"squawk box" begins right now. ♪ >> good morning, everybody. welcome to "squawk box" here on cnbc. we are live from the nasdaq market site in times square. i'm becky quick along with joe kernen and aunedndrew ross sork. this is feeling like a broken record when we see this again and again in the morning with lower futures in the morning but higher closes at the end of the day. dow futures this morning down by about 150 points. s&p futures down by 13 and nasdaq off by 61. we did see new records yesterday for the s&p 500 and the nasdaq. check out what is happening in the treasury market, a little bit lower this morning. the ten-year is yielding 443 and

two-year 484. >> bitcoin down 4%. this is a day we not get a cut. ever a cut? does september look like a cut? bitcoin just fell off. that doesn't show it. the charts are so bad. i don't know why it doesn't show it. it fell under 70. now it's went from 699 or 698 and all the way to 67 to break under 67. you cannot tell from that chart it's down 4% today. >> there. >> now you can see it. >> that's a little better if you did it even 24 hours, it would show you it just fell off a cliff. i thought that was note worthy. >> small business optimism hitting highest level of the year according to the latest nfib survey released just moments ago. despite the rise, uncertainty is rising to the highest level since november of 2020. you can choose your own adventure there a little bit from that he'll possess. joe?

>> a panel of independent advisers to the fda as usual -- fda panel recommended eli lilly's drug paving the way for the treatment to receive approval in the u.s. later this year. the fda typically follows the recommendations 6 its advisory panel. it isn't required to do so. if cleared for use, this would be the second alzheimer's drug of its kind currently on the u.s. market after another one was released. we will talk about about that with a specialist later this hour that was actually involved in the approval who points out it's going to be kind of a long trek' it's going to be combination therapy' not something that necessarily attacks the underlying causes but it can appear to put alzheimer's in to a kind remission where there is no --

but just getting rid of that, we still don't know whether -- we still don't know whether -- it causes it or a result of getting the alzheimer's? they are still looking for the underlying pathology of the disease but we will talk about that and this could be a qings therapy with something else. they will keep working on the underlying cause. >> it's great cause for hope and an awful disease. >> probably doesn't do much for litlly lilly. >> lilly has a bigger fish to fry with weight loss drugs. >> it's like an a.i. stock. i forget what it's worth. >> the white house is reportedly close to naming cftc commissioner chris by goldsmith row marrow to head the fdic. external investigation found widespread sexual harassment and

other misconduct at the agency under his tenure. he said he would step down after a successor is named by the senate. they have discussed two other women for the post but goldsmith romero is the front-runner and served as a cftc commissioner since 2022 and she was the special inspector general for the treasury department's tarp program during the financial crisis. >> uaw president is under invest investigation. a court filing was yesterday. neilbarofsky. he is now investigating whether feign abused his power as union president and accused union leaders interfering with his access to accident and he did not address any issues in the court filing but said taking our

union in a new direction means sometimes you have to rock the boat and upset some people who want to keep the status quo. he is encouraging the monitor to look into any claims made about his leader. >> a weird story. i didn't understand all of the claims made originally. apparently, the treasury secretary there at the union. >> yep. >> who they had taken away basically all of her power, said she had been involved in bad things and she countered back that, no, she didn't and it was them who were doing it. harkens a bad days of old unions way back when. another uaw story. uaw announcing a tentative contract agreement at an ohio factory that makes battery for electric vehicles. the deal covers 1600 workers. solution that produces battery for gm electric vehicles in case

they ever actually sell one. that is what i was not sure -- gm sells a few but it has been probl problematic. we know what has happened in recent months. the uaw plans to use the contract as a template as it negotiates agreements at other battery plants in the u.s. and xa calls for a wage over $30 and goes to $35 over three years. starting wages were 1650 when the plant opened a couple of years ago. that is what we see. over and over, hammering home that wages eventually, when they double, you see that as a component of prices and inflation. >> and inflation and why inflation is sticky. former media executive edgar bronrof has interest of biding

paramount according to the rj "the wall street journal" report. sherri redstone is in advanced negotiations to share to sky dance media and merge paramount with sky dance. steven paul is lining up finance of around $3 billion. we are going to be speaking with matt belloni the next hour about this story. this was their last chance to go look and have time here to see if there are any other potential buyers. i don't know how you match some of these buyers up. do you do a deal that brings in other shareholders as well at paramount. >> mount or mount? >> mount. >> i was thinking -- >> mount. >> bronfman, where has he been? >> he sold mgm years ago. >> go back even further.

>> seagram had a big stake in dupont. he told has. remember? to get into the movie business. >> to get into the movie business and totally -- >> mid '90s. >> it dent work out well and a lot of seagram showers saying what happened? >> years ago. >> he got back in to music? is that successful? >> warner music didn't work for him but he was out of warner music and he was buying other businesses. >> i don't know. that's why i'm asking. we used to talk to him all the time. what? did he finally -- is he doing great now? >> he is starting to. >> they moved him -- he got kicked off by the catcher. >> i've always had a soft spot for edgar. >> you can't let that cloud how

you gauge his relative success versus -- you know, he did have a pretty good start from that family, right? >> in the meantime, u.s. appeals court rejected a bid by uber re reclassify drivers as employees. they failed to show the state law fared them out and exempting other industries. uber said the ruling with not change the status of the relationship with its drivers who are considered contractors under a 2020 known as prop 22. t california's top court heard arguments last month. a.i. has hired sarah friar

as the cfo. wild will be open a.i.'s new chief product officer. >> one of tesla's longest standings shareholders is backing elon musk pay package. bloomberg reports that scottish asset manager gaillie gifford will back musk pay. he has held the stock more than a decade and it began reducing its stake in around 2020. and holds about 0.5% of tesla across its funds. >> this is a squeaker. >> amazing to hear the back and forth. >> coming up, when we return, apple is unveiling its long awaited artificial intelg fea intelligence features for its

a.i. a backlash from elon musk who is threatening to ban apple devices from his company, depending how deep a.i. is integrated in those phones. details after the break. (vo) a law partner rediscovers her grandmother's artistry and establishes a charitable trust to keep the craft alive for generations to come. from preserving a cultural tradition to leaving a legacy, a raymond james financial advisor gets to know you, your passions, and the way you enrich your community. that's life well planned.

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her uncle's unhappy. matchin i'm sensing anription. underlying issue. it's t-mobile. it started when we tried to get him under a new plan. but they they unexpectedly unraveled their “price lock” guarantee. which has made him, a bit... unruly. you called yourself the “un-carrier”. you sing about “price lock” on those commercials. “the price lock, the price lock...” so, if you could change the price, change the name! it's not a lock, i know a lock. so how can we undo the damage? we could all unsubscribe and switch to xfinity. their connection is unreal. and we could all un-experience this whole session. okay, that's uncalled for. welcome back. apple debuting genitive a.i. plans at its worldwide developers conference and integrate all hardware and software products into it and

users can ask siri to use chat gpt and that is apparently issuinging elon musk calling it an unacceptable security violation and threatened to ban apple devices from his companies if the company integrate open a.i. what he described as the operating level, i would say from my reading of it its no the re -- not really integrating at that level. i want to get into your review which was fascinating to read this morning in the journal. it's worth a read for those who haven't seen it yet. help us answer the question. maybe i don't understand it. it did not appear to me that chat gpt is genuinely integrated at the operating level, more this was something that you would sort of use almost like an api and push out to sort of in certain instances when you need it but that it wasn't necessarily living inside the ios itself.

>> absolutely correct. what apple talked about yesterday was doing a lot of this a.i. processing either in apple's on the device or using apple's cloud services, what they have called the private cloud compute and this is a way they invented basically that it's secure on the cloud and it's in their servers and in their world. that said, if there is something that requires a larger language model and apple feels like we can't answer that, they are ask you if you can ask chat gpt. they showed this pop-up during the presentation. you get a pop-up and notification that says can we go ask chat gpt this question and you confirm that. >> so what was your -- so -- by the way -- before. just to finish this off. if you were elon musk. i don't remember if he had tweeted this prior to the presentation or right after, but if you were to actually dig into this and look at it, do you

think he would say this is integrated or not? >> i think elon musk had a very rash reaction to hearing the news, hearing chat gpt is integrated into ios. you can think that but not the case, at least according to what apple is saying and what they are showing. >> it also seemed to me that longer term and there was some references to it yesterday, it's very possible in the future instead of going out to look chat gpt, you may very well do with gemini and able to click off and go to groc if you want. >> absolutely. absolutely. people need to think about this as you can choose what search engine you use on your iphone and safari. i think you're going to be able to choose when large language model you use through siri and really the point they were making yesterday is that siri is going to be this portal to getting information and your a.i. assistant. they never used the term a.i. but your apple intelligence. so eventually they say there may

be other large language models to integrate through there. google, whatever are out there apple on has to make that deal but made a first deal with open a.i. and siri can now do that. >> i've been trying to figure out the musk reaction to this. you both followed this closely. just his reaction to this. he is not threatening to ban microsoft devices from his offices. i think it's more about just banning them from the devices but making shurg people realize he feels so strongly about this. is it a competitive thing? because now open a.i. is going to be able to train potentially off of all of the data it would getting from apple users? >> joanna is the expert. two things. apple said repeatedly that open a.i. would not be able to actually train effectively off of its data they won't get the data which i didn't understand. we got to figure it out. i want to get in to that.

the second piece is microsoft, obviously, has laptops and not phones so not necessarily i think -- android might be something different and i don't know where he stands on that. i think he feels differently about google. >> google than a.i.? >> a personal view about open a.i. but my take. what is yours? >> similar take. similar take. look. eventually, elon musk might strike a deal and maybe once he understand the other is another opportunity. microsoft not until now with its co-pilot pc's has been that deeply integrated with open a.i. with the operating system or inability to integrate that way but also, yes, you're talking about the iphone versus an hp laptop or what is not. >> what was it your sense that the a.i. assistant effectively that is going to be on device, this is now apple's a.i., which

i imagine are going to be smaller models sitting on these chips effectively, that they are good or good enough or as good as what could be done if open a.i. was allowed to go wild on the device, if you will? or compared to gemini, which might live on an android evice? >> i think this is the really interesting thing we are seeing on devices. samsung has taken a similar route that for doing specific things that you don't need these large language models, right? if you want to transcribe audio and summarize it you don't need that large language model. if you want to make images or like they are calling gem emoji, you don't need to go to this super large language model. you can use a lot of models that either local or that are going to apple's own cloud. and so that is one of the interesting things they are saying here is that sometimes you're not going to know where that processing is happening.

