in retrospect we went a bit too far and were reconsidering and rethinking how do this. We received a lot of feedback, a tremendous amount of feedback. Two things about the feedback that ive been paying really close attention to that ive seen that has been consistent. First, people love delta. They love the brand. They love their loyalty. And they were hurt by some of the significance of the change, too many changes all at one time. Were going to have to recalibrate on some of that. Second thing i heard was that almost all virtually said i understand youre going to have to make some changes because you have more premium customers than premium assets. We have to find the best way to accommodate getting the Service Levels to where we need to be at the same time making these modifications where people can understand them better. You said in the past, if everyone is special, nobody is special. Thats true. I have to ask you about inflation. The data that came out yesterday, it is still stubborn, still there. Any concerns that starts to weigh on the consumer . Well, were seeing it in our business, oil prices up, maintenance costs are up, our labor costs are up. At some point youre going to see a knock on effect. Our consumer is more on the premium end of the spectrum. Our consumers are healthy. Our consumers are continuing to prioritize travel as one of their main discretionary drivers. And it is not just travel. It is hospitality. It is entertainment. And everything in that space, that service space, continues to break records. I see that trend continuing. Ed bastian, ceo of delta, not going to talk about the braves. Next time . Next time talk about the braves. Well do it tonight. Im sorry, can i ask one quick question of ed . Sure, go ahead. Hes got an ear piece. Ask him. Have you seen any slowdown in terms of International Travel since what happened . Is there any pullback at all . I know the consumer looks strong. You mentioned theyre continuing to prioritize travel, but your bookings that you see out for the next couple of months, has anything slowed down . We havent, becky. As you can appreciate in the fall, excuse me, a little backlash in my ear, in the fall we have a seasonal reduction in terms of the real volume of international. We pulled the schedule down in normal times. But the overall booking levels stayed really strong. Were expecting our revenues to grow 10 system wide in the Fourth Quarter. Were not seeing any impact. Okay. Ed, thank you very much. All right, guys. Thank you. Well send it back you to guys. Okay, thanks a lot, phil. Coming up, an extortion scam at the box office. Amc Ceo Adam Aron part of a blackmail plot. Aron responding. Well bring you the story to the small screen with liz hoffman who broke it. Squawk box right after this. Time now for todays aflac trivia question. According to the usda, how many pumpkins are produced in the u. S. Every year . The answerhecnssqwk wn bc ua box continues. H saban, this goe took over our office. And hes using it to send out medical bills. 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A new report from semafor saying amc Ceo Adam Aron was the victim of a blackmail bloplot in 2022. The report says aron never compromised Company Information, didnt pay the blackmail, and reported the events to the fbi earlier this summer. A bronx woman pleaded guilty to scamming victim number one, thats how i believe some of this case about, well talk about that, who semafor says was adam aron. Liz hoffman joins us now with more. Maybe it is a movie. Or a tv show. What happened here . I mean, it is actually sort of a simple story, which is you know about 15 months ago, an indictment, a federal indictment in Southern District, that they charged this woman with essentially catfishing and blackmailing an unnamed ceo and there was a couple of days where i was talking about it and it went away and turns out it was adam aron who at the time was in the middle of this crazy meme ride, really had become a very public figure and really overexposed himself. Adam is married. Yes. There is two sides to this. There is the bad news, which is he was bribed. And then there is the other news which is also not great about what he was doing. Right. I should say i dont care about peoples personal conduct, generally speaking. And i said very clearly in the story he did not you know it did not seem to compromise the company in any way, but, like, this is a ceo, look, a lot of ceos have good judgment at the end of the day and this is a ceo that demonstrated questionable judgment on lots of occasions. Some are goofy. He did an interview with no pants on, once. Some are serious. He spent 28 million of shareholders money buying a stake in a teetering gold mine. A mining company. Yeah. And really leaned into this meme stock ride in a way that is probably why amc didnt go bankrupt but sold 40 million of stock into this craze. So, i think thats the backdrop here and this is a ceo that kind of bears watching. I want to continue this, but i want to read you, he put out a statement, as you saw in the last hour or so, speaking out about that blackmail plot in a long post. He posted it on x, formerly twitter, saying in part, quote, unfortunately last year i became the victim of an elaborate criminal extortion by a third party who was unknown to me related to false allegations about my personal life. Rather than give in to the blackmail, i personally engaged counsel and other professional advisers and reported the matter to Law Enforcement. I did so knowing i risked personal embarrassment, but with my access to resources if i did not stand up against blackmail, who could, he also writes, i was asked by Law Enforcement to keep this matter confidential during their investigation and Subsequent Court case. Shortly after the extortionists july 2023 sentencing i informed the board of directors which thoroughly reviewed the events with independent outside counsel. This was entirely a personal matter and he says the matter is now closed. So he told the board. He told the board, told the board after, but sounds like after because he was asked by Law Enforcement not to tell them earlier. Thats my understanding as of yesterday, he was asked by the fbi to not say anything, understandable and he didnt. When the matter was resolved this summer, he told them, they looked into it and came to the conclusion it was not a matter that required disclosure to shareholders. Wasnt a company issue. So as a company issue, this goes to the judgment story, he has made a number of decisions which people have found questionable. At the same time, the truth is, and dont know where you think directionally this company is going, at a time during the pandemic when people thought this company was going to fail, i mean, and fail hard, he has managed through all sorts of different ways to continue to raise money. Some people questioned how he raised that money and whether hes done that on the backs of shareholders who dont understand what is happening and all of that. But how do you sort of, through that prism, see all of this . At a normal company, this is very concerning and troubling. I dont know. In the same way that, like, elon musk in a weird way has been like a very good steward of tesla, his antics have worked to that companys advantage, twitter probably less so, adam a aron, whatever you want to call him, his unorthodoxy is probably the reason why amc hasnt gone bankrupt. He was able to activate this crowd of Retail Investors and sell them a ton of stock and raise a ton of money. I dont know. This is a weird one. You think the board is more reliant on his track record and i think it is tough to change courses here. Right . He made it this far, you know, they did an equity offer a couple of weeks ago that really riled up the retail base. Just have been so massively diluted and the stock is down 95 . The truth is, funny, everyone has mixed views about this. In a way i sort of admire all of the craziness because this