recession in the near future even if there were to be one, it would be slight. and a new challenge for the gig economy. the labor department proposing a rule that could request for workers like uber and lyft the stocks got hit hard yesterday. wednesday, october 12th, 2022. "squawk box" begins right now. ♪ good morning welcome to "squawk box" here on cnbc we're live from the nasdaq market site in times square. i'm becky quick along with joe kernen and andrew ross sorkin. and let's take a look at the u.s. equity futures at this hour you're going to see right now there are some pretty strong green arrows not as strong as they were a little bit ago, but the dow futures are up by about 180

points, the s&p up by 27 and nasdaq, 108. the nasdaq dropping another 1%, closing as its lowest level since july of 2020 the technology stocks really hit hard as there are concerns again about what 's going to happen with interest rates. the 10-year looks like it's yielding higher. around the world today, mixed session in asia. the bank of korea raises its interest rates to a 10-year high of 3%. in japan the yen is now trading at the lowest level in 24 years against the dollar i think it was at 1.43 now it's 1.46, yen to the dollar that's crazy

japan has been resisting higher rates unlike everyone else around the globe. the "financial times" is saying the bank of england is displayin displaying a willingness to buy bonds. andrew bailey delivering a similar message. that happened yesterday. he warned pension fund managers to try to finish rebalancing their positions by then. so we're seeing additional turmoil in that marketplace. >> it just seems like the opposite of what we did. you know, you say, i've got plenty left here i've got my bazooka. paulsen saying it doesn't end, it's a dare. players take it as a dare and say, really? we'll see. they start hitting you again, and then you have to -- you have to backtrack. >> they're kind of frustrated, i think, that the pension funds haven't done anything. they're giving you the

opportunity. you're saying, you don't like this price, and so you're not coming in and doing it you've got three days left. >> it sounds like it might be a mistake to u we shouldn't just assume they know what they're doing. they really may not. >> they do have to get out of this little mess they created. the question is how do you do that >> see, that's where -- >> you're not in the hole -- >> i'm saying you're right, but we're not saying the same thing. you're saying liz truss made the mess i'm saying there are others. a lot of people are pointing at where the actual genesis of the problem. >> where the mess began. >> i hope president biden is ride he doesn't believe there will be a recession in the near future here's what he said last night in an interview on cnn >> it hadn't happened yet. there is no -- there's no guarantee that they're going to -- i don't think there will be a

recession. if it is, it will be a very slight recession that is, we'll move down slightly >> the way the labor market is and even consumers, he could end up being right i don't ascribe to the back-to-back quarters that say we're already in one i'm still hopeful. at the same time, he does things that don't help the case if he doesn't want it to happen. but the president said the u.s. has real problems, but credited legislation passed by his administration, not blamed credited with putting united states in a better position than any other country in the world economically i might take issue with that i hope he's right. i don't think it's a given that we go into a really hard jamie dimon -- i don't know where he's saying it's a hard landing, stand, druckenmiller

there are some who say it's going to be. >> interestingly because we're now seeing this natural experiment play out in terms of how we're behaving relative to how europe's behaving and everybody else, when it comes to the policy piece and we can all be critical of the policy piece, i think in tend it's almost been irrelevant to the larger situation in terms of where our economy is. >> we always do better and we should. >> we can debate i mean now you go back and look -- you know, you can look at any of these things, was it a good idea or bad idea in the end, where are we relative to everybody else. >> we would have always probably -- this gig thing we're going to talk about in a second, i mean i understand the -- all these packets, these virtual packets may kind of lead where you're not wanting them to go and i think uber and the whole gig economy is a huge plus for what we have and to mess with it like they

want to mess with it with, you know -- i guess it's good intentions they want people to get benefits and everything else. >> let's talk about a couple of these other stories. i think part of the big problem is what happens to the economy, but what happens to the markets in the meantime. allot of people we're hearing from are those who do risk management and look at the markets. earlier in the day treasury secretary janet yellen spoke to sara eisen in an exclusive interview. here's what she said about the health of the economy. >> we had an employment report just last friday that shows we continue to have a very resilient economy, an economy, of course, that's slowing, which is something we expected fully after a very strong recovery we essentially erased the shortfalling output from its potential. the arp accomplished that. we would expect slower growth,

but, you know, we still hadover 260,000 jobs last month. >> yelin also addressed reports that she was considering leaving the administration after the midterm elections. she said she had no plans to leave. she also said she didn't see at this point problems in the market again, that's the big question the recession that may be coming that some argue may be here in some areas of the economy, how bad it will be will probably be market reaction. biden says he doesn't see a recession coming yelin doesn't see problems in the market those are two huge questions that a lot of people are waiting on. >> the issue is you cannot see problems in narth today, but as jamie dimon says, you may see problems in the market six months from now. it may be semantics issues too. meantime president biden promised there would be consequences for saudi arabia after the opec announced a large

production cut last week they had been urging counterparts in saudi to delay the cut for another month. the officials argue that would be a clear sign that they're siding with russia, but they dismissed it they consider it a political gambit by the biden administration to aprovide bad ne -- avoid bad news ahead of the midterms. >> you can say that, but it's just impossible to really totally dismiss that >> are you trying to affect the midterms is it the biden administration arguing against you? are there other forces at play you've seen those reports arguing on this, that they have to go screw with the administration. >> but by definition, we're doing things that we think help the country, and, therefore, if

they do help the country, we will be re-elected and it's all like a circular -- of course, we're doing that we're trying to help the country and be rewarded for being in power and having good things happen but in its more cynical world you would say -- you would say, you know -- are we going to talk to hugh johnson about anything other than costs and making bags a little -- making a little bit less at the same price what else? i don't know what else to talk about. >> what are people buying at gas stations are they talking about snacks? >> i want to talk about the new sun chips. >> they're made of black beans. >> i got my bag of black beans. >> i like the cinnamon. >> i have not tried them i'm a sun chips guy. always have been. >> teven the black beans

are there side effects at all? is there any side effect to the black beane aspect? >> i heard there's too much artificial stuff going on that it's not no black beans maybe it is black beans. >> we all remember the olestra side effect. that came so fast. >> remembers t tostidos? >> yes. we'll talk more about all of this with huf johnson, pepsico cfo and vice chair coming up at 7:10 get rid of the gig story, biggest story. we'll do it in the next -- i think that -- that doesn't help the labor. that's also self-defeating.

>> worst-case scenario, it could increase costs of uber or lyft. >> 20% to 30%. >> 15%. >> 15% i said 20% to 30%. >> i told you my story. >> i know how much you love uber. >> it's amazing. >> look, you can do the -- coming up, crypto check. it's cryptocurrency. halloween is coming, my favorite holiday. the latest moves in bitcoin. ether and adjacent stocks are next. later this hour, former house speaker paul ryan is going to join us on set. if you haven't met him, he's very tall. he'll talk about the economy very fit the economy, the fed, energy pric, d a esanlot more you're watching "squawk box" on cnbc >> announcer: this cnbc program is sponsored by baird.

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benefits i don't even want to talk about this shares of gig shares plunged after the labor department changed the pape ework as employers rather than independent contractors. lyft fell 12%, uber, 10%, door

daesh by 6%. it would change how the government classifies the workers. that's not really the issue. both uber and lyft said they didn't believe the new proposal if enacted would reclassify its drivers, but the stockmarket believed it yesterday. you have a lot of flexibility as a lyft and uber driver there's a lot of trade-offs, a lot of great things. you can work as much as you want, as hard as you want. this will basically -- it's going to be a stake in the heart of the whole gig economy. >> here's the question there are people who drive 10, 15, 20, 25, and sometimes even 30 hours at different times, odd times, whatever. those people shouldn't even -- we shouldn't even have a conversation about those people. there are people in places like

new york city who decide for better or worse this is the career path they have chosen, right, this is what they want to do, and uber's chosen to do it with them, and they're trying to work a -- >> this is what was said. >> -- eight- to ten-hour-a-day schedule or what have you. it's not an unfair conversation the truth is if you're trying to make it a fair playing field for employers, you know, for those people who are working 40 hours a week in just about every other industry, they're paying those benefits too so that's to me where the debate lies the challenges -- it's hard to understand exactly how the policy would be enacted. but would it cover the larger gambit of people and then this is a more difficult conversation and makes the employment picture for everybody more difficult.

>> the bigger issues may be smaller businesses who can't fight this the same way. in california there was a law enacted back in 2019 uber and lyft were able to get an exemption to it when they took the vote later where they said, we're not going to be part of this, and they got out of it. the bigger concern is what does it mean for nail salons, hair salons, construction companies, a lot of different places like contractors for home billing, and things. >> don't kill the goose. >> they're not going to be able to take it all the way to the supreme court and fight it if you're working 40, 50, 60 hour as week, you are an employee working 30 hours a week, picking up side work, that's a different question. >> you don't want to effectively kill the goose the government looks at it and

it's too good of an idea >> this has been a conversation since hillary clinton was running for president, all the people who were unprotected. it's been an ongoing problem. >> it's impossible you have to go 40 blocks uber eats and everything else -- i haven't used it -- i park my car right in front of my house do you have any concept of that where you walk out the door? i can go there it works too well. the government says, okay, i'm going to turn this into the post office and the dmv. dom chu is here with a look at the morning crude and amtrak. >> i'm a full-time employee. >> yes, you are. >> i work 40 hours a week and i'm here all the time, especially for "squawk box." let's talk about what's

happening with the crypto markets. believe it or not, i didn't think there would be a time when we would talk about cryptocurrencies being less volatile than the stockmarket. that's kind of happening right now. many traders and investors at least when it comes to the crypto world have been eyeing this $20,000 level when it comes to bitcoin prices. right now we're just below it. 19,168 that's up roughly three-quarters of 1% on a price buy sis ether is at $1,300 up about 1.5%. we've seen both of these, by the way, have some more downside volatility from the recent highs we saw from the record levels but not as of late let's show you the charts with what's happening with bitcoin prices down, 70%. remember, about 68,800 record-highs we saw over the course of the last year, and we lost 65% of that value over the

last year. 70% if you look at the intraday highs. what's cure yes, sir is this real band we've been carrying. just beyond that 20,000 large. we'll keep a close eye on whether or not that stability is bringing more traders into the market or less same thing for ethereum, by the way. if you look at ether prices at roughly 1, 30300 or so, this is also, by the way, down by 70% from the intraday highs we saw the charts are at least telling us the downside volatility of crypto isn't exactly as perv pervasive. if we look at the co-efficientc it is still pretty volatile with regard to them, but the trading relationship is trailing off a little bit so it's not trading as closely,

crypto to the nasdaq, as it has been over the last couple of months here. by the way, if you look at some of the crypto adjacent stocks, because of what we're seeing, we're seeing a bit of a bid. robinhood markets up a similar percentage amount but some of the names more closely tied to that digital ecosystem like marathon, 3.5% riot blockchain, 1.5%. block formerly known as square cryptocurrency paints of about 2% right now, given the bid in the marketplace, we're seeing more upside volatility with some of the names that have been beaten up a bit, joe. back to you. >> we're going to see you again at 7:00, right this doesn't replace the movers stuff. >> no, no. i'm still coming back with some of the vanilla names, and maybe we'll talk about pound and gilt because that's what we want to

talk >> we don't want to replace, just add things you do full-time employee i'll do it no matter what. >> not a gig thing. coming up as we head to break, take a look at this morning'sbiggest premarket winners and losers in the s&p 500. >> announcer: "squawk box" is sponsored by bitwise, the world's leader in crypto index funds. gang, we need our paranormal services to be more versatile.

