breaking overnight again. china, chinese tech stocks, ev stocks as well drop the fear a live report from beijing. and house democrats set to propose a 26.5% corporate tax rate and stunner in flushing meadows. medvedev defeats djokovic. it is monday, september 13th, 2021 "squawk box" begins right now. good morning welcome to "squawk box" here on cnbc i'm becky quick along with joe kernen and andrew ross sorkin. if you are looking at things, it is the worst week we have seen for the dow since june

same with the s&p. nasdaq with the worst week since may. this morning, there are strong green arrows across the board. dow futures up 181 last week, dow down 2.1% it is 2.9% from the all-time high we look at the declines. nasdaq down 1.6% last week s&p off 1.7% dow futures up 181 points. s&p up 21. nasdaq up pby 63. the treasury the 10-year is 1.33% we are continuing to watch the yields which have moved slightly in recent weeks. andrew. we have a couple of stories to tell you about. perhaps the biggest is house democrats set to propose a 26.5% corporate tax rate the hike from 21%. the top individual rate would go to 39.6%

rate on capital gains jumps to 25%. the proposal includes 3% surtax on individual income above $5 million. tax hikes are part of the plan to pay for the budget bill we will talk about this with mick mulvaney in the next half hour between the obamacare surcharges and the $5 million surcharge, that is 46% before you hit state? >> the surtax kicks in after $5 million. >> it would be a marginal rate >> right >> most viewers are thinking i don't have this problem. why am i listening right? except a couple of our own >> plenty of viewers that worry about that if anybody has them. >> they are watching the show. if they are out there.

the other big story this morning comes out of china almost like an annuity for us if you are in the business world. alibaba shares dropping following the report that said that china wants to break up ant group's alipay jack ma's company ordered to separate the companies they want a separate app for the loan business. the report is alipay is forced to turnover all data used in loan processing to a new credit scoring joint venture partly owned by the state alibaba is ant's affiliate group. and stocks are feeling the pressure nobody knows what is next after the government ordered the companies to stop blocking links to each other's web sites.

mine meanwhile, the electric vehicles are under pressure chinese regulators say there are too many ev companies and looking to break them up and soho china shares drop after the takeover deal by blackstone fell through. more coming up on "squawk. wall street looking to start the week on the turn around note the dow and s&p coming off five straight sessions of losses. we will talk why that is working for investors. as we head to break, check out the biggest pre-market movers stay tuned you are watching "squawk box" on cnbc >> announcer: this cnbc program is sponsored by baird.

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welcome back to "squawk box" everybody. happy monday morning you are seeing a lot of green arrows futures are indicated up dow indicated up over 200 points s&p futures up 23 and nasdaq up 71 let's talk about ideas of what may be working nfor investors.

joining us is victoria fernandez. also kevin nicholson who is global fixed income at rfrfront i ri riverfront investment. kevin, andrew mentioned the highlights of that going back to the highest tax rate of 39.7%. not a huge surprise there. what do you think of the immediate plans you are hearing? >> i think overall the market will react to this pretty negatively you know, that's what drove the sentiment last week. you saw the market get frustrated and concerned that inflation was picking up the economy was slowing. and taxes were going to be an issue as washington tried to pass this bill

i think companies are resilient. they plan well and adapt to the playing field they are given i think at the end of the day, we will see the stock market continue to rally once we get through the news i think we will be range bound until we get through the issues. >> you said range bound. that doesn't mean you are expecting any big pull back? 5% 10%? >> no, i'm not i expect by the end of the year we will be higher. we have gone ten months so far and we haven't seen a 5% pull back on the s&p. as you mentioned, we are about 2.9% below the all-time high on the s&p. i think what we're seeing is a stop and go type of economy because of the delta variant and the headlines we have.

overall, i think we will ultimately end the year higher. >> victoria, how about you i don't want to call it a swoon. that is overstating it you saw hesitation from investors. do you think that continues and what do you think about the taxes? >> i think you will see choppiness from now until the end of the year and first quarter of next year because of the uncertainty of what is going on in regards to the issues with inflation and labor and delta variant. all of those issues. what is supporting the economy in our view is, one, the consumer, and, two, corporate earnings which has been strong you look at taxes to go higher on the individual and corporate side, i think that will give the market a little bit of jitters and cause choppiness the rest of the year and give the pull back. the 5% pull back we haven't had

and give an opportunity to buy the dip. maybe we see that this morning as people prepare for the week with futures moving higher. >> let's talk about things you both like. you both do have actionable items. kevin, you like u.s. stocks over international. why is that? >> because i think coming in to the pandemic, the u.s. was better prepared. europe and international markets had been behind the curve as far as stimulus starting out earnings have been stronger in the u.s. relative to the rest of the world. right now, consumer discretionary. that has done well over the last month. last week, it was the best performing sector. no sector was good last week all sectors were down. we like consumer discretionary

we believe the consumer is in a good place to de-leverage. they were able to save during the pandemic we like software and technology. technology has been one of the steadfast areas that has done fairly well this year. even though you had moments of technology having pull backs overall, these were the two places we really like in our portfolios right now >> victoria, i know you have specific stocks you like kevin likes consumer discretionary. you like tjx is that the same process >> a similar thought process really, kevin mentioned the tech names doing really well. we agree we believe you should hold them in the portfolio we trend the names to fund purchases on the cyclical side to balance out the portfolio a little bit tjx is one of those. you have an opportunity as the

economy reopens and people are out shopping that gives you an opportunity. docusign is another one. we have never been one to like the pure reopening trade if trends developed over this time period that will continue, that is a good opportunity docusign is one of those and credit cards as well mastercard and visa which is behind the scenes with the payment features or capital one. that is a newer purchase for us which is tied to the consumer, which kevin said has been de-leveraging. they have the opportunity to put more on the credit cards those are great opportunities going forward. >> some of the financials have struggled recently capital one is looking at it from the credit remperspective. kevin, the same thing. >> we think rates are going to

trend higher like the equity markets. it will do it at a pace that the equity market can digest if everything aligns properly, jobs continue to do well and people go back to work and delta cases trend down which we have seen in the hardest hitstates. technical will tell you we get back to 145 on the 10-year from there, the next is 160 resistance we are not back where we were in march. 175 or 177 level we will slowly get there >> do you think the same, kevin? especially because we saw producer prices that were strong last week. we are looking for consumer prices this week >> becky, i'm in agreement with victoria i believe by the end of the year we will be above 1.5 when the fed starts to taper, that will get us there however, until we get to that

point, i think we are going to be between that 130 to 145 area. 145 is where the overhead resistance is in the bond market pertaining to yields i think we are going to probably have to test that a couple of times before we break to a higher level as far as interest rates are concerned. >> kevin, victoria, good to see you. thanks for your time >> thank you >> my pleasure we have a deal, becky, crossing the wires on monday morning. consumer credit reporting company transunion buying neustar for $3.1 billion we should tell you transunion ceo will join us live, chris cartwright 6:45 a.m. eastern time coming up, this morning's headlines on the fight of covid and the update on those under

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welcome back to "squawk box. time for executive edge. novak djokovic was one win away from an elusive calendar grand slam it did not happen. medvedev won the crown it is his first career grand slam he's young kind of young. 25 on saturday, emma radacanu

became the first champion for the women's title. she didn't drop a set and she was a qualifier. that was phenomenal. for djokovic, he played 17 hours and 26 minutes in his previous six matches and medvedev had not played a top opponent. djokovic's match was a five se setter he had to dig deep he didn't have his legs. i said medvedev is number two. the second greatest tennis player in the world. we expect djokovic to do it again and again. you have to win those points

this guy doesn't want you. he is not a machine. he is a human. it was heartbreaking i don't think he will have another -- laver is so cool. he is there. sorry. obviously, at 34, novak, will with he win 24 you could see his legs i watched the whole thing. >> you were there? i thought i saw pictures of you there. >> i was there a week ago saturday. >> not yesterday during the course of the open. >> i saw barty get beat by the american she was tired. his legs he didn't have his legs. the shots he normally would hit. med medved's serve >> you have a good chance.

that's why novak's comeback attempt would not happen you are spotting the guy two already. he is 6'6" you heard patrick mcenroe say you call a basketball player who is 6'2", but plays like he is 6'6" he is 6'6" and playing like he is 6'2". >> i talk about the play. >> he broke him. kn novak broke his racket >> my son said they should kick him out. end the game. >> fined for that. he is not rope-a-doping. >> he is putting his heart and soul >> he would not do that if he wasn't worried it is better than the stupid nfl games. >> lost, did you >> oh, my gosh

pain i upped my bet betting $20 on some of the games. >> oh, my gosh stop we will talk another game. a different kind of game gaming epic games officially appealing the ruling over the weekend that apple's app store is not a mon monopoly judge ordered to change the set up, but rejected the tech giant was running a monopoly we talked about this case now for months i beg the argument. >> i like your take on twitter >> i made the argument that the company was a monopoly the judge agrees it is popular to say apple is a monopoly the judge said it is not i would argue, epic lost across the board. it was almost -- >> the stock was down.