company, without diluting the shareholders, would not exist at this point. You couldnt pay back these bonds quick enough, the loans. So the only way you would ever do this is to do sort of what has happened here and if youre planning some kind of very long game, thats what it is. It is just not a great long game if youre a shareholder. Nobody wants to see blackmailers succeed. Thats a separate the blackmailer piece is independent. The same i dont know, i dont have a dog in this fight, but i think the same impulse that sort of probably got him in trouble here is kind of the reason that he did all the things that worked. Most ceos dont do youtube interviews with no pants on, but his fan base loved it. And they all bought a bunch of stock. I dont know. This is a strange one. Liz, it is a he is a victim. Yeais statement is it was false allegations. There is a slightly complicated subplot there that if you want to spend time at Southern District like i did, you can read about it. Come back and well do a longer thing, like a streaming show about all the well do it together and you can explain what actually happened. A podcast. May not be a family program, i dont know. Liz, thank you. We should mention, by the way, taylor swift, the film, right, tomorrow, premiere, last night, a huge it is a huge not that this is going to overshadow that, hard for that, but this is all happening at the same time. It is a lot. Thanks, liz. Thanks for having me. When we come back, former fed vice chairman Roger Ferguson on his inflation expectations. Plus, can birkenstock outrun nike in a race for investors . Jon fortt tries that one on for size in the next half hour. And super agent rich paul, ceo of Klutch Sports Group on his strategy to get the most for his high profile clients like lebron james. 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Right now we want to bring in Roger Ferguson, the vice chairman of the business counsel and trusty at the Conference Board. Hes also a former vice chairman of the Federal Reserve and a cnbc contributor and, roger, we heard all the commentary from the fomc Meeting Minutes yesterday that were released. It sounded like a lot of the officials at the table thought, yeah, we could raise rates one more time. But it definitely feels like the narrative has changed in the last several weeks, given how much we have seen a rise in Interest Rates. You think theyre going to do anything at this next meeting . I think im with your analysis, which is i read the minutes and they certainly suggested that the vast majority of the members and participants think that the rate is in restrictive territory and there seemed to be a notice of the balances being much more twosided. So, that plus fed commentary suggests to me and many others theyre unlikely to move in the november meeting. And does that is that smudge subject to change as well if we get a super hot price index today . I think it is subject to change. Two reasons, one is they said theyre data dependent. Two, there is a little bit of a surprise in the ppi, so people are set up for maybe another possibility of a surprise. And, third, lets not forget that the forecast that they had, the vast majority of them did expect one more hike. And so there are plenty of reasons why should there be a surprise in the cpi, you know, this meeting could be a live meeting. I dont think we should be at all complacent about the possibility that the fed is done. It may be one more and then done. How does war in israel change that potential perspective, though . How do they view all of that . I would guess they want to be even maybe a little more cautious as they see how things play out . I think there is a need to be a bit more cautious. There might be some sectors that are affected in terms of supply chain. On the other side, we see as we saw the last time around that Energy Prices spiking can have an impact on the ppi and ultimately feed into pricing that consumers face. And you heard from i think a ceo of one of the airlines talking about fuel prices and what that might mean for pricing. And so i think, you know, the story in israel creates greater uncertainty, but an uncertainty on both sides as far as the central bank might be concerned here in the u. S. We havent talked to you in a little while. What have you thought about the huge runup in yields . We have come back down a little bit, but it was an untethered move, something that was much more than what the fed itself was directing. Is that a reason for concern, the idea things are untethered there are movements in the market or a good thing because the fed says the market has been doing its job for us . Certainly heard from many of the fed speakers that the market has been doing its job. Youve heard a number of them say basically they dont know exactly how much, but tightening the market is the equivalent of a tightening move by the fed itself. I think the movement reflects the number of things, first real understanding of the higher for longer narrative. I think that played in after the last meeting. Certainly a recognition that supply and demand dynamics, ie the deficit situation here in the u. S. Is not likely to improve anytime soon. But also i would say, you know, we have gotten used to relatively low rates by historical standards for the last decade or so and this might be a reflection of a regime change toward rates that are much more normal relative to short end and long end of the curve. I am not in the position where i would say this is really worrisome or things are totally untethered. It moved quickly, but it is a reflection of some underlying realities becoming more evident in the market. So, the Business Council and the Conference Board released their Fourth Quarter ceo confidence survey. It showed that the ceos are feeling a little gloomier at the beginning of the Fourth Quarter than they were at the beginning of the Third Quarter. How about you . How are you feeling . Let me explain what they were seeing, because im the vice chairman in charge of the surveys. What the ceos are telling us, slightly more gloomy, still in the territory of expecting a possible recession. And i think what is driving it is two or three things they told us. One, labor markets are still very tight. Two, many of them do continue or expect to raise wages in the range of 3 , which may be a little higher. And i think they were also seeing what we heard from other ceos anecdotally, these b borrowing costs have gone up, at the same time it was taking place equity valuations were down. So inflation, in the pipeline, still exists for many of the ceos. And i would say thats all consistent with the fed story, the story we have been hearing, inflation has not gone away completely. It is moving in the direction the fed wants, but the fed and i think ceos are both watching this situation as it unfolds. The final thing the ceos told us is there is still a lot of risk, cyberrisk and geopolitical risk seemed to be weighing on them as well. I think the reason for them to be somewhat more pessimistic, but still driving the Companies Towards growth. Roger, thank you. We always appreciate your time and we will check in with you again soon. Thank you. Coming up on the other side of this, which footwear stock has more room to run . Cant really run in birkenstocks, though. Birkenstocks, which just walked into the game or nike which has been stumbling since hitting an all time high. Jon fortt will break it down for us next. Theres challenges, and i love overcoming challenges. When better money habits® content first started coming out, it expanded what i could do for Special Olympics athletes with developmental needs. Thousands of bank of america employees like scott spend countless hours volunteering to teach people how to reach their financial goals. It felt good. It felt like i could take on the whole world. Welcome back to squawk box. Should Company Birkenstock stumbling in the first day of trade after the ipo triced at 46. Shares fell 12. 