Market, you will see it looks like the 10year treasury is sitting just at about 4. 29 . The 2year treasury is below 5 at 4. 99. Last week, the transports did see the worst week since march. If you worry about things like that, the downturn, the russell 2000 broken. The dollar is now looking at its longest winning streak in terms of weeks. Weekly winning streaks since 2015. A lot of things to watch this week. We are watching shares of alibaba, talking about kicking things off, after the company said in the surprise move its Ceo Daniel Zhang planned to step down this month. Stepping down as chairman and ceo of the Cloud Business in june. Alibaba said he was going to be departing as the ceo of Alibaba Group to focus on the cloud unit which the company is spinning off as a separate company. Now the cofounder eddie wu was set to take over from zhang this month. He is now going to be taking over the cloud iunit. Joe tsai will take over alibaba. This raises questions of the spinoff and how unhappy he was from that role to this role. We talked about this at the top. I guess it matters the expiration date. Old twinkies arent good. I dont eat 17yearold ones. I havent had a twinkie in ten years. The what are they . Preservatives. Good in a szombie apocalypse. Hostess makes other things. Hohos. None of those contain ill not say it. There are some natural ingredients. Hostess is nearing a sale to jm smuckers which could be f worth4 billion. They survived the deal with general mills. Hostess went through two bankruptcies. A Profit Group Bought the com company. Hostess returned to the Public Markets in 2016. We have all date on the story we told you last week. Ro Robert Isaacson posted last night over the description that elon musk secretly told his engineers to turn off starlink coverage within 100 yards of the crimea coast so they could not attack the russian fleet. He tweeted to clarify. The ukrainian coverage was enabled to crimea. It was not. They asked musk to enable it for the drone attack on the russian fleet. Musk did not enable it because he thought it would create a major war. Musk retweeted it. Much appreciated. It is different than if i refused to act upon the request over the decision to thwart ukraine. Walter will be joining us tomorrow to talk about the book which is getting lots of headlines. We said that on friday. On friday, elon had tweeted that it was never turned on in the first place. They did not ask him to turn it off because it was never turned on. He said that on the show. Walter isaacson acknowledging that. The other piece that is important in this is elon musk, to his credit, decided actually in large part because of the power he had in this circumstance that he didnt want this power in the future. He is building a separate version of starlink for the u. S. Government that will be controlled by the u. S. Government so he will sell that and the government will make those choices. Those are the choices the government has always made. It is impossible for a single individual. It is tis true to his credit. We will see walter tomorrow. In the meantime, a big price target upgrade from tesla from Morgan Stanley. The super computer effort dojo saying it can add up to 5 billion to the tesla enterprise value. That stock up 6 this morning at 262. And Novak Djokovic won the u. S. Open mens final yesterday. Defeating Daniil Medvedev in straight sets. It was his 24th grand slam title and fourth u. S. Open title. On saturday, we saw coco gauff win the womens open. It was awesome. You see brad . His fingernails were down to here watching. Brad gilbert. Gauff has one five singles titles, but this was her first title in the grand slam. Both matches were amazing. Star studded. Im surprised you werent there. I was watching on tv. Leo and nicole and keith. It was great. It was great to watch her win. Didnt you love that . I did. Her opponent hits the ball really hard. She is the fastest and greatest defender. She likes to play offense. She did in the last couple sets after losing the first one. I was worried. You could see brad was a little worried. Yesterday, medvedev, did you see it afterwards . He is a classy dude. I really like him a lot. I felt bad for his wife. It was his anniversary. He won two years ago on the same day two years ago. I thought djokovic was a classy guy. I would have thrown the game if i had known it was your anniversary. He also said, happy anniversary. Im not saying that as a slam. Of course, he had the mamba. That was his 24th tournament. He and kobe were close. I cant believe Novak Djokovic needed someone to give him the winning mentality. He has the alltime mental aspect. Kobe bryant may be the best ive ever seen. How he talked about the mental toughness. Maybe it added to what djokovic or mcenroe is back. I didnt need another four hours of whoever the guy is. He is okay. Mcenroe is great, obviously. He is ready to call novak the g. O. A. T. He loves federer. His idol was rod laver. No one is close to this guy. When we come back, it is a busy week for inflation data and ecb decision and high profile hearing on capitol hill with big names. We have the with squawk planner next. We have an interview with Wally Adeyemo. He will join us at 8 00 a. M. Eastern time. You are watching squawk box and this is cnbc. Youn announcer this cnbc program is sponsored by baird. Visit bairddifference. Com. I watched my mother go through being a single mom. At the end of the day, my mom raised three children, including myself. And so once the client knew that she was heard. We were able to help her move forward. Your client wont care how much you know until they know how much you care. fan 1 there ya go thats what im talkin about until they know how much you care. josh allen is this your plan to watch the game today . hero fan uh, yea. I have to watch my neighbors nfl sunday ticket. josh allen its not your best plan. But you 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. Wow, you get to watch all your favorite stuff. Its to die for. 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. 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. On this weeks squawk planner, we have key inflation data. We have the Consumer Price index on wednesday. That is followed by retail sales on thursday. We will get import and export prices on friday. Also on the calendar, apple is holding an event at 1 00 p. M. Tomorrow to unveil the latest iphone models. On capitol hill, they will look at Artificial Intelligence. Among those scheduled to attend the closeddoor meeting is elon musk and satya nadella. On thursday, the latest Interest Rate decision comes from the European Central bank. It will be released at 8 15 a. M. Eastern time. That will be followed by the conference by christine lagarde. Auto workers will be in focus thursday night and friday morning. At midnight is when the contract with the big three automakers expires. You could see a strike at the least one of those automakers if there is no deal in the next few days. By the way, they are far apart at this point. Joining us now is sylvia jablonski. Sylvia, the big number is cpi and ppi. Looking at the Inflation Numbers will tell us what we will expect from the fed. How much is riding on that . I think so. Good morning, becky. A lot is riding on it in the shortterm market and how it reacts to it. Do we have a pull back from last week or do we resume the rally from the first half of the year . I think the Bigger Picture doesnt matter what happens in one particular read. We know inflation is coming down. It has come down quite significantly. If we keep going in that direction and the economy is holding up, overall, it is not as big of an issue as months prior. Do you think the fed will likely be sitting on its hands or they act in november if they see more trouble signs pop up . Are they happy at the moment . I think the fed is likely to sit on their hands and take in the data they see in the coming months and see where that gets us. I think they are likely to hold rates higher for longer than we anticipated. I dont anticipate major increase to the rate hike intentions. What the fed does is important to the future of the market. I think we are set up to have a rally to the end of the year. What can turn that around is the fed unexpectedly raising rates and deciding inflation is stickier than they hoped it would be. Lets talk about the other he ve events this week. Uaw. Whether i heard earlier is if they go on strike for ten days at the big three, that would be enough to send michigan into recession. Less supply on the markets would bring prices back up for cars after they have been coming down. This is important after the inflationary read. We have oil prices which are higher, too. Could Something Like that extended strike be the issue that pushes all the way back through and changes the feds mind . I think its a storm that can certainly brew and turn into a disaster. It is interesting to see what happens with that. I would flip that and think more about what that could mean in terms of electric vehicle demand and electric vehicle production. You know, it is interesting to see what happens with the prices of oil becoming more expensive and imp mpacting the price of vehicles and supply and demand issues. You may see car buyers look at evs where you dont have the is issues. Sylvia, what are you telling investors . August looked to be a rough month. Things ended okay in august. We had a down week for the nasdaq last week. Futures are indicated sharply higher across the board. I think overall broad based dollar cost average, you get the ride with the rally toward the end of the year. I love the ev trade value. The upgrade on Morgan Stanley that we talked about earlier in the show. Dojo with tesla. The top five electric vehicle makers are set to rally in the next for months. That is a 5to10 year trade. I think that is a great opportunity right now for investors to get in. Sylvia, thank you for being with us today. Thank you. Have a great day. Coming up, Meta Platforms is reportedly ramping up the Artificial Intelligence plans. Details after the break. Later this hour, an update on disneys dispute with charter over cable fees after a busy weekend of sports. Wow. Matt is so young. Sports that spectrum customers could not watch. Some sports i wish i had been unable to watch if you are a giants fan or bengals finance. 55 tmillion a year. Burrow. Neither team could catch a ps. As we will talk to puck news matt belloni when squawk box comes back. What do you see on the horizon . Uncertainty . Or opportunity. Whatever you see, at pgim we can help you rise to the challenges of today, when active investing and disciplined Risk Management are needed most. Drawing on deep expertise across the worlds public and private markets in pursuit of longterm returns. Pgim. Our investments shape tomorrow today. sfx people cheering sfx Stock Exchange bell ringing sfx people celebrating sfx people celebrating sfx Stock Exchange bell ringing what do you get from the Morgan Stanley Client Experience . Listening more than talking, and a personalized plan to guide you through a changing world. We have news just out. Instacarts ipo is happening now. Leslie picker has the details. Reporter andrew, it feels like we have been talking about this for years. Instacart kickingo off the ipo today. The Company Plans to market share between 26 to 28 a piece. That implies the valuation as high as 1. 3 billion which includes restricted stock units in the share cart. That is a quarter of the 39 billion valuation from two years ago. It is below the valuation from the recent round at the end of 2022. A more conservative the valuation is a sign of the Uncertain Times for Companies Looking to go public. Instacart said in may of 2022 it filed for an offering, but punted the offering as Tech Companies sold off. A. R. M. Is planning a smaller ipo than it originally considered. Instacart intends to sell shares in the i ppo in 16 16 million e high end. Investors indicated they plan to purchase shares up to 400 million total. Pepsi has a private placement in the current offering. It will trade on the nasdaq and is expected to start trading next week. Guys. Leslie, in terms of the scale down in the offering, the question is what do the companys sales look like and how sustainable is it and what is the margin . What is your read on how investors are reading that reporter investors i spoken with since it became public, they were pleased with 31 of top line growth for the first half of the year. This is a profitable company. The one concern i have been able to pick up and speaking with investors is the gross transaction volume value is 4 higher during that period. They would like to see that more in pace with revenue. The reason revenue was higher is because they were diffiversifyi into advertising. That is why you see a bigger pick up on the income statement than with total gross sales. Leslie, thank you. Time for the executive edge. Meta is looking to ramp up the Artificial Intelligence efforts. According to the wall street journal, the company is working on the a. I. System as powerful as the most advanced model offered by open a. I. The planned system would help other companies build services to build sophisticated texts and analysis and other ovfferings. This is the part of the Mark Zuckerberg push to establish meta as a major push in Artificial Intelligence. For some reason, this makes me happy. Dont you want everybody working on this in the best minds . We want to win in this country. I think, were hurdling toward an uncertain future with a. I. , but we may as well win. Guys at met a have money and minds and innovation. They are planning to do it differently. A question if it is better. One is an open source. He wants to have an open source approach and all of the others are effectively closed. Even open source a. I. . If you have open source a. I. , that means you or someone on the street can take that code and build their own a. I. We could argue it is great competition and opens the field, but it also opens up the field to do all sorts of nefarious things because you have access to such code. If you have that code to hack things, you could do that. If you want to use it for political speech or hate speech or other things, thats where it gets complicated. At the moment, the system that chatgpt put together and google put together and the system that so many other two or three others are closed and relatively controlled. You have to decide if you like the controlled version or the open versus. I like the open. Interesting. I dont know. Youll see. Well see. Theres an underlining current. We cant babysit everyone all the time. It will happen. I think from the major companies, hes really the only one doing it that way. We should find out if elon musks approach is open. I dont think so. The debate taking place is open a. I. Is a myth. When you ask technology makers, they will still have that control. It will be controlled by big companies. There is no such thing open source a. I. That is truly open source. That is a big article questioning these things. Right. We will talk more about this and more. President biden making headlines at the g20 smiumt over the weekend. Well talk about that after this quick break. Announcer executive edge is sponsored by at t business. Next level moments need the next level network. 