>> and their reaction to it. >> the reaction suggests they were unhappy with it however, there is one major piece which i think, frankly, the popular press is holding on to which is the judge did rule effectively they are anti-competitive not using the sherman act, but california law. the cartwright law you can say anything is unfair she is now saying they have to remove this piece of text in the agreement with developers that says you can't have a button or external link out or anything else language effectively telling you that you can go buy coins or other kinds of electronic goods on other platforms. how that gets implemented when

you don't have a button -- >> it is funny >> a big debate what this means. is she effectively saying you have to have other payment processing there to press the button >> there you go. you are capable. >> she is saying that language is just going to have to go away this is all going to get litigated. it will dogo to appeals court. most federal judges hate state laws that contradict federal laws if this goes to the supreme court, a conservative court will take a california law to apply to the rest of the country that may be considered unconstitutional this is so far from being over that's my input. >> the point i thought was smart that i did not see in other places is the idea of a state law. will federal judges say we can't take that in a broader context >> the stock fell 3% because of

the component. the question is what happens in the next 90 days does the judge give them more time to figure out the implementation judges, by the way, appellate judges really hate solutions that are opposed by other judges typically because nobody is clear which solution they like it is very interesting to see what happens next. >> fair analysis very good and quick analysis of everything kudos. well done. >> it is like apple or google. like the peter thiel you are great. for me, apple is a monopoly. my entire life is in the ecosystem. >> you have a choice you can buy android. >> it is the stickiness. >> it is like not a monopoly, it might as well be

>> it is a serious pain if you think about switching everything in the ecosystem and moving it somewhere else >> apple has skipped numbers for their phone. >> they skipped. >> i think ten >> i got married on the 13th very lucky they are doing the apple 13. buildings that don't have a 13th floor. >> 13 was my soccer number i was always 13. >> good number 7, i don't trust >> odd >> i played soccer >> i like 7. >> soccer. second graders. covid news this is important. we will continue to follow the timeline for possible approval of the pfizer vaccine for children ages 5 to 11. the comments this weekend from gottlieb and fauci that it could come by the end of october

that could be weeks earlier than previously reported. kids could be vaccinated before the holidays we will continue to watch it. in the meantime, overseas, the uk is expected to pull back from plans to call for proof of vaccination to enter places. the health minister says they may drop mandatory testing prime minister boris johnson is set to announce new steps for covid tomorrow. and topic of vaccine boosters controversial because there are a lot of places in the world and developing nations which have no shots yet. israel is planning to make sure a fourth booster shot is possible for his citizens. there needs to be sufficient supply. when we come back, china

tech and ev companies with the crackdown. we have a live report from beijing next >> announcer: executive edge is sponsored by at&t business our people and network will help keep you connected let's take care of business. y b, but all my employees need something different. oh, we can help with that. okay, imagine this... your mover, rob, he's on the scene and needs a plan with a mobile hotspot. we cut to downtown, your sales rep lisa has to send some files, like asap! so basically i can pick the right plan for each employee... yeah i should've just led with that... with at&t business, you can pick the best plan for each employee and get the best deals on every smartphone. ♪ ♪ ♪ ♪

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welcome back among the market stories chinese tech and market stocks under pressure following more regulatory crackdowns. eunice yoon is joining us from beijing. eunice, this is sounding like a broken record. >> reporter: yes the financial times says the chinese regulatorswant to brea up jack ma's super app alipay. the idea is get ant group, which manages the payment system, to separate out the loans business so they are two units. they would be separated from the financial services also the company would be required to create an app solely for the loan business. the user data would be handed over to a credit scoring jv

which is owned by the state. and alipay which boasts over 1 billion users would not check the credit of the users on the loans. the loan business is a huge driver for growth and accounting for 39% of revenue in the first half of 2020 other online lenders will have similar requirements that is why the tech sector in hong kong rattled more broadly the i.t. ministry said the chinese tech players will have to be sure to end a long running practice of blocking each other's links on the web sites beijing says this needs to happen or face the consequences. the i.t. ministry also took aim at ev players. saying china's ev sector has too

many electric vehicle players and in need of consolidation the latest august data shows china has more than 329,000 new energy vehicle related businesses of course, a lot of that is because the policy here has been promoting a lot of the businesses >> reining things back in. most of the ev companies in extended hours turned around byd still under pressure that is the one berkshire hathaway zones a ss owns a stak. and eunice, cathie wood talked about the stocks trying to apiece the chinese government. is that what they are doing? some are doing a better job than others

>> reporter: absolutely. a lot of companies scrambling when they are not asked to accommodate or at least have the best guess to what the next regulation is going to be for their sector i think another way that people are sifting through the tea leaves is in the ev sector is whether or not the government is going to particularly target bigger players or will they promote smaller players? for the evs, the target is the smaller players in the ev sector tech regulators want bigger players become big wither. that is why you see byd a traditional player is suddenly seeing the stock rally as opposed to the other sectors where the government is trying to crackdown on alibaba or tencent to try to encourage the competition for the middle level players. >> a lot of thought needs to go into the process if you are an investor

>> reporter: a lot of guesswork. >> eunice yoon, thank you. coming up, mick mulvaney on the democrats' plan to hike the corporate tax. don't miss our interview with robinhood's chief dan gallagher. and you can watch us ati onymen the cnbc app you can do it right now. we're back after this. n stanleyl collective of thought leaders offers investors a broader view. ♪♪ we see companies protecting the bottom line by putting people first. we see a bright future, still hungry for the ingenuity of those ready for the next challenge. today, we are translating decades of experience into strategies for the road ahead. we are morgan stanley.

house democrats expected to propose raising the corporate tax rate to 26.5% and imposing additional surtax on people who make more than $5 million. this would help pay the $3.5 trillion spending plan that president biden laid out joining us now is mick mulvaney. former omb director and former chief of staff and former owner

of exigus capital. i love the washington post where they said $3.5 trillion bill, mick, faces more cuts. $3.5 trillion, so you know, they already compromised a lot on it. bernie is at $80 trillion. $3.5 trillion is -- we should really be thankful, i think. i don't know why you are not more positive. was it above $3.5 trillion at one point? >> good morning, joe i'm not a fan of orwelian language if i could get rid of a word is trillion it sounds small at $3.5 trillion $300,000,000 i watched bernie sanders throw

around money like it is candy. you see a compromise more. as much as i like to think other things this washington, d.c., debt ceiling might get in the way of this passing. what you saw introduced with the tax increases will pass before the end of october >> what is manchin -- what do you think his numberis do you think -- he would do a half then we are supposed to go thank god. it is under $2 trillion. under $200,000,000 >> we would be thankful to him i read where my successor in the white house as chief of staff said they get manchin at the end of the day the chief of staff is telling you that that is not guesswork. if you listen closely to manchin, he can't vote for $3.5

trillion ask what he can vote for he said not $3.5 trillion. $2.5 trillion? that is large. the budget expense of the federal government every year is $1.5 trillion. you are talking about in a single bill that hasn't been introduced yet not a single hearing no public debate at least twice the size of the ordinary budget of the united states >> it can only lose three. they called them persuadable called manchin persuadable they would never lose three in the house. we have congress member gottheimer coming on today talk about folding like a cheap suit democrats are good at staying together on these things >> i talked to josh a couple of

times. josh is pretty solid keep in mind, what you do not see is the changes to the state and local tax deductions democrats said they have to have it to vote to it i think there is more likelihood of defense in the house than in the senate your point is well made. nancy pelosi runs a tight ship the chances of her getting enough votes is pretty good. >> if you like watching someone that wields power effectively, you got to love er amazing. your point is corporate america is a person without a country at had this point they have gotten so woke to pander to the left that they don't fund republican candidates you know, they use all of the right terminology. who do they have left? >> that's the fundamental -- >> the far left is not their friend. >> you go back and look at mistakes wall street has made in

washington, d.c. over the course of the first nine months of the biden administration, once you sell your soul, it is hard to buy it back. wall street and chamber of commerce don't have a lot of friends in washington, d.c. which is a departure from the past when corporate america would have friends on both sides. they have thrown entirely in with the democratic party and convinced that trump was evil. they had to have somebody more centrist and stable in joe biden. they are looking at dramatic tax increases with few friends in washington, d.c. in t that is a mistake for corporations for how they conducted the first nine months. >> mick, the thing that i and maybe this is the calculus of the business community do you believe the republican party will say sure. we will impose higher taxes on you. we are cool with that. in fact, we will do it to spite

you because of the voting rights and other things i don't think that's the case. at the same time, they are listening to employees and customers who are saying we don't like voting rights bills in some of the states. we don't like the issues in texas or other places or the masking issues or vaccine. i'm not sure the calculus is the wrong one unless you believe the republican party is going to somehow stick it to them economically that seems hard to imagine >> it goes back to the c conversation in washington how republicans are a cheap date for the corporate america. they will vote for the corporations if the corporations don't support them that has been the underlying narrative on wall street because of the principles, the republicans will still defend the corporate tax rate still defend the lower top marginal rate. >> only because if you don't,

then it is more hypocritical because how can you turn around and say we are republicans and we are for higher taxes because we hate these companies. that would be shocking >> it is going to be interesting to see how it plays out. keep in mind, a lot of the republicans don't believe that in the first place many of the hard core conservatives do republicans voted to increase taxes over their course of time in washington, d.c that is why corporate america tried to keep friends on both sides so they also had flows of information from both sides. you might vote the way you vote if you are a member of congress right now. will you take a meeting with amazon probably not will you give them insight to what you are thinking about how you will vote the next time? probably not that is what everybody pays for when they contribute in washington, d.c. it is information. you don't buy and sell votes you are buying information and access it will be really hard for

corporate america to get that. i think republicans will stand by and vote to raise taxes no don't be surprised if a couple of them don't vote and bhornt t whether or not that makes a difference on the house floor especially. >> we are out of time. i was thinking about a couple of things i was thinking about the economy and the last time we were in davos. do you remember? >> the good old days. >> the stark contrast. the year before when trump came, he said, oh, my gosh look at this in europe this guy mean tweeter horrible he was the belle of the ball the first week that is when the first case of covid came in washington state now the narrative is the tax cuts for corporations department work and things weren't working. he ruined it because of covid. 3% unemployment. wages were rising.

does everyone think this is going to be fine that you raise all of these taxes there are people that have told me, mick, we can accept a lower gdp if we spread things out more to people because of income inequality a lot of people saying that like europe accept lower gdp for a greater safety net that is the argument they will make until the cows come home. is that wrong? >> no, i think people have forgotten how good things were before covid there is a formula for letting gak getting back there everything what we know worked >> you were trump's chief of staff. we didn't expect to hear anything from you. thanks, mick mulvaney. we'll see you again. two sides. right? >> you and i are coming together. >> we have on a lot of things.

except "stillwater." i liked the lessons. you sacrifice. you do you sacrifice everything for your kids. >> that's true >> he sacrificed he had a great life. sacr sacrifice. >> the audience has no idea what we're talking about. >> no. becky? when we come back, tra transunion announcing the biggest acquisition. we'll talk about it when we come back jerry is here! j! mate, how are ya!? it's so good to see you. good to see all of you, yeah! why is jerry so... popular? it's been like this ever since we started using workday. what do you mean? it makes it easier to develop great relationships with our suppliers. now everyone, everywhere loves jerry.