obviously, the normal user is not going to know if this is happening on device or it's going to cloud and aim is saying in their presumption, it doesn't make that much of a difference if they are not telling you it's going to to chat gpt. if it is, they will tell you. otherwise, it's in apple's world and making a huge bet on privacy and security. >> you haven't gotten a chance to test it yet. i call multistep effectively projects that you would give the phone like an assistant. the question is how good that really is and whether that as good as what you might get with one of these larger language modeling doing the work for you. they seem to show lots of integration you can say add this to my calendar, email, so and so and do five things all at one time. i think it's to be seen whether it can do the five things at one time. >> we absolutely don't know yet and a lot of these siri promises where we see siri use your

personal data toacross the apps are not ready yet. this is a long-term play by apple. they showed a lot yesterday but absolutely they need to show us how it works to really believe it all. >> can you go underneath the economics of this for half a second? you know, historically, google has actually paid apple to have access to that search box. that was always a very valuable piece of real estate that effectively apple was selling to google and this is a part of even the antitrust suit against the company. in the context of open a.i., i was trying to think through the economics of that. do we believe that apple is paying open a.i. or open a.i. is paying apple? open a.i. is not benefiting if you believe them from being able to train on the data so that is not a value to them. it could be a lead gen kind of product in that there is going to be some kind of integration with a paid version of chat gpt.

how are you thinking about the math here? >> i don't think it's necessarily a lead gen thing. apple said they are offering this for free to their users, right? chat gpt 4-0 is free and you daytona need to sign into the service. if you -- to me that strikes hee as apple is trading money -- or giving money to open a.i. for some of this access here and apple has said they have built if some real privacy how it works. it is not collecting that data and not training on that data, my guess is that open a.i. isn't getting data, then they are getting money. >> joanna stern, great to see you this morning. thank you. >> you too. coming up record viewership for women's basketball. the numbers after break.

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with the ncaa tournament. the wnba is out with new viewership numbers saying the season that began on may 14th has been the most watched in the league's history averaging 1.3 million viewers per game. that triples last year's average. >> when we come back, the fed kicking off a two-day policy meeting. steve leaseman has results from the cnbc fed survey straight ahead. let's look at yesterday's s&p 500 winners and losers as we head to break. [thunder rumbles] ♪ ♪ ♪ ♪

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good morning. welcome back to "squawk box." we are live from the nasdaq market site in times scare. the futures are in the red. usually throughout the day it's in the green the way momentum is

going. s&p 500 and nasdaq closed at new highs and s&p is giving back ten points and nasdaq down over 40. >> fed kicks off a two-day policy meeting today. the fed survey is out. let's get to the results now with steve liesman. if you haven't, update us on fed futures so we know for september, is it still 50%? >> i'm going to do that right now, joe. >> okay, you do that at the end. i do. >> 52.6, joe. >> 62? >> 52. >> 52. 68.7 for november. 9% for july. anything else, sir? >> no. so it's 50/50 whether we get any? or do you have --

>> the point, baby. >> you have to add september and november together? yeah. does that equal 110 maybe? >> no. 60. divide it by two. >> no. no. that is the probability of that of a rate cut. >> i'm sorry. do your survey. i'm sorry. >> okay. we are going to talk about what people think about the election here. it finds our respondents disapproving of president biden's handle of the economy and trump's higher marks in most cases than president biden. 39% of biden's handling of the economy was approved and in line with the surveys of the national product. 48% believe that trump will win a second term in the whites and 35% think it's biden and 17%

unsure. the stock market 23% biden 77% and the economy, a little bit closer there. 54% trump. when we ask about the country as a whole is the one place that biden gets the edge. 57% think that the country as a whole would be better if biden wins the election and 44%for trump. looking at the policies. trump seen better than bidens in categories we asked. biden a slight beat on trade and low marks there for both. on business regulation. 4 out of 5 almost for trump. when it comes to taxes. 3 for trump and about under 2 for biden there. jobs, trump gets the edge a little bit closer there. inflation both getting low marks 2.2. trump having the edge versus biden's 1.6. to be clear, it isn't obvious

what policies trump will use to bring down inflation. many economists see tariffs and deportations and inflation and then again biden's record on inflation. both candidates get low marks on the deficit but trump is slightly higher. bigger story for the market could be the policy of uncertainty created by the presidential elections and could cause further delay from spending. they say this adds downside risk. i'll be back with 8:30 with more on the outlook for the fed and the economy. >> looking ahead, we will hear what the fed says based on what we already know, that friday's jobs number and some of the recent inflation numbers. what is our next big data point? do you think that the fed futures move around based on what powell says tomorrow again? >> absolutely. >> yeah. ? >> look. i do think they are -- what is

the right word? fairly well aligned. i'll look at something else. i didn't know we were having this discussion now so we didn't tell you. we have a look at the january 2025 fed funds contract. what that shows is we are looking at 1.8 rate cuts built in. what does that tell you? it tells you one is for sure and there is a debate about whether or not there is a second one. in fact, this is part of what i'm talking about at 8:30. one locked in. a discussion, a debate, an argument about whether or not there is a second one. that is really the question. and for that to happen, i think you need to have inflation coming down. you asked hme the next big points. inflation points or minor or secondary are the growth reports payroll and gdp. >> you're using the c word, cut? >> nowhere near here.

no. >> i know. but for me what i'm worried about. i'm worried about that we are dead wrong. it democrats so sticky and wages and everything else, that the next -- we either stay where we are or go up. we will probably come down. they want to do it but after the election, who knows, too. january, steve? why cut after the election? >> i don't really think -- joe, what i've heard -- every fed official say the answer to sticky inflation is higher for longer and gets back to the discussion we have had for a long time which is the fed restrictive at this rate? and almost everybody thinks they are which is to say that they believe that the current rate will dot job. >> we are going to hear -- you know -- has his own view of a lot of things you probably disagree with, i guess, steve, but he's not convinced we are restrictive right now and isn't convinced that being restrictive necessarily is the panacea for

inflation. he thinks that, you know, it may not be what actually works. and as you might imagine, we need supply issues to try to ease inflation, increasing supply rather than -- and higher rates -- >> i'm a big fan of david's and i like listening to david. i don't agree with him on everything but i think david is a smart economic mind out there. i will be tuning in. please ask him, joe, what has changed so substantially in the economy from the time that we thought that the neutral rate was somewhere -- i don't know. around 2. now it is substantially and so much higher. how is 538 not a restrictive rate? that is a debate in my mind. >> how do you get to these new highs on the markets on a constant basis if it's not an example of liquidity slashing around and a lot of money there i think is the alternate.

>> what about earnings and productivity and progress and companies figuring out how to navigate difficult times and just being -- what companies do. they make money and they make money in inflationary times and noninflationary times. the fed is -- i don't know. it seems like it makes it harder. >> we still haven't gotten the balance sheet back to where it was before the pandemic, before all of these crises that we looked at. i thought those were supposed to be temporary levels of the balance sheet and worki ing our way down. any hint of the banks they put that on hold. >> but they haven't. they have taken a trillion out of the fed balance sheet. that could be true. that is the david's explanation. i have some respect for that. he says no matter what you say, there is still a lot of li liquidity around.

i would point out the course of the time the fed is withdrawing liquidity and still the market is at new highs. >> fiscal spending, too. >> all right. when are you back? see you later. >> 8:30. them got to watch at 7:30 and i'll be back at 8:30. >> okay. sounds like a plan. coming up, we will talk about the inflation data next. get our daily podcast and follow us on your fore dct p avitpoasap and listen any time.

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the fed is set to kick off its two-day policy meeting today. the markets are also anticipating that big cpi inflation report we are getting this week. for more on that, the markets,

the fed, we want to bring in daryl white, the ceo of bmo financial group and joins us from the summit in toronto. we were talking about what to anticipate from the markets. and what to think of the fed coming. steve said, basically, you're looking at a shot, maybe 60% shot of getting a cut sometime this year. you are still of the expectation that we could potentially get two cuts this year, right? >> yeah, we are. good morning. thanks for having us on. we are in that expectation. i would say we are in the slim majority from steve's report. we are looking for one cut in september and then another one in december. so two quarters by the ends of the year. >> you think that that is necessary? or that it's not? because you also think that inflation is pretty sticky. what is the fed to do? >> yeah. i mean, yes. in inflation is pretty sticky. look. i'm sitting here with you from toronto right now in canada where we watched the bank canada

move a week ago. we have situation here. unemployment is much higher around 6% and inflation 2.728. when you got a situation, yeah, you got stickiness inflation and still full unemployment in the u.s., it's a tough call and i think why you're seeing the survey come back at 52% and not 80 or 90. >> what do you think in terms of whether we are looking at a situation where there is a lot of liquidity in the market. is the fed, its policy this point restrictive? are rates high enough? >> it's not clear that it is restrictive yet. and i think that is why you don't see anybody calling for a move. i remember last time i was talking to you all, we were talking about moves by now. but it's not clear that the policy is restrictive yet when i look at other regions around the world. you see the transmission effect.

given full unemployment and the price stickiness, it's not clear. >> we have the bank of canada and the ecb both cutting rates. it puts us at a different position to see how that is going to affect capital flows. what is the impact for the market in the meantime? >> well, the impact has been pretty -- has been pretty muted, i think, in most places in the world. other than the u.s., where we are hitting new highs on the s&p and the dow and nasdaq. i think there is something to what steve had to say at the end of the last segment. there is clear evidence that companies are figuring their way through productivity and gains and approaches to managing through this environment, so, you know, we have to give credit to the productivity and to the strength of the underlying economy. >> you see the new highs in the market and you are not afraid? you think it's deserved? >> i didn't say i'm not afraid. there is a lot of volatility and a lot of things could go sideways and mostly geo

politically. in the meantime, until and if we see that you can justify is what we are seeing in the market. we are asking investors to be pretty cautious and saying we think you should be fully invested but at the same time we should be careful as we lead into the fall, as we lead for more geo political and the election in november. >> the areas you like would it be technology leading the way to this point? >> we like technology but diversified in our point of view. we think you've got to have full profile on the portfolio and the volatility is at risk increasing. we think significant risk in the fall we will see more volatility. invest for the summer and be careful in the fall. >> darryl white, ceo of bmo,

thank you. >> thanks for the time. >> when we come back, a new treatment for alzheimer's moving closer to fda apov.pral we will talk to an expert straight ahead. old school hard work meets bold new thinking. (laughter) at 88 years old, we still see the world with the wonder of new eyes, helping you discover untapped possibilities and relentlessly working with you to make them real. old school grit. new world ideas. morgan stanley.

