Transcripts For CNBC Squawk 20240703

Secretary yellen later this morning. Auto strikes, day four with both sides digging in. The uaw rejecting the latest wage hike proposals while both ford and gm announce temporary layoffs due to the ongoing walkout. Plus apple reportedly seeing strong iphone 15 demand in china, and tim cook says the vision pro remains on track. Lets begin with the markets as we do kick off a new week. Jim, we didnt get to check in with you on friday. Any degradation, do you think, in this idea of a soft landing . Even the journal today takes a look at how it gets a little tougher from here. I do think that this auto strike is has potential to be very disruptive. I think that oil, clearly, to me, is headed to a hundred before it goes lower. Thats negative. The higher Interest Rates are starting to buy. Theres a really interesting call for lennar, stewart miller, the executive chairman last week, he was talking about the idea that the buyer is getting used to the idea that they have to pay more. Thats the embedded inflation that jay powell most fears. So, i dont think its such a great week so far. Setting up as a bad week. It is. Yeah. I think so. It hasnt even begun yet. Arent you getting ahead of yourself . I think i was asked to project as opposed to reflect. I dont think i was asked to talk about yeah, i did what do we need to be here for if youve already told us . Nobody says you have to be here. I dont care. Would you really not care . No, i would moan the difference. Thats a nice way to start the week. Little love. Im talking about a gauntlet that the fed has to run, and the fed may feel that its terrific and then id read through the some of the things that the uaw wants, and i think, well, okay, thats a big part, you know, lot of employees. Yes. And if you looked at what theyre asking for, and youre jay powell, you would say, okay, game over. I failed. Because the hikes that hes talking about, that shawn fain wants, are radical. Are they radical . Theyre radical you visited a tesla plant. I did in austin, texas. Tesla in 2027, workers will be the labor cost per vehicle, thats really important, is 1,625. Uaw proposal for right now is 3,219. So, how do you be competitive if youre twice expensive per vehicle . Labor costs. Its not easy. Its not easy, carl. Theres a sagelike answer. But it wasnt easy going in. What we have talked about, the fact that tesla has higher margin, something that musk has been willing to sacrifice in terms of market share if he has to by cutting price because he has that ability to do it. And this wont make it any easier for them to compete, no. No doubt. At what point does he have to start paying his workers more money, or is that not something he has to worry about . I dont think he has to worry about it. It takes about three years to build a factory in mexico. There are some pueblo factories, beautiful area, and might take only two years. I think at a certain point the uaw is going to face a lockout. No ones talking about that, but i think theres going to be a lockout. There are enough engines being built by ford right now that shawn fain seems to have all the cards. He may be carrying a two, three, four, five jack if they do a lockout and nobodys talking about a lockout. Its going to have to be front and center. Thinking of huge histories of lockouts. Caterpillar was a big one back in the day. We had this discussion on friday, the idea that manufacturers who have been burned so badly on International Supply chains and are working so hard to reshore, you think would uturn yet again . When you look at ford, its a very different situation than the others in terms of how much of their workforce is unionized, and the fact that it has meant nothing, i believe, has surprised ford. Uaw employees, 56,000. Stellantis, 40. Theyre the only oam to add union jobs since 2007. Lost percentage of temporary workers. Yet, they were struck by everybody else. So i think that ford is not i think ford is the one that shawn fain is playing with fire. And they did go bankrupt. They have five months of pay. Five months theres gm and the old chrysler, wards of the state for a period of time. Right, and i just think that the idea that ford couldnt do a lockout, they can do a lockout. A lockout is very dangerous, as you said, with caterpillar. A lockout says, okay, look, guys, we have a big union, but were going to break it. Doesnt sound good for anybody. War. Isnt good for everybody. Whats it good for . Absolutely nothing. Well see. Thats going to be up to the rank and file to some degree, is something were keeping an eye on as the strike does enter the fourth day. Phil lebeau is on the ground in toledo, ohio. We are across from the jeep plant where they build the wrangler and the gladiator. You see the picketers behind me. Its like this at probably eight or nine of the different entrances around this plant. Heres the latest in terms of whats happening with the uaw. You guys were talking about the pay proposals that were released over the weekend. Stellantis now saying were up to 21 . Fords at 21 . Gm is at 20 . Basically, theyre all around 20 , 21 . The white house is sending a team to detroit, but lets stress this. They are not here to mediate when they get here. They are supposed to be a conduit for conversation so that the negotiations can move along. Im not sure how much good that does, and finally, youve got General Motors saying it may lay off up to 2 how to workers in kansas because it gets stampings from the uaw plant in missouri where theyre on strike. We may see some layoffs there. Just a few minutes ago, this was uaw president shawn fain on morning joe talking about the state of negotiations. Things are still status quo, moving slowly. We had some meetings over the weekend, but we still have a long way to go, and thats going to be up to the companies on how this plays out. Well see how things progress the next few days and if we have to amp up pressure, thats what were going to do. That was about an eightminute interview. Thats the tone of the entire interview, guys. There was no optimism. There was nothing to take away from that interview with shawn fain this morning that made you say, yeah, i think theyre close to getting something resolved. As you take a look at the big three shares of the big three, keep in mind that you have ford and stellantis scheduled to have bargaining sessions today with the uaw. Gm, they had their bargaining session with the uaw yesterday and thats where we are, guys, right now. Im not optimistic that were going to see this resolved any time soon. Just simply reading the body language, the comments, interviews, conversations im having with people at the automakers as well as with the uaw, i just think theyre still very far apart. Phil, does it matter that the different Auto Companies are configured differently in terms of the union . In other words, fords got a lot of usainnion jobs. Or is it just shawn fain is just scorched earth and doesnt care, its capital versus labor . I think its the latter, jim. Not that he doesnt care, but i dont think and weve heard this from ford executives. They have said, look, we employ more uaw members than anyone else. We want to do right by our workers. Look, they have made it very clear with ford, with some of the comments that they made last week, that ford is no different than stellantis and gm in regards to, we want close to 40 . We want a 32hour workweek. We want the reinstatement of defined pension benefits. We want an increase in retiree benefits. We want cost of living adjustments. Thats what the uaw is telling them. And theyre not saying, well, you know what, ford, youve got a few more workers than stellantis and gm, maybe we like you a little bit more. Theres no indication of that at all. Thats incredible. Phil, appreciate that. Well talk later this morning, obviously. So many moving pieces. Phil lebeau in toledo today. Jim, the strike is what one of goldman calls q4 potholes in addition to Student Loans and this idea of a government shutdown, which were going to start kicking around here. Gtheres a terrific piece frm david kostin, saying the ipo market is open for business. I think that instacart is going to be a dud. Id be careful with saying its going to be a dud only because its such a tiny offering, jim. Youre absolutely right. I think it wont be reflective of fundamentals. Youre right, youre right. 200 million worth of stock. What i mean is that this is a company that, if they dont make it really tight float would not do well, because its a down round. But youre right. And goldman wants to price it so it hops. Youre right. It may be a successful ipo, but it doesnt necessarily mean its reflective of a company that is going gangbusters. Yeah, and thats what im really saying is that what you want is a series of companies coming public that are both excite but also are something that, you know, that Say Something about the economy, and thats not doing anything. The potholes are real. By the way, last week, lennar, when they talked about housing, you know, theyre just not giving you what the fed wants. The fed wants Mortgage Rates to be up and housing down. There was an overbuild of 500,000 apartments built, two years ago, 500,000 apartments built last year. Theres too many apartments. They kind of got that wrong. But theres a number of brokerages that boost lennar numbers. Lennar reported and no one seemed to care. I thought it was a good quarter. I think youve got going against going against the potholes is that theres labor. There is labor. There are jobs. Lennar said, look, we have trades. We can build things. So, thats good. But the potholes are real. Everyones so convinced that the fed is its either done or its ready to just skip. I dont see it that way. We do not have a loose labor market. We dont. Now, its true that you can find workers and thats positive. And i think people have to go back to work because of Student Loans, but i dont think its clear that the fed might be done this year. I would not say that. Really . No. Geez, i think that theres still a head of steam here. Impact to the strike that weve just spent the last five minutes talking