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welcome back to "squawk box. trans union out with the biggest news it's had since going

public joining us right now for more for a little more than 3 billion, chris cartwright, ceo of trans union good morning to you, congratulations on reaching this deal help the audience understand what it all means. >> good morning, andrew. thanks for having me on this show it's an exciting day for trans union and for new star what it means in simple terms is that in combination with neustar, we can combine our data and our analytic insights and help promote security in online commerce so both companies our visions are to help make trust possible in the digital economy by resolving the identity of consumers online in order to do really a few things. one, to mitigate ecommerce fraud which we all know has been growing far too fast but also to

help tailor marketing offers and service experiences for consumers during their online transactions >> so -- but just help us because i think the average person on the street, to the extent that they're thinking about you, thinks about their credit score, right? >> yes. >> so how does that -- does that change that at all what are the other sort of businesses on the -- that are ancillary or related to it that this is going to change that dynamic? >> yeah. listen, the core of our business remains credit reporting we're one of the largest credit reporting agencies in the world. we operate not only in the u.s. but in 30 markets around the world and we think that the information that we provide -- the credit information helps make trust possible in commercial transactions between consumers and businesses now there's been an explosion of

growth in online commerce as we all know that accelerated, really took several quantum leaps during the pandemic and the challenge for consumers and businesses alike is ensuring the security of transactions online, right in order to do that, you need to identify and resolve the identity of the individuals behind the devices that are conducting the transactions. and so for several years trans union has been using its authoritative information combined with a lot of information we've accumulated on the digital devices those individuals use to help identity proof, to help resolve their identity this combination with neustar who is a market leader in online id resolution is just going to deepen and broaden our

capabilities to do so. >> final question it really relates to privacy because it's something i think everybody thinks about you do have more information than just about anybody and can id people in a way that most people can't and the question i think becomes that you become almost by default a target of those that are trying to break and try to hack and get at access to people's id. how much are you spending now on security how much do you think you're going to have to continue to spend? >> it's a great question i mean, privacy is the double-edged sword of the digital economy. all of the information that's available allows companies like trans union to allow not only trustworthy transactions but more personalized and tailored transactions online. however, the credit information we have and this other digital information we have that enables better services experience, it does make us a target. that said, we spend tens of

millions of dollars a year on information security that's only increasing we hire some of the best cyber protection minds in the world and it is job one, maintaining the security and sanctity of the information we've got is at the essence of how we operate our business we're also highly regulated as you know it is under the fair credit reporting act. there's a tremendous amount of legislative and regulatory scrutiny and security is -- you know, it's job one it's part of the mission of the enterprise. chris, it's a longer conversation we wish you well with this deal and look forward to following your progress in the future. >> thank you very much. >> thank you. coming up, a big interview with carlyle group david rubenstein ct's out with a new book in fa we'll talk about that, taxes, the economy, the market and so much more when we return

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>> you knew that the market was going to have a snap back today, didn't you warnings grow of autumn stock

pull back, and what have we been talking about since september 1st? everybody's talking about it, especially us. >> can't you tell. >> it's not going to happen. >> counter intuitive. >> never short a dull market that's the expression. and i just feel like i agree with everything in there, like there's nothing left for this to go up for and we're doing all of this washington's got all of these grand plans. none of them are good in the economy for corporations here's what's making headlines at this hour epic games says it's going to appeal the friday court ruling that said apple was not running an illegal monopoly with its epic sports. it is the creator of the fortnite game. it won a partial victory with the judge ruling apple must allow developers to include external payment links. the u.s. now may authorize

pfizer's covid-19 vaccine for children age 5 to 11 next month and that's according to sources that spoke to reuters. pfizer's expected tohave enoug data from clinical trials by then to seek emergency use authorization from the fda how do we decide to say this you were sang shang chi. >> is it chi, kpi. >> i don't know. i was told i was wrong, that's all i remember >> it's that plus the legend of the ten bricks topped the weekend box office once again nearly $36 million in u.s. ticket sales it should be noted that shang chi like kung fu panda. >> shang chi is playing

exclusively in theaters. i blame walt disney for not telling us walt disney said the rest of the films to be released this year will be released only in theaters i told you the most exciting news i heard is that halloween with jamie lee is back he's still around. i mean, that guy, talk about -- michael myers released on peacock. >> at the same time. >> at the same time. it's never too early >> talking about this movie for months before even hearing this part of the news >> right. >> we're all in. >> that's the first one. >> first one >> are you going to go to the theaters and watch it or are you going to watch it on peacock >> i would think about it. i would think about it because i like him on the big screen still use that theme, big screen >> yes. meantime, let's get back to the markets. hopefully they don't have to

play that music over the markets. dom chu with some of the morning's top premarket movers >> so, andrew, i don't think they will. i've got that piano song from "halloween" playing in my head we shouldn't hear that because the markets are generally positive the futures are indicating that nice strong open you'll see strength in certain internet names that's thanks to analysts over at goldman sachs a team of them have initiated 17 internet companies with a host of different ratings among those rated buy are amazon.com up fractionally facebook up fractionally and alphabet, the parent company of google those are three of the number of names that goldman considers buy. they think a number of these internet names including those have potential to really realize some gains from investors as they are under appreciating some of the long-term growth and margin prospects of those gains. meantime they have airbnb and

twitter among those they have sell ratings on only because they think the businesses are okay but the markets are fully appreciating could be disappointing down the line so airbnb, twitter lower initiations that sell. these three initiated buy or better so watch those tech stocks in early trading. also, watch shares of nike, dow component. talk about 2/3 of 1% in the pre-market trade they think that the supply chain constraints especially in southeast asia could have a material impact on the stuff that nike can sell in the coming quarters because of that they expect sales to come relatively flat on a year over year basis nike shares down the ones down markedly so recently as of late are the chinese internet stocks and big fin tech alibaba, baidu

j.d..com, pinduoduo. they could crack down further on big companies like alipay and ant. the etf is off 1% as well. becky, those are the big movers. >> dom, thank you. >> you're welcome. >> see you later this morning. in the meantime, house democrats expected to unveil a raft of proposed tax increases in order to pay for the $3.5 trillion budget bill ylan mui joins us with the latest budget details. >> reporter: one key item, democrats are considering hiking the corporate tax rate but not as much as president biden initially proposed instead of 28%, democrats would only raise the corporate rate to 26.5% according to a document obtained by cnbc that rate would apply to businesses with income above $5 million. businesses that earn less than

that would still be taxed at the current rate of 21% and for the smallest businesses with income less than 400,000 the rate would actually drop to 18% now this structure seems designed to appeal to moderates who have had qualms about raising the corporate tax rate here's senator joe manchin on "meet the press" yesterday. >> i said the 2017 tax code was weighted unfairly to the wealthy. we need to change it that's why i agreed to go to reconciliation i'm not going to shoot myself in a foot and be competitive globally >> reporter: now some tax changes that house democrats are proposing include increasing the capital gains rate to 25%. a new 3 percentage point surcharge on income above $5 million and a cap on so-called megairas the house plan makes significant progress towards the president's core goals but that this process is not over yet. becky? >> ylan, trying to figure out

all of the moving pieces that are going to be in this with the 3.5 trillion we don't know how far manchin will go, my guess is nobody's really going to know what's in this bill even when they're asked to vote on it. it's only going to be in the aftermath when we find it here, by the way, did you know this was in here. did you know this phrase means this gets changed? this is going to be a little bit of a mess. >> reporter: yeah, that's always the way but, becky, especially with bills this incredibly large and complex, the house released its list we have sort of seen what the house is considering over the weekend the senate finance committee has its own list of tax proposals that are different from what the house came up with obviously the white house has weighed in with its own ideas as well and those are also different from what the two chambers are considering there are a lot of things that still need to be worked out here and they are going to matter tremendously for businesses, for investors and for how much money democrats are able to end up raising in order to pay for some

of these programs. it's very likely we'll have to scale back some of the ambition and spending in order to appeal and appease the moderates who are unwilling to go as high on the tax increases. >> this all has to be done before we get to the debt ceiling? how many days do we have left, 17 days or something >> yeah. the debt ceiling is on. >> is it even less than? >> it appears to be a very separate track right. the end of the month is when the government funding bill runs out. the expectation is the debt ceiling increase will be included with that all of those things are up in the air. that's why democrats are hoping to sort of punt the government funding and hopefully debt ceiling debate in order later in the year in order to make some room for them to debate these other things we'll see if republicans go along with that. >> ylan, thank you i have a feeling we will be talking to you again very soon >> coming up, we're going to talk more about taxes and spending with the carlyle group's david ruk ben steen. you've probably seen the videos

of out of control passengers the biden administration says it's going to increase fines for those that are unwilling to mask up just ahead, we're going to speak with someone representing tens of thousands of flight attendants on whether that will actually help the situation. as we head to break, check out the nyse arca airline index had its worst day in close to two months on friday down four out of the past five weeks. ay tuned, you're watching "squawk box" on cnbc

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welcome back to "squawk box. tsa data showing airline passengers levels remain lower than 2019. enforcing federal mask mandates remains a dangerous job for airline workers leading to physical and verbal disputes in july the faa said 75 percent of incidents this year were tied to the mask man dade the biden administration said it will do you believe minimum fines for those refusing to comply sarah nelson, international president of the association of flight attendants representing 50,000 flight attendants at 20 airlines great to see you this morning. boy, has your job gotten tough, sarah, and those of your members who are now effectively being asked to police the skies in ways they never were before.