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welcome back to "squawk box." it's going to a bloomberg report that realty are agreeing to purchase the tower for less than $50 million, and it's a short sale meaning the owners agreed to sell the property less than the outstanding principle on the

building, and now this is not a great a building, so take it for what you will, and we have not seen a lot of buildings in new york city trade, which is being one of the big question marks when we looked at different receipts and other funds. >> it's so often people will hold them or hand it back to the bank, but 67 prs discount, those are the types of things -- >> we should have gone in together and bought the building. >> price discovery is difficult. it harkens back to why it would be difficult to do -- it's just really hard. if they go down, it's like, wait, i already paid. and then we will talk to an expert on the diseases as well as that drug right after the break.

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eli lilly shares are higher this morning, and a panel of independent advisers to the fda recommended lilly's alzheimer's drug may be paving the way for the treatment to receive full approval in the united states later this year. joining us now, cofounder, chief science officer, welcome, doctor, it's good to see you. >> thank you. >> i was looking at one of your op-ed pieces and comparing this to the early days of chemo, and i don't know if i would call it

a blunt instrument, but this is not the first -- obviously we have a biotin drug, and we are in the early stages and we don't know what treatment will look like five or ten years from now, but this is positively a positive start. >> it's the first time we are having a disease-modifying drug that could lead to prevention. i think the future will lie just like in cancer, in combination therapy with prau seubrain scang the field forward. i have been doing this over 40 years, and it's an amazing time in our field where we are having breakthroughs for the first time. >> you know, it's possible for these drugs, which i think they

work on the plaques to clear them a little bit, and the drug puts that in remission and could last up to four years, and what does that do to the underlying epidemiology -- whatever it is, what is happening with alzheimer's, by getting rid of the plaques, is that causing the alzheimer's? we don't know? >> the next question is how are we going to get to 100% slowing, and for that we know it's going to be combination therapy. we know there's a lot of inflammation in the brain, and that's driven in part by the plaques, and the largest category of drugs, 75% better is

drugs directed toward the inflammation in the brain, and i think you will see monoclonal antibodies, and agents against the vascular component of the disease and even gene therapy. >> okay, there's a lot there that you said that clears a lot of it up. the precision medicine you are talking about we are not even sure yet, but is this relatively recent information about the inflammation being such a big component of alzheimer's? >> when it was described the disease in 1906, he described the inflammatory cells around the plaque, and it has been hard to get the right drugs and demonstrate efficacy with the

anti-intphrapl tories, and that specifically targets the brain cells that promote the inflammation called microgleo. >> well, with one of the hallmarks of aging as we all hear about is inflammation, and when we speak about it, it's systemic inphflammation that ge into the blood and brain and turns into what is causing the cells to becoming active, and it's the cells that eat the plaques and that's how it works, they blind to the plaques and they say come over here and you have to get rid of this stuff. at the same time when the cells become too active, the

inflammation becomes damaging, and we are trying to fled the needle between increasing the ability of the micogleo, and we want to make sure they don't get too active because then it becomes toxic. >> it's threading needles all the time, i think, doctor. >> exactly. and cancer, clearly, most people with cancer are on two or three drugs, maybe four drugs, and therapy revolutionized cancer treatment, and i think we will see the same thing with alzheimer's, and these are diseases of aging, and biological aging is shared between diseases and soo and we are looking at fundamental mechanisms of aging. >> yeah, aging is a key risk

factor for everything, i guess, it seems like, doctor. >> aging and obesity. >> yeah, and aging causes obesity, too. maybe we need to stop aging, doctor. can you work on that next? >> that's the alternative. >> well, there's hard science between aging therapeutics and we are starting to look at that in a more holistic way. the drug, like ozempic and the others, they are showing they can slow the progression of not just obesity but other illnesses with old age, so there's a lot of common threads here. >> amazing. that was great, doctor. we are out of time. good luck. godspeed. >> thank you very much. >> hurry up.

>> we are all going to be microdosing it. i told you, it's going to happen. just after 7:00 a.m. on the east coast. i am andrew ross sorkin along with joe kernen and becky quick. before the meeting, may cpi data will be released at 8:30 tomorrow morning, right here as we are broadcasting live on "squawk box." meantime, a federal auditor, and shawn fain over stripping to officials of their duties. he over saw the troubled asset issue, and he's investigating in fian interfered with his access to information. elon musk threatening to ban

apple's iphones from his companies, saying the tech giants new deal with open ai is a security risk and musk has a long-running feud with both companies over the technology, and we will have more on that story in just a bit. i will make a bet that as elon has looked at all this, at least the current rollout plan that it might not be as worry some as he was expecting. let's take a look at the futures this morning. you will see right now the dow futures are down by about 140 points. let's get over to frank holland. he has a look at the morning's premarket movers. >> good to see all of you. the big upgrade from oppenheimer moving nvidia from 110 to 150 per share, and adding nvidia is best positioned in artificial intelligence, and you can see nvidia shares are lower in the

premarket but were lower in the premarket yesterday as well before finishing a quarter of a percent higher. and then shopify, a price target of $74, and that implies a 19% gain. the recent pullback with shares almost at 19% year to date, and that makes for an attractive entry point, and it's a 60 billion e-commerce market outside of china and shares of shop tpaoeu up three quarters of 1%. and oracle, you can see they are tp fractionally lower, and it's a more valuation friendly, and the key metric to watchingi this

report, 23% higher year over year. >> we will see you in just a little bit. coming up, bank of america and the consumer checkpoint, where consumers are spending and their financial well-being. and then apple pushing into ai, and the stock hit its worst performance on the day of the worldwide meeting. "squawk box" will be right back. (aaron) i own a lot of businesses... so i wear a lot of hats. my restaurants, my tattoo shop... and i also have a non-profit. but no matter what business i'm in... my network and my tech need to keep up. thank you verizon business. (kevin) now our businesses get fast and reliable internet from the same network that powers our phones. (waitress) all with the security features we need.

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bank of america releasing its june consumer checkpoint giving its insight into the consumer spending. spending was up .7% year over year with the younger generations being the driving force on this. joining us is liz everett. there's a question we keep asking, is there a rebound in the consumer. looks like your data is showing that, too. >> i would say we are seeing the consumer spending growth continuing to be positive, but it's growing at a softer level. it's stable. i think saying that the consumer spending growth is stable is the right way to think about it. >> is that something you would describe as a soft landing when you look at the economy? >> i don't know that i would say soft landing, but i would say that when we look at the big picture, when we look at labor market growth, wage growth, we are continuing to see gains, again, across -- you talked about generations across all

generations. interestingly, we are seeing, again, like spending, we are seeing that rate of growth come down a little bit, so we are still seeing positive -- >> i would be shocked if the spending was not coming down to some extent. we keep waiting for things to slow and it's not falling off a cliff either and nothing that will indicate the fed will have to cut rates soon. >> i agree. when you look at the components of spending we are seeing a convergence of spending and goods, and spending came down from 3% to 1.5%, and good spending went back up and it's still negative .2. >> are we working through the pig that was the pandemic that changed all our consumer spending habits? >> you are making the right analogy going back to the pandemic, and what we see when we compare the results is that

during the pandemic we were in a totally different space. we are coming back to getting to prepandemic levels. where was the economy prepandemic? it was actually in a pretty good place, right? >> yeah. >> and we keep looking for that and we are in tuned to looking for signs that things are falling off a cliff when things are ending, and when you look at growth and deposit challenges, every generation has deposit balances at least 44% higher. >> that's what shocks me, and we were supposed to run through the excess cash from the pandemic and that's not happening. >> while moderating is still higher than the spending growth, you are not able to run through the money. >> there are consumers on the fri fringes, and we are seeing the potential challenges with the younger consumers, even though they have higher wage growth and

driving spending, but when you look at credit utilization, it's still below prepandemic levels, but it's starting to parttick b up faster for the gen z and millennial consumers. and we need to keep our eye on repayment rates, and we looked at the credit cards that are revolvers, and those people who are using it as a revolver, and it would make sense those would be the ones in financial stress sooner. looking at the repayment rates, the repayment rate is going down. they are not defaulting, but it's going down, and it's going down to levels that were below where they were before the pandemic. >> when you talk about wages, wage gains out doing spending

gains -- >> you have -- again, they are coming down. they are pretty close. you are seeing -- i think this is why we are seeing the deposits where they are, right? this is where if people can continue to spend, they will, however, we are also seeing in our data things that relates to behavioral changes, in particular with, again, younger consumers, where we are starting to see their spending for groceries, for example. shifting from premium and standard grocery stores to buying more at the value chains. >> wow, you are tracking what people are buying on top of it? >> we are not tracking if they are buying broccoli or steak, but we are tracking where they are spending the money. if you look at grocery spend at a high-end grocer versus a value one. we are seeing particularly with younger consumers a shift to people spending more of the

grocery dollars because at the value chains. >> could that be because wall street is putting more performance -- >> it could be that, and i am reading the headlines, too, and i am worried about the economy and will change my behavior. >> is there a spend on grocery going down, the total dollar amount going down or just shifting? >> i have to double-check on that. if you look at the total spend on food including food away from home and groceries, the shift is to more groceries. and it's a more cautious action by the consumer, and again, predominantly younger consumers we are seeing right now, i think that they seem fine but it's something we want to keep our eyes on. >> remind me one more time how many accounts you are looking at, because it's one of the more valuable data sets we watch. >> 69 million consumer and small

business accounts, and we are not taking surveys but actually asking them -- not asking, but looking at what they are doing. >> liz, thank you, and we always appreciate the updates. if you see a big change, i think it's something we will sit up and take notice about, too. >> now they are growing confetti. >> of course. and now is apple too late to the game? we will discuss that after the break. and foer wldrmor bank president, david malpass joins us. "squawk box" coming back after this.

