Opportunity as a result. But first, we begin with two other pressing developments. Joe biden just touched down in michigan and is set to join the uaw picket line, first president to ever do so, as negotiations show no sign of ending soon. Phil is live on the ground there. And no resolution in washington either, where congress is running out of time to strike a deal to avoid a Government Shutdown moodys warning of the consequences on americas Credit Rating well examine the fallout in a moment with dean mackie and Emily Wilkins and Steve Liesman. But first to michigan for the latest on the autoworkers strike and the arrival of the president any moment now, phil and the motorcade has been seen as a gm parts and Distribution Center not far from here i believe its up in bellville well get some comments then that are being taped with the president there, where he meets with some of the uaw members whether hes picketing or meeting with them, hes showing support pour the uaw, and he is expected to give some brief remarks. As soon as we hear from the president , we will relay those to you with donald trump coming to michigan, and the president s trip today, there is negotiations continuing between the uaw and the big three automakers those are some type of a pause going on as we speak right now heres the latest on the negotiations ford and the uaw, they are battling over an ev battery plant that is planned for about 100 miles west of here were not going to go into the details, but this is at the heart of the debate over this contract, the negotiation, what happens with those battery plant jobs, ev manufacturing jobs . Are they uaw jobs, and at what pay scale do those people get representing if they are with the uaw . Then theres stellantis. They put oh ut a note yesterday saying look, we are ready to negotiate and to award a large raise to the uaw but our costs have to be competitive. And stellantis says for its costs to be competitive, it has to benchmark those against foreign automakers here in the united states, and against tesla. And then theres general motors. It continues in its discussions with the uaw but we get no sense that an agreement is in the offing, whether its with gm, stellantis, or with ford so, again, we are waiting to hear from joe biden. That should be momentarily and this is a little unusual, guys they are not doing this where hes at a big rally and theres a whole bunch of press there its a Pool Reporter and a pool photographer who are with him as he meets with some of the rank and file members of the uaw. And then they will feed that out. Theres the president were looking for that black hat. Hes making his way in a blue windbreaker. You can spear through those picket signs, about to take the horn i dont know if we can try to listen in. [ applause ] [ inaudible ] the fact of the matter is, you guys, the uaw saved the Automobile Industry. Companies were in trouble now theyre doing incredibly well, and guess what you should be doing incredibly well, too. [ applause ] you deserve the significant raise you need and other benefits [ inaudible [ cheers and applause all right good afternoon, uaw family thank you i want to thank local 174 theres joe biden, who just concluded some brief remarks into the bull horn, which he just handed over to the uaw president. Phil, just for a quick recap, the president said you guys, meaning the union workers, you saved the Automobile Industry in 2008 you gave up lot, you sacrificed. They were in trouble and now they should sacrifice too. The president said you deserve the significant raise you need and other benefits exactly what he said, kelly the argument you would hear from executives at ford, gm, and stellantis, weve made record offering they are offering approximately 21 pay raises in some cases, an increase in the cost of living adjustment. Actually, a return of those. Those were stripped out in 2008. A reduction in the number of tier wages, so workers are hired in closer to the top of the wage scale. From the perspective of the big three, they have made sacrifices in terms of making a generous offer. But they also are balancing that with what they believe they need to do to be competitive with foreign automarriager automakere united states, tesla, and they are in the midst of transitioning to electric vehicles and nowhere close to making money on them they believe in order to do that, they have got to invest billions more over the years to come, and there is a limit to how much more they can give the rank and file workers. So thats the rung with all this, kelly. Nobody is arguing that the workers dont deserve more the question is, your definition of more. Im still struck by the median worker makes 80,000 and the median worker at tesla makes less than 35,000. Phil, well circle back soon we find joe biden there in michigan this hour, meeting with uaw workers as the strike continues. Dont miss last call tonight Brian Sullivan will be live with much more on the economic and political fallout and the strike continues. Thats tonight at 7 00 p. M. Eastern right here on cnbc while the president is in detroit for the uaw strike, congress is still trying to strike a deal in washington to avoid a Government Shutdown. Lets get over to Emily Wilkins on capitol hill with the latest. Emily . Kelly, its still not looking like there is a clear path to avoiding a Government Shutdown that would begin on saturday night, sunday morning. And congress, its not that theyre not working on trying to figure out a solution, but the house has tried and failed to bring up a spending bill so what they will do today will see this vote come a little bit into the evening the house is going to vote on trying to move forward on four major bills to fund the government and theyre hoping that is a show of good faith to a small number of republicans who have been holding out, and that those