development from the uk. straight ahead and we got a big blitz in bank earnings four of the world's largest banks reporting in the next two hours. better be good, because they kind of led that rebound yesterday with energy. along with energy. but we're going to give you those numbers and the instant reaction i think the computers are working. we should be ready with estimates. >> you think i hope i hope >> it is bad when we can't plus, a salvo in the streaming wars netflix pricing its ad-supported tier one a dollar below disney plus you can watch -- why you would watch that, i don't know friday, october 14th, 2022 and "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 on this friday morning. it is just andrew ross sorkin, that's me and joe kernen becky is off today a wild ride yesterday in the markets. this morning, they may be setting themselves up, don't know if it will be a wild ride or not, but who would have seen? some people saw, some people didn't see, but what a swing yesterday was. right now dow looks like it would open down about 4 points, nasdaq up by 43 and s&p 500 up about 6. let's talk about the swings because the dow started the session in negative territory. you may very well remember after the september cpi data came in hot, and then swung more than 1500 points to close up by 828 points that prompted this tweet from former goldman sachs ceo blankfine, this is one of those trading days where if you have the news in advance, above expected cpi, you really would have lost a lot of money

boy, would have you, the expectations there was, oh, now the fed has got to keep going. >> also just -- we skipped the entire first half of yesterday's move, which we were down, and then we surged on the notion that liz truss and company -- and then we were up two or three, 400 points, and then cpi came down and we flipped again to down 500 and by the end of the day up 800 did you say "squawk box" with andrew ross sorkin and joe kernen i think it is joe kernen and with andrew ross sorkin? i think we should alternate and throw becky in too >> however you like. >> since when? since when >> as you like >> for the week? >> for the week? >> for the week. let's talk about for the week, the dow is up 2.5% s&p 500 up .8% and the nasdaq is flat treasury yields take a look,

right now, where we are on the ten-year note, let's show the ten-year, maybe the two-year at the same time. ten-year, 3.907. two-year, 4.428. i have a question for you. what do you think -- so -- >> what happened yesterday >> i kind of want to understand what you think happened yesterday. i talked to a bunch of traders, all of whom nobody had a good explanation. the uk piece of it was -- >> that was -- >> a red herring situation >> do you -- you know what opinions are like? >> yes. >> on a day like that, after we have been in this environment where it just has been so gut wrenching and it may not be a 40 on the vix, but the hopelessness was pretty thick >> right. >> yesterday at one point where that inflation number came out there is technical reasons people get short, the market, so -- all of a sudden it starts -- like, wait, i'm not going to make any money. it is starting to rally. it starts feeding on itself. technical reasons, if you want

me to try to come up with something with that inflation number, the peak >> right >> folks are saying is that the peak i'm still saying that. >> if you're jay powell, i don't think -- i think 175 and stop. he thinks he's doing 150 for the rest of the year >> no, no, no, no, no, no. >> that's what the market says it is going to do. >> you know what else i thought? okay, we're going to raise rates. we need to normalize rates this darn economy is pretty solid. and in the end, i'm not going to say at the end of the day, in the end, we want a resilient economy. so i know that near term it is like, my god, the fed has to go even further but isn't it nice that we do have this really strong economy to start with, that is going to probably survive whatever the fed does, and hopefully we come roaring back with lower

inflation? hopefully that's what happens. >> the question is, if that's true, and you -- that's like the optimistic case, when is the churn? >> was it yesterday? >> i don't know. >> if you believe that the market discounts stuff, we haven't had people saying, look, when this does -- when there is the slightest indication that inflation might be moderating -- i don't know -- at this point, it is still going to be characterized as one of those sharp snapbacks in onan ongoing bear. >> that's what it is, at best. i'm not being pessimistic. >> we don't know that. right there, you're going out and saying something very definitive and you may or may not be right. i don't want a 40 on the vix i'm hoping this chinese water torture that we have seen in total, when you add it all up, was really a hopeless capitulation where people

finally threw in the towel but maybe not. if it depends -- the more i read -- now i'm worried that, you know, that rail strike, everybody is going to want a raise now. i'm worried that might start now maybe really it is built in to a wage price spiral and that gets scary with inflation >> that's why i don't understand yesterday. but we will see. we will see. let's talk about the bank of england as well because it is emergency bond-buying program scheduled to end today the uk finance minister cutting a short visit to the imf yesterday, flying back to the uk as the government convened to address the economic crisis. mult multiple reports say a u-turn could be announced today including reverse on the reported freeze on corporate taxes. that moved the market a little bit yesterday. the headline before 6:00 a.m. is appeared what to prompt a shift higher in equity futures look at the pound right now if we can -- i don't know, you want to take a trip to england? >> i do love it.

>> it is reasonable. >> we got our place, we got our little routine over there at the grover house >> 1.12. >> the other thing, if you put any stock in what jeremy siegel says or even jim paulsen or those guys, so, let's say it is a bear market rally, what is the potential downside jamie dimon said another 20%. >> another 20% >> is that a worst case scenario >> i'm going with worst case scenario 10% to go. >> if it is another 10% -- >> still painful. >> it is but -- if that 10 is only 50/50 because everything is probabilities, and you think eventually things go do you really think you're going to buy down 10? if you buy now, is it that bad if you buy google -- whatever -- pick your stock and say if you buy that right now, are you sure you're going to be that unhappy two years from now, and are you

sure you would have been able to really scalp it with that additional 10% >> you tell me you think -- >> i think that -- >> siegel is right. >> you think two years from now, the advertising market, for example, basically a symbol of sort of what is happening in the economy, is going to be hotter than it is today >> yes i hope so. >> right now it is actually still pretty hot. >> i like higher highs and higher lows for all of us, for our lives, for our kids, for -- >> i'm praying -- >> the stock market. except for inflation i don't want higher highs and lower lows for inflation and the 70s was scary. it was it wasn't, like, 12, 18 months, it was a period of years >> that's the question. >> i know. i don't know if you believe that we have really -- that the fed has really -- the combination of the zerp for the financial risis, add in zerp for the pandemic, add in from $500 billion to $5

trillion on the balance sheet, i hope not >> by the way, if you're right, all of a sudden you have to start applauding for jay powell. >> i'm still applauding. i like him and he watches and i hope he does well. when i was asking whether he can salvage this, it is because right now his job is so hard his job is so hard right now because even when volcker -- nobody likes to kill an economy to tame inflation. it is, like, you know, the worst -- like the least worst option maybe we can do it -- that's why i said -- >> he's in a pickle. one day he's the worst person in the world. the next day he's the best person in the -- >> but do you concede that it is great to have the u.s. economy as the backdrop? >> we got inflation. do i need to concede this? >> we had some previous conversations. there are certain things about europe you like that we don't do here, right? >> i don't i think they're totally messed up i think that pure form of capitalism in the private sector

and free markets is a better way to go than the entitlement state. we talked about this a million times. i think that's responsible for a lot of our exceptionalism, which i still think is -- >> unparalleled. >> unparalleled in the world >> i always say still got to be earned, but life is relative. >> when i was in high school, there were two kinds of bumper stickers america, love it or leave it, or america fix it or forget it. we always have been -- we have always been sort of -- which is good, i guess. >> i'm still at america -- >> you don't have to leave, but just -- >> start thanks we got news just crossing the wire we got to tell you about. downing street, liz truss has scheduled a news conference for today. not clear what time that's going to be at we'll bring those details as we get them >> only ten minutes. seems like we said everything we wanted to say. so that's -- that's okay >> we can go home now? >> no, we can't. but we can at 9:00. strategy after yesterday's hot inflation data

the day's bank earnings blitz. new inflation data out of china overnight ahead of the five-year party congress we'll talk to anthony scaramucci about the changing power dynamic. you're watching "squawk box" with joe kernen and andrew ross sorkin on cnbc nurse mariyam sabo knows a moment this pure demands a lotion this pure. gold bond pure moisture lotion 24-hour hydration no parabens, dyes, or fragrances gold bond champion your skin

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time for the squawk planner. we're getting ready for a bank earnings blitz here is a rough timeline jpmorgan is about half an hour from now 6:45. then wells fargo at 7:00 morgan stanley around 7:30 and then citigroup at 8:00 a.m we'll bring you the results and the reaction on wall street in real time. on the economic calendar, september retail sales, import and export prices at 8:30 a.m. eastern. and several u.s. central bankers have planned speeches today. we'll be listening for comments about yesterday's hot cpi report from kansas city fed president esther george and fed governors lisa cook and christopher waller dow featutures are up. they were up around 200, they're

down 100 points at 5:55. when the news crossed the wire that uk prime minister could reverse her tax proposal as soon as today, which got us going at one point yesterday. and joining us now to talk about some of these markets, head of north american investments at citi global wealth and victoria fernandez, chief market strategist at cross mark global investments. i don't know whether either of you were able to hear our earlier conversation, and with the caveat that, number one, it wasn't even 3%, but it was an incredible sort of reversal. do you have a fundamental reason to explain it and do we need one? >> i unfortunately don't have a fundamental reason to explain it i think any rally that we have will certainly take, but when you're looking at what could happen or could explain that rally a lot of it had to have been driven by technicals. we saw monetization of large

hedges we saw monetization of short positions and some very oversold conditions generally speaking. i think the question that we have to ask ourselves, though, is has anything fundamentally changed and the answer is no the cpi data we received emboldened the fed of locking in a hike in november and certainly increasing the probability of another one in december. so the fed's in the driver's seat, tight financial conditions and it is too early to call an equity bottom here >> what about your thoughts, victoria >> no, i think there is a lot of information in regards to the positioning going into yesterday's cpi number i think that's why we saw such a reversal we had the expected result after the cpi number we saw the market come down again based on what we think the fed is going to do with that data but, again, like was mentioned with kristen, there was short coverings. i think there was a lot of

action going on in the put markets. there were people coming out of some of the put positionings after they saw the market goes down so, yes, there is not a true fundamental reason i do think maybe you had some people that had cash on the sidelines deciding to come back into the market at this point in time you were speaking a little bit earlier about when do you come in, no one wants to really try to chase the market or time the bottom exactly but when you had down days, we're nibbling a little bit here and there on names we like in order to built that position out. so when we do it hit the bottom, we're well positioned. >> we also, as you heard us talking, i think, kris, about maximum potential downside from here, timing the markets, any maximum potential downside is just a probability nobody knows i guess we could go down more than 20%, we could go down less than 20% are you smart enough to get that last 10% move and buy right at

the bottom or is it time to buy some and then goes down buy some more in names that you like that you think could benefit in whatever environment we're going to be in >> i think, look, one thing is that market timing is next to impossible so this idea that anyone is going to get that right is just a loser's game, quite frankly. look at what happened yesterday. the truth of it is the worst days in the market are followed by the best days in the market and if you're out of the market, just on average the two best trading days of each year, you reduce your per annum return by upwards of 80% it is around 6. -- 9.5 percentage points. so we don't advise market timing i think the real question now, though, is this debate about are we in a recessionary bear market or nonrecessionary bear market we have done most of the work. this 25% down in u.s. equities, we're already there. those are the averages we see in nonrecessionary bear markets recessionary bear markets, you