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the main consumer praoeubgs index will be released tomorrow morning, just hours ahead of the fed's decision on interest rates. for more on that, let's bring in our next guest, former world president -- sorry, you wish. world bank president -- >> i don't wish. >> we don't need that. david malpass, a long-time, long before you were world bank president, you used to come on all the time. >> so bear stearns -- before that i did some in the reagan and bush administration.

we were trying to fight for more growth both at home and abroad, so that's still the fight. >> i think one of your big complaints right now is that we seem to be on a path where these 6% deficits are not going anywhere forever, and unless -- and the biden administration at this point doesn't -- these are the forecasts, they are not saying we need to change this, it's like this is what it's going to be, and that makes it hard to grow, does it not? almost impossible? >> it does, because the government is giving a lot of not only u.s. capitol but the world's capitol, so the u.s. government is sucking up capital from haaround the world to spen on huge subsidies and credits that they put through the tax system and it's the spending backed up even from years ago that they can't find enough uses for, and that causes businesses to invest less. we end up with slow growth in the future and big deficits, so

you are exactly right. the world can't really operate where the biggest economy expect to have a 5% or 6% of gdp deficit out into the future. >> i was a little bit disheartened that you think europe is improving more quickly than we are and that the euro might start becoming attractive -- i don't think it will replace the dollar but it's certainly getting interest. >> i think the dollar has a good chance to be better than the euro, and we are seeing now with europe cutting interest rates but not doing it in a way that adds production. this is a challenge for them. they're facing different problems than the u.s., so no, i think the u.s. is still the world's strongest economy and can be. it's just that we are in a bad phase right now, and that gets straight into all of the policy

choices being made. those can all be changed. >> europe, and -- i don't know, you say europe is accelerating and we are kind of slowing down? they are doing a better job of allowing businesses to reduce and the federal deficits are not in the same league as our, and i want to be in the euro and not the u.s. dollar -- >> in the first quarter, remember, europe capeme off of recession and from the standpoint of view, if you look beyond a one quarter number, the u.s. is better positioned for the world we are in. >> you are not convinced that staying tight is the way to bring down inflation, is that true? >> so tight is a term of art within economists, so you say

restrictive. i want the monetary policy of the u.s. to enable growth in a way that holds down prices. you can achieve price stability by having more stuff within the economy. >> supply stuff. >> supply side, but it's obvious to everybody within the economy. if you are in a small business and facing regulation out the kazoo, you close your business. that's what is going on. the interest rates are high, so you close the business. elite washington does well -- washington and the elite within the country do well with the interest rate environment that we have got. you clip coupons and put money in the bank from the high interest rates, so we need to find a way out of that towards lower interest rates. i don't think it's all that hard. you need to defend the dollar and have more production within the economy. >> sounds like judy shelton in terms that the answer is not just to choke things off, you might do better with inflation if rates were lower.

>> i want to channel ronald reagan. remember how much the rates were able to fall as the economy got stronger, because people are investing in your currency. if you are operating a model that is peace through strength and based on small businesses, what do you think is going to happen? people beat a path to your door. if you build something better, they are going to come and put their money into the u.s. that's not that hard. >> this is kind of interesting, then. you think that they are behind the curve in cutting right now, the fed? >> look, the fed made a big mace take by being at zero for a long time, and the world and the u.s., it takes years to straighten out that problem. at this point, real interest rates are high enough, and i think that we should recognize inflation is coming from what the rest of the government is doing in terms of regulation, in terms of the -- you know, the administration drained spro, the

strategic petroleum reserve at the wrong time, and you are left with gasoline prices high and you are empty from your strategic petroleum reserve, and just a whole series of decisions that are leaving us at a weak point in the world, and putin and china look at that and see that. >> you are not sure that a second biden administration would be a great idea, but what about -- >> let me be clear. biden set out his policies, less production and less energy and weakness that we say day by day on an international stage, at -- >> what about trump, 10% tariffs across the board. >> trump is focusing on we're going to have a better economy for small businesses. we're not going to be biassed against the small businesses and

on the energy side, we're going to have more energy. you know, the grid is going to work in a trump administration. i'm not sure -- the course we are on right now, you have to have real concerns about the electricity grid breaking down in parts of the country. the electricity demand has gone up a lot and the expected production of electricity is not going up because there's all the restraints on that. >> the entire of this paper anyway, and i have not looked at the times, and everything in the op-ed pages of the europe is talk about what happened in europe and some of the elections, and what it means for the paris accord and for net zero. we are going to be at the double emissions that the climate accord wants by 2030 because of ai and everything else, and that came along and threw a huge wrench in the works -- >> yeah, and changed -- they

have gone so many years, germany in particular, dependent on russia for all of their energy, and then overnight you don't get that and shutdown their nuclear reactions, and think of the power they lost by doing that, and then left with all the problems in the energy sectors, and fertilizer, you know, and the household supplies, they moved to china, which is not operating under the same constraints. they sign on to the international accords, and then they are just producing and building electricity grids like crazy and the manufacturing that goes with it. it takes jobs away from americans and europeans, too. >> i told you. when you were head of the world, you never said any of this stuff. >> i did.

i did. >> no mics were there. >> you can't imagine the size of the international meetings where one speaker after another says the only problem in the world is the existential threat of climate, and don't talk about refugees and the coups going on and the arms flowing to africa, child nutrition, all of the problems going on, and the -- they are not doing anything about it. you look at greenhouse gas emissions and they are just going up. the whole goal of the world system was to spend as much money as possible, as possible, and it's not necessary because it's not really working. spend as much as possible because there's a whole complex making of the elite making profit from the climate side. >> and this is steven kuhnen who

is an obama guy. >> i think that's dangerous for the u.s. to think. in europe, the institutional structure is to keep regulating, keep regulating and forcing spending, and that means the -- some big chunk of the fiscal deficit of the u.s. is for things that aren't making production, that aren't getting peoples' lives better. >> thank you. >> good to see you, david. up next, apple's push into ai and what it means for the company's product cycle. is the tech giant too late to the game or not? then, "the journal" reporting more interest. "squawk box" will be right back.

this is "real time insights." i am here with ey america's energy and ai leader. thank you for joining us. generative ai hit the scene very fast and there's a lot of discussion about how to use it and also how to regulate it. what should companies be thinking about right now? >> they should be thinking about artificial intelligence responsibly, which means having a solid framework that includes privacy and transparency and accountability. if all of this is going matter as regulations change and come along. >> what should companies be prioritizing when it comes to responsible ai? >> three things, one, having a purposeful design of their ai to align with their business goals. two taking care of theemerging

risks coming along with it. three is continually monitoring their ai systems to make sure there are no model or data drifts. >> what is the biggest challenge your clients are facing as they tphaeuf gate all this? >> there are a lot of challenges, but the biggest one is the data and algorithmic process. it could lead to reputational and revenue loss. >> thank you so much for sharing. >> thank you for having me. welcome back to "squawk box." apple unveiling its ai strategy

at the worldwide conference yesterday, and that includes open ai integration with siri and a lot more. to talk about the issue with us, our guest. i am curious what your initial reactions to seeing what they laid out with was? >> i think the words artificial intelligence were only used once in the keynote to say it was artificial intelligence for the rest of us. apple in typical fashion swapped out the artificial for apple, and its push towards putting generative ai into its products, which you said, was pretty late. it's early in the race for artificial intelligence, and apple has a lot of brainpower and money to spend. it had to take on a partner in order to keep up with the cutting edge, the large language models people use, and there's

controversial about open ai, and it's what we would expect to see from apple. not the first company to jump into a field, but the company that says we're going to take this confusing situation and make it simple for people to use. >> that's my question, and i know you have not had an opportunity to test it yet. there seemed to be two elements that will take time to work itself out. one is how much of the cross app ai product innovation is going to be there in ios 18 off the bat? some of that even seemed to be suggesting they may not roll that out immediately, that some of that might come later on. how sophisticated that stuff is going to be, meaning when you are talking to siri asking it to do things that might involve your calendar and notes and a couple other things all at one time. this idea that open ai and using

chatgpt for certain types of writing products and other things, and each time you do it you will have to select and decide that you are actively leavin leaving the ecosystem, and how that will work and how they will operate chatgpt, and ai, and could claude, which is owned by anthropic get in there, and how seamless or not that experience will ultimately turn out to be. >> yeah, two things there. first of all, using multiple apps, having your, you know, chat bot basically go through your apps and do something for you. this is ironic, that the siri team at apple ten years ago wanted to put into siri and they wound up going off on their own and tried to implement it and it

wound up at samsung. there's a lot of things they have to get right to do it, especially when you want your ai to do things for you, and say, you made an appointment in seattle. i will book a flight for you. you can imagine what can go wrong when the ai has the power to do that, and if you tell it to do it and one app in the chain of things you want to do will not work. as you say, we will have to see how that rolls out and how well that works. as for the second part, you know, i think that you're not going to wind up having to do it every single time. there will be a setting where you can say, anytime i want to use chatgpt, let it happen. if you pay for chatgpt, you could move your subscription over to apple so maybe people will buy the subscription and

move it to apple. >> nobody has sorted it out or been public about it, and historically google paid apple money for that very valuable search box on its safari browser. do you believe that open ai is paying apple? do you believe that apple is paying open ai? every time those servers are getting hit, that's going to be a lot of processing power, and who is paying for that? >> that's a great question. my sense is that open ai is probably not giving a bundle of money to apple, but as you indicate, they're probably willing to absorb processing costs in order to have the par partnership work. apple said openly after the keynote a number of other things. there could be a multitude of llms, large language model

generative ai products that could swap into apple. and apple has their own. you have to realize, like auto completed emails and their photo ai, that's working on their models, so maybe one day apple might build its own. >> do you believe that -- i don't know if you saw what elon musk said yesterday. he seemed to be very frustrated with the idea that open ai would be embedded at a deep level into this ios. i am not sure it genuinely is in this case just yet, and apple made a point about privacy if you are using open ai through the apple service, they will not be able to train on any of the information would be effectively imputing. do you buy that? >> yeah, i think i do. a lot of the companies are saying the percentage stuff you

store on your corporate cloud, your own emails, they are not going to use that to train their ai, and i -- i do believe that. apple says they have built in extra protections. they say even in microsoft, for instance, goes back on its word and wants to integrate that, you know, they probably could do it without you knowing, and apple saying we are building in protections where even if we wanted to break our word to you we would not be able to do that because we are using encryption that prevents us from violating our word. >> and if you are open ai, maybe you would be able to train on some of the information, and maybe that would be helpful to you, and maybe it's a lead gen product where people will see the experience they are having and decide to pay for the

version of open ai, and do you think companies -- i mean, the way apple over time has succeeded, they get people bidding effectively for the opportunity to be that player, but this is different because the cost of being that player may be huge, and unlike a google that can monetize it through advertising, we have not figured out a way to monetize ai unless the consumer is actually paying hard cash. >> we are going to have to wait for a lawsuit to come around for the arrangements between apple and open ai to become public. there probably will be a lawsuit for something that comes out through these products, and there almost always is. open artificial intelligence is not signing a suicide pact where they are going to spend hundreds of millions of dollars for processing because they have a partnership with apple, and maybe there's something that talks about the amount of

processing they have to do through the apple products that apple will cover that. who knows? >> steven, it's always great to see you and get your expertise on all of this. the legendary steven -- we can call him that, right? legendary. he's a legend. up next, a crackdown on hidden hotel fees is coming. details are next. we're coming right back.

