holmes, cnbc has obtained hundreds of pages of private text messages that could be central to the case. we'll hear from a reporter who's been inside the courtroom every day. thursday, september 23rd, 2021, "squawk box" begins right now. good morning welcome to "squawk box" here onc snb. i'm becky quick along with joe kernen and andrew ross sorkin. we start with the markets. the dow jumped by 338 points yesterday that broke a four day losing streak and posted the best daily performance since july 20th. it came after the fed's announcement, more on that in a moment but if you look at the u.s. equity futures you'll see gains once again dow futures indicated up by

about 240 points the nasdaq indicated up by 114, for the week still looking at the dow and nasdaq off by about 1% but begin gains the last couple sessions treasury yields this morning you'll see there is an increase in the yields, the ten year up 3 or 4 bases points. ten year yielding 1.34%. the 30 year down 1.448%. you did see gains especially in shorter terms. after the turmoil we've seen this week remember the big drops on monday we figured it would be a good time to take stocks of where we landed. the major indexes at this point, the dow, s&p, and nasdaq are off a little more than 3% from their all-time highs the dow transports is a different story. that down by about 13% so it is in correction

territory. and then you have the russell 2000 off by about 6% >> stocks closer higher after the fed indicated the rate hikes could be coming sooner than expected and that it would start pulling back on some of the stimulus it's been providing although it didn't give a specific time line the central bank, also important to cut the economic outlook for the year here are key moments from the news conference. >> demand for labor is very strong and job gains averaged 750,000 per month over the past three months in august, job gains slowed with a slow down concentrated in sectors most sensitive to the pandemic, including leisure and hospi hospitality. my own view would be that the test, the substantial further progress test is all that met. while no decisions were made, participants view that, so long as the recovery remains on track, a tapering progress that

concludes the middle of next year is likely to be appropriate. the bottlenecks in shortages have not begun to abate in a meaningful way yet. >> we'll dig through this with jim grant. we'll do that at 6:30 a.m. this morning. >> always interesting. judy shelton later in the show as well. a lot of questions that the journal notes had to be asked about insider trading, i guess someone had to ask them. across the middle of the country where people that had small wage gains recently but inflation eating away, maybe more questions about inflation or maybe that is something that would be more front of mind for most people about what the fed is doing and keeping assets so high, which adds to income inequality and everything else. you have to ask those questions, i guess. people love a good, these guys they're -- what would you call them they're in a privileged position

so they have privileged information so they're all a bunch of rich fat cats these are the guys in the government, all the swamp. what we really ought to be worried about is what they're doing, not holding bonds but what they're doing in terms of what could be a monetary mistake. >> i think the sound bite we just played from him, that last one, talking about how they haven't begun to abate the inflationary signs haven't begun to abate in a meaningful way is that a step back and acknowledgement maybe this is not as transitory, the inflation as we originally anticipated >> i think it is years from now we'll look back, show that video -- >> by "we" i mean them. >> we will show that video of them making the transitory claim and i think it's going to turn out to be in a different place don't you think? >> i just, once again, anecdotally, the chip shortage is real. you cannot buy -- i mean, i

still -- my car is somewhere in germany. it's like may eventually leave the port i have to turn my old car in anyway i don't know i'm going to be -- >> walking. >> right hitchhike. >> the supply chain is a big -- >> what about housing? what happened to housing why is no one buying houses? i think not because the demand is down. i think there's no supply. so people have given up and prices are too high. that would reflect inflation too. >> fed ex, if you looked at their earnings report, this was a sign when i read through what they were saying, that they have to pay so much more for labor and there are still labor shortages and it's not going away any time soon once you pay more for these employees to come in. >> you're not paying them less. >> i feel bad for the car dealers. this guy said i thought we were going to have some rain but this is a hurricane in terms of no

product. >> some of these guys are selling it, you know, 30% over sticker. >> used cars you can't get new cars. >> i'm saying new, 30% over sticker, used cars the margin -- so i'm not crying at the moment. >> you can cry for me. >> okay. for you. >> i'm carless >> look, if you want to buy a ref refrigerator, couch, it's a problem. >> this happened, totally different subject. but, you know, will we ever stop talking about this i don't know maybe not because there might be a covid season every year. late yesterday the fda authorized the pfizer covid booster shot for people 65 and older. remember the fda panel said that would be okay. other vulnerable americans, immune compromised, underlying conditions six months after they have completed their first two doses that means many americans would

be eligible to receive the shots now. digging into that vulnerable term, the agency used a broad definition, including people who have medical conditions that place them at the risk of getting severely sick and people who have frequent institutional or occupational exposure, that opens the door for front line workers for the cdc to potentially clear a third dose for people in nurzsing homes, prisons, front line workers and other employees who were among the first to get the initial shots in december. the cdc could give final approval for the booster shots to proceed at a vote for this afternoon, like we saw the original eua was enough for a lot of people. i think we need to do moderna, have the people got moderna instead of pfizer -- >> that's going to be in a couple weeks >> you may not need them as much at the moment. >> moderna is not done with the data i think that will be cleared in

the near futuretoo. >> it appears to be a little bit more durable, so maybe get a couple months extra out of it, we'll see. the part about the booster shot that moderna is creating is actually a different amount in the booster. so right now the pfizer booster is the -- >> the same as the second hot. >> that's right. the moderna booster is going to be some fraction of what the -- >> a little bit less, yeah. >> -- of what the other one was. >> that leads to not only does the data have to come before the fda and clear it, then you would need to get different shots out to -- distributed to all of these places >> doing it the way moderna is doing it will make it more complicated. it may be the way to do it but it does. coming up, shares of evergrande, surging overnight in hong kong. we have an update on that $83 million payment that's due today. that's dcoming up next. later we have real-time rail

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for a public holiday despite the gain of 17%, the year-to-date plunge is still more than 80%. yesterday evergrande said it resolved a coupon payment on a bond today it's due to pay interest worth about $80 million on a dollar dominated bond. the chairman said it would be a top priority to help retail investors redeem their proukt products we'll bring you updates on that payment or nonpayment as we get them chinese estates holding said it sold $32 million worth of its stake in evergrande and plans to exit the holding completely. >> let's get to the trading day ahead. the futures right now, back a little bit from some of the best levels we saw earlier. joining us now is kathy bosjancik from oxford economics.

and markets reporter at the wall street journals money and investing team big music fan. let's start with -- i understand completely justin bieber who does not -- i'm kidding. kathy, let me start with you, i kind of smiled because you said that the fed chair was more hawkish but his overall tone was dovish so that's the perfect -- that's what we -- i guess we figured that was going to be the -- what he tried to thread as far as a needle goes. but you thought he was successful >> yeah. he has a lot to juggle i do think he, overall, wants to give a dovish message. they're not in any hurry to raise interest rates so just starting to embark upon tapering of qe which we know they need to

finish -- at least they told us they'll finish that first that's the playbook unless something unexpected happens at the same time the dot plots and interest rates moved higher and they're split whether to raise interest rates next year so he had to balance all of that what struck me, yes, it was a dovish message but a little less so the question is, is that really his feelings or does he have to represent the entire committee which is moving a big more hawkish. >> when you add everything that the fed is dealing with in, you have these -- it's all related to covid i guess because the bottlenecks are related to covid. so you have this possible inflationary period that we're headed into, that may or may not be the fed's fault, may or may not be transitory. but you have fears of a possible slow down if we don't get the variant under control. so it's very difficult to --

he's got to do -- they kind of had to do both things. we do know that asset inflation is everywhere, too so i don't envy what they're trying to do can they do it successfully or do you think there's already a problem for where we are >> well, there are a lot of risks. and interestingly, they release their own perspective on the uncertainty surrounding their forecast and it's the highest in about eight to ten years, both on gdp and inflation and the risks are much higher now on inflation again they're evaluating their own forecasts and they see increasing down side risk to gdp so that's not a great position to be in, frankly, as a central banker we'll see how they can navigate it but there's challenges, headwinds both way i agree with you, joe, i think the key, the supply chain issues if those can get worked out we have stronger growth, that's where the fed wants things to

head >> gunta, you once again point to investors should never under estimate the inclination to buy dips it happened again. there's a question this time, it's been working. they say don't fight that. it's been working for a long time, and it's not going to end any time soon. that's related to the fed, i think. >> totally. >> you know you can always buy a dip because you have the fed there. so it's related. but how will we know when that started -- when we're starting to see that not work or signs it's not going to work next time >> i mean, i totally agree it is related to the fed, right. they've done such a good job telegraphing this tapering and the survey hikes that has butt ressed this buy th dip trade. monday we saw j.p. morgan come in and say we think this is

technically driven and it's time to buy the dip and investors continue to do that throughout the week you're seeing it in the futures market today especially with the higher individual interest in marktss we've seen the past year, that's one thing people are watching how long will this trades persist and when will it stop working. that's what i'm trying to figure out as well. >> shouldn't we just keep it simple and say you know what, since it is, in large part, due to knowing the fed is there, if the fed starts the second derivative, startslessening the amount of accommodation and you see they passed the rube con and it's heading the other way, shouldn't that be the sign that it might not be as strong an inclination? it's coming. >> yeah. it is coming but again, they've telegraphed this so well we saw them lay out this path yesterday and the market was still not deterred the market staged an incredible

rebound yesterday. >> it did. but i -- that's what's hard to figure because we know the market discount so we know the market may be discounting the beginning of tapering and maybe even moving in the first rate hikes to like late next year or something. but markets -- why is the transportation average down so much do you have an -- can you ask someone that even though everything else is -- what do you think? >> that's a good question. we have seen this back and forth all year with like the value trade and the growth trade it looks like that's going to continue to play out i think one key thing to keep in mind is, as you pointed out with the risks, the mood has shifted in september, right. we've had a number of banks come in and say we're cautious on stocks morgan stanley said there's a growing likelihood of a 20% drop in the s&p 500 so people do seem to be on edge in certain corners of the market. >> mike wilson mentioned that

fire and ice thesis last time he was on, but he definitely got a little bit more -- i guess that's the ice side of things. got a little more bearish in the last week or two we should have him back on kathy, thank you gunja, thank you for playing along. when we return, an update on the criminal fraud trial against elizabeth holmes we're going to talk to a producer who's been inside the courtroom each day and has now obtained hundreds of pages of private text messages central to the case you have to hear about it coming up right after this. the wall street journal reporting that chinese authorities have asked local governments to prepare for the eventual downfall of evergrande. an update from beijing in the next hour.