can see declines skeeting 30% and closer to 35% and our base case now is to expect a recession starting in q1 of next year so we are invested in the market, but definitely defensive. and positioned invictoria? same notion here >> yeah, very similar in the sense that you want to focus with all the volatility that is going on and we think you're going to continue to see that volatility because, look, no one knows for sure what the path of central banks is going to be we anticipate the fed will be 75 in the november meeting, probably 50, maybe 75 in december there is a huge question as to what other central banks are going to do. how far are they going to push the limit, which is going to pull through into the dollar, pull through into the earnings for the multinationals earnings could be a huge component for us obviously we start with the banks today. but we have seen expectations come down over 6% this quarter for earnings expectations. so the question is the bar low

enough to where numbers actually beat expectations. if they do, we could see another rally in the markets so i think you need to have a little bit of cyclicality in your portfolio to take advantage of those still have some defense because we're not sure that we hit the bottom as we mentioned a moment ago, so you need to be in a balanced portfolio with some maybe healthcare names, some insurance names. but also some retail names or some cyclicality in there to take advantage of moves. >> kris and victoria, thank you, both in some strange times. another point and a half, yeah, let's do it. another 75 each time maybe that will really hurt this economy and maybe we can really get some people laid off and really get that unemployment rate back up where we want it. it is all warped and it is a sad state of affairs. but i wish there was a way we could do it where -- >> another way. >> but there's no guarantee that higher rates are going to solve the inflation issues that we

have that aren't related to labor. >> in a weird way you're almost buying time. you can think of it like that. >> be glad you have this job all we can do is criticize instead of jay powell, right there are people that actually are on the front lines of what is a very difficult and very important 300 million people in our livelihoods. >> the man in the arena. we're just on the sidelines. we promised you more information about the uk prime minister's news conference we know it will now be held at 9:00 a.m. eastern time the telegraph reporting the p proposed freeze on corporate taxes will be reversed we'll keep you updated as we get more information on all of it. we got a lot more coming up right here on "squawk box. get ready for today's bank earnings blitz we'll tell you what to expect from the big reports all coming, all friday morning back after this.

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welcome back to "squawk box. time for the executive edge. we're going to be getting you ready for the bank earnings blitz that is just upon us in a couple of minutes. leslie picker is here this morning with a breakdown of what to expect. leslie >> hey, andrew it is a busy morning in store for us today with u.s. bancorp, morgan stanley and citi each reporting before the market opens today. now, the key thing investors are looking for this quarter, macro clarity. macro, macro, macro. banks have been whipsawed by economic data throughout the quarter, despite the notion they could provide some relative val

value, but persistent concerns about a looming recession have so far outweighed the margin expansions banks enjoyed from those rising rates you were just talking about. analyst estimates polled by bloomberg show the six largest u.s. banks about $4.5 billion combined for loan loss reserves during the third quarter this is actually the third quarter in a row for loan loss provisions on a combined basis investors will also be specifically looking for downward credit and deposit pricing related revisions as signals that a, quote, more cathartic moment has arrived that's according to ubs. as such, investors won't be able to feel comfortable that the shares have truly troughed until the banks have fully priced in a recession. those are some of the indicators you can look for this morning. butte adding to the confusion is yesterday's price action, outperforming the markets, but perhaps we'll get a sense in

today's reports of exactly where the buying opportunities still exist over the idiosyncratic differences, of course, do tend to pop up when you reduce third quarter releases >> one question i know we'll be talking to you a lot this morning, but the loan loss provisions if you look at the banks thus far in terms of how they estimated their loan losses, relative to each other, are you expecting one bank or another to be more aggressive or less aggressive and also just a posture that they have taken historically >> no, it is a good question one thing that people are looking particularly are those matching the ceos who have been very up-front about calling a recession and saying that there are significant risks on the horizon and what that means for loan loss provisions we heard just yesterday from jpmorgan ceo jamie dimon speaking at the meeting where he reiterated his concern about a recession, he reiterated his concern actually about the consumer and the fact that inflation will really start to impact their wallet share starting in nine months.

that matches that thesis of six to nine months you would expect to see loan loss provisions at jpmorgan perhaps nearing what they did last quarter, but given just the prognostications there, you know, you want to kind of see a match. if you don't see a match, there are more questions to be had. >> leslie, pickepickleball, it everywhere tom brady. >> i haven't heard that one. >> pickleball, it is huge. >> it wasn't as big in middle school, i had other -- >> have you played >> yes, i have >> i have played. >> ping-pong, isn't it >> no, i like ping-pong, tennis -- >> what is the deal? >> i have yet to fall into the pickleball -- >> picker balball, i want to che t i it i think it helps branding. >> i should trademark it, actually i should trademark it. >> tom brady

kevin durant lebron >> hot new business. >> it is a hot new business? >> that's right. i'll do it on my side gig after earnings are over. anthony scaramucci joins us next to talk china as the communist party prepares a shuffle. top official, that's next. and throughout hispanic heritage month we have been celebrating our cnbc teammates and contributors here is gisele ruiz, board member at ulta beauty and univision as well. >> latinas are bringing even more new energy to our country they're the fastest growing segment and the fuel for growth in nearly every industry you can think of and we're not slowing down so it is importantfor you to think about is how am i unlocking the power of this very important and significant community? being a latina, everything there is about you is an absolute gift it is a competitive advantage

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good morning welcome back to "squawk box" live from the nasdaq market side in times square. checking the futures now they're green. even the nasdaq, which was down relative basis more than the dow and the s&p earlier. recapping the latest news out of the uk, prime minister liz truss is holding anews conference at 9:00 a.m. eastern. she's expected to reverse a proposed freeze on corporate taxes. and increase them next year. and the times london is reporting that the financial minister will be -- this, to me, i don't really understand, it is unfortunate for me because i keep calling for supply side remedies and when it happened, i thought,

wow, this is a thatcherite coming in here which in an inflationary environment, is it too soon to try to do that type of fsupply side stuff? maybe. but just as we have done, we have done increased demand with some of the biden administration, it is kind of the flipside of that over there. not a good time. it is not probably a good time to be cutting taxes if -- when you cut taxes, that increases demand too. >> completely. look, we had debates about whether you wanted to have -- >> i was going to do one or the other. >> this or that, or -- >> that's where we differ. i would leave it in private sector, let the corporations flourish >> both of them are supply side-ish. >> i know, but i don't like all the people that went without and now all the harvard mbas or whatever they are getting -- it makes no sense to do that. it does make sense it is less than a month.

>> to the election. >> right. >> all very cynical. >> you know what we didn't talk about. we didn't talk about -- we can get anthony on this. did you see the note from saudi about what they were trying to claim the biden administration was doing? >> look, you think they're just claiming that? >> i'm just saying that's what they're saying -- they're claiming -- i'm -- >> maybe not this administration i don't know whether the pariah comment, doesn't seem like a stretch, when you chop someone up into little pieces, you should expect some pushback. we didn't say that much, but, then again, the world is the world. and i don't think -- i don't think they like bide the biden administration at all. >> i don't disagree. let's get the mooch's take on all this chinese government poised to reshuffle around xi jinping's

party meeting next week. joining us is anthony scaramucci you can weigh in on all of this if you want. we were talking about the role of saudi by the way, saudi, chooina, russia, put them all into one category, if you like. you are here to talk about the direction of china and how you think that's going to change the dynamic and relationship with the u.s. or not. >> it does tie in together because these regimes are different from us. obviously they're not democracies in the case of saudi arabia, it is a monarchy but it is a benign monarchy more or less. but for the fiasco that took place a few years ago. i want to focus on china for a few seconds. i think this is super important to what is going on in the macro backdrop china, currency is down 7% youth unemployment is at 20% there is a regime change going on, and with the regime change, when i say regime change, you

say, what do you mean, the president has been the president for the last 12 years, but it is a different thing that he's deploying now. this is becoming more autocratic they're using the ai not for the development of their economy, but for surveillance. they're also crimping capital controls the regime is actually changing. it is becoming more insular, it is becoming tougher. and i think they're making colossal mistakes because if you go back over the 25-year period of time, dating back prior to the world trade organization, china was in a symbiosis with the west where we were sharing technology i used to travel over there, andrew, the notion was a transfer of technology to china. that is not happening anymore. and, of course, thinkey got the covid problem. if they don't end the lockdowns, they could see upwards of 10 million deaths because they don't have the hospital beds to handle a potential renewed wave of the pandemic. so, i'm super worried about that

dynamic. it is not great for the west we need to have a better economic relationship with china. and it will be up to china to make that happen last point i want to make, he's overestimating like president putin his military and i think that's also a dangerous thing for the world. >> when you think about financial companies in the u.s. that want to do business in china, should they want to do business in china? yes, no, i'm not -- i think about it and by the way, just by background, at one point you tried to sell your business to hna, that was blocked. how do you think about what is happening in the financial world and our long-term relationship with china from a business perspective? >> so, listen, personal philosophy, i'm sort inform the kissinger camp that we need to open ourselves and we need to try to figure out ways to get closer and greater economic interdependence. go back to kissinger's first paper.

you get the global economic interdependence, less strife, more prosperity, less war. i'm for that but i'll tell you right now, the practical reality of that right now, andrew, is that in the congress, this is the only thing that the republicans and the democrats agree upon and that is sort of a clamp down on china and distancing of the u.s. from china, and, of course, we're redeploying manufacturing and things like semiconductors here in ohio. but if you're asking me long-term is that the right strategy, i believe that it isn't. we need to figure out a way to reduce these tensions and i'm not exactly sure how to do that. but i do think that's very important because it never ends well when two colossal superpowers have rising simmering tensions and granted the systems are different, but, you know, we're practical people, we have to figure out a way around that. >> since we walked into this conversation, saudi and russia and opec and oil, how does that

mix into this conversation to you? >> well, listen, joe is in fuego this morning i was watching it, chuckling, as i was trying to put my suit on i love joe for his free market libertarianism and his strident capitalism i also unfortunately spent 11 days in the government and i got a very close look at all the different threats that the united states has against it, and so we need a harmony between our government and our private sector if we really want to keep our people safe and prosperous just the reality of the world we're living in right now. remember, china, that economy is connected wholly to that government and so i'm just telling you guys, we need the harmony between the government and the private sector right now and that will help us deal with russia and saudi arabia and china in a way better way -- >> who is not playing nice with

harmony between the private sector and the government, anthony? you think the corporations aren't playing nice? how would you feel -- >> no, you know where my view is on this. we have got radical tails on both sides of these parties. i don't like the radical tails on both sides. but i think the nonsense on the left, actually, is worse for that harmony because they're trying to, for some reason, to destroy the for profit mentality of america and i think that's just wrong minded and i think, listen, nothing -- there has been nothing like the spirit of enterprise and free capital markets that has lifted more and more people out of poverty, including my own family, joe including my own family. >> i hear you. plus they're doing that and they're trading stocks like crazy and loving capitalism and -- it is awesome they're involved in the decisions that they're profiting from they hate capitalism, but they're the best stock traders in the world, some of those