what's the view about how this should work going forward? >> well, flight attendants have been enforcing safety regulations and compliance of those regulations for the entirety of our careers. it so happenings the masking compliance is one more item we've had to enforce on board. it was really helpful to have the president speak out last week about the increasing of the fines. coming directly from the president but the increasing of those fines is also about the airports we took a survey of our members and they found over half the incidents on board, there was some signal that there may be a problem in the boarding area or even during the boarding process and the best way to keep these problems from happening in the air is to keep them on the ground so if we have more people understanding in the airports if we're connecting airports and airlines, tsa and everyone together doing our jobs to try to keep these issues on the ground, the president did a really good job of signaling

that to everyone in aviation that we've got to all do this together and signaling to the public that they're taking this very seriously i'll tell you, andrew. you talk about demand being up, that is directly in line with more people getting vaccinated which shows that people are willing to travel when they feel safe this is a small number of people acting out and mask policies are also about helping people understand that air travel can be safe if everyone follows the rules. >> but i have to imagine that there have to be members of yours that are calling you up and others saying, look, this job is changing. this job is becoming a lot more complicated than 12 months ago. >> andrew, they're having a very difficult time i'll tell you something else we thought we were on a path to getting through this pandemic and being in a place of recovery this fall. passengers were in these masks on a couple hour flights

not only that, we're concerned every single day when we go to work and put that uniform on, are we the target and are we going to be punched in the face? yes, this has to stop. we can't continue to have this be the conditions in our job it's making it very, very difficult. we need all the help that we can get to get it tamped down, get it under control and get it back to a place that we're used to. >> sarah, i've got a tougher question for you >> okay. >> you know where i stand on this i've always thought that one way you could get to a better place where maybe you wouldn't have everybody wearing masks is if we get the country to be more vaccinated than it is. one way to do that would be to require vaccinations to get on an airplane even though today you'd have to be vaccinated but wearing a mask until we can get to the other side of this. that would be one way to get there. do you believe that your members would advocate for that?

>> you know, andrew, it's not a tough question for me at all in fact, we have heard overwhelmingly from flight attendants that they support vaccination mandates because we know that the only way to end this pandemic is for everyone to be vaccinated. so it's not the role of the union to put in place those mandates, but if we also know that the courts have said and the eeoc has said that companies have the right to put in place these mandates and as long as the companies are negotiating with us about how the implementation will work, we can do this in a way that's fair, transparent and works for everyone and takes into consideration the small number of issues where there needs to be an exception. everyone has to be vaccinated. that's the only way we're going to end the pandemic. that's the only way we're going to get back to the freedoms we enjoyed before it started. >> sarah, i heard southwest airline is extending the period

of not serving alcohol january of next year along with the mask mandates i think they think alcohol exacerbates any of the air rage situations how do you feel somebody up in the air being forced to be a bouncer with alcohol part of the problem? >> alcohol is definitely part of the problem. the survey shows that close to 60% of the incidents were alcohol-related. we don't need anything adding to this the policies on american airlines and southwest airlines are matching what we have been calling for, but it's got to also match what the airports are doing. faa administrator steve dickson asked all the airports to make sure they are ending the policies of to go alcohol, that they're putting signage up to alert passengers that if you're inebriated, you're going to be refused boarding and you cannot be bringing your own alcohol to drink. >> to go >> they do and we have to remind them that that is not the policy you know, we've got first-time

flyers here of everyone coming to the airport right now, becky. we have to reiterate what the rules are and what rules have been for decades. >> we leave the conversation there. we appreciate it very, very much it's a fascinating situation to see where we are and hopefully things can get better. i'm hoping soon. soon >> you know, andrew, i appreciate your concern and thank you so much for bringing up this issue and all the time that you've given flight attendants over the past year. really appreciate. >> you bet thank you so much. who shows up at the airport with their own byob? that's not the way it goes anyway, when we come back, is 13 a lucky number for apple the tech giant expecting to unveil its latest iphone tomorrow what should consumers and stock watchers be expecting on this? we'll talk about that. as we head to break, let's give you a programming note as well don't miss an exclusive interview with the ceo of amazon at 11 a.m. eastern time tomorrow

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the carlyle group will talk taxes. we'll see if he tries to interview us rather than vice versa because he does that at some point some other -- looking for the mayor? is that who? and we'll get you up to speed on everything you need to noah head of apple's big iphone event tomorrow you're watching "squawk box" on cnbc

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we are unpacking the latest tax proposals from house democrats. they appear to give some concessions to companies but high earners may get hit hard. >> they're adding a surtax of 3% on those making $5 million

it would be a combined tax rate of 61% for new york city top earners and about 60% here in california here's the math and here's the breakdown. like the biden plans, they want a top tax income rate of 39.6% the income threshold would also be lowered to individuals making $400,000 and couples making $450,000 high earners also currently pay the 3% net investment income tax. that brings the rate to 43.4%. add to that the new proposed 3% surcharge and you get a top federal rate of 46.4%. now for new york city you add in the new higher state tax rate, the city rate. top earners would face combined marginal tax rate of 61.2% that is believed to be the highest combined rate in new york city.

for new jersey it would be 57.2%. the house would apply that top rate to pass through profits so individuals and companies that file as pass throughs would both face those new higher tax rates. guys, the good news i guess for the asset wealthy is the house is only proposing to raise the capital gains to 25% rather than 39.6% that biden has proposed and interestingly there is no mention here of an elimination of the step up in basis so under the house plan that would be preserved. joe? >> do you know what's still being banded -- this is new stuff. this is not what we expected you're talking about different things every week now, robert. who do you think is the architect of this? who did they talk to did they talk to people in the house? the moderates talk to maybe some

of the senators that are more moderate where did this come from, do you think? >> who knows what is clear from this and, again, you're talking to ylan earlier, these numbers can change when all is said and done what's important to me is just the general direction which is let's give concessions to companies because clearly companies have lobbied heavily against the higher corporate tax rate and the foreign profits rate and so where are we going to get that revenue? we're going to get that revenue. what's important is the direction here raising not as much revenue as they wanted from companies but shifting that onto the wealthiest to appease the progressives in the party. >> 61.7 did you say. for new york city -- >> 61.2. >> 61.2 you have to make thor man 5 million a year >> correct correct. remember, that's a marginal rate so we always have to say that 61.2% highest rate would only

apply to every dollar over 5 million. >> don't look to us to defend those fat cats how many people is that? that's not that many no one -- you know, that's the great thing about raising taxes, you know what i mean it's like is it hard to get 80% of the people that try to stick it to the other 20%? why not? when you get to 5 million, it's like who's sticking up for those schmos nobody are you? they make too much money anyway. >> no, i'm just reporting the facts and the math. >> nobody needs that nobody needs that kind of -- do they, sorkin >> i hear exactly what you are -- >> you're not one of them? >> i want to be one of them. >> why you'd pay 70% in taxes what's the point stop working thanks, robert oh, god, i hope that doesn't happen >> all right for a closer look right now at the tax battle on capitol hill and the potential impact on investors, let's welcome david

reuben stein he he has a new book out "the american experiment, dialogues on a dream." we're going to talk about the book but first we want to talk about taxes. david, if you'll give us a moment on that let's talk through some of these numbers first. the idea of the tax rate on companies not going as high as biden had wanted this is the new ask they're putting the burden on the wealthiest americans is that a good plan in your estimation >> remember, this is just a proposal by the house ways and means committee chair. the numbers haven't been verified by the congressional budget office yet as to what they will raise. secondly, we haven't really heard from the senate. tax bills usually are passed about a day or two before they are really revealed. we won't really know what's in the tax bill until congress has

to have a tax bill in front of it i suspect that will be at the end of the year. so there's going to be a lot of skirmishing and ka bbookie dancing. they're trying to raise $3.5 trillion the senate hasn't agreed to $3.5 trillion suppose they say we only want 3 trillion or 2.5 trillion, then you don't need as much revenue right now we don't know what's going on it's a very good time to be a tax lobbyist because there's plenty of lobbying to be done, but as to what's going to be in the final bill, nobody knows including the chairman of the house committee or the senate finance committee. >> i suspect we won't know what's actually in the bill until after it's passed and there's time to read through all of it and figure out what the implications are you're right, it's a good time to be a lobbyist in any of these scenarios. there does seem to be a bend among progressive democrats to punish the wealthier people or make them pay their fair share

would it surprise you to have something -- again, maybe not the details we're talking about right now but to have some of the burden that was expected to go to corporations instead fall on wealthier americans >> nothing would really surprise me you know, as will rogers famously said, the country is no longer safe as long as congress is in session. the most important thing people should remember is that we don't have an agreement between the house and senate how much money is to be raised let alone where the money is going to come from and let alone how these numbers coincide with what the president's willing to support that's going to be a ways before we know what's going on. clearly we need to raise more revenue, i believe, to pay for the government we now have i think the republicans generally believe that they're going to control congress next time after the mid terms whether that's right or not, they believe that. so i don't think the republicans want to propose any tax increases when they're in control so i suspect while they won't vote for any tax increases

the democrats will barely pass a tax increase and they will get blamed for it, so-called blamed for it by the republicans and the republicans in the next congress won't have to have any tax increases and they can blame the tax increases for this congress. >> you do think something will get done before the end of the year though? >> the only thing certain in my view as benjamin franklin said is death and taxes there is no doubt we're going to have a tax increase, no doubt at all. before congress leaves this year there will be a tax increase of some amount. >> you think that it will be retroactive? i mean, that's the other issue that's kind of hanging out there. some of these changes that are being discussed, if they're done retroactively, could mean some pretty big tax bills for corporations or people at the end of the year. >> as a general rule of thumb, when you announce a tax proposal you say it's retroactive the day you announce it but it rarely happens that way so i would be surprised if anything is really retroactive because in the end you're just

playing with numbers about how much money you can raise and you can raise a little bit more money by increasing rates prospectively. i doubt there will be retroactive tax increases. that would be my view. >> let's shift gears and talk about china because tensions have been rachetting up. we have seen stocks, electric vehicles and some of the technology stocks in china again under pressure just the pressure that we've seen between washington and beijing. beijing may have expected that they'd be getting an easier run with president biden but they have not so far. how do you think this plays out? >> i think the chinese government was probably in favor of biden they were tired of trump in my view and so while you never know exactly what the polit bureau wanted, i think they thought it would be easier to deal with biden. they were surprised but they've adjusted they recognize president biden isn't going to be as easy as they once thought. president biden isn't prepared to look like he's soft on china. the proxy for all of this