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time now for the executive edge some interesting elon musk -- who's always interesting -- news he's selling a fragrance called burnt hair he tweeted last night, with hair like mine, getting into the fragrance business was inevitable it costs $100 and it's available

on the website. >> we took the bait. his next tweet, wait for the countdown and media doing stories on this. >> are we not going to talk about this ian bremmer situation? >> i don't understand that. >> ian bremmer writes a note he does a newsletter every week, paid news letters to subs subscribers, elon told him he had talked to putin and they had -- he explained this whole sort of strategy about how to deal with ukraine and what would be needed to get to a settlement and whatnot, and he wrote that elon musk came back and said -- >> he said nobody should trust -- >> he didn't exactly say it was wrong. he said, don't trust bremer. first he said, i haven't talked to putin for 18 months which

seemed to make it seem like he couldn't have said any of this and then bremer came back and said, elon told me this. i wrote this because elon told me this: and the elon responded to that and said, don't trust bremer so either -- there's like four options. either elon musk is -- he could be lying about that he did talk to putin when he says he didn't want to talk to putin. he could have lied to ian bremmer. that's possible. brehm mer could have lied. my good-faith view of this is everything got conflated and maybe musk said, you know, i talked to putin. maybe he doesn't say exactly when >> that's what i'm hoping. >> yes it's one of -- there's four doors and you can pick one.

>> that's the one i would hold onto. >> there are a least four k outcomes with this war i can certainly see how someone might want to -- if there's a way of ending it right now, a couple of things, i it would be nice if we could do that so the "a" word would get out of our minds. i think it would be nice some of the stuff elon said about crimea and russia, some of that is kind of true. >> it's also talking points straight from putin. >> it is but for us to understand exactly what goes right on over there -- >> ant i don't love us talking about this either. >> it would be nice if something -- if there was something that

could appease someone so -- can't we all just get along? short of saying, okay, every square inch, if we don't get it back, we're ready to go into nuclear oblivion to stand up for that >> it's sad. >> borders in that part of the world? i don't know all the countries can you name all the stans, when they were there, when they -- >> we're going to discuss this with paul ryan perhaps, but we've got a lot of other issues to talk about with him too former house speaker paul ryan is here. he'll join us on the squawk set. we'll get his read on the economy, china, fed, and much more. and throughout hispanic heritage month, we're selling brating our cnbc teammates and contributors he's our our cnbc securities reporter, amanner da macias. >> i'm a second generation

mexican american as a national security reporter for cnbc, a bring a different perspective in terms of immigration issues, border security, and elections that are going to shape our country my advice to yung la tinas is to embrace our culture and to keep up with your spanish the way data is trending it's only going to become more important. it's a key it opens up so many more doors >> announcer: executive edge is sponsored by at&t business at&t 5g is fast, reliable, and secure nice, but i can't accept it. unless every business gets the best deal. on every iphone. uh, actually... we already do that. the plumber with the ascot! big bjorn, little bjorn, too! the caterer who really cares. every business should get the deal! we make a good team. every business gets at&t's

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welcome back to "squawk box. we're live from the times square market we've given back some of the bigger gains we had earlier. last time we checked about a half hour, the dow futures were up by 178 points enthusiasm they're still up, but by only 72 points this is a week or so after the

major averages jpmorgan's jamie dimon warns we may tip into recession in the next six to nine months. and the recession warning, the worst is yet to come for many people 2023 will feel like a recession in an interview on cnn last night, president biden said he does not anticipate a recession. >> it hadn't happened yet. it hadn't -- there hasn't -- there is no -- there's no guarantee that they're -- i don't think there will be a recession. if there circumstance it be will be a very slight recession that is, we'll move down slightly. >> joining us now is paul ryan he's former speaker of the house, of course today he's a vice chair and an economics professor at notre dame. >> go irish. >> you're the perfect person to have on for some of these

issues the back and forth-on recession, is it here is it coming >> nice to see you all. >> look at you you haven't changed one bit. >> thank you, joe. i'd like to say the same about you. i'm just messing with you. you look great. >> thank you i touched your biceps just by accident. >> when did this happen? >> you're working out still. >> do you ever pat somebody on the back and go, wow, they're -- >> okay, this conversation -- >> as opposed to the other way where you go, wow, that's mushy. >> if that has a lot to do with the recession -- okay, becky let's -- let's go -- >> eyes on me. >> eyes on becky i'm in the jamie dimon camp, not the joe biden camp look, the president's going to have to happy talk the economy he's not going to say, we're going into a recession, it's

going to be awful. he's not going to say that jamie dimon is a truth teller. he sees it he hsits on a mountain of data the administration is putting in place the exact wrong fiscal policy they're doing the opposite of what they should be doing. >> in terms of what? >> they tried to pass monumental tax increases. they're overregulating, stimulating inflation, pumping demand when they should be focused on the supply side. >> there's a lot more to talk about. their talk of raising taxes is the opposite of what we've seen from england right now, from the uk their talk of cutting tacks indicates that too. >> without getting to the uk issue and liz truss's internal problems in her caucus, i would say the idea that we're going to raise taxes on businesses is a really bad idea. if we want to have fiscal policy help with the inflation problem

and help prevent a recession, it's telling all the businesses in merge your tacks are going up, don't take risks, don't take investments, that's bad idea, that's exactly what the government is doing today. we have massive spiralling provisions all small businesses, businesses that are not c corps, the vast majority of businesses have a giant tax increase coming and the administration is preparing for that to ph the expense is going to be expiring that's the biggest most powerful soak up excess demarngsd reduce inflation, take pressure off the federal reserve, and the administration is doing nothing about. i think there's some things they could do on labor force frankly on welfare reform to attach benefits to work for able-bodied people frankly, i'd love to do immigration reform but there are things on the supply side you can do to try to

mop up inflation, take pressure after the fed. instead they're going to have to do it on their own as a result, yeah, i think we're going to go into a recession >> not one thing you said -- >> i'm a republican. what do you expect. >> not one thing you said has an ice cube's chance of happening in the government. >> this is why we have a divided government. >> i don't say the exact opposite opposite's enough, but it is the opposite of the past >> precisely, precisely. >> i agree. >> we're pursuing an inflationary path right now. you can say all you want with the economy, but if you're hitting it with a bunch of inflationary spending that even furman and summers says, slow down, it's too much, and you're putting into place higher taxes, what do you expect them to do? they going to crouch in the field. >> how much do you think this is

a central challenge of the economy versus adjacent or marginal issue the reason i ask we were talking earlier how we look relative to the roast the world, the steps we took after the pandemic and the economic policies we put in place. how much do you think it was those fiscal policies versus the monetary policy of how we've approached this that has led to where we are in our own challenges and the natural experiment, which i think we're seeing play out around the world. >> this has an effect going forward for sure first of all, we levitated the economy with our monetary policy the federal reserve did a good job. they needed to do what they did. they needed to basically substitute during the pandemic they needed the first c.a.r.e.s. act. that was important people couldn't work, so you had to supply some stimulus at the time but they then went too far and the biden administration when they came nrk they had reconciliation they said, let's get our own spending bill, take credit for

the recovery that's going to happen and i will say that started under president trump with the additional money >> i think the first c.a.r.e.s. act was necessary. with the fed, they had to do that so i think they all deserve credit for that. but i think they did round two, round three, and they went too far. by the time the bidens came into administration, you knew we were coming out of covid. >> president trump had promised some of those same things. i feel like both parties -- >> i'm not going to defend trump economics. >> he browbeat jd powell >> to your point, we did a better job than other people of getting out of the pandemic. we're relatively better off than anybody else we don't have a war giving us an

energy-reduced recession we're the healthiest looking horse in a glue factory today. >> fur 20 years our gdp is higher than the eurozone because we're not europe. >> we should expect to lead. >> but it's because we have innovation, we have small businesses, risk taking. >> it's not because of the last two years of policies. did you see the tax receipts in 2020 it's unbelievable. record tax receipts. we come out of things -- >> i have not seen an inflation adjusted version of what those would look like. >> of the tax receipts, you mean. >> that was before inflation started taking off >> the point being if we're going to hit the economy by taking away expensing, cranking up -- tanging away the 20% reduction -- when we did tax reform, we lowered the c corps

to 20% most businesses, we didn't want them to have much higher tax rates. that goes away in two yearssom of the best thing we can do is tell all the businesses it won't go away. we're going to make it permanent. know you're not going to have a massive tax increase around the corner take those risks, take that bet, buy that equipment, make that expansion. by promising that that's going to go away, you are putting a chilling effect on the thing that made us better than europe, which is an entrepreneurial sector, small businesses, risk taking, all of those things. >> let me ask. we are in this trouble because we have overspent. >> 100%. >> we have printed money we have done this. we know there's pain to come shouldn't the pain be shared not just among consumers, but businesses shouldn't we -- >> do we want higher productivity, more growth, more

jobs. >> that's a tough message. >> there's demand side and tough side what you're talking about is the demand side. >> and that's what the fed is trying to do, tamp down on demand. >> they're going to hike the interest rates they're going to feel like they have the only hammer in town they're going to be pounding the hammer of inflation when the supply side could do more to help that. >> you are an asset. could you be a cnbc contributor? you've got -- are you taken? >> i'm not taken i decided not to do tv for a couple of years. i wanted to take time off. >> here you are. >> i have three kids in high school i want to enjoy my life and my family >> you're like a gig worker. i don't know if you saw biden's new policy you probably come under that with all your different gigs. >> we can hire you if you have to resign from the board.