politicians. >> we need more normal people like you to run for office the problem is when you get in there, they put you through the meat grinders, so we get radical tails. >> you say normal people run for office you can't be normal running for office, therefore you don't get any normal people running for office. >> it is a rough gig i got my 11-day ph.d. in that. it is rough. >> no way the mutooch was going to -- >> too honest. you can't do that in washington. >> i know. >> do you have any explanation for the wild swing in yesterday's market we were talking about that earlier, just trying to make sense of it. i was talking to a bunch of traders yesterday and nobody had a good answer. maybe this idea that inflation has peaked that's sort of the glass half full hopeful maybe hope without a strategy plan, i don't know. >> well, listen, the last time you had me on we talked about

long-term interest rates, and the bond markets' interpretation of where the rates are going we are in my opinion coming to the end of this bear market. so this could have been a bear market rally, but i don't think so i think this is the start of something new. i think there was full capitulation on the short side yesterday and lots of institutional buying we may look back in three or six-month period of time and say, whoa, that was the moment where people started to realize that things are going to get better, and they get better quicker than the bears think and so i think we're on the way to something new let's see what happens if i'm right about that. nobody really knows, andrew. but i like the dynamics of where we are right now, and like where that tip ten-year break even number is, which is around 220 >> mark the calendar october 14th, 2022, 6:44 in the morning, anthony scaramucci thinks maybe it is a turning point. >> could be, andrew. then again, i'm a super

optimist, as you know. i do believe it. >> okay. mr. scaramucci, always good to see you. thank you for joining us. >> good to see you, andrew good to see you, joe have a great weekend. >> see you, anthony. coming up, bank earnings, the blitz kicks off in a few minutes. we're expecting jpmorgan like now before the end of the hour, followed by wells fargo, morgan stanley and citigroup. the numbers, an instant reaction as soon as they hit the wires. later, we'll talk about inflation and the president's budget with the director of the cbo, phillip swagel. "squawk box" will be right back.

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jpmorgan is out. that's the initial reaction, that's a live tradeup, just under 1% the company managed to post earnings of $3.12 a share. the street is at $2.88 should point out, it was $3.74 last year. the company last year earned $4.5 in the first quarter, never earned below $3 last year. earned a total of $15 last year. so they -- the estimate this year is $11.15 keep -- consider that. it is going to be a down year and it is a down quarter from last year. but above expectations because the expectations 288 the revenue number $32.7 billion.

the estimate was $32.09 billion was the consensus. assets fell. book value up 1% to $87. you can figure out it is at 109. not really what you would consider, i don't think, expensive for what people think is the cream of the crop historically you see the net -- >> trying to find loan loss. >> that will be a good one that's key but for banks, we get these exciting numbers like net interest income, $17.6 billion return on tangible common equity, 18%. revenue on a managed basis was $33.49 billion i don't know whether you compare that to 32. keep looking you look for compensation and things like that figure that out. >> the compensation issue is a

10-year-old post financial crisis >> provision for credit losses. >> yes. >> 1.54 billion. >> third quarter >> and wall street expected 1.37 billion. >> oh, yeah? that's a good one. >> that's according to the street account >> jamie has said, you know, it's not all clear sailing let's get to leslie picker and stephanie link, hightower chief investment strategist. anything we missed, leslie >> no, you guys did a great rundown. you hit those credit provisions that they laid out he also had some macro commentary in here which, of course, everyone does like to pay very close attention to. jamie dimon saying in the u.s. people continue to spend there are significant headwinds in front of us, high inflation

and interests eft we're loorkds for the best, and we are prepared for bad outcomes so we can continue to serve customers even in the most challenging times. >> okay. >> just kind of looking at -- >> i just want to mention -- >> go ahead. >> we can get a double whammy with you guys for this with wells fargo hitting. it's 85 cents. the estimate is at 109 but the company does point out quickly that there was a 45 cent cut to earnings per share by accruals for litigation, customer remediation and regulatory matters if you were to add the 45 back into the 85, obviously, it would be a buck 30 and that would be above $1.09. it depends on how many analysts

knew that there was going to be that item in the results, 19.5 billion and revenue was above. the estimate was for $18.78 billion net charge offs in the case of wells fargo, $399 million. are you looking at wells fargo >> i'm trying to find it >> back to you, leslie, you got this one now expects continued increase in credit losses but the timing remains unclear and we're going to continue to manage capital levels for -- appropriately and prepare for a range of scenarios. you've got time here, steph, to really do the work you need to do to give us some unbelievable commentary leslie, anything else at wells fargo? >> no, i think it's important context here that, that

$2 billion charge relates to the historical matters surrounding litigation, remediation, regulatory matters this isn't a charge or provisions like we were talking about with jp morgan earlier these things tend to be somewhat lumpy in terms of litigation charges and how much people pay attention to it. it looks like the street is looking to that, focused more on the fundamentals here in this release moving forward again, there's some commentary from charlie scharf talking about their business and hitting on those historical matters but saying they're focused on increasing capacity -- >> steph -- >> this is the best performing bank -- >> steph, stock index futures tick higher after this it was just up 180 if it's not just horrific, both of these could maybe be taken as positive if this is going to be a hard landing, would you see more of

it in these results today? steph? >> were up 4, 5, 6% yesterday. and so yet they're still down so much so the expectations were a little elevated after yesterday but today the numbers look good. we have positives and negatives. on the positive side, we know net interest income and net interest margins are going to be better than expected we saw that with jp morgan they were much better than expected by the way, they guided back in september for better net interest income. so that is the spread on the yield curve and that's why -- why you kind of own banks because they benefit from higher interest rates the other positives, fees on fixed income are going to be better than expected given rates, expenses probably better. i haven't seen the expense line for either company, but i think that's where you have the lever in terms of moving some things around

capital is very strong credit is absolutely fine. on the negative side, we know sales and trading are going to be pressured, we know investment banking, there's no activity at all or there has not been, and mortgages also going to be weak. but for now, net interest income and net interest margin is saving the day in terms of jp morgan, the rotce was 18%. provisions were a little bit better as well for wells fargo, their net chargeoffs were 399 million. also a little bit better than expected the stocks, joe, are trading at about book value, right. jp morgan is a little bit higher, but jp morgan is always a little bit higher than the group and usually that's the time when you want to own these things expectations low, even after yesterday, and i think, yeah, i'm overweight bank. i'm happy to see it for now.

>> think about that. we know about the tina trade is gone now you talk about wells fargo, below book, yield 2.8%, a two-year or a ten-year versus a wells fargo, it doesn't sound like you're going to get massacred if it's below book, steph. why not? why not take a shot there instead of just your maximum return on a two-year is 4% >> and i think to your point of, yeah, below book, but you also have a story with wells fargo, right? and the story is, charlie scharf is cutting -- it's a turnaround story. you know i'm -- i like that. that's kind of my style. i like to look for turnaround stories with good management teams and he finally has the good management team in place and he has streamlined the business as well here's what we need, we need the asset cap to be lifted i think that is your catalyst

sometime this year or into early next year. >> and i'll -- i'm waiting for jamie dimon to make a big buy -- he did it in 2008 and 2014 and it was 175 that's arguably the best managed bank in the world. it was 175 and it's now, what, up today -- up a little. but up to 110 or 112 maybe we'll hear -- i don't know the power of suggestion. maybe he's watching. maybe he's calling his people right now. leslie picker, thank you i don't want that to stick, leslie just stick with pickleball and, steph, good to have you on also today's bank earnings blitz rolling on we're going to hear from morgan stanley and citigroup in the next hour. we'll bring you the numbers as soon as they hit the tape. all this likely to move the

market today after what has been wild swings throughout stock futures moving around fast and furious. we got information out of the uk this morning there's a news conference at 9:00 a.m the finance minister will be sacked we're going to keep you updated as all of this plays out live and ineaim rlte. we're here on squawk come on right back what do you mean? these straps are mind-blowing! 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. i'm okay.

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good morning financials in focus this morning as the major banks post quarterly results in this hour mo morgan stanley is going to be reporting. we're going to bring you the numbers in realtime as we get

them. plus liz truss expected to reverse her recent budget moves. she's going to be holding a news conference on the situation there and we're going to get an update and talk about what it means for global markets. we're going to talk energy policy, putin's war in ukraine and so much more with senator bill cassidy as the second hour of "squawk box" begins right now. ♪ good morning and welcome back to "squawk box" here on cnbc live from the nasdaq market site in times square i'm joe kernen with andrew ross sorkin becky -- you don't prefer the top of the hour -- i think it's better at the top of the hour. we better alternate those two. you're good. you're not like that

far be it from you for any type of self -- >> happy to always be in second position or third. >> okay. false humanity that's the worst type. becky is off today u.s. equity futures at this hour up 17 -- you're pretty successful if you got it, flaunt it don't, don't it's not -- >> not becoming. >> the s&p is up -- emmy who me [ laughter ] >> treasuries, you can see we're green and treasuries are 3.89. we were touching four a couple times. they think we can go above but kind of thinking we're near the upper end of a range i don't want to speak for him, but i think that's basically what he said yesterday and then oil, it was -- did you read one of the things -- stocks

rallied because oil was up which makes sense because the -- >> there's the peak on inflation if you think that that is peak and you could argue the vix has come down. >> the vix has come down and globally, if you -- whenever oil really gets hit hard globally, it seems like equity haves a hard time. they just do it portends what could be a sharp slowdown nobody really likes sharp slowdowns globally >> but they're still not a great explanation for this. >> you don't have to go crazy. trying to explain it there's the vix. and then bitcoin back above 19,000 almost back to 20. and it bent but didn't break yesterday when it was down in the mid 18,000 range it seems less volatile suddenly than the nasdaq, for example maybe the same because it used to be so much

more volatile. >> at least at the moment. stock futures have been moving around all morning on reports out of the uk about this, the latest, liz truss planning a news conference, that's supposed to happen at 9:00 9:00 a.m. eastern time the finance minister will be sacked do you like sacked better than fired? >> i like all different words. i think we use a different one each time. >> we're going to have more on this story in just a couple of minutes. i want to get over to frank holland to talk about what is moving this morning. >> good morning. we're going to be with jp morgan, of course, earnings crossing a short time ago. shares up more than 2% after a beat on revenue and a beat on eps. we're not giving an exact number right now. leslie picker will have more later today, but the results come after the ceo forecasted the u.s. could head into recession in the next six to

