Transcripts For CNBC Squawk 20240703

What higher for longer means with Interest Rates. We had conversations yesterday that to me were troubling and i started to think about things. It was transitory. The supply chain part. Transitory. There is maybe an underlining rate of inflation that is higher and it is harder to deal with and it has to deal with crude. It reminds me now it is supposedly not like the volcker era. Wages and unions and workers demanding more. The wage price spiral that picks up and higher wages. Thats what the fed is watching. We paused and only to restart. It was not putting a stake in the heart of it in the first place. A little bit stays and it comes back and you do higher. Stop again. It was the stop and start of the 70s which is what happened. Is that happening again . If you look at inflation in other parts of the globe, it is higher. The uk is operating at 6 . They dobnt have the dollar. That bugs me. 3 . South america averaging 30 . It used to be higher inflation. How many is a candy bar in zimbabwe . I dont know. A couple trillion zimbabwe dollar. The candy bars are smaller. 100 grand bar. Costs a lot more. A lot more than that. A quick look at treasury yields. I wasnt paying attention. Bring it back. 10year treasury is 4. 43 . You are talking significant pick ups in yields. Crude oil prices are sliding below 90 a barrel. That is something to celebrate after what wie have seen recently. Down. 88. A weaker economy would bring oil down. It is a supply issue sdp. A supply issue. An an update on the Writers Strike. David faber reports that they are near an end to the agreement. People close to the negotiations say the two sides hope to fine finalize a deal today. Without a deal today, the strike would go to years end. Why . I know if it gets into the holidays. I think there was still a window in october if you didnt get it done today, you could get it done by the middle of october. Are the actors we really know the actors could not do anything without the writers. They would be like what do i say or do . News anchors . Like news anchors. If you settle the writers, do you actors say okay. The actors have a tougher situation with a. I. The a. I. Situation for writers. That is harder for writers. Glenn close told us last may said she has been asked name dropper. She told us here on cnbc. She did. She told us it was going to be a she had been asked to do th things where she would go in and they film your entire body and they can do things without you being there. If they get around those issues and making sure the same thing. The Writers Strike will give them a template. I think is a sticking point. They will have a template for the streaming issue. I think they take instructions from the writers. Read the prompter. The closest the two sides have come to resolution since the strike began on may 2nd. Oh, my god. I dont know this is going to cost us money. David faber, i dont know what he is demanding in his labor action. He will join us at 8 00 a. M. We get a choance to talk to him. He should come in studio. Maybe we can talk him into this. Ill call him. He will be happy. Lets get to the latest on the auto workers strike. Dp gm and stellantis laid off additional workers because of the consequences of the strike. Gm halted production in the kansas plant because of the Critical Issues needed for the striking facility in missouri. It would continue to bargain in good faith. Stellantis said it is laying off 370 employees at factories in ohio and indiana because of the shortages related to the strike. Those plants make parts for the jeep vehicles for the toledo plant where workers are striking. Stellantis send a new offer yesterday without providing details. It is reviewing the proposal. We will talk to an executive from the Detroit Chamber of commerce who is talking to parts suppliers for months in anticipation of strikes. It ripples through. It does. Shares of broadcom are lower after the report of google talking about dropping broadcom as a supplier of chips as early as 2027. Dp google wag considering designing those inhouse. Those shares are higher right now. Not broadcom. If you are looking at marvell technology. One is a comic book and the other is marvell. Up 3. 5 . This is not our fault. They should have thought about that. Biontech should have thought about that name. Biontech. Why do that to us . Keep us on our toes. Antioch . One oak. Why do they do this . There are people that decide on this. Probably get paid a lot to decide this. Federal reserve held rates steady, but pointed to rates staying higher for longer. Liesman joins us now. Steve, i saw your band mud crutch on sirius. You broke through. You made it through the big time. I almost took a pictures to send it to you to say i cannot believe you made it mainstream. Im not sure what youre talking about. Are you reading the prompter as you are required to as an anchor . Your other band . It is the moon custards. Im sorry. I was trying all right. Hey, steve, are you worried about wage price spirals and oil shocks like the 70s . Im worried about that. Im not, joe. I think this is a really different environment from the 1970s. Thats what we said. A lot of the analogies to the 70s fall apart, joe. You know, put the bellbottom jeans away, man. Theyre back, too. Steve, what about the last one point or two points hard to get . About. I think they can get there, joe. You are asking a profound question which is can we go back to the low inflation world we had and are the supply chains so different now . Joe, i want to talk about what i would call this. The fed left rates unchanged. I think what they executed yesterday is a virtual tightening. What did they do . They continued to forecast another rate increase this year. They raised average forecast for next year. They boosted the growth outlook. You look at yields and it is a virtual tightening. Powell explained better growth was the reason why the forecast for the higher funds next year. Rather than point to inflation more persistent, we have seen inflation be more persistent in the course of the last year. That has not appeared in the latest data. Here is the forecast. Leaving one more hike in there this year. Leaving the funds rate forecast next year by. 50 in 2025. Taking a half a point of cuts off the table they previously pencilled in. At the same time, the fed doubled the growth forecast and boosted the outlook along with lowering the Unemployment Rate. It showed more confidence in a soft landing. No recession means higher rates. There is trouble ahead. Powell said the fed was looking at the Different Things out there and including Higher Oil Prices and Government Shutdown and higher long term yields and auto workers sts strike. It is hard to know if these end up hobbling the economy. The fed forecast is wrong in all sorts of ways, but a surge in bond market yields shows the investors see the higher for longer statement seriously. It also raises the question in forecasting better growth and higher rates, is the fed making a mistake to bring about recession it avoided so far . Joe. Steve, we are talking a lot about it today. A lot of fed speak going on. The markets dont like it so far. They were up for a while yesterday. Closed down. Down again today. What do you attribute that to, steve . The fed took away something that the market could trade on which is the idea of potentially rate cuts next year. It was getting closer to the idea the fed was going to stop and if inflation came down, rates would come down. You have to puzzle over the idea. Powell said it was more growth than inflation persistence. It is also inflation persistence in there that the idea that the average fed thinks it will stay higher or require more rate hikes to bring inflation down. I think the reason why things are different from the 70s, joe, is the fed is resolute about bringing inflation down. It has pretty good Political Support on this and the economy has done a lot better in the wake of these rate hikes so far. So, i think so far were avoiding the worst part of the 70s. We will have a strong number in the third quarter. It is not the 70s yesterday. Not that it couldnt become the 70s. What would make that . If the fed gave up the ghost on fighting inflation. This then would be the 70s. It could be the 35s. We dont need to go to 21. 5. That is the depression, joe. I dont mean that. We dont need to go to 21. 5 prime rate. Who knows if we do and go back to 6 or 7 or 8 because of the last stubborn intractable . Right. You have to ask the question how much is it worth it . Would you plunge the economy into recession just to get that number duown . I said we will talk more. We will talk with Roger Ferguson later this hour. He is probably cheering. He has been predicting we have more work to do. Also coming up, fedex shares rising after the company delivered earnings. We will dig through that report next. Squawk box is coming right back. Weve been through a lot in our countries. High inflation, our governments changed a lot. Many times entrepreneurship is a necessity because you cant get a job in latin america. My advice is just go for it. Go for it maybe your parents did or your grandparents did back home. When you make it, lift somebody else up. Announcer this cnbc program is sponsored by baird. Visit bairddifference. Com. Rich, velvety. Coffee. Cafequality. Espresso. One highpressure system. That can do both. Brew to your hearts desire. With the lor barista system. Now brewing peets coffee. [soldier] take a look at this . With the lor barista system. Theyve left us a gift. [soldier] i think we misjudged them. I love horses. birds chirping [soldier] we should open the gate. Lets see what charlotte thinks. [narrator] at crowdstrike, we monitor trillions of cyber events to detect threats and prevent breaches before they happen to keep your business from becoming history. We stop cyberattacks. We stop breaches. We stop a lot of bad things from happening. Crowdstrike. Protection that powers you. Time for todays big retail number. 4 is the increase of Consumer Spending over last year. Bank of america said yesterday it is hard to see a u. S. Recession as the Great American consumer keeps spending. Fedex shares are higher this morning after stronger than expected profit as it continues cost cutting. Revenue fell shy of estimates. It is raising its guidance. We have the managing director at cowen with us. When we get to the point where cost cutting helps make numbers is not great, but to some extent revenue was slightly below. I guess they pass along extra fuel costs which is not a problem. Would you characterize it as a good quarter . Yes. I have been cover the company for a long time, joe. Most of the time they missed and stocks have gone down. This time they beat on the bottom line. They continue to cost cut as you pointed out. The top line was better than expected which was in ground had to do with the u. P. S. Potential strike. They picked up some accounts, probably 600,000 packages a night in july. They picked up freight from yellow freight. A lot of it was lowmargin business. Fedex delivers a good value proposition. They were able to win a bunch customers based on service re record. Interesting, helane, with the other issues at other competitors. There by the grace of god, are we in an environment where they are next in line . Thats a good question. Heres how we think about it. In 2020 and 2021, they talked about pulling volume forward from 2025 and later. Because of the pandemic, they fast forwarded growth. We came into 2022 and as the year started to reopen, growth slowed because people are going back to stores as opposed to ordering everything online. We have seen the huge declines in cargo volume. I think the Fourth Quarter last year in general, cargo was down 14. 2 . Were coming into a period of time where we are not going to necessarily have the great peak peak, but the comps look better. For them, negative issues were this is fiscal 2024. Were in fiscal 2022 and fiscal 2023. As we go forward, things should look a little better. Joe, they did 90 billion in revenue in 2023s fiscal year. They are on a may fiscal. We think getting the last 10 billion to 100 billion is difficult and probably not until the second half of the decade because the Revenue Growth has slowed a little bit. Are we at peak margins . I was thinking of labor issues. We have seen that number at u. P. S. 160,000 a year. What is the disparity with fedex and competitors . The real number includes benefits. Its not necessarily the average with the driver pay which is closer to 85,000 and you add in the benefits that u. P. S. Offers. For fedex, they have pilots unionized. You reported a few weeks ago that the pilots rejected a contract which surprised me because it looked like a good contract. Fedex is shrinking express and shrinking air operation. On the labor usuaissue, they us independent contractors and they tend to pay standard industry wages. I think they mentioned on october 1st, they are giving another wage increase. They are catching up. Because they are nonunion, they have a different footprint than u. P. S. Meaning what with for which stock you recommend . Thanks, becky. We have been outperforming on fedex and u. P. S. We think margins at u. P. S. Will be under pressure for the second half of the year. Then fedex as i said, we dont see that same margin pressure. 