concludes it's five-year congress with xi jinping taking power again. a new frontrunner for prime minister as boris johnson drops out of the race. and names like the biggest in tech reporting this week. double whammy. higher earnings and slower growth it's monday, october 24th, 2022. "squawk box" begins right now. good morning welcome to "squawk box" here on cnbc we are live from the nasdaq market site in times square. i'm rebecca quick along with joe kernen and andrew ross sorkin. on this monday morning, let's

check out the equities you will see modest advances dow futures up 38. s&p up 5 nasdaq up by 4 this is adding to what has been anything but a scary october for the equities market. look at what we have seen for the month of october so far. dow is up 8% s&p 500 up 4.6%. nasdaq supis up 2.7% the best month we have seen since june for any of the three major averages if you have been checking out treasury yields, that is driving equities for a while when yields aren't too aggressive, equities move up 10-year treasury at 4.173% 2-year treasury at 4.13% >> before we go into this, that was very good you did that friday at 8:58 >> that was an important

headline >> more than important more people need to watch this show because it didn't happen immediately then the futures didn't move. do you remember how much we were down at that point >> they were starting to pick up very quickly >> sharply negative. we ended up 750 points higher on the notion we do one more 75 and they go to a 50. that came out and you did it and we took the chance of going five seconds over on "squawk on the street" time >> it was important news >> it was hugely important >> the hammer for the fed. the fed whisperer. >> that's all we need? it was down 150. the slightest notion that we don't do two 75s and it was off to the races >> the market is trying to suss out when you pivot if they stop hiking by 75, that

is enough for this to say this is the beginning of the pivot. >> max said lets go it was a smart thing we are on record and it turned around >> you were in the middle of the big interview. >> why aren't you talking? i'm trying to get you to talk. will you chime in and say can you believe it >> i'm looking at china and what happened over the weekend. >> we can't forget that was 8:59.30 it turned everything around. >> we had a big guest we were talking to, too. we pivoted now we can talk about china? >> 18,000 miles away >> it matters. second largest economy

>> maybe not 18,000. >> let's talk about it overnight. china gdp grew 3.9% from a year ago. beating expectation. it is below the official target of 5.5%. the data set for release on october 18th, but delayed with no explanation xi jinping with a third term and no clear successor in sight. the drama-free event yielded one surprising moment. the former president unexpectedly led out of the closing ceremony video shows him seated in the position next to xi jinping. approached by a staff member and appeared to be reluctantly led out. the circumstances around the exit are not clear the story was not reported anywhere in the chinese media. we will take you live to beijing for the big take aways at 6:30 a.m. eastern time.

>> so weird. >> in large part, as a result of all of this, stocks in china plunged overnight. i want to talk about tesla in a second hang seng closing 6.4% shanghai composite falling 2%. shenzhen falling 1.75% hong kong tech listed companies. check out the moves in the big names. economists telling the journal that investors are worried about checks and balances after xi's consolidation of power then your turn to talk about it. >> weird. >> he was taken away. >> where was he taken? >> flatulence? >> i don't know. >> he was appealing to xi saying are you really -- >> why did it have to be done publicly people fall in and out of favor and you never know what will happen >> to go from being seated to xi

to escorted out. >> did they just find something out and say now you have to go that is strange. that is sending a signal >> that's the point. that's the point sending a signal this man's in charge and this man's not in charge what does that say about where we are >> it is silencing critics. >> this is about china this is about russia this is about everything. >> talk about the gdp. zero covid it's over-built. he is having trouble delivering on the economic, you know, growth that's going to be needed to keep advancing with the huge population as they try to get into the middle class. >> the gdp numbers with any strength that came from exports. not domestic economy that's the concern the demand internally weakened significantly because of the shutdowns. >> i think the tesla news which

i don't know if you want to front run the news he has effectively cut the price of the cars is a high sign of what is really happening in the economy. especially given inflation and the price of goods that have gone up. he is lowering his prices at a time when everything else is going up that means something s>> and there's chips in taiwan i hope this doesn't force his hand to galvanize, you know, positive national sentiment over in china he may need it tesla shares the company cut the price of some of the cars in china. reduced the price of the model 3 by 5%. cut the price of the model y by nearly 9%. and former uk prime minister boris johnson withdrew from consideration to win back the

top job. he admitted he would not have gov governed effectively in the party. rishi sunak who served as chancellor is on course to become the next prime minister that could happen as soon as 9:00 a.m. this morning if no other tory candidate gets nominations to advance you need 100 votes to do that. >> everything is breathing a sigh of relief. >> for boris johnson not coming back six weeks later >> look at the sterling and look at the gilt. when he stepped out last night, there was a ahh. maybe normalcy can return. >> sterling up .30%. you can see gilts actually the yields are down as the risk of further political and economic upheaval is pulling back what a few weeks it has been in the uk >> it is the people breathing a

sigh of relief >> we have a gdp number coming up chancellor of the exchequer. ours is on thursday? >> our gdp number. >> yeah. >> we're not reelecting anybody on thursday. >> no, but -- >> you might like to >> crazy hair guy that may or may not resurface at some point, too. >> he's resurfaced up against desantis over the weekend. >> i saw. >> we can talk about that, too. >> i saw that. crazy. holding off, i guess, before the mid terms, which i'm shocked he had the self control to not make it all about 2024. normally the good of the party is not something that particular

individual might not be thinking about. are you surprised? the way things are going, it's pretty good right now for what they're expecting on november 8th. >> for the republican party? >> yes >> yes maybe he doesn't want to upset the apple cart >> that's what i mean. that's something in and off itself that he is not saying screw that i'll do it anyway. >> unless there is self interest you don't want to be blamed if the party doesn't win. >> did he care about georgia and the two senators >> maybe somebody told him if he is planning on running again, you can't do that. coming up -- that was news this conversation. futures right now. take a look on monday morning. up on the dow. 7 points nasdaq down 20

s&p moving in the green. i can call that unch we have the big market catalyst. the busy slate of earnings and next is roger ferguson will weigh in he will jump into the discussion we were just having at the top of the show. we're back after this. >> announcer: this cnbc program is sponsored by baird. visit bairddifference.com. ♪ ♪

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welcome back to "squawk box. let's talk about the fixed income in equity markets we have kevin nicholson of global fixed income at riverfront investment group. i don't know if you heard the top of the show, cameron you saw what happened on friday. we really have been discussing whether you think the fed is about to make a pivot and what is about to happen in the economy. what do you think? >> we saw the market rally really hard on friday in response to the hope that the fed would be slowing down the pace of rate hikes after the november rate hike and this interpretation that maybe this is a pivot if you look closely at the wall street journal article that talked about the slowing, it did not talk about inflation slowing faster than expected that is the most bull case here.