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. There are some things that go better. Together. Burger and fries. Soup and salad. Thank you like your Workplace Benefits and retirement savings. With voya, considering all your financial choices together. Can help you make smarter decisions. For a more confident financial future. Hey, a tandem bicycle. You cant do that by yourself. Voya. Well planned. Well invested. Well protected. 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. Good morning. Welcome back to squawk box. Were live from the Nasdaq Market site in times square. Futures are higher across the board. Dow up triple digits. 100 points. Nasdaq up triple digits up 102 right now. The s p is up 25. The economic downturn from china could bring about an invasion of taiwan. I think china has a difficult economic problem right now for a range of reasons that relate to International Growth and lack thereof. The policies that china has followed. I dont think it will cause china to invade taiwan. As a matter of fact, the opposite. It doesnt have the same p capacity it had before. As i said, were not looking to hurt china. Sincerely. Were all better off if china does well. Those remarks come following high level talks with the chinese premier in india. I want to bring in admiral james stavidris. We are all trying to understand what the relationship with china should look like at this point with the u. S. Where we are rooting for their successor no or not rooting forr success. What do you think . I think it is not black and white. There are different issues. Sure, we want to see success on both sides of the table. Ill give you an example on climate. We want china to work hard on the climate challenges. With we want the world to do so. We want to cooperate on humanitarian activities around the world. We want to see a functioning global economy. I dont need to tell the audience why thats important. On the other hand, we have significant differences with china. In cyber. In a. I. , which you discussed a moment ago, we are in a foot race. In thing south chw in the so china sea. I would say we need to confront china where we must. We are not going to give up the South China Sea or allow them to ride roughshod over taiwan. We need to cooperate where we can. Admiral, Everyone Wants to be nuanced. The idea that somehow we can have it both ways, basically. We can be friends on these things, but these things, we are not friends. Thats not how the world works. We talk about that every day as if that is a plauappplausible ao this and you see the rhetoric. Lets go ahead and look at the counter factual. We dont have to imagine what it would look like if we decided to decouple with china. We dont have to guess what it would look like. It would look like the cold war like the United States and soviet union. You can say decoupling and what p pres president reagan did was worth doing. Globally, we would suffer in the face of the decoupling. We need to imagine this as an off off switch. Fully engaged wih china and we want them to win or we decouple and go back to the cold war model. It is to the an off on switch. I argue china is dangerous. We have to bring in caution and skepticism. At the same time, there are zones of cooperation, including business. Admiral, i was surprised by president bidens comments and just talking about china overnight. Just the idea it sounded like an honest assessment of how he sees things. If he were in the sameeconomic troubles they were in, he might rethink the question of overtaking taiwan. Having a u. S. President saying that out loud was like poking the bear a little bit. Why tempt them in that way . Poking the dragon. We think of the bear as russia and china as the dragon. It is a good image. It does do that a little bit. What what he is recognizing is xi jinping floundering and trying to decide whether you might want to think about attacking taiwan, i dont think you are going there. I think you say i wonder if any generals are as bad as the russian generals appear to be. I wonder if the taiwanese will fight like hell the way the ukrainians have. I wonder what with the Global Response would be if we invaded and took over this democracy by force . You have a ton of uncertainty. That is before you get to the president s point which is the diffi difficulties internally in china which are a sputtering economy and terrible demographics with many more men than women in aging society with a need for environmental remediation. If you are president xi, you are not waking up in the morning thinking about invading taiwan. In the last piece, we talked about the security of telephones. Iphones in the United States. State governments and federal pieces as well around whether you should have tiktok on your phone. In china, it has gone further. They are saying you cannot have one of the phones, at least, at the office, on a personal basis. How does that manifest over time in terms of other things that breakdown . Im thinking about technology. If starbucks is there and disney shanghai parks is. There do you imagine a day where you cant go there or we need you to have a partner now . You need a chinese partner. Some have chinese partners in some of the businesses. Do you see that evolving . This is, of course, the soe model that concerns have to go through. Yes, i think your point is spoton. This is an authoritarian nation. It is always going to bias itself in that direction. That is going to put sand in the gear for enterprises that come from, shall we say, more enlightened backgrounds, including those from the United States of america. Yes, it is a concern and ill close with this. Back to Artificial Intelligence. Watch for china to take a very authoritarian approach here. More so than the United States. Believe me, they are not thinking about open a. I. They will look for controls in Artificial Intelligence, facial recognition and quantum computing. Anything that touches National Security. Your point is spot on. We will leave it there, admiral. Thank you. Still to come at the top of the hour, morning movers and a jump for tesla. We have more on that story ahead. Later, Congress Member buddy carter joins to us talk about everything from taxes to the budget and much more. Reminder for you, you can get the best of squawk box in n r squawk pod you can liste any time. Squawk box will be right back. Ever since she was a little ki, all maria wanted to do was bak. Im maria alvarez, owner of marias cakes. And im axel, proud to be her state farm agent. Her baking superpowers have brought sweetness to our community. I make delicious cakes to make special occasions even better. Maria doesnt just bake; she also creates opportunities. Small businesses like marias, open doors for communities to thrive. Support your community. Support small business. You are looking at a live shot of the reflecting pool at the 9 11 memorial in Downtown Manhattan as we remember the terrorist attacks of september 11th. 22 years ago today. More than 2,900 people died on that day. The new york Stock Exchange and nasdaq will hold a moment of silence today before the opening bell. Officials in morocco say more than 2,500 people have been killed by the 6. 2 magnitude earthquake which hit friday night. The search for survivors continues. Antony blinken said the u. S. Reached out to the moroccan government and made it clear we are ready to assist. And coming up, the latest of carriage fees with disney and a charter and why the recent success of hulu may look to buy out that streaming service. Matt belloni will join us next. Reminder, you cawan tch or listen to us live any time on the cnbc app. Good night hey corporate types. Would you stop calling each other rock stars . Youre a rock star. You are a rock star. No more calling coworkers rock stars. Look, its great that you use workday to transform your business. But it still doesnt make you a rock star. So unless you work with an actual rock star. Hi, im ozwald. Hello ozwald. Pam, you are a rock i wasnt going to say it. We welcome back. We are in the green. We have been down a bit at the end of august and now were in the zone up 99 now on the dow. Nasdaq up 105 points. S p is gaining a little. Well take a look at treasuries. Waiting for a lot of data this week. We should get an idea of inflation data with the indicators of how the economy is faring. 10year treasury at 4. 29 . Bitcoin is in the mid 25,000 area right now. Down a little. Crude has been something you want to keep on your radar screen. Wti up at 87. Lets get to the latest media and the dispute with disney and charter over cable fees. Joining me now is matt belloni. Founder of puck news. Matt, we want to talk about hulu. The stories are related. Disney benefitting or hulu seemed to benefit from the charter situation. That is not necessarily good for disney because it means it could cost more if it wants to buy hulu from comcast. Not a lot of good options for bob iger at disney. Monday night football. Tonights the night. Typically we see these carriage disputes resolved by the time the nfl season starts on the network. If there is no espn monday night football tonight for spectrum customers, they will lose those customers. It is dday for the pay tv bundle the. We will see which way it goes. We had that discussion last week about nfl still at the top. Tonight, our discussion focused on match ups and how important they are. Aaron rodgers in his Aaron Rodgers in his debut with the jets in buffalo who people you know, buffalo any year could be there. You know, we forget about them sometimes, talk about other teams. This is a huge game tonight. I cant imagine. Id be furious if i couldnt watch it. And a lot of the spectrum customers are in the new york area, and now were in a situation where typically the ratings for a monday night Football Game involving the jets would be high. The first game with Aaron Rodgers is going to be super high, so well see what disney does here. I mean, i know they really want a deal, but charter has really dug in their heels. This is really a dispute about the future of television because they are not getting in. If you dont, you know, want to be a jets fan, you could always switch over to the giants indeed, a giants fan. Not after last night. Yeah, 400. Im trying to figure out what you think a deal would actually look like. I dont think theres even a sense as of the reporting i was doing over the weekend that theres actually a deal to be had thats on the table that either side would be particularly happy with. Right, and i think charter wants the kind of concessions that disney sees as existential to the cable bundle. If they start packaging up disney plus and the other as much ass that is a potential revenue killer for other cable are providers. Remember, a lot of these cable providers are going to come out of the wood work and say we want a charter deal. We want whatever you gave them. If they cave on this, that all the others are going to want it and could potentially destroy or at least accelerate the decline of cable. Streaming and the way we view it, is it so are we bouncing off the lows for streaming again . Is that so hulu, what was the low valuation of hulu . Whats it worth now do you think . The floor is 27. 5 billion, i believe. And comcasts ceo Brian Roberts said recently that he thinks thats low, that theyve really added a lot to hulu and the valuation. Its one of those interesting situations where if they cant agree on a price theyll have neutral arbitrators do it. Thats a wild card. For disney every dollar matters. I think a lot of the choices theyve been making lately are in anticipation of this big check. For a third of hulu they could end up having to write a 10 billion check. I dont know how that works, 81, thats a level in the stock we havent seen in quite a while. What about the strike, the strikes, and why is it taking so long and could be next year now people are saying . Yeah, on friday there was a troubling back and forth where the writers side essentially suggested that the studio coalition break up because they were willing to make deals with individual members of this coalition that negotiates together, and that Coalition Just put out a statement the same day saying, no, no, no, we are united and were going to see this through. Well see if thats true or not. There are rumblings around hollywood that a couple of members of that coalition are willing to break away. If that happens, there could be chaos where the guild does a divide and conquer type thing where they do deals with certain studios or streamers and use those to leverage the others to agree with it. Thats what happened when they had a fight with their agents a couple of years ago and they did that. What are the studios that would be willing to go ahead and cut a deal because theyre in a different position . Like which ones are saying, forget it were not going to negotiate, versus which studios are going to say, yeah, were getting ready to go back to work. Theres been some reporting that says netflix has said well do this deal. We will do what you want. That has not been confirmed by net netflix. It would make sense that netflix is in the best financial position. Netflixs streaming division is are profitable, and i think they are looking at this and saying perhaps this could be a differentiator for netflix where maybe if they had a deal and the others didnt because the other companies are so challenged that they could pull away in the streaming race. Thats not confirmed, but it would make sense that they would be interested in doing that. You know, and the others are im not in the meetings