Transcripts For CNBC Squawk 20240703

Just below 5 at 4. 99 . We have news just out from the white house. Eight more companies signed on to the series of commitments to keep a. I. Safe and secure and transparent. Nvidia, palantir and ibm and salesforce among those. They will meet today with the secretary gina raimondo. The white house took a pledge of Companies Developing a. I. At the time which included amazon, goog google, meta, microsoft among them. We talked about meta. They will do something more open source and open platform, if you will. The issue here is not so much about whether you want to worry about the big guys, but so much about folks who get access to the technology and build smaller language models, if you will. Were back to nvidia again . We are switching back . Nvidia. Tomato. We have to decide once and for all. I love that. China. Did you read that . Did you read about the a. I. Thing . We developed its beyond the pale. It can be used for nasty things. They show pictures that supposedly show the government developing weapon systems which due with fires. That is low. Theres no level that they will go below at this point. Do we do that with our white hats and propaganda . I dont know. We dont see it that way. We see it as we are defending the country. Oracle shares are tumbling. Revenue came in below expectations. Oracles cloud license and onpremises diffsegment decline year over year. Also missing estimates. Chairman Larry Ellison said a. I. Development companies have signed contracts to purchase more than 4 billion of capacity on oracles gen 2 cloud. That is twice as much which had been booked in the forth quarter. Stock is down about 11 points. It has truly been we dont talk about it as one of the magnificent seven. It is 340 billion company now. Over the years, you know, cisco and others have lost their way. Oracle and qualcomm. 100 billion. Nvidia. Oracle. 3 trillion. You do . Nvidia and apple. Apple is more than 1 trillion. Id buy 1 trillion. Okay. You dont have 1 trillion. I dont have apple. Fair trade. We should tell you about what is happening with the uaw. Slightly lowering the demand for pay increase. Now they are asking for 36 . Thats down from the initial ask of 40 . Sources tell auto news and others that the union is asking for a series of wage hikes in the next five years. It starts with the pay boost of 18 and raises alternate between 4 and 5 annually over the contract. That is something that the automakers are pushing back hard on saying they probably would not be able to survive if they were paying those payouts. Thats what they are saying privately. Gm and ford and stellantis face a deadline of midnight on friday. These two sides are very far apart. It is not just the pay raises they are talking about. Stellantis is offering a 14 raise over the life of the contract. You see 9 and 10 from the others. Uaw wants a 32hour workweek and defined pension plans. The uaw president has threatened to strike at all three companies simultaneously which has never happened before. This is important to the u. S. Economy. If a strike takes place at all three of them, over the course of ten days suggested that it could cause the u. S. Economy 5. 6 billion. Past performance is no guarantee of future results. Selling gas guzzling cars and trucks and getting big profits. Now to come eply with the emiss standards will be expensive. The trucks cant do it. The ev transition and take on tesla which has the firstin advantage and higher margin and lower costs. Will anyone switch to ev u. S. Makers and buy them . I kidded around. The ford f150 electric version. I saw one at the beach. It was pretty cool. For the next few years, i dont know if you see the same profits as they try. I dont know if the union is trying. No one wants to put the automakers back in the position they were in before sdp. This is a tough position. They cant pay those types. They cant handle it. They will point back and say profits are up significantly and the ceo pay is up significantly. They were. The future. It is like the streaming future. I made that point yesterday. The hollywood strikes. Two years ago i would have gone on strike and said you owe me money. A big streaming content party. You strike when you can. By the time you do it, its over. If you were a streaming company one of the problems if you were warner, would you give people huge raises right now . The conundrum is you saw the people behind you saying talk about the prosfits. They made a for tune and we mad nothing. Part of the discussionis it may be rearview mirror, but nobody is saying to management stop paying yourselves. You get as much if not more than before and you already got this sort of retroactive bonus that we did not participate in. Some of the folks would say it is giving me back some of that. They are not going to, but thats what were talking about here. All that is is optics. If a ceo makes 30 million or 40 million, maybe they dont deserve it or maybe 300 times the average employee. Do the math on what theyre asking for. It is not 30 million or 40 million of how it effects the company. Optically. You see the fat cat ceos. You are talking billions of wage increases that a company cannot be profitable and it will not help anyone. It will not help them innovate. Andrew brought this up yesterday. Bigger issues are not just the pay increases. They can probably Reach Agreement if they were talking about pay increases. They are talking job security and 32hour workweek in terms of the benefits they want from the pension. A. I. Will be gutwrenching. That is like giving tenyear contracts with the buggy maker at the dawn of the combustion engine. These jobs arent going to be productive to keep. It is an Inflection Point in society. I dont know how we help people manage the transition. We had to do it again and again. No one works on farms any more. 1 . Lets talk about this story. Nearly 1 million California Workers are set to win salary increases under a new bill expected to pass this week. Most of the fast food workers will be paid 20 an hour next year. The bill has the blessing of the labor union and Industry Groups ending what had been a standoff over wages and working conditions. A separate bill raises healthcare workers to 25 in the next it teten years. That doesnt include doctors and nurses, but everyone else at the hospitals and clinics. You see this move on wages across the board. From the macroeconomics point, inflationary issue. The question is is this a good thing or bad thing . If you are a worker, it is a good thing. For the pandemic on top of it for these workers . You have not just the inflation and the pandemic. It depends. It could be bad for the majority of people and good for the union workers. It could be not so great for the people that get the raises if inflation outpaces what theyre making. Right. Or if it puts your company in a pe pe perilous position. That is why they say we laid off 50 . What if they went bankrupt after laid off 100 . What is coming up . Busy day . I feel like it is. We have a busy day ahead. We do. When is the cpi . Wednesday. Thats a busy day. Thursday is ppi. You said it. Ppi. When we come back, we get you ready for the apple Product Launch event at 1 00 p. M. Today. And Walter Isaacsons book hits the store shelves today on elon musk. You heard the early stories. This is a big lot in it. At 8 30 a. M. , we speak to senator joe manchin. Th is issquawk box and this is cnbc. Announcer this cnbc program is sponsored by ibm. Ibm. Lets create. Or. Can we . This is watsonx orchestrate ai designed to multiply productivity by automating tasks. When you watsonx your business, you can build Digital Skills to help Human Resources spend less time generating offer letters, writing job reqs, and managing schedules. And spend more time on humans. Lets create more time for your business. With watsonx orchestrate. Ibm. Lets create. Coach saban, this goat done 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. Elephant wouldve been scarier. Rich, velvety coffee. Cafe quality espresso. One highpressure system that can do both. Brew to your Hearts Desire with the lor barista system. A masterpiece in taste. Wow, you get to watch all your favorite stuff. With tits to die for. System. And its all right here. Streaming was never this easy, you know. This is the way. You really went all out didnt you . Um, its called commitment. Could you turn down the volume . Here, you can try. Get way more into what your into when you stream on the xfinity 10g network. Welcome back. Apples annual iphone events is today. They are expected to have new futures, but the biggest is the usbc port. Joining us right now to talk more about it is barton. Barton, before we dig into what we will hear today, lets talk about the china and india front. That overshadows anything the Company Might say today. The report out today that says for the first time ever, apple will be selling the made in india iphones on the launch day. That may be a little bit explanatory factor with china suddenly turning on apple saying you cant bring any iphones into the office or any other apple devices into the office in government operations. That has people wondering about the future business in china for apple and maybe this is the back and forth. How do you see through all of this . I think you have to kind of fasten your seatbelt for a bumpy ride. The political back and forth negotiating with a country like china which is a communist country for a company like apple, i think you have to try to see the value to china. Apple is a strong employer. Maker of devices and builder of the ecosystem that china can leverage off for the longterm strategic purposes. I think there is every reason to believe this type of tension is likely to blow over. That said, you never know for sure. If i had to place a bet, it would be these guys would see their way to the other side. Thats why it was so shocking. The idea that apple employs millions of people tridirectly indirectly in china. Tim cook has been so good at walking a fine line with the company which has a huge stake in china. I think that is why people were shocked by this move. Then you see what theyre saying now, but not apple, but bloomberg of the made in india phones. Maybe it starts to make a little more sense. A year ago in december, they got in trouble because of the supply chain issues in china. You can assume they looked to diversified the supply chain at that point sdp. They have to diversify. One would hope that china could understand the episodes that apple has been through with the production inabilities from covid and certain labor tensions and difficulties in the assembly facilities. Diversity makes all the sense in the world with. Y world. That is one of the imponderables. You cant go to sleep with 100 certainty because of who they are dealing with. I think logic and self interest tends to prevail. They will move on with the relationship that is productive. What do you expect to hear from apple today . Look, i think we expect the devices to be much more interesting at the higher end than lower end. This will favor the trend of mix skewing to the pricey devices. Iphone 15 model will have greater camera capabilities with the periscope zooming feature which is an important catchup for apple t. The titanium chassis. Lighter weight. They need to keep interest in the product that is the most essential product of the modern economy. With these guys, they can generate 150 million to 200 million of sales in units by replacing the install base of phones that need to be replaced every five years. They have an audience. I expect great products. You sound like you are an apple enthusiast and positive about the company. You have a hold rating on the stock. Why is that . We had a buy rating up until august 4th when we got concerned about apple trading at peak relative and absolute valuation. Earnings momentum looking muted at this point. I think for apple, the most exciting time to own the stock is when they move into new technology thats meaningful for the p l. That could come with vision pro, but we think that is a slow build. You have an iphone cycle with puts a takes. December quarter is an easy comp for these guys. After that, that levels out. The Smartphone Market is maturing. These guys are taking share. That is well known in the consensus estimate. At this point, not exciting for relative performance. I look for a better entry point or earnings trajectory than we see today. Barton, thank you. Thank you. I have to think about it. Coming up, would you use Artificial Intelligence to manage your finances . Could it be worse than the actual managers . Then again, isnt it the managers put it is programmed by somebody. You may pay a lot in fees for doing that. After saying that, were going to release cnbcs financial 100 list. I didnt realize that is next. You can see the top 100 throughout the day on cnbc. Com. Well be right back. Some people may be worried about the impact of Artificial Intelligence tools like chatgpt on their jobs, but what about the impact on your finances . Would you use a. I. Tools to help you manage your money . Im open to it. Sharon, our personal finance correspondent, Sharon Epperson joins us now with results. Do people do it . Do the same Financial Advisers we think may be lacking, do they put in are they using the a. I. . We have to see. Everybody is doing it differently. Our survey, joe, showed most americans have no interest in using Artificial Intelligence tools to help manage money, but more than onethird of adults in the u. S. , 37 , are interested in how chatgpt and other a. I. Tools could help with finances. 