it is more concerned of growth and financial stability could be at risk if the fed continues to raise rates at an aggressive pace we knew eventual rvenetianly t eventually they have to slow down from the basis points how long will they stay in restrictive territory? that will outline economic growth we don't think it is a pivot, but we knew the slowing would eventually happen. >> kevin, where are you on this? >> i don't think the fed will pivot. i think the fed is determined they are going to make sure they stamp out inflation. we are a long way from there you have headline inflation still at 8.2%. core cpi has been growing well over 6%. i don't think the fed is at the point they will pivot. >> kevin, do you look at the

equity market on friday and say this is a head fake? these are folks who are too opti optimistic how do you rationalize >> andrew, you are in the bear market we will have the moments in which we have these in the market go up there are going to be -- you will have these little mini rallies. at the end of the day, with inflation as high as it is, i don't think you will see multiple expansion it has to come through with earnings as you well know, about 40% of the s&p 500 earnings come from -- excuse me, revenue comes from overseas and 27% of the profits come from overseas with a strong dollar, that will impact earnings. i think what you will see going forward is that you will see earnings under pressure.

i find it very difficult to believe that this rally is for real >> cameron, what is the chance kevin is right and if he is what do you do about it >> i think as kevin said, rallies happen in bear markets it is a bigger question of where your underlining trend is which continues to be down from the perspective of earnings and valuation. the challenge is this market moves so far so fast to the down side that means we were really a coil spring for any good news of a rebound. how to play it or take advantage of it as you see the market weak, don't press shorts and don't be underweight in market weakness as you see the market rally into resistance, that is where the risk/reward is attractive. the first level of resistance is 3,900. the next level is 4,200.

it is very difficult for the market to get there given the high winds from earnings and valuations of course, because positioning is so light, you could see something similar to what we saw earlier in the summer. >> kevin, between the upside and down side risk assessment and at 3,752 at the s&p, you think there is a bigger chance of 4,200 or greater chance of 3,200? >> it is a matter of time. that is the point of bear markets. they take time you can get to 4 s,00 before you get to 3,200 that is the issue of not pressing shorts at 3,600 the market could rally in the other direction and not chasing the rally to the upside. that discipline is really, really important >> okay. we will leave the conversation there. cameron and kevin, thank you both coming up, big weekend at the box office for dwayne "the

rock" johnson. and we take you to beijing for the latest in the stocks stocks fell sharply overnight. "squawk box" will be right back.

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warner brothers "black adam" brought in $67 million in north america teicket sales. the latest since "thor" to top $50 million. this is the latest for dwayne johnson as a leading man.

and the rnc alleges that google has been discriminating by sending emails to the spam folders of users google says they don't filter emails based on political affiliation. >> that is interesting a lot of stuff ends up in my spam folder. >> for google? >> google. >> the number of political ads on outlook. >> i doubt >> from both parties >> i would like to think that i can't imagine how given what i see that there's discrimination. maybe it is an effort to create discovery and get inside google and start to get -- a lot of the law lawsuits, that is the effort more than anything else. meantime, changing the name from slumber j to something

easier slb. >> seriously >> the change takes effect today. the company says rebranding under scores the vision for the decarbonized future. >> they are getting rid of schlumberger >> now they are a technology company. don't tell me the private sector is doing it themselves >> with lots of pressure it doesn't mean we have to say wow. way to go. you have a company with a great name leading oilfield services company. say it loud and say it proud slb. that's the stock symbol. how much did they pay for that madison avenue what did i see that took two years to come up with? >> verizon >> i'm loving it we looked up

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good morning welcome back to "squawk box" live from the nasdaq market site in times square. if you look at the futures this morning, we are seeing some pretty steady pick up here dow futures up triple digits a gain of 102 points above fair value. s&p up 11.5. nasdaq up 13 now up 113 we started the moving looking at the dow up 30 points pretty significant gains over the last ten minutes >> earlier it was down >> yeah. pivot. back on the table. >> ask roger ferguson about that in the next block. >> he doesn't think so >> people who follow the bond market and the fed don't think so the people who think so are the equity folks the question is who is right

this is the fight as long as we -- >> hope springs eternal. >> does that force the fed's hand with 75 this time and before the end of the year, make the markets think you are not taking your foot off the gas this is the psychology game they have to play >> i'm with them in that and i can't imagine buying stocks when unemployment really spikes it's just so warped. the whole notion we will have jared bernstein on. president biden is talking about how strong the economy is. that is not a good idea. that is counter productive >> the fed goal. it's an election how will you not say that? everything suctks good message >> yeah. stocks in china plunging after the conclusion of the party congress

let's get to eunice yoon who joining us from beijing. eunice >> reporter: joe, as you said, the stock market had fallen a bit as investors were nervous because of what they heard over the weekend. president xi is now the most powerful chinese ruler since founder chairman mao at the congress over the weekend where president xi revealed he secured a third five-year term and unprecedented in not naming a successor. as for the seven-man leadership team, investors need to know xi loyalists are in reformers are out. xi's number two is the man who is the overseer of shanghai's brutal lockdowns which is suggesting to many, including in the market, that the zero covid policy will not meaningfully change any time soon now, xi's dominance seemed to

also include a flex move on one of his predecessors. ex-president unsceremoniously removed from the congress toward the end. the official media has not been covering this at all one state reporter tweeted in english so targeting a foreign audience that it perhaps is because the formerpresident wa feeling unwell however, most people believe that this is, in any case, a signal sent by president xi that he has been able to defeat his political rivals and he has total control over the government >> eunice, that is what we have been sitting here talking about. clearly this was done for the cameras. clearly there is a purpose for this this was orchestrated in the way

that you saw the beijing olympics opening games orchestrated they intentionally sent a message. >> reporter: yeah. it is interesting because this move when he was taken out of the room came while media were entering the hall. you know, it was right before and in front of the cameras. that would suggest that either president xi was doing it to show a foreign audience what was going on or that he didn't care and wanted him out so, there is still a possibility that there was a health reason, although a lot of people don't really believe that. if that is not the case, the message either way is sent that president xi is the one in

control. >> it's like "mean girls" at the lunch table. eunice, the drop in stocks, significant drop in stocks, is because if you have one clearly leader, there is no question or openness anybody who thought easier days are coming, that is not the case look at those drops. >> reporter: yeah. that's right that's right i think there are a lot of people worried about the risks associated with one-man rule also many are worried about what this elevation of xi really means for the markets and for many in the private sector because his approach has been state led and a lot of influence on the private enterprise. he has been pushing the idea of some sort of regulation on what beijing considers to be excessive wealth accumulation and then the whole zero covid thing. there are so many people here --

so many people were hoping to see easing on zero covid although people don't believe that will happen there is some hope there may be some opening a lot of people were asking me what did they say about zero covid. i said he didn't say anything. that's been depressing a lot of people it has been affecting so many people's lives i know four or five people in quarantine right now i don't know anybody whoever had covid. no one has covid, but -- >> you don't know anyone who had covid? >> i can introduce you to some >> wow that in itself is a telling statement. >> reporter: not anyone i know >> i think we all have had it. >> we have >> eunice, the clock is ticking on taiwan. maybe we did a daylight saving time reset that is closer time