280 price on fedex. It is not you like the union shop. I will not connect those dots. I dont want to get canceled. Helane, thank you. Thanks, joe. When we come back, disney ceo bob iger said the company will quiet the noise around culture wars. We have the details on what that means after this break. A programming note for you. Ill moderate a session at the Economic Club of new york with the japanese primary fumio kishida. We will talk about the demographics in japan and navigating the negative Interest Rate policy. We will have the latest on squawk box tomorrow morning. Announcer this cnbc program is sponsored by ibm. Ibm. Lets create. 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. Dad, we got this. We got this. We got this. We got this. We got this. Yay we got this. We got this life is for living. We got this lets partner for all of it. Edward jones time for the executive edg. Disneys bob iger is vowing to quiet the noise of the culture wars. The company has been embattled with the governor over the states rules over schools teaching Sexual Orientation and gender. That is moving to the fight over the florida theme park and it is something that either side has fared well with here. Thats what wie were talking about. Its a loselose scenario. A lot of issues s a lot of issus with a candidate gaining traction. It is reported that ron desantis has fallen in a lot of polls. And disney sdotock is down. That looks to me like not a retreat, but you are not out in front as much as you were. Quiet things down. If you can get out of that, i dont think any Company Wants to be in the middle tof it. Some of it started before iger came back and would have been handled dcifferently had he bee there. Just tie it to the part of the chapek and desantis. I tie it to some of the backlash to just how woke disney is across the board in a lot of ways sway s. Thats a fair statement. What do they have at the theme parks . All of the characters are canceled. Maybe with the strike settled, they can get new characters. I dont know. Nobodys perfect. You cannot erase everything thats happened in the past. If you are trying to calm down the noise around the political situation, thats something you can control versus a lot of things you cant. Right. No more comments on it. Coming up, the big take from yesterdays fed decision. Well get reaction from former fed vice chair Roger Ferguson next. As we head to break, here is a look at yesterdays s ps winners and losers. Announcer executive edge is sponsored by at t business. Next level moments need the next level network. Copy that. Make a hard left down the alley. Networks got you covered. [please confirm requesting backup. ] changing route. Go. Roadblock ahead. Back up, back up. Reverse reverse next level moments, were 30 seconds out. Need the next level network. [north corridor, hurry ] coming through or 3, lets go. The network more businesses choose. Transplant received. At t business. Im hearing different ways for me to screen for colon cancer. Its time to use my voice, ive got a choice, more than one answer. I sat down with my doc. We had a talk. Knew just what to say. I asked for cologuard and did it my way. Cologuard is a oneofa kind way to screen for colon cancer thats effective and noninvasive. Its for people 45 plus at average risk, not high risk. False positive and negative results may occur. Ask your provider for cologuard. I did it my way good morning. Welcome back to squawk box live from the Nasdaq Market site in times square. Futures are in the red the day after the fed decision to pause with the potential for another 25basis point increase down the road depending on what happens, obviously. It is amazing how many nuances we can figure out by things that occurred to me. Knowing the fed doesnt know if they are in restrictive territory or not. That may be part of the reason you see the downdraft in the futures this morning. We have known what was coming. This was a period of time where jay powell admitted we dont know. We will keep all our options open and see what happens next. There is more tuncertainty. That can lead to volatility in the markets. Jay powell says that he will hold rates steady for now. Signalled another rate hike for later this year. A lot of questions around that. Joining us right now is former fed vice chairman Roger Ferguson who is also a cnbc contributor. Roger, jamie dimon said yesterday he expects more rate hikes will be necessary for what we have seen in Commodity Prices and in wages. You had Jeff Gundlach saying he thinks oil prices will require more rate hikes as well. What do you think . Actually, i think they are right. I think what the fed pointed out yesterday is there is still a great deal of Forward Momentum in the economy. They clearly expect they will hold rates higher for longer. Something that was important was they pushed out by a year when they expect to get back to the 2 inflation target. Im in the group that says at least one more and possibly a couple more hikes will be called for because the economy is doing an a positive sense very well. That means inflation pressure are not receding as quickly as the fed would like. Not just one more rate hike potentially, but several on the horizon . Several, several . I would not go several, several, joe. Thats too many. I think more than one. Potentially two. Well have to see as chair powell said yesterday. They are data dependent. They are not sure exactly how restrictive they are because after putting in so much in terms of rate hikes, the economy is still moving along very, very quickly. I think its a period of great uncertainty and markets hushoul be prepared for more than one hike. The comments were interesting. It pointed to any and all scenarios and including, i f forget the exact language, but crisis in the markets or credit markets potentially, too. If you see problems there in the Financial System itself and that shows you what a new place were in where they think theyve done a lot which gives up room for at least stopping and pausing and looking around. Really not knowing which path is coming next is a lot of uncertainty. Do you feel like anything could happen, roger . Look, i think there is great deal of uncertainty geopolitically here with a potential Government Shutdown. I think as you say, almost anything can happen. The odds are for more increases and higher for longer as opposed to a rapid reversal. In part, because the inflation dynamic is still a one that is worrying to them. As they emphasized several times, that is the primary goal and objective. While anything could happen, i think the odds are for more in the way of hikes versus a quick reversal and it is starting to reduce rates. Can you allay my worst fears, roger . Maybe were at the beginning of something similar to the stop start fiasco of the 70s and t80s . Remember the oil which started it and wage price spirals and increases with the spiral we talked about . When i mean stop start, can we end up at 6 or 7 or 8 two years from now because we are not high enough . At most, three. 25 increases . We wont have another 300 point . Let me allay your fears. This is not 70s. The fed has shown to be more resolute than the 60s and 70s where this got started back then. Secondly and powell pointed this out, it is good news that longterm Inflation Expectations are really well anchored. I dont think were in the early days of 70s kind of wage price spiral. Pos possibly, as i said, fed rate number ending in a 6 is a possibility. I dont think 7 or 8. Let me allay your fees, joe sdpjoe. The automakers have not had a raise in a long time. That number opened my eyes to think we underestimated the arc of workers wanting to be better compensated. That can be a powerful force that we are not really taking into account. You combine with the income inequality, roger. To be fair to your point, there are risks on both sides, for sure. Unions and labor markets are restive than they have been for a while. Im not denying forces here that are driving inflation forward. I think the fed is very much on its game around that. You know, part of whats called for here and they still the have it is creating credibility. They create credibility by taking action. The market should expect more than the one they talked about for some of the reason you pointed out. There are a number of forces here that say maybe inflation may get more entrenched than we like. Lets be careful. While the fed talked about the probability of one very explicitly, i would remind everyone that does not mean two or possibly three hikes are ruled out. It is not yet decided sdp. Ing r roger, i have been trying to help a friend find housing. Rents are off the charts from a year ago because Interest Rates are so much higher because plac looking at a higher price. That is serious pain to a lot of people. No doubt about it. And inflation, by the way, and housing. Thats the dynamic. In housing , in particular, we have a supply and demand imbalance. Jay powell has been clear about the inflation which is an i insidious tax among all of us. For those in the market for those activities like housing. The vast majority of americans are not in the market to buy housing. If you are, it is a more difficult and challenging situation. Rents have risen as a result. You cant find the same rents because the comparison to a monthly mortgage pushes up rents. That is inflation that will stick around. Absolutely. All the more reason to get the Inflationary Pressure out to the peak and hopefully things will settle. Raising rates is not without costs, but allowing inflation to pick up has more dire consequence. Roger, thank you. We appreciate your time. Well talk to you soon. Squawk box will be right back. Announcer currency check is respo sponsored by interactive brokers. The best informed brokers are interactive brokers. ella fashion moves fast. Setting trends is our business. We need to scale with customer demand. In real time. jen so we partner with verizon to take our operations to the next level. marquis with a custom private 5g network. ella with verizon business, we get more control of production, efficiencies, and greater agility. marquis so our customers get what they want, when they want it. jen its not just a network. Its enterprise intelligence. vo learn more. Its your vision, its your verizon. Rich, velvety. Coffee. Cafequality. Espresso. One highpressure system. That can do both. Brew to your hearts desire. With the lor barista system. Now brewing peets coffee. Oh, no. House speaker Kevin Mccarthy telling lawmakers to stay in town this weekend to work on issues for the country. They are talking about a stop gap measure to fund the government until october 31st. Emily wilkins joins us more from washington. Emily, im taking the weekend. I dont care what he says. You can, but congress cannot. They are really barrelling toward the Government Shutdown with only ten days left to fund the government and there is no plan right now that could actually make it to President Bidens desk. House republicans did make some progress last night. They agreed to further cut spending to 1. 53 trillion. The shortterm spending bill would have bigger cuts and Border Security provisions and creates the commission to deal with the growing debt. This new agreement has moved some lawmakers from no to yes, it is not clear this will pass the house and it cannot pass in the senate. Lawmakers like steve womack are worried about how the shutdown could hurt the economy. Listen to what he told us the other day. It will impact a lot of people. Even people who think it wont impact, it impacts. It sends the wrong message to the market. Fitch has already downgraded. Moodys is sitting there paying attention to this. Further complicating government funding is the debate to give additional aid to ukraine. The white house asked for 40 billion. President Volodymyr Zelenskyy is on the hill today meeting with lawmakers. Guys, it is an open question on whether, if any funding, will go to ukraine. Yeah. I cant believe that is part of the calculus. Emily wilkins, thank you. We will have more on the shutdown stillhe aad. Senator chris coons will join us in the 8 00 hour. Squawk box coming right back. What did i do to get here . city ambient noise right. Work. You worked hard and its time for a bank thatll work hard for you. Everbank brings security and a guarantee. That youll earn a yield in the top 5 of competitive accounts. Going, got you where you want to be. Were the partners for your next move. Everbank. Advantage, you people are excited about what ai will do for them. Were excited about what ai will do for business. Introducing watsonx a platform designed to multiply output by training ai with your data. When you watsonx your business, you can build ai to help coders code faster, Customer Service respond quicker, and employees handle repetitive tasks in less time. Lets create ai that transforms business with watsonx. Ibm. Lets create. upbeat music Constant Contacts advanced automation lets you send the right message at the right time, every time. Constant Contact. Helping the small stand tall. General motors and stellantis