about . Even Morgan Stanley on friday said, probably going to keep them on hold at least this month. Look, i was listening to shawn fain, and that was fightening. That was just listen, we want our fair share, but the fair share is going to come out of one thing we dont talk about. We dont talk about the shareholders. Make no mistake about it. These companies are not going to be bankrupt. Theyre going to be uninvestable. Isnt that the just part of the pendulum between capital and labor . Im not used to labor being as strong as they are. Not used to labor actually getting a piece of the pie. They want more did you think that they would already give them cola and 20 . C. O. L. A. Is dangerous. We havent seen that in a long time. Cost of living. Although, Union Membership is a fraction of what it was in the 70s. Thats why some people think it is different. There is a ripple effect, but you do take out look, i think that may keep them on hold, but i think that if you have a lockout, i dont know if the rank and file is so in favor of this man who won by very little margin. The previous people who ran the union, bunch approof them went jail. Wasnt like they went to yale. Yeah. Not touching that one . Decided not to. Theres nowhere good to go with that. The compares are easy. Look, the previous management was the cardinals in the second half. Am i clear . Well talk about nfl season over the weekend. Congrats, by the way, belatedly, on thursday. Thank you. A wins a win. Before anyone says, oh, they didnt look so good, oh, go to hell. The state of demand for apples iphone 15 lineup in china. Plus what tim cook is saying about the vision pro. Saras going to sit down with the treasury secretary this morning exclusively at 10 00 a. M. Eastern time and theres ton a of upgrades and downgrades. Lockheed, dash, carvana, paypal, arm. T possible to use predictive monitoring to address operations issues . We can help with that. Can we provide health care virtually anywhere . We can help with that, too. Is it possible to survey foot traffic across all of our locations . Yeah absolutely. With the advanced connectivity and intelligence of global secure networking from comcast business. Its not just possible. Its happening. dad oh yeah mom bringing in a new roommate to save money . Is that the plan . dad well we gotta find someway to save. So say hi to glenn from work. glenn hey thats my mom. mom yeah. I think i have a much better plan. We switch to myplan from verizon for just 25 per line. daughter and that price is guaranteed for 3 years. mom all on the network we can count on. daughter its a good plan. dad it is a good plan. Glenn looks like were not going to be needing you. So, ill see you at work . son uh later, glenn vo save big with myplan. Starting at. Just 25 when you bring your own phones. Guaranteed for 3 years. Its your 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. Presiapple is going to be i focus. Chinas global times says the companys witnessing Strong Demand for the phone in their country. Meanwhile, goldman reiterates a buy on the stock, said lead times for the pro and the pro max suggest demand outpacing supply. Wedbush, jim, as well, says they think maybe 8 to 10 above what the 14 was doing. I think theres a misconception between of what wall street was looking for. They felt it would be tepid and turns out not, as opposed to just those of us who just think, every time theres an iteration, theres people who go from the 12 and the 11 and the 10, and wall street seems tone. About that. But i always wait. David, maybe you can help me to see what tmobiles offering, what verizon is offering, what at t is offering. Thats how people buy phones. Their promotional activity has been no more than it has been in the past. I know some analysts have pointed to an increase in it. Im not sure thats accurate. But i think what is interesting is going into this launch, there seems to be a belief that response might be tepid for upgrades and thats not going to be the case. Its not. And we talked a great deal about china and this potential ban that was discussed or at least reported on for government or employees of stateowned enterprises. That doesnt seem to be impacting anything right now. China news is so tough to parse. I know that you you laughed at me about the pictures last week. My channel check, so to speak. But its a Chinese Government publication. Theres not some rogue well, theres not a lot of rogue chinese action, particularly because they detained some of the Wealth Advisors at evergreen, and i dont think that was because they got the yield curve wrong. I think it may have been more pointed than that. Meantime, tim cook was on cbs sunday morning, talked to Jon Dickerson about using the vision pro. Im using it on a regular basis. How do you use it . I watched the entire third season of ted lasso on the vision pro, and of course, theres some things that i have access to that other people dont have access to. Has it been more complicated . Are the puzzles that you have faced with creating it the same kinds you would face with an iphone . No, its more complex. And so, it requires innovation and not only the development but also in the manufacturing. But is it on track . It is on track. You got to like that. Yes. And look, i think were going to have to get used to something that i know is david will make fun of me right now, but later, hell be using it pretty much constantly. David i just turned you off, i turned you on, turned you off. That thing cost 3,500. So, maybe tmobile gives it to you. Theyre not going to. How do you know . Theyre not going to. I think that you may be wrong. No. 3,500. Theyve got to reduce the price to make it a mass market. Could you give a discount . Could youive a discount . Carl, sorry. Zip it . Is that it . I just made him disappear. I put up the grand canyon. Have you watched, by the way . Morning show . On apple . No. This season. The reviews have been good. Oh my god, its unbelievable. I mean, the control room, the outage, i dont want to give anything away, but i found it riveting, and i think that i would like to watch it lying down by myself with a vision pro. Okay, with my wife, maybe. What do you mean . If you have it on, it doesnt matter whos with you. Anybody could be with you. But im married. Congratulations. Well done. Well, i think, i could be invite a bunch of people over and watch it like this. Great social experience. Hamm pretty good . Jon hamm was needing a good role and i think he found one. Were a couple weeks behind. Well catch up. 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. Weve got your back, road warriors. Because we know youre picking up the pace, steering life at 10 and 2. Youre hitting the road. And were helping you get there with confidence. So skip the counter without missing a beat. Choose any car in the aisle. And be the boss of you. Go national. Go like a pro. sfx stone wheel crafting the biggest ideas inspire new ones. 30 years ago, state street created an etf that inspired the world to invest differently. It still does. What can you do with spy . Chips are going to be interesting today. Nvidias your biggest ndx laggard, along with arm, down about 3 as bernstein does initiate arm underperform 46. Although theres other calls as uthe ura descpgdes micron. Dont forget, you can catch us any time anywhere. Announcer the opening bell is brought to you by nuveen, a leader in income, alternatives, and responsible investing. All right, were going to get to a mad dash and im going to be surprised too because he and i didnt talk about it during the break. What are you going to do . Micron. This is very important. Theres a Deutsche Bank upgrade and there were a number of positives. Theyre talking about finally, the inventory glut is behind them. They also say that they we are at the inflection point. They have something thats more proprietary than commodity. This stock can be a leader, and there are others that can go wit. I mean, for instance, historically, you might find that amd will go with it because theres a big pc component. Now that is if Deutsche Bank is correct in their analysis. If theyre correct, exactly. And trying to predict the bottom so far has been a fools game. Just a fools game. But ive got to tell you, david, if its true, this group is a leadership group, and its been just kind of weak for weeks now. I mean, obviously, intel would benefit from this. Right. I had not found anything other than nvidia thats a positive. Nvidias been oneway street, down since they reported that great number. So, maybe micron sparks a little life. It wouldnt surprise me. We talked about the movement in nvidia directly after the report of the quarter. Stock market hasnt done particularly well since then either, has it . No. So far, it hasnt done that well. There are individual stocks that have done well. I can name seven of them that outperformed the 31 in the nasdaq. Amazons been terrific. Meta, tesla. Teslas amazing. This is anecdotal. How long will people ignore the fact that alphabet, google, has an incredible football package . And maybe brings in more people. Look, i know when you talk about these things and you talk about the nfl, its always anecdotal but you did have that monday night football being the best. You do have a surprisingly good option in alphabet, much better, i think, than directv. You have gambling. I know from draftkings, out of control positive in the Fourth Quarter. You actually have Fourth Quarter action thats shocked people and its almost like vegas is involved. I know thats not true. I just think that people are misjudging, and i think alphabet may be a real winner in this. We cannot dismiss the nfl as a factor in our lives, that monday night football is quizzical, because obviously, jetsbills the bills market, buffalo, last night, look, not a giant market. But youre right. The fade on nvidia, the fade on oracle, the fade on adobe, and yet google has managed to resist all of those. Adobe was a remarkable quarter, but alphabet google, i think people are starting to think, you know what . Maybe they can do even 10 million perhaps in tv. And also, by the way, the cord cut. Its