nine months. infosys raises revenue and margin guidance and boosting its dividend they announced a share buyback plan in the u.s. where it gets 60% of revenue, growth remains strong looking at travel. delta air lines up more than 1.5% this morning after a big upgrade from cowen the shares could rally as much as 80% saying affairs are higher so that shift bodes well for forward revenue. and nasdaq, shares of the company falling after a big downgrade, setting a slowdown in market tech growth eps growing meaningfully in 2024 but says 2023 will be a bit of a tepid year back over to you guys. >> okay. meanwhile we got a little bit of breaking news in merger land albertsons and kroger plan to merge in a deal involving two of

the most well-known supermarket chains the two sides were in talks. we're going to bring you the details of that transaction in just a moment. we should say it's $34.10 per albertson share. so you're seeing the stock there, albertsons up almost 20% even after yesterday's news hit the table. let's get back to the banks. jp morgan and wells fargo, let's get more reaction to those numbers. leslie picker rejoins us >> hey, joe. some merger activity should serve at least jp morgan pretty well here because they did see their investment banking revenue drop as the entirety of wall street, essentially. but to dig in a little bit more on wells fargo, this has been the standout performer this year obviously trading below book, but has been, you know, outperforming the other large banks and you can see there,

shares are up more than 2% this morning. part of the reason behind the bullishness surrounding wells fargo is its liquidity position, its ability to redistribute capital to shareholders and they said they increased their common stock dividend by 20% and their cte-1 ratio was 3.10%. so if capital levels, they'll be prepared for a wide range of scenarios, including a slowing economy and market volatility. another key play here is wells fargo is a key play on the raising rate environment net interest income was up 36% from the year ago quarter. that's largely based on higher rates, higher loan balances. here's the question on nii that a lot of analysts are asking, when you can see that inflection point, have rates risen to where

those benefits will start to taper off. deposits are down there, loans are up it included about $385 million increase in the allowance for credit losses reflecting loan growth and a less favorable economic environment you start to see different elements of kind of this nii trend that they've enjoyed so much this year how is that shifting as we start to reach a threshold that many people didn't see possible with regard to where the fed funds rates will go, will it be beyond 4% if so, how does that impact, kind of the nii, the margins that these banks have enjoyed all year >> kind of like life, leslie they get the -- if it were a nice yield curve, it would be great for them then you got to offset, you know -- i guess you offset the potential slowdown and credit losses with the higher rates something wins out, but today i

didn't disappoint even after the big gains they saw yesterday >> yeah. and that tells you something too. obviously with the big gains we saw yesterday, i thought it would take, you know, quite a big beat or a lot of, you know, improvement in order for these stocks to rally on their earnings, but you can see there, they're up pretty significantly at least on top line beats for all of them and the nii aspect of it, which they've definitely been enjoying this year, a lot of that has been priced in the market is tending to react to other areas that have outperformed in addition to just some of the tailwinds that these banks have been seeing >> thanks, leslie. a programming note, wells fargo cfo will be joining closing bell today at 3:00 p.m. eastern time

t to driscuss quarterly results. prime minister liz truss holding a news conference at 9:00 a.m. expecting to reserve finance proposals and sack her finance minister take a check on the markets right now. wild swings yesterday. wild swings in the future. dow up 212 points as we get the bank earnings coming in. the s&p looking to open about 19 points higher. we got morgan stanley coming later and talk about this big supermarket chain merger with kroger and albertsons. come right back with us. we're coming back right after this

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overlap or synergies and everything else at -- >> and here's the question, is this going to be considered inflationary >> because -- do -- >> i don't know -- >> do supermarkets come meet i guess they do. tough to compete with walmart as a supermarket. >> that's one of the arguments for a deal like this. >> for letting it happen. let's talk about what's happening in the uk. it's whipsawing markets this morning. liz truss planning a news conference that's going to take place this morning at 9:00 a.m. eastern time the markets reacting to reports saying that the finance minister is going to be sacked. let's get to steve liesman with more on all of it. what do you think, steve >> let's call this a fluid situation in the uk this morning, andrew. we know for sure the prime minister is going to hold a press conference 9:00 a.m. eastern. the finance minister did return early from washington. we have unconfirmed reports that the uk -- the times in the uk,

two news outlets that say the finance minister will be sacked and we have multiple reports the prime minister is going to announce that she's rolling back her plans for strong deficit spending that spooked the market all of this news, it's reflected in the world's new crisis benchmark, the ten-year gilt that's the one i get up in the morning and look at every -- in the morning. it's rallying strongly for a second day you can see here the rally has pushed down uk yields a massive 65 points in two days and helped steady markets globally. all of this coming up against a u.s. inflation report that did not raise questions about whether the fed's rate hikes were showing results in combating inflation. i showed you what's happening in the uk look what's happening in the u.s. seeing it at 4.50. the peak rates were almost 20 basis points higher than before the cpi report

for the moment the trade seems to be less risk of a financial crisis in the uk that spreads globally is more important than the risk of the fed doing more or too much. the question is, whether bond traders will be satisfied this morning after the press conference and whether there are reasons to be concerned about u.s. finances, andrew? >> that was the question i was going -- i was just going to say to you, steve, you looked at what the market did yesterday and now what the market is doing today. we're getting these bank earnings which are looking positive, how much do you think this is a uk story versus the cpi story? i don't think that if you're jay powell you're changing course at all, no? >> n >> no, and the future markets don't think that we were talking last week about that quote which we know is from -- that predicting the future is really -- predictions are really hard, especially about the future

i just want to add, you w whispered to me yesterday that you thought the inflation number was going to be hot. tell me that you knew the stock market was going to rally 800 points on that news. >> i would have been -- >> to which -- so i want to add this -- so i want to add this to the quote which is, predicting the future is hard, especially -- even if you know the future right? if you knew inflation was going to be "x," you could not possibly predict. >> i would say that knowing in advance any of those numbers, it's never worked. >> you can't make money on it. >> on employment fridays we never -- it's almost impossible to connect -- well, one of them, the reasons, it's always like the opposite, good news is always bad news in some respect

for any of these numbers i still think yesterday, steve, i'm with the -- all right. the saudis screwed us with this bank -- with the production cuts energy is going to not be a positive but i think supply chain issues eventually start easing. i even think that the labor participation rate might start rising when people come back so i think that people were looking beyond yesterday, i'm trying to be half full -- not trying to be, i am did you see anything in there -- did you see anything in there that's just sort of portending an easing of some of the pressures that gave us that hot number that's what i saw in there >> you had the used car prices came down, the thing about ian shepherdson and we have the interview with siegel. he said inflation is going down everywhere expect in the data. that was kind of an interesting one. ian has been -- we've had him

on ian has been one of these guys who has been very bullish on inflation coming down and coming down sharply i think he was wrong about it happening, you know, later this month -- >> it doesn't seem like the '70s, steve. unless we printed so many dollars that we can't get control of it, maybe we can talk to your next guest stay with us joining us to talk about the outlook for the deficit, government spending and whether the u.s. is headed for a united kingdom-type incident, phillip swagel is the director of the congressional budget office. phil, did you see anything in those numbers that -- i mean, long term, you've got numbers that scare me a lot in terms of where interest expense for the government is going to rise. even though the deficit is down, cut in half to 1.4 trillion, what did the student loan add to

the 1.4 trillion now we're back to 1.4 trillion, that was a huge mistake, in my view but it was half of last year did you see anything in that number yesterday that gave you solace >> i mean like steve said, the used car prices are coming down. we have a sense that the housing price numbers are more lagged. so those are running hot there's some sense that housing price inflation could slow the fed is going to do more and we see the effect of that in the economy and investment and we'll see later today about consumer spending but yeah, there's more work to be done. >> you're cheering the fed on with another 75 and another 75 after that, is that the right move >> we have to predict what the fed will do for our budget projections because interest rates, the government is on the both sides of interest rates,

but higher interest rates have a big fiscal affect. that's the risk right now is if interest rates go higher and stay higher, that will feed through to net interest spending people say it's -- inflation helps the government in terms of, you know, paying off debts with cheaper dollars but you think that gets offset by the higher borrowing costs, right? >> that's right. the u.s. government pays for things that inflation makes higher costs and we saw that yet with the social security cost of living increase. the government pays for a lot of things it's really the fiscal risk is interest rates that's really -- in the near term, that's the fiscal risk. >> long term, you point out that the -- i don't know how -- do you sleep okay at night? the interest as a percentage of gdp is going to be almost 8% in a couple of decades. it's never been that high before that hurts growth.

it takes away, you know, funds that could have been spent on really useful things it's just not where we want to go there's no stopping it, though, is there >> right and that -- as you said, that's the challenge. net interest payments are rising from 1.6% to gdp now to, you know, more than double, 3.3% in ten years and then doubling again over the next 30 years and that's just going to squeeze out all the other things that we want our government to do, whether it's national defense, whether it's more tax cuts, whether it's spending on education, anything, interest payments are going to squeeze all of that out. >> phil, could you -- yeah, walk us through this, phil. how much of a percent of spending could be devoted or that we have to spend on interest rates or interest expense? >> 1.6% of gdp and that's -- that's the spending that we are going to make.

this is from alexander hamilton, the start of the republic. and it's climbing. and so that -- that's the challenge that we can't do anything about it and higher interest rates will feedback into higher payments now the good news that the treasury doesn't fund itself with 30-day t-bills. there's lots of debt that's locked in at long-term rates the average duration is around seven years now. it's like an accelerator effect. if rates inflect up, the spending will go to those interest payments. >> phil, economists use this sort of -- i don't know if it's a euphemism or not, but putting the fiscal position on a sustainable path when we put up that chart of the trajectory of deficit of a percentage of gdp and we look at what's happening in the unique when the prime minister comes forward and saying we're going to do additional deficit

spending, even if it's not that much, can you say that u.s. finances are on a sustainable path >> so we know the fiscal trajectory in the u.s. is not sustainable right now. something has to be done the good news is that we have time, right? we look at the uk and we'll see what they announce later today we look at them and we see the effect of sentiment. sentiment can change and that feeds through to interest rates and hit us quickly. we seem to be in a good position now, in the sense that we have time to make adjustments we have to make them we don't have to make them at this moment. >> phil, the inflation that we saw, the hot numbers yesterday, that we were just talking about, that supply chain, energy, is it the -- the low participation rate is it what both the trump and biden administration did fiscally is it what the fed did in terms of money supply and the balance sheet? is it all the above?

>> certainly, look, it's definitely all of the above. it's both demand and the very strong demand push we've had over the last two years, and the supply chain issues you mentioned. i want to go back to what joe said a little bit earlier in the program about the labor supply there's about 2 or 2 1/2 million workers. people before the pandemic would have been in the labor force and they're still out of the labor force. some of them aren't coming back, we know, that the older workers. but there's at least a million still coming back as health concerns, childcare concerns get resolved. >> how do you rationalize that >> joe, guys, guys, just real quick, i want to report that reuters is reporting that the bbc is saying the uk finance minister has been sacked i just wanted to throw that out there. there's a headline that the bbc is reporting >> sacked, fired, pink slipped

that kind of thing. >> sacked. it's sacked. >> do you have an explanation for why so many folks have not returned to the workforce? is there a rational answer that you think makes economic sense right now? >> it's just -- it's a mix of things i mentioned health, childcare, sometimes that's the policy part that is still missing, really crisp guidance for childcare there's immigration, that's the only policy piece is that there's half a million immigrants who haven't shown up. and i mean legal immigrants. that's the other thing that we can make a difference on >> phil, thank you appreciate it. thanks see you later. we have morgan stanley earnings in just a moment. >> announcer: time now for today's aflac trivia question. what percentage of u.s. households hold either a e ecking or a savings account?