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welcome back to "squawk box. former ceo elizabeth homes is on trial defending herself against counts of wire fraud and conspiracy to commit wire fraud. cnbc obtained thousands of text messages between the ceo and then boyfriend we want to get to our producer who's been in the courtroom and obtained the text messages tell us what's in them. >> reporter: andrew, i obtained thousands of text messages between elizabeth holmes and the ceo, they span from 2011 to 2016 which is when we know their relationship personally and professional ended when he left

the company. the text messages show he was a confident ceo. let's look at the first example from 2014, she texts, total confidence in myself best business person of the year sunny responds to her, awesome, you are listening and paying attention. another example. elizabeth is boasting about the money flowing in from investors. she texts sunny just finished calls, alice walton in for 50. she's from the walmart family, ended up investing 150 million sunny texts they're not investing in our company, they're investing in our destiny. that's a different destiny than what ended up happening as they're fighting hundreds of charges, serious charges and prison time.

i reached out to attorneys for both and they declined to comment. >> what does this tell us about her and her defense case in terms of how she's trying to -- going to want to paint herself, does this help or hurt her >> you know, it could go both ways this -- these text messages paint a picture of elizabeth holmes that we all knew, a cool, confident, ceo, but i have to tell you, andrew, that it's completely different than the elizabeth holmes we are seeing inside and outside this courthouse i've been covering this case for three years and she has been silent we throw her questions outside as she's walking in, she ignores all of them. i jumped in the elevator with her and her attorneys before and tried to chat her up and she doesn't say anything their m.o. is clearly to keep her silent, which is a complete contrast to the elizabeth holmes you and i saw just years ago, making the media rounds, ap

appearing on every magazine, television networks, it begs the question who is the real elizabeth holmes andrew >> yasmin, does the time line go to the point where any of the text messages say, wait a minute, you're telling me that this doesn't work? and that the entire technology that we built the company on is a fraud? is there anything like that? confidence is great, but is there any indication that she knew that it was all built on a house of cards in none of it was real? none of that >> they do talk about some issues with their edison blood testing technology they don't text about anything related to fraud but do mention about issues within the company. they mention about some exits of employees. they mention about some turmoil within the company they talk about the former wall

street journal reporter john kerryrail and him getting -- talking to these employees within the company and how they can squash that. they do bring up the issues. >> does the ceo not know -- maybe the ceo didn't know that the technology didn't work that would be my defense, i guess. i don't know >> reporter: there is this papertrail that showed she was aware. >> there's nothing in the text that betrays the idea that she is nervous at any point or anxious at any point that the technology isn't working or they have to use these other testing machines to verify or, in some cases, do the test itself? >> yeah, there is -- again, there's text messages that show that, you know, they were -- that they were worried there's one that sunny sends to elizabeth that came out in government testimony that said that the normandy lab is an

expletive disaster so they knew there were issues >> i've seen some of the texts, too. the defense that we've heard at this point is that, you know, sunny was the one who was controlling things and that she was under his thumb with some of those things the texts i've seen didn't bolster that case. >> reporter: it definitely does. that is going to be probably one of their defense strategies. we saw the bombshell documents that were unsealed a few weeks ago. elizabeth holmes is claiming very serious things. she said that sunny abused her both mentally and physically it's allegations that sunny categorically denies i looked through 600 pages of these text messages and what i saw were text messages between two individuals who were in a relationship but again these messages are only one piece of the puzzle and as you know this is a very big puzzle if elizabeth does take the stand

it's going to be a monumental moment because we have not heard from elizabeth holmes, her side of the story. >> it is great to see you, we appreciate you walking us through this and reporting on this as diligently as you have we're looking for updates and progress boy is it a courtroom drama. thank you. >> thank you. when we come back we have more takeaways from fed chair powell's comments. and later are your travel rewards points worth less? why hording them is a terrible strategy right now. as we head to a break let's look at yesterday's s&p 500 winners and losers

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good morning welcome back to "squawk box" right here on cnbc take a look at futures we're in the green again dow up about 187 points. nasdaq up 93 points. s&p 500 up about 20 points -- 25 points i should say as maybe we get a bit of a reprieve here after a couple of down days, more than a couple down days yesterday was not. >> the backup at the ports has trucking rates booming let's get to frank holland with the big numbers in the impact in the shipping business. hey, frank. >> reporter: good morning to you, joe a record 71 container ships are waiting to unload at the port of los angeles, long beach. it's a new record and 31% increase just from early september. companies racing to get holiday goods into stores has led to a surge in container shipping but container shipping on u.s. rails has declined the last two months because the shipping network is

backed up, bottlenecked and backed up. all the things shipped in containers are being put on trucks driving the rates 89% higher than december of 2019 demand 424% higher for general trucking and 525% higher for refrigerated strucking with so much shifting in the supply chain, more freight is expected to be shifted to truckers that carry goods from various companies in the same load, companies like old dominion, that's up 50%, as well as air freight carriers. companies that deal in freight brokage also expected to see more demand. those are companies that arrange for things to be shipped overseas and here in the u.s there's about 15% of the u.s.

trucking brokerage market. back to you. >> i see a question here but i was thinking this myself that it's hard to get employees, and that's a big commitment. especially if you're not a guy or gal who gets home every night driving a truck. but those rates, frank, 500%, things like that, obviously not sustainable. >> right. >> but -- and it does show where a lot of this inflation is coming from from bottlenecks but those are big numbers. makes you worry about -- >> those are big numbers. >> if it did last, that inflation is going to be passed along to the end products and to consumers, no? >> well, joe i think some of that inflation is already being passed along to consumers, sometimes in things like grocery because those have to be shipped more often so you'll see the increase in your grocery stores sooners, but wage inflation is an issue for companies

what's the right cost to get more labor in house. look at fed ex's results the last week, shares down 11%, first on the idea, the speculation they were having problems sourcing workers and then on confirmation they are having a hard time sourcing workers and paying more for the workers. there's thought that people are sitting out the labor market knowing wages are going up and incentives are going up, if they wait, they can make up the money they lost by not taking a job sooner with incentives >> very strange, cross currents. we talk about the transportation average being down so much the demand is there, seems like the best of times, worst of times. you need to show a bottom line number and there's a lot that goes into that, other than just demand thanks, frank holland. >> thank you, joe. coming up more on the fed decision still to come jim grant is up next and then -- we had mark grant yesterday. grant, we need a scorecard to

keep them on track we have other ones, too, i think. later we'll talk to the one and only author and economist judy shelton in the 8:00 hour jay clayton is going to talk about the coin battle. and much more. we're coming right back.

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we also said we wouldn't raise rates just in response to very low unemployment in the absence of inflation so that was another aspect of it because we saw that that really benefitted in -- labor market participants in a broad and inclusive way. that's of course not the current situation. we have significant slack in the economy and inflation well above target not moderately above target that's how we think about it. >> that was jay powell outlining the central bank's thinking on the economy and inflation. of course, he was speaking yesterday. joining us is jim grant, the founder and editor at grant's interest rate observer jay powell laid out a clear strategy, said they're going to

start tapering soon. didn't give any idea how quickly that tampering that would happen or how steeply what are your thoughts on this >> the punch bowl is overflowing or perhaps more appropriate, the fire hose isn't blasting so by tapering, the fed means that we'll become perhaps slightly less accommodative. it does not mean it will remove a accomm accommodation, let alone tighten. this in the context of some of the most welcoming conditions in the corporate finances ever and some of the most pungent anecdotal evidence ever. so chairman powell talked about financial stability but the fed would seem to me to be the author of great, if pleasant,

instability. >> we talked for a lot of years, jim and this has been a concern, as we've been building the balance sheet and as it continues, that this would catch up to us some day, there would be bad things that happen. we haven't seen it yet what do you think eventually happens and how does it manifest itself >> if history is a guide, it will end in drama, and great copy for the financial press, i'm looking forward to that. you know, one of the -- becky, one of the sights of this cycle, one of the most atonnishing, jay powell talks about the balance sheet but doesn't go into the analysis of one -- one might apply to the bank. the federal reserve is a bank, the federal reserve bank of new york is principal and it's excessed 300 to 1.