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they are bringing democrats and republicans together. this afternoon lawmakers are supposed to widely support the measure to look at the hotel fees and hotels raked in an estimated $2.9 billion in fees, and a 2023 consumer report survey said 37% of respondents found hidden fees after receiving a hotel bill and for a number of those folks, it pushed them over the budget. the fees help support wi-fi and transportation and other amenities, and lauren wolf said she found that's not true. her company sued five hotel chains including hilton and hyatt. >> everything goes into the same bucket of money. it's not paying for any special amenities and they are just telling you that to make it seem

like this is some sort of reasonable fee when really its just a way for them to get extra money from the consumer. >> the american hotel and lodging association has defended the fees, and a full commission found only 6% of the airbnb areg this legislation, saying it's going beneficial to have one national standard for how hotel costs should be advertised. and hopefully, if the house passes this in a bipartisan manner, it potentially could fly through the senate and who knows, maybe could actually impact some of the summer travel coming up. andrew? >> emily, thank you. we can hope. >> here's my problem with that. if we're going to focus on things with no transparency and cost, do something that matters like health care costs. i know we agree on this. >> yes, we do agree on that. >> the idea that you can't figure out where you can get an mri, what the price differential is at different places, any number of tests, if you get pt

that's connected to a hospital it's one thing. >> the hoealth care lobby is clearly more powerful than the hotel lobby. >> when we come back, "the wall street journal" reporting former media executive edgar broffman jr. has expressed interest in buying national amusements. that's the company that controls paramount. more on that story in just a little bit. and later, council on foreign relations president emeritus richard haass will join us to talk abo tuthe shifting political winds across europe and much more. "squawk box" will be right back. . and using workday to put finance and h.r. on one platform. is it kinda does. you are not rock stars. (clears throat) okay. most of you are not rock stars. oooh. data driven insights, and large language models. oh, that's so rock roll. it is, right. he gets it. yeah.

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welcome back, everybody. former head of warner music, edgar broffman jr. expressing interest in a bid for paramount global. that is according to a report by "the wall street journal" saying broffman is looking to offer somewhere between $2 to 2.5 billion for national amusements. joining us right now is matt belloni, the puck founding partner. and matt, we know that the sky dance offer is real. it is -- is this a real offer? >> that's a very good question. we think it's real. and you know, bayne capital is involved here. and from everything i've heard, broncman, who is the executive

chairman of fubo, a digital streamer focused on sports channel. and my understanding is that fubo would play a role if this bid does go somewhere for national amusements, but this is all a backup to the sky dance deal, which is being pretty heavily negotiated and that falls through, then it perhaps opens the window here for one of these other suitors for national amusements. >> okay, this is interesting. that's a good way of zribi ingd it. this is not something that's going to knock out the sky dans offer. this is something that's there as a potential backup. you also heard steven paul putting together a $3 billion offer for national amusements. sky dans is offering $8 billion. and it's money that's going to go $2.3 billion for national amusements, which is the 77% controlling vote, the stakeholder in paramount, the rest of it would be going to the

other shareholders. this is a different deal, though. i mean, you get back to the question of, could you do this and not get in huge trouble with the other shareholders if you just buy out national amusements. what do you think? >> yeah, that's the pitch. and the money going to sherry redstone, the controlling shareholder, has come down a little bit, in that skydance negotiation, because of exactly what you said. they're trying to head off the shareholder lawsuits from the "b" shareholders and, you know, maybe this skydance deal will come to a resolution and they'll figure it out, but everything i have heard is that sherry redstone is not thrilled with this revised offer. she's now got these three ceos of paramount global, whispering in her ear saying, listen, if you've got to cut all of these costs and fire all of these people and change the trajectory of the business, well, we can do that and you can stay as the

controlling shareholder. so she's got a lot of choices to make here. and bronfman coming forward gives her another option just to say here, okay, okay, we'll figure out what to do with paramount global later, but th perhaps there's an interest just to sell the controlling interest in national amusements. she gets a title and then they figure out how to deal with paramount. >> i mean, that's a really interesting question. a deal that just takes out the voting, the highest voting shareholder doesn't seem fair. but at the same time, should that shareholder not be allowed to sell? this is going to wind up in the shareholder trouble with all of it. >> and the problem is, it doesn't address the very pressing issues that paramount global has. i mean, this is a company that, you know, depending on who you talk to, is sort of teetering and if this skydance deal falls apart, the stock price will

likely go way down, because this has been dragging on and on, and this is seen as sort of a way for, you know, for paramount global to have at least a path forward with a buyer like david ellison, who is the son of larry ellison, who potentially could infuse it with new energy, new money. they will still have to figure out what to do with these assets, but the argument goes to sherry, like, you'll have to figure that out anyways. why don't you do it yourself, or just sell out your national amusements stake, and then have someone else come in and figure out the paramount question. >> what do you think is the potential solution for the paramount question? is it something like a partnership with sky dance, the studio, does this fubo business sounds like it makes sense in any way, shape, or form. has anybody been able to figure this out? this is not just a paramount problem, this is an industry problem. >> absolutely. and this has been the elephant in the room since the beginning

of this negotiation, is nobody quite knows what to do with these linear television assets, which are throwing off the majority of the company's money, but are in secular decline and aren't getting better, so, in almost all of the scenarios right now, there will be a divestment. there will be a sale of some of these assets, you know, perhaps the cable channels, perhaps cbs goes to warner discovery, which has been desperately looking for a broadcast channel to beef up its carriage fees. perhaps, and that would be a way to do that without, you know, raising the ire of the government perhaps. there is a scenario where comcast has a joint venture for paramount plus, so that becomes part of an offering with peacock, and sort of takes paramount plus out of the purview of paramount global. there's a lot of different scenarios here. we're not privy to exactly what

is being pitched to sherry redstone. some version of a divestment, some version of cost cutting on a grand scale, that's all on the table right now. >> it's june 11th. do you think we have an answer in the next month? >> i think we will on the skydance element. i think at some point, the ellison people are, you know, put up or shut up here. they've been trying really hard to get this deal done. and if that doesn't work out, then we will go to plan "b," and we'll figure out how to get -- and sherry will have to figure out which of these other suitors to engage with. or say, you know what, we're going on our own. >> matt , it sounds like we nee to have you keep us on your speed dial as you hear things. >> no problem. it's the wildest deal i've ever seen. >> matt belloni, i have a feeling we'll be talking to you again soon. >> thanks. it's just after 8:00 a.m. on the east coast. and you are watching "squawk box" right here on cnbc. i'm becky quick along with joe

kernan and andrew ross sorkin. among today's top stories, gm shares are higher this morning. the automaker's board has approved a new $6 billion share buyback program. it's also raising its dividend by 33% to 12 cents a share. that stock up by 1.25%. shares of eli lilly also this morning. a panel of independent advisers to the fda recommending the company's alzheimer's drug paving the way for the treatment to receive approval in the u.s. later this year. eli lilly shares up by 2%. and one of tesla's longest-standing shareholders is backing elon musk' pay package. bloomberg reporting that scottish asset manager bailey gifford will vote for that package at thursday's shareholder meeting. bailey gifford was once tesla's second largest shareholder, just after musk, and it has held that stock for more than a decade. meantime, apple going all in on ai, rolling out new futures across its product line. our steve kovach was there for

the apple intelligence presentation. joins us this morning from san francisco. good morning. >> hey, good morning, andrew. before today, apple was considered behind on ai, and now it's largely caught up. apple showing off a slew of artificial intelligence features, that are now integrated across apple's operating systems, for iphone, ipad and mac. in typical apple marketing fashion, they're not calling it artificial intelligence, but apple intelligence. here's some of the highlights they announced. deeper voice controls for apps, that means you can tell your apps what to do in a natural language, it's also going to open up to third parties that can tap into the intelligence system. and the openai will be an optional feature. siri will prompt you if it thinks chatgpt can provide a better answer. don't need to make an account. and there's privacy. this is apple, after all.

biggest difference between apple's vision and other ai visions, lots of tasks handled on device. others will go to the cloud, which apple says will be done in a private fashion. plus, some fun stuff, like image and emoji creators that you can send in text messages and things like that. that's scratching the surface of everything that you announced, butthis is the key takeaway you need to listen to. these are largely catch-up features to what we've already s sign rivals microsoft do with its co-pilot assistant or samsung or google put into their smartphones as well. but what you really need to know, apple intelligence will only be available on newer mac models and ipad models, plus the iphone 15 pro or later, presumably, the iphone 16. if folks find these features compelling enough, this could spur more iphone upgrades. because at the end of the day, selling more iphones is what matters the most for apple, andrew. >> steve, i don't know if you can help us with the question we've been asking all morning,

which is the economics of its partnership with open ai. we've batted this one around, given the way so much of the, a i is going to work on device using apple's own models, but then, of course, if you're going to reach out and use open ai, it's a different story. we've talked about how google's paid for the privilege of being sort of the default choice, if you will, on safari, for search. in the future, we may very well have google gemini. but there's a lot of processing power. it's very expensive, every time you're effectively hitting the server to process your query and who's going to be paying for that. >> and that is pretty muchthe first question i asked apple yesterday, following the presentation. i got a little detail for you. they are not commenting on the financial agreement between openai, if there even is one, or what that looks like s. so who's paying who? we have no idea. is openai paying for access to these iphone users.