>> i veed to talk to notre dame. >> how is everything at notre dame >> i love it i love teaching. >> what about byu? did you see the byu game >> a cup vl been closer. >> i think our quarterback pine who was a second string who's starting has found his footing. >> did you have a review about the biden administration's -- >> i like to review before i make comments. >> you're so rare. >> i'm old school. >> you're against it. >> paul, we've loved having you here come back again soon. >> good to see you. >> nice to see you. >> call me. coming up on the other side of this break, china dealing with a new covid outbreak. is the government preparing for this week's party congress that's going to set the direction for the economy for the next five year we're going to take you live to beijing. that's after this.

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this ahead of covid cases and the party's congress i want to get straight to beijing where eunice yoon joins us with the latest eunice. >> reporter: thanks, andrew. the authorities say the security here is iron fist tight. zero covid protocols have been tightened more 36 cities are in some kind of lockdown 196 million people are affected. and today, about 1, 00800 cases were reported nationwide shanghai says they're ramping up testing until november 10th as well as imposing other measures because they detected covid. it's widely expected that president xi jinping is going to be taking a precedential-breaking third five-year term and foreign investors, the most interesting is what's going to

happen at the end of the week. that's when we're going to see when the new team is lining up that will tell us how much control xi jinping has and the whether there might be easing of the policies including zero covid. there's hope it could be eased, however, the suggestions we're hearing now in state media seem to indicate that zero covid is here to stay the people's daily, which is the communist party's mouthpiece said just this week zero covid is sustainable, zero covid is based in science, and today the people's daily has been warning people not to slack off or what in chinese they say lying flat on zero covid. in fact, the official paper went as far as to say other countries don't follow zero covid not because they don't want to, but because they can't andrew >> eunice, we really appreciate

that report. it's going to be quite a week in china. it's going to set the direction for what we're going to be seeing for many, many years. we're going to see you in the next hour to talk re autmobo it all. but up next, we're going to talk strateg that's next. sq "squawk box" rolls on.

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welcome back to "squawk box. it would be the slowest since q-4 since 2020 joining us now with stocks we should be paying attention to, chief investment strategist at hightower. stephanie, a lot of folks think you should just be in cash,

frankly. what's better than cash right now on your list >> well, i think it's really hard to time, andrew, right, we have to get through a lot of issues there's a lot of macro happening. i'm excited to get to earnings and pepsi, by the way, started off with a bang. that was a really good number. they haven't missed numbers in over a decade. and that number was quite good i think expectations are quite low for earnings but we've got to get also through this macro stuff, right, the fed and the boe and inhalation and that sort of thing. hopefully we can focus on fundamentals and i have a couple ideas i like. >> throw them out for us to hear top of the list. >> let's go. let's go well, i have recommended this for a long time. the stock is up year to date it's the number one oil field service company in the world they're focusing on technology and the digital technology

it gives their customers pricing power and they guided for margins to be up 200 basis points this year they have an analyst day on the 3rd of november and it will be a nice, positive catalyst as they showcase -- >> i thought about the stock, though given how much it's already moved, how much higher do you think it can move versus how much -- on the downside, how do you see that >> well, i'm overweight on energy, right? i'm double my benchmark. i believe energy is going to continue to be strong. what i think is underappreciated, andrew, is the international recovery we have seen a recovery here in the states not internationally. and they have a big exposure overseas and around the world. so i think that it's trading actually at the cheapest of the big four in numbers of oil field services industries. i think it goes higher, a lot higher let's go to number two on your

list. >> so hope depot is number two i haven't recommended a housing stock in a long time the stock is down 31% here to date it has a 2.6% dividend yield they are the number one home improvement company. they actually focus more on remodels, restatoration pro. the vast homes do not change hands, so they have to fix up their homes and i think that plays right into the strength of home depot it's down so much. and i like the valuation >> finally number three on your list, berkshire. i really like the diversification. they have pricing power in their insurance business and energy business the discretionary businesses are doing quit well. rail volumes are going to be soft but they can offset that with pricing, and i think supply chains, that's going to help

volumes and margins and they have 1$106 billion in crash and they have bought $45 million worth of equities in the first half of this year. that's versus selling 16 billion in equities over 2020 to 2021. i like the story i like down 10%. i think you can get a great company on sale. >> we appreciate it. nice to see you. we're going to see you again at 8:30 for the ppi data. don't go anywhere. >> yeah, okay. >> when we come back, pepsico shares rising after beating on earnings and revenue we're going to dig through the numbers with hugh johnston "squawk box" will be right back. that stock up 8.1% i may be close to retirement but i'm as busy as ever. careful now.

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and over 30 million people rely on prudential's retirement and workplace benefits. who's your rock? good morning futures pointing to a higher open ahead of key inflation data and minutes from the last fed meeting. pepsico beating wall street's estimates we're going to talk to the company's cfo. plus, gray scale is going after the s.e.c. arguing that the regulator is setting the bar too high we'll talk to the firm's ceo as the second hour of "squawk box" begins right now

♪ good morning and welcome back to "squawk box" right here on cnbc. we're live in time square. i'm andrew ross sorkin along with joe kernen and becky quick. take a look at u.s. equity futures at this hour we've been having some green on the screen today we had red that turned green that turned red. we have the dow up 120 points. the s&p 500 looking to open about 20 points higher we'll show you treasury yields if we could. we're going to look at the ten-year note. that's at 3.960. the two-year note is at 4.293 and we've been talking about energy, oil and everything going on in europe let's show you where wti crude stands right now that's at $89.65 and finally, we're going to have a little bit of a debate later about the world of crypto. but bitcoin now sitting at

$19,151. i want to get over to dom chu with a look at this morning's premarket movers what's on the list >> the big earnings report of the morning is pepsico they're up roughly 1 1/2 percent after it reported profits that beat expectations. pepsico was able to past along cost increases to coordination revenues grew at key business units. next up, you have shares lyft. 40,000 shares bouncing back after yesterday's sell-off but those gig economy stocks, given the new proposals on possible reclassification of contractors as employees, this morning, those lyft shares are

getting help they've upgraded that stock from a buy to a hold. they say that the stock underperformance and overly negative investor sentiment has created an attractive entry point, those shares up 3% now. we'll end on another upgrade norwegian cruise line up 3%. ubs is raising its rating to buy from neutral, but lowering it's target price to $15. they like what they're seeing in bookings improvements and more relative exposure to u.s.-based travelers. so, joe, norwegian cruise lines and lift getting some kind of a bid right now in the market. i'll send things over to you. the bank of england insisting it's not going to extend its bond-buying past

friday steve liesman joins us now with more gilt, bonds, interchangeable we're talking gilts, right >> we're talking gilts and sterling and all this other stuff. we're saying bonds but there is some fog in london this morning around monetary policy after reporting, they suggested the bank of england could extend its program beyond friday but the official line comes from comments made yesterday by governor andrew bailey right here in washington bailey closed the door on extending the program. >> my message to the funds involved and all the firms involved, you've got three days left now you got to get this done because, again, part of the essence of financial stability intervention is that it is clearly temporary. >> that's three days from yesterday, two days from today the program was announced in

late september amid widespread liquidity problems that was brought on by a surge in yields in uk gilts. uk gilts not taking the news all that well. you can see there, 453 and the 30-year, it was just above 5%, but it was up more than 20 basis points this morning. the battered pound remains battered, just a touch stronger this morning and ftse had been positive, now trading in negative territory. europe feeling some of the effects. we've got the ten-year up several basis points this morning. the german bund and italy and france up five to ten basis points this morning. despite moves in the market for the moment, the deepest concerns remain in the uk janet yellen saying there were

some concerns about liquidity, but she said markets continue to function well. the u.s. and europe right now have different fiscal issues they're not considering massive new increases in bond issuance and government spending. yet bond markets in the u.s. are facing far steeper rate hikes. there's a lot going on right now and the extent to what's happening here matters over here we continue to monitor it. >> what's in the mind, do you think, of the boe at this point? i know that's mixing all -- boe can't have a mind. but the people whoare making the decisions, we talked about how it's kind of like daring the markets to -- okay, to keep coming at them is there a reason to -- if they're advancing onto extend it, is there a reason to apprehend they're not going to

extend it initially. >> there might be. we might want to engage in a conversation with andrew about the friday before the great financial crisis where i -- andrew made famous, i reported that they weren't going to do it and andrew maintained they were always going to do it. but let me just answer the question separately and get andrew in if he wants to comment. which is, there is a line in the monetary policy -- or the fiscal policy report this morning in which they said there were lessons to be learned here so it may be one of those wagging the fingers at markets, trying to get them to do what they can do and make sure we don't create a moral hazard issue. i think overall, joe, in europe and the uk, they're less likely to caudal markets than we are in the u.s. and think that the market is an entity that deserves quite as much respect as we give markets here in the united states. >> it doesn't feel to me that

they're caudaling the markets as much as the pension funds. that's exactly who the message was to yesterday you have three days to get this done meaning, you better get forward and accept you're going to take tough markets. >> they're not caudaling the markets there. they're more likely to do that kind of coddling over here i remember during the financial crisis talking to europe banking official and is they were like, the market they're doing something stupid or sort of more talking downwards. here we are more likely to take price signal and provide a little more respect for the decisions of the market to price something the way they are european bank officials i talked to in the past are more likely to reject that pricing it's a great question, joe it is a game of chicken going on where bailey had laid down the law and said, three days, two days, whatever you want to say right now, and the question is, whether or not he eventually does have to give in, which would be a tremendous -- what would they call it over there, a