11 are very interested and 4 have already used a. I. Tools to help them manage their money. What we learned was most people who are consulting these resources are verifying what they hear with Financial Advisers. Half of the investors, 51 , have little or no trust in Financial Advice from a. I. Tools according to the cfp board. 31 are comfortable implementing a. I. Information without verifying from another source. You can check out options online or on your phone. When it comes to starting a business or buying a house or paying for college or funding retirement, some people may want to talk it out with a financial adviser. The way i like to explain it is until my computer can hand a tissue through the examiner screen to my client, i dont fear ill be replaced. Theyre crying . The cfp board found they demonstrate more confidence from a. I. Tools after vetting it with a financial adviser. Many investors want expert advice. We have a new resource to share. Check out cnbcs fifth annual fa 100 list released today on cnbc. Com. We will talk to the advisers at the top of the list today on the exchange. How much do the people on the list move around . There is movement on the list. Im hoping the top five or ten advisers are the same . Continuity is very important. One guy is great one year. Are they guys or are there firms . Firms and individuals. There is diversity. Some women on there. It is important to also look at what the assets are under management for people looking to figure out if they can use the Financial Advisers. Steiffler . You have to check out the list. Go to cnbc. Com. It is based on a variety of factors. Track record is definitely in th th there. I want the poll done. 50 say they dont trust a. I. Financial tools. I dont have that off the top of my head. There are a lot of people who have one already and dont want that one. They want to figure out how to fire that person and get somebody else. The list is coming out . It is up on cnbc. Com fa100. Cnbc. Com. Cnbc has a web site. Cnbc. Com fa100. I need to see. Financial advisers 100. No, i cant find the list. I have to do that. Go through the list. There are some. You will hear from the number one person. Im not telling you who it is yet. You know ours is better. Not even close. Thank you, sharon. Join the Financial Advisor summit on october 12th. Learn what advisers can do now to position the clients for the best possible outcome. Scan the qr code or go to cnbcevents. Com fa. Coming up on the other side of the break, the biggest antitrust trial in decades. Google heading to court to defend its Search Engine. And we talk to chris kelly and we will talk about the antitrust case he had in 20001. And a look back as we head to break of the s p 500 winners and losers. Power e trades easytouse tools, like dynamic charting and riskreward analysis help make trading feel effortless. And its customizable scans with social sentiment help you find and unlock opportunities in the market. E trade from Morgan Stanley. With powerful, easytouse tools, power e trade makes complex trading easier. React to fastmoving markets with dynamic charting and a futures ladder that lets you place, flatten, or reverse orders so you wont miss an opportunity. E trade from Morgan Stanley this is a clustomer. Hello its what happens when Marketers Group customers with very different behaviors. Into one tangled mess. This is a mess with mailchimp, marketers can use realtime behavior data, to personalize every email for every customer. Turning clustomers, into customers. Intuit mailchimp. The 1 email Marketing Automation platform. Welcome back to squawk box Justice Department with the antitrust trial against google. We go straight to eamon javers who joins us with more on the biggest case in quite some time. Andrew, the tech trial of the century so far. We have not seen a heavyweight battle like this since the u. S. Department of justice took on microsoft in the struggle with government and industry in the 1990s. The trial will be months long and it is full of technical testimony. At the core is a set of simple, but competing arguments here. The u. S. Department of justice will argue that google built the Search Market share by violating the law and spending billions of dollars a year becoming the default Search Engine and squashing the ompetition. Lawyers for google will say they made a better product that customers and Business Partners chose on their own. They will say the government is defining the competition too narrowly. Google will not just compete with smaller Search Engines like bing and duck duck go, but competing with people searching for information. Think about amazon or twitter or x. All of that is competition, says goog google. The two sides are bringing enormous issues to light with google the hiring three outside law firms to prepare for the case. We expect googles ceo to testify at some point along the way. Witness lists have not been released yet. We cannot confirm that yet. Google founders are not expected to take the stand during the course of the witness worse of the trial. We expect googles partners to be drawn into the fray. Apple the executives are among the witnesses here, but likely not ceo tim cook. Trial overall is not expected to be finished until some time in 2024. This is just the first phase of the trial. It will establish whether google has liability under antitrust law. If the court find it does, they go to a second phase to figure out the socalled remedy to see how they they change doing business. What is the timing . We think it will be october or november. We dont get the final resolution until some time in early 2024. Not exactly clear where it will land. The question is if they figure out liability and they do to the remedy phase, it is not clear how long that will take. You could be looking at well into 2024 before you ultimately have a remedy imposed by the court if thats where it lands. If you think back to the Microsoft Case in the 1990s that everybody is talking about as comparison. That case ended with a settlement. Microsoft ultimately settled with the u. S. Government and changed some of its business practices. There was, you know, a victory there, i guess for the u. S. Government. In the end, it wasnt the giant breakup of microsoft that a lot of people were thinking might be in the cards in that case. This case, the remedy, if it is imposed, narrowly tailored. Eamon, thank you. Joining us for more is chris kelly. He was the privacy officer for facebook and he has a history in big tech antitrust cases. Representing netscape in 2001. How strong do you think the governments case is and to the extent you are a Technology Company and ceo or investor or other big Technology Company, what are you looking for in this case that could potentially impact the others . The worry on the part of the government is primarily about innovation markets and what they look like over time. When you have a 90 dominant player who can spend a lot of money to make sure they stay the default, are you squashing new startups that could actually overcome them at some time . Through the normal course of competition and what is competitive conduct deserves a remedy. The worry of any government, as it was in the Microsoft Case, somehow the startups were being squashed, we were worried at the time with deputy general counsel walker and my former colleague, now representing google this time and they are explaining now they engaged in the conduct and allowed companies or didnt allow companies to go through the normal course of business. The allegations that google is engaged in the conduct are relatively strong, but the idea that you cannot protect co comp competitors, but the antitrust law will be in the assessment of the case. The fact that the sophisticated judge, this is a bench trial, with a set of fairly well developed d. C. Circuit rulings he has to Pay Attention to will guide the case to operate largely within existing principles in antitrust law, but the problem the Justice Department and atc is approaching this is pushing the envelope on traditional antitrust law. Chris, it sounds if you could take one side or the other, you get to represent dpgoogle the o the government, it sounds like google . In this case, google is in a better position microsoft was when they took this on. I do think there are some very strong allegations of payments, especially, that have affected the market in a massive way and google is paying apple the billions of dollars a year to be the default search on all apple products. Po in the right circumstances, that could be deemed in violation of the antitrust. Explain that to the audience. People are trying to understand how antitrust law works. We often said being a monopoly unto itself not illegal. How you become a monopoly or maintain monopoly is where the problem lies. There is some point or set of documents that say when apple or samsung is looking alternative to google in search if they are dealing with microsoft on bing or open a. I. On chatgpt for how that may replace the search works on the devices, does google the offer incentives tha step over the line . That is how some of the things would potentially come out. You know, the pretrial discussions have shown that google thas been well prepared o not talk about the way microsoft talked about cutting off netscapes air supply, for example. There are not vivid documents like there were in the Microsoft Case. We will see over time. There will be testimony, obviously, from a number of partners and potential partners that could be as big a blockbuster case as the testimony in the Microsoft Case or intel in the way that microsoft maintained their chip monopoly. Do you think the payment to apple represents you seem to suggest that was actually a parti particularly Fertile Ground for the prosecutorprosecutors. We will see how that works out. What would make it illegal . The act of doing it. If they can prove it was done to maintain the monopoly under existing law, that would actually establish potential liability. Why else would they do it . You know, the question of monopoly maintenance and ease of consumer use is the key thing that google will present in opposition. They will explain this is more about making it easy for consumers to get to the information they want. They have an easy way to change the Search Engine to duck duck go or one of the other competitors. They can download an app to provide them with better results. Chris, remember, some emails, if i recall, that suggest the folks inside apple wanted to do the deal with google the because they thought that Search Engine was the better Search Engine. Quality is one of the things that they will say that it was the driving force. Do you know how big that payment is . This is the first time i thought of this as a potential threat to apple. If i rule it is 7 billion. A better Search Engine. You have to pay 7 billion to put us on . If part of the settlement is eventually reached or something that goes that way or this is the weakest point, maybe you look at this as a bigger issue for apple than google . We will see how the testimony works in the case and judge meadow will focus on the way the existing antitrust law assesses these matters. Chris, great to see you. Im sure we will talk as the case continues. Thanks. Thanks, andrew. When we come back, we have a big lineup. Including an interview with Walter Isaacson with the book about elon musk on store shelves today. And dont miss our interview with senator joe manchin. And you can get the best of squawk box with squawk pod and listen any time. Squawk box will be right back. O u know what is . Myplan from verizon. Switch now and theyll give you nfl sunday ticket from youtubetv, on them. hero fan this plan is amazing josh allen another amazing plan, backing away from here very slowly. fan 1 that was josh allen. fan 2 mmhm. vo football season is here. Get nfl sunday ticket from youtubetv on us. A 449 value. Plus, get a free 5g phone. Only on verizon. 