5 . Nike is losing half of its value since the highs two years ago. Which shoe stock is more likely to go on a run or a walk if youre in birkenstocks from here . Birkenstocks or nike . Jon fortt is here to tell us which one it is. Good morning, andrew. What is the better bet, my friend . Bet on birkenstock. The company is well positioned right now and the first about the company. It is german, founded by the birkenstock family in 1774, known as a walking shoe and best known designs are sandals. Post pandemic market wear consumers have favored experiences over products, birkenstocks have been a shiny exception. Sales grew 71 from 2020 to 2022 as Gross Profit Margins grew from 55 to 60 . Two out of five birkenstock customers make more than 100,000 a year and seven out of ten are women. The company has a massive opportunity ahead, with minimal share in asia. Nike, meanwhile, has significant exposure to the uneven china market and has been battling bloated inventory globally, facing a tougher domestic economy, it is tougher to argue that nike has much running room compared to birkenstock stock. Andrew . Hold on, birkenstock really, has it proven it can sustain this Global Growth . That is always the big question. It has luxury niche, but still a niche. I think about canada goose. Ca canada goose. Yes. On the other hand, birkenstock is a risky bet compared to nike. Birkenstock has done well moving to a luxury womens brand. The next stage will be tougher. Birkenstock has one woman on the board who joined last month, all the named executives are men also. It does nearly all its manufacturing in germany, sourcing materials for its uppers in europe. The company does the majority of its sales in the americas, selling 72 of its shoes to women and wants to expand in asia . That makes monolithic leadership odd. Birkenstock has 2 billion in debt. And an unusually Risky Business model where it owns its manufacturing and it stores expensive sandal inventory all winter long. All this as it is arguing that it should be the third most valuable shoecentered brand behind nike and dockers. Nike has the jordan brand, more diverse Leadership Team and board and economic headwinds are easing for nike. Bet on the swoosh. Okay, but, so what is the moment of truth here for birkenstock . I think it might be can they have a jordan moment . A marketing breakout that takes them beyond that kind of niche group that they have been able to cultivate . I dont know why they dont have gwyneth paltrow, she had a big birkenstock thing a couple of decades ago. Their original break into the north American Market back in the late 60s, early 70s was led by a female distributor. So, with all the social media influencers, there are ways, perhaps, for them to break in. But they i dont know they have done it yet. Have they come up with new product . You think it is a celebrity influencer story . They have silhouettes, different designs based on they got boots now. A lot of different stuff. But mostly their sales are a lot of those traditional sandal types, a couple of closed toe designs. Okay. Jordan moment. You think that jordan moment is coming . It could. Who are they going to get . Well, but if you want to examine this argument, of course, you can do that in the on the other hand newsletter. There it is. Or you can type it in, cnbc. Com otoh, easy access to the weekly poll on linkedin. Weigh in, let me know which side you agree with more. Results from the most recent topic, is amazon abusing monopoly power in Online Retail . You think i tipped my hand what i thought. The viewers, 48 said yes. Amazon is abusing monopoly power. 52 said no. So, very close. Closest yet. Okay. You want to think how hot it is, robert frank told us this morning it has been around since the 1700s, which is insane. Yeah. Got popular in the i think of birkenstocks, i think of that hippie and in the 90s, they got popular. Theyre popular now with kids. If it is a fad that keeps coming back, that can work. Look at crocs. It could be a fad. Then you have five or ten year spell where it is not cool and then what do you do . I dont know. Buy another shoe brand, they could diversify. Thanks, jon. When we come back, the super agent that lands billions of dollars for his clients, including lebron james. Rich paul, who is the founder and ceo of Klutch Sports Group will tell us about his success and making his own luck. Squawk box will be right back. That first time you take a step back and see everything youve accomplished. I made that. With your very own online store. I sold that. And you can manage it all in one place. I built this. And it was easy with godaddy. I am doing this. With a partner that puts you first. Start for free at godaddy. Com sell 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. Welcome back, everybody. Our next guest is the superagent to some of the biggest names in sports. He has negotiated over 4 billion in deals for his allstar clients. Those clients include lebron james, Odell Beckham jr. , trey young, many others. Joining us is rich paul, the founder and ceo of Klutch Sports Group. His new memoir called lucky me. In it, paul outlines his background in gambling. I sit as cohead of sports, i started Klutch Sports Group, built it and done over 4 billion in contracts as well as im on the board of uta, on the board of live nation, i sit in these rooms today as a young man who comes from a different background, but more importantly, as an example to the youth, despite wherever you come from, this is a gift to them. Everyone can share and experience whether it is through a sentence, a chapter, several chapters in lucky me. I want it probto be impactful. I want it to have a perception and story of perseverance. And what i can say for me, my dad was so vitle al to me growi up. So i was extremely lucky in that regard. When you actually read the book, youll understand that title can be very sarcastic because my mom did struggle. I had to struggle. I would go six, seven, eight months straight without ever seeing my mom as a fourth grader, fifth grader, you know. So, that could be tough. And there is plenty of kids out there today that is probably going through the same challenges, without having anyone here or care about whats going on in their life. I want them to know to continue to push because as you become older and able to do things for yourself, youre just as genius as anybody. If you take these kids, and you put them in Harvard Business school, put them in stanford, they can become the next Mark Zuckerberg or whomever they want to be. So i truly believe that and they can become the next rich paul. And i love the rules that you come through with this, things like take care of your people, iron your clothes, neutralize your anger. You give all of these sort of rules in your book. Survival those are survival rules. Yeah. Theyre all things that make perfect sense. Rich, i wonder if you can comment on what is taking place in College Sports right now. College athletics, with the nil, the rules of name, image and likeness, how has that changed things in terms of what it means for the athletes themselves, the people you represent . It changed a lot. We have to be very careful with this because the focus was young men and women should be paid based upon what we saw, the colleges making from their name, image and like nness. That is great and that is important. What we cant forget is the essence. So now if we only focus on the finance of it, you see kids transferring and seeing everything being about who can pay the nil, money and how much money they can pay me and then when you get people involved, it becomes a were trying to get rich thing. If youre a College Quarterback and you stay for four years or five yeernz not going to be a pro for, you know, you probably wont be a pro at a high level, it might be best for you to stay in college as long as you can and make nil money. But, you just have to be really careful with it. I think there is going