relentless, and i dont know lot of people, by the way in the meantime, we do not have any i just find a lot of people arent watching the traditional shows. They just dont watch them. And whats promoted for the most part during football is whatever plus offering anybody has. I guess i got to go to yellowstone just to kill those ads. Its the Monetary Fund for the unga this week. At the nasdaq, its former Vice President al gore along with key investors, founders and executives across the climate ecosystem kicking off nyc climate week here, jim. I didnt know that the imf was kind of like the giants who traveled to the cardinals. Kind of surprising. The imf, kind of a boisterous group. Wheres that going to open, the imf . I dont know. Doesnt trade here. Oh, it doesnt trade. Okay. Sorry. Sorry, jim. Well, its just that sometimes you have these if you would engage by clapping, then this imfs a lot more popular than i thought. Feeling good about imf, huh . I just feel rosy. Isnt that also the Impossible Mission force . Hows paramount doing right now . Not great. The phrase sell Rosh Hashanah gets tossed around a lot as the seasonally weakest week of the year. It sure is, but that would mean that by friday, you got to start buying. Obviously, thats like sell in may and go away, but i think its held up better. I think since 88, the week following september opex is down 27 of 35. There have been weeks ahead of yom kippur where youre just stunned at the lack of buying interest. Im not sure exactly how they want to draw a conclusion there. Im not sure there is one to be drawn. But apple is up. Nvidia is down another 3 . Nvidia i have a new dog, and unless i rename this dog nvidia, this dog is the most stupid dog ive ever seen. This dog has no idea what its doing. Its a mutt. And i this is ragu. And i guess what is the proper word youre allowed to say . Urinate. Urinates exactly when you dont want it to urinate. Like, usually when theres a big Fourth Quarter stance, that dog is urinating. I mean, its like, wow. We got to put it on. Oh, stop trading. I mean, honestly. During the comeback, the cardinals comeback i mean, the giants comeback, i got to tell you, this dog was urinating every single possession. Very excited, obviously, about the giants. You got a giants fan on your hands. I hadnt thought of that. Should i call him eli . Eli, get over here. Daniel. Go with daniel or jones. Just call him jonesy. I dont know. I dont want to necessarily say that the dog is the dumbest dog ive ever seen but i think hes not mensa, clearly. Give the dog time. Hes got general graduate. Lets talk a little clorox. Okay. It was back on in midaugust, august 14th, the company identified unauthorized activity on some of its Information Technology systems. After becoming aware, it said it began to take steps to stop and remediate it, including taking certain systems offline. Now we find that taking those systems off lineup actually stalled business a bit. Its forced the company to take certain systems offline, implement more manual ordering and processing procedures, and it will transition back to normal automated ordering soon, as in next week, but right now, its got an elevated level of Consumer Product availability issues. And its going to have a Material Impact on q1 results. This is, again, a cyber intrusion. You see them all the time. Having an impact here and then, of course, we talked a bit about mgm, caesars, which suffered similar cyberattacks. We never really went into it. We havent, and they chose to approach them somewhat differently, and its interesting. Its an interesting question for companies at this point, many of which have insurance. Do you pay or not . Caesars paid. Now, i dont cnbc. Com reporting it could have been a 15 million ransom. Caesars paid. Most of that is covered by insurance. Mgm didnt pay. And mgms stuff was offline for a longer period of time, i think, than caesars. Thats an interesting question as well. In this world we live in now where cyberattacks, of course, are quite common. Do you pay . Youve got insurance for it. Why not just pay . Because i think that the governments going to say, if you pay, its going to be like what we did with kidnapping. We wont allow you to pay. The governments already we dont negotiate with terrorists . The governments said, you got to report any hack. But i thought what was so interesting about the clorox hack is they still cant they havent been able to figure out how bad its been. Impact will be material but they dont know the extent. Little visibility to the extent of financial fallout. It is i mean, these companies, again, mgm had to go back to writing everybodys information on a piece of paper. Give me your credit card number. Clorox, you would assume, manual ordering is probably somewhat similar. Its like taking you back to the 70s. The companys been very forthcoming. I had Todd Mckinnon on from okta. Okta was caesars and mgm. It was a social hack where they got i. T. To re to give new credentials to people they thought were employees but werent. One of the things that Todd Mckinnon emphasized to me, and i think its interesting, carl, the way people work, but there were people who asked for information, and the these are service dog employees. I mean that very positively. They wanted to be forthcoming, wanted to get the operation done and thought they might be holding up the operation, so they gave the information away and that is not something that okta can prevent. Okta came on to say, look, we cant prevent employees from being uneducated and just saying, hey, listen, lets send them that. By the way, you know who is the most who is the toughest and has really figured this out . Because they were the most hacked . Verizon. They were easily hacked. And so now, if you try to get help from verizon, you have to inperson. Its very difficult. Thats what its coming to. Were going to have education, and every employee is going to say, i cant help. We may have the tools to identify ourselves in ways that are not easily replicated. Right, but i think whether to pay or not to pay is going to be a government decision soon. Not going to be up to the companies. Youve got two companies that approach it differently, but one suffered more than the other. But if you decide across the board that no ones allowed to pay, then i think we get the government involved. Right now, the look, theres companies that are really unbelievable at cybersecurity, and i think the game theyre playing is whackamole. Nikesh aurora will tell you, we have artificial intelligence, and we have a leg up on the bad guys. What you want to do is find the car in the parking lot where the doors arent locked. Thats the easiest one. Some people do. Bad guys are good at doing that and exploiting it. Interesting because the quarters from the cyber companies, cyber software, havent needed highprofile hacks to drive the stock. No. Like the old days, and my travel trust owns palo alto, and i just am kind of blown away by how good they are. They are using artificial intelligence, but there is i think davids right. Theres going to be fundamental debate about pay no pay. If you want realistic, you have to watch here i go again. But you have to watch the morning show, because what it will you listen to me . This is the new narcos. Jims latest obsession. Ive literally never gotten through a show on apple tv. I go in excited and by episode five of all of them youre plus cutting. Keeping the cord and plus cutting. I have it. I like the services. You like the comedies on abc, nbc . No, i dont. The notion is, pay no pay, and there whether its a stance that anybody really cares about. The media, you would care, but i think that no one would have cared if clorox had paid. But linda went dont even know what the ask was in clorox. Were talking about caesars. You mean like their Hidden Valley ranch . Too much Hidden Valley ranch . I like Hidden Valley ranch. They seem to have identified who the potential hackers were in the case of the gaming companies. I think its time that somebody went to jail. I dont understand why its not more vigorously prosecuted. All you have to do is have a couple guys go to jail and i think the others might think twice about trying to get as much kingsfords as possible. What was it . Listen, if you dont pay us, were going to make you make more kingsfords than you can use . Whats the point here . What are they doing . I dont know, jim. Do you like Hidden Valley . Do i like Hidden Valley . The dressing for my salad . Yeah, the dressing. No, im not a user of Hidden Valley. Its delicious, david. Is it . I have a gas grill, so i dont need the charcoal. But i use bleach. I do like bleach. You do use bleach. Yes. Sure. Well, maybe they you have to be careful with it, though. Always make sure to mix it with a lot of water. Dont put it in your contact lens . No. Thats really helpful. Well, i was just told arm is now down 6 , jim. Thats brutal. Im sure youve read the bernstein initiation. Arm is expensive. Theres no doubt about it. Arm opened up that last spurt in the last half hour of trading on the day it came public made it go from being a company that you could get behind to being a company that is clearly the most expensive semiconductor company, and now they are in a lot of places. Theyre in auto. Theyre obviously, they dominate cellular phone, but when you compare it to cadence and synopsis, which were the goes with the comparison i used, its just too expensive. That said, look, i mean, they have things they were the ones that jensen huang decided to pair. People are using 40 billion price tag. Thats what jensen was willing to pay. I dont think youre going to get that. It was a few years ago. Right. That was 2019. Before im sorry, 2020. Before grace hopper. And the grace hopper 200 is the one that everybody wants. Now we are right around a 60 billion value. That said, its still listen, it is seen as a successful ipo. They launched it. It went well. Its still trading nicely above the 51 price of which it was offered, and it does set up for this week with the two. Weve got clavio and instacart. Im so glad you pronounced it. Im pretty sure i got it right. Its clavio. Thats