>> reporter: what is interesting is other developments that we saw he amended the constitution. he established the core of the party which we heard before and xi jinping thought would be a guiding principal. that included the rejection of taiwan independence. that suggested to people that the timeframe may be earlier than previously thought of what china would say reunification, but people in taiwan would say an attempt to unify taiwan to the mainland. >> eunice, thank you we will speak with you soon. all of these issues are front and center and will be continued. when we come back, we will talk about the potential for the fed pivot and implications for the market former vice chair roger ferguson will join us. and later, former white

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investors are bracing for at 75 rate hike next month, but the following move in december is up for debate the wall street journal reported before the opening bell on friday that the fed is reading the signals as a pivot that sparked a rally on friday joining us is roger ferguson the former vice chairman of the fed reserve and adviser for tiaa and cnbc contributor roger, let's talk this through it was off to the races on friday that the fed pivot is coming come december what do you think? is that the right take what is the fed actually considering? >> i think what the fed is actually considering is 75 basis

points the next meeting. pretty much baked in the market understands that. 50 in the last meeting of the year and continuing one or two more increases in the first part of next year. the market was wrong to get off to the races as you say because i think once the fed is done with hiking, it will stay there for a very long time until inflation is conquered the market is misreading the fed intentions even if the fed does, you know, slow down in terms of pace at which it is raising rates. >> if they stop, they will look around for a while and say what's up? have we defeated inflation before you can sniff the idea of a rate cut >> i think that's right. i think chair powell has said that i think the market has had moments of hopeful and optimistic behavior earlier in the summer with, of course, have

we reached peak inflation and then the pivot that died away with bad numbers in the recent cpi. the pivot is back on the table in the minds, but losing the big picture which inflation is running far too high for the fed's comfort. they will use their tools, primarily interest rates, to get inflation closer to the 2% target they will have a high degree of confidence before we see rates >> how much psychology goes into the fed discussion or thought pro process? if the market is excited and the fed pivot is coming, does that mess things up for jay powell having him think we can't have them believing this good hope so we have to stay and continue to raise rates for a bit longer or be more aggressive in the december meeting to send a

message? >> i think there's some focus on the market, not so much in the psychology the way you are talking about it, becky, but as chair powell and others said monetary policy works through financial conditions and tightening of financial conditions one of those tools for so-called tightening the financial conditions is the equity markets. equity market rallies means monetary policy is not transmitted as much as the fed would like that way, it would actually play in it is not so much a psychology game as it is the reality of monetary policy being made less effective when markets rally against the obvious intention of the fed to keep financial conditions tight >> but fair to say that chairman powell and company looked at the markets reaction on friday and were not pleased >> um, i think that is probably

right. i know if i were sitting there, i would think, you know, two separate issues. one maybe is they are not hearing us clearly and we will use our tools to get inflation under control. and secondly, they may be misinterpreting a stepping down from75 to 50 to maybe 25 as a change in intention. if i were at the fed, i would be scratching my head a little bit as to why it is so hard to keep equity markets understanding the intention and do we have to make stronger speeches as well as take stronger actions. >> roger, i guess it is like shaking your fist at the rain or weather to complain about the way we're doing this the market rally is oh, no, that's bad wow, great job numbers with wage gains. oh, no that's bad all these things that we're talking about -- it's the way you do it. you are trying to hurt demand.

trying to rein in inflation. you can see how frustrating it is and it just seems like a terrible way to do it. i was saying i wish you could do supply side answers. every supply side answer is stimulative. if it is tax cut, it is stimulative. less regulation? sdi stimulative. you have to decide which is which. increase supply or hurt demand we are in the latter camp definitely housing prices down. who wants their value of the house to go down, roger? that's what we want. >> yeah, i think you put your finger on the unpleasant dilemma. the reality is jay powell said the pain that we are all suffering and continue to suffer until inflation is under control is a lot less than the pain we suffer if they hadn't taken

these actions. you know, it is really a story of what is the alternative this is the least bad alternative in the central bank. it is also the result of getting started later than they should have it forces the foot on the brake for longer and harder than perhaps otherwise necessary. >> not to relitigate when they should have, but if he started let's say three or four months earlier, which is probably the earliest you managed that would have happened with the exception of him having to get reap reappointed, how much would that change the dynamic >> you raise a really good point. it would change it at the margin that is not irrelevant to be sure they still have to pick things up quite a bit in terms of starting from zero on the other hand, there are three or four months which inflation got hold and now

appropriately concerned not just about the level, but expectations one could imagine starting a couple of meetings in advance and it would not have changed things dramatically, but the pace would have been a little more stately and a little slower and in fact, the anxiety, about the inflation expectation would have been lower. >> roger, you said 75 and then 50 or 25 i'm taking that as positive. >> the futures on friday that happened. that came down you are saying there is some pivot? >> you're saying there's a chance >> i heard you thank you. >> there is no news in the 50 or 75 comment it is obvious they will debate with the pending incoming data,

joe. >> blah, blah, blah. you can't take it back thank you. some of the biggest names in tech will report we will get you ready after the break. and reminder, find our daily podcast on your favorite podcast app. >> it's a really long podcast.

♪ welcome back meta downgraded at bank of america from buy to neutral. the analyst says there's a greater ad spending pressure ahead that could hit the company's reels business it's going from 196 to 150 meta reports wednesday alphabet and microsoft report tomorrow amazon and apple report thursday

joining us, senior research analyst. we know about higher interest rates, dan that gives us multiple problems. that's why people have talked about, you know, tech being problematic. the nasdaq may be being more adversely affected by what the fed is doing you've got a lot of headwinds that you're bringing up for the results too. a lower multiple on slowing earnings growth too. what are the things that are hurting the results, the actual fundamentals of tech right now >> good morning, joe besides higher interest rates, of course, there's a little more inflation in the system. there's headwinds, let's not forget, which is really a transitory impact -- >> supply chain? >> supply chain. higher labor higher fuel costs. the list goes on i think, though, if we step back and think about what's going on. companies that are able to invest, to innovate, to execute on their product cycles through