so i dont know exactly what they are saying to each other. But weve heard that the studio side has very different approaches to this because theyre all in very different businesses apple is not in the same business as nbc universal. Theyre just not. Matt, but theres sort of a prisoners dilemma. Arguably netflix can do this and pay the most, but they can also hold out the longest, right . In some ways im not so sure about that. In some ways theres a view that disney and, for example, warner media, you knows need more come 24 going into the summer, theyre going to need to have some films and tv shows up and running, whereas netflix still has something in the thats the argument. I dont know if you believe it. That is the argument. You hear that a lot. Im not so sure about that. Netflix ultimately is in one business, and its in the business of providing you a steady stream of content to watch on your service. They dont have theme parks. They dont have all the other things that these companies have. They dont have a Financial News network that can make money for them if they dont have summer movies. God bless you. Its not that easy. When Stranger Things is not on the air. If thats their job, theyre failing. Im trying to watch unbelievable, but theyre failing. I need more. Can movies come out without the stars being at the premier . Will they not do that sth . They want to promote it the best they can. Will they wait or finally just say, eff it. Theyre delaying some. Youre seeing some of the movies that are being delayed. Im at the toronto film festival, and typically that would be a star driven affair. Thats a long one. And the movies are mostly here without stars. Thats a long one, a couple of weeks or something. Have you seen anything yet . Have you seen poor things . I saw dumb money on friday night, which is the gamestop movie, and our friend andrew is in that movie a lot because they use a lot of clips from the gamestop from the meme. Awesome. What about all of us strangers or were all ive seen like 11 movies, i want to talk about them all. I can tell you about all of them. Theyre all good. Anyway, were over. Matt, thanks. Squawk box will be right back. 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. Im so glad we did this. Im so glad we did this. Im so glad we did this. Im so glad we did this. Im so. Glad we did this. [kid plays drums] life is for living. Lets partner for all of it. Im so glad we did this. Edward jones opportunity is using data to create a competitive advantage. Its raising capital to help companies change the world. Opportunity is making the dream of Home Ownership a reality. And driving the world forward to a Greener Energy future. [applause] sometimes the only thing standing between you and opportunity is someone who can make the connection. At ice, we connect people to opportunity. Good morning, futures in the green to start a fresh week on wall street. The markets gearing up for big inflation reports that we have coming. Tesla shares getting a charge, an influential analyst upgrading the stock. The new details on the upcoming instacart ipo, as the second hour of squawk box begins right now. Good morning, and welcome back to squawk box right here on cnbc. Were live at the Nasdaq Market site in times square. Im Andrew Ross Sorkin along with joe kernen and becky quick. The s p 500 up about 25 points. The nasdaq looking to open about 111 points higher. Lets show you treasury yields as we speak, looking at tenyear note just about 4. 296, the twoyear at 4. 995. Take a look at oil as well. Were talking about the Energy Complex and right now the wti crude 87. 07. I dont know if you guys buy any gas this weekend at all. 4 bucks again. I was about to say, its getting up there. Crypto, bitcoin at 25,702. Thats not really budged. Its been sort of holding steady. It hasnt really reached 25. People say under 25, i forget what katie stock had said the next level is, but its oh, next. Below 25. Its like well below. Lets see. Lets get to dom chu with a look at this mornings premarket movers. Whats next, the ryder cup . Is that a couple weeks there. What should new york fans do . Everythings on the jets. Mets, yankees, giants, i mean, you got Aaron Rodgers, i hope he has broad shoulders. So i mentioned this on Worldwide Exchange this morning. I dont think that there are that many things that you can read in right now if your a giants fan, a bengals fan, a chiefs fan, a seahawks fan or a steelers fan about what the rest of the season is going to look like. Im happy that my niners really put abeat down on the steelers because im a niners fan. I think as a bengals fan ive seen this movie before, prime time, it was like oh, my god, its on. I cant believe it, its on. Its going to be great. It was id rather put needles in my eyes. I paid for the sunday ticket this year because i finally was able to now that its not on directv anymore. Heres what happened, i have joe burrow as my fantasy quarterback in one of my leagues. I also have travis kelce as my tight end. You can imagine how good of a week ive had. So lets get your morning movers set up for the new trading week. This stock is definitely helping to drive the premarket positivity. Its tesla up 6. 5 . Its over 2. 3 million shares of volume so far this morning. The electric vehicle maker is getting upgraded to an overweight rating. The target price goes all the way up to 400. It was 250 before. So whats new for jonas and that team for autos over there, is this opportunity for teslas dojo niinitiative. They think it could add half a trillion dollars to teslas in enterprise value. Tesla shares up 6. 5 . A deal could be in the works for food. Jm smuckers is closing in on a deal to buy Hostess Brands. It could be announced as soon as today. That hypothetical deal would bring together smuckers jelly, jiff peanut butter, with pastries like twinkies, snowballs and ding dongs. Lets get a quick check on shares of oracle. Theyre up about a preseercent so. Its been a huge outperformer, up 56 so far just this year, 2023. And by the way, the options marks is currently pricing in what could be an up or down 5 move in the stock on the heels of the report, and of course traders and investors will be closely monitoring any Artificial Intelligence related commentary from oracle tied to that report in the conference call, becky. Keep an eye on oracle shares. The big report of the day. My son had jalen hurts in his fantasy league. He did pretty well yesterday. I have one of my other leagues has josh allen, so im pinning all of my hopes here because of my failed effort on my one fantasy team with joe burrow and travis kelce. I know that that puts me at odds with jets fans out there as well. Im going to stay measured about it. You watched the bengals, dom, or no . I caught part of it. This was the first season i had the sunday ticket so i could toggle back and forth. Red zone can do that too. I bought the game obviously as a niners fan out of market in the new york area, and it just so happens that of course the first game of the season for me is the National Televised game, right, across the country so i kind of didnt get my moneys worth. It was raining. Glove kept going on burr ow. He he was so worried about not throwing an interception, not a singl single ball was thrown that either team could catch. I would say the timing was a little rough. Youre just hours after signing the biggest deal in nfl history for compensation. Yeah, yeah, yeah, hes got some of those nice suits he wears, leopard colored with the chains. Brim hat. Thats working for him. All right, thanks. Got it. Fairweather fan. I know. Im done. Im a jets fan. Dont do that. A big week ahead for investors with key inflation and retail sales data releasing this week. Weve got wednesday and thursday the cpi and then the ppi. So we want to talk a little bit more about the markets and what the reaction might be with Cameron Dawson, she is chief Investment Officer of new edge wealth, and cameron, you think that the feds not going to raise rates basically no matter what we get with the cpi or ppi. Certainly if we had a big upside surprise to the cpi that could push the probability of a rate increase next week from the fed. Right now theres a very, very low probability thats priced into the bond market. It is expected by Consensus Forecast for cpi you will see an uplift in the headline number coming from Higher Energy prices and its quite a bit of an acceleration up to 0. 6 on a month over month basis. Thats likely enough for the fed to hold for another month. Really then its a question of what happens to the 2024 forecast because wedo get an update to the dot plot at this september meeting, and the fed has 100 basis points of cuts already baked into the 2024 forecast. If we continue to see cpi remain elevated above their target and growth remain robust, it really does raise the question if that forecast is far too aggressive. Yeah, thats what a lot of people may start wondering. The fed, if you talk to fed officials, most of them keep saying higher rates for longer. The market may be ignoring the for longer part of that because the idea of rate cuts anytime soon, that may be a fantasy. And then its a question of course if that matters for the equity market because what weve seen this year is effectively that same thing play out meaning that we have had higher rates for longer. If you went back to the forecast for the fed path at the beginning of 2023, we would have already been in an easing cycle right now, meaning that there were cuts priced in to start in july. Of course that hasnt materialized, but at the same time youve seen a big uplift to equity markets driven by valuation expansion. If we dont get the easier, kinder fed in 24, will that matter for equities, and i think thats probably the biggest question facing the equity market going over the next few months. What do you think the answer is, what would you tell people to do right now . I think that as long as earnings hold up that there can be a floor under the equity market. I think its one of the reasons why we have seen resilient trading. We saw that short shallow correction back in august, but we are starting to see earnings estimates get revised higher in the past couple of months. Now of course its then the question of how much uplift can you get from a valuation side of things, meaning valuations for the s p 500 back in july reach 20 times forward for the nasdaq, 31 times forward. That seems to be a ceiling of how much we can press valuation. So in a better growth but tighter fed environment, it likely points to lower returns, doesnt necessarily mean big down market, but not huge upside because of that valuation ceiling. Real quickly, ask you about what you expect with the dollar. The dollar has had this great run, i think the longest weekly winning streak weve seen since 2015, but there were a lot of comments over the weekend about japan, they might end negative rates by the end of this year, and that could turn things down a little bit. You to see the dollar index weaker this morning. It certainly could. I think in the shortterm from a technical perspective, the dollar did get overbought last week. It will have that extraordinary run like you said, so on measures like the rsi it got oaf bought that suggest its going to have a little bit of a period of consolidation. Of course if you were to see a big policy shift by the bank of japan, meaning the end of yield curve control, which is still something theyre not contemplating until the end of this year, that could put downward pressure on the dollar. It really is remaining to be seen if were going to see the bank of japan shift that policy. If it does, it could mean a weaker dollar. Cameron, thank you. Ungthank you. Is the u. S. Auto industry about to come to a grinding halt . A strike deadline looms as they try to make a deal. Were going to check on the progress and the chance of work stoppage that could happen later this week. We have new details on the highly anticipated insta all that and more when squawk box returns. Announcer this cnbc program is sponsored by baird. Visit bairddifference. Com. Mlb chooses tmobile for business for 5g solutions. To not only enhance the fan experience, but to advance how the game is played. Nows the time to see what americas largest 5g network can do for your business. Welcome back to squawk box. Ipo road show today with a scale down, market shares between 26 and 28 apiece. Thats according to an amended s1 out earlier this morning. It implies valuation of as high as 9. 3 billion, on a fully diluted basis. Thats a quarter of instacarts valuation in a private funding round two years ago. It plans to list its shares on the nasdaq under the symbol cart. And expect its to start trading next with joe. Its been a summer of strikes and the next one looming is the uaw. Gm, ford, and sta lantus laid out contract proposals. The offer from the automakers falling short of the unions demands. Joining us is tim higgins a wall street jushl journal reporters. The recent jobs numbers are good but beginning to show some signs of weakness. I wonder if these devicguys, th might over play their hand. Youve got gm offering 10 . Thats historically much higher than youd normally see and ford 9 . The uaw asking for 40 . Yeah, yeah, 40 . Thats far apart. They want a 40hour workweek and only work 32 hours a week. They want to return to pensions. They want a lot of things, and the big question is if they got everything they want, detroits Hourly Compensation would go from 66 an hour to more than double that according to bank estimates, and the question is can they afford that . Can they afford that longterm, can they afford that going up against the likes of tesla, which their labor is estimated at Something Like 45 an hour, and elon musk is pushing to cut costs dramatically in that next generation vehicle by 50 . When you talk about a future of ev for these companies, the question is, you know, whats a affordability going to be. Americans actually buy evs made by tesla. Its already much more expensive for these guys to make an ev. Absolutely. If an ev does decide to buy, how much more is that going to cost . What are the margins going to be compared to tesla . Ford, for example, is trying to improve that. Theyre losing a ton of money on the sale of each of their electric vehicles. They have plans to get to profitability. The question is how big of a lead does tesla have, and then youve got the union who has seen these record profits in the past ten years, and are saying stuff like record prorfits shoud make for record wage increases. They feel like theyve given. Go back to 2007 period. I was on this show, and i talked about how it was hard to imagine a strike then. And there was a strike, but that was like a totally different time for the car companies, you know, close to the edge of the abyss, right . Now huge. By selling f150s and gas guzzling suvs. Exactly. Thats why they have big profits. Totally. Theyre making the money on the suvs and the trucks and that transition to evs is very unclear and scary, and its not only scary to the uaw but its also scary to the engineers and white collar folks, who have made their money on gas guzzling cars. If they went on strike at all, three of the automakers, 5. 