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 i saw this yesterday. Sports Gambling Company draftkings apologizing for a bet parlay offer that would have paid out if three new york teams won on the anniversary of the 9 11 taattacks. Feature bet was never forget parlay. It was shared briefly in remembrance of 9 11 and an apology post on twitter or x. We respect the significance of the day and especially the families of those directly affected. Bad idea. Bad idea. Yeah. Coming up, we will talk to gunjan about her piece in the wall street journal about the rise of Lottery Ticket bets as an option. You can listen to us live any time on the cnbc app. 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. upbeat music woah. Constant Contact delivers the Marketing Tools your Small Business needs to keep up, excel, and grow. Constant contact. Helping the small stand tall. 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 our next guest just published a piece in the wall street journal about the rise in popularity about the zero day to expiring, and elections to the high risk trades to lottery bids on the stock market, but are among retail investors. Lets bring in a writer for the wall street journal. I had seen this movie, and usually on expiration friday you could do it. You are telling me this could be done every day . Why and educate me, but there are options that expire every day. The casino is open every day of the week, and you can place option bets that retire the same day tied to the s p 500 and the qs, and they expire the same day. What we will see shortly after the opening bell, there will be a rush of activity are they listed as options . Yes. What kind of prices can you get . So many, and it ranges from bullish bets, and they have expanded how many expirations are available. A lot of the activity heated up when the Global Markets decided to list options expired tied to the s p 500 index, inspiring every day of the week, and then for longterm investors, that really do that to help with their retirement, and thats the only reason to do anything like that. So if the s p moves a percentage point, can you make 1 . Or 1000 . People are holding these for seconds or hours, and they are willing to quadruple their returns. They want a turbo charge their investments, and they were called Lottery Ticket trades. And then i dont know, the favor pitch that was crypto and Everything Else at the time, and that fell by the wayside. Yeah, options are risky than just trading mean stocks, right, because of the trade options on mean stocks . Yes, and on leverage etps. Big players are divvying up into little trades to nest their activities . I am sure there is some of that happening. I got data that said that from around 30 to 40 of oneday s p option trades are stemming from retailers, and i have spoken with scores of investors and they want to get in on this and are hungry to take the giant risks in the market. The rise we have seen in the s p, i guess there has been a lot of long active people wait, and there will be another day where the s p closes higher, and so individual stocks and tech stocks, people are buying things for 100, trying to buy 10,000 . . Yeah, you can trade weekly options on them. For options with five or fewer days until expiration, those recently made up around half of all options activity up from just onethird a few years ago, so this activity have taken over the market, not just the indexes. You can do this at robin sued, for free . Yeah. There used to be a commission totrade, and i had 100,000 commissions at the end of the year, and this is bad and its gambling and people should not be doing this, and you can definitely replace draftkings with Something Like this. What does it indicate in your view about the market sediment . I think a lot of people thought speculation was wiped out of the market last year, and as stocks fell people took less risks, and now people dont want to back down, and they are not happy with five or 10 returns. They want to really, really play these high octane bets in the market, and there is a ton of risk taking out there. Yeah. Ouch is right. You need to think these returns, when you do manage to clock them in, they can be so high that people get hooked. They are like, i want that 300 gain again. I want that high again, almost, and they get hooked to Trading Options and some of the investors i spoke with said exactly that. Ouch. Ouch is right. Thank you. Thank you for bringing in a new way to main line risks yeah, exactly. Coming up, new data on Consumer Spending from bank of america, and we will bring you that story next. And Walter Isaacson will be with us at the table talking about his new biography, and hes making headlines everywhere. We will talk to him in just a minute. Squawk box returns after this. This is cynthia suarez, cfo of gogo foodco. , an Online Food Delivery service. Business was steady, until. Gogofoodco. Go check it out. Whaatt . overnight, users tripled. Which meant hiring 20 new employees and buying 20 new laptops. So she used her American Express business card, which gives her more membership rewards points on her business purchases. Somebody ordered some laptops . Cynthia suarez. Cfo. Mvp. Built for cynthias business. Built for your business. Amex business. Power e trades easytouse tools, like dynamic charting and riskreward analysis help make trading feel effortless. And its customizable scans with social sentiment help you find and unlock opportunities in the market. E trade from Morgan Stanley. With powerful, easytouse tools, power e trade makes complex trading easier. React to fastmoving markets with dynamic charting and a futures ladder that lets you place, flatten, or reverse orders so you wont miss an opportunity. E trade from Morgan Stanley good morning. Stocks riding a threeday win, as investors bet the fed is set to head pause. Futures are lower this morning. War games with wall street. Executives called to play out the what ifs scenarios. The ceo of ups defending the companys teamsters union. The second hour of squawk box begins right now. Good morning. Welcome back to squawk box here on cnbc. We are live in times square. I am Andrew Ross Sorkin along with becky quick and joe kernen. Lets look at a little red, unfortunately on the screen. The s p 500 off about 10 points. Lets show you treasuries before we kick it over to dom chu. The twoyear basically sitting where it has been sitting for the last couple of weeks now, 4. 995. Lets get to dom chu, the aforementioned gentleman with a look at this mornings premarket movers. Lets do that, and then we will talk. We will take care of business, joe, first. Lets talk about the stock right now that is driving a lot of the premarket action, the conversation, and thats oracle down about 10 right now. Just a little over 100,000 shares, and the profits did top expectations, as did the current growth revenue forecast, and there was particular attention being paid to the oci, and you will hear that a lot with oracle, and it was by a whopping 66 , and that growth rate was slower than the 76 we saw a quarter earlier, and that did trigger concern, and we are watching oracle shares down 10 . And tesla is down, and the electric vehicle giant is pulling back ever so slightly after the 10 jump big move yesterday on the heels of analyst of Morgan Stanley, and they said it was a big opportunity. And we saw a state official in mexico yesterday say they would invest in 15 million in factories there, and we will end with an analyst that is upgrading cvs health, and expectations given some of the Medicare Advantage stuff that they are doing and more Reasonable Risk level, and the shares are up, you can see half a percent, and so now that the business is done i can talk about whatever you want to talk about. Four snaps . Yeah. Did you hear your producer, matt, in the control room . He sent out a great email today about how uncanny some of the things that happened last night were. The last time we saw this kind much hype around a quarterback was vinny test srurty. Well, carson palmer, the bangles finally made a playoff game, and he threw a touchdown but tore an acl on that play or something. Its very weird. Give me the new york team it still has to be the jets. That was Pretty Amazing what they managed to do even after that, dom. This is going to be about robert saula and his staff making a great coaching infrastructure in place, because will zac wilson, you changed that up with Aaron Rodgers but now you will rely on him, and the team has to rally around him because wilson is the guy for the foreseeable future. You have to make things work. What is the latest, though . Is there any way its not the worstcase scenario . I thought the xrays were negative, and now they have to do the mri . Yeah, first of all, i am not a doctor and i dont play one on tv, but the idea is if you have that kind of an injury that requires that kind of evaluation, that you are not coming back in a couple days. This could be a multiweek thing they very best, and who knows, you could have a great story line developing in new york with regard to the quarterback story. You have a piece about stocks to watch, right . Yeah. All right, dom chu, thanks. You got it. Consumer spending remains strong for the month of august. According to bank of americas consumer check report, debit and credit card spending rose 4 year over year, and spiking gasoline prices were also responsible for the spending. Joining us to break down the report and figure out what it really means for the economy is liz everett, and liz, a lot of moving pieces in this. It was the worst month when you look at it seasonally adjusted, and what do you see here . What is happening . If we were just look at it year over year, it was up 0. 1. I think its still positive. One thing i thought was most interesting about this month, is last month we noticed goods come back up, and if you dug into the details, what was driving good spending . Gas, up 6 . Why was it up . Because gas prices at the pump were up. When we look at that transition, it makes me think a little bit. If you look at the proportion of necessity spending to total spending, the gas ended up moving that. You have the essentials on the rise again. What does that mean for furniture makers, for clothing makers and retailers . Those are where you are funding the necessity spending. Another thing a lot of people are talking about is how are people funding this spending . Are they putting it on their credit cards, and are we seeing delinquencies and balances increase, and we saw that data coming out from the fed. When we look at the bank of america data, what we are seeing as it relates to credit card utilization is credit card utilization is up off of the pandemic growth, and its still two and three Percentage Points below off that data. On the other hand where we are seeing a big difference in terms of behavior is in credit card balances. Balances are up from the pandemic lows, but lower income households are seeing that jump and move much faster. Relative to 2019, lower income households credit card balances are up 8 , and middle and higher income households are actually flat. When you think about that in the context of inflation, right, and inflation is up 22 , and it makes it less concerning about the higher consumer than potentially the lower consumer. And the Interest Rates were at higher Interest Rates than prepandemic. Yeah, and there are two areas of our data that make me less concerned. Wage and income growth, and thats disproportau porschely h. What we can look is at the wages, and bonuses and the whole thing, and lower income houses are seeing wage growth up 2. 4 last month, and higher income was flat. Thats one thing we are looking at. Certainly still talking about the strength of the labor market and the consumer. Inflation is still positive and still growing, and its growing more for the lower income consumer than the higher. You talked at the beginning of the year, and if you talk to the bankers, they would tell you they thought the excess money from the pandemic would run out by the summer, and that has not been the case so far . No, the money is still there. Checking and savings accounts and where are they, and they are certainly off the highs. If i compare, again, lower, middle and higher income households, their balances to where they were prepandemic, they are at least 45 higher. We always talk about comparing to 2019. Was 2019 well, why is that a special number . We look at it because its prepandemic. If you look at credit card delinquencies in 2019, they were at multiyear lows. Just adding all of these inputs up, when you look at it do you see more signs that the economy is strong and chugging along, or do you see warning signs theres something about to crack . Each warning sign i see, i see something offsetting it, so i think the consumer is very stable. Thats what we are seeing in the spending. The spending numbers are not up the way they were earlier in the year, 10, 20 , but they are up a little bit, you know, up. 4, but still moving in a positive direction. Thank you for that update, liz. Coming up, we will talk about congress, and congress turning to wall street to raise awareness, and we will speak to a Top Republican and democrat. Before we head to the break, though, lets get a check on the markets right now. You are looking at red on the screen. 