this, i think those companies are going to emerge stronger as we get into next year and really look at the reacceleration of growth late next year and into 2024 so insofar as this week is concerned, we have google tomorrow, core search is durable. it's slowing in the near term and compares are difficult but that is a very vibrant -- there's a lot of innovation there. microsoft, of course, they're a key partner in helping clients transform their infrastructures to really embrace this digital future and i'll mention amazon as well. as they get back to more and more one-day delivery with prime, i think that e-commerce business is going to reaccelerate and amazon web services is a valuable platform to its enterprise customers. pulling it all together as we look through the balance of this week and into the weeks and months beyond, cloud, immerse remain healthy, even in the face of what are, of course, some

cyclical challenges. >> what i'm asking is, all stocks get hurt by higher interest rates that's a given what makes tech to attractive in a bull market, it grows more quickly than legacy companies, whether it's consumer products or retailers or whatever else. so in a period like we're in right now, which could be months, it could be quarters, it could be years, does that -- what sets tech apart positively during good times, does that remain a positive in bad times they still innovate? they still grow more quickly or does it actually hurt them more -- is it better to go with the stayed, consistent, sort of legacy companies which is it in a -- sort of a dull period. tech is good or bad? >> joe, tech is good in my view even in this period which is a little bit more challenging. if you look at their r&d, their capital expenditures in the tens of billion dollars of dollars

annually for these companies, their ability to both manage costs as we go through this period but more importantly, innovate and really push ahead in terms of what their customers will find valuable during this period and after this period, those are really foundational to creating value for all the constituents in their various ecosystems if they're able to do that, i think they're going to create significant shareholder value is why i prefer looking for growth opportunities even in this environment. it doesn't mean there aren't challenges, but we think the market ultimately is going to look through it as we get into next year and focus on what comes beyond >> and the nasdaq is down more than the s&p, for example. so maybe you've already seen a recalibration of what these companies are worth. so your top three in the company that are reporting this week, you would buy any of them on -- >> i would buy all of them this

morning, google, amazon and microsoft. and to your point, joe, the market has been discounting quite a bit of this. what i suspect we'll see in the coming several weeks through earnings is the market will get a sense of what potential downside can be, and as it looks forward to what the growth that can unfold, i think these stocks can be nice performers, certainly as we get into next year and think about what lies beyond >> it will be interesting, dan that's what we hope for. we'll see how these -- and then there's the advertising component that seems important to most of these companies too, which is affected by all the other companies we mentioned and how their fortunes are thanks, dan. >> thanks, joe coming up, a lot more right here on "squawk box. stock futures, take a look where we are we've been moving around this morning. we were in the red when things kicked off the dow will open up about 125, 126 points higher.

nasdaq up about 13 points. and the s&p 500 up about 13 points we will show you what is all moving ahead, whether it's going to stay this way or not. vehammed el erian is going to gi his take and tell us whether a pivot is or is not upon us. >> announcer: squawk picks is sponsored by wisdom tree gang, we need our paranormal services to be more versatile. i know a group who can help us. not those new age shamans again. i'm talking world-class business experts. data geeks, strategists, tax advisors, the works. what about technologists? 40,000 strong, baby. we'll be able to hit our projections both fiscal and astral. this company sounds great.

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good morning, everybody. the futures pointing to a higher open after wall street notches its best week since june big tech earnings will be a focus for investors this week. with two weeks to go until the midterm elections, new polling shows the economy is front and center we will talk about the biden economy and much more with economic policy adviser jared bernstein. president xi's power grab in china. stocks there falling sharply overnight. we'll talk about what's driving that move as the second hour of "squawk box" begins right now. ♪ good morning and welcome back to "squawk box" right here on cnbc. i'm andrew ross sorkin along with becky quick and joe kernen on a rainy monday morning.

maybe not rainy for the markets. we were in the red this morning when we talked in and now we are in the green looks like the dow will be powering higher, the s&p 500 up 17 points higher, the nasdaq up 32 points higher a real turn on friday in terms of where equities went into the green. right now, though, you're looking at the ten-year note at 4.162. the two-year at 4.468. we talked to roger ferguson about whether a pivot by the fed is upon us, he doesn't think so. seems to be a fight, debate between the optimists in the equity market and maybe the pessimists in the bond markets take a look at the oil market, though, right now as well. we're going to show you wti crude, right now at $84.28 things have come down a little bit. maybe that's helping things on the other side hard to know take a look at crypto. we're over 19,000 on bitcoin i think we're sitting right now

at $19,401 >> let's get to dom chu who is going to take a look at this morning's premarket movers kind of like a quiet before the storm. i think a lot of earnings this week, dom. >> second busiest week of earnings 156 next week and 152 this week. a lot of stuff to digest we'll start with the check on what's becoming a hammering of these chinese tech stocks right now. some of the biggest premarket laggards, you got names like jd.com, pin duo duo, they're the worst premarket performers this is after china and hong kong markets closed lower overnight. worries about the prospects about the chinese economy, and

what future crackdowns could be at play for these companies now that president xi jingping has been elected to a third term in power and consolidated his power. by the way, china internet ticker is sharply lower. watch those chinese internet stocks we got meta platforms down 2% now. just around 110,000 volume -- shares of volume analysts have downgraded the metaverse company to a neutral from a buy they cut the target price to 150 bucks. it was 196 and they cited among other things more pressure being brought to bear on advertising spending in the future meta platform is down there. another analyst call, at&t, shares are higher just about 60,000 shares of trading volume. this is due in part to analysts at raymond james which upgraded the telecom giant. they have a $24 price target

there. they think at&t will outperform verizon over the next few months and they like things like the path for wireless subscriber additions. we'll end with a check on gas. schlumberger announcing a name change as it shifts more of its focus to cleaner, renewable energy schlumberger, chevron, the fallen oil prices, exxon, marathon and diamondback energy. i'll send things back over to you. >> thank you very much. new data from the national association for business economics sees sharply slowing sales and profit margins at companies. joining us right now is steve liesman. good morning >> yeah, good morning, becky the third quarter outlook shows profits and sales heading to

levels in the past that have been around the levels for recessions the met rising index, the percent of companies with increasing versus decreasing sales fell it came in at minus 17 more companies see declining rather than rising margins it reflects a challenging environment for companies. wages have input costs look to be pressures company bottom lines. wages are expected to rise and material costs and prices charged. also positive, all three, by the way, are at least off their peaks. one bright spot, the outlook for capital spending has held up and even rose in the last quarter. it seems to remain capex demand that couldn't be filled during the pandemic and efforts by the companies that we hear to address the labor shortage with technology the data is in line with quarterly earnings reports that shows a lackluster earning

season so far. we're only about 20% through the process now. at the same time, profit margins have been about 2 percentage points above the long run averages what happens to valuations if profits return to average levels and it's been interesting over time to see companies have maintained profit margins throughout this rise in inflation and rise in wages. but the question how long that can continue >> i guess the question keeps coming, a recession is coming but when >> yeah. i think that's right and you have these indicators coming down not quite at the levels, but as i said, heading towards those levels and we're watching and, by the way, there's a lot of differences in different industries for example, the profit margin index for what they call fire finance insurance and real estate, that fell sharply. the other ones were down but not quite as much as fire. >> steve, thank you. we've got a lot more coming up chess grand master and outspoken

critic of president vladimir putin is going to be joining us to discuss the end game with ukraine and so much more important conversation you don't want to miss before we head to the break, though, let's get a check on the markets. "squawk box" coming ghbarit ck with a little bit of green on the screen this morning. we'll see whether it holds up. back after this.