recently has been taiwan there's been a lot of rachetting up of revenue relating to the rhetoric -- i should say rachetting up of rhetoric relating to taiwan we've been skirmishing over taiwan we've been using that as a proxy for the differences between the united states and china overall policy right now i think the business community in the united states is somewhat worried about some of the clamp down on large corporations now in china and some of their inability to do certain things but as a general rule of thumb u.s. and china businesses moving forward, the government rhetoric is not very good it would be desirable, i think, if president biden and president xi were to meet but there doesn't seem to be any effort for that in the near future. >> one of the reasons i love talking with you is we can talk about so many different things i'd love to get your thoughts on the markets. last week was a rough week relatively speaking for the markets but you're still talking

about the dow less than 3% away from an all-time high before it's indicated up another 2 points today does it make you nervous when the stocks are sitting at these levels or do you think it's justified and there are more gains to come? >> the economy is coming back. despite the virus, the economy is coming back it is growing. will grow probably 5.5 to 6% this year. overall we're still a little bit below where we were before covid in terms of gdp. the economy is growing if we can solve the virus now, it will continue to grow the markets are a little frothy but in the end the markets are not so high as to make me think we're going to have a gigantic correction any time soon so i think the markets are going to look at what's happening in congress, going to being loo at whether we're making progress on the virus. overall i think the markets are going to tread water for a bit more i don't see any gigantic up side right now but i don't see any down side. >> you sound pretty sanguine.

>> i'm sorry >> you sound pretty sanguine. >> the markets have seen increases. the markets are frothy in the private equity world people are paying high prices. people are buying things from people who pay high prices and even higher prices the markets are reasonably good. i think the economy is in reasonably good shape. our economy is much better shape than economies around the world. the u.s. economy is okay if we can get the virus in better shape than we have today, i think the economy will be a little better than we have been. i do think the markets are worried about what's going to happen in congress i don't think the markets are going to react unduly to the tax proposals. the markets recognize these tax proposals are going to go back and forth for quitesome time before we know what's going to happen the markets have built in a tax increase of a certain level. they're more concerned about the rate increases when the fed gets around but i think the markets believe rate increases are not

going to occur this year. >> hey, david, question about the vaccines related to what you were just mentioning, trying to get us back all on track controversial decision by the president in some quarters do you have either portfolio companies or your company itself that's planning to object? >> well, our own policy and many companies which we are involved with is to have our employees be vaccinated we do believe vaccination is the best way to proceed in terms of dealing with the virus i'm vaccinated and all the people i deal with are vaccinated i assume you are all vaccinated. >> we are. let's extend this to your portfolio companies. is that policy extending to all of your portfolio companies and the employees in those companies? >> well, we don't control all the companies. sometimes we have minority stakes and so forth and so on. it depends remember, every company we own is not in the united states so it's a different kind of situation. >> right in the u.s. >> in the u.s. i would only say

that carlyle has said that we want our employees to be vaccinated that has been our policy >> your portfolio companies though >> i've said -- >> that's the -- take out the ones that you have a majority stake in for example >> i can't say that we've issued a statement on that yet, but it is my view that it would be a good thing for everybody to be vaccinated clearly when you have vaccinations, you have a better chance of dealing with this virus. the delta variant is strong and while the current vaccine works for it, it's not clear yet whether if we have mutations on the delta variant whether the vaccine will work. i think it will, but we don't know for certain the most important thing we know is vaccines do work. it's a miracle that we got a vaccine in less than 11 months normally it takes 4 to 7 years to produce a vaccine so it's really a greatest amount to our nih and the vaccine manufacturers that we could get this vaccine and it does work and i do think at some point

when people can get boosters it will be helpful to do that as well as a general rule of thumb it will be a good thing for everybody to be vaccinated i'm a concern for people who don't want to be vaccinated. it's a challenge for the overall economy. >> david, let's talk about your new book for this you spoke to a lot of really interesting people. kim burns, paul simon, billie jean king, david mccullough and you asked them about different subjects and how that kind of relates back to the american dream. how did you come up with the idea >> the theory is that our representative democracy works best when people are informed about our history and the way the government works and this has been part of an effort to do a little bit better job than others have done about informing people of our history. it turns out many people in the country cannot pass the basic citizenship test that foreigners get when they want to become naturalized citizens

it's a sad commentary because we don't teach civics very much we have wonderful rhetoric and we all men are to be created equal and all people created equal. we have tremendous rhetoric. this is the story of how we tried to live up to the rhetoric of the last 230 years. sometimes we've done it well, sometimes we have not. i talked about the stress tests that our democracy have gone through. the most obvious one is the civil war. we've been through two terrible stress tests recently. one of them was the coronavirus stress test which really put our health care system in great peril and the health of our economy in great peril and secondly the events of the election and january 6th another stress test that i believe we've gotten through because of the rule of law i talked about the fact that the united states and americans, all of us, have certain genes that are part of our system including the belief in the rule of the law, the belief in the rule in the importance of equality,

importance of separation of powers, things like that the rule of law prevailed. the book is dedicated to the public servants who preserve our democracy because it's my view that the judges did a spectacular job of really making certain that people believe the rule of law prevails and that's how we got through the most recent stress test in my view. >> you spoke with david mccullough and the wright brothers how does that fit into the theme? >> david mccullough is one of our greatest historians. it's an interesting story about american innovation. we are an incredibly innovative company. we were invented as a whole new cloth invention really we were invented by our founding fathers. we have a great interest in invention in this country and creativity and the book describes many of those kinds of inventions, one of them is the ability to fly and the wright brothers were not educated in terms of college education. they had no aeronautical engineering. they were two bicycle engineers. they went to kitty hawk. they created the ability to fly

and land safely but they had to do it in france more or less while they did practices in kitty hawk people in the united states didn't take them seriously they went to france to demonstrate. only after they did things in france did they come back here as david mccullough reports and finally people here accepted what they had done. >> i know you never want to pick your favorite out of any of these stories, but give me one of your favorites. of all the stories that you learned of all the historical takes you took, which one was it >> i would say there are two that i would just mention. sonya sonya sotomayor talked about civic education. she is focused on making sure people know history and civics she talks about why that's so important. somebody i used to work with at the white house who later became the first woman to become secretary of state madeleine

albright talks about being an immigrant coming to this country. she came here and made a life for herself. both of them are very emotional stories of the backgrounds of people who come from different backgrounds and many, many people in america. one was an immigrant and one's parents came from puerto rico. >> david, thank you. appreciate your time and we appreciate the breadth of all the different subjects you let us cover with you. his new book again is called "the american experiment." you should check it out. what to watch at tomorrow's big apple event. big apple event. we expect th you booked a spacioue unveilf iphone 13. whether it will be called 13 no one knows. coming up straight ahead and a grill that awaits family from near and afar. but the thing they'll remember forever?

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tomorrow apple is expected to unveil product updates, what it's calling its california streaming event. the iphone, which has gone through about two dozen iterations since it was first announced in 2007 will likely get a big upgrade. we're showing you a few of the biggest refreshes. you can also see a new version of the apple watch joining us is joanna stern, senior technology specialist at "the wall street journal." you think it's a two-part thing, new phone and then the watch which has been enough in recent years to keep the stock going. let's start with the phone i like the name 13 i like 13. it's a good number i think it's good -- >> should it be bad? >> will it be the iphone 13?

>> i bet you $13 it's called 13. >> you've got it >> first of all, i don't think it's going to make itto your wall of fame there because we're really in the incremental upgrade year, right? there's always the tiktok cycle of the iphone. last year with the 12 we got a big design refresh, we got 5g. it was a big year for the iphone this year looking at incremental upgrades doesn't mean it's going to be boring, it will just be smaller upgrades it doesn't matter to most people because they're not upgrading every year we're at a three to four-year upgrade cycle for most people who have phones so they will be getting substantial camera improvement, better screen, better design and now 5g since those people haven't had 5g. >> the camera's awful good the pictures, selfies are too good can it be -- will it automatically fix some of my flaws? how is it going to be a better

camera more resolution, better background how is it going to be better >> yeah, lots of reports about video recording capabilities over the last number of years seen a big, substantial improvement to taking still photos, right? the improvement of portrait mode coming to all the models of the iphone tomorrow there will likely be four models. they have the mini, regular, pro, pro max i expect the pro maxes to have more camera features and focused on video recording, portrait mode video recording a cinematic way of recording videos those will likely be the bumps i'm with you the camera's good enough all of my photos look kind of amazing coming out of this small thing in my pocket >> my daughter knows how to photo shop i look so much better after she fixes things to do that automatically, i don't know if we can so the watch, bigger screen.