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households hold either a checking or savings account? the answer, 94.6%. welcome back to "squawk box. morgan stanley just releasing results. let's get over to leslie picker who has the numbers and the details. >> just digging through these numbers here, it appears to be a miss on both the top and bottom lines. they reported net revenue of 13 billion. the street was expecting 13.3. eps came in at 147 that was shy of about two cents compared to analyst estimates. revenue for this firm has beaten consensus 16 out of the past 20 quarters a rare miss for morgan stanley you can see shares ticking down slightly there digging into their individual businesses, this firm stands, they have half in wealth management now, half in banking. wealth management added 65

billion in net new assets which is a bright spot mirrored with what we saw yesterday. they also purchased $2.6 billion worth of shares during the quarter. investment banking revenue down 55% from a year ago. no surprise there due to lower levels of completed m&a transactions underwriting volumes, ipos have been basically nonexistent throughout the course of the year net revenues were down 14%, that's been expected although it slightly missed street estimates for morgan stanley specifically. fixed income was up 33% and that was a slight beat of what the street was expecting you can see shares down about 0.6% this morning in early

trade. andrew >> i was going to say, i wanted to make sure that that's -- i saw it down a little more than that but it looks like a real trade that's not -- that's not horrible yet at this point, leslie, given that you mentioned that there was a slight miss on both but the stock taking it in stride those are real trades right now. >> that's right. and morgan stanley has been a significant performer this year, obviously with investment banking. not necessarily a bright spot in the world of banking they still manage to balance out their mix of business to still be able to produce decent results. a bright spot for them during the quarter despite the fact just overall the industry has been experiencing some weakness in m&a due to the limited availability of deals to close we're seeing some of this morning. so maybe the future looks bright for investment banking we'll see. >> leslie picker, thanks so much for helping us through it.

still to come this morning, joe lonsdale is going to join us to talk about everything from china to esg and so much more. he's here at the desk in person. plus, you already heard results from jp morgan, we have wells fargo, morgan stanley, we'll bring you those numbers as soon as they cross you're watching "squawk box" on cnbc or whatever this is. but the things that last a lifetime like happiness, love and confidence... you can't buy those. but you can invest in them. we believe that your investments should work harder for the future you imagine. and that's where our strategic investing approach can help. t. rowe price. invest with confidence. t. rowe price. gang, we need our paranormal services to be more versatile. i know a group who can help us.

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♪ ♪ we got a fast and furious reports coming out of the uk this morning confirming reports that the finance minister has now officially been fired. prime minister liz truss holding a news conference at 9:00 a.m., expecting to reverse more of the tax cut proposals. what's going on? >> reporter: extraordinary 24 hours. the chancellor returned really from the meetings in washington.

he got back to london about a couple of hours ago. came back to downing street just over here and it has been confirmed in the last ten minutes that he has indeed been sacked from his role this would mean that the uk has had four chancellors since 2019. bigger questions remain about the future of the prime minister herself. a poll recently said that 50% of the general public believe that the prime minister should be ousted from her job, only 9% of the public believe that she was the right person who was chosen this summer. lots of questions about her own future she's set to give a speech in an hour and a half time and there she's expected to spell out further potential u-turns on this so-called mini budget this is the budget that came out on september 23rd, sent the uk market into a financial tail spin since then, we've had the bank of england intervene to buy gilts. we had a small u-turn out of the government on the higher tax cut

measure. they're going to have to roll back other measures, such as corporation tax cuts, dividend tax cuts as well in order to bring the public finances profile back in focus again. now, we know that the major fiscal event is expected to be held on october 31th t the question is, can investors hold on given the political uncertainty at this time this morning we came in thinking that the big story of the day was going to be the end of the bank of england temporary gilt stabilization program. that has been moved to the side now as we focus on what's going to happen in terms of the political competiosition and th future of the prime minister herself. >> thank you for the report. we're going to be coming back to you a lot this morning. meantime, in an effort to curb the sell of semiconductors and parts to china, the white house putting restrictions in place. according to "the wall street journal," samsung and tsmc have

been spared from the new ruling this year. joining us now to discuss competition with china, esg, maybe a little elon musk, joe lonsdale is here you want to talk china first this is a big issue. you've been talking about it for a very long time >> you know, it's been a good year for the u.s. on a relative basis, right one bright spot you could say with all the incompetence going on is that democracy has shown it's a better system w these autocracies are in a future amount of trouble in the world. >> how do you think about u.s. businesses doing business in china? this is not -- i'm not saying chip companies i'm talking about nike, starbucks, blackrock >> i mean, listen, there's obviously a huge middle class of consumers there and a huge

market i think everyone is realizing you can't have your supply chain dependent on china everyone is scrambling to fix that i think the bigger thing, it's crazy the extent which they've destroyed their tech sector. they made it so -- it's like friends don't let friends become chinese billions they're terrified of those companies now. >> does that put us in a -- if you were sitting here two years ago, you would have said china is a major threat that could eat our bunch. >> china is still a major threat from a defense perspective they're going to be a long-term threat the way the tech sector works, it's created by people who have already built things elon musk has already built stuff. if either of us are china, do you think we would be building the next new company, and no, we

would be terrified and xi jingping doesn't want you doing that you would be too powerful. if the u.s. takes advantage, keep bringing in the top talent people, get our immigration stuff -- >> and you've written about that what do we got to do on the immigration front? >> the table stakes, first of all, the op-ed this week in the journal is, it shouldn't take 800 days to get a visitor days, it shouldn't take 400 days on average to bring in someone for business, just to come visit the state department is completely broken on that. as much as it's a good year for democracy relatively, we need to hold our government accountable. >> this should be a bipartisan issue, i would think. >> i should -- you know what's not bipartisan, what's not happening right now is congress needs to demand accountability, they need to demand competition in our government. this is not -- what's going on right now is not because some kind of like special security thing or whatever. it's because we haven't demanded people come back to work after covid and hold them accountable

for basic competency. >> i want to pivot -- >> you would want to pivot he doesn't want anyone -- >> i got -- >> do you believe that >> he can't get the fed to pivot. but, man, was that a quick pivot. >> we got five, ten minutes with joe. there's 100 things we want to talk about he's been critical of esg, something you would appreciate >> which is to say -- >> i figured we should go down this road with him. >> fine, as long as you admit you're dead wrong on coming back to work. >> i'm back at work. here i am. what are you talking about >> there you go. you mentioned liz truss. i thought it was great that finally the british government admitted they should have been fracking -- it was russia propaganda friends in the middle east, they fund ecogroups to convince them

not to frack you can't turn it back on, andrew the uk is screwed and they're wasting hundreds of billions of dollars because they were too -- >> did you see paul tudor jones the other day. he's like esg, the environmental part has blown up in their faces. he's saying, $25 an hour for everyone in the country because we take polls of people in the country and they say people should get a decent wage what about the people that don't have any job when $25 is not competitive with all the other competitors? all these feel-good social things sound good on paper, but they may not work. it's like almost a wage control. we don't hear any of that. it's just all happy talk >> i think when the economy goes through what it's going through now, we get a chance to see what's real and happy talk you're seeing some messes out there right now. >> let me ask you, though, about this, which is you may think

it's happy talk or not happy talk there are pension funds -- i would say the last four, five years, pension funds, specifically in europe, but oftentimes in the u.s. and other investors who said i want to put my money behind these companies that we're -- maybe it's virtue signaling, maybe it's not. there's real economics behind that we could say that was a mistake for them to go down that path, but i don't know if it was an irrational mistake for companies to pursue those policies from an economic perspective and so maybe it wasn't -- i'm trying to save the world maybe it was, i'm trying to make a buck >> there is some of each you know it's crazy. look at pension funds and you look at, like, for example, family offices or people owning companies and what they did d.o. with their money and it's different. when you're doing something with other people's money, you're much more likely to be virtue signaling. when it's your money, you're doing something that makes sense. we have a lot of virtue signaling -- >> we got -- >> on the social issues, andrew,

if you're not -- you could never have a pressure -- pressure a corporation to do a prolife thing or progun thing, it's always got to be the liberal side of things. >> it's true for a for long time, it was the progressive liberal -- >> that's the only people that they want their corporations to do. >> now it's -- >> what if it was -- >> that tactic that was being used -- >> you want to talk about elon >> we got to you could turn the music off we're staying with joe for one more second here. >> who is next >> help us with this last night elon says about starlink in ukraine, i got to make the pentagon pay. i can't do this anymore. and says, part of the reason, he suggests, it seems, is that, you know, the ukraine minister, the finance minister told them a four-letter word off because of some of his comments about what

he thought should happen there what do you make of what's happening and also just the -- the power that elon now has -- almost singularly in a unique way. not just in cars, but in space and now in terms of a war? >> i mean, he's obviously a very competent guy. there are other companies plays important roles. what elon did is impressive -- >> if you lose the communication l link, like the whole game is over. >> it's been critical. listen, he -- it's very impressive what he did what i was most amazed by how they were able to re-adjust it in a day when they deployed it right away that is the key to modern warfare right now and i think what ukraine shows us and what his power shows us is how important it is we have our best and brightest working on defense. very similar to esg. no one wanted to fund our defense stuff for the last 15

years and suddenly everyone is engaged in that. hopefully, it's a lesson that we need to be doing fair things. >> fair for him to ask the pentagon to pay. >> totally fair. it probably shouldn't be his -- >> does he buy twitter in the end. >> god, i hope so. i hope so. not for his sake necessarily -- it's going to be a mess. i really hope so for our democracy, for a democracy, that would be amazing that would be amazing. we want transparency there's not -- >> come back to work. >> thank you, joe. come on back there's so much more to do. >> coming up, more on the uk finance minister being sacked. us using sacked nk t nt g oup isheexbi ba reporting

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more about politics and not about americans wallets. bill cassidy is here with us this morning he serves on the energy committee. little did they know that we would be using that expression forever, there's politics going on here. of course there is, senator. and it goes on both sides. and the american people watch this and, you know, probably

don't like it very often, but we all know it's par for the course of course you didn't want a production cut before the elections. but it's -- you're trying to do your best for the american people too you don't want higher oil prices. >> there would be more to that if they actually hadn't said, oh, saudi arabia, don't cut prices until just after the election it's an incredible -- >> you know what republicans would have done? we the first week after a republican president took office, we couldn't have killed the keystone pipeline. that would have been 800,000 barrels a day, a pipeline that would have been completed by now, coming from canada to the gulf coast to be refined for distribution across the united states >> what about the notion that oil companies have nothing to drill on and we had a big

discussion yesterday with someone off the camera federal leases are down at the lowest level in 50 years how much does the oil companies need to drill on federal versus private land. >> the privates are doing their job. if you look at the rig count in the private sector, it's up more than 50% relative to a year ago. on the other hand in the outer continental shelf -- >> which is federal. >> which is federal. i'm told that there were permits applied to drill off an existing platform in january and that if they had been granted within six months, there would have been oil and gas production coming to the shore to be refined. now, that was in january, do the math, even if it was in six months, it was nine months, we still would be having an increased supply available now at every point, the biden administration has done their best to shut down north america energy production and now they're like, oh, my gosh, we got to blame the saudis.