Enterprise Software, and the Enterprise Software is the that ones really small. But people love Enterprise Software, david. Right. They bathe in it. This is like this is like alturex. How do you like that . Enterprise software has been you said youve been saying that b to b, not b to c. Its b to b, and everyones trying to make all this stuff b to c, and forget it, its hidden. Crowdstrike is moving up. Well, b to c with a. I. Will generative a. I. Applications, but i dont know when were going to see that. Name me a b to c. I dont know when youre able to do this with the watch and something happens, cool. You know who the biggest user so far is . The banks. And you never see it. The banks are big users, yes. And the banks, by the way a lot of them are interesting it internally. A. I. , we have to distinguish here we go. We have to distinguish between a. I. And generative a. I. A. I. Has been around for a long time. Generative a. I. The idea of asking questions and getting very detailed responses in the language that you understand well. Thats different. Look, i think the Insurance Companies and the these Auto Finance Companies are the best use case because they need to change very quickly. When i talk about generative, its not just that. Its also code, which may, in fact, even prove to be more important, the ability for it to write code or fill in large sections of code. Well, but i love the fact that you can speak and i mean, Frank Slootman from i mean, he was snowflake he said that you can speak and not even speak in a necessarily coherent way and get a good answer. Theyll figure it out. It will figure you out. Its too smart. There was a great piece in the ft this weekend about how it really works and identifies the words around it and how clever it is. I still think its got a way to go. There was a piece in the times where i forgot i shouldnt say which paper, but a professor gave had it take the test, and it didnt do so well. Its like eighth, ninth grade right now. But this is chatgpt 4, wherever alphabet is on theirs, but when we get to 6, 7, 8, 10, its fo going to be really strong. Is that it . When we get to 8 . Right . I mean this is the best thing that apples ever come up with. Im turning you off big time. I need information, i need it now. Click. Jim, energy. I got a lot. Valero and marathon leading today. We did get to 91. 70 on crude. You see yardeni . I will tell you that iea had been saying that the u. S. Is not upping production. Thats not true anymore. The u. S. Production has, in the last month, starting to really jump. This is why citi is a little dovish on oil right now, because of nonopec supply. I think people dont understand that they have turned it on, and that has been saudis a swing. Russias a swing, and were a swing. And up until just now, in the last few weeks, we have held back because we didnt know if its real. The more it stays here, the more we can pump. Weve been pumping in the last the numbers are the ring count was plus two on friday, but the amount of oil we can pump from individual wells is rather extraordinary. Lets remember, pointblank, that the u. S. Is producing more and that will knock the price down. Youre not calling for a hundred . A hundred and go down. By that point, the u. S. Output will be clear to everyone, because the Oil Companies are getting theyre starting to get bullish, and they have been very bearish and theyve been spending a lot of money returning money to shareholders. Thats been their goal. But the last couple weeks is really the definition of pumping like mad. Of our megacaps that we keep an eye on, apple up, alphabet up, amazon, but teslas down another 3 . Even though they have this tieup with saudi. They dont necessarily have a tieup with saudi, but there are reports theyre in early talks to build an ev factory in saudi arabia. By the way, erdogan apparently also asking musk to build a factory in turkey. Macron a few months bag wanted him to do something in france. Everyone wants elon to build a factory in their country. Unclear whether that will happen in saudi, of course, but there are plenty of ways that they could woo him, one would expect, including apparently the right to purchase certain quantities of minerals and metals from countries including congo. Well, all i can tell you is pacific electric has an amazing relationship with elon musk and theyre trying to produce as much power, equal to five Diablo Canyon nuclear reactors, just taking the energy back. Extraordinary. Way to be able to reduce we could be in a position where we go to a not a deficit but a surplus. You plugged in your car and its taking the power from your battery . Right to the grid. Its really, i think, remarkable. And musk is the leader there. Yep. Yeah, he saw that coming a long time ago. Still to come this morning, saras exclusive with the treasury secretary is at the top of the hour. Important week for treasury and of course the fed will get a decision this week, along with housing data. The fed blackout, though, is going to lead to some vacuum on how bonds respond, but for the time being, you do have the twoyear at 5. 03 . Anythi woman what if my type 2 diabetes takes over . What if all i do isnt enough . Or what if i can do diabetes differently . vo now you can with onceweekly mounjaro. Mounjaro helps your body. Regulate blood sugar. And mounjaro. Can help decrease how much food you eat. 3 out of 4 people reached an a1c of less than 7 . Plus people taking mounjaro. Lost up to 25 pounds. Mounjaro is not. For people with type 1 diabetes or children. Dont take mounjaro if youre allergic to it,. You or your family have medullary thyroid cancer,. Or multiple endocrine neoplasia syndrome type 2. Stop mounjaro. And call your doctor right away. If you have an allergic reaction, a lump or swelling in your neck, severe stomach pain,. Vision changes, or diabetic retinopathy. Serious side effects may include pancreatitis and gallbladder problems. Taking mounjaro. With sulfonylurea or insulin. Raises low blood sugar risk. Tell your doctor if youre nursing, pregnant,. Or plan to be. Side effects include nausea,. Vomiting, and diarrhea,. Which can cause dehydration and may worsen kidney problems. woman i can do diabetes differently with mounjaro. vo ask your doctor about onceweekly mounjaro. Every day, businesses everywhere are asking is it possible . With comcast business. It is. Is it possible to use predictive monitoring to address operations issues . We can help with that. Can we provide health care virtually anywhere . We can help with that, too. Is it possible to survey foot traffic across all of our locations . Yeah absolutely. With the advanced connectivity and intelligence of global secure networking from comcast business. Its not just possible. Its happening. Welcome back to squawk on the street. Im sara eisen in midtown, manhattan, im getting ready to speak with treasury secretary janet yellen in a first on cnbc interview, she is here along with President Biden for the u. N. General assembly and for climate week. Well talk about the u. S. Priorities but there are fresh questions facing the u. S. Economy that we will get to in just a few moments, including uaw strike, the deficit. Speaking of the deficit, someone who is worried about the deficit right now is ken griffin, Citadel Hedge Fund titan, but a good chunk of that interview has not aired yet, including the big question on everyones minds, whether the gop mega donor will continue backing Governor Ron Desantis for his president ial election bid. Lets listen. Were now through the first debate and ill tell you what im on the sidelines who to support in this election cycle. In fact, it probably doesnt matter. Donald trump is made the martyr by the legal system. Hes right now the runway favorite in the republican primary and theres no real contender against joe biden who, with all due respect, its time for him to enjoy retirement. Griffin is as frank as ever. We talked more about Desantis Campaign strategy and what a Trump Presidency would look like. Also talked about whether hes investing in china and what he thinks of onrmsnean portrayal of him in dumb money. Special edition of cnbc leaders, 8 00 p. M. Eastern time. More squawk on the street when we come back. 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. We moved out of the city so our little sophie could appreciate nature. Transplant received. But then he got us tmobile home internet. I was just trying to improve our signal, so some of the trees had to go. I mightve taken it a step too far. chainsaw revs tree crashes chainsaw continues daughter screams lets pretend for a second that you didnt let down your entire family. What would that reality look like . Well i guess i wouldve gotten us xfinity. And wed have a better view. Do you need mulch . What, we have a ton of mulch. Loving this pay bump on our allowance. Wonder where mom and dad got the extra money . Ton. 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. Lets get to jim and stop trading. There was a piece that came out by lisa ellis this morning, which was a downgrade of paypal. A lot of talk about remember you got a new ceo coming in in ten days. I find were at this moment the revenge of mastercard and visa, that old, no. Theyre not working. You can stay away. You want to be in the old fins, mastercard is doing incredibly well. Doing great job. That moment where i thought that everything was going to go with the new guys that ship has sailed. Yeah. Alex begins in a few days, and they talk mostly about apple pay competition. Apple pay is 10 years, i think apple pay is theyre very bullish. I can tell you that. Goldman, i dont know. You spoke with david solomon. I think theyre getting hurt on apple pay. What do i know, they dont break it out. They dont. They would say consumer such a small percentage of the overall revenues and clearly not reading into it any longer. . You can sell it ap. Im sure somebody wants it. You had high hopes for that card. I did. There was a shuffle at goldman, the person i was close to, went to another firm and but i am very now im bullish on what apple is doing, not what goldman is doing. What about tonight. Oracle got crushed, when they reported, went down to 108 intraday. This is from oracle cloud world. Well see what happens. Pick. Hidden valley ranch. He doesnt realize its head and shoulders, not the shampoo, above the others. I totally agree. There is no competition. You can make a lot of different things. Well see you tonight, mad money. 