57 points down on the dow. And we are coming right back after this. Since the citi custom cash® card automatically adjusts to earn me more cash back in my top eligible category. Suddenly, lifes feeling a little more automatic. Oooooohhh. Automatic sashimi earn cash back that automatically adjusts to how you spend with the citi custom cash® card. Rich, velvety coffee. Cafe quality espresso. One highpressure system that can do both. Brew to your Hearts Desire with the lor barista system. A masterpiece in taste. Welcome back to squawk box. Last night the House Select Committee on China Holding a table top exercise with wall street to show the threats to our economy. Mike gallagher is the congressman in the select committee, and also a Ranking Member of the China Select Committee is here. How was dinner . Great. Its great to be in new york. Its intimidating for somebody from green bay, and i feel dramatically uncool while i am here. Was there anybody at dinner that took the position that china is not the risk that both of you may think it is . I dont think anybody took that position, and we got a lot of pushback, and what was interesting was a scenario that happened back in 2008, and we saw this play back in the pandemic where they threatened to weapon eyes advanced pharmaceutical and we need to take meaningful actions now should we have to confront china and are you both on the same page . I think we are relatively on the same page, and perhaps theres an emphasis on what we need to do going forward. We need to prevent a military move on taiwan by china, and we have to prevent a war at all costs. We have to do what we have to do with our partners, friends and allies to combat the economic aggression. Where we differ is on how much dialogue we would have are you an atallcosts as a function of the democracy or semiconductor issue . Some people say we should protect ukraine at all costs and some say we should not, and by protecting ukraine you are trying to protect taiwan . All of the above. If the ccp, Chinas Communist Party moves on taiwan, it would lead to a catastrophic war and a global depression and tens of thousands of lives being lost on all sides and thats something we have to prevent. What are you at . We have many reasons to defend taiwan, and the simi conductor issue is important because it would allow them to hold the rest of the world economically hostage. I would say we have had this debate about foreign commitments in recent years and the nature of sort of using the military to spread democracy, and thats very controversial. Theres Something Different from defending democracy from an authoritarian leader. What do you tell tim cook, if you are a Government Official or employee in china, its not only that you cant take this into the building, which means you dont want to own this phone. What do you tell bob iger, who has a huge Capital Investment there, and the folks at starbucks, they have over, what, 25,000 employees i mean, what do you do . We have had an opportunity to talk with all of these people in a bipartisan position, and they are starting to recognize the risks of having your supply chain or Business Model concentrated in china. I recognize that changing that is not going to happen overnight. Its not like we can fly over with a helicopter and then drop that off over india. One of the most interesting things we have learned is private Sector Companies are already doing a lot of what we are doing, as a governmental body, asking them to do. So the question is, do we need to put more incentives in place to accelerate that process . Do you believe this idea that there could be a nuanced sort of a nuanced decoupling, meaning we are going to be your best friends on climate and certain geopolitical issues and other things on tech and some strategic issues, and we are going to fight you to the death. Can you actually do that . Can you, you know, thread that needle . I am not sure. As you can tell by the way i am asking the question. Thats probably where we disagree slightly. I think it creates confusion and i think you are seeing it at times in the administration right now, this idea that we are going to compete and cooperate, and we cant get the language right, and china was a threat and now its a challenge, and i think this revival of diplomatic Economic Engagement is slowing you dont want a cold war either. Well, they have been waging a cold war against us for quite some years, so we can accept that fact and take steps to help well, you may think that, and again, and i will use tim cook as the proxy, and tim cook doesnt think theres a cold war going on, right . All the folks on our screen here, elon musk wouldnt say theres a cold war happening. You just referenced a shot across tim cooks bough. I dont think theres a cold war happening because we are so independent, and our trade is at an alltime high, despite donald trump and joe biden have put tariffs on our bilateral trade. Are you glad trump will be the nominee if he is . I want a younger nominee. You want a younger nominee. Are you glad biden is running for reelection . Yes. You are . And you think is he . You are in the 30 , because 70 of democrats think he should not run . Why, because you need somebody to hold on to power . He has accomplished so much, the bipartisan infrastructure bill and other major legislative achievements not all republicans thinks those are great things, and if you buy that, he will be 86 years old when he is done, and Vice President harris is waiting in the wings. Sure. You know, sometimes age is wisdom. I think he has shown a lot of wisdom in dealing with a difficult congress over the next few years. There are no ages with you, and watching him and any of the things that we see, none of those are issues for you . Well, i think that, you know, i have dealt with president biden, and i am not best friends with him or anything but i have dealt with him several times over the past few years, and extre extremely cogent. Lets say trump is not the nominee, but lets say its Chris Christie or nikki haley, and does that change who you think will win . No, i think he will win and will carry the flag forward. Dont just sit there i am going to be him. Anybody that watched bidens performance in the g20 press conference thats just the latest chapter. Biden is older than the peoples republic of china, and our nominee the likely nominee will be as old as biden was when he took office, so lets step away from the boomercontrolled bureaucracy. And biden is not a boomer but a member of the silent generation. We thank you both, gentlemen. See how this works . You are both welcome. Are you okay . Im good. You okay . This is great, yeah. When we come back, mcdonalds taking steps to hear from owners and franchise operators as part of an ongoing civil rights audit. We have the details right after the break. A reminder, you can join us for the summit on september 28th here in new york city where we will be convening investors and leaders to provide insights, ideas and analysis to help you balance risks with maximized returns. Scan the qr code or visit cnbcevents. Com. Squawk box will be right back. The first time you made a sale online with godaddy was also the first time you heard of a town named dinosaur, colorado. We just got an order from dinosaur, colorado. Start an easy to build, powerful website for free with a partner that always puts you first. Start for free at godaddy. Com welcome back to squawk box. And then in california, most of the states 500,000 fastfoot food workers would be paid 20 an hour, up from 15. 50 an hour. And it is ending what has been a standoff over wages. And the bill would raise wages for Health Care Workers on the front lines, in hospitals and dialysis clinics and other facilities. Mcdonalds will start focus groups with owners and operators as part of an ongoing civil rights audit. Kate will join us on this story. Good morning. Good morning. Mcdonalds will begin virtual focus groups with some of the owner operators as part of an ongoing civil rights audit. Mcdonalds retired a law firm to conduct the audit that aims to determine whether the companys policies had an adverse impact on its stakeholders, suppliers and the firm will partner with perception strategies that will conduct a climate and belonging assessment to gain insights into the u. S. Owner and operators, the memo said. The note also assured owners that neither mcdonalds or anybody employed bythe company would participate in the group or the selection process, which would be volunteer. Identities will not be shared with the company. An owner said some franchisees were expressing concern by the 12person panels and retaliation by the company, and mcdonalds said it has a long history of being responsive to its shareholders, and looks forward to the audit which has been in place since last year. And last year apple and amazon shareholders approved proposals for similar assessments. Back over to you. Okay. Kate, just looking through that, what was the outcome of the other companies that have done the civil rights audits . What came of it all . Becky, we are still waiting on the two big ones, amazon and apple. Amazon, in particular, had big pushbacks, and apple had a audit after the arrest of two black men and the company admitted it had work to do and it sets goals for diverse firing and the results of other companies, they are out of my sphere of coverage, and those two from apple and amazon is what we will be watching here. Thank you. And joining us now, oscar health ceo, mark bertolini. And later, the coach that helped the latest u. S. Womens champion, coco gauff to victory, and he has been a friend of squawk, and brad gilbert will be here. Stay tuned. You are watching squawk box on cnbc. 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. Welcome back, everybody. The Technology Focused Health Company is getting a nod of approval after the corporates restructuring. The stock is up over 70 in the last six months since the plans were announced to bring the Company Along the path of profitability. In the last six months, its up 67 . And joining us is the ceo of oscar health. This is a company that went public back in march, and you joined in april right after. Right. It has been a very impressive run since the ipo. What is going on and where do things stand . Yeah, getting the profitability and building the cash flow and capital we need to grow, and so in 2023 we took a step back and slowed the business down a bit and decided to focus on profitability, so getting the technology and operating model right and the team right, that has been our work. In the first two quarters of the year, we are showing company profitability. Do you have to get back to growth at some point . We will be getting back to growth. Our projection is for january to grow faster or at the market, which is above 15 to 20 . Is this your proof to investors, though, if we need to we can do this, make adjustments and turn a profit anytime if need be . Well, where we have come from, it is pretty straightforward we know how to grow and improve margins, and we did a lot in the cost infrastructure, and we have been using Large Language Models for sometime. We have been working on this before a. I. Was the cool thing to talk about. Where do you stand now . What specifically did you do to improve margins . First, we renegotiated a number of big provider contracts, and so the company had not renegotiated the deal for four years, and i suggested we move forward and get that done. We had a large piece of savings over the next four years that will then push through the cost of the company, and ultimately be able to generate the margin level. You came in as somebody running etna and knew the industry and new what worked and saw it as a Technology Company, and said here is how you put things together . Yeah, here is how you do this. Quite a concept. It has been great. The team has been working hard on it, and we are working on operating models and staffing models, and how many people should we have, and how do we focus the technology on things that matter, and so theres lot of Good Opportunity on the platform. Now the platform is set with the operating advantage and it will allow us to grow in a size able way, and a little less on membership and more on revenue. We are able to price through a margin that did not happen in the past because of the cost changes we made. A. I. Is a great buzzword, and if you can been working on this for years, what does a. I. Do for you and how does that compare to what somebody like an etna would have . Our strength is we have a singlethreaded platform, and one version of truth, and there are not multiple providers with the same name in the cyst pump. You dont have old Legacy Networks yeah, its all single threaded. The platform is, so the use of Large Language Models on the back of the