j.p. morgan chase by comparison is leveraged 13 to 1 so leverage ratio of 300 to 1 presupposes a great deal of confidence or a certain i institutional arrangement to prevent you from bearing losses. and the latter holds true with the fed. about ten years ago the treasury in effect wrote the fed a perpetual overdraft right and the fed goes on about its merry way addings assets, not capital and the temptation to add to the deficits are irresistible. it's like would you stock hacksaw blades in the prison gift shop? no, you wouldn't, the temptations would be unbearable. we have put the fed in a position where it is nothing

except the treasury's hand maiden the $2 billion a week handed over to the treasuriry it has 4.25 in assets, the afore mentioned 300 to 1 leverage. and i wonder what it would be like if the fed were held to standards to the rules and regulations that pertain to ordinary banks it would be a source of welcomed -- welcome external discipline on a system that really answers to nobody, doesn't answer to congress, congress doesn't ask the right questions. but if the fed were regulated as a bank, i think we would be, at least one or two steps closer to a state of financial discipline that is altogether lacking these days. >> jim, that may all be true,

but any investor who has ignored the fed or waited for this -- you know, this -- this day of reckoning would have been left in the dust. >> for sure. yes. >> so what do you tell investors now? is there a way for the fed to finesse this and get out of this and eventually start to wind down the balance sheet or do you think the day is never coming? >> there's certainly that option, that possibility one couldn't be dogmatic about anything in this day and age everything is new and unprecedented from valuations to back story, to -- but, you know, we have, i call it, a 4.5% inflation rate, maybe 5, maybe 3.75, we have a 1.3% ten year yield, negative real interest rates and some of the highest equity valuations ever so the way this ends is, you know, is -- well, the way it

ends is no one can stand to be on the outside looking in. and if it would help, i myself would turnbullish, but i just can't do it. the point, becky, about people who have -- let alone thrown bricks back at it, that has not necessarily been a winning strategy although one can make a living by looking for value where value does still exist here and there, but i think it's important to take the measure of the macro environment, which is one of immense risk. i heard that the nasdaq is not opening to live broadcasts because of fears of the delta variant or something -- >> it is open. >> is it open for visitors >> not for anybody who wants to walk in off the street but they are doing broadcasts

from there >> i see. >> and other things, too. >> i was going to make a false -- i was going to say 120 times nasdaq worried about more than the delta variant >> yeah. again, we watch this and it's one truism is don't fight the fed. that's what investors have learned. jim, it's great to see you today. thanks for being here. >> thank you, becky. >> take care travel rewards after covid, are your points going to be worthless? that's the question. we have the points guy up next you have to hear what he has to say. squawk returns after this. i can make a rustic cabin feel modern. i am a guidebook for guests. i can make an indoorsy person, outdoorsy. i give families a home, not just a place to stay. i am a vrbo host. ♪ ♪

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next on "squawk box," more travelers are returning to the skies and airline points and miles deals, they are changing it might mean the rewards are becoming, yes, less valuable joining sus an expert on airline points, brian kelly the ceo of the points guy

talk about inflation a lot maybe there is inflation or deflation with miles what are we going to do here, brian? >> you know, it's not all bad news most frequent flyer programs have made it easier to change or cancel tickets so i've actually foyed that frequent flyer miles have become more valuable because they give more flexibility if you want to cancel that trip for whatever reason you can get your miles back. certainly it varies by program but what i would tell people is, if you got credit points, transfer them to airlines. there can be amazing deals out there. >> for those of us that like to do the math and we are clever in arbitrageing what's happening here what's a mile worth today? when are we getting a good deal? when should we have to use the miles? when should we wait? >> so look, the best is still international business class, next week, i decided the last

minute to go to paris, air france, there is awarded availability like i've never seen, ten tickets, 115,000 miles round-trip business class. i checked, it was an 8,000 flight they are charging a huge premiums, but it's a screaming deal when you use piles. i got 9 cents per point in value for my amex points they have 12 transfer partners. air france was a 120,000 bonus i used 90,000 for round-trip business class if you have the appetite to travel abroad, going to europe, business class, this is the best time, too, there are far fewer tourists than in the past. delta, they want you to use your miles. we saw delta is charging as low as 6,000 sky miles one way from seattle to new york one example. >> you are arguing right now,

which of the airlines have the best deals which have the worse sft >> you know, i think when you look at the value, alaska airlines has valuable miles. it depends, each has its bright spots, delta is a great airline. >> are you an amex guy, a chase guy? >> amex and chase are neck and neck chase has partners like hyatt. you can't go wrong >> the trick is, we were talking about this, you have to transfer the points directly to the airline rather than go through the card program, correct? >> absolutely. for example, chase just added aeroplan which is air canada's loyalty program. it's 70,000 miles one way to go anywhere in the u.s. to europe if you book through their portal, will you get ae 700 or

$900 ticket. if you fly coach, you pay directly if you travel in the business class, that's where the value is >> i never understood the transfer game. the issue is once you transfer, you can never go back? >> witness you transfer, you can't say i want my chase points back >> let's get practical i think a lot of people watching have dealt with this before. you can actually book the flight before have you the miles in the account, so sometimes there is this little chicken and egg problems do you know what i'm talking about here >> some airlines will hold an award. we got a point guy airline loyalty program lets you do that but there is a level of risk, exactly to your point. where there is high risk, there is high reward if you transfer, there could be changing availability. but in general, once you educate yourself on how to transfer your

credit card points to airlines, you can get tremendous value one example, emirates is adds back up to 90% capacity starting in november from their u.s. gateways you can fly to dubai juan way in first class a $10,000 ticket there are huge rewards to take the risks. >> is there anybody out there buying miles from people >> there is a grade. i don't recommend it if you see google ads, you know, half off business class, generally what those people are doing is buying frequent flyer miles and they are booking you tickets. if the airlines find out, they can cancel the flight and take your miles all away. we have the points guy giving you your net worth it will track your airline miles and credit card points i think it's important tore people to visualize how many miles they have. deep let them keep rack up

over time they will lose value use your miles, no better time to do it >> brian, appreciate seeing you, it's fun i have been following you for so long, i constantly click on that website. i am glad to see you see you again soon >> still to come this morning, former house majority leader eric cantor will join us surplus judy sltheon on the feds and watching your money. you are swatching "squawk box" and this is cnbc

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futures play to a higher open following the rate's decision we will have a full tapered time line and what it means for investors. the debt limit in washington is starting to show up on wall street we'll talk worst case scenarios and the possible economic impact and a shakeup in the seats via facebook a top executive is out as the company continues to deal with the growing pr crisis. we will talk to tim armstrong about that and much more as the second hour of "squawk box" begins right now. good morning, welcome to "squawk box" right here on cnbc.

we'll show you the u.s. equity after this hour. we heard that news from the fed which sent the market soaring. right now the markets are looking up, dow up 161 points. the nasdaq up 86 points and the s&p up 20 points >> stocks are snapping after the fed's interest rate holds it steady hikes could be leaving us sooner than expected. hey, steve >> good morning, becky, for investors they look at the glass half full or half empty. policies will be less accommodative. but it will be accommodative for a very long time here's the take away likely it sounded in no it could be they start in november. most thought they would begin in decemberp for rates completed by the mid-year 2022.

the first hike 2022 or 2023. if the fed starts tapering in november and reduces it per month. it will buy $660 billion in assets that, by the way, is equivalent to the second quantitative easing program fed chair j. powell thinks the economy has passed the test for starting to taper. >> many on the committee feel the substantial further progress tests for employment has been met. others feel that it's close. they want to see a little more progress there is a rate of perspectives. my view would be the test, the substantial further employment is all but met >> rates, the federal market committee split 9-to-9 in 2022 or not 7-18 see a hike. fund rates 1% for 2023, 1.8% for

2024 they currently show a 65% chance now, a december 2022 rate hike that's about where it was before the announcement it was expected. zero rates and asset purchases, remember, they were pandemic emergency programs they're going to hang around well into next year we learned yesterday even though the economy has come a long way from the worst days of the pandemic >> steve, i don't know if you've heard jim grant, when we were talking to him about this. just the idea that this is a big ballooning issue that eventually is going to catch up when you talk to people who think we can ease our way out of this, is the expectation that we eventually shrink the balance sheet significantly or once we cross those thresholds, do we never go back to a much smaller balance sheet? >> so, yes, i did. and jim is on the right question there. because there is a difference between reducing the amount of

quantitative easing out there and quantitative tightening. that's what we're talking about here you remember, the market was okay with stopping the purchases. what happened the last time the fed tried to reduce the balance sheet was the market freaked out and powell and company had to reverse course there is a danger there. powell dropped the ball on his foot and pumped it when he was asked that question about quantitative tightening during the press conference he said, we will deal with that down the road when we get there. we are not there yet it's an interesting question as to whether or not the size of the balance sheet is required and the fed can get its way out of that. i think the question is fed will ask to answer that question, is does the size of the balance sheet, itself, distort markets and create inflation if so, if it has an inflation problem and that is linked to the balance sheet, it's going to have to deal with the size of the balance sheet.

by the way, by june of 2023 will be $9 trillion. >> how does a $9 trillion balance sheet not distort markets? i feel i can answer the question for him right now. >> it probably does, but there are different ways the fed is soaking it up. reverse repos and all kind of stuff going on in the plumbing of the financial system. it certainly does, what happened, becky, overtime, is the size of the balance sheet will reduce relative to the side of the gdp if the fed keeps it that way. >> if we just let everybody go and inflate and inflate, eventually, we won't look as big. we used to talk about the $64 billion question it's got nothing on the $9 trillion question. >>, no, no, no becky, becky, you have that wrong, using millions and billions is inappropriate in this conversation. you need the start all conversations with trillion. sorry, what was your question?

>> no, that's what we get at if the idea is we're going to hold pat, how many years lit take the rest of to us catch one that, the balance sheet to suddenly not look so outsized compared to budget and everything else that's going >> becky, there is a weird dynamic here i don't think anybody really understands. it gets into the plumbing of the system and we can talk to jim about this next time, but what is the demand of the banking system for reserves? one way to think about what happened in 2018 is the federal reserve began reducing the amount of the reserves in the system the system, itself, rebelled and needed and wanted more reserves. the fed has a hard tame gauging this one thing it found is it was brigg down the balance sheet when it thought that the demand for reserves by the bank system was less than they thought it was there.

so they started bringing it down and the market, itself, was telling the fed, we need more reserves out there i don't think we fully understand the need for the reserves out there the fed will have to basically grow it's way in the dark if it finds itself to the balance sheet. >> that is a great answer to my snarky question. >> good haircut. he needed it new this morning, the "wall street journal" is reporting that china is asking local governments to prepare for potential downfall of the company. yesterday, evergrand said it resolved a coupon payment on ap yuan denominated bond. today it's due to pay interest worth $83 million on a dollar denominated bond we will bring you updates on that payment or non-payment as we get them. coming up, america's economy moving one day closer to the fiscal clip. but it seems that we talk about

it every couple years. we will discuss that with eic cantor the markets right now up, the dow is good. "squawk box" will be right back.