to be an adjustment to this in some capacity because as you can see, the colleges, coaches are being getting very frustrated. It is becoming the wild, wild west. Im all for young men and women making money through their name, image and likeness, but the most important thing is it pertains to nil is the protection of your name, image and likeness. Rich, thank you very much for joining us. Rich paul, again. And the book is called lucky me. Appreciate your time. Thankou y, guys. Thank you. Squawk box will be right back. Meet gold bond daily healing. A powerhouse lotion that moisturizes, heals, and smooths dry skin. With 7 moisturizers 3 vitamins. And. New gold bond healing sensitive. Clinically shown to heal moisturize dry, sensitive skin. Gold bond. He said he would be nominating him on the floor. Listen to what he told reporters yesterday. It is important that we are back functioning as house of representatives, steve is the guy for that. I have offered to give the nominee speech for him when we get back in session. Many members who voted for jordan are ready to back scalise , except for a dozen holdouts. I feel like that is the story of this congress with you tiny margins of majority. About a dozen have come out and said they will not vote for scalise or they have concerns about backing him. Several lawmakers including low bulbar so that scalise is a continuation under the status quo under mccarthy and that americans need a bigger change. According to the house rules, until there is a House Speaker nothing can be done per that means no addressing the war in israel and no passing bills to fund the government to avoid the upcoming shutdown in mid november. Any ideas about what they would want or expect lawmakers to get in line . You have to figure out what everyone is trying to extract . That is what scalise is doing. He met with a number of holdouts yesterday trying to chat with them about what they want and what they need. Really concerns are all over the board. Some are concerned that he was mccarthys number two. There is also concerns about his health, scalise has been diagnosed with blood cancer that he is battling. There are a number of concerns out there. I think we will see scalise trying to work on those holdouts to see if there is a way to get to the magic number of 217, if he cant, republicans wonder where they go next. It seems like they are completely gridlocked and there is not a path forward. Interest rates will be in focus at aids, 30 eastern time when we get the september cpi report. The cpi will be the number one factor to determine if the fed raises or hikes next month. Joining us now is chief fixed income strategist. What do you expect the number to be . And how do you expect the fed to think about this . We dont publish shortterm Economic Data forecast. The number is right on somewhere around point 20 to. 30 of a percent per if you look at the over the past three months which is the inflation metric that the fed is attempting to target, it has run over a touch 2 run rate. That does not provide incentive for further tightening especially when we are feeling the Economic Impact of roughly 18 months of hikes. You see, when you look farther out, do you see a rate hike in the next six months or are we going downhill . It could be across the country im not sure. There is a chance because of the way inflation data has been calculated has been set higher, particularly related to health fair healthcare inflation. We are pretty bad at measuring inflation. We measure the process and that takes years with a couple of numbers and that introduces a lot of noise. We could see a lot of reset. It might spur some talk, i do not think it will trigger further rate hikes for the next six months. What is your take on the jobs number we had on friday . Some people said hot, too hot to handle. Some look at those numbers and look at Wage Inflation which was not as hot, looked at the hourly hours worked and did not see that coming down. Maybe it is not so hot. What do you think . I think it is a continuation of one more data point of remarkably strong Economic Growth. Normally this point in the cycle, 18 months after the fed starts tightening and tightening dramatically, you would expect Economic Activity to deteriorate. In the Third Quarter, growth appears to have been pretty strong and job status suggest that it continues to be strong. What i attribute this to is a growing chance, far from uncertainty, this is not a prediction, a growing chance that the u. S. Economy is entering into a productivity room that could have Economic Growth higher for longer than we would expect. Lets go back to the productivity boom idea. What is the true sign and when would you know . This has become en vogue the last couple of months, the godfather productivity economic said productivity is evident everywhere but in the statistics. Productivity booms are rare, they tend to be once in a generation event, the last one was in the mid and late 90s. It is strong Economic Growth driven not by creation of jobs but other stuffs that are hard to measure. You do not know until you are a couple of years interit. Interest rates is a correlation with productivity booms. 12 months out, we are 4. 548, where do you think it sits . The official position is agnostic, i know that is a copout. What does that mean . It means genuinely not sure. You just dont care, you dont know . Dont know. The Economic Conditions that i described, they can break higher from here, in that scenario we are looking at low 6 10 year treasury, not a forecast just an outcome and that scenario. Much more likely as we get a garden variety economic slowing. We appreciate your time and perspective. Agnostic. Is that just at par, it is what it is. Interesting phrase. Thank you. When we come back, september Consumer Price inflation data is the number we have been waiting for. Plus, with the promise of crypto currency for making easier payments to supporting terrorism and we will speak with an expert on how hamas has used crypto and efforts that are underway to track that flow of money. Later, an important conversation with mark rowan on critical efforts on trying to fight a surge of antisemitism on college campuses. when the day that lies ahead of me seems impossible to face a lovely day lovely day lovely day lovely day a bank that knows your business grows your business. Bmo. upbeat music awww. Awww. Awww. Nope. Constant Contact delivers the Marketing Tools your Small Business needs to keep up, excel, and grow. Constant contact. Helping the small stand tall. The wall street journal reported early this week that hamas, hezbollah and jihad received large amounts of crypto. On tuesday, Israeli Police said the country had frozen crypto accounts that were used to solicit donations for hamas with binance assisting in the process. Joining us now the head of legal and Government Affairs at trm labs, an organization that helps other organizations track cryptorelated Financial Crime. Previously, he worked as an assistant u. S. Attorney in washington prosecuting terrorism threat, finance and crypto cases, and this is something we have been watching for a very long time, but this is a reallife example. What do you know right now . What can you tell us about how much has been sent in financing to these terrorist organizations through crypto . First, yeah, thank you so much for having me. I think its important as we discuss cryptocurrency and Terror Financing that it is a very small part of a much larger sort of Terror Financing puzzle that involves networks of money exchangers and state sponsors. But crypto does play a role, and hamas was an early adopter. Really, we saw in 2019, hamas start to solicit donations in bitcoin. In 2020, the u. S. Department of justice actually seized a number of websites and about 150 cryptocurrency accounts associated with hamas, that hamas was using to raise funds. On the one hand, were seeing a lot of fundraising activity in crypto, but were also