turnabout? >> we don't need to relitigate 2008 -- i thought we were in agreement that we thought there was a game of chicken going on i always thought in the end that they were prepared to actually help in some way even though they -- >> and they were using me as the con due it, right? >> they didn't want to fully show their hand. and it was not something that was plan "a," "b" or "c" but was probably plan "g" or "f" down the line but it was something they were hoping to never get to. >> hank paulson was supposed to take me fly fishing and i was supposed to discuss that with him. we never made that trip. i don't know when they told me they weren't going to do it, they meant they weren't going to do it maybe they were going to do it. >> when they talked to you, i think they didn't want to do it -- >> didn't want to do it. >> so they were genuine in that

respect. i just think in the end, they were also going, okay, if we really get there -- >> do people know what we're talking about? it's 14 years ago as to whether or not they were going to bail out lehman that weekend and i reported they weren't going to do it. reported all weekend it wasn't going to happen while markets kept -- other media kept reporting it was going to happen i will say this, andrew, i ended up being right, for better or worse. >> that is true. we try to figure out what other countries -- they're our closest ally, but they're still different over in the uk there's a coronation coming up. what is that about can you explain that to me >> have you not seen "frozen"? >> then what then he's king and what's it all about -- >> it's an insignificant position, i think. i mean, if it was significant, it wouldn't be a democracy over

there -- >> what's the deal >> it's a business that's what it is. >> i don't like birthrights. >> we reject it because we're americans. >> i'm the lowest of the low born. >> as americans we reject it, joe. >> steve, thank you, sir nice to see you. enjoy dc coming up, pepsico beating revenue estimates. we're going to talk to the company's cfo next take a look at this morning's biggest winners and losers stay tuned to "squawk box," right here on cnbc >> announcer: this is cnbc program is sponsored by baird. visit bairddifference.com.

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global soft drinks and snacks giant pepsico with quarterly results. earnings and revenue tops estimates. companies raising guidance and organic sales guidance joining us now is hugh johnston. we should mention that hugh serves on our cnbc global cfo council. always good to see you most quarters, hugh, thanks for joining us. >> joe, great to be with you guys good morning obviously we feel terrific about

the quarter this morning. >> yeah. and we're trying to figure that out. the outperformance in organic revenue -- so that -- you're backing out any inflation benefits from higher prices and these gains are in units how does it work exactly how much are you benefitting from the inflation that you're allowed to pass on in terms of higher prices? >> yeah, so we saw revenue growth of about 16%. that includes the higher prices. volumes are units that we sell were up just a bit on the quarter. so pass along a bit of inflation. our commodity costs are up even more and as a result gross margins were down a bit. but then we managed the balance of the cost structure tightly. we were up 30 basis points it's a combination of, look, we invested in our brands, we're seeing good consumer response, despite the fact that we've had

to increase price and is we got a cost structure under control well we delivered a superior result >> you look at the beverage side of things as kind of the stayed, slower-grower side, and is a lot of what we're seeing in salty snacks >> it's really both. fre frito had a remarkable quarter revenue grew 20% in north america and for frito. but the quaker business grew 16%. so it's pretty broad-based what's happening right now we think they're all capable of growing at accelerated rates. >> you have all kinds of diversity, all kinds of different beverages and snacks and you're all over the place. can you break down exactly, you know, where are consumers doing

the best >> yeah, really they're doing well in an awful lot of markets. and i'll give you a couple numbers to make the point. internationally, we grew 16% which, obviously, is a very good number but we grew 16% in north america. so good balance there. latin america very strong. we grew over 20% we're doing a great job executing the business down there and, frankly, the consumer still seems to be healthy down there as well. asia, middle east, africa, asia pacific all seem to be doing well and even europe continues to do well despite the obvious challenges i think what it comes down to is, look, in a world that's obviously stressed economically, as you guys have been talking about all morning, the one thing consumers know is, they may not be able to afford big ticket items like houses and cars and personal technology, but they can afford a simple luxury like a bag of chips and it brings a smile to their face in what are

challenging times. that's kind of what's happening right now. >> i want to talk about all of your new products. i always talk about that stuff the holy grail of a protein snack that tastes like a greasy potato chip is still somewhere in the future. i don't know what it's going to take look at the iphone i mean, you can't make a protein product that tastes like a greasy potato chip, but we have an i phone that beams movies -- >> we're continuing to work on it, joe. >> when you're trying to streamline the company, is it packaging? is it logistics? is it innovation in taste and product breadth? will all those things help you deliver better results. >> yeah, when we're looking at costs, we really look at everything i mean, the approach we've adopted internally is, i don't want to call it zero-based budgeting.

that's a term that got abused a few years ago. look at every cost and say if i was starting over again, would i do that cost or wouldn't i as a result, we've gotten pretty good at cost control while we're growing the top line well. part of that is, we're trying to prepare for what could be a tougher future from a consumer perspective and if it is, we'll be ready for it. but frankly if it's not, you'll see quarters like the one that we just posted where we're controlling costs and we're getting great top line we're trying to control what we can control in essence. >> talking about costs, i want to talk about advertising spend. you're one of the largest advertisers in the world and a signal i think -- or really a pulse on what's going to happen to the advertising market across the board, how are you thinking about advertising and how are you thinking about the mix of advertising going forward? >> yeah, i mean, we expect to continue to grow it. we've always tried to have our advertising kind of go up in line with revenue. i'm not sure that will happen

next year because the growth has been so strong you'll continue to see our advertising increase we're also spending a lot of time, as you point out, working on, okay, what's the right mix and candidly, linear tv is still for big brands, a great, great play for us. the mix is moving towards digital. you can interact with consumers on smaller brands and a much more targeted way than you can through linear tv. >> what products are elastic would you know if we were in a recession? are we will we be >> it's a great question i won't comment on the recession word because it's become something of a politicized word it seems at this point it used to just mean two quarters of down economic growth but obviously that's not the case anymore i guess what i would say is, if a recession came, we're generally going to be a better place than most. and right now, we don't see any

signs of that. and, again, i think a lot of it is the upper households, they're balance sheets are in good shape. they're cautious because of what they see and hear. but frankly, when it comes to spending on affordable luxuries, they're still willing to spend on your products. >> you're not seeing any -- the consumer seems good to you globally >> yes >> one more quick question just about the job market is it getting easier to hire people >> yeah, it's a great question, becky. easier but not easy. it's still a tight job market. it's an inflationary job market and i don't expect that to change unless we see a significant change in the unemployment numbers and as you have noted, we're not seeing that at this point the truth is, the u.s. is just short of frontline workers and that's something that i don't think is going to be fixed very quickly. i think it's going to take some time to get there on that one. >> hugh, have you had the

cheetos-flavored macaroni and cheese >> absolutely. i love it. great product. i think it's one of the best ones we've launched in the last couple of years. >> if i've been thinking about that and thinking about making it, like, maybe later today, does that make me a foodie what does that make me what kind of person thinks about macaroni and cheese? >> i think it makes you an excellent person, joe. i would just take it that way. it makes you a top-tier individual. >> what's the healthiest chip that we could eat right now? >> that's a great question we think they're all pretty healthy. i guess the sun chips with the black bean is a pretty good example. >> okay. and real black bean. we were discussing that? >> absolutely, of course >> it has nothing to do with black beans, they just call it -- we're asking whether there's downside, i guess, is what -- the beans?

you need beano >> nothing that's he's heard -- >> everything i hear, it's great for you. [ laughter ] >> i don't know why it's almost always so much fun to have you on, hugh maybe it's because i am a foodie you say this stock market, you're doing pretty well, maybe we can learn something from those results. thanks >> uh-oh we'll have to get him back when we come back, new data this morning showing demand for riskier home loans is growing. we've got the details next as we head to a break. it's time for today's aflac trivia question. on average, how many pounds of potato chips do americans consumeae ch year? we'll have the answer when "squawk box" comes right back. look at the size of that- gaaaaaaaaaaaap!!! is that a goat?! you talkin' about me? gaaaaaaaaaaaap!!! i think this goat is saying “gap.” must be talking about the expenses health insurance

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all right, welcome back to "squawk box. it's time for the answer to today's aflac trivia question. on average, how many pounds of potato chips to americans consume each year? oh, boy. 1.85 billion pounds in total between all of us.

that's, like, 6 pounds a person. >> what about those horrible baked lays that taste like cardboard? that's the best -- >> that's -- >> people in my house eat those things. >> that's potatoes >> why bother? i would skip it. you need the barbecue flavor it makes it sort of edible. >> you think about this a lot. >> i do. >> we've got some -- let's talk about the mortgage market right now because diana olick has the latest on where things stand where are we >> well, andrew, dare i say the beat goes on rates rose again last week and now we're seeing more interest in risky loan products last week, the average rate on the 30-year fixed rose to 6.8% that's for loans with 20% down

on the survey. that caused refinance demand to drop there are so few people who can gain anything for a refi barely 150,000 borrowers applications were down for the week that does not bode well for the fall housing markets where prices are starting to come off of their peak and the share of adjustable rate mortgage applications remained high, just under 12% of total volume. the arm share of applications was around 3% of the -- at the start of this year and it was for several years because rates had been so low. borrowers didn't need to take on the added risk not so much now and the rate on a five-year arm is now around 5.5% just to make matters worse, rates have continued to move higher this week

the 30-year fixed is over 7% back to you guys still to come this morning crypto asset manager gray scale is going after the s.e.c we're going to talk to the ceo in an exclusive interview. and later. wally adeyemo is going to talk about his take on inflation and what he thinks is happening with gilts this morning you're watching "squawk box" and this is cnbc