staying off workers as the uaw strike rolls on. Phil lebeau has more. Hey, phil. Joe, were a week into this strike and we told you that this was likely to happen. Most expected it to start happening earlier this week and it is starting to pick up some momentum. These are layoffs that are basically because either a plant has been put on strike or the work that it was done at a particular facility no longer can they send those goods to a plant where there is a strike. So, here is a partial list of what we heard so far in terms of strikes. Gm announcing yesterday it idled its fairfax, kansas, plant. Ford, 600 out of wayne, michigan, facility, where they have strikers at one of their plants, the Michigan Assembly plant. Stellantis, 68. Toledo, ohio yesterday. It expects another 300 at its facilities in kokomo, indiana. We started to see it yesterday and well see it today, probably tomorrow as well, picketing, outside of plants either that are not on strike or at headquarters for the automakers. This is the stellantis u. S. Headquarters in auburn hills, just outside of detroit. These are uaw members, supporters. They call this a practice picket. It is a picket. They are making it clear that they support the uaw and what is happening right now. As you look at shares of stellantis, we should point out that stellantis did extend a fifth Contract Offer to the uaw yesterday. Neither the uaw, nor stellantis, are saying the particulars of that Contract Offer. And as you look at ford and gm, remember, the deadline that has been set by the uaw is noon tomorrow. If the uaw does not see what it deems serious progress in terms of contract negotiations, we are likely to see more strike locations, whether thats one, two, or all three automakers, that remains to be seen. All right, phil. Thanks. Lets talk more about the impact of the strike across the auto sector and really across the economy. Partsmakers that supply the big three have more than 38 billion of revenue at risk if these strikes expand. And some partsmakers rely on gm, ford and stellantis for as much as 76 of their sales. Glen steven jr. , executive director of the michigan auto at Detroit Regional Chamber of commerce. Glen, we had the big chamber of commerce on not too long ago warning about the ripple effects. I think thats part of the power that the unions are able to wield. So, we can warn about how bad it is, but this is gives them leverage and, you know, adds to their ability to maybe extract higher wages and benefits. Well, no one argues that the uaw should have a raise and has worked hard for a raise. At the same time, the oems, the ones that employ people, they have to compete on a National Stage and interNational Stage too. And to pick up on what phil is saying, were seeing more ripple effects. Yesterday, a supplier in detroit laid off 650 people that makes seats for broncos. Were seeing this on the west side of michigan, east side and across all the communities, the suppliers are feeling the pain right now. 40 is a long way from 20 . You have got some gray hair. I think this isnt your first rodeo. Can you tell me when, how, what it is going to take, how long it is going to take and what is your gut feeling on how this plays out, glen . Well, youre right. Ive seen this a few times. We are at a very historic moment because of the things like electrification entering into the picture. We didnt have that before. Nobody really knows. We have encouraging news out of canada with the settlement or tentative agreement between ford and thats encouraging. The fact is the oems put a very substantial offer on the table. And they have to compete. They have to be able to invest in their future. And they have to compete on a National Stage. Look, labor and management, labor and companies built michigan, they built our country, they forged agreements before and were hoping that it happens real soon that they forge a new one. The outsized profits that the uaw keeps pointing to, are you confident that these that a you would need these outsized profits, obviously, to give increases of 40 most likely. Are they guaranteed . Theyre gas guzzlers, f150s, suvs. If were transitioning to evs, where those are loss leaders, losing 4 billion or whatever, how do we know the government isnt going to end up subsidizing these eventually and taxpayers subsidizing these wage increases when the companies cant compete. Cant you see that playing out that way, again, glenn . I can, but it wont. And ill tell you one of the things we have seen in the industry from the big Vehicle Manufacturers all the way down to the small companies, 2008, 2009, theyre operating with the really focused discipline on the future. You know what they need to do and what they can do, theyre investing more money in their r d and electrification than their profits. So, they have to be able to reinvest. At the same time, again, they put a really good offer on the table for the uaw and no one would argue that the uaw and people in that that work and build america need to be better in their lives. I think and i hope were getting closer, but we cant have a scenario where there is bailouts. Thats not possible and it is not acceptable. So, im just wondering about the big three transition to evs and whether in 2030 were talking about everybody driving a big three electric vehicle and whether you really you dont think thats a pipe dream . Well, i think that there is a lot of prognostications about where well be percentagewise. Right now were at 7 in the United States for all teslas. Well, the majority of them are teslas. But the detroit three and toyota and bmw and audi, these companies are all interring the fray here and the chinese. The chinese are doing it too. So it is people dont really want yet. So there is a lot of things between now and then that need to go right for people to be making these profits. And it is just a really daunting thing to go through right now, both sides are really good points, but i dont know how it plays out. G to weotrun, i guess. Glenn, thank you. Squawk box will be right back. G each other rock stars . Youre a rock star. You are a rock star. No more calling coworkers rock stars. Look, its great that you use workday to transform your business. But it still doesnt make you a rock star. So unless you work with an actual rock star. Hi, im ozwald. Hello ozwald. Pam, you are a rock i wasnt going to say it. Good morning. The fed declines to hike, but says rates could stay higher for longer and, by the way, more rate hikes could be on the horizon. We got a breakdown of the latest policy meeting and what it means for your portfolio. The shutdown showing no signs of easing up. We will hear from a republican senator who says now is not the time to shut down and that it is not an option. And shares of fedex trucking higher after reporting stronger than expected profits as it continues cost cutting efforts. That stock and other morning movers are straight ahead. The second hour of squawk box begins right now. Good morning and welcome back to squawk box. This is cnbc, right . Were on cnbc. Live from the Nasdaq Market site. Has to be cnbc, because were actually doing business. Youre joe kernen. Im joe kernen. We actually do do, we cover business news. Becky quick is here. Andrew is off today. U. S. Equity futures indicated down about 158 points or so, 114 on the nasdaq, and the s p indicated in the red as well. Treasuries notably this morning are different. Tenyear, 4. 42. Havent seen that in a while. Even twoyear, we were anchored under 5 . We got to 5 and a couple of basis points now. Maybe eed to 5. 25 . The bank of england out with its latest decision, leaving rates 5. 25 . There was a strong expectation that they would continue to hike rates. Yesterday, the day before, earlier this week, days all blend together, they got numbers of inflation that showed that inflation was cooler than anticipated. It was still north of 6 , but here is the celebration, hooray, we have conquered it and for now were going to hold rates pat. Theyre going to do the same thing the fed is doing now and stop and look around to see what happens. Lets get over to dom chu with a look at this mornings premarket movers. Dom, what is on your radar screen today . It certainly is going to be fedex, becky, joe. To that point, maybe that global bellwether, you know, for transportation, economic activity. If you look at the shares now, theyre up solidly, just about 5 in the premarket trade so far. Now, fedex actually posted mixed quarterly results, profits came in much better than expected, cost cutting measures will be driving the bottom line there. The revenue side came in a little bit lighter. Everybody is focusing a little bit more, if you will, on the full year forecast. They upped the lower end of their full year forecast range for profits. Thats helping to provide some tailwind to this stock. Also talking a little bit more about whats going on with market share gains. They got some work from u. P. S. , talked about market share gains because of the yellow freight bankruptcy. Shares in general up 5. 5 now, just about 52 year to date so far. Also checking out what is happening with an interesting story coming out of technology right now related to broadcom. And this is coming via a report from the information citing sources saying executives over at alphabet owned google had discussions about possibly ditching broadcom chips at some point in the next few years to possibly favor designing and making those chips in house. Broadcom shares down 7. 5 on that particular bit of news. And then innvidia, advanced showing some movement, that broadcom story gaining a lot of attention this morning. And one other check here on the recent hot ipos, clavo from yesterday, at 32. 20. Instacart, 29. 70. Arm holdings at 51. 44. The reason it is important, klaviyo and instacart at 30 bucks a share, were right around those levels. Instacart below it. Arm holdings at 51 per share level. Maybe some of that steam coming out of the hot ipo trade. We had a big discussion about it last night on fast money what it says about possible sentiment. Well keep an eye on the stocks. Back over to you. Were going to get right back to the fed. But, just for a second, can i ask you about we havent talked about gary player. Ive known gary a long time. Hes always been kind of blunt and unfiltered and now hes 87 years old, but the other day, what would you i would call that gratuitous nastiness. He said he was at a buffet and saw you and said it looked like the last supper. That was uncalled for, was it not, dom . Youve known gary longer than i have. Ive had a working relationship with mr. Player over the course of the last ten years. Hes like that. One of the things that hes done because i often see him at events and certainly at the Charity Event he hosts at the baronburg over the last decade or so, ill go there and hell always tell me, dom, you got to skip the bacon, skip the eggs, and, by the way, there has been an evolution in the menu over at that event because now they actually put out those freshsqueezed juices, the juices, the red juice, the orange juice, the green juice, and he says to me over the last few years, he goes, go get the juice, dont get the eggs, dont get so i understand my wifw waistline is a little bit he was actually he was actually kind of helping. He thought he was on national i dont know. Far be it for joe to pick up are you going to sue for defamation of character . No, im not. What i know about gary. Gary is a you saw what was on camera. What was off camera, gary, im telling you right now, gary player has always been a genuine real straightforward straight shooter person. And he told me, he goes, you got to work on your health, dom. Thats the bottom line. I think that was the message to all of us. Yes, so, what . This is what everybody should be doing. Okay. Im not going to becky, hes never been anything but genuine and nice and honest with me about hes 87 and runs up and down steps behind his house and does 150 pushups and situps and hits he shot his age 3,000 straight times. Hes 87. Not every 80yearold seems quite as with it and energetic as gary player. Ill sigh thisay this, our c here now serves those squeezed juice products so im about to go get one right now. It is not the age, dom. It is the mileage. Thats what im it is not the actual age. Sorry. Youre smiling and laughing. We got someone here we have to talk to. Priya is great. Im sure shes a juice drinker as well. I think so. I dont know about kale. The fed delivered a hawkish pause and you point that out, priya is with us this morning. You think the central bank at this point is actually done hiking, but because of a slowdown it is in the cards that it might be, you know, this is a lag effect that we have talked about, your jpmorgan assets. I think the fed doesnt know. I think theyre trying to extrapolate from the recent strength in the Consumer Spending data that we have seen. I think theyre hoping that they get this soft landing. When you look at forecast for next year, they have got the economy barely landing. I would say it is a soft landing or it is a no landing scenario. I think thats what the fed hopes, which is why they i think it was a very hawkish message. They didnt hike, but what they did was they signaled more positive real rate next year because if inflation declines as they project, theyre telling us theyre not going to cut rates next year. So the market thats why the market the rates market reacted, hawkish message. I do struggle with this higher for longer with the fact that the economy is slowing. There are some clear signs of slowdown, which is why we think this was the least of july was the last rate hike. I think the feds forecast, thats sort of i would argue someone fanciful. I think there may be more of a lag effect and the damage is going to come become more apparent, maybe more quickly, than the fed may be anticipating. I think there are serious crunches to the economy, whether that be in lending, being able to borrow, and for consumers at the bottom rungs being able to pay off your credit card being able to find housing that is not prohibitively expensive. It is terrible when your groceries are expensive, your gas is expensive. When it is your mortgage or rent payment, i mean, that is the biggest chunk of your you might be able to keep up with inflation, you complain about it, you can keep up with some of the things. Not when it is the biggest bill youre paying every month. That takes a while because majority of americans have locked in their mortgage. It takes a while for people who have to move, then they have to start to pay that 7. 