is apple paying openai on a per-query basis or something like that. we do know it's free. so there's no money from the user coming across. someone's paying someone. what i do know and i did get clarification on this, for most of those artificial intelligence features, like you said, that is running on apple's own language model. then if you -- there's an option to choose for the chatgpt stuff, and the future models, they've mentioned google is coming as well. that's going to run on actually run on the microsoft cloud. i got confirmation on that, andrew. this is good news for microsoft, because all of those queries running on the azure cloud is just more money going into microsoft. this is really interesting, if you're a microsoft investor, knowing that this chatgpt technology is going to be pushed out to the end of the year, a couple hundred million folks. that's good news. >> steve, i'm going to push back on that. because there's two pieces to this. just because there's queries on the microsoft cloud doesn't mean that there's economics to microsoft.

in fact, the truth is, there could be cost to microsoft. if, in fact, apple is not paying openai and there's a big question, that's why i was asking about sort of how this is all being arranged, if openai is not paying for this privilege and apple is not paying openai, it actually costs them to do this. >> right, exactly. >> and you could have made the argument that they were going to be able to train on this data from -- you said,thal have access to all of these phones. well, if they can't train on the data -- >> they're not going to have access to the phones though. >> -- it's unclear what the value of having all of these folks attached to this really are, unless you believe this is some kind of lead gen program to get people paying for chatgpt, the professional version, where other folks are paying. but effectively, that's still up in the air. >> we just don't know, andrew. >> just because microsoft is going to be processing all of these things, tlhere is a big cost to processing them.

>> someone's paying. someone's got to pay -- >> it could be microsoft is paying, though. >> it could be microsoft. and that would be horrible for them. >> that would be horrible. i would be surprised if that's the case, because just the way we know other openai services, let's just say on a smaller scale what openai works for, when you pay openai to use the paid version or even an enterprise comes in and starts using it, some of that money is going to microsoft. so it is confusing. and again, apple is not saying the nature of the partnership, openai is not saying, microsoft is not saying, of course. i'm sure it will come out eventually, but it's really hard to pick who's winning really in this partnership. i mean, apple thinks it's going to win, because these features will get people to buy more iphones or more macs or what have you, but we just don't know which way the money is going in this deal. and presumably, more deals. because we got google coming up next. we did confirm yesterday that google will be the next model offered in that system. but i do want to clarify, because there's so much

confusion, including among elon musk, this is a separate thing, this chatgpt element of it from what the apple intelligence part is. it's an optional thing, it will prompt you, the queries will come back saying this is from chatgpt, it's not from apple. that i can into account as well, andrew. >> zwris it just a link? basically a link to the app? >> no, let's say you're writing something in notes or writing an email, and you'll say, make my -- hopefully, it will do it on device, and you'll say, make it better, or you'll say, write me the email, and then it will say, would you like to do that with chatgpt? you'll press the chatgpt button and it will just do it in the app. >> but we can't figure out if this is something that's akin to the app store, where you have to pay them for everything -- >> but you're not paying -- >> but we don't know what the contract looks like behind -- >> that's what i was saying. when steve was saying, this is

automatically great for microsoft. it may be -- >> or a whole lot of traffic -- >> or it could be a lot of cost to microsoft. very unclear. >> let's check the futures before we talk markets with our next guest, futures right now have been weak for most of the morning, but swewe've seen new highs coming. many of the recent sessions. lori is head of u.s. executive markets. if i'm going to be intellectually honest. i like that when people say, can i be honest, it makes me think, what were you doing all those other things. but being intellectually honest, that means you're neutral, and that means you're more bullish than you are. your metrics bring you to a small value of somewhere between 5,100 and 5270 on the s&p for the end of the year and we're above that right now.

>> yeah, joe. i would say, over time, i think most of the investors, i would say, the people who like me, at least, would say that they think i'm intellectually honest. >> i think you are. i >> i try to be. and no one likes a neutral call. and i've been apologizing in my client meetings recently saying, i'm sorry this isn't more exciting, but this is just how i see it. and i think it's fair to say, i think you hit the nail on the head, joe, when i run through the numbers, if i take my earnings number, i can get to that 5,100 based on the p\e assumption, which is based on the consensus view of fed, inflation and ten-year yields, where they're going at year end. and my earnings numbers are admittedly a little bit below consensus. i've not yet updated for this last reporting season. there are still a few companies trickling in. i've had a more pessiosessimistw on margins. that's where i can get you close to 5,300. layer it in the with the same p\e assumption, and all of those

consensus rate inflation. and that's the range. we try to tell people, our valuation model is a compass, not a gps, it's a rough guide. but even with that, i run through all of these scenarios and if you look at the full version of my report, we have all of these stress tests and these are where those consensus views could go wrong. and i could come up with systemically lower numbers for the s&p. so i have other models i look at, this is one of five things in our tool belt. but at the same time, you know, i would be lying if i could sit here and tell you that i can make the math work really easily to come up with a higher number, and i just can't get there right now. >> and even in 2025, we don't know, you don't know. that's why you point out, it's even foggier in 2025. you don't have that -- a lot of people fall back on, so, you know, 12%, earnings per share gain next year, puts us at "x," but we don't really know. we don't know anything about next year. >> right, and i'll tell you the one data point that we do know

is that if you look at consensus gdp forecast, this is where all the economists around the street think gdp is going to be next year in real terms, it's been tracking about 1.7%. that stat for 2024 is tracking around 2.4. so based on what the economics community knows now, they think that growth is going to slow. not into a recession, but just in something that we would term as economic purgatory. i'm an equity market strategist. stocks typically go down in that environment and if you look at how stocks perform the year prior to a zero to 2% gdp range, it's in the single digits. that's the one data point that's out there, and it doesn't look so pretty right now. >> it's not going to be helped by -- if it is 1.7, that gives the fed some leeway, i guess, depending on inflation. but that's not going to save the market. >> so, you know, we have a 2.6 number for pce baked into that

current, you know, consensus view assumption. that's what's getting to the 21.5 trailing p\e multiple at the end of the day. that consensus view also assumes one to two fed cuts and. that seems like a pretty rosy view. i was listening to my rate strategist this morning and his fed preview for tomorrow. basically, he says even if cpi comes in a little bit cooler than expected and we have a really good day on cpi number, he said, it's still going tyke time for the fed to feel like inflation is on the mend. he's still looking for a december cut up-to-the-in time. and you know, basically, he says the clock has been reset after that string of negative cpi prints that we saw in the beginning of the year. and i don't make the fed call, i don't make the inflation call, but i think there's a lot of wisdom in the way he's thinking about it right now. >> yeah, you are, you're an exhausted bull wing. i see it. that's one of the first things you said, and you just described that. and people are still pretty complacent. i don't think we're seeing much

bearishness built up yet. sentiment, probably, isn't something that could soften the blow, either. but i guess we've got to run, lori. thank you for being honest this time. that's great. no, you are every time. i just like that, "can i be honest with you, lori"? >> yes. >> that makes me feel bad. thank you. good to have you. >> okay. coming up, the political winds of change blowing across europe. we'll get reaction from council on foreign relations president emeritus richard haass is here. and later, has capitalism lost its way? rockefeller international chairman ruchir sharma will be out with a new book exploring that very notion. we'll talk to him in the next half hour right here on "squawk box." don't go away.

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welcome back to "squawk box" this morning. french bond yields jumping to their highest level since november, after french president emanuel maccarrone saying he would not resign, whatever the

results of the french parliamentary elections. he began his second five-year term in 2022, but his administration has been under increasing pressure since a far-right surge in sunday's eu elections. joining us right now is council on foreign relations, president eher the u.s., richard haas. a senior council at center view partners. it's great to have him at the table to help us break down what has just happened over the last week and what it means. zb zb >> interesting weeks. after the elections, you are clearly -- mr. macron, his party will get hammered. >> if you had to write an essay for foreign affairs right now, what would your essay say about the takeaways from just what hap happened? >> it would show, one, it's a really bad time to be an incumbent. european incumbents pay an additional price for low economic growth prolonged. high levels of immigration, and overregulation. you add all of that up, indep incumbents are going to get hit everywhere.

>> what does that say about the politics of europe, what does it say about the politics here? >> what its say about the politics here, europe is good at renovating, not so good at growing. we're seeing the effects of that. and open borders, relatively open borders over years have also really hurt. look, anytime the incumbents don't deliver, they pay a political price. that's the message here. by the way, it's a message elsewhere. we saw it in argentina, in india. we're seeing it everywhere around the world. if you're the incumbent and people don't see measurable improvements in their living standards, they're not confident about thefuture, you're not -- >> what does it say to all of these businesses that look to france and say, i'm going to invest there or invest in india? >> you have to think twice. as it moves to the right, you're looking at a really large welfare state. what's interesting now, right and left overlap in some areas, in europe, as well as here. no one is in favor of small

government. we're seeing it here and there. you have to think about it. banking regulation has been fairly heavy in europe and likely to go that way. businesses will have to think twice. you're not going to have robust growth rates. india, a lot of people are looking at us as an alternative to china, but it doesn't quite emerge as, how would i put it, separate and equal? there's going to be some frustration there. >> in terms of what it means here. you pointed out europe has a slower economy, better at regulating, not so good at innovating, but there's a lot of discontent here when you look at inflation and wage growth that that intel has not recently kept up with inflation. does that play out the same way? how do you see that? >> it's clearly a headwind for joe biden. that no matter what the objective measures are and certain things about economic growth and levels of employment, people don't feel better, and they're not confident they're going to be feeling better down the road. so, yeah, he faces real political headwinds over that, not to mention the border, not to mention his age.

so you have to add these things up. and i would say what just happened in europe is a real warning sign for democrats. >> there's no doubt, though, that one takeaway from europe is that the green's got absolutely hammered. and green in some respects means the industrialization or going to russia for your natural gas, however you want to see -- closing down nuclear reactors. all of it converging with ai needs and grid need, which are going to be exploding. we'll need energy, transition is not going well, people are chafing at what's necessary to reach those aggressive goals that europe embraced more than we have here. >> there's a real listen in this, that energy transitions got out of sync, and people were moving against anything carbon related and traditional fuel related before they could dial up the other side. and people got caught. and that's the lesson. >> wasn't it obvious? >> well, yeah, i would have thought it was pretty obvious.