6 00 p. M. Sara is one on one with the treasury secretary. Dont go away. Good monday morning. Welcome to another hour of squawk on the street. Im Carl Quintanilla with david faber live at post nine of the new york stock exchange. Sara eisen live in new york city at a big interview with the treasure secretary janet yellen in a moment as the stocks kick off the week in the red on some elevated yields and Higher Oil Prices. Sara, looking forward to the interview. See you in a few moments carl. Secretary yellen in new york here for the u. N. General assembly along with President Biden, here for climate week to draw attention to some of the Economic Risks of Climate Change. There are fresh concerns and questions about the u. S. Economy. Shes been banging the drum on the soft landing. Well talk about that and the risks bubbling up including oil prices which continue to rise. Ill send it back to you, carl. See you in a minute. Nahv out a moment ago. We go to diana olick. Home Builder Sentiment fell 5 points in september according to the nhv solidly in negative territory. 50 the line between positive and negative, a 6 point drop in august. A year ago sentiment at 46. Builders blaming high Mortgage Rates which went over 7 and havent budged. 32 said they cut prices in september, compared with 25 in august and the largest share since december of last year. The average discount 6 pfts sentiment indexs three components, Sales Conditions fell 6 points to 51, sales expectations in the next six months also fell six points to 49. Buyer traffic dropped 5 points to 30. Builders say theyre still benefitting from a lean existing home supply, a special question was added to the survey this month about who is buying and builders said 42 of their buyers were firsttime buyers. That is much higher than the historical norm of about 27 . Its about rates. Thank you. United autoworkers president shawn fain rejecting a 21 pay basketball game from stellantis calling it and other offers from ford and gm a no go. Phil lebeau has the latest for us this morning. Phil . Reporter [ no audio ] im not hearing phil either. We can probably get that fixed relatively quickly. In fact so quickly we now have phil. Take it away. Reporter the magic of technology. Lets talk about where things are with these negotiations right now, twice. Youve got ford and stellantis resuming talks today with the uaw. They were holding them over the weekend and theyre going to be back at the bargaining table. Gm was there yesterday. The uaw president shawn fain says if things dont improve they are ready to amp up, read into that what you will in terms of what amp up means, the white house is sending a team here to detroit not to mediate, but to assist in some fashion with the dialog between the automakers and the uaw. Does that move the needle with shawn fain . Here he is about an hour ago on morning joe. This battle is not about the president , its not about the former president or any other person prior to that. This battle is about the workers standing up for economic and social justice and getting their fair share because theyre fed up with going backwards. Reporter and as you take a look at shares of gm, ford and stellantis keep in mind we are starting to see the ripple effects, guys. Gm may lay off up to 2,000 workers at its fairfax, kansas plant, where they build the malibu, cadillac ct 4. That plant gets stappings from the gm plant in missouri. The uaw is on strike in wentzville. If youre not getting stampings there theyre not being sent. Thats the latest from out here across from the jeep plant in toledo, ohio. Phil, appreciate that. Phil lebeau in toledo watching the strike. Back to sara eisen as we said with a special guest. Hey, sara. Hi, carl. Thank you very much. I am here with treasury secretary janet yellen. Thank you so much for taking the time to speak with us here in new york. Thanks for the invitation. Ill pick up where phil left off and i know youre not involved in the negotiations around the uaw, your colleagues are doing that, but how are you thinking about the impact or potential impact of this strike on the u. S. Economy . Well, look, we want to see the two sides come to a winwin agreement. President biden has made clear he expects them to work hard to negotiate 24 7 to get to a solution, and so were hoping that that will happen soon. Because you have to be worried about inflation, i would think, just as its starting to come down, supply chain disruptions are a risk here, arent they . Well, you know, i think its premature to be making forecasts about what it means for the economy. It would depend very much on how long the strike lasts and exactly whos affected by it. Important point i think is that the two sides need to narrow their disagreements and to work for a winwin, a contract thats good, good for the workers and for the industry as well. The industry has been doing well and the president wants to see the workers come out ahead as well. Its part of a string of strikes that we have seen hollywood, the writers, the rail workers, the teamsters, upcoming strike potentially for Health Care Workers on the west coast. What do you think is driving all of this labor activism we havent seen the likes of in years . We have a good, strong labor market and the demand for workers has been high, and, you know, its important for workers to be able to realize gains. The Treasury Department recently put out a kind of white paper about labor unions and the contribution they make to our economy, and we want to see good zobs that pay wages that enable people to live a good life, especially people with a college education, the president feels strongly in favor of collective bargaining and the ability to strike as part of that. It ultimately is just inflationary and disruptive, isnt it . I dont think weve a seen that, so, you know, it depends very much on the circumstances. You mentioned the strong labor market. Its been a tight labor market. Obviously, millions of openings, more than unemployed. It is starting to cool and i wonder what trajectory you think that will take . Well, it is cooling, but its the cooling does not involve significant layoffs. Partly, its people joining the labor market, so the supply of labor is increased as people have come back with participation is moved up. Also, the strength of demand has cooled. You see that in the decline in the number of openings. The number of openings relative to the number of people looking for work is still quite high. Thats a very healthy labor market, but not quite as high as it was and the fraction of workers who quit their jobs, thats sometimes a metric that gives insight into the just how hot the labor market was. That was exceptionally high and its also moved down to the kinds of levels we saw prepandemic, so we have a good, healthy labor market, but not quite as hot as it was and thats important because, obviously, our objective is to bring inflation down to 2 . You have been a big believer in the soft landing story. Weve seen it play out so far, but arent we just starting to see the impact of the lag effects of fed tightening . 525 basis points . How do you think about the timeline there . There are lags in the impact of Monetary Policy and the economy, and we would expect to see some impacts. I think weve certainly seen it in the housing market, but look, we still have a good, healthy labor market. Consumer spending remains quite robust. Weve seen Strong Industrial production. I dont see any signs that the economy is in risk of a downturn and this is the best of all worlds, to see continued strength in the economy, a good, strong labor market, and inflation moving down. That is what were seeing. Do you have a time frame in mind of when we might see the peak lag and how severe it would be . I dont think anybody knows for sure, but credit continues to be available, although the rates are clearly higher. That does make a difference. It has made a difference in some sectors. You know, were seeing some cooling in the economy, some slowdown of growth off record high levels, which is appropriate when the economy is operating at its potential. Im pleased by what i see in the economy. I think were achieving lowering inflation which is very important to households and tremendously important objective, but still, a good, strong labor market. We are seeing lower inflation, which is why im wondering how youre thinking about the gas price move. Big jump in the month of august. Crude is back above 60 per barrel. The saudis are extending the production cuts through the end of the year. Are you looking looking at taking any action on this front . The president wants to make sure gas prices remain affordable for americans. Americans care a great deal about the price of gas theyre still down 1. 