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hey, ylan. >> analysts project the treasury department would face a $500 billion shortfall for october and november if congress does not raise the debt ceiling that will trigger a 40% cut in spending, interest payments, social security checks and military placement even a delay could be damaging as well. in a letter to congress yesterday, six former fed treasuries said postponing action to raise the debt limit until too close to the dead line undermines confidence in our political system at home and abroad it is important to note both democrats and republicans agree default would be catastrophic. what they're fighting over and who should actually do it. >> don't play russian roulette with our economy step up and raise the debt

ceiling to cover all that you have been engaged in all year long. >> reporter: complicating everything is that the debt limit is now tied to government funding, which runs out in just one week this is similar to what happened in 2013 and moody's estimated that 16-day shutdown reduced gdp by half a percentage point at the time the worst case scenarios are clearly bad. even the medium case scenarios don't look so great either. >> ylan, thank you this next person might know something about this for a closer look on capitol hill and potential impact on the markets and investors, let's welcome eric cantor. 3.5 trillion is a lot. so i understand republicans. if you have the house, the senate and the president, don't have you the ability under reconciliation to do this,

yourself what's the problem could they do it under reconciliation >> short answer is absolutely yes, they k. that's been mitch mcconnell's point all along the last couple months he has not put the democrats on notice, the republicans on capitol hill, because they have not been a part at all of the biden administration and the push to spend all this money early on, mitch said, hey, we will not participate in an increase in the debt limit all the people getting nervous, i get this is serious stuff. we have been and seen this movie before, i participated in the movie before in 2011 and 2013, there is no question that the democrats have a path out of this and i believe in the end are going to take care of this i think what the reticense is, a few things are in the way here

one, they have procedurally put themselves in a box. it will take them time to get out of that box which, of course, slows down the march towards time to get through their 3.5 trillion spending bill but they can de couple the debt creeling from the continuing resolution, which is the stop gap measure to continue the funding of government so there won't be a shutdown. they can do that and mitch mcconnell, the republicans have said that republicans will help support keeping the government opened, don't tie it to a debt ceiling. again, it's a procedural thing that will take a lot of time the second issue, very interesting that when it comes to the debt limit. so let's say they're going to separate out the debt limit and have a separate vote on that, i don't believe that they're going to -- well they've got two options, the democrats they can put the provision in their large reconciliation bill. the problem with that is i don't think they will be resolved by

the time for the need when they arises in mid- to late-october so their other option is to have a second reconciliation bill aimed at just increasing the debt ceiling the issue there is if you put a debt ceiling provision in reconciliation, the democrats have to cite a sum specific as to the amount of indebtedness they'll have to occur again which goes back to the democrat's disarray, which they can't decide is it 3.5 trillion, a trillion-and-a-half, 2 trillion, so that's sort of what's behind their reluckreluc. i don't believe we will see a shutdown or default. >> they can take care of it without republicans doing anything can they not? >> that is correct the republicans have to join them in funding the government as you know -- >> that's not an issue you said

at this point. >> no, i think mitch mcconnell said they will help. so the republicans will help do that yes. >> harkening to back you said you had been through it before i had forgotten about that you and boehner and obama had a big deal all ready to go now the narrative has changed. one side says you talked boehner into walking away. the other side says president obama changed the entire deal after you already had an agreement. >> are there alternate facts >> so the other piece of that is joe biden was a central part to that as well, which is a very different joe biden than we see going on today because he was the one who i met with the biden commission three times a week for seven or eight weeks. we made progress in accomplishing spending cuts, which over the next successive

years allowed the budget deals, the spending cuts took the place of what happened back with the time you referred to on the sequester. yes, i think there was a little bit of all of that, joe, president obama changed the deal as well as in the republican ranks way back then, we didn't have the votes for any notion of what president obama wanted at the time as you remember, back then, you know, my party wanted to transform entitlement so we could actually regain some physical integrity and there was just not a meeting of the minds on how to do that between us and the obama administration >> it's not why you got primaried? >> that is something that we don't need to go there >> you are in a better place >> i'm good. absolutely >> so, it sounds like one of the

things the democrats don't want to do is show their hand on the 3-and-a-half versus 2 versus 1 what will manchin go for it's not just manchin and sinema there are moderates in the house. they folded quickly the last time the party, would you say the das array in the democratic party is what's responsible for not being able to raise the debt limit, that's wherewe are >> that is exactly where we are. they're going to have to get over this difference or lack of agreement on the amount of that spending bill in order to raise the debt ceiling as i said before, they'll have to provide for a specific amount, if it's in a reconciliation measure i think also what's driving the disarray is the prospect for increased taxes. i always go back to this the cia was the most republican in the commonwealth of virginia and is now held by a democrat

and the current member of congress i can assure you is not excited at all in raising taxes. that is a death nul to anyone sitting in that seat i think that to your point, there are moderate democrats yes, they have caved in terms of giving pelosi more time. but i don't think that those suburban seats that they are in right now, i don't think those constituents want to see their member of congress vote to increase taxes. >> eric, that's what i was going to ask you about did those moderate democrats cave because it looks like they got sort of what they asked for, which is they wanted the separation of the big infrastructure bill from whatever you want to call, the social infrastructure 3.5 trademark bitrillion bill. they wanted can for whether or not they would vote on the second it looks like nancy pelosi said, okay, we'll vote on that by the 27th, which is monday, maybe it

sounds like they are sticking to that, knowing they don't have the other bill ready to go did they cave or is this -- they've cut a deal and we'll see if leadership sticks with that deal and whether they go along with it if they don't? >> well, it depends on what the conversation was as to whether there was a deal there because if pelosi just committed to bringing the bill up on the 27th so we got that coming next week and that was it. then they'll have to make the decision whether it's even a smart move to execute on that deal, because i can tell you as a leader, you do not want to bring out a piece of legislation and have it go down the floor. that creates precedence votes and the rest it is not an easy thing to overcome once you do that the republicans are not going to join in any scheme that helps the democrats enact one of the

largest tax increases ever and spend trillions of additional dollars. then pelosi has a deal with her progressive caucus they said they have enough votes to block i'm not sure about their whip count. if i were pelosi, i wouldn't take that risk because of the ramifications of putting a bill on the floor that's going to go down >> all right eric cantor. thank you. andrew, i thought you were going to talk to him about he looked unhappy when you were talking about obama and boehner. i don't think he would say anything bad about obama you want to talk to him about anything >> i'm cool. >> are you sure? did he have his facts wrong or something. i was nervous. >> we'll say this. i will make one comment. my comment is that when the democrats, when the republicans are in power, they're willing to

spend, spend, spend, when democrats are in power, everybody -- that's what happens it's a sick -- >> i actually agree with you there, but >> hey, funding the defense, number one, we, in a world, we need and cutting corporate taxes to make them globally competitive so we can compete around the world and hire people and succeed economically is different than throwing -- >> total >> two wrongs do not make a right. i do not support the idea of spending too much money. i find it completely hypocritical depending on who is sitting in the seat, everybody is willing to spend money. i think we need a balanced budget i absolutely do. >> you aren't talking about doubling the debt of the predecessors that obama

orchestrated all of obama's predecessors, doubled the debt of every president. we had the worst recovery since world war ii. >> the prior administration, i did not hear complaints from this side about too much spending >> you need a strong defense you need a competitive corporate sector >> right, eric thanks, eric >> i need all those things i think you can balance the budget >> did you do cradle-to-grave entimements? >> i did not defend that position you did not hear me defend that position. >> how much you want to spend in human infrastructure. >> i would probably spend materially less. we can have a longer conversation about that. coming up, microsoft programs getting a big design 4% of revenue like devices like the surface.

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>>

now the answer to today's aflac trivia question -- it's been nearly a decade since microsoft showed off the first surface devices, part tablet, part laptop. yesterday the company took the wraps off the latest generation in the lineup including the foldable du 02 and laptop studio so is microsoft surface a success? >> it's hard to call the surface a success. microsoft's u.s. pc market share was 4.3% in q2 that's a fifth behind lenovo

i understand microsoft is in for the premium market lenovo doesn't sell cheap stuff. maybe the designs are quirky half tablet, half laptops came out. apple said you can converge a toaster and a refrigerator those won't be pleasing to the user the surface duo flips open and the others have pens, they don't win market share value and at the end of the day, those are what counts. >> those are tough systems that microsoft makes that everyone uses except apple, of course you'd think they can do better >> on the other hand, the surface is a complete trial. don't forget why they created it, it wasn't to bulldoze the pc mark they made it because there wasn't enough creativity in the market for pcs

at one end, the macbook era. that was about a thousand bucks. on other nepd, you had net books, the cheap trash market. it was a race to the bottom quality wise microsoft invested in the high end pc market that main stream pc buyers wouldn't mind paying a thousand bucks for, then hp and lenovo, the goal was wasn't to sell the most, it was to defend so the partners can make money mission accomplished. >> you are saying microsoft is in fifth place on purpose? >> i don't know they intended. as long as it's profitable >> a big market. >> as long as they're not losing money on it. i think it's working they got windows as a surface now. they're doing okay. >> i think so, too thanks, john

andrew >> oh. still to come, there is that conversation going on here at the table that's, we're going to do it later. >> oh, we're not doing it later? >> we're not doing it later. we have to agree to disagree, i can't get anywhere with you. >> sorry when we come back. >> circle down government. >>, no, no, no we have to cancel the rest of the show so you and i can finish this up when we come back, we will talk about facing off and getting a lot of scrutiny. we will break down the former ceo. can we say aol anyway, later, economist judy shelton will give us comments from fed chair j. powell it's hispanic heritage month leaders, on-air anchors and