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♪ good morning, and welcome back to "squawk box. we're live at in times square. take a look at futures the dow up 158 points. nasdaq looking to open 107 higher and the s&p 500 up 26 points among this week's big global market events, china's communist party congress is set to begin we're live in beijing, one of the most important pivotal moments for the next five years, if not longer, in terms of chinese economy and set direction that they plan to set. eunice >> reporter: absolutely, andrew. and that's one of the reason why

public security officials have said that they have put the chinese capital in an iron fist clamp down ahead of the shuffle. it's widely expected that president xi jingping is going to take a third five-year term as of the end of next week, investors will also be able to find out who is going to be part of his leadership team and that is really important because it's going to tell us just how much influence president xi has at the end of the day on various policies whether or not there's going to be any easing, for example, on tech regulation, on the economy, or on the property sector. now, every indication so far is that president xi is going to maintain a tremendous amount of influence over all of those policies, as well as other sectors such as national security as well as foreign affairs. in fact, there's been a lot of discussion that president xi could get a new powerful title and also have xi jingping

thought enshrined in party guidelines so, for example, there's been a lot of hope that one of those key policies that's been intimat intimately tied to him might be eased, but so far, for the past three days, state media and more specifically, the people's daily, has been saying that zero covid is based in science, that it's sustainable, and then today was warning people against slacking on zero covid or in chinese terms what they describe as lying flat. it doesn't seem there's any indication that zero covid is going to go away any time soon becky? >> thank you very much investors are gearing up for the latest read on inflation and bracing for a slew of bank earnings later this week joining us right now is the chief market strategist of

carson group also the chief global strategist at principal asset management. brian, let's start with you. i think of october as being a pretty scary month for the markets, especially when you think back to black monday that happened on a monday, october 19th, in 1987. you look at october a little differently. you say it's got a different reputation you want to explain? >> it does have a reputation for extreme volatility some of the worst starts we've seen have bottomed in october. this year is the third worst. they bottomed within the first two weeks of october so let's put some -- and then you look at the vix. vix futures are finally -- we've seen this historic number of bears. sentiment is negative. one of the worst starts ever we get it. if you look at the ten worst starts to the year ever, nine

times, the fourth quarter was higher only once in 2004, meeting a return of almost 8%. we get all the major concerns that are out there expectations are so low, we're in that seasonally bullish fourth quarter of a midterm year, we're optimistic we're getting closer to a very significant low here >> wow how do you feel about those things especially when you're looking globally >> it is interesting you do see that seasonality. we could be building up for a technical rally. i wouldn't called that the bottom we're going into earning season. there's a ton of bearishness out there. any kind of positive surprise, even if guidance is a little bit negative, means that you could see a bit of a rally, but i don't think that's sustained you are going to see earnings weakness coming in it might be a little bit later than what the market is currently expecting. >> that's what i was going to say. you think some of the numbers we're going to see could be pretty good, case in point pepsi? >> when we look at the economic

numbers, it's very resilient almost everywhere you look you could see the continuation of what we've seen the past few quarters where guidance is talking about profit margins, concerns about supply chains, all of these issues and the hard numbers continue to be quite robust but then, of course, ads we get into next year and we are going to see this continued deterioration in the economy, that's when you start to see the weakness >> so stocks are not cheap, in your opinion, because you're looking at earnings estimates that you think are going to come down significantly for next year >> yeah, again, valuations are extraordinarily cheap. yet the earnings outlook is so negative at the moment that i think -- the market is a little bit too negative right now when you're not going to see that weakness coming through to next year you could see a rally at the end of this year, people looking at valuations and saying this is

cheap. the fundamentals ultimately drive the story through 2023 >> if we were to bottom out with a bear market for now, could that scenario kind of play out, that we're okay for now, but next year we start to see a different set of numbers. >> that's obviously a potential there. on a mid-term election and you go out one year, we're in that seasonally bullish time period check out -- banks, look at financials there are some real sectors that are actually outperforming here and holding in there it's because tech is doing so poorly, the market is looking weak, the largest part of the overall market there are some bright spots out there. i think that's a key concept people need to remember. look at the credit markets it's not blowing out like they

were earlier in the june they're not freaking out things aren't perfect. but these are scenarios that we've seen in past major market lows, that vix finally going -- these are positive things out there. >> we took a few hits on your audio, but i think we get the gist of what you're talking about. thank you both >> thank you coming up, the government taking a closer look at payment apps like paypal we're going to hear from the nation's top consumer watchdog agency and then tomorrow on "squawk," an interview with john mack, author of "up close and all in". he's going to share his message from wall restet and a lot more "squawk box" coming right back after this

paypal's stock price tumbled earlier this week after a proposed rule change was sent out that the company said was an error. the head of the federal government's top consumer watchdog agency is looking closely at the company's recent moves. and here's more. hi, sharon >> hi, joe an update to a paypal policy that said users promoting

misinformation could be subject to damages of $2,500 drew sharp criticism last weekend a spokesperson said that notice, quote, went out in error and included incorrect information adding, quote, paypal is not fining people for misinformation still the director of the consumer financial protection bureau is keeping a close eye on developments >> i've never actually heard of a payment system thinking that they could fine someone for legal expression that their users are making >> the director says banks have authority to make sure there's no fraud or illegal activity in transactions but fintech companies having the power to decide who can say what and who will get fined as a result needs to be scrutinized. >> we have ordered all the big tech firms and payment companies to provide us with information

about how are they making decisions about who they kick off their platforms. but we also need to look into whether they believe they can be fining users for legal activities >> he says they have to understand the facts of this case but he says fintech companies deciding on their own when to deduct fines from customers' accounts and circumstances is new territory and his agency is looking into it. >> it sounds like a great business if you could -- also recently, sharon, the cfpb, been talking about the misuse of data, what's that about? . >> the agency is looking at regulating buy now pay later products and companies he's worried about the volume of the data that these firms collect and if they're using that data to incentivize

competence to spend more it would blur the line between banking and congress >> thank you very much sharon epperson. >> sure. when we come back, gray scale is suing the.e s.c ceo michael sonnenshein will tell us why. that's next. past extraordinary s into the heart of iconic cities is a journey for the curious traveler, one that many have yet to discover. exploring with viking brings you closer to the world, to the history, the culture, the flavors, a serene river voyage on an elegant viking longship. learn more at viking.com

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points a vaccine is being tested along with a mid stage trial data is expected in the fourth quarter, but this would be pretty exciting. i think -- dwayne johnson, the rock, is outside. >> right behind you. >> i see you guys. >> i think you're going to see the rock right now >> i'm going to check it out -- >> what is he doing out there? >> getting his picture taken. >> can we get the camera out there with the rock? >> man on the street, woman on the street interview with the rock >> i want to know if that's him. oh it is him. >> i'll be back. >> is that michael strahan

>> that would be timeless. that would be great. >> i'm going to run behind him. >> we're going to talk a little crypto as becky is taking pictures. >> i'm going to go -- >> oh, my goodness i don't know i'm at a loss for words. >> it's michael strahan! >> crypto asset manager grayscale, we're talking about crypto assets this morning and grayscale. they filed a lawsuit against the s.e.c. joining us right now is michael sonnenshein. grayscale ceo. michael, i know you're not the rock but you're still bringing it you're still bringing it help us understand why you brought this lawsuit and what is at issue >> well, last night, andrew, we filed our opening briefs this is the first document that

goes into the courts that outline it is case we have straightforward commonsense arguments here the newest argument in the brief really focuses on this idea of a significant market test. this is a test the s.e.c. has created on its own or commodities before. >> so in this case a judge will effectively adjudicate this issue and we'll see whether an appeal is necessary, but in terms of the history of cases like this, historically, at least from my understanding, the sec has had a pretty sort of wide berth in terms of what

they're able to do and how they're able to approach these issues the judges for the most part have been unwilling to really take the sec on in such a way, right? >> well, no, not necessarily, andrew this is a case that's really focusing on the administrative procedures act or the apa. that governs the way that a regulator like the sec should have to regulate when they have two alike cases they have to treat them alike. they are treating them disparately. if the sec has approved bitcoin futures etfs, where do they get them, in the underlying bitcoin market that's the same market that a bitcoin spot market like gdtc would get theirs so there's a fundamental flaw in the thinking. >> how much do you think that this is a fight between the sec

and the cftc how much this have is a battle over whether these things are commodities versus securities? >> well, i hope that gbtc is not getting caught in the cross hairs between who has jurisdictional authority over crypto what we now have in dc when we're there, which is almost weekly at this point, is bipartisan support on this asset class. you have multiple bills passing across the floors of congress. you really are seeing our entire industry, we along with it asking our legislators and regulators to develop the frameworks this is not just about protecting investors, doing the right thing by investors, this is also about american competitiveness and not squandering it. you've been behind the scenes of this for a long time what do you think is happening why is the sec taking the position it has been you can read the documents in terms of why they say publicly

but i imagine you may have a different rationale. >> well, i think this is a very fast-evolving asset class. we're constantly developing new use cases in the technology along with it and as a regulator, that can be challenging. that's why we really take it upon ourselves and other industry participants to educate regulators about it. ultimately the idea that this fits into existing regulatory frameworks, again, is fundamentally flawed we have assets and features in this asset class that just doesn't apply to the existing frameworks that govern our capital markets for the last hundred years or so so it requires some evolving in how they're anything about it. >> how concerned are you -- i'm just looking at the screen of the different cryptos we have on the screen how concerned are you that crypto at least thus far in the ball game at least for the most part has been used much more as a speculation or a trade for people than it has an actual use

case and that the more we talk about it like this, meaning as sort of investment speculation and less about the actual use case, that it actually makes it harder longer term for it to actually be used >> i think it depends where in the world you're looking i think here in the u.s. and in developed economies you are seeing crypto being used as an investment tool. certainly, you know, on a global level as we're facing all kinds of government interventions, inflation, massive movements in currencies you are seeing investors flock to bitcoin like a hedge owning other than something that's government controlled but let's remember. let's zoom out, andrew we're, what, a little over a decade into the life cycle of crypto we have to give it the opportunity to develop and the way ichb vestors and users will

work with it people say you've got it put up or shut up no, we've been talking about this for a decade plus and the use case scenario, and i accept that there are folks outside of the u.s. who think about it as an inflation hedge, but for the most part it has tracked sort of being a risk asset the same way the nasdaq has for its history. >> well, listen, you saw this morning dom chu was talking about where the coins are. we're in the winter, sustained pricing environment. it's interesting to see crypto has been range bound and less volatile than others that have come under pressure. over this crypto winter you are seeing investors average down into their positions you are seeing companies and businesses continue to build out their applications, build out their infrastructure that's a really important component of this ecosystem. we've seen this in prior crypto

winters as well. >> it's interesting to see this and the progress you're making and look forward to talking to you very soon. >> thank you coming up, amazon holding a special sales event. we'll talk to the vice president on amazon prime on what he's seeing on holiday shopping season plus, the latest consumer price index is out at 8:30 eastern. we'll bring you the numbers and instant analysis futures are up and the nasdaq is now up triple digits "squawk box" will be right back.