20 off their highs last summer although they have gone up recently. Pandemic lockdowns, although chinese growth is slower than expected, china coming back online and the continuation of the production cuts by saudi arabia has lifted oil prices somewhat. Were monitoring the situation very closely. The president has taken action over the last year. Certainly the releases of oil from the Strategic Petroleum reserve have been important and oil prices are down and well continue to monitor that closely. I wonder how much faith you have in what you would potentially to if because we are losing progress on this front with Oil Prices Rising . My expectation is that they will stabilize, but well just keep an eye on it. Another headwind that people are looking at is the end of the moratorium on Student Loans. Folks will have to start paying october 1st and were wondering what impact that could have on Consumer Spending . Its a key demographic cohort. Well, for some families, i think it will impact their spending. The president has offered up and the Education Department a new set of student loan plans that should make these payments more affordable and will be widely available, but, yes, they will start up again and it could make a difference. You mean in Consumer Spending . It could make some differences. Gdp as a risk factor . I dont know how large that is, but its something to. Watch. The other thing were watching is the government and a potential shutdown again in two weeks to go. The republicans have this shortterm funding bill out. Not clear whether they have their partys full support and whether it would go anywhere in the senate. Are you anticipating a shutdown . Theres absolutely no reason for a shutdown. The Senate Republicans and democrats in the house and senate stand ready to enact appropriation bills that are consistent with the bipartisan agreement to lift the debt ceiling and we want to see Congress Pass legislation that will create appropriations tore a continuing resolution. Theres absolutely no reason for a shutdown, and we Want Congress to do its work of funding the government and keeping it open. But the time is running out, as you know. Is that a could that have a potential Economic Impact if we see a shutdown . It could have some impact, but there is no reason for it to occur and we Want Congress to stay focused. Weve got a good, Strong Economy as weve just discussed, and creating something, a situation that could cause a loss of momentum, is something we dont need as a risk at this point. Some people think the reason we have such a good, Strong Economy in the face of all these Interest Rate hikes is all the fiscal spending we have seen. The infrastructure act, American Rescue plan, the Inflation Reduction Act, the chips act, all of that stimulus working against what fed chair powell has been doing to try to slow the economy to fight inflation. Do you agree . Well, the infrastructure act, the chips act, the Inflation Reduction Act, these are all longterm spending measures that will really boost the growth of the economy and add to its job creating capacity long term. The many of those bills were then paid for and, so i wouldnt regard it as net stimulus. I think the American Rescue plan, which was stimulus, shielded families that could have been very badly impacted by the pandemic and kept a roof over their heads and food on the stable and made sure the Fastest Group the United States economy is doing better than any economy around the world. Weve not seen the longterm job losses scarring that easily could have occurred. The bipartisan agreement to raise the debt ceiling involved a trillion dollars of deficit reduction. President biden is committed to keeping the economy on a fiscally sustainable course, and he proposed a budget with 3 trillion of deficit reduction over the next decade. Were both investing in the longterm health of the u. S. Economy to boost growth and create good jobs and clean energy, semiconductors, to rebuild our infrastructure, to make this economy more productive. And i think thats a strategy thats really working investing in america and americans. It is coming at a cost and the deficit as a percent of gdp is projected to be 6 , double what was initially expected in a time where we have good growth and full employment. Shouldnt it be going the other way . Well, we have to make sure that we do keep deficits under control going out. The statistic or metric that i look at most often to judge the fiscal our fiscal course is net interest is a share of gdp, and even with the rise weve seen in Interest Rates that remains a very reasonable level of around 1 percent. We do need to be careful about what we do Going Forward in order to make sure we stay on a sustainable course. The impact of some of those bills that you were talking about, dont they start to hit into next year and couldnt that keep inflation sticky and potentially cause some concerns in the bond market about issuance to pay for all of that . Im not really seeing concerns in the bond market. Of course, theyve tightened Monetary Policy and that pushed rates up. There are pay for in the legislation that funded all of these programs, and so im not really concerned about the impact that theyll have. Certainly greater deficit is possible. The president has proposed a series of measures that would reduce our deficits over time while investing in the economy and, you know, this is something we need to do Going Forward. I do want to ask you about your trip this week and your Top Priorities and messages for World Leaders at a time where if you look at the Global Economy, you mentioned china is weaker than expected, europe is showing more weakness, germany going negative in growth. What a are you saying to them . We are focused this week on measures to address issues in the Global Economy and to achieve stronger and sustainable growth. Russias continuing brutal war in ukraine is having a very adverse impact and were spending time this week discussing food prices and what we can do to alleviate hunger and shortages of food, especially since the black Sea Grain Initiative russia has ended that. We are focused on Climate Change and the adverse impact thats having on developing countries and emerging markets. It interacts with scarcity of food and were focused on greatly expanding the amount of aid and private investment that we can channel into emerging markets in developing countries around the world. We have an initiative to enable the world bank and the other Multilateral Development banks to greatly expand their provision of resources and to mobilize private capital for Climate Change, were focused on health, preventing future pandemics, and mobilizing funds both public and private, through the president S Partnership for Global Investment with the g7 to boost Infrastructure Development in a meaningful way, Infrastructure Investment around the world, so these are some of the main focuses this week. Its a heavy agenda. It is. Well let you get to it. We thank you for the time. Thank you so much, sara. Janet yellen, back over to you in the studio. Covered a lot of ground. Thank you for that. Thats sara eisen. Up next kaplan is going to join us to react to that interview and share his expectations for the fed later on this week. Tune in tonight 6 00 p. M. Eastern time for saras deep dive with ken griffin, 8 00 p. M. Eastern time we should say, spanning markets, philanthropy and more. More squawk on the street is still ahead. Every day, businesses everywhere are asking is it possible . With comcast business. It is. Is it possible to use predictive monitoring to address operations issues . We can help with that. Can we provide health care virtually anywhere . We can help with that, too. Is it possible to survey foot traffic across all of our locations . Yeah absolutely. With the advanced connectivity and intelligence of global secure networking from comcast business. Its not just possible. Its happening. Every business thats why comcast business de is launching theal. Mobile made free event. With our business internet, new and existing customers can get one year of unlimited mobile for free. Its our best internet. Powered by the next generation 10g network and with 99. 9 reliability. Plus one line of free mobile for an entire year. Its the mobile made free eventhappening now. Get started for just 49. 99 a month. Plus, ask how to get one free line of unlimited mobile. Comcast business, powering possibilities. Welcome back to squawk on the street. Big interview with the treasury secretary a moment ago, yellen saying she does not see signs the economy is at risk of a downturn and Consumer Spending remains robust and premature to make forecasts about the impact of the uaw strike. Her comment come ahead of the fed meeting, lets bring in Robert Kaplan and more. Great to have you back. Sara threw a lot at her. Student loans, gas prices, bond issuance, the shutdown, strike. Hard to throw her off her sense that economy is pretty stable at this point. I think the economy is stable at this point, and the fed rate increases have certainly created a tightening in the economy. Goods are weaker, anything Interest Rate sensitive is weaker. Its harder to get a loan if youre a small business. But i do believe the unspent arpa money, which i agree has been through the federal deficit a couple years ago, but is still being spent, as well as the Inflation Reduction Act spending and the infrastructure act spending currently, are to some extent keeping the economy resilient and i think in particular, keeping the Service Sector ri sillent and the labor market resilient and you have some cross currents here. At this point in terms of activity do you think risks are to the upside or downside . In terms of the economy . Yeah. In terms of the economy, my concern is this, the organic growth capability of the u. S. Economy is being is at one level and i think were get an extra boost from Government Spending. Were running a 2 trillion deficit this year which is substantial when you think its postcovid, but prerecession. Government debt to gdp is over 100 , and so my concern is when this Government Spending starts to dissipate, the organic strength of the economy is, i think, weaker than were seeing, but i dont see any sign Government Spending is letting up in 2023 or 2024. I think we will stay resilient. Robert, the treasury secretary, you know, acknowledged deficits, but said the metric she watches is net interest to gdp, which at 1 , she didnt seem particularly concerned about. Do you share that sentiment . Well, i look at two things, Government Debt held by the public is a percentage of gdp is now over 100 . The present value of unfunded entitlements is 75 trillion. I think youre seeing if you look at the 10year treasury and the 30year, youve seen a meaningful backup in those rates over the last month or two. Were now at over 430, and im not sure the backup has run its course. I think there is some market sensitivity to the fact that weve got a big supply of treasury issuance in the years to come and were running very large deficits and weve got a very large debt to gdp that we have to fund in the years ahead. You mentioned the government programs, many of which are, obviously, involved in just beginning to really spend a lot of money allocated. Are you surprised fed chair powell, when hes been asked about the inflationary impact of those programs, really doesnt seem to think it is significant . Well, if you look at it on a deficit basis, i think the thought is the Inflation Reduction Act was intended to be paid for and the infrastructure act had some pay for, and the arpa money, American Rescue act money of 1. 