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the "wall street journal" is reporting that china is asking local governments to prepare for a potentialdownfall of evergrand. eunice, what's the latest? >> reporter: well, becky, the journal is quoting source saying that local officials have been ordered to prepare for a possible storm so that means reaching out to private as well as state developers to try to find a way to take over a certain real satu estate asset if necessary, the impact on home buyers and jobs,

so a broader look at the broader impact on the economy, setting up teams to prevent unrest and only stepping in at the very last minute if evergrand isn't able to sort out its own issues. so this report is really backing the general impression that beijing does not want to step in with direct report but would rather find another solution most preferably to work out its own issues we heard late yesterday that the founder of evergrand has a meeting of 4,000 managers to try to encourage them to go all in, he said, to try to guarantee homes and to prioritize wealth investors in their discussion and their effort to try to survive. now here where i am right now, at an unfinished evergrand project in beijing, homeowners are still very uncertain about what all this means, especially

because the debt is so large the communication has been a little bit iffy. steph here has been saying what the founder has been saying which is that those homes are going to be delivered. but there is still a whole lot of question marks in the minds of the homeowners coming here all day worried about the debt of course, as you know a part of that debt is the interest on a dollar denominated bond, which is supposed to be coming today we still have no word about that >> eunice, thank you very much let's talk more about evergrand and how it might impact the market action today as it has been doing all throughout the week joining us is senior sara malik global equity division this has been the story of the week, even though it's been quietly out there a long time, things seem to be coming to a head that has markets concerned

how big of an impact on u.s. markets if any >> there has been two main events, one is evergrand the other is the fomc meeting. when it comes to evergrand, they are dealing with property markets and credit markets the government has a large account surplus, which they can use eventually to provide a bailout or backstop to evergrand. we see this as more of a property issue longer term, china's focus appears to be on growth issues they will moderate going forward, in 2022, that's the adjustments the marks have to make our view is you need to be hesitant there if you are going to be looking for value. you need to look for quality companies, obviously, the strong balance sheets for now, this volatility needs to play through. the fed has been tapering, the fomc came out and said starting tapering this year

they didn't blink. this is because the fed will only start tapering now the economic growth is strong enough to handle it they have been communicating it well interesting, though, they are very divided on when to increase interest rates our view is they may be optimistic here, rate increases could get pushed out and that again would be a positive for the marks for the long term. >> why do you think they're being optimistic do you think there is more rough sledding ahead either in the markets or in the economy? >> when you look at 2022 growth rates, you know we're past the peak growth should be somewhat moderate we see it in the high single digits it's strong, driven by the consumer and that moderates over time, the fed may pull back on increasing interest rates. if you look at the bond market, the yield curve is starting to flatten. the ten year didn't react to strong to the fomc meeting

yesterday. the bond market is saying maybe they don't believe in strong interest hikes going forward. >> the fed has two official mandates, first is innation, secondly, most increasingly important is full employment the third mandate that doesn't getting a knowledged quite obviously is the markets do you think the fed will ever be able to pull back if it creates turmoil in the markets even if it's a pull back pullbacks we have been talking about this week are still 3% or a little over 3% for the all-time high for the three major averages >> when you look at tapering historically, if it's done correctly with strong economic growth it tendsing to temporary i think the feds will be able to stomach that when we look at inflation, we are seeing much higher numbers, our view is that spike in inflation is generally

transitory there will be permanents going forward in the 2 to 3% range will the fed view that as too hot or just right? employment is coming in lower than expected going forward. the fed said one more strong employment number tapers the cloth. we hope to see that going forward. it's been in the more single to higher digits. we'd like to see that get into seven figures as delta moves behind this we think it is when they've tried to taper, you are talking in the last ten years. by the way, tapering means they will not be buying it as fast as a pace it's the shrinking of the balance sheet, we will be over 9 trillion >> i mean, that is the, when we look at 2022, what's the big difference between what we've seen recently, we're moving into expansionary policy, how much of a headwind is that for growth. what is going on the d.c., which

we think is going to cause drama in the near term especially, how do higher taxes impact our head winds are for 2022. when you look at a third year coming out of a deep recession, you see darker returns than in the first couple years that itself what we expect next year we talked high single earnings growth the good news is that this is likely going to be more a stock picker's market. you need to be more selective going forward. it won't be a rising tide all going forward. we're looking for quality companies in areas like industrials and reits, we're finding value quality sheets and tail winds going forward. >> are there areas you'd be more concerned about? >> areas we'd be more concerned about are, you know, we're looking outside of the u.s., obviously, china is an area of concern for us for more selective and emerging markets going forward.

some high brisd like latin america and brazil, in the u.s., deep, low quality values, we're avoiding we think the company has a core balance sheet, energy has continuing supply and demand issues going forward we're seeing definitely higher on the quality office software and in the value space staying on the higher quality space. >> thanks for being with us today. >> thanks for having me. >> coming up, a shakeup at facebook, a top exec is out as the company continues to deal with the growing pr crisis going forward. more on that story in just a bit. we'll be right back. ♪ and mess me around and then ♪ ♪ worst of all ♪ ♪ you never call ♪ baby daydreaming again? but i love you still you know i'm driving, right?

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welcome brack to "squawk box. the ongoing chip shortage now expected to cost the global automotive industry an estimated $210 billion in revenue. the forecast is almost double now the previous projection just 110 billion in may they released an initial forecast of 66 billion in late january when the parts problem caused auto makers to cut production, now forecasting that

7.7 million units will be lost in 2021 up from 3.9 million in its may forecast they have warned of massive earning cuts this year some if not much have been offset by resilient consumer demand and higher profits from record vehicle prices and we got to figure out the chip problem here in the u.s. nobody is talking enough about it but you think about taiwan and then you think about china and you have to figure out a way to get all this back to the u.s >> they talk about spending? i don't think 50 billion out of this administration's plan will be enough to make it happen. >> if you offer incentives to companies to build here, it's not going to happen quickly. there is no way around that. this is a problem for a couple of years, it is a necessary infrastructure bill if you want to secure the supply chain. >> you may have to spend 150 billion to do it and you might need to find and then the question, is who will you have

do it? is samsung, intel is the only company we have that can handle this >> a long time, building a fab is very hard to do. >> and commodity chips, the labor price, the labor here is going to be difficult. this is a part of what we're talking about. >> you want to help corporations be able to make money in these things again you don't want to help them you want to drive everything abroad or do you want to bring it back here >> what are you talking about? >> do you want to hurt corporations or hurt them? >> it's competitive globally. >> ridiculous. >> why do you think they went over there in the first place? >> why >> because it's cheaper. >> cheap labor. >> that will happen. >> bring it back >> thank you we have to subsidize very likely. >> tax incentives and scott

gottlieb said we have to think about this not just with chips be all levels of the supply chain. that was a part of the problem with the pandemic. we didn't make the masks here. >> globally. >> you love globalism. it's a global village. >> corporate cronyism on this side of the aisle. >> it's not cronyism i don't think they're the bad guys, they're providing jobs. >> the truth is we need these companies. it's clear we need these companies more than ever that is one of the great lessons of the situation. >> they're begginge mto take us out. we'll continue this conversation, at least in the commercial break we'll be right back.

. welcome back to "squawk box. the debate during the commercial breaks continues we're going to do pay per view, it's streaming on peacock maybe. meantime, facebook is down after the new ad privacy rules have been hurting facebook's business, joining us to discuss this, tim orm strong and do you want me to say co-oath i ask do you go with aol, google or go with that and call it a day? >> you can do aol, google. and more importantly do flow coat we got named one of the 50 top

u.s. startups by linkedin and our company is doing well. you can call me whatever you want to call me. >> i want to get into all that i want to get your thoughts as somebody who has been at the forefront of both technolamb cal world and also the advertising world. what you make of what we're hearing about facebook and then its relationship with apple, clearly, it's going to be hurting earnings, because of these privacy issues and things that apple has now put into place to prevent effectively users from being tracked. >> i think this is a partial story about facebook i think this the a bigger story about how companies have first party data and access to consumers. when i saw the news about facebook's earnings and the disruption potentially by the apple changes hand the their ability to really track inversions if you are a company, you know, in the world, especially in the u.s. right now

one thing you want to do is you want to make sure you are not renting your customers from platforms. you want to become an owner of the first party data i think what you are seeing is the big walled gardens, as they position themselves in different places they may be communicating with each other f. are you a business in the u.s., the same debate you and joe had about the cronyism debate about globalism versus nationalism. companies need that level of debate about the first party data and their customers they need to figure out a way to get aholdof the first party data the facebook issue is the canary in the coal mine for people getting access to their customers. >> i'll ask a question then. is ap tell good guy or the bad buy the? so apple has positioned itself as being on the side of the user, on the side of privacy you the user control it. facebook and i think some other

companies would say, no, no, no, this is actually protecting the wall garden that is apple. where do you stand >> i wouldn't pay a huge attention to wall gardens, messaging each other, i would pay close attention, if i were the ceo, i would walk down the hallway and grab my data science and cto, i would say, what's happened to our first party data in the last six months i think the challenge here is that companies spend a lot more time focused on the apples and facebook than having a strategy on their own about first party data that's one of the reasons we started flow coat. we saw this issue coming years ago. i think it's actually in the first inning if you go out four, five, six years from now, this is going to end up being for corporations, data is the oil in the economy if you don't have control over your data, that's going to be

something that's a major strategic issue. >> tim, with what we're talking about in the news right now, it's good to see you i don't know if we go to '28 corporate taxes. we're discussing why so many things aren't made in this country anymore. do you remember the inversions we talked about corporate inversions almost every day before we brought corporate taxes back down f. we go back to '28, robert frank has done work on this and add in a global tax as well, add everything else in, state taxes, we're back to the highest in the world so how do we expect to bring things back here without government subsidies to offset the higher competitive tax rate we're talking about? >> joe, it's good to see you back and andrew, i think i thought of something the last time i was on, which is, we're having the wrong conversation. if you zoom out to the country level, what is the strategy of the u.s. and i ask people this question all the time, nobody has an answer.