>> oil companies didn't have workers, they went through a slowdown a lot of fracking companies went out of business because the prices -- there are a lot of other things that happened we're not back to 2019 levels. up 50% year over year. recall what i was told by somebody who was in charge of these operations, if we get our permits within 6 months we'll be producing oil and gas. >> i'm trying to play devil's advocate >> i'm glad you're doing it. >> i saw the executive orders on january 20th, 2021, that basically spelled out what joe biden said during the campaign i will put an end to the fossil fuel industry. what i don't understand is when the excrement hits the air conditioner, we don't -- who, us we didn't want -- we were -- but that was your stated -- but that was the stated intention of what he was going to do

>> look, i don't like the politics of what's happening with saudi right now, but let me say this the flip side is you -- we all want lower gasoline prices the question is when do you think -- you want lower gasoline prices not higher gasoline prices you'd want to push the higher gasoline prices off as much as you possibly could. >> you would you'd want to do the spr the same discussion. we want to help americans. >> but it just so happens this is all left for better or worse there happens to be an election here you can't change the date. >> i said that i said that. but spr production is essentially opening up another oil well and so the fact that we're draining it tells us that they think supply is important and that domestic supply is important. they would rather just take it from that which has already been produced as opposed to creating new american jobs and new canadian jobs, north american jobs by allowing the keystone xl to be built or to allow drilling across the coast of louisiana.

by the way, one of our problems in this economy is how do we help that non-college educated, hard-working person who's going to show up every day, get a job which pays his or her bills, which sends their kids to a better school which changes trat jekt try of that family? those oil and gas jobs do that you work on a rig, 30 days on, 30 days off. a month out, a month in, you can make $100,000 a year now i can tell ya, that changes the trajectory of a family and this administration's doing their best to kill those jobs. >> i've got nothing -- i can't argue. you're going to have to take over i do agree with some of that so you're going to have to take over and push back. >> you want me to push back? you know what the push back is >> no, i don't >> other subjects like inflation, what the fed is doing. we've been talking about should you approach this in some kind of supply side way or is there something else that can be done?

>> energy, inflation >> it's all related. >> it's all related. >> first it is two sides it is supply side, clearly the high cost of fuel driving up the cost of everything else. number one number two, people are criticizing liz truss and the bank of england simultaneously sur suing the stimulatory policy and let's raise interest rate policy on the other side, the inflation reduction act, canceling of student loans, the american rescue package is a stimulatory package working at direct odds to raise interest rates. the american rescue plan, american real wages have fallen every month since. >> for years. >> this is not an american rescue plan, this is an american hit job. if you are talking about -- >> what's your position on what liz truss is doing >> so truss has an issue of where they've got declining productivity and they are falling behind other g7 nations.

i am told that they are the only g7 nation whose economy is smaller now post covid versus pre-covid. so i don't have special insight but i do know what they're doing is what we did in our tax reform bill when the republicans controlled things which is totaled out an immediate or one year expensing.

that can increase productivity which means you have more money to pay higher wages. there's a lot of good economy in there. >> the point's been made that the gdp might be worse than the u.k.'s in a way it was received it was prior to liz truss even being there. liabilities of the pensions. it's a debt to income ratio. does that make it we did the same stimulatory stuff >> it's a schizophrenic economic policy and the american people are paying the price the people are paying the price for the mental illness of this >> you did hear what they say. >> throwing it down. >> you're exhausted. >> you exhausted the debate. >> we've got to go >> we have senator warren on anybody can come here and say things some people are going to complain complain what you do and then when we have senator warren. >> thank you thanks, appreciate it. >> thanks for having me on. >> bank earnings, back to those.

they've been coming rapid fire this morning citigroup's numbers are out. leslie picker. do we have her i haven't looked at them >> i am going through them now, joe, but it appears that citi was able to notch a beat both on the top and bottom line here reporting revenue of about $18.5 billion compared with estimates of $18.3 billion in terms of the bottom line, 163 compared to estimates of 142 so significant beats on top and bottom lines you can see those shares down about 1.8% in pre-market trading on these results let's get through some of the details here overall we saw revenue increase by about 6% but net increase -- net income decreasing 25% during the quarter. that's largely similar to a lot of citi's peers. operating expenses did go

higher they were up to 13 billion in the quarter, an increase of 8% that largely has to do with inflation, volume-related expenses and the like. their cost of credit was $1.4 billion. saw loans tick down versus the prior year period. deposits also down both of those were kind of on a similar trajectory down 3% versus the prior year period cet 1 ratio up to 12.2% for citi so approaching the target they had laid out there investment banking, down about 64% during the quarter, which is the steepest drop that we've seen among its peers reporting this morning that's largely due to just overall client activity being down and the areas that citi does investment banking have not been as active a particular strength for them, there hasn't been as much spac activity this year retail services, revenue was up

largely due to nii, net interest income so shares have come back a little bit now down 1.6%. just in terms of jpmorgan, dug through that release a little bit more, guys there was the credit cost that you mentioned of 1.5 billion that included the 808 million net reserve build. jamie diamond commenting on the release providing some additional macro comments. not too dissimilar from what we've heard from him before. he notes there are significant head winds immediately in front of us. high inflation leading to higher global increases not too surprising that they would add an additional 808 million to its net reserve build and there was also something notable in this release, $959

million net investment securities charge. that led to 24 crept decrease in earnings per share during the quarter. so some interesting dynamics not every bank is alike obviously but the macro clearly playing a factor in third quarter results, guys. >> just go 30,000 feet for us if we were to combine morgan stanley, jpmorgan, citi, wells, what do you think the sign, if there's a signal here about what's going on, at least what's gone on previously, but really more importantly, what it portends >> yeah. i think what's interesting is what's going on with regard to loan activity and deposits we are seeing deposits tick down this has been an area that's been really sticky for the banks in recent quarters as such, they've been able to maintain their pricing and have relatively low rates by which they pay their depositors. if you start to see those tick down, if you start to see outflows, that's when the banks need to start paying their depositors more.

that cuts into their margins that cuts into the benefit that they enjoy from these rising interest rates, so obviously a huge tailwind for the bank and a reason why a lot of investors have been playing these this year has just been the overall benefit from rising interest rates and the fact that banks have been able to generate significant profitability for loan making as a result of that. if you have to pay your depositors more in order to do that loan making, that obviously cuts into your profit. >> okay. leslie picker, thank you so much meantime, "fast and feurious news prime minister liz truss holding a news conference expecting to reverse her tax cut proposals. we're live from london in front of downing street. good morning >> reporter: good morning, andrew just in the last couple of minutes the now former chancellor just tweeted out that

he is leaving his role as chancellor kwasi kwarteng it is confirmed he is stepping down from the role as chancellor there's a lot been going on in the last 24 hours. a day ago he was at inf washington meetings. he flew back early there were lots of reports early on in the day that he may be coming back to actually lose his role this is obviously now being confirmed. then again, there are lots of questions looking ahead as to the future of the government as a whole. liz truss and kwasi kwarteng were very close. they set together the mini budget we saw the massive move in gilt which prompted the bank of england to intervene their stability program is meant to end today lots of people were talking about the possibility of this cliff edge what happens to these financial assets now that they have stopped intervening.

the next leg of that is what the government plan on doing on the fiscal side of things. the next scheduled fiscal event is scheduled to happen october 31st whether or not it can make it to that point without further clarification and what the fiscal plans are and now that the chancellor has actually stepped down as we found out in that tweet just a few minutes ago is anyone's guess. but a lot of people are saying that they could be look to go do further u-turns on some of the key measures in that mini budget, including tweets to the corporation tax. they had plans to freeze it over the foreseeable future maybe some plans could be introduced as well all of that in an attempt to ensure that is under control when it comes to the economy, public finances and the political future she is expected to speak in a couple hours' time we should be getting more messaging out of the pm as to what those plans are

>> jomana, thank you we will be back with you, i'm sure, throughout the morning. coming up, aside from the bank earnings and the news out of u.k., we have moreheadlines if you can believe that. including some major deal news in the grocery industry. we're going to breakt iall down we're going to do that next right after this

♪ ♪ ♪ ♪ ♪ ♪ ♪ ♪ ♪ ♪

welcome back to "squawk box. a lot going on in the u.k.

bank earnings. that's not all that's happening. there's some movement. >> the overall market is also in individual stocks. let's start with the big m&a in the grocery space. kroger is acquiring albertsons albertsons shares closed 11% higher this combines kroger, the second biggest u.s. grocery chain with albertsons walmart is the biggest coming up on closing bell, do not miss a cnbc exclusive interview with kroger chairman and ceo rodney mcmullen. moving higher in the pre-market just one day after announcing ad-supported tier plan for 7 bucks a month. shares up 1% in the market that plan priced $1 less than

disney+ and hulu it launched on november 3rd. nutanex surging. shares are up more than 20%, even higher than they were a minute ago nutanix is exploring a sale. they're looking at industry rivals and pe firms as possible buyers finishing off with beyond meat down almost 8% on news it's reducing the outlook and another round of job cuts. this time 19% of the workforce this raising more concerns about demand for the plant-based meat products and increasing competition. important to note, coo doug ramsey who made a lot of headlines for arrest biting someone's nose at a football game he's also leaving the company. back over to you, andrew. >> frank holland appreciate that report lots of stuff taking place. in a week full of economic news, we have one more big key report for you that's retail sales.

next, going to be joined by former fda commissioner dr. scott gottleib covid booster data also going to weigh in on rising cases in europe. stay tuned "squawk box" coming right back

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welcome back to "squawk box. futures right now, as you can see, up about 16 points. that's all that's up as far as the s&p and the nasdaq and the dow, those three we were up about 200 and we were green across the board earnings initially were pretty good jpmorgan, i don't know whether jpmorgan and wells fargo, both above. i don't know whether morgan stanley being slightly below citigroup. i don't know if it has anything to do with that. don't forget that big turn around yesterday 1500 point. >> turn around i think there's still people wondering. >> right. >> whether the fed changes course i don't think the fed does how much of that was the u.k that was sort of in there a little bit of course, all the way to peak inflation. still a good question. meantime, want to talk about pfizer and biontech's booster shot adopted for b.a. 4 and b.a.