seeing really sophisticated efforts by u. S. Law enforcement, together with israeli authorities, to actually seize cryptocurrency wallet addresses and ultimately the funds back. So, a lot of success in this area as well. Thats what i would say. This is supposed to be something where the ledger tracks every single person. You would think in some ways it would eventually be easier to track down the criminals and the terrorists using that very ledger. Its really well said. I was a federal prosecutor for a long time, and i investigated cases involving networks of Shell Companies and highvalue art. There was no ability to track and trace those things on an open publicer ledger and i think thats really what has allowed successful investigations and prosecutions in the cryptocurrency space and i think well continue to see that here. I think the paradox is crypto allows terror financiers and others to move larger amounts of funds faster across border than ever before, but at the same time, Law Enforcement using tools like trm can now trace and track funds in realtime, something that we never could do in Financial Crime investigations before. In 2021, there was violence in israel and gaza. We saw fundraising increase. Were likely to see that again here, but were also likely to see a lot of successes because of the ability to track and trace funds on the blockchain. Just this week, israeli authorities announced the seizure of cryptocurrency addresses associated with hamas. Those are much longer, more complicated investigations if theyre not on the blockchain. I would say, look, i think theres a lot of ability of Law Enforcement and authorities to track and trace the flow of funds where, quite frankly, we lose those visibility is the places weve always lost visibility and that is off the blockchain, and i think well continue to have challenges there to be sure, but i think were going to continue to see hamas and other organizations attempt to raise funds in crypto, because they will attempt to raise funds in absolutely any way they can, but were also going to see successes, and i can tell you that israeli authorities, the u. S. Government, our partners that we work with around the world, are laserfocused on this issue right now. What would you say youve seen in the last several years in terms of fundraising, and what can you do about it . Do you go after the organizations receiving the funds or the people providing the funds . Weve seen a number of different organizations that are attempting to raise funds in support of hamas, and quite frankly, what we do at trm, we have a team of threat hunters who are out there identifying cryptocurrency addresses associated with these types of fundraising and then we build out, in our tool, addresses that are associated with those. That allows Law Enforcement, fbi, israeli authorities, and others to track and trace. What were doing is were out there looking for addresses wherever we can that are being used to raise funds for hamas, and were sharing that information with Law Enforcement and helping them build investigations to ensure that we can, a, seize those addresses but then take down the infrastructure. There are websites that are being used to raise funds. There are social media platforms, telegram channels, so really working in every possible way to take down the infrastructure that terrorists are using to raise funds right now. Binance gave a comment to cnbc through email that says, binance actively partners with global Law Enforcement agencies and regulators, united in the mission to combat Terror Financing. They say they use the data to pinpoint individuals addresses and beyond. I guess my question is, how helpful have binance and other exchanges been . How helpful have any of the social Media Companies been just in terms of trying to take down any of these efforts once theyre identified . Look, the overwhelming majority of cryptocurrency exchanges, particularly the ones that everyones heard of in the u. S. That are or work with u. S. Customers are very compliant. They use tools like trm. We work with most of the large exchanges in the space and they are doing compliance. They have robust compliance teams and part of compliance is responding to subpoenas from Law Enforcement, responding to requests for information, and i think the example this isnt the first time we see this example where binance has worked closely with authorities. We saw a case really just a couple weeks ago where binance had worked with Law Enforcement authorities to help take down a network. I think the problem is that this is happening in the first place, that these terror financiers are able to engage with exchanges, but exchanges are getting better, and their compliance teams and the tools they use are becoming more sophisticated but i think its really critical to ensure that we have a highly regulated system when were talking about those on and off ramps. Its one thing to raise funds in crypto. Its another to be able to use them to buy weapons, to offramp those funds, and thats where we need to ensure that regulation exists. You said hamas itself was the earliest Terror Organization to start adopting crypto . When did that happen . Thats correct. We saw fundraising around 2019 or so, really started withhamas using telegram channels. It grew to ultimately putting solicitations on their websites, and weve seen it continue. I think as we move into a digital age where wars, in part, are fought on blockchains, were going to see more and more of this type of activity, but i think the really unique qualities of blockchains, this ability to track and trace funds in realtime, is really the difference maker here. We can track and trace those funds in ways we could never before and seize them back, and were seeing u. S. Authorities do that. Were seeing israeli authorities do that, and i know that that will continue. Ari, i want to thank you for joining us this morning. Thank you so much for having me. Coming up on the other side of this, a new read on inflation. Were going to get cpi data a few minutes away and may move this market in a big way. You can get the best of squawk box on our daily podcast. Listen any time. Weve got the ceo of apollo in just a moment on a provocative and controversial letter that he sent yesterday. Well talk with him about that as well. Welcome back to squawk. Rhythm capital buying sculptor capital. Its a little bit of an odd saga. Heres a recap. Sculptor is the biggest u. S. Publicly traded hedge fund, 30 billion in assets, have agreed to a takeover deal by rhythm capital in july at 11. 15 but then Boaz Weinstein led a consortium of investors in a takeover bid. The consortiums bid was 12. 76 per share. But reportedly included language that would have given Boaz Weinstein ultimate Decisionmaking Authority over investments. Both boards unanimously approved the deal at 12 per share. Well see if someone comes back and does something else. That is a lot to follow. I told you, theres a lot of names. In hedge fund land on wall street, i hope folks who are at least living in that world understood what i was just saying. It was a lot. When we come back, its that number weve been waiting for this morning, the breaking inflation data. We will bring you the september Consumer Price index, the instant Market Reaction to that inflation number. Stay tedun. Squawk box will be right back. Ai has the power to automate, but if its using untrusted data can you trust the results . Your business doesnt just need ai, it needs the right ai for your business. Introducing watsonx a platform designed to multiply output by tailoring ai to your needs. When you watsonx your business, you can train, tune and deploy ai, all with your trusted data. Lets create the right ai for your business with watsonx. Ibm. Lets create. Welcome back to squawk box on cnbc. We are just a few seconds away from the september cpi inflation number, also initial jobless claims because, of course, it is thursday. Futures this morning have been significantly higher ahead of this. Dow futures now up by about 140 points or so. S p futures up by about 18 and the nasdaq up by 70. If you wanted to take a quick look at where the tenyear is standing ahead of all this, the dow futures right here, the tenyear has been sitting just about 4. 