6 billion hit to gdp just in the first ten days. Does the president actually get involved . Hes notoriously been hands off and said this is going to be up to the unions. The uaw is warning him to stay out of it. What happens . Whats actually going to get these guys to the table . Thats a good question. Theyve kind of withheld their endorsement of him. The uaw withholding its endorsement. Hes saying he doesnt think there will be a strike. The union wasnt happy about that statement. It looks like strike is in the water. The question is do they strike all three at the same time or go to the tradition pattern of picking a starting and going after them. And what do you think is the more successful route . With this new president it seems like there is a call for so drama, a call for something new, so perhaps we do see an idea of a threeway strike. Theres a theory going around that perhaps its a short strike to generate a lot of attention and then a pullback and pick one target like tradition. Thats all just game theory at this point. You know, ron get l finger, the old uaw president would say those who dont know say, and those who say dont know, and were in the final moments here. How much of this do you think is a fight effectively against technology . We were talking about the fight in hollywood against ai. People are so worry their jobs are going to be lost. Thats ultimately whats going to happen here. And if you talk about what yl elons. Its a fight for what that future is going to be. Not just detroit autoworkers, you see it in europe, you see it around the country in this kind of movement, really supporting the idea of unionization and these kind of summer of strikes really. And its almost like the writers and actors waited too long because streaming is no longer this cash cow where you can share all the profits, there are no profits with everyone. And theyre striking when gas powered cars are going theore theoretically, like the timings not great. Theyre hitting the mouth that feeds them or whatever, the hand that feeds them is in precarious position in both of these industries. Its a precarious position but theres also a feeling they have given, they have helped these Companies Get to this point where they are making huge sacr sacrifices. Profits can go away quickly. The president did not call the union dog face soldiers, at this point, did he . I dont think so. That might be coming. Tim , thanks. When we come back, the court rules the white house overstepped its bounds when contacting them to remove content out abcovid19. This ruling could impact big tech and Big Government when squawk box returns. 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 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. The u. S. Fifth Circuit Court of appeals has partially upheld an injunction restringting the way the government can coordinate with social media companies. Saying the administrations efforts likely amount to a violation of the First Amendment. Joining us right now with more on all of this is aneesh chopra, the former chief Technology Officer at the white house under president obama. Hes currently president of care journey. Good morning. Good morning. Weve had this big debate. Its been going on around this table for quite some time kpt Public Square as well. Some people think its not happening enough afternoon the Public Square. Do you think First Amendment rights have been quashed or otherwise blocked by this communication, if you will, between the administration and these Technology Companies . Look, my personal view is that we want to have more open and free speech, but in the midst of the Public Health emergency we went through, there was a moment where we needed to have a bit more understanding of a new threat that hadnt been understood, and that is the rise of disinformation on social media. I dont begrudge decisions that were made in the past. The ruling just sets guardrails so we have clear perspectives about what to do moving forward. Give guidance, provide expert judgment, flag content but maybe not go so far as to say this must come down, you must remove this account and so forth. What do you think about the idea of preventing that kind of communication between an administration and well do this on all political sides. You also saw it are from other parties as well, communicating with the Technology Companies . Yeah, the root cause of the problem is that we didnt honor up section 230, the sword and the shield. We gave folks a Liability Protection on social media platforms for the content that runs through their systems. They were supposed to step up and have some efforts to mitigate harms to society, what this is really a symbol of is that the frustrations and the black box of content moderation viewed by both sides of the aisle frustrating everybody, and to some degree that feels like a problem of the past as more and more of the content moderation practices move to this evolving concept of standards based and to some degree more whats the answer then . We talked about transparency. For example, should every communication and frankly, every communication at least over email and the like that goes from the administration to a tech company or anybody else typically can come out later in a freedom of information act. Should it be immediate . Should people see the dialogue happening behind the scenes . And is transparency always the best disinfectant . Are there times youd want to be able to make that phone call, we talked about it in the context of reporting in journalism. Ive gotten calls from all sorts of administrations trying to bend my ear on any particular issue and then of course its up to hopefully myself and the organization and institution to try to do right. Yeah, transparency in this case is of the al fgorithms tha address content moderation within the systems themselves. Once those become more understood, then professional processes can be put in place. Look at cybersecurity, one of the charging in the original ruling, that was the notion on cybersecurity flags, something is seen as a National Security risk, sis is a, the federal agency tasked with making those communications more routine, they dont require white house involvement or emails. These are structured formal communication that got process and transparency to how the platforms respond. Many take actions immediately to mitigate security risks. We want to move towards more of a rational form of communication from federal agency with accountability on the platforms, but that requires the platforms to have a bit more clarity as to what the input is they want and how it feeds into their algorithms, the twitters decision or xs decision to release the code open source makes that a lot easier. You dont have to deal with the pick up the phone, theres some urgent issues, somethings not working quite right. Thats a yesterday problem. Weve got to move forward. Do you think that facebook is going to follow elon musks lead . Maybe not in the open sourcing level, but i do think there will be questions made like monetization. Do the algorithms promote viral content good or ill because of the economic benefits to facebook, and that may create harm. So youll see follow the money, okay, if the economics in these black boxes result in some effect, there will be more scrutiny of whether or not that should be mitigated, and you see some efforts in the multistake holder world to get recommendations of what considers to be, you know, inappropriate or unsuitable content for monetization. Were now coming up on an election year. How do you think this plays out in that regard now that be twi twitters model is going to be open. I dont know what well see, i should say on facebook, and on youtube and the like. The bigger 80 20 rule of the threats in this election cycle are going to be about ai generate content. The white house secured commitments from the large frontier ai model to start water marking content, which will make it easier for Community Notes or other mechanisms to highlight that this thing thats getting you rooiled up was generated by ai. Im more anxious about ai generated content than i am particular accounts that say First Amendment style comments that may become viral because people are frustrated, they need to hear that information or learn more about it. Fair nuf. Were going to leave the conversation there. Appreciate it. Still to come, the irs launching a new crackdown on wealthy tax evaders with the help of ai. Squawk box is going to be right back. We have breaking news from qualcomm, stocks up about 7 . Kristina partsinevelos joins us now with the details. Good morning. I guess it is good, were calling it a win for qualcomm. After much concern that apple was going to ditch qualcomm chips using its iphones. Today we find out thats not the case. Qualcomm announcing it will continue to provide apples 5g mod dem chips. Thats why youre seeing the stock react positively. Apple is designing its own chip. It bought intels modem chip business in 2019, but the fact that apple continues to partner with qualcomm for the next three years shows how tough it is to make those chips. At this point apple still hasnt figured it out at scale. Popular supply analyst ming she quo suggesting the modem chips wont be ready for another two years. Ubs statistics show androids like samsung contribute 54 of that pie. Apple alone contributes 23 of total revenue. This announcement implies that revenue stream should continue for the next few years or so. Since this is material information, qualcomm wanted the news out today, even though it does fall one day before apples big iphone event tomorrow in San Francisco. As you can see, qualcomm shares up over 7 right now. It was 185 stock not too long ago. Qualcomm. Does this have the worries and concerns about this have hurt the stock . No, not just about apple. Theres been other concerns too. Just in jgeneral. You have the cyclicality. Qualcomms ceo had warned they werent going to supply apple chips in 2024. He said at the last Earnings Call, the Earnings Call before that. It definitely did have an impact. Apples a pretty good customer. 23 of total revenue and theres been a lot of tradrama between both companies for quite some time. Was that just tough talk when he was saying were not going to be a partner . I tried to get details about the drama. He said it on the calls. He said we will not supply, and to your point the stock did react negatively. I dont know if this is apple turning around and saying finally, you know moving back a little bit and saying maybe we cant do it after all because it seemed like he really believed that, and thats why they put so much emphasis on the android business, which is over 50 of their total revenue. It is a pivot for apple to do this and go back to qualcomm. Apple does a lot of amazing things. If you got a really good supplier, like, if i had to make my own chips, forget it. If youre saying that about apple you can say that about all hyper scaler and chips. Lets see hoe successful they are to beat out nvidia or other chip makers. In this case we see it didnt work. So far. Kristina, thank you. Thanks c. The tax man going hightech, the irs about to unleash Artificial Intelligence to catch wealthy tax cheats. Well have that story, and we will hear from a Budget Committee member that wants to radically change the nations tax system. Plus, you can get the best of squawk box on our daily pod llbcast. Foow squawk pod on your favorite podcast app, and you can listen anytime. Well be right back. That first time you take a step back and see everything youve accomplished. I made that. With your very own online store. I sold that. And you can manage it all in one place. I built this. And it was easy with godaddy. I am doing this. With a partner that puts you first. Start for free at godaddy. Com sell you got this. Lets go. Gobble gobble. Ive seen bigger legs on a turkey rude. Who are you . Im an investor in a fund that helps advance innovative sports tech like this Smart Fitness mirror. Im also mr. Leg day. 1989 anyone can become an agent of innovation with invesco qqq, a fund that gives you access to nasdaq100 innovations. I go through a lot of pants. Before investing carefully read and consider Fund Investment objectives, risks, charges, expenses and more in prospectus at invesco. Com. sirens [due at target in 5 ] copy that. Make a hard left down the alley. Networks got you covered. [please confirm requesting backup. ] changing route. Go. Roadblock ahead. Back up, back up. Reverse reverse next level moments, were 30 seconds out. Need the next level network. [north corridor, hurry ] coming through or 3, lets go. The network more businesses choose. Transplant received. At t business. Welcome back, the irs turning to ai to crack down on those trying to avoid paying their taxes and guess whos here for that story . The one and only robert frank who knows all. Good morning, andrew. Good to see you. The irs announcing a sweeping historic effort to restore fairness to the tax system using billions of dollars from congress and new Ai Technology tools. The irs is launching a crackdown on those wealthiest tax evaders. There are trhree parts to this. Its going to target 1,600 millionaires who owe more than 250 million in unpaid recognized tax debt. Thats taxes they agree they owe but havent paid them. Secondly, theyre going to use ai and Machine Learning to target the 75 biggest partnerships in the u. S. Those have an average of 10 billion in assets. Thats going to be hedge funds, real estate partnerships, law firms and others. The agency said ai is going to help them identify patterns of avoid dance and the most complex returns. Next month theyre