5. it was well tolerated in testing according to new trial data. cdc saying 3.3 million people in the u.s. got updated booster shots in the past week only though about 15 million people have gotten them over the shots first six weeks. joining us to talk about this and what has now turned out to be a rising number of cases in europe, dr. scott gottleib, former fda commissioner, cnbc contributor. serves on the board to pfizer and illumina i got my flu shot. i need to get my booster shot. tell us what's happening we are starting to see more cases in europe, at least historically it seems that we have tracked europe oftentimes by about 5 to 6 weeks. what do you think? >> yeah, look. you're seeing cases go up. you're seeing hospitalizations and icus going up. some have denser waves than others they are ahead of what you would expect this year

germany has rising infections well ahead of what you thought they would be. some of this is waning immunity and some is just life getting back to normal people congregating again. not taking precautions the virus is spreading some is the new variants you reference. there's really three categories of new variants we're tracking they're easily broken down into level 4, level 5 and level 6 variants that's how a lot of scientists are referring to them based on a number of unique mutations in the spike protein, the business end of the virus, if you will. right now we see level 4 mutations like bf 7 spreading in austria, belgium, denmark and the u.k. we see level 5 variants spreading in india and level 6 in singapore so if you look at what's happening in singapore, they have a new variant called xbb which has been spreading very rapidly. rising cases of hospitalizations that's a level 6 variant the belief is they do pierce the immunity from prior b5 infection

and some immunity from the booster. >> a lot of people have not taken it, a, i got it before so i think i'm -- i'm not saying that i think that, but there are people saying i feel like i'll be able to be fine and there's questions about whether it really prevents transmission can you speak to that? i also just want to throw into the mix that there was a clip that went viral this week, as i'm sure you saw, a back and forth between a politician in europe and a pfizer executive around this issue of transmission i think there's a lot of questions around actually whether we know how much these vaccines prevent transmission, which is the whole sort of backbone of the idea of trying to prevent this from a societal perspective and trying to do this for others and not just yourself >> right remember when the original vaccine was approved, people

were very cautious, including me on this show, from saying that the vaccine would prevent transmission what we knew from the initial clinical trials when both the moderna and pfizer vaccine was approved, it was substantially effective at protecting against symptomatic disease. there was a presumption if you can protect transmission you can protect infection. look at the real world evidence. we subsequently learned with the original vaccine against the original wuhan variant it was very effective at preventing transmission and it was a tool to control the spread of the virus but as the virus mutated, it became less and less effective against preventing infection, although it still was effective, and less and less effective against preventing transmission, as the virus mutated away from the original strain now by reformulating it closer to the prevailing variant, the presumption is it's going to restore a lot of the ability of this vaccine to prevent

infection and hopefully some or a lot of the ability to prevent transmission the virus has mutated, you're right. >> is that just a presumption? the other piece of it is you said it before, if this is already piercing ba.5, folks who already had that once, why wouldn't it pierce the vaccine >> it's more than a presumption. i'm careful in what i say because until things are proven in a clinical trial that meets the standard of the fda, you can't make a claim around the efficacy but we do know if they produce a high level of neutralizing antibodies as the data says they do against the prevailing strain, it's going to protect against infection, it will probably reduce transmission the new variants, we don't know how well the vaccines will protect against the new variants they're descendents of ba.5. they'll maintain some

protection, but it may be reduced because there is a higher number of mutations in the new spike proteins on these variants that said, recency does matter what we found with the old wuhan vaccine, even though it wasn't highly effective against preventing infection against the new variants as the virus involved, a recent vaccine was protective if you have a recent inoculation, it's going to probably be protective even against these new variants. >> doctor, we go way back, i don't know how many times during the pandemic you were on, probably three times a week. you turned into a security blanket for us and i think for viewers everywhere, and the entire time i don't ever think you dodged a question or politicized a question you talked about the origins and were very straightforward about what could have happened, what didn't you talked about the efficacy of the vaccines, masks. you'd go against the conventional thinking. i think it was all science based and totally objective.

i have to ask you about this i have no doubt you want to weigh in on it on tucker carlson, "new york times" reporter, alec baronson said you got him kicked off of twitter. a convoluted conspiracy theory that somehow you told twitter to get rid of him because he was asking too many questions about the efficacy and safety of the covid vaccine. do you just want to respond to that and tell us your side >> yeah, look, i'm not going to comment directly on that he's threatening litigation so another reason not to respond. i've raised concerns around social media broadly and i've done it on these networks around the threats that were being made on these platformsand the inability of these platforms to police direct threats, physical threats about people that's my concerns around social media and what's going on in that ecosystem >> so it wasn't as much about -- you know what, i had covid i had three vaccines i think without the vaccine, those were one of the great

scientific discoveries, and i've seen all of the -- i still see it, it does this, it does that we didn't know this, we didn't know that. that's the way for me, it was basically like a mild cold because i think of the vaccine so i'm not questioning that -- >> look, i'm not concerned about debate i'm unconcerned about debate i'm unconcerned about debate taking place in platforms. i am very concerned when threats are being made, physical threats against people's safety. >> this had to do -- >> i'm very concerned about physical threats being made against people's safety and the people who gin up those threats against individuals. that concerns me. >> got it. thanks, doctor. >> thanks, doctor. appreciate it. >> thanks. coming up, to what extent is the government at fault for soaring inflation? this week's data shows we're still in the thick of it we have a debate just ahead that you don't want to miss stay tuned, you're watching "squawk box" on cnbc

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welcome back to "squawk box. rick santelli here live at cme hq wild week it has been. looking for the september read on retail sales. remember, not adjusted for inflation. expecting up .2. unchanged. goose egg. unchanged. that follows up .3 and if we

look at x autos, it improves by .1, up .1 that actually was expected to be a slight negative so that's an improvement. strip out autos and gas, you rise up to .3 of 1%. if we look at what's known as the control group used to input up the food chain economic data points, it is up .4. this series has been quite strong if we start out the year up 3%. these numbers have been better and if we look at import prices month over month, down 1.2%. down 1.2%. that's actually roughly in line with expectations and just to put a face on it, we're down 1.5 in july. so believe it or not, this is a bit of an improvement. and if we look at x petroleum on import prices, that is down half of 1%. very close to expectations and if we look at some of the year-over-year numbers, this is

sometimes some of the most important aspects to pursue the data from a strategic standpoint, import prices year over year were up 6% up 6%. that follows 7.8 and the recent high water mark going back to an 11-year high in march was up 13%. every month other than the last two have been double digit gains. believe it or not, as big a number as that is, it is coming down to some extent. and if we look at export prices month over month, down .8 of 1%. expecting down 1%. finally, maybe the biggest number of all, export prices year over year, expected to be up 9.3% comes in higher at 9.5%, but as high as that is, it follows a slightly revised 10.7. the high water mark there going all the way back to 1984 recordkeeping was in may and that was up 18.6%. so still some lofty numbers but we know the dollar and its strength, you know, has been up in the neighborhood of 17.5, 18%

and after yesterday, of course, it gave a little of that back, but it does underscore the difference between import and export prices and how we do benefit on the import side joe, back to you >> all right, rick stay with us steve liesman joins us now with more hey, steve i see you looking down and you're thinking. you've got a big nothggen there thinking >> i'm thinking and reading. rick doing the great job he does in laying out the numbers. i'm trying to keep pace with him in the analysis of this thing. i'm curious to see motor vehicle down 0.4%. i'm not sure that comports with the other numbers. gas station sales down 1.4 that's going to come back. i think the overall take here is this, that that goose egg gets deflated by the inflation number and so it's, again, a negative real number that's a back of the

envelope calculation maybe down 4, maybe down .5 on the other hand, we know that goods are suffering, but the service that we have -- we have one little service indication in this report. that comes from your restaurants and bars and that's up 0.5%. so we want to say, and we believe the consumer is certainly suffering from the 13% increase in food costs and everything like that on the other hand, we do know that they're making the shift into services so that's worth talking about. joe, if you don't mind, i just want to flip real quickly to this bank of england story there is a little bit of commentary out i don't know if we have the full screen there's a comment here this marks the first time in decades since at least the '90s that the financial markets have forced the government of a big developed economy with its own central bank to capitulate oncor fiscal ambitions

this comes obviously as the chancellor, the yes checker, has resigned, been sacked i guess is the right word we're going to have a press conference coming up also, the other important point here is we talked about the bank of england, whether or not he was pressuring the pension funds to get their act together because he was going to stop the bond buying. i think it's also worth pointing out that that same action by the bank of england pressured the government to get its act together and then that's just like a catalyst for rick to go off on this issue of, you know, what role the fed plays in enabling deficit spending here in the united states but andrew bailey, the governor over there, he drew a line said, i'm not going to support this market anymore beyond friday so the government had to get its act together and it looks like it may be about to do that joe? >> yeah. you're right, rick -- or steve now saying rick/steve.

stick around joining us now for more. >> they're a pair. >> they are a pair for more on this morning's news, heidi heitkamp, a cnbc contributor, founding member -- board member of the one country project. and tom phillipson, former acting council of economic adviser chair and you no professor with university of chicago. we have steve and rick still with us. senator, not great things happening sort of all around the country. just start with, you know, that inflation number, the stock ma market we've got an election coming up. where are you? what's it like with this happening? >> we're a commodity state high dollar value affects us, but for the most part people are pretty optimistic in north dakota when you look at what's happening in agriculture, markets. people are making money and they're making money in the oil

patch and probably will make more money after opec cuts production and so overall if you look at north dakota's economy, other than the people who are working for a living who are paying, you know, 30, 40% more for a gallon of milk and 50% more for a loaf of bread, i think people are pretty optimistic. but overall i think when you look, joe, at whether these numbers, whether the economic well-being of this country will be the big voting issue, i think a lot of democrats are banking that it won't, but i think that's a failed message. they better have an economic message for those swing voters because democratic voters might be voting on issues other than the economy, but if you want to win in these swing districts and in these swing states, you're going to have to have a message and that message is going to have to be about middle class relief over these year over numbers on economic relief and

housing costs. >> people probably think i'm crazy, but i was saying when we see strength in the economy and it's something that we are looking at at a stance because the economy is not cooperating with the fed in terms of slowing down when you look at that, say, oh, no, they've got to go even further. i was trying to say that it's nice that we have this problem it's a good problem to have, that the entire globe, we're probably handling coming out of everything better than anyone else we're used to it we are one of the -- you know, in terms of gdp growth we outperform europe for the past 30 years is it good or bad that our economy is so resilient? does it make the fed go further or at least leave us an economy when they're finished with the rate hikes >> i think you have to separate how economists like me and you think about the economy versus the main street. for main street, your viewers,

essentially, they have experienced a dramatic reduction in the standard of living, particularly for old folks on social security, which now got indexed obviously, but it wasn't before so for them it's been an 8.5% reduction in their standard of living that's a really hard landing, and yet we keep talking about soft landing so i think you've got to separate, you know, all this discussion about is there a rece recession, et cetera real income, which is really what matters to people, how far does their paycheck carry. the biden administration is essentially taking the opposite tact from the trump administration and delivering the opposite results we have declining real income, decreases in real income, prices going up income inequality and wealth inequality increasing versus