54 . And its dropping as if somebody thought they had the number but theyre wrong, because its hotter than expected. Cpi for the month of september headline expected up 0. 3 and many are saying if you extrapolate this number, were in the twos. Well, its up 0. 4 . Still dont see revisions up 0. 6 in the rear view mirror. Strip out the all important food and energy, which is what i was referring to with that extrapolation, it hovers at up 0. 3 . That is the second month in a row its been there. We havent had a revision yet. The prior two months were the lowest since february of 21. Its now up 0. 3 and year over year, 3. 7 . Year over year headline, 0. 1 hotter than expected, exactly as in the rear view mirror, so thats 3. 7 backtoback. The recent low water mark was in june, the lowest since march of 21. This is my favorite. Year over year core, which, by the way, hasnt been below 4 since may of 2021, is now 4. 1 , exactly as expected. However, we have made progress. It moves from 4. 3 to 4. 1 . As i said, still havent been under 4 since may of 2021, but 4. 1 on its own is the lowest level since september of 21 when we were at 4 . Lets go to initial jobless claims expected up 210,000. Darn close. 209,000. Last month, revised up 2,000 to 209,000. Backtoback 209,000. Lets look at it this way. We havent been at 250,000 since the first week in august, just to put a face on it. And continuing claims always a month in arrears actually popped a handle, expecting 1,675,000. It barely popped up above 1. 7 million. In rear view mirror, a subtle upward revision from 1. 664 manager to 1. 672 million. We havent been above 1. 7 million since the second week of august. Suffice it to say that Interest Rates have moved up a bit. If you were to look at a twoday chart, what you would find is that today, we are looking at twoyear note futures above yesterdays high yields, never dabbled below. Tenyear, on the other hand, are aiming for yesterdays highs but still havent come to it but have done some work under yesterdays lows. Should we start to trade above yesterdays highs, we could call this an outside day. Technically significant. I would Pay Attention to that dynamic. Becky, back to you. Rick, thank you very much. Again, were watching that jump right now in yields, and a little bit of pressure on what weve seen with the futures. Stock futures have given up some of their gains but youre still talking about them all in positive territory. Steve liesman joins us with more on what hes seeing with this. Steve, what do you think . Im looking over it. Obviously, you had a pop in gasoline prices, up 1. 5 , maybe a bit less than have been expected but still, thats a big number to the upside. Im looking at used cars falling 2. 5 , apparel falling 0. 8 . Looks like there was a surprise in shelter. I want to find the owners equivalent rent. That was 0. 6 . It ticked back up, which is contrary to expectations. On the other hand, we did have a decline in medical services, up 0. 3 on that and also Transportation Services were up 0. 7 with a 4. 9 increase in airline fares. That may also be passing along higher fuel costs into the ticket price there. I think this is the kind of thing that tests the markets mettle for figuring out, is the fed really done here . I think it is, and i think there is some tolerance for this kind of oscillation in the number, a bit of higher on the headline, but right in line on the year over year when it comes to services, and while im talking to you guys, i want to see the fed probabilities if they have changed at all, and they did a little for december. They remain below 10 for november and theyre up slightly above 33 . They were down below 30 before we went into the number here for december. I still think the fed is on hold here. I think theres some tolerance, but again, as i said, the data has to behave. We have to be in this situation where the fed can be confident that inflation is gradually coming down, but so far, what i have heard from fed officials, the burden of proof is on hiking again, not on holding. Okay. Steve, thanks very much. Coming up after this, you dont want to miss this. An American Business leader making an urgent call to fight growing antisemitism on college campuses, and he made a lot of news yesterday. Hes going to make some more this morning. Marc rowan is going to be joining us live after sending that letter asking penn alumni to stop giving money to that ay. Versity st tuned. Youre watching squawk box on cnbc. Im so glad we did this. Im so glad we did this. Im so glad we did this. Life is for living. Lets partner for all of it. Im so glad we did this. Edward jones this is american infrastructure, a prime target for cyberattacks. But the same aipowered security that protects all of google also defends these services for everyone who lives here. Welcome back to squawk box, everybody. The futures have come down decidedly since we got that hotterthananticipated month over month number for cpi. It came up 0. 4 versus 0. 3 in terms of expectations and immediately saw the air let itself out of the equities futures here. Dow futures had been up about 150 points or so. Now theyre up by 38. S p futures up by just one point. The nasdaq up by just one point as well. Meantime, the israelhamas war bringing new attention to the rise of antisemitism on college campuses. Its been a debate all over the country. Marc rowan urging alumni at the university of pennsylvania to halt donations until the president and chair resign. In an oped rowan wrote, he criticizes University President Elizabeth Magill and board of Trustees Chair scott bok over a palestinian Literary Festival had last month ostensibly about arts and culture. He said the gathering featured well known antisemites and fomenters of hate and racism. Magill and two other leaders released a statement saying they condemn antisemitism but support the Free Exchange of ideas. In his oped, rowan says, in our viral online world, its especially dangerous when once fringe ideologies receive a stamp of legitimacy and a cultural justification that allows hatefilled ideas to spread as acceptable alternatives. Marc rowan joins us this morning. Thank you for having me. By the way, difficult call for a place that i love for the last 40 years. Well, this is your alma mater, so lets just talk about how this came about, what was going through your head, what kind of conversations you have had that led you to write this. This is not, at the end of the day, about free speech, because i whether people like it or not, me personally, and most people, support free speech. There are always going to be racists and haters. This is about a universitycondoned conference, University Professors, university supported, and the inability of leadership to exercise any sort of moral clarity with respect to saying, this is hate. This is antisemitism, this is racism, but were going to allow it. That condemnation should not be so hard. Unfortunately, if you lack moral courage, it is hard. So, this festival took place, i believe, three weeks ago now, three or four weeks ago. Little less. Before the terrible and disgraceful attacks that took place on israel by hamas. What were you thinking then, about going public then, whether conversations you were having then, and how did that change over the past week . There has been a gathering storm around these issues. Microaggressions are condemned with extreme moral outrage, and yet violence, particularly violence against jews, antisemitism, seems to have found a place of tolerance on the campus, protected by free speech. President magill is not an antisemite. President magill is just not capable of exercising moral leadership