good morning futures pointing higher. quarterly news, moderna and merk teaming up to sell an enhanced mrna cancer vaccine. deputy treasury secretary wally adeyemo will be here on his assessment of a risk of a recession. the final hour of "squawk box" begins right now

good morning and welcome to "squawk box" here on cnbc live from the nasdaq market site in times square i'm joe kernen along with becky quick and andrew ross sorkin >> we have all things outside. >> they were mad that we noticed? we didn't go over to "good morning america. they're mad -- >> they didn't yell at me. don't take it personally, doing your job. >> we put them on a street for a reason, to draw a crowd. >> trying do a show here who was it, one of the security -- >> it was fine it was fine. huge crowd it stopped traffic. >> "good morning america." ohhh. >> the rock. >> you were. >> i've never seen people go so

crazy. >> you know how excited my son is going to be with the jumangi. >> you said the rock i thought you said barack is over there i went, whoa that's a little bit casual for a former president but, anyway, the futures are up. >> ppi coming out. >> comcast has promoted mike cavanaugh to president the first was brian roberts. mike is only the third in all of this time. he's going to stay on as cfo he'll have both of those titles. roberts said they are focused to

have new and exciting growth before that mike served as cfo of j.p. morgan chase and he was the co-ceo of a corporate investment bank. in a statement jamie dimon said mike cavanaugh is an outstanding leader and executive what i call an elite business athlete who led complex business aspects through the worse parts of the global finance. he's a friend and i congratulate him on his new role at comcast we congratulate mike, too. very glad to hear this news. as a reminder, comcast is the owner ofcnbc universal >> 59 years. both the previous ones shared something in common. that is the last name of roberts. it's neat when finally another name is associated.

>> brian's young. >> yeah, he really is. >> not going anywhere. >> it's a great thing for mike i've known mike for a long, long time made his pit stop at carlyle. >> it's great. >> also, i think it's not -- in terms of what he's doing at comcast, i don't think it's anything different i think he's already been side by side with brian so this just makes it -- it'd be nice to be president. i said earlier, i would like to be president of "squawk box. are you already president? do we need to run? >> becky, do you want to be president of "squawk box"? >> vote from the viewers >> is there a chairman title. >> you would be non-executive chairman. >> as opposed to executive chairman >> yes. >> why >> i don't know, you've got so many other things going on and i don't think you can focus enough on "squawk box." >> put me on

>> let's go to today's top stories. >> how did we get to this place? >> i don't know. >> congratulations to mike cavanagh. >> with what's the most uncomfortable thing we've said >> paul ryan before we started -- before we turned the cameras on deals on u.k. government bonds moving higher. bank of england reiterating this morning that an emergency bond buying program will end as planned on friday. the central bank is extending help to u.k. pension funds which it found themselves in trouble over derivative positions that have been working to raise money. this was boe governor andrew bailey late last night. >> my message to the firms involved, you've got three days left now you've got to get this done because, again, part of the essence i think of a stability intervention is it is clearly temporary. >> the british pound this morning as you can see, it's

been a little bit of -- higher this morning the financial times reported that the bank of england might be open to he cextending bond buying the central bank said that friday is the final day. third quarter earnings out from pepsi this morning. the company beat analyst expectations on the top and bottom lines raised its guidance for the year earlier on the show. cfo hugh johnston commented on pepsi's ability to raise prices in the current environment >> we saw revenue growth of about 16%. that includes the higher prices. buy-ins are units that we sell were up just a bit on the quarter. so passed along a bit of inflation. obviously our commodity costs are up even more and as a result gross margins were down a bit but then we managed the balance of the cost structure pretty

tightly. operating margins were up 30 basis points. >> 2022 pepsi now expects organic revenue growth from 12% to 10% shares of intel are higher bloomberg reporting the chip maker is going to cut thousands of jobs in the market. as of the summer intel had nearly 114,000 employees meantime want to get back to the broader markets with the s&p 500 now on a five-day losing streak that's what it is. losing streak. >> hard to say today we're going to get back in the morning at least based on the futures what was lost in the final hour and 15 minutes yesterday after the bank of england announcement

to me shows a very skiddish market they weren't drawing a direct line between bank of england and the stock market our yields didn't blow out. it's yet another thing that seems like a stress point. we made a new interday low we're basically around where it closed on september 30th much lower volume yesterday. sometimes people look at that and say if you trade it back to the old low, less volume, maybe that's a net positive. you can squeeze and see some parts of the market that are diverging from others in a way that also could be taken as a little bit of a silver lining. this is the s&p small cap 600. a one-month chart. you see that the s&p 500 as well as the top 50, the largest 50 stocks in the market really have been the drag on things and the small caps have actually held up a little bit better. it's a thin read because on a year-to-date basis they're down a similar amount small caps seem to have taken their pain beforehand. real yields have been the story.

if you look at the 30-year treasury inflated protection yield. 30 year tips a 5-year chart it raised higher you get this yield along with whatever cpi does over the next 30 years if you own this security and you see right now this is the kind of -- it shows the restrictive policy is here real yields are real income after expected inflation to an investor or lender but it's what the borrower has to pay. restricted policy's here the question is how much more does the fed thing we have to do and how long do we keep it in place? >> okay. mike santoli breaking it down as he does so well. >> news alert on the rebound in air travel phil lebeau with more. hey, phil. >> reporter: hey, joe. united airlines has been one of the most aggressive airlines in terms of taking advantage of the increased demand for international travel they're doing that once again.

they expanted how many flights are going to europe. they're going to be doing that again next summer announcing a pretty substantial expansion in international trans atlantic travel capacity will grow another 10% compared to 2022 nine new nonstops will be added. three new destinations those new destinations, one is dubai in the united arab emirate and then you have molliga spain. its capacity next summer will be up 30% compared to where it was pre-pandemic in 2019 and united is pointing out that for the second year in a row they plan to have the most seats of any u.s. air line across the atlantic over to europe. don't forget that we're going to be getting united's q3 results next speedweek it will be a chance to talk with scott kirby. he's long been one of the most

aggressive in terms of developing a network and seeing what are new markets that are new opportunities and that's what they're doing once again. take a look at the airline index. we're back to where we were probably at the beginning of 2020 for the airlines. no surprise here given the fact that what we're seeing is a lot of uncertainty about, yes, there's strong demand and how long will it last? speaking of earnings, we get united next week but on thursday we're going to be talking to ed bastian, ceo of delta airlines we know there is strong demand out there. we'll hear that from delta the question is does it extend beyond the holidays. we usually see this to be a quiet time, october, early november that's not the case. the planes are full, revenue is higher you saw the guidance we'll talk with ed about that on thursday just for you, ed -- or, joe, kicking off earnings season bringing you ed bastian. >> that's a good start otherwise, we're going to be in

bank hell with just the banks. duels it first >> ha. >> no, it's all right. just interest expense, net interest income, all those things that are kind of arcane more fun to talk about whether people are actually flying again i think, phil. >> that's right. >> thanks. >> you bet coming up next, we're going to speak with the vice president of amazon prime on inflation and consumer spending. is this week's massive october sale spell the end of the traditional holiday shopping season. counting down to new inflation data, consumer price indexes are just a few minutes away stay tuned, you're watching "squawk box" and this is cnbc. (vo) while you may not be a pediatric surgeon volunteering your topiary talents at a children's hospital — your life is just as unique. your raymond james financial advisor gets to know you, your passions, and the way you give back.

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zwro welcome back ppi. maybe it will be okay. what do you think? >> what's okay >> maybe it won't scare them >> hopefully it's not hot. >> i don't think anybody -- >> don't have any feelings about

anything. >> high inflation brings pain all the way around. >> there was a time we wanted it there was good news -- >> good news -- that was considered good news that would be bad news now we want the opposite. >> there was a time we wanted to go from 1 1/2 to 2. >> we wanted to see it come back down >> that would be nice. >> one company that's front and center when it comes to inflation is amazon. right now it is halfway through its early two day access for prime members. the deals end at midnight tonight. this is amazon's second prime day of 2022. coming in october it gives customers an opportunity to get an early jump start on holiday shopping that's what it's good for. it may also mean though that it's adding another nail in the coffin of the traditional holiday spending season.

first of all, jamil, thanks for being here >> thank you for having me >> second prime day. caught us by surprise. consumers excited about it retail competitors, not so much. why did you add this second prime day? >> we know that our members are always looking for savings it's true with primeday. prime day this year was the largest prime day we've had in our entire history, over $1.7 billion in savings given the current macro economic environment, we know that savings are even more important so we wanted to allow our prime members this exclusive 48 hour period forthem to get a jump part on their holiday shopping. >> does it have anything to do with excess inventory? because some people look at it as a sign of this is just a lot of retailers got stuck with extra inventory. is are you getting rid of stuff. >> not at all. this is a curated brand.

we're offering apple, hp, sharp, all the things our members are looking for as they go into the holiday season the top 100 list these are the most giftable items all of us are looking for for our loved ones, kids, neighbors, family. this is a purpose built event exclusively for prime members. we heard a lot of costs does this blend in with lots of profit bimt. >> it's another exclusive offering the original