5 mortgage rate. I would also argue that the covid savings that we had, i think that cushioned a lot of the blow to consumers. That in our estimate and in the Fourth Quarter is likely to run off. I think it is already run off theuseholds, but it will come out on aggregate. Interest rates just take a while to play out and the fed is trying to buy time. I think in their idea that we can get inflation all the way back to 2 without a slowdown in the economy, without a rise in the Unemployment Rate and i would look at they would say they expect a slowdown in the economy and the rise in the Unemployment Rate, but maybe not as much i think their forecast is 4 . Theyre forecasting 4. 1 . Thats essentially full employment. So i think, you know, our view is the economy is already starting to slow, you look at the labor market, that deceleration, it is gradual. I think as that tends to continue to decline, the three month run rate for payrolls at 150,000, as that gets to 100,000, below 100,000, i think consumers ability to keep spending is going to go down. You got all the wild cards between the strike, the shutdown, higher gas prices. But i would say even beyond all these wild cards, real rates take a while to play through the economy. Thats our view, why we think the economy is going to slow down and i think there is value in bonds. We havent heard this point of view today. But i would hope listening you would be like, oh, good, were not going higher. The economy is slowing. None of this is good. Either were going three or four, 25 basis point increases higher and everybody has higher mortgage costs, and it is not what the markets want, another three or four hikes, youre telling me they dont need to do it because the economy is already in bad shape or sort of weakening at this point. Those are both bad things. Were stuck in a in a bad situation. Lesser of two evils almost. I think if inflation declines, i think it will come down to that. If inflation decline really fast, i think we actually get that soft landing. Our view is inflation gets really sticky. You get close to 3 of the economy. Thats not in your forecast. Thats not in our forecast. The economy weakens and inflation stays tough. And we look at the fed and say what are you going to start to cut rates . The fed is telling us not so fast. We are going to keep rates high enough or decline really when we see the whites of the eyes of the recession. Thats bad for risk assets, which is why i would say everyone that is hiding out in cash start to think about reinvestment, start to move out the curve as we say, you know, to any rate at 4. 5 , those are very attractive. The rates can rosise 20, 30 mor basis points. But the rates have a lot of room to decline. Do you really drink juice with do you . I should be drinking. You should be. We all should be. We all should be driving evs and we all should be drinking juice and we arent doing either one of them. Were not smoking. No, were not. Were vaping. Were vaping. Priya, thanks. Thank you. When we come back, a number of retailers announcing new hires amid the Holiday Shopping season. But not nearly the numbers we have seen in the past because of those higher costs and weaker Consumer Confidence. Well talk retail right after this break. And then, steve iceman of newburger burrman will join us to talk about the markets and more. Squawk box will be right back. sean i wish for the amazing new iphone 15 pro jason sean do you mean this one the one with titanium . Switch to verizon, you can trade in any iphone, and get the new iphone 15 pro on them. vo trade in any iphone in any condition for a new iphone 15 pro on us. Only on verizon. sean i wish for the amazing new iphone 15 pro jason sean do you mean this one the one with titanium . Switch to verizon, you can trade in any iphone, and get the new iphone 15 pro on them. vo trade in any iphone in any condition for a new iphone 15 pro on us. Only on verizon. 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. Darden restaurants just reported earning ings of 1. 78 share. That was just above expectations. Same store sales 5 during the quarter. Street was looking for just 3. 8 . The olive garden parent also affirming its full year guidance. And yet the stock is off 1. 6 . The countdown is on for the Holiday Shopping season. And waning Consumer Confidence is already having an impact on retailers. Seasonal hiring is expected to hit a 15year low this year as inflation takes a bite out of consumer pockets. Thats gross. Joining us right now to talk much more about this is Forester Research retail analyst sukarita kudali. We know Consumer Confidence is waning. We know that consumers are feeling a pinch from inflation and Higher Energy costs again. What do you think this Holiday Shopping season is going to shape up, what is it going to look like . Well, the retail season overall this year has been pretty soft. It has essentially kept pace with inflation. When you look at the absolute numbers, the nominal numbers they are higher than they have ever been, but the shopper isnt keeping up with the level of inflation, particularly in a lot of those four holiday categories, apparel or electronics. So, when thats already happening through much of 2023, im not anticipating a great q4 for the Holiday Season at all. The sectors that are groegrowin from the darden numbers is like the grocery sector is growing. Thats not really seasonal and thats not going to really make an impact on those retailers that are hoping for a great q4. Why do you think hiring is going to be at lower levels or existing levels for most of the companies . Is it because theyre expecting less in sales, you think theyre going to be more efficient in terms of efficient meaning there is going to be less workers around the store to help you out . Yeah, yeah. It is interesting that some of those numbers have actually been trending lower for a couple of years now. We saw some spikes during the early part of the pandemic, but then it really wasnt as high in 2022 either. Sales were higher in 2022. It does suggest that some part of this softening and hiring is not just due to an expectation of softer demand, but it is that maybe retailers are expecting more of their more of their sales to shift to ecommerce, it could be that they just may be using more technology in the stores to either manage their task management or to help just allocate labor in a more efficient way. So, that does seem to be part of what is a factor here. But there is also no doubt that their labor costs have to be held steady and given that were at all time high levels of hourly wages, these retailers just dont have the ability to add more. Theyre going to have to figure out what they need to do to even add more technology and automate more to make those stores as smooth running as possible during a critical time period. You say amazon seems to be the outlier. How so and why is that . Yeah, so, it is interesting, you mentioned the expectations around lower hiring numbers. Amazon is one that has come out and is expecting higher sales higher hiring volume in 2023 during the Holiday Season than ever before. They announced that theyre going to hire a quarter million more workers during the Holiday Season. That was even higher than anything that they had announced during the pandemic. So, theyre expecting a lot. But the question is whether thats going to actually show up in sales or whether it is because they opened a lot of microfulfillment centers, smaller dcs around the u. S. They may be more labor intensive. When we think of amazon dc, there are millions of square feet and highly automated, lots of robotics. Some of these last mile facilities are the ones that could be driving more. That actually suggests maybe theyre going to be capturing more of the last mile deliveries and capturing more share from u. P. S. And fedex. Thank you. Good to see you. Thanks, becky. Coming up, the ftc updating its complaint against amazon for what it says is deceptive prime sign up and cancellation processes. Jon fortt looks at that and whether it is worth a fight for regulators. Lets get a check on the markets. Green is nowhere to be found except one little plus 10 on the fair value for the dow. Everything else is red. Coming right back. Time now for todays aflac trivia question. This ghost buster was born on this day in 1950. Who is it . The answer wn bc ua xhecnssqwkbo continues. Coach e took over our office. And hes using it to send out medical bills. Good hands hospital bill for prime . gaaaaap did you just say gap . hes talking about Expenses Health insurance doesnt cover. Good thing coach prime knows about. Say it one time aflac because aflac gets you money to help close that gap now how do we get this goat outta here . whistles aflac meet one of my new homies gaaaaap get help with Expenses Health insurance doesnt cover at aflac. Com. 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Now the answer to todays aflac trivia question. This ghost buster was born on this day in 1950. Who is it . The answer, bill murray. The federal trade commission this week amped up its lawsuit against amazon, which accuses the company of making the prime Subscription Service too hard to quit. Now the ftc is naming names. So is this the right battle for regulators to be fighting . Jon fortt is here to weigh in on all of it. I suspect you have an opinion or two. Or two, becky. And the ftc should not be suing amazon for making prime hard to quit. Maybe it is me. Maybe im out of touch, too fannie f fancy with this tv job. I never heard anybody complain about trying to ditch amazon prime. Remember when you cut out the picture from the catalog and waited. I heard complaints about cable bundles, government regulators, but not amazon prime. So thats the context i bring to news that the ftc yesterday amended a lawsuit it filed in june adding the names of three amazon executives and details of how they allegedly made it easy to sign up by accident, and too hard to leave. The ftc says amazon used dark patterns like free trial periods and making the sign me up button bigger than the no thanks button. Im sorry, what . Arent those dark patterns just how the entire consumer economy works . Is the ftc going after mcdonalds next for bundling a drink when you werent that thirsty. Theyre trying to pressure amazon execs to help build the larger antitrust case here. Can i offer up a list of companies that do that to me . Get you to sign up and never let you off. I guess that raises the question, are they picking on amazon or are they just trying to send a message by coming down on a company that was, they say, gaming Consumer Behavior at scale and theyre already going after . Yeah, well, on the other hand, becky, amazon is so massive, if they design the prime process to make even a small percentage of consumers spend by accident, it is a significant problem. So, of course, the ftc should sue. There are enough details in this complaint to raise some serious questions. The complaint shows some analysts employees raised concerns about the impact on shoppers from managers to wave them off and it alleges the code name was iliad, which calls to mind homers epic tale where odisius manages to cancel his prime subscription. Now is not the time, even if the Overall Services are good. In this Artificial Intelligence era, Big Companies will have every incentive to let Smart Software lure us into signing up for subscriptions and trick us out of quitting them. Whether most people enjoy prime isnt the point. Someone has to stop the Big Companies with the most data from turning us into retail lab rats. Sure, it is harsh to call out execs forconsumers, but we have nip it in the bud now. Is this about protecting consumers from accidentally being prime members or something much bigger at play here . This reminds me of how you kind of turn screws on certain individuals, right, to try to get them to have they not the Columbia Records place that used to be out there, sirius this week, you will never unsign in time, you have to cancel your credit card if you want to get out disney clubs, all kinds of all this stuff. It is like consumer 101, you need to know, if im signing up for something, if im clicking a button, where is the fine print. Right. I cant do anything without getting they get me some way or another. I cant find any news piece. Something comes up, they dont show me where the x is to get rid of it, theyll show you an arrow and then im on the website of the personeperson advertising. We are owned by comcast, just to be fair. I dont know any business that doesnt do that. If youre a business not doing it, you probably have investors and other people criticizing you for not being more effective at being sticky. Your pattern arent dark enough. If you want to go deeper on this, there is the on the other hand newsletter, of course. Lets get that qr code on the screen or if you dont like qr codes, type in cnbc. Com otoh, gets you easy access to the poll on linkedin. Weigh in, let me know which side you agree with more. You might get solicitations for jim cramers newsletter too. I had to call that out because i am just talking about you getting stuff that you didnt necessarily well, results from the most recent topic, should you buy chip design firm arm after the ipo . 