here because she feels academic pressure, peer pressure, and its unfortunately the environment we live in on campus. Over the past two weeks, more than 4,000 of our alumni, many of our leaders, trustees, board members, have said, weve had enough and signed an open letter basically telling president magill that she was heading in the wrong direction. Whats happened next is a compounding of mistakes. Imagine telling a group of firefighters a week after 9 11 that youre sorry for their loss and then adding the word but as if youre going to explain the action of the terrorists. Thats kind of what happened on our campus. And at the same time, while protecting free speech, president magill, chairman bok have come selectively after trustees and leaders of boards, asking them to resign for exactly exercising their free speech and objecting. What have they done . Theyre asking trustees to step off the board . Absolutely. For what . To silence them. To silence them. But they asked you to step off . I was strongly encouraged to reconsider my chairmanship of the wharton board, to which i told them, no thanks. And by the way, the other three trustees of the University Said exactly the same thing. So, imagine in this moment of kind of moral preaching where people are talking about free speech and the exercise of free speech, in the background, there are three trustees and one chairman in my instant who are being asked to step off the board, all of whom signed this open letter zbdisagreeing with what the university is do i think and all four of us jewish. Have you had a conversation with scott bok . Thats what i did just before i came here, and weve agreed to disagree. And weve seen the statement that penn put out, not recently, but or in relation to your oped. Has there been any change in position at all . Absolutely none. President magill is essentially the leader of the university. Its about having a point of view but also the symbols of leadership. Symbols are really important. This weekend, while 1,200 israelis were being butchered and murdered and raped, we tweeted, as a university, about Indigenous Peoples day. President magill was posting instagrams of she and her dog out in the rain. The lack of ability to actually understand what the community was going through and the environment in which its not her fault and the environment in which she presides is actually quite toxic. This is happening at harvard. Youre seeing Larry Summers and bill ackman, who have made a number of comments about the statements that were made by some groups at harvard as relates to this and other universities as well. What do you think is happening on campus, and what do you think the pressures are or arent on leadership as it relates to this specific issue . Look, universities, at the end of the day, we think of as bastions of free speech. Thats, in theory, how they hold themselves out. The reality is not the case. We are, at penn, a bastion of preferred speech. Imagine, in the wake of george floyd, a group of professors getting together and deciding this would be a good night to hold a whiete nationalist rally. My guess is the university would have found its voice as the university, by the way, has found its voice every time it has it wanted to. Unfortunately, with respect to jews, with respect to antisemites, were not talking about arguments over a twostate solution or the Political Division of land. Were talking about hamas. Were talking about terrorists. Were talking about a penn professor outsourcing this conference to a known antisemite who then does exactly what we expect them to do. They call for ethnic cleansing. They call for rounding jews into cantons. The best we can do at the university is say, we stand for free speech . Really . When did they ask you to step down . Was this a result saying, if you dont like what were doing, leave . This is subtlety. The three trustees, they actually asked to step off the board for publicly disagreeing, going around the process, which itself is another issue. Mine was more subtle. Really encourage. Can you continue to do the job . It is, again, a sign of the moral confusion. Let me ask you. You are probably one of the wealthiest and bigger benefactors to this university. I imagine there are others you have spoken to that are saying, i dont know if we should be giving our money to this university. Youve been telling people, quite publicly, do not give money to this university. Youre now the chair of wharton. How are you thinking about those issues, and how do you think the pressure is being brought to bear, and whats going to ultimately happen . Well, it remains to be seen what ultimately will happen, but what i will say is this is tapped into a nerve. Whatever peoples dissatisfaction with how universities, in particular the university of pennsylvania, is being run, this just has made it boiled over. We already have seen 150 million that would have come to the University Move away from the university. Weve seen more than 4,000 of our most engaged alumni basically say, the university is heading in the wrong direction. Yesterday, my email and text blew up with people sending me photo copies of a 1 check to the university of pennsylvania. Sometimes, when people dont give to the university, the university can misunderstand it. Maybe we forgot. By sending them 1, theyre sending the university a very important message, and trustees are really faced with a very difficult choice. This is not president magill didnt create this problem. The question is, is she the right person to manage this problem, and most of us do not think that . Is there anything she could do to change your mind . I dont believe so. Let me ask you a slightly different question, which is, youre speaking out quite publicly on this very issue. One of the things weve seen even over the last year or two is ceos who had spoken out publicly after george floyd and many other issues decided they wanted to take a step back from making Public Comments about anything, frankly out of fear that they were saying the wrong thing or that they would be attacked as being woke or antiwoke or that, you know, the various governors of different states were going to come after them or come even after their pension money, which goes into exactly. Tell us about your thought process about this particular issue, how it relates from this issue to potentially other issues. I think theres a lot of people who, in some cases, would like to say certain things about whats happening now who arent. Thats kind of the punchline. If i tell you, yesterday was an overwhelmingly positive day from our employees, from our partners, from our limited partners, from the people we do business with, from people i dont know who literally just said, thank you. Thank you for speaking out, and of course, my response to them is, feel free to join. This is not an issue of woke or antiwoke. This is an issue of right or wrong. This is a group, hamas, that believes that the jews should be killed. Read the charter. Behind every rock, you shall seek out the jews and kill them. This is not about a political solution or disagreements over how israel has treated palestinians and the west bank and gaza. This is a group that is a terrorist group. The inability to actually say that is morally confused and bankrupt, and some have gotten it right. Look at the president of the university of florida. Hes gotten it exactly right. Actually said the truth. What basically called these are terrorists, this is not a political discussion. This is right and wrong and moral clarity. Well discuss the politics of israel and the palestinians another day, but theres no room here. And so for me, i felt very comfortably comfortable speaking out, because its morally clear. You said that this has been a long time coming. Is it just on this issue, or have you felt that there have been other areas, upenn and other universities, where you see things that you dont like, things that you think are astray . We