so are we trying to bring jobs in, jobs out, a low cost provider, a high cost provider some of this stuff you talk about corporately is really a government strategy question, so i won't touch that, i think we can look at the engine in the u.s. over time it has been the innovation cycles and the ability for the u.s. to keep being in the lead dog rule in terms of innovation. i think the biggest danger we need more companies not focused on these issues, joe, but on where the innovation is. i think if the innovation gets going, that solves a lot of these problems the tax stuff will work itself out eventually, hopefully fought the wrong way, i'm more of a low tax person than a high tax person, the bottom line is there should be some quality in taxes, but i'm more concerned about making sure the u.s. is investing in innovation. >> if i can help to vilify people that are successful and

need money even if they send up their own rocketships, they're not bad people they create hundred his of thousands in shareholder wealth. it's the stance we see on the other side >> joe, let me give you a perspective you guys don't see we have 2 million creators of our products and everyone from individual businesses up to people like nbc and nfl and people like that first who use our products so we get to see the full spectrum we say one thing positively right now about the u.s. we see incredible consumer engagement for people in the economy right now, one out of ten people e people scan a flowcode, who is out of these 2 million creators, we've seen incredible diversity of usage and growth so we see companies actually investing off p&l in these new areas. >> we have to jump i want to have you back. i want to get into facebook

stuff and how is people can have a relationship with their stergin these rule of gardens and what that means. >> every business needs i'm so... ...glad we did this. [kid plays drums] c life is for living. let's partner for all of it. i'm so glad we did this. edward jones you're driving innovation. you're racing to the cloud. you need to do it securely. that's why palo alto networks developed prisma cloud - an integrated platform that secures your cloud environment end to end. used by the world's largest organizations, prisma cloud provides the cyber security you need from code to cloud. so you can get cloud security right, the first time around.

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good morning futures pointing higher after the best day for the dow and s&p since july federal projection and comments from chair j. powell moving the markets yesterday and again this morning. and congress is running out of time to raise the debt ceiling in what everyone agrees will be a catastrophic move. democrats and republicans can't find common ground we will ask pennsylvania senator pat toomey and china reportedly prepping local governments causing the collapse of evergrand. [ music playing the final hour of "squawk box" begins right now [ music playing good morning, welcome back to "squawk box" here on cnbc

s u.s. equity futures are trading a little bit higher, more than 200 points on the dow. we saw a good snap back yesterday following the comments from j. powell and i think we've made back everything after that initial break that we saw and we're winging our hands. >> we're down about 1% for the week. >> that's before the futures this morning so 1% as of yesterday's close. you are looking another a gain of another 200 points potentially. >> the nasdaq was up yesterday and the day before unlike the dow. it's up 72 today you see a little stability in bitcoin. it looked like it was down 42 at one point. we might talk to clayton about that >> so many people are complaining it's not updated >> i saw that, exactly, on people keep us honest. we hear quickly when there is a mistake or something

check out treasury yields. a slight move higher in yields since yesterday, since the meeting ended at 1.34% let's show you the asian marks minus japan. you can't talk about asian marks without talking chinese property developer evergrand, the china sector du yjour the paper cited officials familiar with discussions surrounding the country. we'll bring you the details on this story a little bit later this hour, but first, an update on yesterday's closely-watched fed decision the u.s. central bank holding interest rates steady as indicated hikes might be coming more quickly than many assumed economic projections from 18 fed officials show nine would like to raise rates next year

that's more than the view of those officials back in june these are the dot plots we are talking about remember officials also indicated they're getting ready to pull back on the pace of emergency bond purchases. those have been tied to the fed's effort to influence interest rates and get beam e people back to work the bank has been waiting for what it calls substantial further progress here's what j. powell the chair had to say about that. >> many on the in the feel that the substantial further progress tests for employment has been met. others feel that it's close. they want to see a little more progress there is a range of perspectives my view is the substantial progress test for employment is all but met. >> when it comes to economic growth, fed policy makers did downgrade their expectations for this year. they see gdp growth of 5.9%. the prior had been 7%. we will talk much more about the

fed's strategy later this hour with author and economist judy shelton. >> in the meantime, six former treasury secretaries are warning of dire consequences if the united states does not raise its borrowing limit soon in a letter sent to democratic and republican leaders in both the house and the senate, the former official says the nation is risking serious and economic security harm. on tuesday, house democrats passed a bill to temporarily fund the government and suspend the debt limit republicans arebalking at raisig the debt ceiling senator toomey from pennsylvania, welcome. >> thank you, beck why i. >> this is not a new movie we seen this play before, the risk of not raising the debt limit. it comes at the consternation of the bond holders the u.s. chamber of commerce, business leaders are pretty upset like this. they don't like to see this

wrangling around this. it's a kind of a stupid procedural issue we know it will get worked out just before or just after that cliff. i don't understand why we go through this wrangling every year other than to make a political point. >> well, i think the markets tell us just how worried and how much we should be setting our hair on fire the markets have been through this and look, as you point out at the top of the hour, equity markets have fully recovered if you look at the futures this morning. >> here's the reason why i think it's a good idea to force this exercise we have a spending problem in america. the federal government does, that is. our democratic colleagues are determined to make it much, much worse. in past decades, it was always the issue of the debt ceiling focusing congress on the need to borrow still more money that led us to fiscal deal, going all the way back to reagan and o'neill's

deals on security and george h.w. bush deal with democrats. bill checkpoint's deal even with barack obama in 2011 and republicans, it was over the debt creeling that we agreed we would create a super committee and try to go at the real fundamental long-term fiscal problem we have, which is entitlement programs growing too rapidly and if we couldn't get a solution in that committee i know because i was on that committee. then we would put pretty draconian caps my point is this has been a moment we have both side of the aisle come together to say, what are we doing to get our fiscal house in order i long argued we should tie an increase in the debt creeling to curbing the rate of growth of these entitlement programs, which are out of control they're growing too fast not only can i have that conversation, there is not a democrat to engage on this idea. not only that, they're about to

launch more more the middle class to the tune of trillions of dollars f. they want to go in that direction, they can provide the votes to raise the debt ceiling that will provide the borrowing that they are going to drive. >> i get i.t. it sound at the end it's procedural. its politics it's a way of doing what you can when you are in the rules, within are you not in the majority trust me, i understand this is the slimmest majority. are you talking an evenly split senate and house. >> i think - >> go ahead. >> i think there is an important description we should make here, becky. it is true that the more you spend, the more you have to borrow they want to go on a very dangerous unprecedented irresponsible spepgd sprending spree. i don't want to be a part of that it will be really bad for america. they don't need us they got the votes to do it. chuck schumer could do it this afternoon without a single

pru republican we couldn't stop it if we wanted to it's a little rich with setting their hair on fire when at any moment they can completely prevent it >> this note it was not just democrats. stephen mnuchin was missing from the list. >> and all the others were democrats. and look, the treasury has a plan to prioritize in the extremely unlikely event we didn't raise the debt ceiling. they don't like to talk about it it's very in15 my point is, if it's so bad, why haven't they done this already they got the votes there is nothing we couldn't stop if we didn't want to. >> democrats go along, they said when republicans wanted to pass the trump tax cuts, that they needed the democrats to play along in raising the debt ceiling. even though democrats were against that legislation, they still went along with it to

raise the debt ceiling is that true >> the problem is the price that they charge, joe this is the way it always is with the democrats they've usually voted against debt ceiling increases when republicans are in control they always made it clear, they're available. if we're willing to grow government enough and make the underlying problem worse by enough, then they'll go along with that. yeah, there has been times they've voted for that. >> so it's a cugill. >> for every year in the senate, i want to take at least one of the big entitlement programs that drives our underlying fundamental fiscal misalignment and curb the rate of growth. that's all we don't need to cut it. we don't need to throw anyone off own entitlement program which they're accustomed

but at some reasonably foreseeable future the rate has to slow down so the economy can catch up so these programs don't continue to consume ever more of our country's gdp. i'm saying, let's take one of them you can pick it. the democrats can pick the program. take one and put it on a sustainable fiscal path. you can sign me up. >> what if tra program was defense spendling? >> no, i'm talking entitlement programs it's not the discretionary spending defence is not the discretion air side it's the programs on auto pilot that are universal in some cases, right, medicare, social security and then medicaid, which is the most problem matibleric >> there is new entitlements proposed if they took care of med car. >> absolutely. >> let's say we means tested the other ones, then you look at some of the other important projects for democrats child care, whatever you want to look

at >> joe. >> yeah, go ahead. >> no, this is all a terrible, terrible idea. this bill, this $5 trillion bill they're pretending is a 3.5 trillion bill is meant to make the middle class dependent on government from pre-k and free child care and free paid leave here is a check in the meal within you have a child. here's a raise when you have another child. we used to think that middle class families that have an income have some responsibilities for raising their family the democrats want to socialize this this is a transformation of american society and the traditional relationship between the american people and government this isn't about how do you deal with people who are in abject poverty. how do you deal with people temporarily unable work. it has nothing to to do with that it's about prosperous middle class citizens becoming dependent on government and separating the check and responsibility to work this is a very bad idea.