>> we spent 12 trillion -- but we're still at 80% fossil fuels. >> yeah, and we can look at the mix of fossil fuels. less coal. >> they don't do that. >> but you've got to do that. by the way, this transition, we're not talking years, we're talking multiple decades. and that's what people have to internalize. >> what do you tell all of y your -- now that you're a big investment banker -- >> thank you. >> -- what do you tell your clients about what you're doing and what to do about it? >> for any business, you have to assume it's a much more turbulent world. we'll look back, andrew, at the last couple of decades or more, as almost a golden age of geopolitical -- >> so you're just very pessimistic about the future? >> i'm worried about the reemergence of geopolitics, the absence of trade over regulation. what i feel positive about, though, is technology. think about it, we got through

the covid technology because of two technologies. mrna technologies and zoom. zoom is probably the underappreciated technology there. i think we'll get through the climate thing because of technology. that is the hope. and a lot of issues, that's what i'm positive about. >> but if you're talking about the breakdown of the world order -- >> there's not going to be a world president. >> no, no -- >> davos is not at the center of things. >> look, if you look at the top -- i don't know, fortune 50, fortune 100, fortune 250 companies in america, they're effectively multi-national companies. that is the business. and if you're saying, that's not the business with the future or that's a much more complicated business, that's a thing that i imagine most investors don't think enough about. >> true, because it doesn't plug into models, but that's the reality. you have to assume that

u.s./china ties are going to remain defined by friction, more, notl less restrictive. the global trade is not going to come back. we're looking in this country at more protection and more industrial planning. whether it's trump or biden. the pent lumbar has swung, the economic model has changed. the middle east is not poised on the edge of stability. europe is not poised on the edge of stability. you have to assume when you look around the world, it's a less-benign environment for business than looking backwards. >> now through tariffs into the mix, too. >> tariffs are in the mix. people are going to reciprocate and they're going finflationary. i actually think, any look down the road. this is more your department than mine, but i think inf inflationary pressures will grow. if we close down immigration, we get reciprocal tariffs elsewhere, how is this not going f inflationary. >> richard haass -- such a sunny

day! >> i feel badly having come here -- >> you didn't tell us what you tell your clients. leave a voice mail. i'll call you at the turn. >> i'm really disappointed we didn't talk about the open. >> he'll talk about the tennis open. >> i'm happy to talk about tennis. we can talk about what just happened in france, the french open open, i love tennis. >> if scotty scheffler wins, even more than the tiger slam, right? >> it would be up there. >> and you got to shake jack's hand? >> mr. nic nichols. >> when we come back, the white house may have found a new leader for the fdic. we've got stthat story, straigh ahead. plus, the results of cnbc's fed survey and wt cldhaitou mean in terms of the rise of the hawks. "squawk box" will be right back.

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welcome back to "squawk box" on cnbc. the futures a little worse, down 141 points now. actually, yeah, 140 on the dow. you can see the nasdaq's lower as well. bitcoin down about 4%. oh, we're going to look at that in a second. let's look at treasuries first. i haven't seen a lot of action in treasuries. that can change in the next couple of days with the fed, but the ten-year is at about 443, and haven't looked at bitcoin recently, but it was below 70 and threatening to break 67. it now has, it's down 4%, it's 66,800. >> it has secured 600 million euros in funding. that would bring its valuation to $6 billion. being led by general catalyst and jason horowitz, also backing the company. some corporate backers, as well, nvidia, microsoft, salesforce, samsung, and ibm. so another player on the scene,

becky. >> coming up, we've got the hawks versus the doves. we will have the results of the latest cnbc fed survey, as chairman jay powell kicks off the central bank's two-day policy meeting. and we will also talk to former atlanta fed president, dennis lockhart, about the fed's potential rate path, the upcoming inflation reports, and e atofs ony.thste iecom "squawk box" will be right back. at corient, wealth management begins and ends with you. we believe the more personal the solution, the more powerful the result. we treat your goals as our own.

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the fed's two-day policy meeting kicks off today with a decision coming tomorrow afternoon. this morning, we have the results of the cnbc fed survey, and for that, we turn to our senior economics reporter, steve liesman. hello again, steve. >> hey, good morning, becky! respondents to the cnbc fed survey growing aed by more hawkish since the last meeting, whittling down the probabilities for rate cuts this year and extending how long the fed is expected to be reducing its balance sheet. here are the numbers, 46% probability for september. 62% for december, both are down from the may survey. both are a bit below market pricing, as well. 5.01. that's the average year-end funds rate. that is up a few points. and march 2025, that's when the fed is expected to end quantitative tightening, in the prior survey, it was january

2025. peter boockvar, he writes in, nothing in the recent data we've seen should give powell confidence that it's time to cut rates, and i don't think he's going to be influenced by other central bankers that have already cut. more on that in just a second. okay, so here's the outlook for the funds rate, 5.4 is the current one, goes down to 5 at the end of this year. 4.1 next year with the long run, 3.3. you can see the fed expected to be above the neutral rate for quite some time. at the beginning of the year, the outlook for 2025 was about 50 basis points lower. even why this outlook has turned more hawkish, the group has more concerns from the dovish side. take a look here. what's the most likely scenario? the fed cuts too late, say 66% of our respondents. 21% say it cuts too soon, that's the most likely scenario. and just 14% thinks fed gets it just right. mike engle, he writes in and says, there are growing signs u.s. economic growth is

beginning to weaken, perhaps as supply shortages across industries are finally dissipating, providing more two-sided risks to the economy. still, respondents don't think the fed should cut rates just because the real funds rate has gotten more restrictive with the fallen inflation, but they think the ecb did the right thing by cutting interest rates for just that reason. and of course, becky, we have that cpi number tomorrow morning, which could actually influence the outcome of the meeting tomorrow. >> you think? so they'll be looking at that last-minute data and it could potentially push them one direction or the other? >> i think you can't ignore it, if you're a data-dependent fed. if you're a data-dependent fed and you think the risks are more on the inflation side and you get an inflation report that's hotter or weaker, i will say, i am looking at the cleveland fed index, and it's a little bit lighter than the market expectation. cleveland does this now-casting on the inflation numbers for the cpi, and there's 0.08 on the headline, and 0.3 on the core.

>> i might run for office, because i'm going to flip-flop again, steve. >> oh, no! >> now i think we should cut. >> why? >> after talking to malpass. how much of inflation is mortgage rates and small businesses that's too expensive to start anything and high interest rates can be inflationary. >> so now you're a real estate developer? >> i don't know. i'm flip-flopping. i think there's something to increasing supply that high rates don't necessarily solve the problem that you're trying to solve with inflation. >> but it's the only tool they have. >> but sometimes it's actually -- >> you know, show -- >> it can be counterproductive, steve. >> it just warms my heart and i feel like after 20 years, i'm making some progress. >> so you see this -- >> getting you to see the one hand and the other hand. >> that's jon fortt -- >> this is basic supply side economics for you. >> i am a supply-sider.

the difference between supply-sider is i'm a supply and demand-sider. i see both sides of that. but let me say a very quick word on what you just said. there are some inflationary aspects between the fed raising rates. one of them we don't talk a lot about is the interest income. and also, what about the cola increase to seniors a couple of years ago, they got a huge increase. >> well, they got a huge increase from nothing and if you're looking at finally being a saver who's making some money on this, that's just going back to where we were before the pandemic and before the great recession. okay, back to good old days. >> but becky, weren't you talking 6:00 a.m. -- at 6:00 a.m. about liquidity in the market? >> yes, i can talk out of both sides of my mouth, too. >> there you go! we have the whole crowd talking that way. >> we're way behind the curve on cutting. >> we should cut tomorrow. >> joe, i have a -- i have a third scenario here that i want to -- that i've been talking about, which is, i don't think

the fed needs to start a cutting process. what i do believe it could do is take a little bit off the top. i really think laguard might have showed the way here, which is, if you notice, she cut by 25, and the market didn't race to price in, you know, 20 rate cuts down the road. she did -- >> but that's because the ecb is not the fed. if the fed could do that -- look, i think people figure, ecb will do this and wait and' what the fed does next. i'm not sure -- >> so your argument is that the fed is sitting on top of is the jockey of a thoroughbred racehorse and the ecb is sitting on top of a nag? >> not at all! but i think if you look, if the fed does it next, it's concerted central bank intervention around the globe. you have the bank of canada, the ecb, the fed piling on, and i

think that changes the whole dynamic when you have friction between what the ecb is doing and the fed, that creates a little bit of a different scenario in terms of how the markets will interpret it. >> flopping. >> that'sinteresting. dynamic global bank thinking. i like that. >> i might go back -- >> steve's right. i was saying something else at 6:00. anyway, steve, thank you for kb giving us a whole lot to talk about. for more on what to expect, we'll ask someone who has had to make decisions like this. dennis lockhart is the former atlanta fed president who's a professor with the sam nunn school of international affairs at georgia tech. dennis, you tell us, what would you be thinking at this point? how would you walk into this with all the same information that the rest of us see? >> first, let me talk a little bit about tomorrow morning's cpi print. it should affect decision making, but in my experience, when people enter the room, they're sort of locked into their positions. and it would take a pretty

startling cpi report to change the basic momentum of the meeting, i think. so that's one point. what i would be thinking is that we've been in a period for a while with inflation data kind of going sideways. therefore, somewhat ambiguous. so i think the theme of remaining patient and continuing to look for validation that the two-path is disinflation towards 2%, that's wing, the positioning. so this is likely to be on balance a boring meeting. >> boring except that there are so many other things that are happening. i think what you just said is what we heard from peter boockvar. steve was just telling us what he had to say about how if you're looking -- there's nothing in recent data that should give powell any confidence that it's time to cut, but is there any thought that the ecb and the bank of canada's actions do add a little

pressure or not? >> there's always a consideration, the overall level of the cost of money globally is an important factor in the global economy, but because we sit on an economy here that is so large and so dominant and relatively speaking, more closed than open compared to some of the other economies around the world, i just don't think what the other central banks are doing is going to be that much of a consideration at the table. >> what about the malpass argument? david malpass was here an hour ago and said, look, this is a situation you can't really fix with higher rates. that this is a splish, we need to be more focused on that and what the fed is doing not only doesn't work, but adds to the inflationary picture, because higher rates do add cost in a lot of different places in the economy? >> well, if you want to predict the path of policy, i think we kind of have to put ourselves

into the head of jay powell and the committee, and they believe that monetary powell policy and high rates eventually will achieve the objective. there's been no abandonment of that conviction, so i think they will continue to use the tool they have, which is the level of the interest rate to rye to slow the economy and bring inflation do down. >> let me ask what you think about this? we talked earlier today about how a building was sold here in manhattan at a 67% discount by what was paid bay related company's unit, something like 2018, they paid over $150 million. they just sold it for less than $50 million. that's the type of pain that you see spread out in places. is that the type of pain we need to see more of before the fed's tool can really work to bring down the economy?