61 said no. 39 said yes. And given what the stock has done since last week, i would say people who took the poll might be on to something. Yeah, i think so too. Cant get the weather. No, no, cant do that. Got to get this all this other cant play the wordle. Cant play the wordle without now it is affecting your life. Yeah. Something popping up. Popping up, i cant you know what i do, you know how to get rid of the whole search thing, i just forget it. Dont want me to see it, fine. It is your loss. Im not looking at what i clicked on in the first place. Thanks, jon. Get off my yard still to come, well talk to senator Mark Wayne Mullen for the latest out of washington on avoiding a Government Shutdown. But first, steve eisman is going to join us to discuss the fed, the risk of a recession and the markets. Youre watching squawk box on cnbc. Please stay tuned for this ad. [due at target in 5 ] copy that. Make a hard left down the alley. Networks got you covered. [please confirm requesting backup. ] changing route. Go. Roadblock ahead. Back up, back up. Reverse reverse next level moments, were 30 seconds out. Need the next level network. [north corridor, hurry ] coming through or 3, lets go. The network more businesses choose. Transplant received. At t business. You know doug, ever since switching to workday youve been a real rock star. Rock star . What do you know about rock stars . Billy idol . I mean wheres the skintight leather . My shoes are leather. Wheres the unnecessary zippers . That thing billy, rock star is just how doug feels when he uses workday. Thanks, rory. Ill show you rock star be a finance and hr rock star. Workday. For a changing world. Billy idol just stole your golf cart all right, the futures at this hour are looking worse. It has been getting worse over the course of last hour and a half. The dow futures are off by over 200 points. Nasdaq futures indicated down by 156. S p 500 features down by 36. A lot of this coming after what we heard from the fed yesterday. It is a little bit of a tough hawkish message that rates are going to be higher for longer and there could be more hikes to come. For more on the markets and the Banking Sector specifically, we want to bring in steve eisman, senior Portfolio Manager at neuberger berman. There is a lot we have been talking about this morning. Just concerns and jitters after the fed came out with a message that maybe the market is not quite prepared for. Start thinking through that, okay, rates will be higher for longer, we have to figure out what that means. Coming at a time where oil prices are up again. You got a number of strikes taking place. Wages likely to go up from here. I dont know if i would call it a spiral but go up significantly and Goldman Sachs coming out and saying theyre looking at the biggest profits plunge since the pandemic, just in terms of what to expect from Companies Earnings in the first quarter. Theyll be down sharply because margins are going to get squeezed pretty tightly. A lot of scary news. You can understand the red arrows. It is not that scary. Okay. Talk us through it. First of all, sort of amused by peoples reactions to the fed every single meeting the fed says the rates will be longer for hire higher and they dont believe them how does that work . Higher for longer. Everybody says we dont believe you and after the 15th time they say higher for longer and people say, okay, thats bad. Maybe theyre just hitting reality, which is if it is not higher for longer, it is going to be because a recession is starting to set in. The economy turned down pretty significantly. Neither of those are great options. I dont see it that way. Okay. At this point, everybody is basically been wrong about the economy. People who are negative are positive, people who are positive are negative. Everyone went negative and said there is a recession coming. I saw him a week or so ago and he admits there is no actual evidence a recession is coming, he just thinks it is coming. What changed is there a c. J. Lawrence still around . No, hes with evercore. He thinks rates will cause the economy to go into recession. People have been saying that for the last year and a half. Im not an economist. This is a very humbling business. You can be right one day, wrong the next, right, wrong on the same day. At this point there is no evidence it is a recession is coming at all. Maybe it is. But so what . Do they need a recession to break the back of inflation . It doesnt seem like they do. It will come down to like i said, im an economist, im data driven, at this point, inflation is coming down, the economy is strong, people are gett ting hysterical because they say rates will be higher for longer. Im not so hysterical. What do you see when you see the market, see prices where they are, do you see bargains . Signs are starting to develop again. There had been a correction. Maybe more of a correction. You call what we have been through a correction at this point . A little correction. Pretty modest. Maybe there will be more. Tech had something of a correction. If there is a correction, at this point, since i dont see a recession company, more inclined to saying there are buying opportunities than shorting opportunities, except in the Banking Sector. Okay. Lets talk buying opportunities. And then back to the Banking Sector. Why do you see buying opportunities . I think Infrastructure Companies that are coming in, the money that the government is going to be spending has just been a trickle this year. It is going to come in, starting next year. The companies will say it is really not having any impact on earnings yet, but a lot of plans are being drawn up. I expect 2024 and 2025 to be massive years for infrastructure type companies. You cant talk individual stocks, but infrastructure at large . Yes, aggregates, road builting, factory building, automation, eventually some day solar will come back. In that whole area. Reshoring, greenification, et cetera. Im not short bonds short duration, long duration, what do you buy . I like relatively short duration. Five year. Nothing more than five years. Fiveyear corporates or treasuries or munis . I like for some of our clients that have cash, we bought some call it fiveyear duration corporate bonds. What quality, like . High quality. High quality. And what can you get there . Over 5. But the interesting thing is you can get over 5 just by buying a threemonth treasury and in our Money Market Fund you are taking risks there. Combination of the two is some variation there of at this point for those that have cash is a good thing to sit and wait on that stuff. The very thing that makes you positive about some of these infrastructure plays, the idea that a lot more Government Spending is going to kick in, could that just hurt in terms of inflation, just the continued spending that comes through . Well see. Like i said, im not an economist. Well see what happens. I doubt it. But i dont have any evidence at this point. What else do you like . I dont like banks. Thats for sure. Okay. What about banks . Is it the underlying credit issues not so much the credit issues. I think if i could be somewhat blunt from a not from a training perspective. You think the Investment Bank is going to come back a little bit and it is a trade, fine. I think the whole Banking Sector is uninvestable. Why . One, even though deposits are down, year over year around 6 , thats mostly concentrated in the medium to small cap banks, the deposits in the Banking Industry are still 2 trillion above trend. It is still going to come out. If rates go higher, it will come out faster. The idea that net interest margins are going to bottom anytime soon i think is wrong. The other thing is that the new regulations that have come out increase the amount of capital that the banks have, which i actually think is the wrong thing that the regulators are doing, which is something that jamie dimon said recently. It is going to hurt the earnings and retirement equities of the banks. Unfortunately, i dont think any of the ceos including jamie dimon have any credibility with respect to regulation, with respect to the regulators. Why . If you go back to after dodd frank, the first vice chair financial supervision, which is a fancy term of saying Bank Regulators theyre on today. The sound bite, hes the greatest banking regulator in the United States and nobody is a close second. Between 2010 and 2016 he accomplished three things. He crushed the leverage of the Banking Industry by more than half, he reduced the risks that they had on their Balance Sheets and he for the large banks he dramatically increased the amount of liquidity they had to have. Thats why when during the whole Silicon Valley debacle, none of the banks had significant problems because the rules required them to have so much liquidity. Some ceos would take issue. They can take issue as much as they want, but thats what happened. Theyre not that much smarter than regional banks. They were they could not buy that many longterm bonds because they had such high liquidity issues. During this whole time as terulo did this, did the Banking Industry say, thank you for doing the right thing . No, they beat him up relentlessly. The liquidity requirements are too high, this happened every year, they beat him up every single year. I think every single one of them would admit today they were 100 wrong. You dont are a have a problh the duration mismatch. You think deposits are going to continue to lead and the thing with Silicon Valley was not just that they that their Balance Sheet was upside down because they bought a lot of bonds, it was a bank can withstand that if they dont lose deposits. They had the market. Crystallized their losses. You dont have that in the large cap banks. Not to say you dont have any. Bank of america has 100 billion on its Balance Sheet that is like that. Within the context of bank of america, that is a small earnings problem as opposed to a sustainability problem. Unfortunately, like i said, the Bank Regulators this time are right. The regulation should not be focusing on raising capital requirements, they should be focusing on raising the liquidity requirements for the midcap and small cap banks. Theyre doing the opposite. It is like the old slogan, generals like to fight the last war. Steve, thank you for coming in today. We would love to hear more about banking. Come back again soon. Thank you. Thank you. Dont leave yet. Is it that unpleasant . Little hot. Getting warm. Coming up, the latest on the Government Shutdown. Kevin mccarthy pushing House Republicans to get behind a shortterm extension that would avoid a shutdown. Well talk to Markwayne Mullin in a few minutes. Get the best of squawk box in our daily podcast, follow squawk pod on your favorite podcast app and listen anytime. Stay tuned. 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 at ameriprise financial, our advice is personalized, based on your goals, whatever they may be. All that planning has paid off. Looks like you can make this work. We can make this work. And the feeling of confidence that comes from our advice . I can make this work. That seems to be universal. I can make this work. I can make this work. No wonder more than 9 out of 10 clients are likely to recommend us. Because advice worth listening to is advice worth talking about. Ameriprise financial. ella fashion moves fast. Setting trends is our business. We need to scale with customer demand. In real time. jen so we partner with verizon to take our operations to the next level. marquis with a custom private 5g network. ella with verizon business, we get more control of production, efficiencies, and greater agility. marquis so our customers get what they want, when they want it. jen its not just a network. Its enterprise intelligence. vo learn more. Its your vision, its your verizon. When we come back, everybody, were going to be talking about a lot of things. What do we have right now . Cisco is acquiring splunk to help make organizations more secure and resilient in the a. I. Power world. Just hitting right now. Trying to see how much everybody is paying. 