republicans, once the four bills are past, come on board with that shortterm funding. Thats a lot of ifs. Theres no gauarantee that is what we will see from the house in a couple of days. Kevin mccarthy talked to reporters today and what he is trying to emphasize to members is that this shortterm bill includes a number of republican priorities for the southern border, building the wall, limiting immigration listen to what he told reporters today about that short term spending bill and the Border Security the republicans will put on the floor a rule to secure our border i think thats the appropriate way to keep government funding, secure or boarders, and keep the government open to work on the rest of the appropriation bill reporter of course, even if the house winds up passing that short term bill, there is no guarantee it goes forward in the senate the senate is working on its own bipartisan bill, which stands a better chance of passing and ending the shutdown, but not clear at this point when the senate is going to be releasing that bill text we know its going to be about 45 days of covering government funding, then we do this all over again emily, do either of these bills cut spending are they trying to cut spending . Reporter the republican bill does try to cut spending i think at this point, there is some sort of willingness to do that but i think the main priority right now isnt about cutting spending the main priority is about keeping the government funded so congress can work on some of the longterm spending bills thats why republicans are hoping to get gains in terms of funding cut and hopefully something for immigration is what republicans want to see but at this point, its not clear how things will shake out when it comes to funding the government in longterm. Emily, we appreciate it we just had a twoyear note up for auction top of the hour, and the way yields have been behaving, we have some headlines. Lets get to Rick Santelli with that reporter keep in mind, twoyear note yields are the coupon closest to what the fed may or may not be doing, and they correlate 48 billion twoyear notes, the largest offering going back to april of 2022. And the yield at this dutch auction, 5. 085 , which is exactly where the issue market was. So that screams an average auction. As you go through the metrics, dealers took 14 versus 17 option average i always liked that, because if dealers are taking less, investors are taking more. All the other metrics are close to the average, so c plus, c plus is the grade. But there is a couple of unique things here, the highest yield at an auction in 17 years, and the old guy is trading 5. 13 1 2 yield. The new guys, trading 5. 08 1 2 so all you tech nniciantechnici just a six basis point roll. Kelly, back to you rick, thank you very much 5. 14 is the latest print there from the threat of the Government Shutdown to the uaw strike to the high Interest Rates we just mentioned, the economy is facing a lot of pressure points, including a big drop in confidence confidence as gas prices have rebounded. And jamie dimon said hes not sure the world is ready for 7 Interest Rates, a hint of what he thinks could be to come and moodys warning a u. S. Government shutdown would be bad for the countrys credit with borrowing rates already at 16year highs. Now back to joe biden before we continue, though hes making more comments out in michigan at the united autoworkers strike. [ applause ] taking the bull horn back for a brief moment now lets go over to dean mackie and our reporter Steve Liesman is here, as well steve, just set this up for Us Consumer Confidence dropped this morning. Not a great sign i think you set it up pe perfectly. You started off with the two big issues affecting the economy you have the uaw strike, the Government Shutdown, and then the higher oil prices, those are all three challenges that are coming for the economy theyre coming for the federal reserve. Without the higher oil prices, the fed at this juncture might have offered some relief its a bit in a box where these High Oil Prices create a huge challenge for the fed, where they cant really afford at this point to take their foot off the brake of the economy because of the concern about how High Oil Prices could reignite inflation here so it has to remain tough, even though theres a lot of signals in the economy, including what you just mentioned, the Consumer Confidence number that suggests the fed ought to be easing up here dean, a perfect time to have you back on here you know, its not every day we hear from someone who was the most accurate forecaster two years in a row you have to remind me what the exact designation was. My nsense is youre not quite as bearish on the u. S. Economy, do you remain optimistic now that we can avoid a recession, if thats your base case . I to remain optimistic. There is a couple reasons for it we have had these recession fears over a year now, and growth has been 2 or higher every time in those four quarters and we think growth in the Third Quarter this year will be 3. 