white house economists jared bernstein will join us to talk about inflation, risks of recession and much more. plus, mohamed el erian will join us to talk about the markets as earning season rolls on. as we head to a break right now, let's take a quick check on the futures this morning dow futures up by 130 points the nasdaq up by 17. the s&p up by 13 this comes after the best week of gains we've seen for the stock market since june. we'll be right back.

tesla shares are falling the company cut some of its price on some of its cars in china. it reduced the price of the model 3 by 5% and cut the price of the model y by 9% the stock is off by 2.9 this morning. elon musk faces a deadline of 5:00 p.m. eastern time this friday to close on his deal for twitter. there's still a lot of uncertainty swirling around about that acquisition including reports that the biden administration and some officials there are talking about possible security reviews

for musk's business ventures joining us right now is j-2 ventures founder and managing partner. let's talk a little bit about what's happening here. if you look at the price for twitter right now, it's substantially below the closing price and part of that is because of these concerns about a cfius review those are things that you talked to us a few weeks ago and some of the statements that musk has been making recently. >> absolutely, becky, one of the important things to reflect on, the government does thousands of contracts a year and a security review is something anomalous. i can't comment on whether it's going to happen, all of those proceedings tend to be classified behind closed doors or often at the clearance level, i can say that the -- the

insinuation that such a review is going to happen is impactful against a ceo that contracts so much with the government. >> and we should also point out for people who aren't familiar with the last time you were on, you were someone who served in the military in combat who now has a fund so you understand these issues, you've got through it by work that you've done what worried you about the comments that elon musk was making just in terms of ukraine, in terms of russia, in terms of taiwan at some point too. >> i think something to reflect on, we had a great conversation on before. by the way, thank you very much for having me back on the show when you contract with the government in such a significant capacity, the government is giving a lot of leeway to those ceos and trusting them in a level that you don't get with normal enterprise sales. there's a lot more at stake. when the government is buying your technology, they are assuming that you are in some ways surrendering good faith to the government to use that

technology on their wbehalf that's why the standards are so high when reviewing these purchases. >> when elon musk makes a statement that -- on twitter that, look, we should -- if we're going to get about ending the war between russia and ukraine, here's what would have to happen, would that be concerning would that set off flags >> it's absolutely on the government's mind. and i think everybody's. the constituency here is much broader than most other businesses when you're selling to the government, you're acting on their behalf and you are not only appealing to the department of defense, but to congress that gives the appropriations to the department of defense and in turn the citizens that vote in those congressional members to give those appropriations. and so when people see you acting in a way that they could perceive as not being in the best interest of the united states or its allies, that

becomes difficult. >> administrations change. how can -- let's say the contractor on one hand -- take iran for policy. a treaty with one -- the next administration got rid of the entire treaty. the private enterprise go with whatever, whoever is in power? that's what's good for the country? i mean, how do you decide what's good for the country when you have no idea whether you just -- you know, the current prevailing winds of this administration says this versus the other how do you ever know whether you're doing what the united states, what you just said, the united states may not be what the biden administration says it is >> i think what's important to reflect on here is in america, we all signed up for that. yes, the administration changes. but those are elected representatives and that's what makes our system great is the

ability to change. >> how -- that still doesn't help you could flip-flop completely as a company depending on who is in -- in the white house >> i would disagree with that. >> that's what you're saying, though you're saying you need to flip-flop with whoever's policy is sitting in the oval office right now. >> he's saying you need to be quiet if you're a defense contractor. >> it's not about -- i think it's not saying anything that's the right way to put it which is, you are speaking on behalf of your company when you decide to contract with the government. >> we have publicly traded defense companies in this country and then we have lots of privately owned defense defense companies in this country. we're dancing around elon musk and what he's saying and whatnot. you have lucky is an outspoken guy in his space where do -- how do you sort of see this playing out and do you think that everyone is just

going to ultimately be quiet that's going to become the rule? or do you see it becoming this other thing? >> and i want to revise a previous comment it's not that you don't say anything spacex is incredible these companies have come about really in the last 20 years and there's been an extraordinary research in start-ups wanting to work with the government and that's an incredible trend unlike a lockheed or boeing, they don't fully know what they're getting -- >> do you think it was a generational shift -- you're starting to see these more outspoken leaders who are contracting with the government, it's -- it almost feels like a generational shift in terms of what the approach was. i think for 50 years, it was, like, don't say a word that's the norm. and now you have this sort of younger group of talent that's

saying, i'm going to speak out it's good for my business. whatever they think it is. >> and i think that's a function of whether or not that's consistent with the ends that you signed up in the first place. and that is what ceos should be sensitive too. >> ultimately, do you think any of these contracts get pulled as a result of any of this? >> it's difficult to say, but it is certainly something to be sensitive to the ceos have to understand like any business in enterprise sales, you're going to have implications to what you say and the government is no exception to that. alex, thanks for coming in. >> thank you. coming up, hyundai has georgia on its mind. the company is set to break ground on a new ev plant details coming up. futures at this hour are up, up about triple digits in the dow after a big gain on friday "squawk bo wl rhtacx"ilbeig bk. what should the future deliver? (music) progress... (music)

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markets focused on the big december debate which is 50 or 75-point rake hikes from the fed. which is it? steve liesman is back with more on this. there seems to be a big debate between those folks living in the equities world and those

folks who are living in the bond world which seem to be on the other side what do you think? >> yeah, i think it's one of those things where, like, bond traders are from venus and equity traders are from mars it's worth to look at how much of a change in the fed market is priced in as we go back and forth on this debate so, first, take a look at the fed -- what do we have here first? the outlook for the january contract i don't know what we put in first there. let's see. there we go. anyway, no graphics. anyway, what i want to tell you is that what's happened in january is for january 2024 is you've come down about 20 basis points instead of trading at 476, we're now trading at 458

and you look at a chance of 50 in december. that's down 53% versus 46% for a 75 basis point hike. you look at the whole structure. the guys who are trading the funds contract, they read the journal story, a times story and saying, this is worth 20 basis points en route to 4 1/2 with a peak funds rate up so we're up towards the top of the range of the fed to the extent there's been a pivot, maybe a baby step >> what do you think is happening in the equity markets here do you think this is an overshoot? a head fake? we heard from roger ferguson who was somebody who lived inside the fed. i consider you one of the great fed watchers everybody has read that journal story. did they take too much away from it what's going on here