10% bigger you can't make it much bigger. >> no. i mean, we don't want to be wearing televisions on our wrist but the idea, i think, here is going to be that they can get the rest of the hardware is smaller so that means they can fit in a bigger screen so it doesn't take too much more space on the wrist but some of the other components are minimized in a way there's supposed to be a new redesign to the watch. what i've seen apple doing is big upgrade on the iphone, next year big upgrade on the watch going with the tiktok cycle. last year not a big upgrade on the watch. very minimal hard to tell a difference between the 6 and the 5. this year thinking bigger redesign, new features and setting the pace there for some health features down the line. >> i wonder if they got it down in terms of blood pressure and the health things. obviously our glucose levels, it's going to have to be algorithms based on something they can measure easily from

outside -- basically outside of your body. i don't know are they -- have they got it down to where they could be within 10% of the actual numbers do you think i'd like to do it. i'd like to lower my blood pressure, lower my heart rate with biofeedback, things like that. >> they definitely made strong improvements over the years in the health features. the journal has actually been reporting over the last couple of weeks that they had a lot more in store around that glucose monitoring, around temperature monitoring but the thought is that this year might not see those upgrades that would be the next series next year. >> we've really got to go. the epic, good or bad? some people say they're not a monopoly so it was a good decision >> apple is saying their chief legal counsel saying this is a win for apple. i was pretty -- some strong language saying we repeat we are not a monopoly they are definitely hanging their hat on that. >> we are a monopoly, i think,

at "squawk box," i do. but a legal one. kind of a legal monopoly we don't -- >> in the -- defined as the -- >> right >> -- financial morning show space. >> yeah. we crush our competition based on just being great. >> but as the judge says, success is not illegal. >> exactly >> right >> exactly thanks, joanna see ya. coming up, congressman josh gottheimer is going to join us to talk about the latest out of wall street about the president's plan to increase taxes. and later robinhood's chief legal officer, dan gallagher so much to talk to him when it comes to meme stocks, apes, board apes, so much more "squawk" returns after this. industrial experience and insights. meet honeywell forge. analytical software that connects assets and people to deliver a cybersecure record

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good morning ready to run we're going to turn to mohamed el erian for his perspective higher corporate taxes coming congressman josh gottheimer is going to talk us through it all. then the sec versus robinhood. dan gallagher is going to respond to changes that regulators say could be on the table as the final hour of "squawk box" begins right now.

good morning and welcome to "squawk box" here on cnbc. i'm joe kernen along with becky quick and andrew ross sorkin u.s. equity futures solidly higher up 200 points after a rough session on friday. tough week tough couple of weeks. we'll see whether it's the beginning of anything noteworthy in terms of an autumn slump but it looks good today. the nasdaq up 75.75. treasury yields, take a quick look 1.32, 1.33 bitcoin was at 52 while everyone was excited in el salvador now it's 44. i don't know how they're feeling down in el salvador at this point. they were buying the dips. today maybe they're buying below 45,000. let's get you caught up on

some of the stories investors will be talking about today. alibaba shares are under pressure alibaba has a 1/3 stake in ant group. shares down 1.7% epic games will appeal friday's ruling that apple's app store was not a illegal monopoly and pfizer's covid-19 vaccine could be authorized for use in children aged 5 to 11 as soon as next month the company is expected to have enough study data to submit an application for emergency use authorization to the fda i think that would come this month. then the fda would have to have some time to consider that maybe potentially by late next month. right now let's get to some of the top stock movers dom chu is here. >> let's start off with shares of mgm

you are getting a bid in trading today. analysts over at bernstein have upgraded this stock to an outperform rating. it was market perform before they think there is 40% up side because in part they have under appreciated some of the internet gaming and online sports betting aspects and growth aspects of this particular business they also think some of the real estate could empower shareholder value. mgm is up 1.5% up 36% year to date. some of the big thematic movers, some of the top s&p 500 gainers in the pre-market have been marathon oil up 1.5% simon property and crown, well, some of these have moved there check out simon property and delta airlines if you take a look at some of those names, the reopening has come out as a big theme after a five-day losing streak for the s&p 500 and dow jones industrial average. and then check out as we always do in this hour of "squawk" the most popular ticker searches,

cnbc.com from friday's session maybe no surprise that apple is giving a lot more attention because of that big product unveil, i guess, is the best way to call it coming up tomorrow. the 10-year note yield which sits at the top -- all but most of the time is now the number 2 spot affirm holdings after that big earnings announcement off about 2% after a blockbuster day on friday and the dow industrials and the s&p both riding five-day losing streaks trying to see, perhaps, if there's some sentiment to come in and buy the big dip becky, those are the top five. the rest of the top ten are on my twitter feet @thedomino. >> good tease. good way to make people check it out on twitter. >> you bet. the overall economy. the road back barometer returns with the back to school edition. steve liesman joins us now with

more not an all america thing or a -- what was that? got a lot of good names. cnbc rapid update. >> look at the gauges on the road back barometer. 17 schools have opened and shuttered.

21 increase. the week before was 100% increase on average the schools shut down 8.1 days before they reopened. the number of schools that have closed is the fraction of 100,000 schools in the country look at the map showing the closings widespread across 38 different states with a concentration in the south and southeast. also elsewhere creeping up into the northeast some places in the west as well sometimes it's a single school that closes and sometimes it constitutes the entire district. when schools close to in-person learning, 55% went virtual 39% closed altogether. some state legislatures have limited the ability to offer virtual classes. 4% delayed there opening time what's going on in the schools mask mandates. despite bans from some governors, they report 36 of the top 200 schools requiring masks. reopening schools is part of getting the economy back to normal freeing up the parents who can't

work because the kids are home and helping resolve the labor shortage schools themselves have their own labor shortage themselves. teachers, nurses, bus drivers have their own shortage. they tried to recruit parents to drive buses offering test drives to anyone who came by with a license, joe. >> you need a barometer, steve no one expected this 20 months. 20 months into this thing and tamping down it's very disturbing very disturbing. you know what, i hope the next data points start improving. i think there's hope for that. don't you think? >> the guy who does this data tracking, he thought he was done.

you're right, it does come up against the expectations we all have for a fabulous fall >> i like that branding. branded. arthur digby sellars not a light weight 166 episodes son is a loser, you know what i'm saying he's a brought flunking social studies. thank you, steve liesman they come out of the woodwork with the slightest judevine's reference. carl quintinilla loves it. >> you've seen it? >> no. >> the big -- >> oh, yes >> just like people at home.

coming up when we return, are higher taxes coming? a new plan with congressman josh gottheimer you're watching "squawk" right here on cnbc i need indeed. indeed you do. indeed instant match instantly delivers quality candidates matching your job description. visit indeed.com/hire

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box. futures higher, 217 higher the s&p 500 up 27 points higher. the nasdaq looking to open up 9 points higher. >> thanks, andrew. among our top stories this morning, house democrats are set to propose a 26.5% corporate tax rate joining us is new jersey congressman josh gottheimer. he's the co-chair of the problem solvers party. >> hi, becky how are you? >> good. we're hearing a lot of different th things. >> the democrats and the house are going to be proposing a 26.5% corporate rate versus the 21% there is now and less than 28% the biden administration sought a lot of that is offset by higher taxes on the wealthy. robert frank told us that would mean people in new jersey, the highest earners would be paying

more than 57% in total in taxes. wondering where you're coming down on what you're hearing so far? >> well, as you just said, it's the beginning of this debate the ways and means committee hasn't started debating that portion. there was an outline and we'll see what happens in the committee. of course, becky, as we've talked about before and as the speaker committed to in august, what matters is what can get to 51 votes in the senate that's what we'll consider in the house. we're just in the beginning. there will be a lot of debate in the next month or months what i'm focused on is what is the impact on new jersey as you pointed out. of course, what can get to 51. that's ultimately what matters and what will matter in the house. we're not going to vote on something that can't get across the finish line in the senate. >> in other words, you're not paying a lot of attention to what's going on because this is negotiation at this point? >> i'm paying attention. i'm saying let's not start counting the numbers until we see a bill, which we haven't

seen yet and until we see where this can get to and how the debate unfolds. what matters first and foremost is getting our infrastructure out of the house which we'll vote on by september 27th. we saw the storms of ida and the devastation it caused in the northeast, jersey, new york, connecticut getting where there's critical investment and the gateway tunnel and other priorities let's get that done. let's continue to debate that reconciliation package we'll get there. there will be a long debate and a lot of twists. >> you point out there is something that you need to be able to get 51 votes in the senate you need to be able to get the votes in the house, too, and there's only three votes separating the democrats from the republicans at this point. so you need every last vote there as well. has the party been assured that they'll have your vote on what comes down the pike? or are you holding out to see what happens >> i mean, i don't assure anything until i read a bill and

see what's in it as you know, there are critical priorities of mine like s.a.l.t. that have to be in there at the end of the day i've committed to engaging in this debate in the way we should, which is back and forth, getting back to the issues that matter with my district. a lot of other members feel exactly the same way this is how we should legislate, govern, debate things and discuss them you and i are going to talk about this a lot i hope until the next week until we can get to 51 in the senate and point out the house. >> you and i may have talked about it a lot what has the party leadership told you >> on this particular piece? >> no, on -- >> on reconciliation >> not just on reconciliation, but to see what's in here, you have your concerns that you want to make sure that are in there including s.a.l.t. i haven't heard anybody say anything about that recently have you been given different guidance >> we're talking about s.a.l.t. and other priorities

they all know there's many of us that have said pretty clearly, no s.a.l.t., no dice if s.a.l.t. isn't in there, it will be hard to get this bill passed everyone is well aware of that our leadership is aware of that. that's why we have to have this debate and that's why we'll see it nothing can come to the house floor for a vote until we actually know we can get to 51 in the senate. that way we don't pass things that sit on a shelf or go nowhere. that's important as it was to commit to the fact, we voted on this in the house, we're going to vote on an infrastructure bill in the house and do that by september 27th. another huge priority of the president's historic package we've talked about it. how important it is to new jersey and the country, fixing our roads, bridges, rails, gateway tunnels and water resiliency and the climate to me, we should do this in a smart way and keep forward momentum that's what the country wants. >> congressman, when the last i

guess you were negotiating and you arrived at a deal about how to -- how the two were linked at 3.5 trillion and the infrastructure deal, and there's just a lot written the next day about you and your colleagues, eight or nine of them went in like a lion and just kind of came out like a lamb at least that was what the scuttlebutt was. you saw the articles that you gave up pretty easily. so you talk tough a lot. again, i give you a big compliment i said the democrats -- >> i don't know where you read -- >> not for nothing democrats stick together and when push came to shove, you were totally on board, all in with speaker pelosi with what she wanted even though it really wasn't what you talked about i just wonder whether people now when you talk like you're going to hold out for things and really demand things, nobody really believes it anymore, congressman. >> joe, i don't know what you read i read plenty that understood

exactly what we got out of that. we were very proud of what we got done just to explain, we got two commitments, one to separate out infrastructure from reconciliation so that each bill could get a vote on its own merit, which we believed is really important, stand alone and vote on infrastructure which will happen by september 27th regardless of reconciliation because that should run on its own. you tell the 2 million jobs a year, all the hard working men in labor and others who are going to rely on that plus obviously those critical investments in states like mine that will move forward on september 27th historic once this a century vote so first of all, that got done secondly, this other commitment the speaker made which i believe is critically important, not only is she going to help us make all of the votes for infrastructure and work for that, we're not going to vote on something in the house that can't get to 51 votes in the senate so you're keeping these packages separate, which is very important. debate them on their own merit joe, i was very happy with the -- the commitments we got

and obviously the progress we made and what matters, as you point out always, is the results in the end so let's keep focused on that >> do you think senator manchin is going to have the same spinal strength that -- as you and your eight colleagues or is he actually going to demand 50% or is he going to go for 3.4 trillion i think he'll go for 3.4 trillion i don't believe anyone do you >> well, you should ask joe. he's a good friend i think at the end of the day what's going to matter is the ultimate product that comes out that we can get to 51 in the senate and joe and kirs stin sinema and others will be debating this for the next weeks. i think they go back this week to start that process in the senate and then we'll see what the ultimate package looks like. >> when you say 51, you're not going to get 51 senators >> 50 democratic senators plus

the vice president. >> very close with such major things i don't know anyway, congressman, thank you and i said -- >> thanks, joe. >> the democratic quality could show the republicans about sticking together, solid support, backing their leaders, things like that they could learn something from it thanks. coming up, the shipping indicator, new news on what goods are moving, where, how much it costs. unique spsnahot of the global economy when "squawk box" comes right back you alright? [sigh] [ding] never settle with power e*trade. it has powerful, easy-to-use tools to help you find opportunities, 24/7 support when you need answers plus some of the lowest options and futures contract prices around. don't get mad. get e*trade and start trading today.