going to send compliance letters to 500 large partnerships that have discrepancy that could point to underreporting of income. The audit rate for those earning more than 10 million has fallen from 21 to 4 over the past decade because of under staffing. Though the audit rate for the wealthy is eight times higher than the overall taxpayer base. The irs commissioner saying no one making less than 400,000 will see an increased audit rate. They havent told us what that audit rate will be, but they say that theyre not going to be audited at an increased rate, just targeting the wealthy. We were using avoidance. Evasion are very different. We used it for those trying to avoid. That was not me. Okay. Everyone tries to avoid taxes. What would happen if you just said the irs is only going to be examining folks over name your num number. What do you make, over that is what youd like . That isnt me. Is there a number, though, who you would it change the dynamics . My view is why should there be just saying were only going to audit people above a certain look, there is tax evasion at every level of the income ladder, especially with all the Payment Services that you have now, the contractors, all the gig economy that is avoiding taxes. Why are we just saying everyone under 400,000. I mean, theyre still reqgoing be audited but i dont believe you should set an arbitrary number saying everyone above that should be the target. Everybody should follow the rules. Thats the basic i think we should put a target on those wealthy people. I do. Theyre horrible. How about do it for things that are not w2 . That would probably make more sense. Its harder to cheat with a w2. This is a back doorway of effectively raising taxes on the wealthy. They couldnt do it legislatively, so theyre saying, look, the irs and its not to say the irs they should go where the money is, which is at the top, and there is evasion at the top, but i think theres evasion throughout. The crypto crowd, based on what they found, theres 75 noncompliance in the crypto crowd based on arbitrary john doe letters theyve sent to the crypto exchanges. There are all these other places, some of those are wealthy, but just to say were only going to look at the top and all our ai tools were going to talk to a republican in a moment who says we dont want to give more money to the irs because we dont want more people to be taxed or audited. And what im saying is if you said that 90 , 95 of america is not going to be touched, i think that would change the dynamic in terms of how youre right, and the commissioner on the call on friday said if youre a hardworking honest american taxpayer theres nothing to worry about, and thats exactly what they want. Thats the message they want to send. Robert, thank you. Thank you. Joining us to talk more about it is republican congressman buddy carter. He serves on the Budget Committee and introduced the fair tax act that would essentially abolish the irs, youd get rid of taxes on income but you would be talking about taxes on everything you buy, right congressman . Absolutely. First of all, let me say congressman, im sorry, were taking hits on everything youre saying, were not hearing it clearly. Maybe we can hold off for just a minute, try and get the audio fixed. We got to start over. I didnt hear a word of that. Congressman, try again, lets see if maybe we got this fixed. Okay. What about this . Thats good. Start over, though, you said absolutely and then you went on. Okay, well, first of all, you know, to those who are mourning the loss due to 9 11, thoughts and prayers to them, but look, im not opposed to the irs being more Cost Effective or more efficient. Thats what they should be doing. Here we have another example of where technology is being used against the American People as opposed to being used for the American People. Look, tax cheats, they should be prosecuted. No one should be cheating on their taxes. But at the same time, we dont have a revenue problem here in america. We got a spending problem, and heres an example of the government using their resources to go after the American People instead of helping the American People. Look, i was a small businessman for 32 years, and i can tell you, its a harrowing experience to go through an irs audit. I went through two of them. You almost have to make a decision early on, is this worth it financially . Is this worth it emotionally or should i just go ahead and concede and let them have it . This is another example of the American Government using and weaponizing issues like this. And thats what we need help. What about the shoplifting thats going on in america. Over 90 billion in shoplifting last year. Why cant we do that . Why cant we address that with our resources . And i tell you ai is a hot subject right now in america and in congress. Were trying to get our arms around it, and we dont were not there yet. I will tell you that. No argument theres a lot of issues that need to be addressed including the shoplifting and the theft thats taking place in stores, but lets talk about your proposal, the fair tax proposal. Theres been a lot of criticism of it, i know youre trying to simplify things and just say that we will be charging a tax at 23 on everything you buy. The problem is is that really hurts lower income people because theyre spending their entire paycheck on things. I realize there is a rebate at the enofd of the month, that ses pretty complex too just like the system now is complex because it includes all kinds of exclusions and things that make the tax code very complicated. If you were doing straight on income that would be one thing. If you were to just do this at 23 , again, it seems like its pretty rekbgressive and hurts people that dont make much money. Thats why we have the prepay. Is the fair tax perfect, its not perfect. I would submit to you if my colleagues would help us and come up with suggestions instead of criticisms, then we can make this better. Look, people dont like to pay taxes. We all know that. However, given the choice between a property tax and a consumption tax, they would rather have a consumption tax where theyre in control, not where the weaponized agency of the irs is in control. Would you exempt anything . What about Health Care Taxes . If someone goes to the hospital and has 100,000 bill are they going to have to pay 123,000 . Thats the kind of thing we need to be talking about. Look, governments supposed to be about big ideas. Thats why we need to be discussing this. Is that something . And this would be an opportunity for us to help sectors that need help like this. Certainly Health Care Costs are major among the costs that people are facing now. Weve seen that. I serve on the Health Subcommittee of energy and commerce. Weve seen the impact that Health Care Costs have on people. It can be devastating, so theres an example of where we can address this situation. It then becomes complicated like the Current System is very complicated if you start having exemptions. Theres also been indpependent studies suggest that it would have to be closer to 30 to wring in the same revenue as were bringing in today. I would submit to you, we dont have a revenue problem in washington, d. C. , what we have is a spending problem. Thats what people were so frustrated with is the fact that were going after them when we should be held accountable, when government should be held accountable for our deficit spending that has resulted in 33 trillion in debt. All right, congressman, appreciate your time on this. I know that this is a plan thats come around again and again, 1999 is the first time it came out. Well see if it gets more traction this time around. Congressman carter, thank you for your time. Thank you. Coming up on the other side, were going to talk about building a tool to make Bitcoin Transactions faster and more scaleable. Former paypal and med executive david marcus running pmeaynt startup lightning network. Hes going to join us next. Dont go anywhere. Squawk box is coming right back. This is dr. Arnold t. Petsworth, hes the owner of petsworth vetworld. Business was steady, but then an influx of new fourlegged friends changed everything. Dr. Petsworth welcomed these new patients. The only problem . More appointments meant he needed more space. Thats when dr. Petsworth turned to his American Express business card, which offers flexible spending limits that adapt with his business. He used his card to furnish a new exam room, and everyone was happy. Built for dr. Petsworth business. Built for your business. Amex business. Nice footwork. Built for your business. 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. 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. You could ask them for an email address and email them easily the next minute. You could text them, add them to a group video chat, but if you were to send them money if they were not a u. S. Citizen here in the u. S. Using one of the same fintech apps youre using, you wouldnt be able to do that. Were still in the fax era of global payments, and thats what were attempting to solve. Why is that so important, by the way . The truth is, i can use venmo. Others can use services that are connected to each other. Why is that such a terrible answer . Lets double click on that for a second. You can use venmo, but if someone is not using venmo or is an International Tourist walking right outside right now, if i have an iphone and i want to message somebody if i dont have whatsapp and somebody wants to whatsapp me, they have to whatsapp app. You have text, which is universal, which you can communicate with one simple addressing scheme, which is a phone number, which is human readable, and you cant do that with money. Theres no universal protocol for money on the internet that actually enables value to be transported through the internet, so if you were to want to send money to one of these people, you would probably need to ask them for a Bank Account Number. The Bank Account Number would be in different format, depending on where you are in the world. You would have to walk to a branch and pay 50 to do an international wire, and if its after friday, 5 00 p. M. , tough luck. And how big a business is that . Its ginormous, millions o transactions through swift and other payment networks. Let me ask you another question around bitcoin. Weve all been questioning, where does this go, and does bitcoin ever really become a currency . Do you think the value of bitcoin needs to or can move up if its actually the currency . Meaning, ive always made the argument the currency problem is if you think bitcoin is going to 30 or 50 or 60,000, theres no way im going to spend it on a pizza or on anything, frankly. If i think its going to go down, i might spend it immediately. Our view is that bitcoin is not the currency people will use to buy things, but a fragment of a bitcoin on top of lightning is like a small data packet on the internet, only for value. You can exchange at the edges of the network and send dollars to someone who will receive yen on the other side or euros. The actual net settlement layer that is used is basically bitcoin, lightning, and it settles at a very low cost. One last very technical question. Theres always this idea of being on chain, meaning everything is seen on the chain. You can see where everything is. Thats one of the great arguments about the benefits of bitcoin. For this to work, my understanding is that you are effectively on the chain, then you go off the chain, and then back on the chain. The second youre off the chain, doesnt the entire sort of credibility and construct of the integrity of the system get upended . Not at all, because transactions and payments typically are private. A merchant wouldnt want to have their competitor know exactly how much they were making in sales, and so payments need to be private. Lightning brings privacy but compliance at the same time. And then its built on the core trust principles of bitcoin because you can close the channel on layer one and everyone is settled. This is mr. Bitcoin over here. If it was 60 or 25,000, it wouldnt matter with your little packet on top of the network. It wouldnt matter. Because you can do it, at that given time, so you dont even care where it goes as long as its still correct. The volatility is not a problem because you settle the transaction in sub one second. Really cool. I like that. For the purpose of it actually being used to buy things, and hes not saying youre using it to buy things, youre just saying youre using it to transfer value. Nothing does that now. Think of it as neutral internet money. The whole story of only 21 million and its going to be mined that doesnt matter if its 500,000 per coin. Youll still do it the same way with the little packets as you would at 25,000. I think the algorithmically programmed supply of bitcoin is massively important for the trust of the underlying system but not the price. I like it. David, thank you for being here. Im sorry about that whole goldmansachs fiasco. Thats not me. All right. What a screwup that was. No, thats not you. Coming up, deputy treasury secretary Wally Adeyemo joins us next to talk the state of the ony. In avoiding a Government Shutdown and much more. Constant contacts advanced automation lets you send the right message at the right time, every time. constant contact. Helping the small stand tall. Good night hey corporate types. Would you stop calling each other rock stars . Youre a rock star. You are a rock star. No more calling coworkers rock stars. Look, its great that you use workday to transform your business. 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Futures point at gains for the major averages as we get ready to kick off a week featuring new inflation data, and congresss full return to washington. And ipo news out this morning. Instacart out with details about its upcoming offering in a rundown of the expected price and Company Valuations for you. And then, this hour, weve got a special interview with the Kanter Fitzgerald ceo Howard Lutnik on giving back as the nation marks 22 years since the 9 11 terror taattacks. The final hour of squawk box begins right now. Good morning, and welcome to squawk box here on cnbc live from the market site in times square. The u. S. Equity futures, take it on a monday starting off in the green. Not quite what they were when we began, the nasdaq still up triple digits. The dow had been up a similar amount, up now 56, and the s p up about 21. Treasury yields, i saw 4. 