business, explanation of benefits into actual english, and it reduces phone call volumeand improves member satisfaction. We are in the process of implementing 47 Large Language Models in the last few months. And it saved you guys costs, too, and you would do things like send out nurses when somebody came home from the hospital to make sure they did not have rugs they were going to trip on, and you wanted to make sure people could get home faster, which people want to do, and good for them and for you because its cheaper. Are you doing the same thing here . Yeah, same thing here, and our most profitable benefit plan is a plan that attracts and treats diabetics, and we believe we can make the market more individualized going forward. The 35 Million People in the middle market small group, we think that should be an individual market. How many customers does oscar have . Just under a million. Thats pretty small. In this game, yes, it is. How are you been in terms of retaining and bringing in new members . Our retention is strong because people like us, and our relationship with brokers is strong and that helps us to keep the Business Inside the operation, and its about expanding markets, so we are moving into markets adjacent to the markets we are in, by looking for good areas where we can get good rates to support people. What do you think in terms of health care policy. First up, the negotiation between the government and pharmaceutical companies over some of their priciest drugs that are out there. Is this a good thing or a bad thing . Good thing. I think it has been a long time coming. I think the pdms are going to be in trouble. You saw what happened in california with blue cross blue shield. The benefits managers. Yeah, the pharmacy benefit managers had a model that a lot of people had been deconstructing for a number of years, and probably for a decade, and now its not a surprise where you have some things like blue cross, and they have decomposed it into vendors to get the best cost structure. If they can work together, he will have a different problem. If the pbms are the problem, why go after the pharmaceutical companies . Theres problems on both sides. Our costs versus other countries, and i would argue theres room in both places, but middle men generally generate numbers at the cost of the consumers. You are talking about the cost shift, and in large commercial employers, they are paying about 140, 150 of costs because medicaid pays 65 of cost, and assuming we leave the cost structure that is appropriate industry this is a much longer conversation, and i hope you come back because i would love to have more time to talk to you. Thank you, and take care. Former pro tennis player, he used to win ugly, he says, brad gilbert will join us and we will ask him about his experience coaching the u. S. Open champion, coco gauff. Hopefully he doesnt get quite as anxiety ridden on air as watching him in her box. That was something where i got nervous. And later, joe manchin joins us to discuss the potential for a government shutdown. Squawk box will be right back. The thought of getting screened for colon cancer made me queasy. But now ive found a way thats right for me. Feels more easy. My doc and i agreed. I pick the time. Todays a good day. I screened with 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 ups ceo speaking exclusively to cnbcs frank holland, and the company releasing a presentation to investors outlining labor costs, and the agreement was called costeffective and fair. Now, its a bit of a bar bell structure where its heavier in the beginning of the contract, and real low in the middle of the contract and it steps back up at the end of the contract. Get this. 46 of the cost increase happens in the first year, so imagine what the last four years of the contract are, they are really good for us. A 3. 3 annual growth she said it was not just about money, but worklife balance, and shares of ups have fallen since the deal was announced back in july. Coming up, former pro tennis player turned coach, and we will ask him about his experience coaching the u. S. Open champion, and coco won over the weekend and what a win it was. We will talk to him in just a minute. And then we will talk to Walter Isaacson about his new book, and thats coming up during the 8 00 hour. upbeat music woah. Constant Contact delivers the Marketing Tools your Small Business needs to keep up, excel, and grow. Constant contact. Helping the small stand tall. 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. 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. Holy cow. I dont know who wrote this. Maybe brad wrote this. Our next guest has been a boldface name in the tennis world for the last couple of years, and he coached agassi, and now on the latest u. S. Open champion, coco gauff, and a huge day trader and stock trader, and i know you never want to talk tennis, you want to talk stocks, and i like talking tennis and maybe not talking stocks. How are you, brad . I am good. I hear you talking about musk and a government shutdown, but lets talk a little tennis first. It was amazing. 21 days of the u. S. Open, coco gauff is a special young lady, and she was so resilient throughout the u. S. Open. I mean, there are coincidences, but, i dont know, when did you come onboard and suddenly it became the summer of gauff. You are too modest to say it was you. I guess we were just meeting, and andre was, like, 700th in the world, and then he brought you on and that sounds a little better. I started with andre in 1994. I was playing and he was ranked below me at that time. Thats saying something. And then a year later i stopped and he became number one in the world. I world. I had a great run with roddick in the summer of 2003. Now fast forward 20 years later is it you . Is it you . For coco . You know what . I was in the right place at the right time. Coco is a special talent. I like to think, joe, that we started on july 30th. And i dont think about honestly anything thats happened before me. Once i go to work, i just start thinking about small Little Things to help the player get better. But i can tell you, three days into working with coco, i had this great idea about what she has an amazing team around her. Everything was in place. And i just kind of looked at when the final was of the u. S. Open. And i saw that the final was september 9th. And i wrote down on a piece of paper in my hotel. She hadnt even played one match yet when we started in washington. And i wrote down that coco would be there on september 9th and it would be our 42nd day together. So kind of had this feeling, but, you know, sometimes you jump ahead, but, you know, like i said, she has incredible ability. She has great resilience. We started on the fly. It wasnt like we made big changes. And i helped her a lot with strategy she said she took the bob gilbert strategy, do what you like. And she said, i want to have fun. And she came back and won those matches against really tough opponents. You dont take your advice, because i see you and i know you. Theres not enough tums or mylanta in the world to calm your stomach when youre watching. I see your face like i see you like this sometimes, brad. Its torture for you, isnt it . It is not torture, you know, you know what it is is, you want your player so badly to do well and any nails left . Let me see your fingernails. Three different times she dropped the set, and even in the third set, she was down a set, but i like to see if more than anything, it was coco being able to problem solve, being resilient, and a little bit of ugly, where she had to dig out of some matches. And i think the most important thing to learn thats great for any athlete is learning how to win when youre average. Its easy to win when youre playing great. Sometimes you have those days where you cant beat anybody. But about 90 of the matches are when you are average. Someone like coco gauff or agassi or roddick, their average is incredibly good. But its learning how to understand that and move forward and get it done on those type of days, which she had to do four different times during this u. S. Open. It was amazing to watch. It was amazing to watch her and watch you watching her. But the question i want to ask is youve worked with so many players, some of whom have had Great Success when theyve been super young, and have continue to go on to have Great Success. Others who have Great Success and dont necessarily make the leap. How do you know, and do you . I mean, its a good question. I like to think of, if you have the skill set, you know, look at novak jdjokovic, whos 36 years old, whos probably playing better tennis than ever. So your whole goal, andrew, as a player and anything you do is to continue to grow and try to become a better player. So i think more than anything with coco, i think this is just going to make her thirsty to work harder and want to get better. And if you dont put things on yourself like, ive got to win here, ive got to do this, you put extra pressure on yourself. But if you keep telling yourself, i want to get better, i want to keep improving, great things can happen. Look at a guy like tom brady, in his late 30s, was still constantly pushing himself to get better. So, i think that the journey is only beginning for coco. And i think great things are in front of her. Tell us about all the sponsors i assume every sponsor in america is calling her now, saying, i assume nike, that new balance shirt off. We have to put some different sneakers on you. Right . Isnt this how this works . You know, the company that shes represented by is called team 8. Team 8 is founded by tony and Roger Federer. So they have an Incredible Knowledge of what theyre doing on building a brand. They built probably the greatest brand in sports history with Roger Federer. So i think that, you know, she has a bunch of great deals at the moment. And i think that they will probably try to figure out what is the best fiveyear plan for coco moving forward. And im sure theres lots of people calling today, wbut im listen, thats the business side for them. Weve only got a minute and i dont want to get yelled at that you didnt get to talk stocks. What do you need to get off your chest about anything related to what we do three hours a day . Okay, first and foremost, i just spoke about them, a stock that i started buying a year ago, oncloud, onon. Oh, dont please, please no microcaps. This is like peter lynch. You know what you know. You know the sneakers. Give bad some credit. This is a okay, joe, this is a 10 billion company. No microcaps. Its a 10 billion company. Thats all right. And you happen to like it. Okay. Go on. I think it has Great Potential and Roger Federer owns 5 of the company. I expect in the next five years, this company is going to explode. And another company that i love, i think listen, the only thing im bummed about, it doesnt pay a way better dividend is microsoft. I think thats todays new bang. I tell my kidsto invest in that. And at 2. 8 dividend, it should be 5 . And time for us as a country, listen, we need to get rid of the fed chairman and the treasurer. We need to get younger. Its ridiculous what theyre doing to Interest Rates. And we need to get younger get rid of all of these old politicians, twoterm limit and lets get younger and more motivated for the country. Oh, my all right. Love it love it two terms and youre done at every level, period period brad, Interest Rates arent that high. Whats your mic . Oh, my mic Interest Rates are a joke, becky. Its inflation. Its not that high, historically. All right. All right. Dont get me started on Interest Rates. This is my fault. Brad, its great to i want to have him back to you didnt call me super joe, first time ever. Super joe, thank you, i appreciate it. We go way back. And your book, was it called winning ugly . Its called winning ugly, and can you believe after all of this time its still selling. Being good looking, but winning ugly. After this, an interview you dont want to miss. Walter isaacson will be at the table. His big headlinemaking biography on elon musk and what he learned about the worlds richest man. Squawk right back after this. 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 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. This morning, futures pointing to a lower open on wall street. However, the dow is on a threeday winning streak. Oil near its highest level since last year. And apples big day finally here. The tech giant expected to unveil its new iphone. What to expect. And inside the minds of elon musk. The hottest biography of the year hitting the shelves today from our good friend, Walter Isaacson. Hell join us live right here on the set, as the final hour of squawk box begins right now. Welcome back to squawk box here on cnbc, live from the Nasdaq Market site in times square. Im joe kernan along with becky quick and Andrew Ross Sorkin. U. S. Secretary, we probably should mention bitcoin, i looked at it just out of nowhere, its up almost 5 , back above 267, so up about 1100 or so. And i dont know. Im trying to figure this out. But there doesnt need to be anything going on for crypto to move like that. But it did bounce off it may have gotten under 25,000. Got down to just above 25,000. As it has in recent sessions or recent weeks. It has bounced off 25. So well see. Treasury yields at this hour, a lot going on. About 499 or so, as weve seen on the twoyear, 4. 