i wouldn't be for it if the money were free. money is not free. this is a disaster >> senator, let me ask you >> what do you make of inequality in the country? by the way, ail sigh straight up, we might be overspending and i think there are issues that you are raising here that are pertinent, important an not unreasonable either. but i also recognize that if you look at the data and you look at this country, the inequality that exists today is at a very different level than it was 20 years ago. >> so, andrew, if you ask me, the biggest single driver of the inequality we have across america has to be the monetary policy that's inflated assets to unbelievable levels. people who have the financial assets, especially real estate as well. people who have the assets i have been very critical of this monetary policy we should have normalize long

ago. >> senator, there are two ways to fix this. one is for the fed to fix it that means we have to increase rate we see what that does to the economy across the board is other is to do it through tax policy. >> there is another way. first of all, i'm not suggesting it's the fed's responsibility to go out and eliminate inequality. their responsibility is to conduct normal monetary policy that preserves the value of the dollar and if they do that, they won't be exacerbateing inequality that's my first point. the second point is, look at 2019 in 2019, we had the strongest economy of my lifetime, tremendous economic growth record unemployment and wages were growing and fastest for the lowest income americans. we were nor rogue it through strong economic growth and organic wages that comes from

that that's thousandr how you do it strong growth is the best way to inequality >> senator toomey, thank you for your time. i have a feeling we'll see you back here soon. >> coming up, the debate continues. we will talk crypto currency with jay clayton we will talk about china with him as well. stay tuned you are tcng "uawahisqwk box" on c nbc. c nbc. >> 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 too "squawk box. chinese authorities are asking governments for the collapse of gigantic developer evergrand eunice >> thanks, andrew, the journal is quoting sources saying the central government has ordered local officials to prepare for a possible storm that would include reaching out to states and private developers about looking at possible ways to take over local real estate

assets to examine how the mitigate some of the negative impacts on the economies, particularly when it comes to homeowners or to jobs and then also to set up teams to prevent unrest finally, the report says that the local authorities are being told only to step in at the last minute if evergrand isn't able to work out its own issues in an orderly fashion. so this report really backs the general feeling here that the government does not want to step in with the direct bailout that it prefers an alternative route. probably most preferably they work out their own issues and the founder took a direction convening a meeting of 4,000 managers, telling them they needed to go all in to work out issues and deliver homes to home buyers and then they needed to make wealth investors a top

priority these are both recommendations the company got from financial regulators at a recent meeting now here where i am at an unfinished real estate project, there have been homeowners coming here, all day long, looking for information. very concerned about whether or not they will get those homes delivered because there is so much uncertainty around the debt, which includes the 83, 85.3 million dollar interest payment on a dollar denominated bond, which still has not been resolved andrew >> eunice, thank you for that so does the evergrand crisis rhyme from 2008? jay clayton has a few thoughts he's a lead cnbc contributor is this a lehman moment? >> well, you're about as qualified to answer that as i

am, andrew, with your chronicles of those days. look, this is the kind of moment that our chinese counterparts are probably looking at this is this an isolated incident or does it have systemic effect i'm sure that's exactly what's financial through mind of people what are the potential channels of systemic effect here? is this a situation the, let's put it this way, at the company, are the lenders to the company short duration lenders, is there going to be a case where this is a real liquidity squeeze there is that. more broadly, the assets underlying, you know, the enterprise so to speak, real estate, retail real estate, residential real estate to coin a phrase, are we gentleman to have price dislocation there that's what people are thinking about. that's what you think about when

are you in one of these prudential roles there is a point that eunice made, actually two one is, what does this mean for non-chinese investors in the debt of this company are we going to have a situation here they are treated differently or the same? it's something to watch closely. last eunice just made the point, don't step in until the last minute that sound great in theory, except you don't know when the last minute is so there is a lot going on here, i'm not saying it is like a lehman moment. but you analyze it like that >> jay, hank paulsen came out yesterday saying they don't believe this is a lehman everything this is something that is going to be contained. are you in agreement with that >> look, i have great respect for former secretary paulsen especially around these matters him i'm sewer what they did is go through exactly that

analysis what are the potential transmission channels here to the rest of the economy should you have a failure, their conclusion was this can be isolated through either public sector or private sector intervention but that's the kind of analysis they went to will this transmit to the rest of the chinese economy >> we are turning the conversation for a moment to crypto there is a battle brewing as you very well know between what appears to be the crypto industry and the sec where you formally sat over whether these crypto currencies if you will, currencies or securities, coin base taking it to gary genzler and stepping back a bit about this product, where there would be effectively an interest rate product or interest-oriented product, they're no longer going to offer that after gary genzler said if that's the case, it would be a security. what should it be at this point?

>> look, i think, well, i hope that i have been consistent on this fred mcintosh and i wrote an op-ed in the wall "wall street journal" four or five months ago. we'll call them crypto products. i think the best way to analyze them from a regulatory perspective is what incumbent product are they providing the same exposure investment and the like that's not a perfect match because you will come to whether digital assets such as bitcoin or the like, have any incumbent analogy. but that's what you look at. in terms of a, what i would call a lending product or an investment product like a stable coin at what point does for example does it start to look like a money mark mutual fund a money mark mutual fund, that's just logical i hope that's a good way to sort of tee up the conversation. >> therefore, what do you think is the next step in this

are we at a point. let me ask you a different way are we at a point where crypto is out of state philosophy and actually it's no longer a question about whether the regulators are going to stop it. it's how the regulars will deem with it. i wonder if bitcoin is like uber, it may have been stoppable, maybe it's at a point where it's everywhere, there is no choice. it's a matter of how they handle it >> well, let's tack up specific products and go to the technology i personally believe that this technology is here to stay and it's going to come to incumbent markets as well as new markets i'm involved with a couple of private companies that that is their thesis, crypt to currency or said better blockchain technology is going to add tremendous efficiency to our incumbent markets as well as provide new opportunities for

investment i believe that that's my personal opinion i think a lot of people believe it the question around particular projects, whether they thrive, survive, fame, that provides a microanalysis as to what functions they provide and whether it's something people want and what the competition is. >> jay, i do want to ask you one thing, it's something your contradiction seem to believe, which is that in your final days at the head of the sec, the sec brought a case against ripple. now you are advising other companies in this space. and they point out or suggest that this is a conflict. >> well, let me say that we brought a number of cases during my tenure at the sec in the ico space operating securities that were not following our rules around registration. i will not comment specifically on the case you mentioned.

but in terms of my after government service in the space, what i can say is that the companies that i advise, you know, i don't want to be promoting them, but modern institutional managers and others is one i would call infrastructure i did not know these companies while i was in the government. i was introduced to them after i exited, did my due diligence whether i would be an ad advisor and chose to do so >> in terms of, comparing this to a money market and a money mark should be regulated that makes sense i get that analysis. i get that comparison. and it does make sense to me but gary genzler made some comments recently how there are five to 6,000 coins out there, stable coins, different variations, it's wild west you won't have many banks issuing thing. he compared it to when banks would issue their own money and

that's crazy i understand his point on that as well. maybe that's where some of the confusion comes in the comparison to a money market if are you saying that this is, you know, you've got funds for every single coin that's there, i get that i understand gary genzler's point about not having all the banks out there. i think it leads to confusion what is okay what is not, how you iraq e regulate all of that >> i think a significant source of the confusion was the path that we started on the path we started on in crypto industry, issuing tokens, was one that there must be a place where you can finance ventures with public money. where you the ventureer, the person whose efforts everyone is relying on have a tremendous amount of information and you can sell interest in that to the public without going through the sec registration process

i think chair genzler has been very good in articulating in 1933 and 1934, we decide when have you that type of information asymmetry and you will raise money broadly from the public, in order to fund that venture, you're most likely engaged in a securities outfit for some reason we started with the perspective it was some broad area where you cannot comply with the regulation requirements so we went down a path from psychologically, it was inconsistent with the existing law. i think that's a part of the friction you are seeing today. >> jay clayton, it's callss good to talk to you we hope to have you back very soon. >> thanks very much. great to see you. >> i saw a lot of those on twitter as well about jay. sometimes i like it when there is a controversy in a crypto area, because all that, that's all our twitter feed is and i

don't see any of you're fat, you're bald, because you got to go through them one by one because there are so many apt rip him that's all that comes through for days, ripple what was the other one, the apes that's all you get on twitter, i don't have to look at twitter, because it's about some ar cane. you get those? >> sometimes we're lucky we don't see other stuff in there. rick santoli is standing by in chicago. >> yes, initial jobless claims popped 16,000, one-sixth higher, they were revised from 332,000 last week to 335,000, joe. now we take that to 300. a week in arears, continuing claims, moved from a revised

2714,000 to the present number 2 million 885,000. so we are movieing a bit in the wrong direction but for all practical purposes at least on initial claims, they seem to be consolidating a bit. continuing claims popping a bit. after yesterday's fed meeting, maybe the residual issue that most traders are discussing around the water cooler is actually an ongoing issue. the complexion of the yield curve. how short are maturity, so the dynamic in place before yesterday's fed meeting. my hats off to traders for seeing that ultimately the change in dot plots may not be accurate policy but it is accurate insofar as the notion that the taper needs to be done before we can raise rates and continuing to underscore the taper is coming and finalizing more that rates have to increase

ultimately left the impression we have to address long maturity rates rise, like future inflation and most susceptible to rising interest rates at the end of next year, we're short of maturitys. you are seeing that play out in real time. >> we have judy shelton coming up in a little while good time after some of the comments, so much to talk about. it's not inside baseball talking about the fed, is it, rick >> no, not inside baseball at all. as a matter of fact, i think we better have a lot more conversations regarding the fed. i found it especially interesting with andrew's discussion about the fed and the role in potentially addressing income and equality. when maybe they're the catalyst that expresses it. these are complicated issues so hopefully, judy shelton can

weigh in on that. >> the fed are dealing with crappy policies, they put growth and zero and they got to be there. you heard toomey things can work well if you do - >> the problem is sometimes there is policy and the fed is trying to make up for him now we have the fed's policy, withty policy makers have to make up for. >> no, they don't. >> i'm saying. >> andrew, there is no way around, we're going to address income equality when we basically borrow 75 cents of every dollar we spend. it's only going up it's fool hardy to think we can. the only way, it's common sense for crying out loud, education we spend so much money on it but there is never a cost benefit analysis geeze, look at the kinds of kids we are generating out of high school they can't read. >> you and i will agree on that. >> good. >> no question.