157 a share. In cash. Representing 28 billion in equity value. Splunk president and ceo will join the executive Leadership Team at the combined entity, reporting that chuck robbens, chairman and ceo of the acquisition builds on splunks heritage of helping organizations enhance their digital resilience, it will accelerate ciscos strategy to securely connect everything to make anything possible. The combination of these this is the company talking, the combination of the two established leaders in a. I. , security and most importantly observability, which is not it will help make organizations more secure and resilient. The transaction, they say, is expected to be cash flow positive and gross margin accretive in the first fiscal year post close. And nongap eps accretive in year two. Thats like cisco. It will accelerate ciscos Revenue Growth and growth margin expansion, they say. They say the transaction will not impact ciscos previously announced Share Buyback program or its dividend program. And it is well show cisco. It is not a share it is not a stock deal. So, it could be dilutive. It is not a when we come back, well be it is a big deal, though. It is a big deal. 28 billion, 8 billion over premium, 20 billion stock yesterday. After some splunk is halted. Ipo is now a deal. Well talk to the ceos are coming on later this morning too. Chuck robins, gary steele will be joining later today. Were going to talk to senator Markwayne Mullin when we come back. Well get the latest out of washington on avoiding a Government Shutdown. Squawk box will be right back. Rich, velvety. Coffee. Cafequality. Espresso. One highpressure system. That can do both. Brew to your hearts desire. With the lor barista system. Now brewing peets coffee. Welcome back. Joining us now republican senator from oklahoma Mark Wayne Mullen. Its good to see you, senator. Good morning. Thanks, joe. Good morning. We said in going to break that senator schumer is hoping for some bipartisanship. I know you were in the house, the rough and tumble house for a while. Now youre a senator, getting used to the new digs obviously. When one or the other party talks about bipartisanship, eu usually it means doing what you do on either side. Theres no chance for that in this case, is there . There is a chance for bipartisanship. When we Start Talking about the leaders and the members, no one wants to have a shutdown. In the senate, we want to avoid this shutdown however we can. So if thats a bipartisan approach, it will be a bipartisan approach. At the same time you have the house working through the process. Speaker mccarthy, a dear friend of mine, is working to get the most conservative bill that can be signed obviously by President Biden. So theres a challenge moving forward. I am not sure which direction the senate is going to go. We cant just wait forever on the house who move. So at some point i believe leader schumer will have to bring hopefully a clean c. R. If he starts attaching a lot of things to it that his democrat colleagues want, then its going to be less bipartisan for sure and more partisan. I believe if we have to, which isnt ideal, we need to make changes, the house and senate need to make sure were controlling spending and we do that which i by not just reupping what we did last year, we can do that. Lets say the guys in the house that are most conservative on spending and then you look at the democrats in the senate that feel obviously a different way, its pretty daunting. Its a daunting issue, isnt it . Because i really dont i dont think a lot of people in the senate, democrats in the senate really they havent found religion in terms of cutting spending. Theyre ready to spend more. And then on the other side you got guys perfectly willing to shut down the government, even if it hurts the Republican Party because theyre so i dont know, what would you call it . Theyre so fiscally conservative that they cant see the forest through the trees, i think. Well, theres a fine line between some of them and i really say maybe one or two in the house. They claim to be policy driven but really its about selfpromotion. Who are you talking about . Who are you talking about . Ill use matt gates for example. Hes more about promoting himself that he is about sound policy thats going to move forward. Hes more committed to vacating the chair than getting policy to sign into law. We want to be as fiscal conservatives as we can but we also have to be practical on what were dealing with. Republicans, we dont control both champion bers and we dont control the white house. So the bill isnt a perfect bill but theres never been a perfect bill. It will be a bill well have to negotiate on and both sides will have to agree that theres things that we want in it. Now, if we controlled the both chambers and we controlled the white house, the bill that we decide on in the next few days, isnt the build that we would want a much more fiscal conservative. When i operated my businesses and i netting deals, i always said i wanted 110 but i was ready to negotiate to 70 but walked away from the table with 69 . We have to negotiate a lot water of the line upit now you i dont know how i characterize what his life must be like right now. Were all, up know, he just looks hes got a new haircut but he looks like this is wearing on him a little bit. Its tough, isnt it . But hes a fighter. Is he going to prevail . Do you think hell be speak agriculture year from today . Absolutely. If Kevin Mccarthy wants to be speaker a year from now or two years from now, hell be speaker. When you talk to members of the house, theyll typically describe kevin as friends. I describe him as one of my best friends. Hes got a lot of weight and balancing differences when you have john bay nor as speaker and harry lead as leaver. Kevin is but kevin articulates a little bit more, spends a little more time with members really trying to find that sweet spot that the conference can move together on, he doesnt is a lot of wiggle room to negotiate. I think it is probably wearing on him a little bit. But, man, every time i talk to him, hes still in the joy full the. You must have crossed paths at some point with my coanchor. What part of oklahoma did you represent, sir, when you were in the house, senator . The entire eastern side. So from kansas to texas. Where were you . Right outside tulsa. Our business of at 118 place. Sfli used to live at 221st 64 south. I know exactly where that was. Walmart down 71st street. s a. So i grew up east tallouuill. I think the first second cherokee to serve in the senate. First time since 1925. Since 1925, holy cow. All right, senator. I never knew where binger was i nt offensive team this year. Good to have you on, senator. Thank you. 2585332. Youll never foreget. When we come back, the man what had campbell harry plus a deal announced a couple minutes agencies co acquiring Cyber Security Company Splunk for 180 billion in cash. The ceos of splunk and cisco will be joining quack on the street later this morning. Well be right back. 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 first time you connected your godaddy website and your store was also the first time you realized. Well, we can do anything. Cheesecake cookies . The chookie manage all your sales from one place with a partner that always puts you first. we did it start today at godaddy. Com good morning. Futures are in the red. Fed is still in focus. The u. S. Central bank did leave rates unchanged but indicated again it would likely keep them higher for longer, maybe next year, maybe another hike. Hollywood perhaps about to yell cut on the Writers Strike. Were hearing there may be an imminent deal but theres no final draft quite yet. And a 28 billion Cyber Security deal just crossing the wires. Cisco is buying splunk. Details ahead as the final hour of squawk box begins right now. Good morning, everyone. Were live from the Nasdaq Market site in times square. Im becky quick, along with joe kernen. Im trying to understand this from johnny bench. Binger is 28 1 2 miles from resume speed. What is that . He must be using the audio version. I want to figure that out but go ahead. At least hes watching. U. S. Equity futures at this hour. Lets take a look right now. Youre going to see that we are under some pressure. Weve been here for a while. Things got worse over the course of the last couple of hours. Right now the dow is down by almost 200 points, s p boff by 36. A lot of this because people are trying to figure out the feds commentary yesterday. Youll see right now the 10year yield has picked up to 4. 45 , the 2year 5. 1 7 7 for the lat. Two and a half miles. On cruise controls, take it off for a second, two and a half miles, you resume binger and thats how small it is. The more time passes by, the clearer that books. Breaking news, cisco buying splunk. Go back to the breaking news. Im not cisco buying splunk to create stronger Digital Security offerings. Upon its close, the company says splunk ceo will report to Chuck Robbins and will include more recurring revenue and both ceos of both companies are going to be on in the next hour on squawk on the street. Lets go over to our own dom chu. Dom, good morning again. Becky, joe, well start off with a report moving things around this morning. They had discussions for Artificial Intelligence related semiconductors. Thats according to a report citing a person familiar with the matter. Adding they could move to help save billions a year for google depending how heavily it invests in ai and theyve been working to replace broadcom. Shares you can see moving on that bit of news because of the report. Logistics companies betterthanexpected profits but a lower beat. Fedex said it saw market gains as ups dealt with labor unrest and fedex share up 5 1 2 and well end with hot initial public offerings. Klayvo up 36 . And insta cart gained 13 and arm holdings gained 41 at 51. 42 right now. So, joe, some of these cooling off pictures in the ipo market here, not sure what it says about sentiment but traders are contemplating those now. Back to you. Thanks. Hollywood producers may be zeroing on a deal to end a Writers Strike. Did you have an inkling . I was mess pessimistic about it. What happened, yesterday, david . I had been but facetoface meetings would bring a breakthrough. You dont want to get too ahead of yourself here but late yesterday a number of the people in the writing community i know seemed more than optimistic. That may have been tempered from a memo. What i picked up on both sides was a level of optimism they had not seen in the past and a hope they can finalize something as soon as today. Theyre meeting at 9 a. M. Pacific time, again, and the expectation is that will there are very few its nems left that they really need to nail down. If this that were not going to be the case, if the writers come back in apparently as ive been told with a longer lives of what they say are open items again, walking away of the two sides for some period of time,io pup and on both sides more optimism certainly than ive sensed in terms of speaking to people around this. Nobody giving me the specifics in terms of whats been offered and or already accepted. You can look bam being, didnt really get to the fin ush line but did make some progress, you can make ain so important here. 9 a. M. Today. Well see if they can get it to the finish line. David, we had spoke from matt belamy from puck earlier this week and he had a theory off the record and they kind of agreed with it, just this idea that transparency would be a big part of it, that this would be the thing that streaming services will have to tell the writers how much money theyre making on each, which is the most successful so that they can get paid more like they would have in the old days when these theyre finding a pay increase before 4 and 8 , not a big deal. Writers room, that would be the main sticking point. Is that the sense youve got i dont know from the people you talked to, too . Its certainly been a key. I dont know about what was heard from that tick issue. And net flick has been known has perhaps the most luck luck ant to its creators, it writernd. They did say that because six wga staff could you a loud to they can come back in 2026 and ask for viewership had much based residuals. Even that. We talk about the hollywood strikes. Theyre not the patriot missile, would it still be possible that we were talking about the actors strike into next year . Does one norl . The writers theres no Fran Drescher screaming about workers unite against cap i dont know. Shes so out there that i dont know whether you can bring that back in. I whether or not that actually occurs is unclear. Really . They have been talking again, i believe, but i think that is the the fear is that if you dont get something done in this near term time period, lets call it early fall here, that this thing goes through the end of the year. Its not good for anyone, david. And the