997. Meantime, for the last two years, our first guest of the hour has had unprecedented access to the worlds most compelling businessman, the onagain, offagain richest person on the planet. We want to welcome Walter Isaacson, author of the new biog biography. It is great to have you at this table this morning. So much. Beckys got the physical book. It is thick and are you reading it . Oh, yeah. Its more than 600 pages. Its amazing. I cant put it down. Yeah, dont interrupt becky, shes saying nice things about the book. I want to start where it ends. Where you ask a series of questions and i now need to ask you to answer them. Which is this. You say, would a strange musk accomplish as much as a much unbound . Is being unfiltered and untethered integral to who he is . Could you get the rockets to orbit or the transition to electric vehicles without accepting all aspects of him, hinged and unhinged, sometimes great innovators are riskseeking manchildren who resist potty training, but can they be but they can be reckless, cringeworthy, sometimes even toxic. They can also be crazy, crazy enough to think they can change the world. So the question, which you ask, that i want you to answer is do you think that he could have accomplished all of this, the whole book sort of wrestles with these different identities that he has. Could he have accomplished, could anybody have accomplished all he has without these demons, which you write so eloquently about . I think not. And thats the theme of the book, which is, he has these enraging qualities, these drives and these demons, but if you pull those out, you dont have the impulsive character who sets things off. We have been a nation of risk takers, ever since people came from the may flower across the rio grande, we have become a nation now with more of referees than risk takers. More about people who try to regulate and be lawyers than people willing to be adventurous. Thats fine. We need both. But we dont have we dont have the ability, other spacex, to get american astronauts into orbit. We have not been able to land rockets ourselves. We have not been able to move into the era of electric vehicles. This does not excuse bad behavior, but if you dont have the whole cloth of elon musk, youre not going to get the innovation. You pointed that out, one of his worries is if Technology Goes backwards. Yeah, he says its not always true. They built the pyramids and they lost how to do it. Nasa. I hasnt really thought of it. We put that switch what happened . We turned the switch off on about 50 years ago, we sent rockets to the moon. And Elon Musk Space shuttles about 20 years ago is driving in from long island here, and looking and saying, where are they going to go next, and realized there was no plan to go anywhere or back to the moon. What has elon said to you about the book itself. Because there are parts of the book that are very favorable, praiseworthy, about all of the remarkable invention that hes accomplished. At the same time, you just describe him as manchild, somebody who doesnt have the empathy gene. So many other anecdotes and things, which of course, are being pulled apart and picked apart by journalists everywhere. Hes, as far as i know, when i started this is you let me in every meeting, you let me by your side, this isnt based on interviews, this is based on me just being around you at all times with nothing offlimits, but you have no control over the book and you dont get to read it in advance. You really think hes never read the book . I think so so. Because there are things when he reads it, i thought maybe id hear from him. Are you waiting it sounds like youre waiting for the incoming on it . No, you know what, its hard, but you have to keep in mind every hour of the day, whyd you write the book . The book is written for you. Youre reading it now. Its for everybody, the readers. Its not to see if musk is going to like it. I dont need an ongoing relationship for something. And so every paragraph i would write, i think, okay, what explosion will this set off. And i had to keep saying, is this good for the reader. What do you think is the most explosive thing in this . The thing thats well, when youre talking about personal, this relationship with the father he hasnt spoken to in a long time, who instilled all of the demons w who took the side of the bullies when he was beaten up as the kids. Where youre supposed to be a bully. The first time he was scrawny and socially awkward and they beat the heck out of him. The second time he went, he had gotten bigger, and i just learned, you punch people as hard as you can in the nose. And thats a lesson he does every day. Every day sometimes. You spent a lot of time with him. Saturday night live, he said he was on the autism spectrum. Do you believe and when he was young, they used the rword, that we dont even use anymore to describe him. Do you believe he would be diagnosed on the autism spectrum ors ab aspergers . Yeah. To me, that gives hope to so many people. It does and it should. Ive talked to a lot of people who say, hey, my kid. And autism spectrum, as you know, quite well, can be a wide variety of things. Theres so many manifestations. But in his case, its an awesome focus and ability to just filter out everything when hes on a problem. But also, to filter out empathy and feelings and emotions, which is not great if youre running a social media network. Social cues and the like. You speak to this, though, theres two issues, one is just the remarkable power he has now given his ownership of spacex, starlink, weve seen the headlines made around whats happening in ukraine and the influence that one individual may have over a massive geopolitical issue, tesla, now twitter and speech and the like. How he thinks about that responsibility. And if you contextualize it, the one other piece of this youb talk about the empathy piece. He says, and i believe him, that he thinks hes doing all of this work for humanity, right . That he really believes in humanity. But i think a lot of the reviews seem to suggest this, that from an individual humanity, meaning the humanity of you or me or joe or becky or any one person that he doesnt think about it like that, meaning, its this sort of larger piece, but on an individual basis, you may very well be expendable. You know, every businessperson listening to this show would get this, which is that he actually believes that if you care about humanity writ large, getting it to mars, getting it into the era of electric vehicles, getting it through the era of Artificial Intelligence, you have to care about the endeavor and the big mission, which means that if you are too empathetic to the five or six people or the 20 people in the room with you and youre caring about not firing people and caring about not jumping down somebodys throat when they do something bad, he musk would say i dont say this i was a great manager, as you remember but musk would say, youre actually being selfish if youre sitting there hoping people that right in front of you like you as opposed to cutting off that sense of emotional connection and saying, whats best for the larger mission. But how much does he care about being liked . Theres a fascinating anecdote which i had never heard before around paypal, when he was getting pushed out of paypal, and we talked about this, this idea where peter thiel is basically saying, youve got to get out of here, were not going to keep you. Hes still on the board, still the biggest shareholder, and he says, what do i want . He said, i want to be the face of the company. No, no, hes not a shy individual. And he does like playing superhero how much of that is about external validation . I think he really sees himself as a savior hero type of the comic books he read, and he really hates not getting credit for things. If you want topush his button, number one is his father, but number two is like martin who says, i founded tesla, and musk gets really upset. And same with paypal and Everything Else. So, yes i think that might be why he cooperated in this book, is he wants people to see both the good and the bad. You talked with his father, that every conversation at the very end was, you are pathetic and you will never amount to anything, and he became the richest man in the world. And created still not just trying not trying to just say, no, im not, im this. Is it. I talked to father, he said, my worst days of my childhood was watching my father berate elon. And every really successful man not everyone, but most yeah, living up to the expectations of the father. Either correct and false or i want to get to, i guess weve got to take a break, but he sees First Amendment that gift we have in this country as almost technology. And hes worried that twitter was backtracking that was that that technology was going backwards as well, like nasa was going backwards and he had to save that, right . Yeah, i think there were so many reasons he bought twitter, almost on an impulse and sometimes regretted. I said he bought it for all of us. He obviously didnt buy it for himself. But there are lots of psychological reasons that he bought the playground. Part of it was a pissing match. And also, he felt his daughter would tradition to become a marxist had been infected by leftwing ideologies of twitter. I do think he opened the aperture to allowing a whole lot more people to come on twitter. But even standing on the mezzanine level of his gigafactory in texas, i listened to people like kim howery say, wait, wait, its not that simple. You dont just open the aperture to extremists and think that youll have a better democracy. So i think hes found it more complicated. Well press a pause button on this and take a commercial break and come on back with Walter Isaacson as we explore the mind of elon musk. Thank you, walter, dont go anywhere. I wont. As we mentioned, more with walter right after this and cantmiss interviews coming up with West Virginia senator joe manchin on the latest government funding deadline. And allianz adviser mohammad elerian on this weeks highly ne ecipated inflation data, stay tud,verybody. You are watching squawk box and this is cnbc. 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. We earn your trust. Maintain our financial strength and stability. And deliver solutions that meet complex needs. Massmutual. Partnering with financial professionals, benefits brokers, and institutions. Ai has the power to generate solutions. But if its using unverified data, it could generate problems. 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. All right. Welcome back to squawk box, everybody. We are talking with Walter Isaacson. Hes the author of the highly anticipated biography, elon musk, which is actually out on store shelves today. Walter, weve been talking to you about this for a long time, and i know that this is something that you report everything into, i want to come at this from the perspective of other people you know, who you also talked to for this book, bill gates. Not one of not somebody who is elons a big fan of, bill gates, because of the shorting situation. But i was surprised in the book, just about how elon reached out and invited bill to come with his son to spacex, i was confused if it was at spacex or the gigafactory. Bill gates and his son, roy, came to spacex out in california, but later, bill gates comes to visit in austin, texas, and just texts and says to him, i want to come visit and talk about giving money for Climate Change and charitable things. And elon says, fine, and bill says, ill have your assistant call yours. And musk at that point didnt have a schedule. Because he fired his assistant, right . Yeah, he wanted to keep his own schedule. So bill had to just text him, and he finally arrives and the first question, really, that musk has for gates is, are you still shorting tesla . And gates admits that he is. And it just theres demons dancing in elon musks head includes people shorting tesla. He says, im not even going to talk to you about it. I asked bill gates, why you shorting tesla and say, why are y you shorting tesla . And he thought i didnt understand him and he thought i didnt understand him. But i almost said, you do not need more money, so why are you shorting the stock to make a little bit more money when you might hurt the confidence in the company . So at some point, i get a text from musk, calling gates insane and using a word that begins with a. Bill needs a little extra cash to pay for