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welcome back to "squawk. the cost of shipping items from point a to point b is getting even more expensive if you can believe that frank holland joins us with the latest data. frank. >> good morning, andrew. u.s. freight rates in august, they increased 27% year over year the biggest increase since 1990. that's the first year on record. there was no sign of decline in sight. freight shipments, those increase 12% 4% over 2019 it's largely driven by retailers, trucking, inventory and ahead of the holiday season and even some manufacturers trucking extra orders of semiconductors when available to mitigate that shortage rails are a cheaper way to ship. volumes of containers on rails have declined.

that's largely because of a shortage of the chassises used to haul containers away from rail yards a key transfer going from west to east according to the intermodal association there pushing more and more freight on to trucks. >> for transportation companies, it's safe to say that this is the best pricing environment ever and for shippers it's safe to say this is the most challenging cost inflation year in history >> reporter: big container shipper j.b. hunt expected to benefit also knight, swift, saya truckers for big box stores. all are outperforming the s&p. that pricing power is expected to increase due to 125 ships being anchored off of u.s. porlts waiting to unload the cost and the time they ship only expected to increase as we get closer to the holiday

season >> so do we see any end in sight though that's the real question to me >> you know, andrew, no end in sight at least in 2021 there's a whole lot of other mitigating factors, hurricane ida. that's pushing rates of refrigerated trucking and general trucking higher. there's also the fact that we still have a driver shortage a lot of times these trucking companies are competing with the companies they work for, amazon, walmart. they're all hiring the same group of people and fighting for those workers. >> frank, great to see you appreciate it. we'll keep our eyes on all of it becky. when we come back, robinhood's chief legal officer on the company's brewing fight with the sec stay tuned, you're watching "squawk box" and this is cnbc. ? with your qb's increased spin rate, any pass with a launch angle of at least 43 degrees puts sanchez in the endzone. you a data analyst or something? an investor in invesco qqq.

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>> the saga. kansas city. national rate hike canadian national now has five days to improve its offer. the futures. nothing is very far. all-time highs. >> the sec chairman.

joining us now in his first here is dan gallagher former sec commissioner and now chief legal officer at robinhood. good morning to you, dan. >> hi, andrew. how are you doing? >> i'm good. thank you for joining us this has rocked the marketplace. the debate over payment for order flow coming into relief, if you will, or high relief in this whole situation around gamestop and what that conversation's created, but curious what you thought of and whether you believe right now it really is on the table has there been communication between your firm and the sec over payment for order flow? >> look, undoubtedly it is on the table. when gary says something like that, chairman gensler, it's for

sure and, you know, in my heart though, andrew, you know, i've got a lot of experience with the sec, i think they're going to take a deep look at this issue i think they have to by law go through a very arduous process, right? they have to go through notice and comment. rule making. take comments in study this issue when they do that, this will take time, but when they do that, they're going to arrive at the conclusion that payment for order flow is undoubtedly an amazingly good thing for retail investors. so i think we're going to go through a process here we look forward to engaging with the sec, chairman gensler and his staff and i think the overwhelming evidence that we see is payment for order flow is so good for retail investing from our perspective at robinhood, it's the life blood of no commission, no minimum balance brokerage. this is what has brought in a whole new generation of investors. millions and millions of investors. >> speak to this issue when we

talked to ken griffin at citadel and virtue on the other side, both of whom provide this service, do you believe as apparently gary gensler does that your customers are not necessarily getting the best possible price they could. >> i think we're getting excellent prices for our customers. i think our execution quality statistics proof that out. i think you've heard doug cifu very convincingly and clearly show the numbers which clearly lay out that the price improvement for retail customers when using wholesale market makers is much better than you would get on exchanges again, i think the overwhelming evidence here is that the current market structure works well for retail investors. >> if you're right, why do you think gary gensler is not just putting it on the table but he has been pretty blunt about his view that there is a possibility that customers are not getting the, quote, best price best price is better than excellent price. that's a separate component of

this the other issue on top of this is what kind of data, firms like citadel are really getting at how they may or may not be using that data? we've heard firms saying they don't use that data but nonetheless gary gensler seeming to take the side of some of the folks on reddit and others that have questioned that. >> yeah, look. on the data issue you should know that the amount of data that the wholesalers receive as we send the orders over is very, very limited very similar to the order being executed doug cifu would be the most clear on that. they're not using data for any purpose other than to execute the order. it's a good issue. i'm not saying any of this is not right or interesting for the sec to look at i do think, andrew, to go back to your first statement about this being related to gamestop, it's not related to gamestop this is a false narrative like so many other false nararatives

happen payment for order flow was the reason for the gamestop january 28th saga. there was a false narrative of what happened. there was a false narrative of hedge funds and retail firms like ourselves and that was proven to be false everyone moved on to something else that's been sitting around in the ub verse for years. >> clearly one of the issues is how much effectively the citadels are skimming off the top and what that really means to the customer. now it may very well be that that's still a good deal i don't -- you're not going to -- you won't dissuade me from the view that it might be a very good deal. how do you convince the public of that when there are going to be times where the customer is going to lose. it may be on the whole that everybody wins but on a very micro level it may be different, right? >> yeah. look, i think the customer's -- we need to be clear in our communications with customers about our protocols, right the way we route orders has

nothing to do with the amount of payment for order flow we receive. we charge the same to all the market makers and we route our orders to the market center that's going to give our customer the best execution. so, again, we need to be clear about that, but i think the notion of skimming off the top, what we're really talking about here, andrew, is a spread. a spread between the bid and the ask as represented by the nbbo, national best bid and offer. they capture some of that and they give it to us and price improvement to the customers and that's as old as high memorial here that you capture the spread. >> sure. one of the things that people are saying is actually that the quote, unquote best price -- that there's flexibility, if you will, in what the best price actually is. >> yeah. well, i think that's what i've heard from chairman gensler's statements is the nbbo vibrant enough is it reflective of the market activity such that that spread is narrowed as it could be

and i think that's an excellent issue for the sec to study one issue that we at robinhood have put out there is that subpenny pricing on exchanges could help this. that could narrow spreads. not exactly a statement in our own interests, right, but one that's good for our customers. so we're going to support and engage in any discussions that result in tighter spreads and better execution of quality for our customers. >> what would happen to the business if gary gensler and the sec were to come to the conclusion the payment for order flow was not something they were willing to support anymore >> you know, andrew, as i said, we're going to go through a long process, a proper process takes a long time. i don't think they're going to come out to that conclusion because i think, again, the evidence is so strong that payment for order flow is good for retail but, you know, when we get to that point, which will probably be well more than a year from now, we'll have to look at all alternatives on the table. >> dan, as somebody who thinks about public policy and the

public at large, what do you make of the usage of the services at robinhood by the public in terms of this meme stock phenomenon, the arguments that it's been game ffied and i may be a good thing in the markets and may mean they're not as educated as you'd want them to be about these issues. >> i have to tell you, andrew, on behalf of our customers i am insulted every time i hear this. the notion that our customers are stupid, that they need protection, they need the government in any state to come out and save them from making bad decisions. i think they're insulted they of course have never had a voice before they were not engaged in our markets. they were ignored by traditional wall street. they were ignored by the wealthy in a system that was created to perpetuate access only by the wealthy, here comes robin hood gets rid of commissions, by the

way. this is funny. when we talk about payment for order flow, payment for order flow is not new. it's been around since the '80s. the sec has studied it mandated disclosures what's new is no commission trading. i was looking at the numbers, the publicly available numbers in the five years or so leading up to the elimination of commissions in 2019 by all the major retail brokers it's about $13 billion in commissions were charged to investors. robinhood comes along and upsets that apple cart. that money goes back to investors. not only have we engaged them, have we brought them in, we've let them do it in a cheap manner, right? we haven't charged commissions we haven't charged account minimums or special knees and it's engaged this whole new demographic. andrew, you know when i was on the commission i gave speeches. my democrat colleagues gave speeches it was not a partisan issue. we wanted retail to come back into the market. since the ' 0s the number of retail participation has

declined robinhood is up ending that almost by itself. >> how do you feel about what might be described as the social media enabled sort of runs on stocks and some of the commentary that you hear from folks on social media around certain meme stocks. you can think of an amc or gamestop or others where arguably and even the ceo of amc would argue to you that the economics of the actual business have become disconnected from the stock prices. >> yeah, look. this is a big issue. this is the real issue, i think, that the commission should be focused on coming out of january 28th again, nothing is new in washington, andrew when i was an intern at the sec working in the enforcement division in the '90s. >> i worked on the first internet enforcement case. in that case i was reading yahoo finance boards about a pump and d dump that's the same thing, woe havea