have a climate of fear at the university of pennsylvania. The other really clarifying thing over the last few weeks is tenured professors, department heads, senior administrators reaching out and basically saying, go, marc. And of course, theyre reaching out from their private gmails or cell phones because they are afraid of being canceled. Theyre afraid of being ostracized. Theyre afraid of speaking out. We, as a university, are diverse in almost every way except for political ideology, and that creates a dangerous echo chamber in which thoughts like this and morally repugnant acts fail to be condemned because weve created space for them. Again, were very good at targeting microaggressions, but somehow, we cant summon the courage to condemn murder and violence and call it what it is, and thats essentially whats happened here. Two or three weeks ago, we had this festival. A University Professor outsourced this festival to a known antisemite. This was not a question. This is someone who speaks every day in an antisemitic tone and foments hate. The university allowed it to proceed. The university funded it. The university supported it. The university hosted it. Okay. If were a laboratory of free speech, let that take place, but summon the moral courage to say, this is hate, this is antisemitism, its repugnant to our values but as a protector of free speech, were going to let this go forward. And they wouldnt do that . Theyre unable. If you lack a kind of moral foundation, if everything is relative, if youre talking about the events of 9 11, but you need to say the word but or if youre talking about the slaying of but, you lack a certain moral clarity. At the end of the day, i think this is a very, very dangerous exercise for this university. I think its a very dangerous exercise for leadership. I think the fundraising impact of this will be thats what i was going to ask. We are we are on a business network. What do you think the Economic Impact is going to be on penn, specifically . What do you think the Economic Impact could be on harvard, for example, dealing with these issues . Ill stick close to home, the place that i have loved and supported for 40 years, and this doesnt come easy. This is a place i showed up to without money, and they took care of me. Its a place where my father died while i was a student and they took care of me. Its a place where i graduated without paying my tuition, and they allowed that. I have a lot of reasons to want to give back. I have chaired the alumni. Were just heading in the wrong direction, and trustees have a choice. We can double down and continue to do things that are not working, or we can actually stop and say, we made a mistake, and we need to provide some guidance to leadership. Do we want to be a place of objective research . Do we want to be a place of free speech . Do we want to be a place of moral clarity . These are questions trustees have never been asked. We dont have the governance mechanism in place and have not had it historically to actually do this, and the trying to dismiss trustees or pressure them to resign, for me, actually was the last straw. Anyone who believes in free speech should be outraged by whats happened here. Marc rowan, we appreciate you joining us this morning on what is a very hot topic of the moment. We do hope to have you back, have an opportunity to actually talk more about the economy as well. We do that as well. Im sure well do that. Thank you. Thank you. When we come back, a lot more on squawk box, an update on the key stocks making moves ahead of the opening bell on the back of that cpi report. Well tell you about it when squawk returns. My brother max recommended you. So my best friend sophie says youve been a huge help. At ameriprise financial, more than 9 out of 10 of our clients are likely to recommend us. Our neighbors, the garcias, love working with you. Because the advice we give is personalized, hey, john reese, jr. Hows your father doing . To help reach your goals with confidence. My sister has told me so much about you. Thats why its more than advice worth listening to. Its advice worth talking about. Ameriprise financial. This thing, its making me get an ice bath again. What do you mean . These straps are mindblowing they collect hundreds of data points like hrv and rem sleep, so you know all you need for recovery. And you are . Im an investor. In invesco qqq, a fund that gives me access to. Nasdaq 100 innovations like. Wearable training optimization tech. Uh, how long are you. Im done. Im okay. Welcome back to squawk box, everybody. Just moments ago, star witness Caroline Ellison arriving for her third day of testimony at the Sam Bankmanfried trial. Yesterday, she said bankmanfried was aware that his hedge fund was siphoning billions of dollars in customer money from his crypto exchange, ftx. We will have more trial updates throughout the day, but theres the actual video of her arrival. And a little more than half an hour to the opening bell on wall street. Dom chu joins us with a look at premarket movers. Whats happened . Weve Seen Movement since that cpi number. Absolutely and not just that. Thats the macro picture driving a lot of the tape but weve got micro stories out there. Specifically on the autos front, with regard to an expansion of the auto workers strike, now the uaw targeting a big plant for ford in kentucky. Thats responsible for a lot of heavyduty fseries pickup trucks and larger ford and lincoln suvs. 8,700 employees there have walked off the job. Ford shares right now down 2. 5 in response to that. General motors and stellantis, each lower in the session as well. Well keep an eye on whats happening with the automakers with the expansion of uaw work stoppage. Also watching an upgrade of exxonmobil. Analysts have upgraded exxon to a buy from a hold. They raised the target price up to 131 bucks from 110. They like the deal to buy pioneer natural resources, not just expands acreage for exxon, but they think theyll get enhanced well production with the two of them together, so exxonmobil shares, up. And then well end with dominos pizza. Those shares down about 2. 25 . Mixed report, earnings were better than expected. Revenues were a slight mix, but u. S. Comparable store sales growth, down about 0. 6 for that previous quarter. So, dominos shares, under some pressure. Dom, thank you very much. Lets take a final check on where the markets stand. The cpi numbers came in hotter than anticipated for the month. The headline number was 0. 4 versus the 0. 3 that had been expected. Core was in line with expectations. But the headline year over year was a little hotter too. 3. 7 versus 3. 6 . Futures immediately dropped down. Were still in positive territory, but we had seen the dow closer to up about 145 to 150 points. Right now, up by about 72. S p futures are up. The nasdaq is up. We saw big movements when it came to yield in the treasury market. Right now, the tenyear in positive territory for the day. Its been under to this point but 4. 6 for the tenyear. The twoyear at 4. 06 . Also keeping an eye on the oil market as the issues continue in the middle east with the israelhamas war. Right now, wti, up by about 1. 38. Okay, folks, make sure you join us back here tomorrow. Its been interesting. Im sure it will be throughout the day as well. Were going to hand thengds thing things over to squawk on the street but well see you back here tomorrow. Good thursday morning, welcome to squawk on the street, im Carl Quintanilla with jim cramer at post nine of the new york stock exchange. David faber has the morning off. Premarket is holding on to gains despite september cpi running a touch hot. Up 0. 4 on headline. Core was in line. Yields are higher, but that tenyear, managing to stay below 4. 6 for now as we turn our attention to earnings next. Our road map begins with that latest inflation print. Hotter than kpexpected for the month. The uaw expanding its labor strike against ford, targeting one of the company