his carbon offsets, as hes taking a boeing 737 around with three people on it. Youre half joking. Im not joking musk will do more by Climate Change by keeping the money invested in tesla than some ngo. Ithought bills response was very bill gates, when he said, he elon says a lot of mean things to people, so its not that different. I want to say about bill gates, he really cares about solar, hes putting a lot of money in solar, alternative energy, as well as small nuclear. He is doing great things for the environment and his pushing of things like solar are doing great, just like elon musk pushing both solar and batteries and electric vehicles. It was just a great they could work together. Yeah, yeah. I was going to ask you i will say that Claire Bucher said that basically when i told her this story her name is not grimes . Her name is Claire Bucher, said its a something measuring contest. I wont say the middle word. Gilelizabeth warren is now calling for probes into spacex as a result of the starlink issue around ukraine. I was hoping you could speak to that. I know theres been some confusion around what elon musk actually did in that circumstance, what he didnt do. Ill tell the story, because it did get to the core issue of should this person have this much power and his thinking through it. There was one friday night, i had been with him for a while, but i was back home in new orleans watching a High School Football game, and i got a message from him and we started communicating that the ukrainians were using starlink to get drone submarines to do a sneak pearl harborlike attack on the russian fleet in crimea. And he said, but were not allowinallow ing starlink to work within 100 kilometers of the coast. I thought mistakenly that he had made that decision that night, later after there was a publication, and he said, oh, no, thats been the policy for a while. We geofenced crimea, so it couldnt be used so there couldnt be an attack on crimea using starlink. So that had been a policy that had been set before that night. But whether it was set before that night or that night, theres this huge interplay. I have all of the Text Messages in the book saying, hey, youve got to let us do this attack. But what was the u. S. Government saying . When i talked to him, i just asked questions. So one of my first questions was, have you talk to Jake Sullivan . Have you talked to general milley. He said, yeah, im going to talk to him. And what they talked about eventually, and i think is a good resolution to this, is that spacex will make a military version of starlink and sell it to the u. S. Government. How much influence do you think the u. S. Government really has over him, though . Because the other piece of this is, there are fcc licenses and all sorts of other licenses that are given to him by the u. S. Government. Theres defense contracts that the u. S. Government so you would think that actually if the u. S. Government wanted him to do something, that he might or not really . I think that that what they wanted is to say, let us have a certain number of Starlink Service and then later, a more military version, where we get to control it, and elon musk said yes. And thats the right outcome. But theres a question of, why does this guy have so much power . And he finally felt that way. He finally said, whoa, whoa, whoa. Because he was inventing things ahead of the pace and this is the bigger question, which is, why has nobody else been able to set up an Internet Communications system with those type of satellites . Why has nobody else been able to have rockets that could take them into orbit . Even the big u. S. Military spy satellites, nasa cant get them into orbit. Theyre shot up on the falcon heavy, the spacex rocket. So, i think the question is not only, should elon musk have this much power, but how come he got this much power is basically, i think, are somewhat sclerotic innovation. Walter, youve written so many books. Steve jobs, ben franklin, da vinci. Einstein. One of the most important inventors of our age. Is this the hardest, the most complicated, only because theres so much activity and stuff that we were following along the way that you had the actual story on all of it. Yeah, this is the most thrilling and the good and bad its like rollercoaster rides. Its thrilling and elon musk has an affection for things that are thrilling and dramatic. If things are calm, he wants to stir it up. So this is a dramatic, exciting, thrilling, me, i dont have quite as much affection for things that are totally wild and thrilling. And there was some days i was kind of white knuckled and saying, gee, i hope this calms down. But it doesnt. Its a wonderful rollicking tale. He seems throughout the book to have this awareness of him sometimes being his own worst enemy . He sure look at his tweets that are just horrible at times, and what he reposts on x. And on christmas, hes with his brother and their family and says, resolutions, start with whats the thing youre most ashamed of or a problem you had this year. And he said, i just keep shooting myself. I shooting myself. Christmas eve or new years . I think this was new years eve. New years eve in cabo. So you think he does have regrets about this . I think there are many elon musks. He has a few, but he did it his way. And there are times when he gets into a dark latenight ambien and red bull dark mode, and he will shoot off tweets youre being kind. At 3 00 in the morning. And then realize he shouldnt have done some paul pelosi retweet or whatever. And yes, he has regrets, but there are times he doesnt have regrets, when hes in demon mode or pushing really hard. You dont think there are things stronger than red bull . Im sure, and no, and he said that he uses prescription drugs for all the things that he has thathallucinogen . Ive never heard or seen him use im not saying theres anything wrong with that. But a lot of these drugs that people write about, ketamine and others are lcd. Mindexpanding psilocybinbased. I know youre the expert on recreational drugs. I went to the university of colorado in the 70s. Really . Thats all im going to say. I think. If you remember the 70s, you werent there. The book again is called elon musk by Walter Isaacson. Walter, congratulations. And thank all of yall. A coupleyear ride and ive been here a lot at this table. Appreciate it. By the way, folks, you can read some of the excerpts from the book right now on cnbc. And just from me, god speed, elon. I wasnt always but once the flame thrower came out, im the fanboy of all fanboys. Thank you, did it for us, thank you. Coming up, another countdown to shut down West Virginia senator joe manchin will join us on what he sees are the biggest hurdles to getting a government funding deal done before the end of the month. First, though, as we head to break, programming note. Dont miss a special cnbc pro talks with bob pisani this afternoon from the futureproof conference in california. Submit questions at cnbc. Com protalks. We will be right back. [soldier] take a look at this theyve left us a gift. [soldier] i think we misjudged them. I love horses. birds chirping [soldier] we should open the gate. Lets see what charlotte thinks. [narrator] at crowdstrike, we monitor trillions of cyber events to detect threats and prevent breaches before they happen to keep your business from becoming history. We stop cyberattacks. We stop breaches. We stop a lot of bad things from happening. Crowdstrike. Protection that powers you. We earn your trust. Maintain our financial strength and stability. And deliver solutions that meet complex needs. Massmutual. Partnering with financial professionals, benefits brokers, and institutions. News from ridehailing platform lyft, the company launching a feature called women plus connect which will match women and nonbinary drivers and more women and nonbinary riders. People will be able to use a new setting on the lyft app to prioritize these pickups. The Company Calls the feature highly requested. Meantime, early rollout cities will include phoenix and san francisco. Almost women make up almost half of their riders, only 23 of lyft drivers are women. Coming up on the other side of this, Mohamed Elerian will join us live right here on the set. But next, West Virginia senator joe manchin will weigh in on the looming possibility of a government shutdown. All of that and more. Live st thoofhe capitol. Youre watching squawk box and this is cnbc. [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. Congress fully returns to washington today. The government will shut down at the end of the month if lawmakers cant reach a new funding agreement. Joining us now, democratic West Virginia senator, joe manchin. Senator, always good to see you. Wish you were in studio, but well do what we can do with you. Youve got bigger fish to fry down south of here. North of richmond. All of those rich guys north of richmond. Good to have you. That was a good one. That was a good song. Yeah. Thank you. We actually had Mick Mulvaney on yesterday in kind of a debate about the shutdown. He on camera said that may not be the worst thing in the world that this group, i dont know what you call them, but the antimccarthies, the ones that are questioning his leadership, that want to shut down the government, he said that might not be the worst thing in the world, if it focuses on spending, which is out of control. Is that wrong . Well, i dont agree with that at all. I have all of the respect for mick, but mick and i dont agree with that scenario. The fiscal responsibility act was signed three months ago, joe. It was signed basically by the president and Kevin Mccarthy making a deal. If you want to look for a reason to be against it, fine. There are a lot of reasons you may not like it. Things that you wanted that didnt get in, things that you think we shouldnt be spending on, but a deal was a deal. And right now in this town, a deal is only a deal until basically its not a deal. And it doesnt make any sense whatsoever. Were basically going through this drama, continuing drama, the world markets, watching us, saying we cant get our act together. Why cant we just pass that . And heres the thing, theyre talking about the politics. Theyre threatening the shutdown. The bottom line was, the fiscal responsibility act was passed with 314 congressional votes, about 150, give or take, on each side, the democrat and the republicans, they came together. I was extremely proud to see that happen. We passed it in the senate with 63 senators, 17 being republicans. I was proud of that bipartisan effort. Youre not going to get these same people who want something perfect. And theyre letting the perfect be the enemy of the good. Theyll probably vote against it again. Therell be a reason its not perfect enough. So we might as well put this back up to the vote, fiscal responsibility act. The only thing around here that seems to be bipartisan is both sides want to spend more money to a certain extent, the majority. Weve got to curtail that and the fiscal responsibility act gave us savings of 1 to 2 trillion over a tenyear period, thats not nearly enough, to basically subside this tremendous runaway train we have. Were approaching 30 trillion of debt. Where we were just 20 years ago . You know, and have this type of increase in such a short period of time. It should be alarming to everybody. Get your financial house in order, and thats our responsibility. Well, i saw you make that point yesterday. And you had a statistic last time, we didnt spend more than we took in, how many years was that, senator . Joe, 21 years 21 years in a row, we have spent more than weve paid in. And theres not one business person watching this right, leading to somewhere with that. So its lets just get it off the table. So its bipartisan. I dont want people saying, we attack one side or the other. But lets talk about where we are right now. For the last couple of years, and you had a lot to do with it, so were pushing on 33, 33 trillion. The president all the president and his men and women say this hes cut the deficit. And theyre bragging and boasting and in fact, its going to be 2 trillion this year, up from 1 trillion last year. Now, number one, why mislead people . Whats the solution. What can we do . You were part of it. You held out. And i dont think that its what you thought it was going to be, either. Well, hold on, joe. Okay, go ahead. Let me explain, first of all, the bbb was way, way over reaching. I think it would put us in a tremendous recession, if not a depression because of all of the additional spending in that bill. All the wish list was in there, and the demand would have been from the public, and they would continue to have debt financing. I basically came to the conclusion that we would to have Energy Security and to have Energy Security, youve got to produce more fossil in the cleanest possible way, and you can walk and chew gum by investing in new technologies for the future. Thats exactly what the ira did. And you dont hear him talk about Energy Security. Were producing more today in oil and gas than we ever have. Were at 4. 