9 trillion went through the budget. If you look at the impact on the ground and i travel a lot around the country you see more than 15 new battery plants, 4 billion each, sprinkled around the country. You see new infrastructure proposals and announcements every week. When youre on the ground in cities and towns, the impact is, in fact, meaningful, and it creates more demand for not only goods and services, but particularly labor and thats why i think the labor force has remained relatively tight. I think well continue to remain relatively resilient because of that. Would you argue, are you arguing, that the government spend is masking a soft economy . I mean, would you use the phrase sugar high . I wouldnt use the phrase sugar high. I think a lot of this spending on infrastructure is needed. A number of the Green Investments in the Inflation Reduction Act i think are needed, but this is substantial these programs all take all three of them plus the clips act, theyre substantial, and i can tell you on the ground in cities and states through the country, theyre having an effect at a time where the labor force is already tight. My main advice is just we should be aware that this is playing a role and i think at the fed, ive suggested that i would have a very i would try to have a very good fix on the forward calendar for this spending because i think when the spending dissipates, i think the organic strength of the economy is weaker than it appears. Im curious as to how you think Higher Oil Prices will impact the economy if they do. Its climate week the treasury secretary is here for. We have Oil Prices Setting new recent highs. Yeah. So we have a fundamental issue what y youve heard me talk about before. We are globally under supplied on fossil fuels. We need to speed and we are speeding to try to reduce our reliance on fossil fuels, but despite that, were probably three to five years away from peak oil demand. We are to some extent limiting production in the United States, although were the cleanest producer in the world, and you can the releases from the Strategic Petroleum reserve are tactical, but they dont address the issue that were globally under supplied. I think were going to be vulnerable to price spikes in oil over the next several years, and so this Energy Transition is going to take more like 20 years plus or 30 years plus, not 5 or 10, and if we dont produce more fossil fuels in the United States, were going to be more vulnerable, i think, to under supply and also people making 50,000 a year who pay money for their car to get to work, you know, gasoline, theyre somewhat more stretched as a result of it and theres 50 million of those workers. Although youre down in texas. Were right near alltime highs for u. S. Production, arent we . We are. The u. S. , if we had an ability, my concern is if you look at Global Demand versus global supply, were burning more coal globally. Global demand is growing for fossil fuels. Weve got to speed wind, solar and alternatives to close the gl gap but we have to be realistic. Its going to take longer to make the transition than we like to think, and i think we have the ability to produce more in the United States if we had the determination to do it. Thats a sensitive, structural issue strategy issue for the United States. Robert, fascinating and great discussion coming on the heels of the yellen interview. Good to talk to you. Still to come, arms return to the public market. A look at the ipo landscape, star pricing after the close today, klaviyo raising its price target. What investors need to know in just a moment. 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. Elephant wouldve been scarier. captivating music the first law of thermodynamics states that energy cannot be created or destroyed. but it can be passed on to the next generation. mom bringing in a new roommate to save money is that the plan . dad well we gotta find some way to save. Next generation. So say hi to glen. From work. glen hey. Thats my mom. mom i think i have a much better plan. We switch to myplan from verizon. We get exactly what we want and save big. All on the network we can count on. daughter its a good plan dad that is a good plan. Glen looks like were not going to be needing you. So ill see you at work. son later glen. vo this week. New and current customers. Get a free Samsung Galaxy s23. Plus galaxy watch and tab. All three. All on us. Thats a savings of over 1800 offer ends soon. Its your verizon. swords clashing had enough . No. Arthritis. Here. Aspercreme arthritis. Full prescriptionstrength . Reduces inflammation . Thank the gods. Dont thank them too soon. Kick pain in the aspercreme. About an hour into trading. Want to check on movers today. Arm is giving back some of its ipo gains. Still in the green since its debut, but about 10 off the intraday highs last week. Dash is up after the upgrade at mizuho. Bullish on the companys market share. Lyft agrees to pay a 10 million to settle sec charges that it failed to disclose a Board Members financial interest in a transaction involving lyft. Squawk on the street is back in a couple minutes. Your record label is taking off. But so is your sound engineer. You need to hire. I need indeed. Indeed you do. Indeed instant match instantly delivers quality candidates matching your job description. Visit indeed. Com hire welcome back. Im Pippa Stevens with your news update. The white house says iran released five americans wrongfully imprisoned in iraq today. The agreement gives tehran access to 6 billion in oil revenues. A senior diplomat tells nbc news five iranian nationals are expected to be release in the deal. Hunter biden is suing the irs. The president s son filed a lawsuit today accusing agents of repeatedly and intentionally publicly sharing his private tax return information as they investigate him. The younger biden nearly reached a plea deal over misdemeanor charges over failing to pay federal taxes but that fell apart in court weeks ago. This morning, authorities located all nine teens who escaped from a pennsylvania Detention Center sunday night. Police say they slipped out of the center after a riot broke out. The facility is miles away from where a convicted killer was captured last week after he broke out of a pennsylvania prison. David, back to you. Thank you. We are getting ready for another highprofile ipo. This time its instacart following arms successful debut last week. Lets get to leslie picker who is tracking all this recent ipo activity for us. Hey, david. The Capital Markets are clearly open. Another bee week ahead for ipos. Instacart set to final its price after the bell today. Its expected to opt for something at the high end of the new range or above that range, as is typical when the range is boosted. Instacart is likelily to have a valuation of 10 billion or more by the time it starts trading tomorrow. Klaviyo opting to increase its market range by 2 there a share on strong investor demand expected to start trading on wednesday and both of these come on the heels of arm,s the biggest ipo in years that priced at the high end of its range traded up 25 . Its down about 5 today. Now goldman says that its ipo issuance barometer is more consistent with a normalized backdrop thanks in part to a 17 jump in the s p 500 this year, but this crop of deals were seeing is similar to that of the recent cycle peak of 2020 and 2021. Instacart will do a down round with the ipo valuation just a quarter of where it was less than two years ago in raising its price range this morning, klaviyos valuation is pretty close to levels it saw in private fundraising, but that was two years ago in may 2021. Guys . Leslie, i know both of us made this point last week, and it bears repeating again, i assume well repeat it a number of times, the instacart offering looks like 600 million plus, is small when you take out the cornerstone investors. Its a tiny slice, susisnt it . Its about 260 million. Which for a 10 billion company is 10 of the company theyre floating in the deal. Thats important for the overall supply and demand dynamic. It leaves little supply relative to the potential demand out there. Especially considering there has been such scarcity. You had arm trading well that could encourage investors sitting on gains there to invest in the ipo coming down the pike as they can see its clearly working in the market. A small float is not necessarily indicative of an amazing first day of trading, but oftentimes there is kind of a way that you can orchestrate that to get gains on the first day. Yeah. Again, it may not be fully reflected in the fundamentals as much as supply and demand. Leslie, lwel keep track of things. Thank you. Leslie picker. Where rbcs head of equity strategy sees opportunity. Were back in a moment. Are needed most. Drawing on deep expertise across the worlds public and private markets in pursuit of longterm returns. Pgim. Our investments shape tomorrow today. Good night hey 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. New projects means new project managers. You need to hire. I need indeed. Indeed you do. When you sponsor a job, you immediately get your shortlist of quality candidates, whose resumes on indeed match your job criteria. Visit indeed. Com hire and get started today. Welcome back to squawk on the street. Yellen telling us this hour she sees no economic slowdown ahead. What might that mean for the markets . Joining us at post nine is rbc capital head of u. S. Equity strategy target of 4 50. Great to have you back. What youve been writing about the energy trade has runway. We think so. A couple weeks ago, the trading community, even my commodity strategists were starting it say look maybe things have