>> all of the things they've been doing something we do every year it's about taking care of our members first and foremost. >> let's talk about prime video. obviously "thursday night football" have been huge what can you tell us about it and whether it's been a success? >> we've been blown away by the reception of "thursday night football." we've shared previously that it was the biggest primetime event for prime video in our history in addition, i can share with you that in the three-hour period around the launch on the 15th of september we had the most prime signups we've had in an entire history of the program. that's on top of prime day, black friday or cyber monday so unprecedented numbers and in terms of engagement, production quality is excellent i know i'm a fan lots of our members are as well so we want to continue that throughout the season. >> jamil, how much do you think about that, meaning the prime video piece of this, as a way to

actually get either new prime customers into the entire ecosystem, either just on the video piece, on the preventing churn on the other piece how do you sort of -- when you guys actually sit with a white board or try to map out the economics of the video piece relative to the other piece, how does it sort of pencil out for you? >> yeah. so you could rewind the clock and in the beginning in 2005 prime was all about fast, free unlimited shipping over the time we've added benefits like prime video, music, gaming, reading and many, many other benefits. the reality is any one member might join prime for any one of those reasons. they might be coming for an event like prime early access sale, they might be want being to watch a piece of content like "thursday night football" or "rings of power" but what we think sets prime apart for one simple membership you get access to everything else and over time

our members discover the others. we'll invest in selection, speed, convenience to make shopping the best proposition it can be for all of our members. we're going to continue investing on prime video, gaming, music, all the other benefits ultimately we think that combination of shipping, shopping, savings and entertainment is what sets prime apart. >> you've paid about a billion dollars for the "thursday night football." did the math work out for you? was it money well spent? do you plan on going after other sports rights? >> it's an 11-year deal. we're excited about the early results. it's too early to say in retrospect we're focused on giving a fantastic experience every thursday through "thursday night football," through the continuing series of "rings of power," all the other content and what we're celebrating today and members should check out by midnight tonight is prime early access sale. there's deals on apple

first ever deal, 15% off on the polo ton bike. skin care products, toys, home, apparel. there's discounts in some of the best pricing of the entire year across the entire store. so that's what we're going to keep doing with prime, just raising the bar on the experience for our members and prime early access sale is no different. >> i'm sorry, a billion dollars a year it's an 11-year deal jamil, "the rings of power" little bit of a slow start i have to admit. i'm hooked you got there with the character development. what's the feedback? there's been some criticism. notes about how reviews were shut down for that, but what's the feedback you get from your customers at this point? >> the feedback has been fantastic. we shared that previously on the first day we had over 25 million viewers globally and that's only grown over time. the series will continue through the rest of this season and then into future seasons. we're very, very excited about

the property it's a beloved global property that we're taking care with and building over time and so far the feedback has been very positive and we're looking forward to the rest of the season and seasons to come. >> jeff bezos feedback has been strong too i know he was particularly interested in this, making sure this was done right. >> i'm hoping that jeff is watching as well i have a sneaking suspicion that he is. >> jamil, thank you. jamil gahni from amazon prime. thank you. >> thank you thank you so much. instant reaction and we have the deputy treasury secretary going to be joining us live in just a little bit. ay tuned, you're watching "squawk box" on cnbc owing! they collect hundreds of data points like hrv and rem sleep, so you know all you need for recovery. and you are? i'm an investor...in invesco qqq, a fund that gives me access to... nasdaq 100 innovations like... wearable training optimization tech. uh, how long are you... i'm done.

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merck exercised an option to sell an mrna cancer vaccine. the vaccine is being tested along with key trued da in a mid stage trial. data is expected in the fourth quarter. stock is higher. obviously almost $400 stock at one point. but up almost 8% this morning. up next, the number of the morning, september producer price inflation. we're going to bring you the breaking data, market reaction

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welcome back to "squawk box" on cnbc. we're just a few minutes away from september producer prices let's welcome our panel, hightower stephanie link gabriel santos and our own steve liesman and rick santelli. liesman, santelli, we're in the business of numbers. sometimes it's the jobs number, other times it's gdp should we be happy or scared. >> i can't remember any time we've had a five panel core has been coming down that has not shown up in the cpi core and that's part of the argument in the market these days which is if prices are coming down up the production scale or production chain, why will they

be coming down in consumer prices >> it's staggering we haven't had to know anything about this stuff for 40 years. >> nobody knows what's in it >> we haven't had to care for 40 -- 40 years >> rick, we're going to wait for you. you have five seconds to think about it the numbers should be hitting any second >> yes, yes. all those years the central bank seeded the clouds of inflation now the downpour has started our september read on producer prices, the supplier side of the cost equation expected up .2 on head lean. multiply that by 2 up .4. that's the hottest since it was in june when it was up 1% and if we look at x food and energy that sounds silly. that's the big enchilada it came in as expected up .3

up .3. in the rear-view mirror we have up .4. don't see revisions yet. it's up .4 now we get to the real numbers year other year final demand, up 8.5. the high water mark for this one is going to be up 11.7 yes, you heard me right. 11.7 that was in march. all the high water marks for producer prices were made in march so that is, indeed, good news, 8.5. that almost sounds crazy in and of itself. x food and energy up 7.2 high water mark in march was up 9.7 and if we look at the final year over year numbers, x food, energy and trade, up exactly as expected, up 5.6 which exactly

matches the rear-view mirror up 5.6. high water mark was up 7.1 if you're the federal reserve panel and you're looking at this, they have definitely moderated from extremes. have they moderated enough for the fed to put their neck on the block? i probably don't think so. we'll see what the panel says. we see interest rates have moved from a bit lower to a bit higher in yield as we continue to hover above 430 in 2s. you see the way it popped up on that number. the 10-year actually didn't move very much. much of the yields today have been under that 3.95 mark. 4% new psychological level. joe, steve, back to you. >> rick, let's get some reaction from our panel steve, we will go to you first i don't want to have to go above any of those numbers rick

mentioned, even the 5.6. i don't want to have to get above that we are sort of in a moderating environment, are we not? we're not going to hit new peaks in any of these numbers any time soon >> is that a forecast or a hope, joe? >> i've got to start separating the two. >> yeah, i know. i'm with you on that let me just tell you quickly what rose in this number here and why it's important for the fed. a big chunk of the increase came from final demand for service, up 0.4%. a big chunk of that was in travel accommodation and i think that's the new travel business adjusting to the -- you had somebody on yesterday who said it was just going crazy in terms of travel, lodging, that kind of stuff. that's new demand there and obviously we reported this quite a bit. you're still down a million workers in the leisure hospitality business it might be 1.2 billion last i checked. so what's important here is that you have this call for people saying the fed is not paying

attention to what's going on in prices well, maybe they are in the following sense. goods prices have been coming down and moderating. it's the fed's concern about what's happening in the service sector that has propelled them or motivated them to be cautious about the idea that inflation is coming down. what you're seeing here is wholesale prices, you still seem to have rising service costs inside wholesale prices and the concern is that remains the case inside of the cpi that we get tomorrow >> all right gabriela, does this -- how does this make you feel in terms of telling clients how to prepare for the next six months or year? >> so it really emphasizes our message that it's still too early to be adding risk. still too early to go all in, chips on the table so we would still be under weight equities,

bonds, fixed income. ultimately we're still seeing a lot of uncertainty around the future path of inflation and ultimately where real rates settle, where all asset classes take their cues in terms of equity, credit so i think the data this morning just emphasizes that we're still seeing the early days of a deceleration process in inflation with very mixed news as steve went through. there is some good news. there is some deceleration in goods prices, some improvement in supply chain issues mixed news around commodities more recently with a slight rise in energy prices once again and then some still bad news in inflationary pressures in services as well as in a component that's not included in the ppi but it's important for the cpi tomorrow, which is everything around owners equivalent rent, which is the

biggest component of cpi so we're still very much early days here of the decelerating inflation. still keeps a lot of uncertainty about when the fed can decelerate, when it can pause, never mind when it can start cutting rates much later on. >> stephanie, you know, the fed looks like they're smart, you know, for talking tough and it's going to last and everything do they know, do they have any inkling about what those numbers are going to be, do you think? >> no, they don't have a lot of credibility. they were behind the curve they should have been raising rates a year ago and they were buying bonds in march, joe, as you know so, i mean, this is -- they're way behind the 8 ball. you know, i step back and i look at these numbers fine, maybe we're kind of peakish, but we are a huge, huge levels 8.5% on the ppi and 7.2% in core i sort of kind of ignore core because i think food and energy are a big problem and i think

it's going to be very hard for the fed to get these numbers down basically what this reinforces is what we've been hearing and seeing inflation is high. the fed is going to be hawkish they're probably going to overdo it we don't even know what the impact is right now from all of the rate increases and we're not going to feel that until sometime next year because there's a lag impact so 2023 likely recession rates stay high for longer and we just have to buckle in. >> all right you're not going to sell anything today, are you, stephanie? >> no, i'm not, and i'll tell you, i am very much looking forward to earnings. i know we're going to talk banks on friday. i'm looking forward to that. i was very excited about pepsi i mean, that was a really, really impressive report today and talk about, you know, input costs. they're at the forefront of that i'm not going to sell because we're already down 23% in the s&p year to date and sectors and stocks are down. many of them are down much more

than that, so i am looking for bargains markets are a forward looking indicator. we're discounting a lot of the stuff for next year, but that being said i think we're in this trading range. there's no real rush but i do have dry powder so that i can add on some really ugly days >> gabriela, would you ever get to the point where you said, you know what, i'm going to take a major position in a 2-year long term if stocks only do 6 or 7% long term, if the 2-year were to get to 5% or thereabouts, would you make a major asset shift for clients? does that become something -- has it always got to be equities or do you say, look, we need to do this for at least a large portion of what we're managing >> absolutely, and i think we're at the point already where short-term fixed income is already quite interesting, right? you've got yields that we haven't had in a decade plus at

the same time that you still have a lot of volatility in riskier parts of the spectrum including credit, including equities where we don't feel like we've fully flushed out in terms of valuations or in terms of fundamental expectations. so already the short end of fixed income is a lot more attractive and becoming a good place to think about investing when we say it's too early to add risk, it doesn't mean there aren't other things where we're finding opportunities to actually engage in and one of them being the short end of the curve. another one here thinking more for recession hedges, thinking of engaging in other parts of longer duration fixed income, for example, investment grade. >> rick, how bad are things? if you buy a 2-year at 4 1/2%,

let's say, do you have less buying power in your view in two years? do you think it's that bad where inflation stays that high so you don't make -- you're actually behind from where you started two years from now >> listen, joe, my feelings, i think any viewer/listener knows pretty darn twhael in my opinion the sticky prices are going to be energy. fed can't do anything about it and they're not going to go away any time soon. that's going to remain, but i still think that charlie the tuna has killed tina, okay tina's gone. rip tina i would definitely be funneling money in areas of the marketplace where i'm comfortable with my cash stream with regard to my coupon does that mean that i will have the luxury of selling that 2-year or that 5-year in the future maybe not. yields may continue to go up which means the price goes down, but that's okay. if you're happy with 4.30 in a