outsized profits that streaming was going to bring and content is king forever, its a different world than it was two years ago. We kind of need to Work Together here. I think the same way with the uaw. Theyre very similar been. I know. Youre dealing with two industries in the midst of major transition and obviously workers is it are for more. Or m but in that case in the recognizing that streaming and the profit kt associated with it are nowhere near the cable ecosystem that weve all grown up with and the ability for writers to go and all of a sudden, oh, i have got a script now. You isnt. Oh, okay. And youre not either in. No. David, thank you. Theyre wrapping up with coming up see you, dave. Were going to talk more about and were going to speak to a close kaft dant of President Biden. Why . Because hes in delaware. Stay tuned. Stay tuned, youve watching squawk box on cnbc. Taylormade, titleist and ping. Tour balls from your favorite brands. And the most dapper styles from travismathew and walter hagen to calia and lady hagen. You handsome devil. Select the best golf shoes like footjoy, nike and more. And get back on the course with onehour pick up. Look good and play great with gear from dicks sporting goods. ella fashion moves fast. Setting trends is our business. Look good and play great with gear we need to scale with customer demand. In real time. jen so we partner with verizon to take our operations to the next level. marquis with a custom private 5g network. ella with verizon business, we get more control of production, efficiencies, and greater agility. marquis so our customers get what they want, when they want it. jen its not just a network. Its enterprise intelligence. vo learn more. Its your vision, its your verizon. Nice footwork. Man, youre lucky, watching live sports never used to be this easy. Now you can stream all your games like its nothing. Yes [ cheers ] yeah woho running up and down that field looks tough. Its a pitch. Get way more into what youre into when you stream on the xfinity 10g network. Loving this pay bump on our allowance. Wonder where mom and dad got the extra money . Maybe they won the lottery . Maybe they inherited a fortune . Maybe buried treasure . Maybe it fell off a truck . Or maybe they switched to Xfinity Mobile the fastest mobile service. Save hundreds a year over tmobile, at t and verizon. Now i can buy that electric scooter. Im starting a private equity fund that specializes in midcap. You do you. Switch to Xfinity Mobile today. The Federal Reserve opting to keep rates unchanged at their last meeting but indicating theyll be likely to hike before the end of this year. Inflation has moderated since the middle of last year and longer term expectations appear to remain well anchored. Nonetheless, getting the dollar up 2 , it has a long way to go. Our next guest coined the invertedyearold curve indicator. Professor thanks for, here because its gotten a will the of pressure from people say its hng being us kating recession for a long time. You think youre rice moos so the indication. One thing it sfchl beginning of a recession. If you wook he it is evening so its way too early to say this is a false signal. Maybe it does turn out to be a false signal but you cant say its a false signal when youre not even at the average. So at the average we would expect a downturn to start in december or january. December of this year or january of next year . Correct. Because it takes 12 to 13 months before its going to kick in anyway and thats people say, well, weve seen yield curve inversion pms. Well, the last four recessions, that happened before the recession. You think a recession is coming . Yes. So i think that the fed has made a major mistake. What they should have done yesterday is nottiest pause but say this is it approximately for them to say, well, to decrease the rates, not to increase the rates. Unfortunately theres false narrative going on by the fed that inflation is well above ielts comfort level, and it didnt pick the most important component, the, which is right at 3 nt7. 3 and shelter is runn at 7. 3 and thats far away from the shelter inflation in the real world in realtime where houses prices are flat or negative. Rental services, those are flat or negative. Then inflation not to report 3. 7 . It is 1. 5. If you believe shelter inflation is a little higher like 2 , then the inflation rate is 1. 8 . The point im making is this, quote unquote, long way to go that we hear from the chairman, that doesnt make any sense. And im not talking about a special inflation gauge where you trim certain things or you throw good and energy. Im looking at the bag but replace one. So you think inflation is not nearly as bad as the frrn. Do you think an economic recession is closer than other mites suggest or the fet mi be mb why dont you think theres more of a traction with that picking up . Why dont you think that message is getting related more often . People want to believe that we can avoid a recession. I actually hope we can avoid the recession. Mobbants. So 2023 looks pretty good for gp its driven by the consumer. The consumer bailed us out in 2023, and thats a result of a lot of au savings covid have and are likely to about the so consumption is not going to bail us out in 2024. The other important cop pon inter, in inthen. In 2023, the investment recession are and you put those two things together and it spell sfre low but notefully. And every time that the fed increases and it is you have to have a public bathroom because you look at the the other stand who in and realize in the future that 7. 3 ing is it dp and inflation will be within their range. Instead, at the if it increases the possibility of a scenario that nobody wants. I do think that if we do pause and maybe start the decreation, we can avoid the possible possible taste it if and mr. Harvey is the man who came up with the inverted thanks. When we come back, the banks cleaning up on the latest. Well be right back. Trading to help sharpen your skills, you can stay on top of the market from wherever you are. E trade from morgan stanley. Power e trades easytouse tools make complex trading less complicated. Custom scans help you find new trading opportunities, while an earnings tool helps you plan your trades and stay on top of the market. E trade from morgan stanley. Rich, velvety. Coffee. Cafequality. Espresso. One highpressure system. That can do both. Brew to your hearts desire. With the lor barista system. Now brewing peets coffee. That first time you take a step back. I made that. With your very own online store. I sold that. And you can manage it all in one place. I built this. And it was easy, with a partner that puts you first. Godaddy. After a long drought for highprofile ipos, weve gotten three over the past week. Shareholders might be happy about that but it the Investment Banks that might be really happy. Leslie picker joins us with more good morning, leslie. Good morning, joe. The recent spate of ipos may not be bringing to all. But the return of ipos means fees are back on tral street interest is so we were able to calculate in total the underwriters made 173 million for their roles in managing the arm insta cart and clafio deals been thats figures that could make the market go higher. Its largely the firm brought in 43 million combined from those three deals, which amounts to about 13 of what the equity unity made in the entirety of the second quarter. Jpmorgan, which had mom nent roles from with a 27 million haul. And parkly will is. Still, if, which ultimate hi. From. F but thank you. Good points. And its thursday which means jobless claims. Dont go anywhere. Squawk box will be right back. Rich, velvety. Coffee. Cafequality. Espresso. One highpressure system. That can do both. Brew to your hearts desire. With the lor barista system. Now brewing peets coffee. Welcome back to squawk box. Rick santelli here live on the cmehq trading post, awaiting numbers for thursday. Every thursday initial claims. Initial claims coming in under expectations. 101,000. Expecting about 24,000 higher than that. 2001, 2,1 rear never fwraur we have to back to the last week in january. Thats a way back machine number. If we look at continuing claims, not much different story. Theyre also coming in on the under 1,6622is the latest nechl you know, all the numbers are comping back eight months. I know many are scratching their head. Maybe its fraud, maybe it post covid. They found many states jor compensating but this a and mine is 13. 5 as we the week is going back to april, which wean, a little under expectations, a little smaller red oog minus 212 billion. And traits arezoom, zoom, zoomi. More talking about if they want to really stand bad but slicing through that you will that. Oo 2s, 3s, 5s, 10 all move on the 5year. Steve, what are you thinking getting through some of this . Yeah, were not getting were not seeing much response at all to whats going on with the strikes or this idea of a softening labor market not showing up in the weekly claimswhen when i would great height. It 1662, the forward moving average fell drop it but its hard to look at the numbers and see a whole lot of weakening in the jobs and numbers. Adding on to ricks comment about whats going on in the treasury market, the market not necessarily buying all of that the what the fed is buying next year, in terms of lets say 50 more of fed funds rate, taking. But they are higher by looking at the june and january contract. Those are two the bunch marks had much by ten basis points. The market is saying if the if he and have at least some in there. The metro market thinks it will be the grinch when it comes to christmas time. A pao in december, thats where the market has moved that discuss to or debate to, when their fact and podingousing the thats certainly on the table depending on the tay trump we have high are rates in the treasury market and thats also into the Market Pricing of core the kid is going to be this year or next. Okay, becky. Thank you. Joining me, daniel forillo, who led regulatory reforms in the wake of the financial professor. I hope you werent teaching a class when steve icesman frng. I mean, it was staggering how did you. Did you get tough bag with has much interest in strelg a price in this area. They give them on an chick sort of. I dont know how they do that when one person says bothnd frnl i dont have a great feeling after reading some of your point mrs one of the points you make is when t in woman a fwchl so its kind of a seat in the pants . Yeah. To a considerable extent i think its not just the problem about the fichld and the last couple financial which is to say the data thats already come in. I am a little concerned they dont seem to have their arms around especially the question of lags. That is the degree to which the past increases in the federal funds rate have yet to work their way through the real economy and thus the degree to which theres further tightening already baked in. You know, i thought chair towel alluded to the without a very granular sense or many can and a lot of Office Commercial real estate. The fact that a lot are very low because theyre very low and may have to go back out in the markets. So those are still to come. There could be financial conditions already baked in. Im a little concerned that the fed partly out of mess di has been tach. And i dont know anyone who enroy from because with what you just described, either policy mace particular a just who aric. Frrchl and historically. That was just awful but staying tight for too long and putting the economy into a recession when it didnt feed to be, if so its really. I think id quit. I dont disagree with that and i think that as steve just kbhented ng nfrpg is helper threw out had this, first, the fact that the step is not a collective judgment, much all putting in things. What he didnt say, and i would have added this, they had to adjust because the june projections turned out to be wrong. So needed to make an adjustment. But the fact that theyve made that adjustment just between two steps means that they may make it again. So i wouldnt. Too much smock about what the dot plot iscying. If conditions change in the next few and thats the amazing thing, it almost is like the political environment we find ourselves in right now, both sides are so sure about whether one side Roger Ferguson says at least one morinno more tykes and were probably going to cut mayorly soon. Results in recession. Its been right 8 out of. I mean, you dont like people out of work if the fed is shooting for a paint and a half of increase unemployment. Thats not why oo to where both constituent. If you think as a couple with hem of the s and youll id, well, pass of the fichlg and i think others do that this is doing in nuvg frnl employment numbers in particular themselves a lagging indicator of where the economy is. So i think difficult as it is, the feds needs to be a little bit pore moe bethat, you know, cant dprc sfwrchl. Based on the data we get before the next meeting is especially helpful to markets. Nobodys got a crystal ball either. And the own us is on fok. Did can from. No, no, theres no 100 with what you said a few minutesing a. And this moment to note, its important nrm what we nope are the difference of are you r in an oft to at that. In flfrm sometimes its not entirely clear and the hawkish paws in in yun squ dwrm but when you understood in is a compromise that already thought the fomc had gone nar and you. In as an institutional matter, i think hes really done quite an impressive job of keelin where they should be is a different story. Im like to talk to you about pochl and all that stuff, too, and whether you think were i dont know. Are you troubled by the state of that industry . Ziel tell what you we should talk about, joe, is the condition the wide easily. Theyre in a bid bieb and i think policymakers need to have sao there. What happened, dont you think . But thats a good team for nor all right. Dan, let do that. Okay. Okay. Coming up being del which are season tr with his take on what it will take to aroid it which definitely wasnt used in that if stay tuned youre watching squawk box on cnbc. jen so we partner with verizon to take our operations to the next level. marquis with a custom private 5g network. ella with verizon business, we get more control of production, efficiencies, and greater agility. marquis so our customers get what they want, when they want it. jen its not just a network. Its enterprise intelligence. vo learn more. Its your vision, its your verizon. 