>> you know, first of all, you don't have -- you don't really need to second-guess the market and say the market has it wrong. the market has come off -- we talked about this -- a very long way. there's no saying that the market declined to this point is the absolute correct level the idea that the market seems to rally, i don't know what you would call it, 3 to 8% on good fed news, it means i think the market is just correcting for where it's gone. it's come a very long way down the idea that it could rally on a little bit more positive news is not a crazy idea. i also think that the market is very hopeful here. there's -- i think a good amount of cash on the sidelines it's looking for a way to get into this market they hear somebody like daily. it's worth pointing out -- this is what drives me a little bit crazy. i was a little -- i don't know what to say, a little frustrated with the rally on friday you know when we hit the low in the contract and the high in the yield for the fed at 5.03

that was friday morning based on comments you have this back and forth i think the fed chair is going to be definitive you have talk from fed officials you have to process and i wouldn't go crazy on one comment from the san francisco fed president when the philly president told you the opposite the day before. >> so you just think -- i mean, we were talking about this earlier, this sort of upside surprise versus downside surprise it has been throughout this entire process of what's been a strange trend where the equity markets sort of jumped and then there's been this sort of moment where the equity market goes, maybe we're being a little too optimistic about this. i don't want to say pessimistic. maybe realistic about the situation. how do you see the difference in psychology, though >> you know, i think -- joe was

talking about hope springing eternal. i feel like, andrew, it's a little frustrating in the sense, i feel like there's equity traders that want to click their heel and is go back to kansas when it comes to the way things were they're like, oh, risk on, let's go when, you know, during the pandemic it was like fifth grade soccer, everybody got a trophy for participating. i don't think we're going back to that world for quite awhile and i think roger ferguson, he's reading the fed correctly. and we had, of course, ken on last week and he was talking about a 5%-plus funds rate there's still that risk. you have jeremy siegel idea, andrew, that we're already done and inflation is already falling. the fed doesn't see that yesterday. >> fair enough >> steve, always good to talk with through with you as we try

to understand what's happening around us. meantime, i want to talk about china's communist party. xi jingping kicking off his third term with rivals out of the way and no clear successor in site. the drama-free event yielding one surprising moment. hu jintao was led out of the closing ceremony here to discuss what this all means about the global world order, former world chess champion garry kasparov. he's been a vocal critic of vladimir putin who says the war in ukraine poses a grave danger to the u.s he's the founder and chairman of renewed democracy initiative which has distributed $4 million in humanitarian aid in ukraine i want to thank you, garry, for joining us this morning. maybe there's a line to draw

here between what we saw happening in china over the weekend. it was a strange video a lot of people suggesting this is a demonstration of power and autocratic power and it's the similar -- i don't know, is it the similar autocratic power to what we're seeing in russia and how this is going to play itself out, garry >> thank you very much for having me. you're absolutely right. it's a demonstration of power. dictators, they know that the power is perception. i think it was well staged to demonstrate that xi jingping had no more competitors. i am not a great expert on chinese politics but i think there was some doubts about xi jingping's aggressive policies and i read that his predecessor was one of the, quote/unquote, pro-western advocates arguing that china had to be more cautious in their approach and this kind of

demonstration was the best illustration of xi jingping total control of chinese domestic and foreign policy. it still remains to be seen whether his declaration about taiwan will materialize because he's watching russia's -- russia in ukraine and he might be thinking twice it becomes a very poor element of his overall success and so for those who are arguing that ukraine is not important for america, all dictators, they watch each other god forbid putin had succeeded in the takeover of kyiv, xi jingping would be all over taiwan think about consequences of the global economy if taiwan is attacked ukraine invasion caused humanitarian problems in the south, the food problems, food

crisis now what antibbout semiconducton taiwan >> you would back ukraine to the hilt i don't know what the hilt means in the same way it seems like president xi would back pursuant to the hilt. and i don't know what the hilt means. where is the hilt? is there a point at which there's a way to ends this that doesn't involve nuclear weapons? >> okay, first of all, xi jingping is not backing putin. china is sitting on the fence. putin is not winning the war he's on the losing side. xi jingping is watching very closely and he and his clients in the central asia and others, they are demonstrating they are a distance from putin and putin caused russia to be isolated as never before in history. let's start from the very beginning. ukraine is a sovereign nation defending its land and people

from a terrorist state for those who argue that we have to consider that putin and all the desperation would use nukes, look, whatever can happen by -- i believe that using even tactical nukes is almost out of the question i think it's very, very low probability. but the fact is, you know, it's -- if we let the dictatorship that has access to nuclear weapons to blackmail the free world and would give in, why do we need data? what will happen with american influence if any state that is now -- is being attacked by dictators with nuclear power is defenseless. continuing getting -- >> then what is the end game what is considered a win is there a way for both sides to win? is that a bad way to think about it you've heard a lot -- >> yeah, it's bad, it's immoral, and geopolitical blindness it's a war that's -- where one

side wants to destroy another. putin's goals have never changed. it's the total destruction of ukraine. he's been saying it for years and now his propaganda, he keeps talking about the it even today. the only way to end this war is for ukraine to be liberated. there's no other way anybody who says the opposite doesn't understand what's going on there -- >> and for -- >> or has some interesting that is not -- >> for the critics or those who say they're pragmatists and looking for some kind of settlement, you tell them what >> i tell them that it's total ignorance of lessons of history. putin gets -- always in a more aggressive way when he gets what he wants there's no other way to solve the problem as to liberate ukraine. otherwise, the whole international order goes bust and america benefitted over decades because the world had

been playing by the rules. and putin is trying to destroy this world order which will affect everybody -- >> there's all sorts of folks who have said, look, the cost, the cost in terms of human lives, the -- if, in fact, it ends with nuclear weapons, that that's -- that cost to the world is too high. you say what >> absolutely shame. the cost know is huge but ukraine is paying this cost and they're willing to pay the cost for liberation of their country. why people sitting in the comfort of their mansions in silicon valley are telling ukrainians how to conduct their affairs. there's a threat of nuclear, but it will get worse if you give in if putin attacks poland of lithuania, then it's the nato countries. are we going to walk away or invoke article five which means american soldiers will be on the front line ukraine is doing what was nato is built for, and it's a front

line of the battle between freedom and tyranny. >> who are you referring to in silicon valley, just so we're clear? >> many. it started with elon musk. unfortunately, the list is much longer as i said in my tweet, it's moral idiocy and blindness >> we look forward to seeing you and talking to you again very, very soon. >> thank you very much. jared bernstein is going to be with us to talk about what's happening right here at home "squawk box" coming right back