2-year or ultimately if we get closer to 4.5% in a 10-year, then take it you can hold it to maturity, that's the question. i think that form of diversification is good but i do think i agree with stephanie that i will speak a good demand in the equity markets, there is going to be a place where the federal reserve stops and the day they either do less than expected or they pause, and i'm not sure that's going to be this year, when it occurs you know those thousand point down days we have in the dow, you're going to see a day that rips to the up side and blows those away. >> we'd love an inverted yield curve, wound you you have a higher rate on the 2-year that's too good to be true there's something messed up here where you can pay more to have less duration risk. >> yeah. capitalism is supposed to work in that you get more money for lending for longer that's an essential aspect of

it i'm kind of with you on that, joe. look, there is obviously a lot of risk here maybe we ought to look at the fed rate outlook which i think is peaking at 4 p.69, 4.70. that's your down side. if the 2-year averages 4.70 every day over the 2-year span but it sure looks like you're a lot closer to being towards the peak assuming the fed can stop at the 4.70. i would push back a little bit on stephanie on this thing i agree the fed has very little credibility on the forecast. to look at the 20% decline in the stock market, the fed has a whole lot of credibility when it comes to where it says it's going. right now the market is trading in a way that has a whole lot of

belief in what the fed is saying >> but, steve, if they actually have cash in -- >> capitalism doesn't have central banks that keep buying their debt i'm sorry, stephanie. >> right >> if we're going to take a swing at capitalism. that's a crazy comment back to stephanie. >> that is not a crazy comment, rick >> it is if you want rates higher, tell them to blow up their balance sheet. that's why i brought it up. >> it's a simple observation. >> no, it's not. it's a wrong headed observation. >> the market is trading in a way that it absolutely believes the fed and in that sense the fed has credibility. >> the fed broke something, they're just not sure what >> it's not controversial. >> quantitative easing, distortive long-term rates let's move on. >> you tell somebody that's down

20% in their portfolio -- >> don't knock capitalism when i'm on tv. >> how did i knock capitalism? what are you even talking about, santelli my god. >> you said that's the problem of capitalism when long-term rates aren't high enough. >> i said capitalism requires, rick that's what i said, it requires. >> it doesn't, it requires central banks to keep their nose out of the market. >> beuhler beuhler? stephanie. >> beuhler, beuhler. >> steve, if the fed acted a year ago, if they acted a year ago. >> i agree. >> we would not be in this position so i cannot agree with you on the fed has credibility because they should have acted a year ago and they didn't. >> i thought that was going to be the argument. we got the other thing going normally i love that i actually still did like it thanks stephanie, gab bring lael, steve and rick. >> coming up after this, deputy treasury wally adeyemo is going to be joining us ahead of the

cpi and so much to talk about. tomorrow a special interview with former morgan stanley chairman john mack he's author of a new book "up close and all in." keeping morgan stanley alive in the '08 crisis we're going to get personal with him with some important news stay tuned, you're watching "squawk box" on cnbc ♪♪ ♪♪ be ready for any market with a liquid etf. get in and out with dia.

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let's get down to the new york stock exchange with jim cramer the inflationary picture will be riding on the markets today. >> yeah, it's just plain bad there's absolutely nothing to say about it other than it's bad. a lot of people are hoping the numbers could be good, maybe accepting tomorrow's going to be bad. the only thing that's actually even remotely positive about it is that there's nothing in it that's really shocking to the up side it's just kind of just as bad as it's been. i did like the fact that rick stressed that the high water mark was reached that's the only thing that's good about it though pepsico's different. pepsico, only 20 basis point of gross margin problem they were able to pass on everything the consumer gets hurt by that that was a very good clean

number i think that hugh johnson told a good story. pepsico should be up big that makes a lot of sense. i think the future's going to end up being down. pepsico shows you, as did general mills, that the companies that are involved in the food and beverage really have a loott of pricing power and brand power. frito lay did good and the bull market. >> are there other places where they can pass on the pricing to? what other areas would you anticipate either sectors or companies. >> nobody. >> nobody? >> nobody. i think the gross margin's going to be very bad that's the real problem. and i see gross margins coming down everywhere. general mills was down 400 basis points they had good numbers. pepsico is going to be terrific. i think coca-cola will be terrific we look at the autos we look at airlines. the airline numbers but i don't think the gross margins will be that good. >> hotels. they were talking about how

inflationary prices were really high maybe they have pricing power. >> there's no relief here. they can take the market up. it's not -- it would be stupid i think. there's just nothing good here it's a shame. >> thank you >> i thought there would be something good here. >> yeah, i know. it was a disappointing ppi >> bad number. >> we will see you in just a few minutes. "squk x"ilbeig bk.awbo wl rhtac with powerful, easy-to-use tools power e*trade makes complex trading easier react to fast-moving markets with dynamic charting and a futures ladder that lets you place, flatten, or reverse orders so you won't miss an opportunity ♪ ♪

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welcome back to "squawk box. tomorrow, we've got an interview with john mack, he's got a new book out, and we can disclose that he was diagnosed with early stages of dementia, and we have that conversation on tape, and we talk about it and what it means and how he's trying to get through it he also talks about his entire career and we will bring you that interview tomorrow morning. meantime, recapping this hour's inflation data, we just got it, september ppi coming in double expectations, futures have come down pretty significantly since 8:30 eastern time and we had that debate just moments ago with mr. santelli and mr. leishman and so many others, but right now, deputy

treasury secretary at the table, wally adeyemo. how hot is inflation, and is there anything that can be done about it >> great to be here in studio with you, and i think the thing that we all know is that inflation around the globe is too high and what we're doing in the united states is the federal reserve is doing its part in terms of using its tools to bring down inflation, and what the president's focused on is doing what we can to expand supply in the u.s. economy this includes what we've done with the spr, what we've done in terms of trying to bring down other costs throughout the economy, but we've got to do more in order to make sure that we bring down costs throughout the economy. >> so, obviously, there's a debate about that, because there are some who think there are certain elements of what you're talking about in terms of what the administration is doing is trying to bring down some of that inflation, and there's other elements we were just debating this plan this morning, for example, around the gig economy and turning those workers into employees, and what that might do to inflation on the other end. what do you guys think about

that >> i think the most important thing is to look at something like inflation reduction act, and that summarizes our logic in terms of, we want to make investments that expand the capacity of the economy while at the same time taking steps to bring down our debt and deficit. we think we can do both things at the same time, and you look at the labor market. you look at the data we just got from the labor market where we still had strong labor force growth in terms of we created jobs last month, but you look at the other data with regard to quits data and also what you saw in terms of job openings, those came down, and what those are all indicating is that we're moving towards a more healthy labor force participation going forward, and that's exactly what we want to see so, we think that you can create good, well-paying jobs while at the same time having a healthy labor market going forward >> wally, the supply siders somehow have gotten -- you know, depending on which side of the aisle you're on, a bad reputation, but in a period like

this where we really wish we didn't have to kill demand to cure inflation we look for fewer jobs it just seems counterproductive. it seems perverse. so it's almost like, we're all supply-siders all of a sudden, because it would be nice to just -- if we could attack inflation from the supply side, but i don't hear actual supply-side remedies from the biden administration in terms of less regulation or cutting taxes. what you normally think of with supply-siders. it's like the spr, i'm not even sure that's a good idea to do it for prices when we might need it for an emergency do you ever see the biden administration sort of embracing the other idea of supply-side economics? i don't think you're heart's in it >> you got to think about supply differently. when you look at the bipartisan infrastructure bill, that's a supply-side legislation. when you look at the chips act, ha that does, it's going to expand the capacity of the economy. even when you look at parts of

the inflation reduction act where you're making investments in climate, so treasury has $270 billion in tax incentives they're going to put out into the economy that should create up to $3 trillion of investment in the u.s. economy. that's going to expand the capacity of the u.s. economy, so i think we are thinking about supply side. how do we expand the supply of the u.s. economy and our capacity to produce going forward, which will lead to growth and create the types of jobs that you're talking about you're right that the president ultimately thinks that we need to be on the sustainable path in terms of our debts and deficits, and that means we're going to have to modestly increase taxes for some in the economy over time, but ultimately, we think we can do both things, put us on a sustainable path while creating jobs going forward. >> do you think the president would like to increase the supply of hydrocarbons produced in the united states because it doesn't seem like his heart's really in that either, and that would be a good -- i understand we're on a transition long-term, but then again, we know, i mean, it's going to be at least a decade. so, near-term, we don't want to end up with this really scary

winter scenario that we're seeing over in europe and what could possibly happen. i mean, wally, the eiffel tower's lights are off at night. i mean, this is serious all of a sudden >> the answer to your question is, yes, the president wants more investment in hydrocarbons. he's called for it we're seeing it. right now we're on pace to see in 2023 the largest level of production in united states history. we want to do more and i think what the president has said to the secretary of energy is that if there are any good ideas out there that are coming from the industry, please bring them forward, because we want to produce more ultimately, we know that the reason that america is so well situated to deal with a global headwinds we have today is because we are a net energy producer we need to continue that, but we also know that we need to make the investments to end our dependence on hydrocarbons, not just for climate reasons but because it's in our national security interest. >> wally, very quickly, wage inflation has been part of the most concerning part when you look at the administration's new proposal that we're just reading about on

the front pages today, to make gig workers full-time employees and have a lot going loo along with it, that would raise wages significantly for a lot of different industries and definitely play into inflation is it a good idea? >> the thing we have to think through is, what are we trying to build towards in terms of long-term economy in the united states one of the things we want to do is make sure employees have the security they need going forward. and our goal here is to make sure that as the economy transitions to more sustainable growth, we also transition to more sustainable employment. we can do both things in terms of bringing down costs in the economy while putting employees into the right classification. that's exactly what we want to accomplish when you think about where we've been in terms of the job creation over the course of last two years, which has been historic, we're starting to see that come down as we expected. the goal now is to make sure that as that comes down, we're in a place where the people who do have those jobs have well-paying jobs look at micron, which made a

huge commitment to invest in upstate new york the jobs there will pay better than some of the jobs that have been there they're also expanding the capacity of the u.s. economy to grow >> we want to thank you for coming in this morning it is great to see you at the desk, and we hope to see you again very soon. >> thanks for having me. >> thank you that's it for us we have had a heck of a three hours. make sure you join us tomorrow "squawk on the street" begins right now. ♪ good wednesday morning, welcome to "squawk on the street," i'm carl quintanilla with jim cramer and david faber, premarkets trying to hold on to some games even as september producer prices come in the hottest since june they do decelerate for the third straight month to 8.5. our road map this morning begins with recession-ish the president saying he expects only a "slight economic dip" and the treasury secretary says market