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. Every day, businesses everywhere are asking is it possible . With comcast business. It is. Is it possible to help keep our Online Platform safe from cyberthreats . Absolutely. Can we provide health care virtually anywhere . We can help with that. Is it possible to use predictive monitoring to address operations issues . We can help with that, too. With the advanced connectivity and intelligence of global secure networking from comcast business. Its not just possible. Its happening. All right. The latest on the fight over spending in washington and the possibility of a Government Shutdown, a new shortterm gop plan would set spending for next year at just below 1. 5 trillion. It would include Border Security measures and create a commission to deal with the growing u. S. Debt, but its unclear if that plan can pass the house, and its highly unlikely it would go anywhere in the senate. Joining Us Democratic senator chris coons of delaware. He sits on appropriations and judiciary committees. Its a lot going on. Appropriations has to be where much of your focus is at the moment. What do you think the odds are of a Government Shutdown . Well, becky, im increasingly concerned that theyre high and getting higher. Here in the senate weve been doing our work. The Appropriations Committee on which i serve has passed all of our bills with big bipartisan margins and were ready to move forward with passing them and sitting down with the house to begin hammering out the spending bills for this coming year. But the house hasnt produced anything and, frankly, the House Republican majority has tried everything but working with democrats in the house. Im concerned that Speaker Mccarthys challenges with the more extreme end of his caucus are only getting sharper as the time is getting shorter. And, becky, a Government Shutdown doesnt just hurt millions of americans who rely on difference government services, it hurts our reputation around the world. It reinforces xi jinpings argument that the american political system is uncaincapabf meeting this home on the world stage, too. Whats the solution . If the idea that the plan the gop puts forth on this point, if thats kind of dead on arrival in the senate, what is the answer . Well, the answer is for Speaker Mccarthy to keep his word. To be blunt, months ago the leaders in the house and the senate and president reached a handshake deal about spending levels, the debt ceiling deal and Speaker Mccarthy promptly walked away from it and the theyve been marking their bills to 20 to 30 below the levels we agreed on. I understand that he has a very difficult caucus, i understand that he has folks gunning to take him out of the speakers chair but Speaker Pelosi when she was speaker had a narrow margin and managed to corral a wide caucus. This is a challenge of leadership and i think speaking mccarthy needs to come forward with a proposal that actually has some chance of being resolved with what were doing here in the senate. This is a moment for leadership between the heads of all four caucuses. The consequences for the average american in terms of the impact on our economy, our daily lives and our strength on the world stage are too great and i think there are too many who are cheering on the idea of a shutdown. In talking with a republican friend of mine, a longserving conservative senator here, he said part of the problem, chris, is that all the folks who paid the political price for the last shutdown have left, retired, moved on to other things and so this small group thats holding Speaker Mccarthy hostage doesnt have that experience could guide them. Senator, hopefully we get through this like we usually do but talk about leader she and everything else. I nope youre in delaware, i nope youre verve protective of the president and you have relationship with him, and i know you see some of the polls and some of the murmurings, i dont know whether you hear it from colleagues, about the age issue and everything else. How do you really feel are you urging the president to stay the course no matter what . And in your heart, do you think another fouryear term is the best for President Biden and for the country at this point . Well, joe, what i talk about a great deal when people have questions or concerns is, first, the core question is too old for what . President biden is running to be president , and he has a very strong record. Our economy continues to move along with the lowest unemployment for the longest period in 50 years. Its been below 4 for more than a year and a half. We continue to have robust job growth, 13. 5 million jobs, 850,000 manufacturing jobs, and their legislative record, in particular, the bipartisan legislative record of these first two years is remarkable from infrastructure to reducing drug prices to investing in Mental Health to strengthening our manufacturing economy, and i could go on. I think President Biden has a very strong record to run on. So, when there are questions and concerns, i say to them, compared to what . As President Biden often says, dont compare me to the almighty. Compare me to the alternative. And the alternative here is someone whose record, i think, stands in sharp contrast. Many of the things i just reviewed, former President Trump promised to do. He promised to reduce health care costs. He promised to rebuild our infrastructure. He promised to strengthen manufacturing. He didnt get those done. President biden has gotten those done, and most of those accomplishments were bipartisan. So, thats the sort of argument i make, joe. I understand. Frankly, later today some of that rings hollow with a lot of americans with their view of the economy. Youve seen those numbers as well. Less than one out of three would give that same sort of appraisal of the current state of the economy. So, like so many things, so tribal, and theres two sides to all these things. I hear what youre saying. He can run on his record, but i dont know whether being able to run on your record really answers the question. We see how it ages a president. You look back in history, and its the toughest job, maybe, on the planet, and i guess thats just the question. It is. Im not sure what the alternatives would be for democrats. Just thought id put that out there. Were all facing it as a country. Look at these two choices we have, senator. Its nutso. We have tough choices ahead, and i think the choice of returning President Biden, given what he has done in europe, in the fight against russian aggression, to mobilize 50 other countries who together have done more than we have to financially support ukraine, their fight and to support ukrainians, i think hes been a very strong leader on the world stage. Strengthening our alliances in the indopacific with japan, with south korea, in europe with nato, and here at home. And joe, i do see those polls. It is striking to me that your average american does not feel the progress in our economy, but id rather have a strong record for our president to run on, strong numbers in our economy, a strong record in global leadership, and have to communicate to move the numbers in that direction than the other way around, to just be a carnival barker with no actual record of accomplishment, which i think is the contrast between the current and the former president. Senator coons, thank you for joining us today. Thank you. Coming up, were going to get you ready for the opening bell on wall street. Meanwhile, cisco is buying Cloud Software Company Splunk. The ceos of both will be on squk t see aawonhetrtt 9 15 eastern time. Corporate types. Would you stop calling each other rock stars . Youre a rock star. You are a rock star. No more calling coworkers rock stars. Look, its great that you use workday to transform your business. But it still doesnt make you a rock star. So unless you work with an actual rock star. Hi, im ozwald. Hello ozwald. Pam, you are a rock i wasnt going to say it. sirens [due at target in 5 ] copy that. Make a hard left down the alley. Networks got you covered. [please confirm requesting backup. ] changing route. Go. Roadblock ahead. Back up, back up. Reverse reverse next level moments, were 30 seconds out. Need the next level network. [north corridor, hurry ] coming through or 3, lets go. The network more businesses choose. Transplant received. At t business. The citi custom cash® card a different kind of card that automatically adjusts to your spending earn 5 cash back on your top eligible spend category up to 500 spent each billing cycle learn more at citi. Com customcash a little more than 30 minutes away from the opening bell on wall street. Joining us now, julie biel, Portfolio Manager at Kayne Anderson rudnick. Is there anything we havent said today, julie, about yesterday and jay powell and what can you add . After all that, were you did you change any of your opinions about investing in the stock market . What jay powell said yesterday . What i think is kind of interesting is where the fed is right now, theyre kind of clinging to the phillips curve, like thats really what they believe in, and were all just kind of wondering, hey, are you guys going to make the soft landing that were expecting you to do . The fed is not a bunch of pilots. Its a bunch of firefighters. They really dont have easy mechanisms to make this perfect, delicate, soft landing, and that makes it really hard for them. They want the soft landing, and they want the ability for job growth to continue, but not too much, and they want the ability for inflation to come down but not so much that it negatively impacts the rest of the economy. Its hard. I mean, they have that horrible sophies choice, whether they want to have a soft landing with inflation staying quite a bit above 2 or do they want a harder landing where they get inflation under control . Thats not a great choice for anybody. I think they would rather err on the side of waiting at rates too high and having less economic output. I think theyre just terrified of repeating the mistakes of the 1970s, and i think what a lot of people on wall street are arguing is its not really the 1970s because what caused inflation in the first place was an exogenous supply shock. It wasnt driven by crazy excess demand, and thats why youre seeing the categories that saw the most inflation declining most precipitously. Is that the choice youd like, julie . Is that the right choice for all of us in the country . I think part of whats difficult is some of the data is fresh, and some of the data is not fresh. Its pretty difficult to understand why the labor market has been so strong in the face of this much tightening this quickly, and what i think were kind of all recognizing is the relationship between inflation, Interest Rates, and the labor market is probably not as tight as we had expected, and so that makes it really hard to navigate. For me, i would have paused probably sooner and waited to see how that was digesting, but i think for them, theyre not interested in rate cuts right away, because they want the firepower to be able to help us if theres a recession. Allright. Julie, thank you. Those are all things we actually hadnt talked about, so value added. Good to have you on. Happy thursday. We like thursdays because tomorrow is friday. Friday eve. Friday eve. Market is not down 200. Thats about the best we can say on the dow. Ill see you tomorrow. Thank you. See you tomorrow. Make sure you join us. Squawk on the street is next. Good thursday morning, welcome to squawk on the street, im Carl Quintanilla with jim cramer, david faber at post nine of the new york stock exchange. The postfed stumble for equities continues this morning as the market comes to terms with higher for longer. Jobless claims, lowest since january, not helping. Tenyear almost to 4. 5 . Our road map begins with big deal news this morning. Cisco acquiring Cybersecurity Firm splunk, all cash