>> i don't think we need to see that kind of pain, although there could be a great deal of pain related to commercial real estate coming down the road in the next two years, and everyone's quite well aware of that. but i think principally, what we need to see is a more and more cautious consumer, who is spending less or trading down in they're spending, and just basically a more mute d economy with pricing power, not really very strong on the part of price setters. >> well, based on what we heard from bank of america, who looks at 69 million accounts for the consumers and small businesses, that's not what they saw last month. they continued to see consumer sp spend, even younger consumers leading the way, even if it meant they were taking out more loans and credit card debt. >> i'm not saying it's happening, i'm saying that's what we would probably want to see -- >> so that means it's a ways off? >> i think the committee simply

has to be patient with this until they begin to see some of that evidence. >> dennis, thank you for your patience with us, explaining it to us. >> great conversation earlier. i loved it. >> great to see you. >> it's like a jon fortt thing. >> i don't know if i'm flipping or flopping. >> somebody's got "squawk box" t-shirts on right behind you. >> oh, wow! i like that. where can we get those? coming up, we're going tuk to rockefeller international chairman ruchir sharma about his new book which is "clickbait titled: what went wrong with capitalism," because that's not what he's saying at all. sq"squawk box" will be right ba.

joining us now, future nobel laureate, i think, after this -- maybe not, but ruchir sharma is here, rockefeller international chairman and breakout capital

founder and cio. we just had a moment, ruchir, i'm so pleased, his new book is out today, "what went wrong with capitalism," the whole thrust of this book basically is that capitalism has been, i guess, it's been ruined by big government. and we don't need capitalism 2.0 or some type of woke capitalism, we need to return to real capitalism, because the government spending deficits, regulations, have spoiled capitalism. and the reason that you name it that is you know no one c's goi to read it -- >> you're projecting! >> no one's going to read it if you don't -- you can preach to the choir, you want to bring in people that hate capitalism and show them what the real problem is. >> yes, exactly. and so far, that seems to be succeeding. today is my launch date. but the early buzz words i can make out is this. a lot of people have spoken about how government spending is out of control, how budget

deficits are out of control. what i try to show in this book is it's a suite of government habits. if you look at relagulations, w introduced now, america, 3,000 new regulations a year. >> and don't get rid of any of the old one. >> in the last 20 years, we've gotten rid of 20 in total. 3,000 every year, we've gotten rid of 20. then we become a bailout nation. it's a history i've learned when researching this book. back in the 1950s, '60s, '70s, right up until the 1980s, the concept of the american government bailingout a private sector company was heretical. it was, we don't do this. then the first big bailout in 1984, of continental illinois. and after that, it's been a succession where you get progressively bigger and bigger bailouts, where now, it's become almost analogous to our culture of pain management. you get the slightest pain, you give them opiate. so then you have an opiate crisis as a result. similar in the economy now, the risk has become socialized, which is that when things are

going well -- things on the upside, let them run. the moment there's the slightest flutter or something is going wrong, we're going to intervene and the government has your back. so this is not what capitalism was really meant to be. it's a suite of government habits. on your show, you have people focused just on government spending or even the fed, spending or even the fed, in terms of the asymmetry of the fed. the book tries to show the last 100 years how capitalism has progressed to this very disported form of what we have today. >> there is something for everyone in this. this is not just government's fault. this is big corporations that want bailouts. >> yes. >> but they ruin capitalism, too. we have problems from government and corporatism -- >> the problem is -- it's a cliche. the gains have been privatized, the losses have been socialized. >> the moral of the story remains that if you can -- they're both at fault,

governments and corporations, but capitalism in its purest form is the way we need to go. >> i'm not sure you can say that either because you also talk about competition. >> yes, but i say in the book -- >> that there's not enough competition. that goes to the government part. >> and that hurts capitalism. >> but you need government to do that, maybe. >> the risks, andrew, tent to be business. who are the people able to gain the regulations, to pay for the entire regulatory environment? it's principally big business. the cost today on wall street, setting up a fund if you're a small person is ten times larger than 20 years ago. >> so you can never get it back. >> exactly. you all the big hedge funds out there able to do it. you have enormous growth there, but for anyone new looking the do this, it's become very tough. that's a microcosm. >> this is an age-old problem. the lobbyists and everybody who

can get a congressman or congresswoman to listen to them. >> i want to add one piece of context or nuance to that. that is true in the world of finance. it's not true in so many other worlds. i would argue that now we have this backbone called the internet and the technology that anybody can use a cloud and sell product. the idea that somehow the incumbents are always going to win, i think there's a lot of truth to that in certain cases of the biggest. but in terms of the amount of small businesses that could come online over the last 20 years as a function of technology is a remarkable thing, no? >> it shows over the last 20 years up to the point of the pandemic the number of new startups in this country is declining. economic and social mobility have declined. the probability of you being a billionaire and becoming en trched has gone up 40%. that's why capitalism, as i argue in the book, is not working for the average person.

therefore, in america today, most young people when they're polled say they want socialism, not capitalism. what they don't realize is what you have to do is not capitalism the way it was meant to be. this has become socialism for everyone. we're at risk of being socialized. that's the point in the book. it's the suite of government habits. not going down the part where we're at 6% budget deficit. >> how much has government captured? >> a lot. lawyers in this country, america always has the highest number of per capita lawyers in the world. the last 20-30 years the growth on that has gone parabolic. who are the biggiest lobbyists today in washington? tech companies. >> the reason i'm asking you these questions is because from a party perspective, political party perspective, who do you

think is pushing back the most and who do you think is pushing back the least? >> who is going to save us? if corporations are too powerful and government is too powerful, who can stand up for pure capitalism? who can do that. >> today in america, 70% of americans are saying that they want major economic change and the polling language used -- >> as seen in europe. >> in europe it's even higher because they have an even more distorted version of capitalism than we do. yet, as we go around the world -- i offer examples in the book from switzerland, taiwan, vietnam. to give people more economic freedom, people do much better, societies tend to be happier. >> how do we get back to that? >> until unfortunately that we get a crisis and the government is out of the its ability to rescue and to spend, there will be no turn. it's more of the same. >> until there's an absolute

complete collapse basically? >> until the ability of the government to do this, because what i show in the book is progressively every decade the habits have gotten worse. as i said, we never bailed out companies into the 1980s in terms of the stock market reaction that every time the stock market is flying, it's fine. >> you're talking about great depression? >> no. i'm trying to say that something needs to be able to get people to course correct which is for now we have the sort of attitude which is very true, the biden administration everything is great. why do we need to do anything. >> the great financial crisis. that didn't do it. then we had a global pandemic. that didn't do it. that pretty much leaves a nuclear war. >> which is maybe coming, too, with putin and everything else. >> i'm trying to highlight it here in terms of, as i said, the first step to the cure is diagnose the problem.

a lot of people say we need more intervention to fix these problems, more intervention to fix inequality. i'm saying you got into all this mess with capitalism because of the way you've been running government for the last 30-40 years. the road to hell is paved with good intentions. >> i'm just telling you, one party is paving us wh ita hell of a lot more good intentions than the other. thank you, ruchir. "squawk box" will be right back. (vo) what does it mean to be rich? maybe rich is less about reaching a magic number... and more about discovering magic.

i was three months old when it started. i was six years old. they said, "don't tell anyone." i needed help. they took pictures and videos. the images of me have been found over 36,000 times. they're on icloud now. i just want them gone. i think about the pictures and the videos a lot. the abusers who watch them. save them. or share them on icloud. apple could help us. but they don't. people couldn't see my potential. so i had to show them. i've run this place for 20 years, but i still need to prove that i'm more than what you see on paper. today i'm the ceo of my own company. it's the way my mind works.

i have a very mechanical brain. why are we not rethinking this? i am more... i'm more than who i am on paper. check out shares of gm. they're moving higher this morning on word that the board approved a new $6 billion buyout plan. earlier we also mentioned the dividend hike. that was not new news, that movement today, the stock is up by 1.5%. that's because of the $6 billion buyback. let's take a final check on the markets before we hand it over to our friends on "squawk on the street." take a look at the knew tours right now. red arrows, the dow off about 146 points, nasdaq down about 47, 48 points, s&p 500 off about 12 points.

ten-year note sitting at 4.47. the two-year at 4.847. in the energy complex, oil, wti crude, you can buy it by the barrel, 77.69. >> bitcoin down 4%. >> it is down about 4%. make sure you join us tomorrow. "squawk on the street" begins right now. ♪ good tuesday morning. welcome to "squawk on the street." i'm carl quintanilla with jim cramer and david faber at the new york stock exchange. monday's closing high for s&p, nasdaq. the fed meeting begins today. the market shifts its focus from tech to the macro. our roadmap begins with apple joining the ai arms frenzy. big potential boost to the tech giant's product cycle, but is it too late to the game? >> el lie lilly's alzheimer's drug get