decreasing as under trump. difference, exact opposite in policy, exact opposite results >> we took a couple hits there, but i think, heidi, you probably got the gist of what thomas was saying there do you concur with that? do you think all the spending we've done, and in both administrations we've done -- you know, spending on tax cuts, they're spending on -- we're seeing that in the u.k. now. they're spending on government programs do you think the last two years, do you think things have shifted, as you said, 180 degrees and caused some of the problems that we're now facing >> well, i think the first thing that you have to do is you have to divide government policy. we've got fiscal policy. we've got monetary policy obviously from the fed and then we've got policy policy. when you look at fiscal policy and you look at the american recovery act, which is the piece of the stimulus that's baked into the economy, it literally is less than 1% of annual gdp. so how much inflationary impact

will that have i think one of the things about these numbers that is not getting talked enough about is it's being driven by high housing costs. and housing is something that, you know, is a leading indicator. i think wesee problems in the housing market we haven't paid enough attention on fiscal policy to -- or on regular policy to housing. the problem that you have is when you talk about zboft intervention, a lot of housing problems come at local and state level. when you talk about energy, we have a lot of energy and no way to move it and that comes from local and state restrictions as well one of the things i want to say if you want to cure inflation, especially in energy, you've got to build infrastructure for this country's abundant source. i mean, why the republicans walked away from joe manchin's infrastructure, you know, permitting bill i don't know, but they should revisit that

when we come back because that's a critical piece of curing inflation. >> should we resurrect keystone then, heidi? do you wish that had gone through? >> you know, keystone is always the red herring. >> i know it's a red herring wait a minute. it was a private sector infrastructure spend that was ready to go. >> yeah, joe -- >> it's a red herring. the fact is, it didn't go. why? you're throwing stones at the republicans for permitting >> let me explain this the first thing donald trump did was give the keystone xl pipeline a permit. they had four years to build it. they didn't build it you know why because the economics weren't there to build it to move oil south into our country and so let's talk about gathering lines in places like the permean bases, places like the ba lca n. let's talk about building natural gases so people's prices

don't rise we have to have infrastructure for renewables if you are looking at this as policy, let's develop policy. >> thomas, i'll give you the last word. rick, you don't even need to talk just having you in that box with some of your expressions, that's good enough. that helps maybe i'll let you talk in a second thomas, do you want to respond quickly? >> well, yeah, i think it's misguided to still talk about what's driving this inflation is all sort of this now coming down to this. i think the reason we have inflation is the m2 took a huge hit in 2021. it's now flat. you know, i think that's obviously what's driving this. it has nothing to do with energy. >> rick, i can't help myself you've got to say something. go ahead, rick have you got a comment >> just a couple of things i agree.

the old people really have not been treated very well and this cost of living situation is going to hurt them, but do remember, many of the older americans get their money from interest rates and interest rates are put down to zero they were the donation in that equation, okay and with regard to the senator, i completely agree, okay states need more power the top down federal government reaching into a neighborhood's education, reaching into energy, my one question to you is cut through everything if they weren't going to build a pipeline, why was the administration so negative on it in the beginning let the private sector do what they will. if they want to build it, build it if they don't, they don't. i guess they would have changed their mind ultimately, alls i know is pre this administration we were exporting record amounts, now we're importing and we're importing and begging doesn't make any sense energy, yes, love it and in terms of the infrastructure oh, boy. i agree. we have problems with the

infrastructure let me think anybody has a cold winter. forget your ev anybody who has a super hot summer, forget your ev think about how your cell phone asks apartment building, chicago, new york, we going to have extension cords into parking lots? boy oh, boy do we need infrastructure i'm done >> we're all done. thanks, rick tomas, thanks. steve, sorry, man. you've been on nonstop heidi, senator, thank you. >> before we go to break, we may have the best viewers in the whole country. >> we do we do. >> they're right out here. i don't know if anyone -- on camera who needs the rock for those of you who were watching the show. we saw the rock over the way when you have becky, joe, andrew "squawk box," cnbc they wrote out the whole thing thanks, guys appreciate it. >> they're right jim cramer's firstake ton the trading day. stay tuned, you're watching "squawk box" on cnbc

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down to the new york stock exchange jim cramer joins us now. jpmorgan, a pretty good bank no, jim? >> as great as that number was, the wells fargo was better because wells fargo's got -- the next quarter's going to be good. the next quarter's going to be good very consistent. back to the oiled wells fargo except for this time it's real, not phony.

i really like what wells has to say. i think that's when they pull off what people will be impressed with jpmorgan is solid. the only person who can hurt that is jamie by saying the wrong thing. i haven't done enough work on citi yet to make a conclusion, but it's wells it's wells charlie sharp is back. charlie sharp knows how to run a bank the interest market is terrific. stock's to buy people can sell it all they want they're wrong. >> what's the most important numbers in terms of earnings next week, jim you know what's coming >> you know, it's a lot. i was going to say goldman if you have some leadership, we are so in danger of having the

leadership right now the banks are at the cusp if we get goldman to say the right thing, it would be incredible >> all right fantastic. that's the one we're missing we've got the other ones >> yeah. that's the one that's going to determine it they've got the good got the gol call with apple today. i'm going to have to call saul >> we'll be catching to see if you get some insight see you aoue nuin cplmites. "squawk box" will be right back. this thing, it's making me get an ice bath again.

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welcome back to "squawk box. we're awaiting a news conference from uk prime minister liz truss now scheduled for 9:30 eastern time, and reports say that truss will reverse controversial budget moves that have thrown the british markets and the pound into turmoil and the gilt over the past few weeks. her finance minister has already been fired, and we're joined now with more. good morning again >> good morning, joe so, a lot of fast-moving news in the last 24 hours over here in the uk we thought today was going to be a significant day because it was officially the last day of the bank of england temporary gilt stabilization program. instead, the political news has been dominating. this just in, a short while ago, a tweet from the outgoing chancellor, the finance minister, saying, "you have asked me to stand aside as your

chancellor, and i have accepted in a letter to the prime minister." but i think to your point, this government has come under a lot of pressure since the revelation of that mini-budget on september 23rd because of the sheer quantity of unfunded tax cuts that were embedded in that mini-budget that led to a massive selloff in gilt yields, prompted a bank of england intervention to stabilize the market and of course we saw the pummelling of the pound before it started to rise again in the last couple of days, but i think there's one note in this letter of resignation that is worth flagging that is, he's saying, it is important to emphasize your government's commit to fiscal discipline the medium-term fiscal plan is crucial to this end. and this is really what the international community want to hear out of it they want to understand that this government has a grip on public finances. the first opportunity for them to formally spell it out will be at the fiscal event on october 31st, but as you mentioned, we are also expecting to hear from

the prime minister in about half an hour's time locally where she should also give further color as to who the replacements will be for the chancellor. some local media are reporting that it could be jeremy hunt he was a turn who also was at the beginning running in the race to be the next leader of the conservative party he didn't win, obviously, but his name is coming up as a potential replacement. as i mentioned, i think the bigger focus right now on this government is reversing some of the measures that they introduced in that budget, and reassuring the international community and local community, local investment community, that they do have a plan to bring back some of this debt over the medium term. >> all right, yeah, it's been confirmed. jeremy hunt has been confirmed by the government. i'm just -- do you know someone? how'd you get that shot there? i mean, it's right behind -- aren't there a bunch of people that wanted to stand there

do you know someone? h how did that work? nobody else covering this story? >> there are a lot of people around me. i would say it's the magic of the cameraman, joe, as you know, but definitely it is a great day to be standing in front of 10 downing street there's a lot going on here. >> i don't know. >> i'm sure there's going to be a lot more to come >> yeah, you're too humble that's a good shot thanks, see you later. >> for more on this uk news and what it means for markets on both sides of the atlantic, i want to bring in peter oppenheimer. we're dealing with this, we're thinking a lot about what's happening just with the banks and the earnings we saw this morning, and then this whipsaw just yesterday and what the fed may or may not do about all of it when it comes to cpi data where are you? where do you want to start >> well, i think that in a sense, what's happened in the uk is reflective of what's happening more broadly, and that is that the cost of funding debt is rising on the back of, still,

rising inflationary pressures and also particularly across europe the pressures to increase fiscal support to moderate the shock coming from things like real income squeeze as energy prices rise so, in a sense, it's a broad picture of stabilizing interest rates, and i think that until there's clear evidence that inflationary pressures are coming down and inflation expectations are stabilizing, it's really going to be interest rates which are dominating the risk backdrop, and certainly, looking back in the past, it's not really been until inflation and rates have peaked that equities have tended to trough in a bear market >> so, do you consider what happened yesterday and what we're seeing this morning, at least in u.s. equities, ahead of the market open, to be sort of a rally and a bear market? is that the way to think about this >> i think so, yes i mean, look, we've seen most equity markets falling well into bear market territory, 25%

broadly, is what most have done, at least in local currency terms. of course, in dollar terms, many markets outside of the u.s. have done a lot worse but typically, we see equities falling around 30% in bear markets that are associated with rising interest rates and recessions, so i think we're quite far through this, but i don't think we've yet seen the conditions that would typically be consistent with a final trough, so i think this is just a rally in that process. we saw a strong rally, of course, remember, in the summer on what was then quite premature hopes that interest rates had peaked or were quite close to it >> so, in your estimation, though, the downside risk from here in the equities markets -- and by the way, a lot of traders yesterday said, oh, the s&p 500 was just oversold so just given where volatility was, that's why we've seen this little rally

but you look at it and are you in the jamie dimon camp that things could get as bad as alto another 20%? what's the upside at this point? >> to the first point, i don't think the scale of the likely declines from here would be so significant, and there's a couple of important reasons for this one of them is that in the periods where in the past you've seen really dramatic falls, 50 o or 60% as we did in the financial crisis, these have really been associated with systemic crises as interest rates have risen and asset markets have deflated, and they've reflected very weak private sector balances, particularly in the banks. we don't have that now we've got strong -- >> peter, is there any chance that this is going to be -- we're going to look back and this is going to be an inflection point >> i think it's still too early because i think we need to get

more confidence that rates have peaked i think we also need to get to a point where the rate of macroeconomic slowdown is moderated, and i think we need better valuations still. >> all right we're going out on the highs peter, we want to thank you for joining us this morning. >> going out on the highs here >> we're going out on our highs on this friday morning >> after 800 yesterday >> we'll see everybody on monday morning. we'll see where the market ends today as well. have a great weekend "squawk on the street" begins right now. ♪ good friday morning, welcome to "squawk on the street," i'm carl quintanilla with jim cramer david fakber has the morning of. half a dozen bank aeearnings, t uk sacking its finance minister and retail sales gave us a bounce ten-year yields back to pre-cpi levels big banks, mixed, jamie dimon doubling down on his economic