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this week, korean automaker hyundai is going to be breaking new ground on a new plant outside of savannah, georgia it's the latest in a wave of new ev plants that have been announced over the past few months phil lebeau joins us now good morning. >> good morning. what we're going to see from hyundai this week is the beginning of two years before

this plant is up and running, but they need this because of the new inflation reduction act incentives for evs we'll talk about that in a bit it's going to built evs and battery packs. production will start in the first half of 2025 it will be just outside of savannah, georgia. if you look at ev investment announcements here in the united states over the last couple of years, they've totaled up the totals and it comes on a rolling five-year basis, basically it doubled. every year from 24 to 50, to $100 billion in announced ev investments by automakers, a numbers of those recently coming from foreign automakers. for hyundai, the importance here is it's got a nice start relative to its competition. forget about tesla because tesla dominates this market. everyone would like to topple tesla, for hyundai, they got 8%

market share here in the united states, they would like to build on that. the current incentives are going away and that won't help hyundai because they import of their evs sold in the united states. the plant will employ 8,100 people take a look at gm and ford we get gm's q-3 results tomorrow morning and then we get ford on wednesday. and the key focus here, it's been so much about evs over the last couple of reports, the focus here is going to be on where you are on the supply chain, on the cadence of production, and where the industry is in terms of increasing the inventory that is being sold and what they think about the overall market yes, evs will get a lot of attention, but certainly people are going to be talking about the bread and butter, the engine production. >> yes, and their stock price is down 40% year to date for gm and

ford thank you. >> you bet. president biden's economic policy adviser generator bernstein is going to join us. later, earning season kicking into high gear this week more than 150 s&p 500 companies, including 12 dow components, all set to report. d 're going to talk markets an more with mohamed el erian "squawk box" coming right back

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two weeks. over two weeks because it's monday. but basically two weeks ago until the midterm election the economy is front and center for many americans when it comes to deciding how they'll vote it's the economy, stupid i'm not saying that to you, but someone once said that someone who is pretty smart politician why do we forget we know that >> yeah, it's the economy and the economy is not looking good. america's pessimism about the economy has hit an all-time high the latest nbc news poll shows that half of the country, 50% exactly, expect that the economy will get worse over the next year the previous record high was in september 2009 during the depths of the great recession so that probably explains why more voters are putting jobs in the economy at the top of their list of priorities 35% now say it's one of the most important issues, threats to

democracy rank second and inflation is third and when it comes to addressing those economic concerns, voters appear to give republicans the edge those who were worried about jobs in the economy favored republicans, 46/30%. for inflation, 50 to 40% but americans are also clearly fed up with the status quo voters are less likely to support a candidate who wants to continue the policies of president biden or former president trump. what do voters want to see instead? 84% said they would get behind someone who supports lowering health care costs and prescription drug prices 67% want to see washington fight inflation by cutting government spending only 55% would support a candidate who wants is to combat rising prices by increasing taxes on corporations. the survey shows this is the most engaged voters have ever been in the midterms they want to make their voices heard. joe?

>> inflation, i think, tends to do that more than any other issue, it seems like we all go to the supermarket, we all buy food and fuel. that's why they exclude feud and fuel numbers from the inflation numbers. joining us now is jared bernstein. it's so topsy-turvy, jared, good news, bad news the president keeps talking about how strong the economy is, that's normally good except when the fed is trying to orchestrate a slowdown in demand so, you know, everyone time the president says things are awesome, things are great, we've got -- job numbers are staying in there solid, it just means that there's no pivot coming see how hard it is to walk that line, jared? >> yeah, i hear you. but both of those things can be true and i would argue are true.

the president has talked about this over the past few months, a transition from the breakneck growth pace of 2021 to more steady and stable growth that's what has to happen to ease inflationary pressures. by many metrics, that's precisely what's happening our goal is to maintain the strength of the labor market while doing all we can and respecting the fed's independence as they do all they can to reduce price pressures. when you have an unemployment rate that's close to a 50-year low, you're creating jobs at the kind of pace that we're seeing, i think it's very hard to make any kind of an argument that the economy is not good. i think the economy -- and i should say family budgets are very much challenged by elevated prices but even there, we see progress. particularly in the area of energy but also in the area of supply chains and goods prices. i think there's a much more fulsome story to tell there.

>> even the public is aware that government spending can exacerbate inflation, jared. and i was going to -- i was going to help you out and mention that the uk, inflation numbers are worse than here. they're 10%. around the world we're seeing it >> that's true. >> and there's a lot of reasons for reasons for it that still doesn't mean that you should pile on the spending, though, with something like student loan or -- did you try to talk the president out of that do you still need to tell us that that was a good thing to do that >> let me speak to two things you just raised. i want to get into this poll you just showed because i think it is fascinating so first of all, it is now known, the congressional budget office, we've been saying that but the cbo just announced that the budget deficit will come down $1.4 trillion this year we could argue about the causes for that it has to do with lower spending and strong economic growth generating receipts into the treasury and so that actually creates

negative fiscal impulse, that is implementing the fed now the thing about the follow is that -- the thing i caught was that is exactly the slide i want to put up thank you. we're keyed in this morning. cutting health care costs, cutting government spending and raising corporate spending, what voters want. majority on the third. every one of the policies is a complished in the inflation reduction ac it cuts medical cost, it cuts the cost of prescription drugs and health care premium. and it takes about tax evaders, it does that too you talk about less government spending, it more than pays toer itself republicans have said on record they want to repeal the inflation reduction act. so if that what voters want, if that is what they want, what they don't want to the repeal of the legislation that does

exactly that >> let me ask you, jared, and get your answer on this. so we did stop the emergency spending on covid. that was in large part one of the reasons that the deficit has come down so much. but also very strong tax receipts >> right. >> do you contend that tax cuts from the last administration on corporations and others, are you saying that had, a., no effect, and it, b., it would mean higher revenues now if we haven't done that or, c., we're still in a sfrong position because those tax cuts may have worked where are you? >> b i think we have more revenues had we not gone that route i think the about the tax cuts from the trump administration, i think that the thing where they really underperformed was the

selling poin that they would increase investment. and i just think there is empirically, there is no evident that there they helped investment at all. i think what is happens here is when you have the strongest labor market in over 50 years and ten million jobs since the president got here, 700,000 in the manufacturing sector, consumer spending still pretty good household balance sheets and business balance sheets are solid, you're going to spin off a bunch of revenues. if you dig into the deficit numbers, the increase in receipts is larger than the decline in spending. so that is a really important part of the story. >> i was thinking about our next jobs number when we get it, jared, and i don't know what -- it starts out the interview, it is so warped so we're going to get a gdp number on thursday i don't know what you expect that to be and then think about the next time that we have a -- if we get a strong jobs report when you're talking about with wage gains.