30 again on the tenyear. 4. 30 , just above that, and the twoyear, closing in on perhaps that 5 , although we should probably always look at oil at this point. I think its 87 now even though down a little bit today, but i think 87 on 87 exactly on wti. You caught up on some of todays stories. Instacart out with new details about its upcoming ipo. The Company Planning to market shares between 26 to 28 apiece. That implies a valuation as high as 9. 3 billion. That would be well below the 39 billion valuation from a private fundraising round just two years ago. Shares of qualcomm popping after the company says it will continue to supply apples 5g modem chips through 2026. Speculation recently has focused on the possibility that apple would stop using qualcomms chips in its iphones. As we just heard from kristina partsinevelos, the qualcomm ceo said as much. Qualcomm shares are up by about 5. 6 . Apple shares up over 1 . Shares of chinese internet giant alibaba falling on the surprise news that the outgoing ceo will also be stepping down as the chairman and ceo of the companys Cloud Business. The stock has recovered somewhat from the lows of the session. Junes announcement that he would leave his post was also seen as a surprise. The stock actually right now down by less than 1 . President biden departing asia following the g20 summit and a visit to vietnam. President said the u. S. And vietnam were deepening ties in Cloud Computing and a. I. , and the white house unveiled a nearly 8 billion deal for Vietnam Airlines to buy 50 boeing jets, and speaking about his time in india, the president said he met with president xi jinpings number two, but she was notably absent from the gathering. Joining us to talk about the chinau. S. Relationship, deputy treasury secretary Wally Adeyemo. Secretary, good to see you. Good to be back. We should never be surprised that things were not expected, but 3 gdp for the near future, five years for china, was not something that i thought, i dont know, wed get used to. That nation, accounting for 35 of global growth, and we cant count on that anymore. Yeah. They have a bunch of headwinds in chinese economy, but as you know well, joe, they have a bunch of resources. The thing we should be worried about is the longterm structural challenges china has. Bad demographics, high debt. Ultimately, the challenges china has, they can solve, but it requires them to put in place reforms weve been calling on them to make for decades. No one thinks that president xi is threatened by whats happening, but is he the right guy . Hes not as powerful as he used to be. One of the lead stories in the journal today is that hes his consolidation of power means hes not allowing stimulus. Ive always pointed out that his backtracking on a lot of the private sector modernization that we had seen in china, weve seen that, and thats partially responsible for some of the problems. I think youre right. When you think about it, one of the things the chinese havent done is open up to the private sector, and secretary raimondo was there and made the point that opening up to businesses would be good for china because it would create competition in their economy and not just american businesses but european businesses and businesses around the world. As you all know, chinese businesses are able to do business here, sell things to american consumers. We want american businesses to be able to do the same in china on a level playing field. China doing this isnt only good for our businesses and workers, its also good for china. We know that china probably wished that the recent trip by the commerce secretary would have ended in a relaxation of some of these new rules, and that didnt happen. She didnt backtrack. There was a lot of hawks that dont want her to, but were partially responsible for chinas slowdown, arent we . No, i dont think were responsible for chinas slowdown. Weve really targeted a narrow set of things when it comes to china that affect our National Security. Chinas responsible for chinas s slowdown. They made a set of policy decisions coming out of covid that were very different than the decisions we made. We invested in our people. China did the opposite. Youre seeing the repercussions. Here you are telling folks, i think, china should open up, and american businesses should try to go there if, in fact, they were to open up. At the same time that were basically saying were closing down to them in many, many ways. Preempt lively. I dont understand i sort of dont understand the messaging, which is, to me, either and i hate to say theres no nuance in it, but either we have a view that theres a real problem in china, and we shouldnt be doing business with those folks or not. I think youre right that the key is the nuance. What we have said is that we are targeting a narrow set of things in china that were not allowing them to get from the United States. But fundamentally, chinese businesses are able to do business here in the United States, to be able to sell things in america. We want to make sure that American Companies are able to do the same thing on a level playing field, and the same with our allies and partners in europe. How concerning to the extent that chinas economy is struggling or going to be challenged, how concerned are you about president xi acting out, if you will, whether it be geopolitically around taiwan or potentially talking about our fr treasury, if you want to boost the yen i mean, if you want to boost the rnb, do you start selling treasurys, for example . Chinas going to do whats in chinas selfinterest, and i think that while they have headwinds, they have the resources to deal with it. They have 3 trillion in reserves, and they have the ability to make investments in their economy. The question is what choices theyre going to make internally, and i think theyre going to be internally focused because thats where they have to how concerned are you about the external choice of selling treasurys and what that means to our market . Ultimately, theres no better resource for the chinese to hold than u. S. Treasurys. Deepest, most liquid market and thats why countries and individuals around the world continue to hold them. Im more kshd concerned about what chinas slowdown means for their neighbors and europe than i am about what it means for the United States. I think, wally, you do believe that its a nuanced world. We deal with saudi arabia. We deal with, i mean, we have to hold our nose and deal with all kinds of bad actors in the world, but im just trying to figure out what some of the take apple, for example, or disney. There are companies that are so deeply involved with china, i just dont we must assume that theyre not going to move that xi wont move on taiwan for another 20 years because it would everything would be all bets would be off if that happened. I think, you know, when you talk to ceos, something they have learned mostly from covid, frankly, was they need better supply chain resilience. They cant have all their supply chains in china, and youre seeing a number of these companies from apple to companies throughout the economy build supply chains in china, mostly for their chinese businesses, but also looking to build supply chains in places like india, in mexico, that give them resilience in order to make sure that if one country decides to shut down their borders, they still have the ability to do business, and i think thats what youre going to see going forward. Ultimately, companies are going to make the decisions that are in their selfinterest, and i think thats why youre seeing a bunch of investments around the world in building up more diverse supply chains. Have you spoken to anyone today about budget problems that are coming . Do you have anything new for us on how this is going to play out . Here we are again. I dont have anything new for you. But i think the key thing to remember is that we cut a deal this summer, and the people who watch your show, the ceos, the investors, when you cut a deal, the thing you expect is for the other side to fulfill the terms of that deal, and part of that is we expect the budget to get done. Democrats all agree here. Our hope is that the republicans find a way to get us to a place where we can get a budget done. How are you concerned about the potential for a uaw strike, and what role do you think the administration should or should not play in those discussions . There seems to be sort of a mixed view about what the uaw even wants from this administration. So, what i know is that the uaw is an active conversation with the three out companies. Our expectation is that theyre going to get to a deal. My colleagues, gene sperling, and the acting labor secretary, are engaging in those conversations as appropriate, but ultimately, the conversation right now is so different than the last time i was in government during the financial crisis that those Auto Companies are having. They have profits. The question now is how do they make sure those profits are divided amongst the companies and labor . How do you think about the complication of technology, which is to say, were about to move into this new universe, if we havent already, where so much of the manufacturing can be done effectively by robots. This is, by the way, similar sort of a. I. Ish conversation happening in hollywood right now when it comes to that strike, and folks trying to effectively protect jobs that ultimately Technology May very well upend. And i think the truth is that Technology Already plays a huge part in building every car. I was at a ford facility in 2012, and you had a bunch of technology, but ultimately, they still need people. Sure, but does it make sense to require i mean, this goes back to the issue were having in hollywood, which is the writers room. Should they require eight or ten people in a room if two people can do the job . What i know about each one of these companies is theyre going to do whats in their economic sense and what they have made clear to everyone is that its in their economic sense to have these workers and to have labor union. If there is a strike, its been estimate it would be a 5. 6 billion hit to the gdp of the United States within ten days if theres a strike at all three. Do you have Contingency Planning for that . Is this something the administrations thinking through . So, im not going to talk about the hypotheticals, but what i can tell you is that ultimately, both sides want to reach a deal because its in their economic interest, and theyre talking about how theyre going to divide up an economy thats growing for the Auto Industry because of a number of choices they have made but also the investments we have made like the i. R. A. Theyre well positioned to cut this deal. Thats what we expect them to do, to be in a position to grow the u. S. Auto sector and by doing that, we continue to grow the economy. 33 trillion in counting, i guess . And i think 2 trillion this year added deficit . We hear the president consistently and a lot of his people bragging about having cut the deficit when it was a trillion last year and its at 2 trillion this year. Are you concerned . What about next year . Should we not be, like, perhaps misleading the public about how weve done with the deficit and start tackling it . I think the truth is that we cut a deal with republicans. No, i know. I just mean, big picture, what are we doing . Another 2 trillion. We havent cut the deficit this year. We doubled it from last year. The goal has got to be that we take steps to make sure we have fiscal sustainability. The president s laid out a plan that includes 3 trillion that will bring down the deficit. I think the question is really what is the oerther side proposing . Weve proposed increasing funding for the irs so we can collect some of the money that people dont pay. We have a gap of about 600 billion a year. If we close that gap, thats its not how much we spend . Its how much were taking in . The president has also called for certain cuts and making sure were in a position where we can reduce the cost of health care, which is a huge cost on our economy, by cutting the cost of prescription drugs, looking at ways to cut subsidies to the oil and gas industry. Youve got to have the other side be in a position where they have proposals that are credible going forward, and the pre president s willing to and committed to having that conversation to try and make sure that were on a fiscally sustainable path. Secretary, thank you. Love having you onset. We got bigger things that we got to talk about. Twinkies. I think a deal might be always good to be here. Thank you. On that twinkie update, that deal we told you about earlier is now official. Jm smucker is buying Hostess Brands for 5. 6 billion in cash and stock. That is a 54 premium to the Closing Price from august 24th, which was the last trading day before the possibility of a deal was reported. You see smucker shares were down just about 10 on that. Lets bring it back. Take a look to the hostess, but smucker is down about 10 . Hostess brands up by 17 . Coming up, a very special interview with Howard Lutnick and his firms tradition of giving back as the nation marks eainhe september 11th attacks. 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. Every business thats why comcast business wi de is launching theal. Tem. 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. Wow, you get to watch all your favorite stuff. Its to die for. 