6 billion barrels of oil we would produce this year. Almost 37 trillion cubic feet of gas. Prices determine that. When it goes up, youll have people producing. But you know now that the i. R. A. , its 1 trillion, not for fossil fuel. It should never be 1 trillion. Thats the problem i have, joe. The implementation theyre implementing it. You saw the leases are being set there. For thefossil fuel administration. Its happening in spite of the administration, not because of it. Well, hold on. No, its not. Because, first of all, this. That i. R. A. Bill says youre not going to go out and pull windmills in the golf unless were extracting the minerals. Theyre trying to do everything they can to get around that. Thats my problems i have. Implementation. Theyre trying to implement a piece of legislation that aint never passed. Just implement the bill that we put if front of you. Also what youve never heard, 238 billion of that bill that was about 690 billion as far as how it scored. 238 of that went to debt reduction. You never heard a word about that, joe. No ones talking about, it was a balanced piece of legislation. The administration is liberalizing it to the point, and were fighting it. Weve got the Mountain Valley pipeline that well put 2 billion cubic feet of gas into the market, okay . Were producing more than we ever have because they had the force them to do some leases they didnt want to do. Then they come back and do the thing in alaska which i thought was horrendous. You cant take anything off the market when you have a Global Demand and you have putin weaponizing energy. You cant do it. But we can do it better than anywhere in the world. You cannot eliminate your way to a cleaner environment. You can innovate your way, joe, you cannot eliminate your way. Senator, are you going to be the West Virginia senator . What are your plans . Are you going to retire . Can you you have a really tough schedule at West Virginia at the mountaineers. Could you do anything with penn state. That was bad. Are you going to be president of your alma mater . Whats going to happen . Are you going to run for president . Many decisions of my political career, but lets go down the list of things you mentioned. First of all, im a proud alumni of West Virginia, a mountaineer. A very proud alumni, they gave me a good education. With that, ill sport gordon gee and their staff, everything i can do to help them. Lets leave that there. Next of all, joe, only in america does an election start the day after the last election. I dont have anything as far as my filing date doesnt start january 7th. I have plenty of time. I have a lot of gas in the tank still left, as you can tell, im ready to go. And i believe that the middle needs a voice. Theres no voice in the middle. Youre either extreme left or extreme right. Thats not how weve built this country. This is about the United States of america and not let it be divided. And haasthats what theyre try to do. I dont want you to pick a side, theres only one side, the american side. But there has to be a voice, common sense. Get our financial house in order. Sk and i said this before, my grandfather used to say, whats going on with all of and he said, joe, let me tell you something, unmanaged debt will lead you to make terrible decisions. And thats whats going to happen. The old adage of robbing peter to pay paul, thats where that comes from. You basically shuffle things around. We cant shuffle any longer. We cant carry 600 billion of interest that were basically paying 600 billion. Next year, joe, we could be spending more than we are for if you did become president , senator, would you cut spending . Would you raise taxes . Would you try to progrowth alsos. People say the only way out of this, and you mentioned debttogdp is going to be almost 180 by 2050 or something. Its higher than its ever been since world war ii now. How would you fix that . Im still a fan of bowles simpson. I saw a pathway forward, i supported that, i thought we should have supported it and it was a shame it never got a vote. It was a shame. And no ones taking it seriously. We need a bipartisan, Bicameral Group of fiscal hawks, if you will, that can basically come in a bipartisan way to the agreement of what we should do learning. Theres so many things that can be done, but basically, looking at all of the difficult things, in my state, Social Security and medicare is sacred to so many people. We have to protect that, but the way were going right now, were sticking our head in the sand and saying, well, in another eight or ten years, you know, the fiscal stability of this, so theres things that need to be done. The cap at 167 right now, ill use that. The cap of 167,000 of salary. 100 of the working people pay that in taxes. If you dont run, senator, it likely looks like its a race between President Joe Biden and former president donald trump. How do you think the American People feel about chose choices . You know, i dont have. As soon as i announce any of my intentions, right ow, im still able to work across the aisle very well and get things accomplished. And thats all that needs to be done, joe. Youre definitely do some something. Its like dumbabledorfs. Thanks. Thanks, joe. Rich, velvety coffee. Cafe quality espresso. One highpressure system that can do both. Brew to your Hearts Desire with the lor barista system. A masterpiece in taste. Is it possible to fall in love with your home. Before you even step inside . Discover the Magnolia Home james hardie collection. Available now in siding colors, styles and textures. Curated by joanna gaines. 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. Welcome back to squawk box. Big action on the data the august cpi next. At the table since last month proves to be more theres a lot more questions about when you raise, when you lower, what you do, whereas before was actually the hard part. So theres two different issues. One is, what do the inflation dynamics look like. And two, the policy dynamics. The inflation in the month continues to go down. All right. That were going to have well behaved. Headline may pop up a little bit, but it will come down. And importantly for policy, that means the importance is going t is headlines are going to prove more complicated or whether youve seen people push up their month on month of headline all the way up to 0. 6, 0. 7, core inflation will be less behaved and the fed will have a choice, do we leave with 3 inflation or crush the economy. Well, and the question id ask is, how quickly you think they need to get to two, right . I dont think theyre changing two. Two is hard but the question is whether two is in 12 months from now, two as in 24 months from now, i mean, and whether they really are prepared to crush the economy. Im not so sure. I hope they dont crush the economy. It wouldnt be a good thing to do. I think we can live with inflation above 2 as long as its stable. Dont forget 2 is completely arbitrary. I understand the fed not wanting to talk about it but you have more and more economists willing to talk about it saying im not sure if we said it would be two. What i think will end up happening is theyll push two out more and more and more and were going to live with higher than two and at some point down the road well make that transition, but were not going to get an announcement of a different inflation target any time soon. Is your sense that right now you think its a pause and the market thinks its a pause and the question is are they going to lower rates later . Do you think there is a possibility of one hike somewhere in between . What would the market have a heart attack if thats the case. The market shouldnt but what the market should recognize were high for longer. I was going to say, if they dont lower rates at the beginning of next year, the first half of next year, does the market react poorly, the stock market . I think the market will have to absorb this notion that were high for longer. What we dont know and there is a massive debate going on about Monetary Policy. Is it level or the rate of change . Have we seen most of the long and variable lags or have we not . So there are real questions about the design, the conduct and the effectiveness of Monetary Policy that the marketplace is not absorbing and assuming the fed will cut rates early next year. I dont think that will happen. Other things are taking place. Jamie dimon was railing against the Capital Requirements for banks, the amount of lending banks can and will do as a result and that will have an impact on the economy. Do you worry about that . I do. I think jamie is absolutely right in saying higher Capital Requirements is not the answer to what happened march and april. March and april was a problem of supervision. It was identified but nothing was done to force these banks to deal with the maturity mismatches. To then react and increase capital yet again is not the right policy response, and there was a risk that that will not just lower credit but push it into the nonbank segment and that segment is well less supervised and regulated. Lets move on to crypto if youd indulge me. We have crypto conversations and there seems to be this thing happening. Joe, we were talking about 25,000 with the coin. Meanwhile, blackrock and all these folk, all that we thought would never do this are now doing it and yet its not moving at all. Its moving today. Well, i mean, sure, 26 this is 26. It was 4 when we started saying it wasnt going anywhere. 4,000. Oh, well, okay. But, so but the question is, is this a risk on, risk off thing . How do you correlate with whats happening to the fed . You used to talk about crypto in regard to the fed. So, i think crypto is settling as part of the ecosystem and people have recognized it is not the new global currency, people recognized its not going to disappear tomorrow. It is becoming institutionalized. I think this maturation process is a good thing if i was a crypto person. I still think its outperformed every asset, oneyear, fiveyear and tenyear. I think it has. Well, i dont know whether one year is 17. It was last year got as low as 16,000, so might not have outperformed everything. Its outperformed most things. Yeah, i think year to date is 17 . I think like in the last year oneyear period, fiveyear but and we know that really good stocks can have similar moves, i mean, stocks can go from 65 to 26 and like a lot of wellknown stocks as we know. Netflix, 700 to 180. A great company. Great company, right . So, i mean, theres volatility. Depends on what everything depends on what someone will pay. I like your jets tie. Im not bringing it up. Im not going to be predictable. Congratulations. I wore that for you. Whos the quarterback . Zach. Look at the defense. Yesterday great coach. And inspiring performance. You always congratulate me on the bengals. Have you seen a bigger mess of that game. Against the browns, right . Yeah. 55 million a year for i mean, it was raining but was it not raining on the grounds . It was raining on the browns. Are you on the bandwagon . I dont know. I know. Im not quite off yet. Im on the colorado bandwagon. Shedeur and coach prime. Coach prime. I did. Texas alabama. I didnt like it. I had alabama. Qusquawk will be right bac. Partnering to unlock new ideas, to create new legacies, to transform a company, industry, economy, generation. Because grit and vision working in lockstep puts you on the path to your full potential. Old school grit. New world ideas. Morgan stanley. Pano ai chooses tmobile for business for 5g solutions. Because tmobile helps pano ai innovate, so they can stop the spread of wildfires. Nows the time to see what americas largest 5g network can do for your business. If you havent heard it already apple is expected to launch its new line of iphones at an event in california today. If the companys naming pattern stays the same this would be the iphone 15. F the charging port is expected do change to usbc from the lightning standard theyve used since 2012 hoping the new models will juice phone sales and help them recover from a recent slump. We will have coverage on cnbc all day long. See that stock up by 39 cents. Lets take a quick final check of whats happening in the broad markets, the dow futures off by 71. S p futures down by 14. Of course, this comes after three days in a row of gains for the dow. Folks, that does it for us. Make sure to join us tomorrow. Right now its time for squawk on the street. Good tuesday morning, welcome to squawk on the street. Im carl quintanilla. Cramer is there. Backtoback gains. Oil near 88 1 2. Is the highest of the year as becky says the apple event is the headliner. Our road map begins with storm clouds for oracle. Revenue and guidance coming in lighter than expected. Plus, it is apples biggest event of the year expected to