>> excellent, hip hip. >> if you thought this conversation was over, you'd be wrong, much more on the latest fed decision and when we might see the first rate hike. former fed board nominee judy shelton will join us first, though, we are watching pot stocks rally again this morning. shares are higher to include cannabis banking reform in a big bill "squawk box" we'll be right back have a great flight. thanks. we'll see ya. ah, they're getting so smart. choose the app that fits your investing style. ♪♪

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. coming up, jim cramer's first take on the trading day ahead and former federal reserve board nominee judy shelton will join us with her take on fed guys who the central bank has, maybe she'll weigh in on the debate around this table this morning. stay tuned you are watching "squawk box" on cnbc

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doesn't cover at aflac.com we have been talking about it all morning the fed indicating rate hikes can be coming sooner tan expected and telegraphing a pullback of some of its pandemic era emergency stimulus >> while no decisions were made, participants generally view that so long as the recovery remains on track, the gradual tapering

progress that concludes by the middle of next year is likely to be appropriate. >> joining us now, judy shelton, a senior fellow at the independent institute and a former federal reserve board nominee and author of money meltdown, restoring order to the global currency system some of the things perhaps you wish started earlier do seem to be on the table now in terms of starting some tapering and maybe eventual rate hikes coming in sooner than maybe previously had been indicated are some of those things positive for you with what you heard yesterday? >> it's really mixed, joe. i don't see anything new the taper agenda is exactly what has been predicted we knew it had to happen before the end of the year, so now on schedule, it looks like it will be announced in november and started in december.

if they whittle down that 120 billion per month in purchasing government backed debts say 15 billion each month by about july, they will have finished it out. meantime, they will have spent another 600 billion. the fed balance sheet will be up to 9 trillion. that's approaching 40% of gdp and will any of that affect inflation? i really don't think so. i think the money that the fed has been spending to buy government-backed debt has just been no bail out the government. i mean, if it's monetary stimulus, was it meant to create jobs because that's not our problem we have plenty of jobs going unanswered so the inflation that we're actually seeing now in the cpi and the consumer price index has much more to do with limited supply and maximum demand because of fiscal stimulus so, i'm afraid that the fed's

tapering is going to seem like some kind of signal, but we could still end up with inflation, maybe lackluster growth, less than maximum employment and then down using that big weapon of raising interest rates >> just if you were j. powell, if you were on the fed and maybe who knows, some day perhaps you will be, so you got a dual mandate and this horrible pandemic and you saw, you know, 9 million, 10 million jobs were gone you are trying to get them back. are you not back to where you were so you go the cover of bottlenecks to hang the inflation, the transitory inflation problems on. and if you are loyal to your other mandate of full employment and you see the delta variant, a case could be made that you are doing the right thing by -- and as you did something, if you

took stimulus back too quickly and you know the economy did slow a lot more than you thought, you'd be blamed for tightening too quickly i think they have cover if they want to try to logically explain what they were thinking. although, as you point out, they're not taking into account the fiscal situation, where there are jobs but have you people that aren't inclined to take the jobs. should they have looked at that and taken that into account? >> well, the fed's job is to be lender of last resort and provide liquidity in emergency situation. they did that. they deployed the airbags. they threw the kitchen sink at saving the economy from liquidity problems but where are we now where are we now how is the fed supporting the economy by financing overspending what does that do to create jobs, which as i say is not the issue? how does that get people to take

those jobs of all the political comments that the fed chairman could make, that is, judy comment on the fed's role in climate change or racial inequity no, i don't think the fed should be involved in any of those things the one thing you say say is if you wanted to have the least distortion to price signal if you want the private sector and the economy to go to entrepreneurial capitalism to work up, you can't have the government distorting these things so you have to have a balanced budget that is really the goal. we were close to that in 2000. it is doable you at least have to have a plan to get to some kind of fiscal responsibility you can't have sound government without sound finance. >> judy, we have been having a discussion whether the fed at zero emergency accommodation,

whether it's actually spawning income inequality or making it worse or causing a lot of what we talk about. so you can weigh in on that whether you believe that then we've talked in the past about how sometimes the fed is seen as political because, you know, big fiscal bills need the fed to cooperate by buying the bonds and by keeping interest rates low. so, it seems like a vicious circle that the fed stays at zero income inequality gets worse you have you know a progressive congress want to try to help income and equality by spending more money that keeps the fed at zero because it has to enable the spending of more money and the income and equality gets worse again. powell wants a second term, too. so it all looks like it's sort of rigged in a bad way >> it does, and the only way to get out of that vicious circle

is to take a stand that's why i think this battle over the debt ceiling goes much bell e deeper than political posturing. we're really talking about the future of free enterprise, individual freedom, of private sector, that encourages innovation that believes in competition as a way to get the best product. that creates new jobs. that is what america has kind of stood for all this time. and i think we're now talking about not equal opportunity but regressing material differences. that is financial inequality to government i guess government equalization of income i mean, that's where you would be headed. and it fundamentally changes the relationship between citizens and development.

i am very distressed that monetary policy is not only not getting us out of a very bad choice between a more socialized approach and i think a freedom-based approach, which i think ultimately leads to economic growth and increases, increases prosperity for people, raises living o interest rates, that does exacerbate the inequality. we have accomplicepolitical pol now impacting fiscal policy. that is sort of where we are pox on both houses, if you will, because, you know, under both parties, we have seen, you know, the debt go up, and we have seen

nobody seems to want to have a balanced budget anymore. so the question is, what do you do about that? let's be honest. this is a both-party problem >> i'm aligned with republicans on this. i'm a citizen now, so i'm free to say my political policy is for smaller government i think individuals make better investment and better spending decisions in deciding how they're going to seek happiness in life without government influence and trying to socially engineer people's choices. >> let me -- i'm going to ask you a serious question i notice joe thinking i'm aligned with the party that's in power now. i don't believe that's the case, because i don'tagree with the amount of spending that's on the table today, but if you don't

agree with the amount of spending on the table today, would you say you're not in favor of the spending that took place during the trump administration >> what we had during the trump administration was a pro-growth economic agenda that i would do anything to get back to now. we're reversing from it. >> hold on we have -- >> just a moment in 2019 i think we had 2.1% gdp. when taxes were brought down to, you know, the lowest in quite some time. do you think that worked >> i think it worked yes, i do think it worked. i think lower taxes, less regulation, more investment in energy production, and taking on -- >> did it do anything to balance the budget, that i both i think agree we want. >> is it better to balance by

taxing u.s. corporations so they can't be competitive >> no, no, i'm not making that argument. >> that's not the right answer. >> i think we have to both agree in a there was a problem before, there might be a problem now, and let's try to find a place in the middle i think, unfortunately, we have extremes on both sides that aren't talkingto each other. >> i think the best thing we can do is be on a path to higher real growth, not just financialization of the -- higher, real productive growth, where we're making things, where people have jobs and perform services that other people want. not just playing with money. >> your narrative is, prior to the pandemic, you didn't think that any of those pro-growth policies had worked? you didn't think unemployment was 3% do you dispute that a lot of those things were having a positive -- i think we did 2.9%.

the wage gains were better than we have seen in the past 20 years. do you dispute those tax cuts were bearing fruit >> i think there was a benefit, but i also think -- selectually the conversation would suggest that trendwise, going back to 2014, we were beginning the trend then i think it helped to some degree, but i don't think it helped enough to justify and rationalize the additional money that we are going to be in debt for, and therefore have this new conversation we're having. >> the pro-growth policy of obama administration i guess set up on the upward trajectory? >> final words >> we were not on the path then. i have to dispute with andrew. i'm happy you pointed out to him

that exactly the place where chair powell is hoping we can one day return to is where we were under the trump administration in 2018 and 2019. >> you can spin the narrative any way you said in hindsight. that's why we never will come together, because i have a completely different world view. >> do you remember the trough -- >> you don't remember the wages or the unemployment number >> we did it in the context of the markets. i never saw us talk about the biden bump >> i just want to know which ones -- >> chairman powell is not -- you can't win. you can't win. >> economic growth is the most inclusive policy to pursue >> i don't disagree with that. hallelujah amen >> thanks, judy.

from one man's opinion to another man's, electric check in with jim cramer. i want to talk about the markets this week. after all the ups and downs, we're almost back to basically where we started, if you include the futures this morning what happens next? >> well, i think it's in the hands of eunice yoon, and by the way, her 5:00 report, unbelievable how does she get in front of an empty apartment. she's the bravest person the fact is, that president xi overstepped. now he has to make good on a lot of loans he probably doesn't want to have to do i think he decides to cut off all the international guys, they will lose, but because he didn't let this thing go down, lit really at the same time that jay powell said party on, it was very hard to stay short. i'm a powell man why? he's worried about trying to get

so -- and he's worried about something that i know that dr. gottlieb is worried about, which is that we have to stamp out delta. you know, once we stamp out delta, get better employment, i think he's going to come around and say it's time. i lie like the setup president xi is running with the bulls. >> jim, great to see you this morning. >> thank you i'll have president xi on "mad money" tonight he may cancel. it's my fault. heather told me. he wouldn't come on any more thanar mk zuckerberg see you later. time for "squawk on the street."

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♪ good thursday morning. welcome to "squawk on the street." i'm carl quintanilla with jim cramer and david faber the dow is down just ten points from last friday's close as investors show some comfort in evergrande headlines and an even more hawkish fed stocks look to rally f