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. Stoday is the 22nd anniversary of the 9 11 terror attacks. A commemoration ceremony is being held at the 9 11 Memorial Museum right here in new york honoring the nearly 3,000 men, women, and children who were killed in new york, washington, and pennsylvania that day. As well as those who were lost in the 1993 World Trade Center bombing. Several moments of silence will be observed this morning. The first one is a little later this hour, but you can see the scene right now. In the meantime, we want to bring in Howard Lutnick, the ceo and chairman of Kanter Fitzgerald and bgc group. Kanter, as you probably know, lost 658 employees and 61 euro brokers on 9 11. Howard lost his brother. Howard came back in and rebuilt Kanter Fitzgerald and kanter has actually turned this day into one of charity at this point and we want to say, thanks for being here today. We are all thinking of you. Thanks. Its such a tough day, so what weve done is weve tried to turn it into something beautiful. All our new employees, they all waive their days pay today, and our clients get together, and we try to make it special. Lots of celebrities come, and we raised, last year, 12 million for charity, and i hope this year, we do better. Who do you have coming in this year . Every year, a lot of celebrities are there. Lot of every year, you guys have people who are really working very hard to make sure this money is raised. So, matthew mcconaughey, nicole kidman, and keith urban. Charlize theron, keenan thompson, lots of athletes. The rangers and the knicks are in town. Just sort of every president clinton always comes by. We cover everything. We do this in london. We do it around the world. And you see these offices behind us, the brandnew offices, so obviously, Cantor Fitzgerald is on fire. Were doing great things, and you know, the companys gotten so much bigger. We had to commit to rebuild the company to take care of the families, but now, the companys up to 15,000 employees globally, so its come a long, long way. Thats great to see. Howard, lets talk a little bit about what youre seeing right now just in terms of where the money goes. Has this changed over time, the charity that youre bringing in . And now youre reaching out to a lot of different charitable organizations and giving back some of those funds. Correct. So, we invite in about 150 different charities. Theres a process that they go through, but we invite in 150 different charities. Remember, we started by taking care of the families of 9 11 victims. We gave them 180 million, took care of ten years of health care, and made them a part of us, and now weve expanded it. 150 different charities. All the celebrities, they come as ambassadors to a charity, so theyre helping raise money for a particular charity, and we try to give it to the communities where our employees work. Sort of be connected to who you are and who we are and lets support the areas where our employees live, where they work, and what they care about, and what our clients, where they live, they work, and they care about, and it makes it a very personal day. Tough day, of course, but very personal. Very tough day. I hate to even bring up the questions to ask just what youre seeing in the broader markets at this point. But obviously, its something that has made cantor bigger and bigger, as you do some of those things. What are you seeing in the markets . What do you think . Well, you know, when markets are tough, we need to, you know, i say, embrace the avalanche. So, just this month, like literally just this month, we hired eric schmidt and josh shimmer, two of the best biopharma, biotech analysts in the world. We hired cole bader and a team of 20 tech bankers. The banking business at Cantor Fitzgerald is growing. We hired doug harmon and adam spieth. They are liquidating the Signature Bank portfolio, so just this last week, we announced 33 billion is being auctioned in Signature Bank loans, an incredible opportunity. You go to new mark, by the way, go to newmark. Com signaturebank, you can bid on those portfolios, and it is amazing. There are 14 different portfolios, and so thats an example. And then our last company, bgc group, which is public also, new markets public, and bgc group, as, think about it, all those treasurys that you were just talking about being issued, the 2 trillion new deficit this year, theyre issuing treasurys so much to trade and that business is really doing incredibly well. Remember, at zero Interest Rates, there really wasnt a lot of trading going on. But now with Interest Rates back at 5 , 5. 25 , the treasury issuing up a storm, volumes at bgc group are doing great. Last quarter, up 13 . So, i feel really good about what weve rebuilt. You can see behind us, these are our brandnew offices, brandnew. I mean, a month ago, we moved in. So, brandnew. Where are you now, howard . Were at 499 park. Im at 499 park. Were also at 55 water. And if you could see behind us, our employees are back at work. The people who make money on wall street are back at work, back at their desk, pounding away. Thats how you build the culture. Thats how you collaborate. Thats how it works at crosscCantor Fitzgerald for sure. We are so glad to see the success you all have had and to see where you have come, howard, and just want to remind everybody about this day and say, thank you, and we are thinking about all of you today. Howard, thank you. So, this afternoon, at 4 30, we all get together with our employees, and the families, down at the 9 11 memorial. They host us, and we have a Beautiful Service together, and all the families are together. The most important day, and we really appreciate your love and support all these years, guys. Thanks for it. Howard, thank you. Again, were thinking of you guys all day. Howard lutnick. Always, always. Coming up, much more on the markets this morning. A Big Government funding deadline and a cci wk rualorfor apple. Well discuss it all when squawk box returns after this. Dicks Sporting Goods has everything you need to upgrade both. Find toprated drivers and irons from callaway, taylormade, titleist and ping. Tour balls from your favorite brands. And the most dapper styles from travismathew and walter hagen to calia and lady hagen. You handsome devil. Select the best golf shoes like footjoy, nike and more. And get back on the course with onehour pick up. Look good and play great with gear from dicks Sporting Goods. Please dont go by harry casey, Richard Raymond finch sfx ping please dont go please dont go. Please dont go please dont go dont goooooo dont go away please dont go music the walking tree is said to change its entire location in pursuit of sunlight where could reinvention take your business . Accenture. Let there be change. Coming up, the clock is ticking in washington. Congress doesnt have much time to reach a new funding deal and avoid a Government Shutdown, but plenty of sticking points remain. Tere going to get into them afr a quick break. Squawk box will be right back. Is it possible . With comcast business. It is. Is it possible to use predictive monitoring to address operations issues . We can help with that. Can we provide health care virtually anywhere . We can help with that, too. Is it possible to survey foot traffic across all of our locations . Yeah absolutely. 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So, good start to the week, and the nasdaqs picked up a little bit. Treasurys, i saw weve been talking about 4. 30 on the tenyear and maybe 5 on the twoyear. 4. 991 . And the dollar is probably where the strongest economy relative to all the others in the United States right now. There ares been doing pretty well. Meantime, house lawmakers returning to washington this week. Theyre going to have just 11 working days to fund the government or risk a shutdown. You can mark your calendar right now, potentially throwing a Monkey Wrench into the process and the House Freedom caucus. That group, likely to use the threat of a shutdown to try to slash government spending. Joining us now, jane harmon. Also, Mick Mulvaney is joining us now, former white house chief of staff under president trump. I think we all understand whats at stake here. I think the real question is whether you think there is a red line here and were going to go over it or not this time . Let me say first that its 9 11, and i was there, walking toward the dome of the capitol as a Senior Member of the house intelligence committee, and whats noteworthy is not only the heroism on the First Responders in new york. Kudos to the new York Fire Department for what it did, going up into those buildings that were glowing red. But to everyone in new york who suffered through this and at the pentagon. But at the end of 9 11, we came together as a country. The members of Congress Held hands on the steps of the capitol and sang God Bless America and it didnt matter if you were a republican or a democrat standing next to you. I mention that because now, 22 years later, were in a really bad place where a small group in the house is trying to, one more time, shut down the government. Weve seen three movies like this, long movies, at least in my tenure. The longest during the Trump Administration when mick was there, i think, for 35 days, and it hurts everybody, and it will certainly hurt those who want to do it. Mick, you know this group. Are they going to hold everybody up . Yeah, i think they will, and ill disagree with jane a little bit, and jane and i have talked before. We get along fairly well. I dont think theyre setting out to shut down the government. I really dont think thats the goal. Maybe for one or two of them. I think they want to spend less. Theres also a group that wants to focus on Border Security. Theres a larger group that wants to focus on impeachment proceedings and so forth, but i dont think anyone goes into this saying, the goal is to shut the government down. They recognize this is the only leverage that fiscal conservatives have. So, do i expect going right up to the deadline . Yeah, in fact, im probably close to 100 on some type of shutdown for some short period of time while these issues get worked out. Mick, i like you, but i really disagree that a shorttime shutdown doesnt cause the kind of pain were talking about. First of all, the defense bill sont floor this week. Will that pass . Do we care about having a Strong National defense . I was a blue dog in the house. We were devoted to fiscal responsibility. That group has shrunk, sadly, but i took the risks that you took for fiscal responsibility. You know, i proudly voted for a balanced budget in 1997. Got overwhelming support, and we were talking about how we were going to spend our dividend, peace dividend, whatever, surplus in the early 2000s before 9 11. Same point. I dont think these issues should cause us to shut down the government. I think we should work them out, and you probably agree with that part. I do, but jane, so often, washington, d. C. , compromise means you agree with me. This is what i hear the fiscal conservatives saying is, look, can we at least maybe get this on Border Security in exchange for spending this much more money . Could we get something on an impeachment inquiry in order to spend this much money . Could we spend a little bit less money than you folks want to . Thats what bothers me about this debate. Everybody in washington says, compromise means you agree with me. Do you support the idea that we have to keep having these votes to deal with the debt ceiling in this way . I know its a leverage point if youre a fiscal conservative, but the truth is, it is terrible policy from a global perspective, where the rest of the world looks at this country and says, do these people have their act together . Every couple months, they seem to look around and have to question whether theyre going to pay people back on time. Is it really bad policy . Keep in mind, this is not a debt ceiling discussion. Its a spending discussion, so its in the same family, but this is the spending issue. But look, the debates that we have had, jane just mentioned she was able to vote for a balanced budget in 1997. Im pretty sure that was the last time we had one. One of the reasons they had that was because they had fights, including Government Shutdowns. The government shut down under newt gingrich. The death ceiling debates have been productive in terms of getting our spending a little bit under control in the past. Is it ugly, nasty, does it look strange to people overseas . Yes, but its the way the system works, and its always worked. The government shut down for 35 days in 2019 when i was the director and no one seems to remember or care anymore because only about 15 of the government really shuts down and to janes point about military, and shes right to a certain extent, but jane, you and i both know that a continuing resolution, which is one of the things thats being offered as a compromise, damages the Defense Department just as much as a shutdown does. Im not for a budget by cr. I am not. That does hurt the government. Our military are the readiness is crucial at a point where kim jong un is meeting with Vladimir Putin and theyre doing an exchange which could lead to more lethal Nuclear Capacity in north korea in addition to more russian capacity against ukraine. These are scary times, and our government has to show unity, and i think youre absolutely right that when you travel around the globe, people think were falling apart. Our biggest weapon is our political democracy, and that democracy is in tatters at the moment, and Kevin Mccarthys holding on by a thread. He made a deal with the devil. I dont mean that these people are devils. But he made a deal that makes his survival as speaker enormously fragile. And i hope he can hold on because i think what comes next could be total chaos, and that communicate to the world that American Leadership is maybe not worth trusting, and that scares me to death. It is worth trusting. Joe biden just had a very successful trip to asia. Why is it worth trusting if youre saying that were just about to get into a situation where the whole governments going to shut down . Im saying that is the problem. Im saying American Leadership, the things that we do, the values that we hold, the fact that over time, and mick was there too, we were able to work out problems in a civil way and actually listen and learn from each other, listen to and learn from each other, is part of why america has been, as Ronald Reagan said, the shining city on the hill. We got to leave with the conversation there. Jane, thank you for coming in this morning. Mick, thank you for the discussion. Im sure well talk a lot about it over the next 11 days, if not longer, and lets hope its not. All right, when we come back, well talk about whats at stake for apple and its shareholders at tomorrows expected iphone reveal. Al will be speaking with the top anysts when squawk box comes right back. 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. 