5 there are some headwinds, but the economy did have a lot of momentum coming into this. Now, each of these pieces, the auto workers strike and the shutdown will chip away at growth in the fourth quarter, which we think was going to slow down any way but these two seem like theyre likely to be somewhat temporary forces they shouldnt last for months and months and months. We think that underlying resilience that got us these strong growth corridors still remains there. This isnt necessarily where you want to go, but when you hear jamie dimon talk about 7 , is that Interest Rate feasible, and would it negate everything you just said or could the economy still withstand it so i dont think its crazy what he said in terms of Interest Rates going much higher its not our base case we think that and really it comes down to the inflation outlook. We think that inflation is going to settle down over the next several months, and its going to be enough to get the fed to stop hiking rates. So we think the fed is finished hiking rates right now the only thing thats not true in the sense that the fed has a lot more work to do, as mr. Dimmon suggested, is if inflation takes off again. I think at that point, the fed would be willing to cause a recession and i do think raising rates to those levels could cause a recession. So its not a farout scenario, but its not our base case steve, im glad youre here today. I always like to bandy about sort of odd, new ideas i have a new one, which is, does the fed need to get hawkish again to crash bond yields in the longer term . I cant figure out how we get out of this debt and deficit situation, unless the tenyear goes way back to something more like 2 , and i dont see how that happens without way low inflation or, you know, a way more slow economy. Just a warning to viewers, folks, kelly and i are going to chat and you can listen. I have the same question, kelly. The deal is this remember, a throughout a lot of this period, the long end was lower in part because it was banking on a recession. And im confused as to why that hasnt happened now. Right i think whats happening right now is the long end is reflecting three things. First, it was higher growth. Second was greater issuance. And the third is perhaps baking more inflation and inflation compensation all of those things are factors in why those volumes are higher, and not due to what we expect them to do, which is reflect a greater chance of recession. On deans comments, i think of the soft landing, i like to watch a lot when they talk about how a ship has to hit orbit at exactly the right place or it spins off into space that window for a soft landing is a narrower one. And the idea that these three, four things on top of each other, they make it difficult to hit that soft landing unless the fed eases back i dont think the fed has to get more hawkish here. It was plenty hawkish last week, maybe too much, but i sympathize with the challenge created by higher oil prices, which i think is going to create an issue of expectations and something they will have to deal with it. So theyll have to keep it higher the idea is those fourth growth quarter forecasts will come down and well be back in those place where is we have been forecasting zero and 0. 5 gdp numbers for those quarters dean, do you spend time looking at, you know, the budget deficit . Normally, when we are talking about forecasting, thats not a huge variable. At least it hasnt been in 15, 20 years does it factor in now in any kind of way . Well, it certainly matters. You know, it can matter in a couple of ways it can put upward pressure on Interest Rates that may be part of what we are seeing now it also can be at times, a lot of fiscal stimulus hitting the economy. I dont think thats what we are seeing rite now, though. A lot of the reason the deficit widened is because of lower income tax receipts because Capital Gains last year when the market was down, so those have been coming down thats not really stimulative to the economy. So i dont think the reason for the strength in the economy is because fiscal deficits are wide the reason for the strength is consumers are in Strong Financial position, real Income Growth is quite strong from the labor market Household Net Worth to income is higher than it was ever in the seven years prior to covid thats fueling Consumer Spending thats why we are seeing it continue to outperform is there any way in which high rates become a shock . For consumers, this is a windfall at some point, if you can get, you know, cash on cash, that kind of meaningful way, i guess the flipside is if credit continues to deteriorate as a result but does it shock the economy if we see rates move higher certainly higher rates do hit the economy, and we saw that last year. Its worth highlighting,l last year housing got hit hard, it took away as much as 1. 5 of gdp growth but housing is now turning into a positive the Third Quarter will be a positive factor for gdp growth so housing has already taken that hit and its improving right now, because theres so little supply in the existing market so housing has taken that hit from rates i dont think it has another massive leg down with the current rate structure thats why the combination of housing, at least moving sideways, means a recession is not imminent soon. And maybe this is the last week we even get the data to know what the feds next move might be yeah. I mean, nothing like flying blind. Its not a way to run a railroad, so to speak. I think thats a big problem the government shuts down, the fed doesnt get the data i think there we have to be wary of the impact of the higher rates, especially when it comes to the corporate Balance Sheet i agree with dean about the idea about the household Balance Sheet being in good shape, but at some point these higher rates take effect and they have been recently i think theres some need for relief when it comes to reit structure in housing, and i think the fed can provide that without giving up the fight on inflation. Thank you both. Appreciate it today. Stocks are falling today on multiple concerns. Higher rates, potential Government Shutdown, weaker economic data, down almost 300 points my next guest says this is an Inflection Point charlie is vice chair at aerial investments. Im referring to the chat we were just having about higher rates, charlie i think thats where youre going here yeah. So for 40 years, rates have done only one thing, go down. Every tenyear period, there was not a single time in the last 40 years in which if you looked forward ten years, Interest Rates would not have been lower. And people had started taking that into account in investing it was very