moved too far too fast, and im sympathic with that. Looking at my models and valuations they look valuations deeply attractive and earnings revisions early stages of a recovery, and so we just looked and said if the oil price cooperates an hangs in there, theres plenty of room to run from our perspective. I think the growth trade needs to correct and that money has to go somewhere. Fundamentally its still a supply story as opposed to demand . What mike has been saying, our energy strategist, the fundamentals of the oil market are some of the best that hes seen in a while. It felt like maybe from a sentiment perspective things have gotten ahead of themselves. Other parts of the market, weve talked about the mega caps and their out performance versus the nasdaq, let alone the s p. What about small caps and where things stand given their under performance this year. This is an area i used to cover exclusively and look at my models the valuations are deeply compelling. Not just financials. Every sector is cheap and small relative to large. Earnings revisions are starting to improve in small cap and positive revisions. Everything is working on the data, the funds flows have improved a little bit, but we cant seem to get the out performance trade going. I think the problem is that theres enough doubts about the recession, about whether or not were going to get it. You see confidence grow that were skipping it, its not delayed. I think that should help. I think you need to get closer to fed cuts traditionally small caps do very well after the fed starts to cut. Im wondering if were going it see people talk about that in december, maybe november, maybe see prepositioning around it. Second half of 2024 seems far off. Soft landing, confirmed and or even cuts and small caps might out perform. I think so. Youre not as cheap back in the tech bubble but were down around the lows that have been holding the last five or six years and those lows dont seem to be breaking. I think small caps are drawing a line in the sand and fighting back in that resilience needs to be expected. I wouldnt short them. We had yellen on a couple moments ago and went through the catalog of potential potholes, the Student Loans, or Energy Prices or the strike. How do you frame those in your overall macro setup which appears to be constructive . We feel neutral tactically. We think its early in 2024. I have been a little more tactically cautious in the short term and that hasnt worked. The market has been more resilient. I worry were getting the Student Lending issue at the same time gas prices are starting to spike. This is a lot to pile on. Excess savings, were hearing about that from the Economics Community being worked down. I push back a little bit. If you look at homeowners theyre still benefitting from the era of low Interest Rates that Interest Rate on mortgage debt outstanding at the end of q2 was 6 . I think there are buffers that arent being appreciated, but there are a lot of potholes coming up. To the, textent you under estimated the resiliency of the market, what was it specifically youve revised your thinking on, if you have . We do a weekly and put out this deck every monday and go through the High Frequency stuff we track and the thing that surprised me last week was to see that u. S. Equity inflows were picking up again and strengthening and it was the growth part of the market. I didnt expect that this late in the year. And where we saw the weakness, it wasnt money bond to equities. Thats what bears would have anticipated. The money flows are starting to soften on japan, china and emerging markets. Its a u. S. , nonu. S. Dynamic that suddenly is starting to help us. I talked to my economists last week and one of the things theyre starting to think about is the idea that the u. S. Is this fundamental island, oasis and our fundamentals look better than the rest of the world and thats a shock to Global Investors negative on the u. S. To start the year from an economic perspective. Because of where we were in the rate cycle at the time . Yeah. Just the idea that we were going to be unavoidbly tightened into a recession. The resilience of the consumers and corporations were under estimated by nonu. S. Investors. Well see if that changes and the china data continues to stabilize and our own. Its interesting. Just recently we started to see the shares in the red and overall mixed tape. Quick programming note, we are less than two weeks away from delivering alpha, the cnbc Investment Summit where the top investors and Business Leaders break town where they seek reward. You can visit cnbc. Com alpha for more. With comcast business. It is. Is it possible to use predictive monitoring to address operations issues . We can help with that. Can we provide health care virtually anywhere . We can help with that, too. Is it possible to survey foot traffic across all of our locations . Yeah absolutely. With the advanced connectivity and intelligence of global secure networking from comcast business. Its not just possible. Its happening. 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. Shares of clorex under pressure after warning its earnings will take a hit due to a recent cyberattack about a month ago. It comes after cyberattacks at mgm and caesars. Eamon javers joins us with more on a beat youve covered for so long. The clorex company is trying to clean up its i. T. Systems. It was the victim of a cyber hack on august 14th. The Financial Impact will likely be material to its quarterly results. They say it attacked portions of its i. T. Infrastructure which caused widespread disruptions of operations. That led to a lower rate of order processing and what they call an elevated level of product outages. Clorox says it cant tell if the impact will be material to its annual performance. The company now says it believes it has contained the attack and transitioning to normal processing on the week of september 25th. It says it has resumed production at the vast majority of manufacturing sites but it cant say how long it will take to get back to normal. The company did not offer any insight into who the hackers are, if they demanded a ransom or if the company paid money for access to its systems. Disclosure comes on the heels of last weeks major hacks of mgm resorts and caesars entertainment. Those were conducted by a group they call scattered spider. Its not at all clear if the hacks are related in any way. Back to you. We were talking about mgm and caesars earlier and the decision by companies to pay or not pay ransom. Thats a tough one. In the case here, caesars did, i believe. Mgm chose not to. Mgm suffering more significant consequences as a result. What is the advice for companies and where does the government stand in terms of what it wants to see what happens when ransom is asked for . In the old days the fbi would advise you, dont pay a ransom. All you do is make a market for this and encourage guys to do it again and you give then cash they can use to buy better servers and equipment and conduct more cyberattacks. But they kind of backpedaled off of that over the past couple of years. The fbi sort of a little quieter on whether or not you should pay ransom. A lot of companies, it is material to their quarterly results. It is material to their operations. They are in a real bind. And Law Enforcement gets that, understands the pain theyre in. And so now its a little bit of a soft dance. They dont Want Companies to pay these ransoms, but they understand why they do, when they do. And thats the challenge here. I asked clorox about this if they paid any ransom or had any indication of who the hackers are, they said the investigation is ongoing and dont provide any more detail than that. Scattered spider, along with other hacking groups, there are so many defenses one would expect but they continue to be able to exploit simple personal relationships as well, right . Sort of on the social side of thing. The social engineering. You literally call up the i. T. Department and say, hey, ive been out of town, im an employee, i need to log back in, but i lost my password. Some goodhearted person will try to help, right . People always want to help, especially if its a colleague calling with a difficulty, right . So, they take advantage of our own human good nature here and then strike. Yeah. And it continues to be a real story, obviously. Insurance i guess they all have insurance against hacks or ransom as well, or Many Companies . Usually they do. Usually its the Insurance Companies who end up paying these ransoms. That becomes a whole other negotiation. You have to negotiate with the hackers, with your Cyber Security vendor and also with the Insurance Companies as well. Eamon, thank you, for covering all of it. Fascinating story. Still developing as well, certainly when it involves clorox. Eamon javers. Jacques jacques ja 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. I did have hearing aids from another company. I was just frustrated. I almost gave up. With miracleear its all about service. Theyre personable. Theyre friendly. Im very happy with them. We provide you with a free lifetime of aftercare. Meaning free checkups, cleanings, and adjustments. I see someone new. Someone happy. Its really made a difference. Hear the world better during our limited time sounds of autumn event. Call 1800miracle to test drive our hearing aids risk free. music call 1800miracle to test drive the walking tree is said to change its entire location in pursuit of sunlight where could reinvention take your business . Accenture. Let there be change. Morning. Im Carl Quintanilla live at post 9 of the new york stock exchange. Sara eisen will join us shortly after talking with the treasury secretary last hour. The latest on the uaw strike. Were live on the ground in toledo as they remain at a stalemate. Instacart expected to price after the bell as the ipo market picks up seem. Saks ceo joins us as some households have cuts. We await wednesdays fed decision and, of course, the ripple effects have the uaw strike. Our senior markets commentator mike santoli joins us on set with the setup this week, which historicly