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 welcome back to squawk box. Shares of apple slightly higher this morning, but they took a beating on reports officials in china will face iphone usage restrictions. This comes ahead to the iphone 15 unveiling. Joining us now, Senior Research analyst from newberger burrman. What are you expecting to hear tomorrow . Do you think its baked into the price of the stock or not . Good morning, andrew. I think well see new devices with a lot of emphasis on the pro where youll see advancements in key areas like the camera, of course, video, and photography becomes more and more important with each generation. I do think the stock is attractive here. I appreciate the concerns around china, which i think apple will continue to be able to navigate. If we step back, the key really is the innovation around the products, the ecosystem is healthy and the install base is continuing to expand, and so if you put that all together, i think the Investment Opportunity remains attractive over the coming year. Dan, there is some question mark, though, about whether people are holding on to these phones for the purpose of the investment side of it, for maybe too long. Do you think thats the case or not . I think the replacement rates have been lengthening. The key, though, is that if you have over a billion devices in your install base and even if it extends out to four or even five years, apple is still able to sell over 200 million iphones a year. The other important piece of the equation is that youre seeing customers mix up. More and more customers want the pro or the pro max because of the better capabilities, and thats helped average selling prices. And so putting those two together has led to what is still, i think, a very durable business, even as replacement cycles extend. Dan, how big a risk do you think the situation in china presents for apple right now . Andrew, if we look back at the last several years, the Chinese Government and stateowned agencies have tried to push for chinesemade pcs. Weve seen the same in telecom equipment, and so i think this is really a continuation of that trend where the chinese want to see more local products being bought and consumed by their population. If you look, though, what apple has done, you have millions of people in the apple developer ecosystem, their supply chain, so apples been a good corporate citizen. I think, sure, the Chinese Government may look to make it a little more difficult for a lot of foreignowned Technology Companies, but ultimately, its going to be the products and the services that i think will matter to customers in china, who, of course, want the very best. But in terms of what is the larger risk to apple . In terms of not just whats happening with the government now but do you see this actually taking even bigger shape . I think youre going to continue to see raised levels of tension. Youre already seeing bifurcation of supply chains. With respect to apple, if apple is able to continue to straddle this delicate line between beijing and washington, and add value to both the chinese economy and, of course, the american economy, i think theyre going to be able to do that. Andrew, i wormry smore about thr ability to execute on the product cycles. Its been driven by the strength of their product lineup. Okay, dan, were going to leave the conversation there. Were going to keep our eyes, of course, on apples announcements tomorrow and all the new products and see what happens. Thanks, dan. Thank you. All right, its almost not quite 8 45. Were going to check the futures while we still have a chance. Were up about 95 points now on the dow. Nasdaq, up about 132 or so. The s p indicated up 500. Im sorry. The s p, 500 indicated up about 26. Im thinking about where were headed and its almost 8 45 here on the east coast. In just a minute, those gathered at the ceremony at the 9 11 memorial and museum in Lower Manhattan will observe a moment of silence on the 22nd anniversary of the 2001 terror attacks, and it was 8 46 a. M. Eastern, the first time that an American Airlines flight struck the north tower at the World Trade Center, and the hashtag, never forget, ive used it, and its trending, obviously, and its what all of us are thinking, and we will never forget that morning, and i remember it so well, like it was yesterday. And it was during the show, as you recall, and maybe mark haines, the late, great mark haines finest moment. It was very difficult, horrific, and it changed the world. It changed our view of the world. And we all, as americans, share that, i think, that collective horror. Anyway, we are going to observe this moment of silence right now. Welcome back to squawk box. We are watching shares of tesla this morning, the stock earning an upgrade from Morgan Stanley. Adam jonas and Morgan Stanley autos team citing the opportunity for teslas dojo custom Super Computing Initiative thats meant to help power selfdriving car capabilities. The analysts think it could add up to half a trillion dollars to teslas enterprise value. That stock at 264 this morning. Meta is reportedly looking to ramp up its Artificial Intelligence efforts. According to the wall street journal, the company is working on a new a. I. System intended to be as power aflz the most advanced model offered by owners openai. It would help companies produce sophisticated text, analysis and other offerings and part of Mark Zuckerbergs push to establish meta as a major force in Artificial Intelligence. The shares of rkx, the Company Formerly known as raytheon, announcing it will buck a roughly 3 billion pretax operating charge. Operating profit charge in the Third Quarter related to its pratt and whitney gtf engines. The Aerospace Supplier is also cutting its Sales Outlook for 2023 to a range between 67. 5 billion to 68. 5 billion, down from 73 to 74 billion previously. Market seems to be stuck in a little bit of a typical but anxious seasonal pullback, according to our own mike santoli, who joins us right now with more on that. This is september, right, mike . Thats right. It was august before that, and all that fits together, because in midjuly, starting around that period, in the wake of a very encouraging cpi report around the 13th of that month, the market did get a little overheated. You had probably the need for the valuation and sentiment and technical positioning, all that stuff to cool off. Thats whats happened and weve been churning ever since. Kind of right below this 50day moving average, we had a maximum of about 5 or 6 intraday, maximum decline, trying to recover some of that. Theres been a loss of momentum, and what happens then is especially this part of an economic expansion, people start to assume were in the late cycle, is anything going to throw us off course . The hard versus soft landing debate has been very much in force. Take a look at a couple of worry points. Thats feeding into those concerns. Which would be the bond market and the oil market. Both pushing the upper end of their range. I have the inverse treasury etf, which basically tracks yields, so you see that on a yeartodate basis, its been going right along with oil prices. I would argue neither yields nor the price of a barrel of oil or a gallon or gasoline are themselves at critical, absolute levels that the economy cant handle. We just dont know that in advance, so thats why the market is watching them pretty warily. I would also put the dollar in this category today. In terms of the fed, we have another cpi report coming tomorrow. Take a look at the oneyear treasury yields, one we dont focus on much, but i like to see how this steadiness right around this 5. 4 level, so project ahead one year when this bill matures and the markets essentially saying the fed funds rate will probably be roughly around here. And so, right now, at least, the higher for longer type of message from the fed is registering here on the oneyear note basis, even though some of the fed funds futures say, yeah, we could get some cuts starting in the first half of 2024. That certainly remains to be seen, becky. Thats been a big argument, back and forth, about whether there are expectations for fed chopping rates, come back down. We had a conversation with Cameron Dawson about this earlier. You think that is baked into the market . I dont think the stock market is here at this level and holding up well strictly because cuts are anticipated. I think that the fed funds futures market is saying, well, if the fed is almost done, probably, then whats the direction of surprise off of being almost done . Its probably to cut if something goes wrong or if they feel as if inflation is tame. So, its really a probabilities game as opposed to people wishing and hoping and betting that we get some cuts in the next six months. I like that take. Mike, thank you. All right, joining us now for more on the markets, zach hill, head of Portfolio Management at horizon investments. Good morning, zach. Its good to see you. So, feds data dependent. Thank god, right . So, to try to figure out what the feds going to say doesnt really matter if we dont know what the data is, does it . Yeah, i mean, thats the way that were thinking about it. Last year was really about that kind of interplay between understanding what the fed wanted to do and needed to do with rates more so than the market, and you know, as we sit here right now, pretty much regardless of what happens at the september cpi or the august cpi print, the feds not moving in two weeks. And so, really, what were thinking about is november and further out, and thats where theres a little bit of dispute, and so going back to what mike was saying, i mean, rates do really matter. Thats what were watching across the board here for markets right now. Youve been friendlier to Financial Assets than many. Do you still feel that way . I dont believe you think theres a recession coming, but we may not have rate cuts anyway. Yeah, thats right. We have been more bullish on the economy, and really, that kind of comes down to the consumer and the labor market. You really need to break the labor market in order to get a recession, a proper recession, that we really care about and all signs point to a very, very tight and very healthy labor market. We think thats a good thing that provides kind of medium term support for asset prices. But you know, right now, as we sit here, entering september, it feels like we might see a change in trend. Were watching markets really, really closely. Yields is a big one, and also, you know, the data that we get coming in to kind of see where this next trend that were going to have before we get to q3 earnings season. From data we do know, as a barrel of oil costs 87. Do you think that makes if you got to go somewhere in the market, youre not sure financials makes sense or even the overall market, but energy makes sense . Yeah, i mean, we like energy. A lot of the same kind of reasons for liking energy last year, you have structural undersupply, years and years of lack of capital investment, investment overhang kind of from the community writ large. All those things still apply. The reason that energy really cooled off at the end of last year, beginning of this year, is that we were afraid of a recession. As we sit here right now, we dont see a recession in the next six months, so you put all that together, and Energy Trades quite well. Especially when you have an immaculate disinflation view for the market. Its a really nice hedge with the asymmetry that we have. You buy that, though . I mean, if you if you dont buy that inflations under control before oil went to 87, how do you buy it now . You know, i think, joe, what weve learned about inflation is just we have to be humble and trust our models, but as we kind of look back and say, okay, where do we get things wrong . Where did we get things right . Obviously, Energy Prices matter not just for headlines for also for kind of the broadbased its one of the most intangible things about inflation that we have, what you drive by and see what the gas station is offering for a gallon of gasoline every day is something that consumers really internalize, and so thats something i think thats really important for us as we look forward and thinking about the reaction function for rates and where the feds going to go and when they are going to start cutting, which is quite uncertain. We only got about 30 seconds left. What inning are we in, in terms of this ratehiking cycle . England were in the bottom of the eighth, top of the ninth. I dont think it matters quite honestly. 25 basis point hike in november. Really, does that change the overall situation when you got rates at 5. 5 . No. What were really more focused on is how strong the economy is, how long we can continue to kind of chug along, and for that, the labor market is what were looking at. Its not going to be extra innings or a double header or anything like that. Thats not on anyones card . Those are too many analogies for me. I dont know. You missed the yankees here. They were no hit for like 11 innings and then they won. It was the craziest game ive seen. Lets get a check on oracle. Its been a big outperformer so far this year. Look at this. Up already 55 just in 2023. The Options Market currently pricing in what could be a move of 5 on the stock, up or down on the heels of that report. It had been the sort of laggard, though, prior to that. People hadnt given it frankly enough credit, so the question is whether this continues this afternoon. Well see. Lets take a final check on the markets right now ahead of that. You see the futures this morning, weve been in the green all morning long. Dow futures right now indicated up triple digits, 109. If you need to take over, just let us know. Jump in for me. Youre looking at the dow up 1111 points. Lets show you the tenyear. The twoyear, though, still right under 5 but sitting right there, basically, 4. 995 . The dollars been of interest. It has been the longest weekly winning streak weve seen for the dollar since 2015 but this morning, you can see a little bit of weakness there. There were comments out of japan talking up the yen a little bit and talking about zero Interest Rates. Anyway, folks, that does it for us today. Make sure you join us tomorrow. Right now, its time for squawk on the street. Good monday morning, welcome to squawk on the street, im Carl Quintanilla with david faber at post nine. Cramers at one market in San Francisco ahead of dreamforce, which gets under way tomorrow. Futures kicking off monday with some green on the back of this tesla upgrade. Very busy week between dreamforce, apples event, cpi, ecb, some conferences, and the uaw contract expiration. Our road map begins with this massive week ahead for investors. Lot of economic data. That looming auto strike
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