third party, third party on reddit providing a forum to exercise their first amendment, exchange ideas and that drove market activity undoubtedly. the sec has a hard time regulating that. there's no authority to reg gu r -- reg gu tlat. >> if you were back in that job, dan, how would you do it how do you balance the first amendment rights that everybody should have -- look, people come on our program and they talk up stocks, they talk down stocks, they talk their book hopefully they disclose and we require and ask them questions about where they're coming from and why they're taking these positions, but how do you think about that >> look, if i was back there, i would be making sure that the enforcement division is taking a hard look at all of the folks who lied, who lied around all of this activity in late january, who said i'm diamond hands but

they were selling, you know, who put out false accusations by the way, and there are some pretty high profile people who simply put out false accusations, some involving us about the market activity that day. i'd be looking at those cases and i'd be bringing enforcement cases. i would let people know, you can't just freely go out and lie and manipulate a market in that way and so i don't expect they're doing that, andrew. >> i don't know if you're referring to this, but i think you may be would you be bringing a case against dave portnoy who made an allegation against the company suggesting you were in ka hootsd with city -- citadel. >> i wouldn't make any accusations but i would be looking hard. >> hope we can continue this on the air in the future as this continues on thanks >> thanks for having me, andrew. >> you bet when we come back, mohamed

el erian will join us with his take on the markets. 3m cfo telling a conference inflation is higher than it thought in the third quarter 3m is seeing inflation out strip prices and the innation isbroa based. across many parts of the business 3m shares down by 1.5% stay tuned you're watching "squawk box" and this is cnbc this is the gap, that opened up when everything shut down.

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s&p up by 28 points. nasdaq indicated to open up higher let's get down to the nasdaq exchange and speak with jim cramer good monday morning. >> good morning, becky how are you? >> good. this news from 3m, they're seeing higher costs being a little more persistent and broader base than they had anticipated. the ppi numbers this week, cpi next week. what's your take on inflation? >> 3m, that stock has been down relentlessly for the last weeks. i thought it might be because of groundwater. everybody has the same situation 3m has i don't know i think you bait the opening

then you get completely faked out. i'm concerned we have another positive opening people come in and buy and then they get hurt. i caution people to come in. september 17th has been historic for the last 20 years, the beginning of the major downturn and we're right on the edge of that. >> uh-oh doesn't sound good something to watch out for producer prices being higher, inflation prices being higher, we spoke earlier with frank holland and he talked a little bit about shipping costs, how those have been up so much the l.a. port, something like an eight day delay. 50 ships backed up there eight days you have to wait before you can unload everything those issues don't seem like they're going away. >> i don't know what's going to happen to the christmas holiday. these are when you -- you've got to get your goods in by the end of september and if you have that delay, already you're talking about near the end of september. this could be a fiasco unless you order a lot for holiday in february, march, don't laugh because cignet, that's when she

ordered that stuff, kay, zale. i don't know if people will have goods. i cannot understand what's happening. >> me neither. we keep hearing these issues that maybe you're going to see if you're shopping for christmas presents just from a consumer's perspective, you better do it now. that's not a joke. >> no. this could be an amazon christmas where you take a look and see how many days and if it's third party, it's trouble otherwise, i think people say, i can get this in four days. i'm going to order it from amazon etsy could do the same it's domestic. it's a mess. it's just not going to be the same holiday >> thanks, jim you've got a bounce in your step i know you're floating on air. that was decisive. that was -- i mean, you've got a quarterback and i think that -- i mean, that was like night and day from last year, wasn't it? are you happy? huh? >> we have to think that -- i don't want to get my hopes up

because the new falcons were horrible yeah, we have a quarterback. we have what i think is real momentum offensive line defensive line look, this is the beginning. we have a series -- we're going to play the chiefs, the cowboys. there are some real good teams coming up. jamar chase looked great that was a beautiful touchdown >> you know -- yeah, the bengals, joe burrow hasn't learned yet that you're supposed to be able to find a way to snatch defeat from the jaws -- they almost did. they almost did but then somehow they ended up winning with an overtime he'll learn. he'll learn. >> it was a great game. >> huh >> it was a great game. >> i know. i know it's going to take me a while. it's going to take me a while. >> i think you look good i'm excited for you. they're real good. >> be a good -- do the eagles and bengals play, do you know? >> we play the -- we play that chiefs division, out west. unfortunately, i don't think we

do i tell you, burrow recovered beautifully. that was some bad injury he looks great. >> right scary. >> the guys -- the guys who are doctors in the nfl, we should all hope to use them they're mazing. >> all right, jim. thanks. >> thank you. >> i had to throw that out because i was watching thinking about you. joining us now is mohamed el erian. mohamed, you heard the 3m stuff. this fits right in with some of the stuff that you have recently published and sent to us a couple of other things that i don't know if we mentioned auto production 3m, down 6% on the chip shortage is the new forecast versus 3% earlier costs of raw materials, biggest supply chain challenge and the earnings per share impact is at the high end of previous ranges. this is all kind of playing into your stagflation theme are we underestimating the issues facing us, mohamed?

>> let me thank you. after you had the discussion about the eagles and bengals i thought you would go to the jets and i was terrified thank you for not going there. it was painful and it will be painful. thank you, joe. >> good old sam. sam looked good. i have high hopes still for zak zack, though anyway >> well, keep him. the only thing we have is a kicker that can punt that's what we learned yesterday. >> yes, yeah hey, tell me that guy wasn't strutting around after that even though it was -- he was. the kicker has never hit a guy like that in the history of the game there's no way that he felt bad. he didn't try that that's a weird rule. anyway, let's talk yeah, go ahead. >> i think jay was absolutely right. he says everyone has the situation that 3m has and the cfo says higher and more broad-based inflationary

pressures. i would also say more persistent, and we have to get used to it that the problem is no longer about demand demand is ample. the problem is about supply, and these supply disruptions are going to be with us one to two years at least >> the market is a -- you heard cramer, i didn't think about that friday we were up, too, and we ended up down 270. we've been up almost every morning, and even though this autumn slump, it's talked about in "the wall street journal," but i don't think anyone really believes it yet. do you think this is the beginning of the long awaited pullback or 5%, or 10% correction muhammad. are we in the middle of that right now? there's not a whole lot of good news do you think the market rallies if the democrats get this deal done >> so i don't know the answer to your questions all i can tell you is you're raising fundamental behavioral issues until very recently, the

behavioral aspect of this market was buy the tips there is no alternative, and fear of missing out, and those three came together and every single fall was quickly reversed, what we've not seen in the last few days, this month, in fact, is that behavior. now, part of it could be because the inflation jitters put in doubt the ability of the fed to orderly normalize. part of it may be elevated prices part of it may be it's temporary. i don't know all i can tell you is you have to be a behavioral scientist the last leg in asset prices have been really behavioral, have been people just believing if they don't buy now, they're missing out on an opportunity. >> now that i think back, the last time you were on that was -- that was what your contention was that there's momentum and dip buying that it

may not be related to anything or at all logical, but it's going to continue. i think we asked you, how do you know when it's not going to continue do you know now? are we at a point where that's starting to diminish that impulse? >> i don't i see great clarity on the economic issues, and the economic issues is basically we're going to have to deal with stronger strag agflation narstas pricing power among corporates is very important. what's not clear are the behavioral aspects these behavioral aspects have dominated and that also relates to how the fed behaves oaf the next few months. it's a period of greater uncertainty. i still think that deep inside we have a lot of liquidity chasing assets, but just keep an

eye on the whabehavioral assets. >> do you think over time is stagflation, the worst possible combination of economic -- i mean, i think the opposite would be strong growth and low inflation. that would be awfully good, so slow growth and high inflation, that's like the death knell. i don't -- when do you finally say, okay, i'm going to at least raise some cash? >> okay. so stagflation is really problematic for policymakers i mean, think of the fed, does it react to the stag part? the stag part means be loose the inflationary part means be very tight which one is it? it paralyzes the fiscal policy action because you want to increase output and capacity, but you don't want to put more demand in the system that pushes inflation higher so stagflation is the night mare of policymakers, and that's why

we have to take it seriously this is not the 70s, this is something wech haven't seen for quite a while. my own view is it's with us for a while, these wins. as to the market, what does it mean for the market? we've got to figure out what does it mean for the fed skchlt then we've got to figure out pricing power. a lot of companies are going to say we can pass on these prices onto these higher costs onto higher prices, and they're starting to do so. they're going to protect their margins. others are not going to be able to do that others won't even have product to sell. expect much more differentiation going forward than we've had so far. >> you said it's a big problem for policymakers at the fed. haven't they already decided didn't they decide and the pandemic gave them cover that they were going to work on the stag thing they totally ignored the flation side of things that you're saying they already made their mind up two and a half years ago. >> i mean they made up their mind up and we've heard nothing

from the leadership but that inflation is transitory, don't worry, it is transitory. the problem is both bottom up indicators and top down bpi, cpi tomorrow suggests look, think of a two-tailed distribution. think of the flation side as well as the stag side. policymakers are going to have to catch up to reality on the ground they're not there yet. >> all right, thanks yeah, you're welcome i didn't bring up another team that rhymes with jets either didn't bring up, which i won't not going to mention it. >> okay. coming up, this morning's biggest market movers, but don't miss this first. got delivering alpha coming up the annual conference bringing together the biggest names in the investment community and influential political and economic leaders

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just about a half hour to go

until the opening bell dow futures up by 225. the s&p up by just over 30, the nasdaq up by about 95. remember, though, cramer says watch out. we've been up and giving it back during the session we will see, again, just about a half hour to go until the opening bell that does it for us today. gentlemen, see you back here tomorrow, and we hope we see all of you back here with us too right now it's time for "squawk on the street. >> good monday morning, welcome to "squawk on the street." i'm carl quintanilla with jim fa cramer got nor cautionary notes from the sell side on commodity inflation, tax policy risk and now 3m warning about q 3 inflation running hot. our road map begins with the risks for equities stocks are set to rally. goldman says tax reform not reduced economic growth is