that is going to cause the fed to have a case of incredibleageidda. we've working in opposed universes in what we want. >> yeah. and it gets back to the first question and i guess i would not frame it up that way. i think that we have -- look, when you have inflation that is as elevated as its been, of course the fed is going to engage in a hiking cycle what you have to ask yourself are the fiscal and the monetary flowing in the same direction and as we discussed this morning they are and what kind of impact is that having in terms in of the housing market, very clearly the fed has cooled that overheated part of the economy. when it comes to the labor market, there is actually persuasive evidence there too. they could seize our -- are significantly down and ploim is solid. that is very much in keeping with the president's goal, maintaining our goals while

easing some of the pressures. >> jared, you saw what happened in the u.k what would the agenda, there will be a -- a november 9th is coming there will be a day after the election and the president has two more years. i'm sure you're going to be around with what happened in the u.k., so it was tax cuts that are stimulating in that -- and also subsidies that they have to spend on energy. that is a whole different area we didn't get into this time. >> right. >> but whether it is tax cuts or whether it is more spending, they're both counter productive in and they both give bond vigilantes reason to worry are you going to propose more government spending, or did we learn something from what happened over in the u.k. >> to the extent that we proposed government spending it is paid for and that is, i think, key i'm not going to get into the u.k. -- >> but even if it is paid for,

it is still stimulation and the fed is going the opposite way, jared. that is the whole point. >> i think you're basically right. i think what you want to see is fiscal and monetary poll isy in the same direction and i think that is an important part of the issue. you also mentioned energy prices fact that oil topped out at $120 a barrel a few months ago and is now down to $83, $84, wti, i checked it before i came out here, the price of gas ticked down today, it is about a buck 20 below where it was. that is some breathing room so that will help too as long as we're headed towards the president's goal of steady, stable growth while maintaining the labor market gains that we've achieved and giving some consumers breathing room at the pump, i think we have a strong agenda here. i think we should look at area where's inflation is starting to trail back a little bit. we've seen declines in rents, we've seen goods and supply

chains unsnarling and there is progress being made and if you compare that to the alternative, as we discussed earlier, we're talking about an agenda that makes sense versus one that flies into the face of what voters want, according to your poll. >> we'll see you -- i hope they pay you a lot. because there are some hard things that we're all facing. >> there are all hards >> you always have a good story to tell. but november 8th may be interesting for us but thanks good having you on, jared. >> see you soon. >> okay. >>m >> coming up on the other seed, mohamed ellian will be on. and we'll get you up to speed on twitter and more with morning joe co-host joe scarborough. we're also going to talk a little kanye

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good morning, futures pointing to a big jump now the opening bell just 90 minutes away major averages coming off the best week since the beginning of the summer and we have a huge slate of earnings coming our way jockeying for position in great

britain. and we'll talk about who may become the next prime minister as boris johnson dropped out of the race we'll speak to mohamed el erian, and we'll talk about china, president xi and his -- on the country. and highlighting the zero covid and we'll take to beijing for the latest as the final hour of "squawk box" begins right now. good morning and welcome back to "squawk box" here on cnbc live from the nasdaq market site rainy days and mondays get people down. and it is like rainy day -- >> not these equity markets. >> okay. we'll do that. but usually they mean like a tuesday or a -- a rainy tuesday or a monday gets you down.

it is a raining monday. >> it is supposed to rain until thursday >> is it really? >> yeah. >> that is better than 40 days. >> there are rain-makers on wall street. >> we're going to wall street. >> let's get to the u.s. equity futures, they were up 300 a second ago and now up 240. on friday 750 almost after just -- clutching at straws, traders are like, maybe it is not two straight 75s maybe it is and maybe it is not. and there might be a 75 and a 50 get people excited on friday treasuries have behaved today. i saw 415 last time we look at the ten-year. >> the high of the session was 4.2. and this is a high for global -- >> is it 430 or 435. >> i'll have to look at a chart. yields are coming down around the globe. this is not just a u.s. sorry. they've been coming down more

significantly in europe. i think italy, the ten-year bond there down by 20 basis points. german's down by 10 basis point and that is in the last 15 minutes or so. we're watching shares of chinese tech giants which are down stharply after xi jinping capturing a third term as leader of the community party below 7.3 per dollar and we'll talk more about kline and get a live report from beijing a little later this hour sticking with china though, take a look at tesla. because that company cutting prices on the model 3 and model y. they're up to 9% we've seen signs of softening demand in the country. elon musk had made some comments about that but as the cost of things, inflation continues to go higher in terms of the input costs. toyota also looking at rebooting

the electric car strategy it announces last year. roi ears knows that changes would mark a big shift for the plan and they have halted work on current electric projects, joe. >> and let's move back to the broader markets as we get set to kick off next week a new week with trading on wall street a lot of earnings. mike santoli joining us now with what he's watching a thousand points of light in two days, mike >> not too bad recapturing a thousand dow points that we have not too long ago. that is the story. but the market was abe to respond that the fed is nearing the end of the so-called front loading period it is been going on for close to eight months and four percentage points of fed rate hikes by november seems like that is when the front loading is over. that is what the market is hoping i think the relevant piece is even though yields have been in

control and they have not been friendly in general in realtime to stocks, it hasn't been the overall story in terms of direction. the fact that the s&p 500, the index fund has been unable to make new lows, maybe there is something to do that maybe there is a recession given all of the leading indicators does not assume to be a done deal so 3800 is interesting you'll feel that breaks the down trend from august. that is a small step it is not going to turn the trend higher but i would point out, right here, the ten-year treasury yield was just above 3% and here we were at 3.6% and now we are above 4% it is not the whole story. it is not just the litany relationship there if you invest in the vanguard balance, 60% equities, 40% bonds. been one of the worst stretches in history after a very good run in this strategy

bonds and stocks going down together it is taken this down to well pre-pandemic levels. in fact back into late 2019. so it is a huge give back. but look at that trend you have better returns than you should have expected for that period going up into in it now with yields higher as a starting point, it is rebuilding value and a buffer from the bond side of things that is maybe the silver lining in all of this again, not only do we get that report about maybe the fed officials rethinking the pace of rate hikes, trying to support, rather, the value of the yen the yen is getting weaker and you see the curl around the 150 level, bank of japan saying let's not let things get out of hand people on watcher to a global financial mishap has been focused on this. we'll see if that holds a bank of japan. >> will a phillies win world series bother you?

>> it would worry people because a philadelphia baseball team, not always the phillies when they have the rare occasions that won the world series has been around the time of financial calamity i'm not putting that in my financial algorithm. and it was always good, and it just went away because you got a larger sample size >> you can't count on anything any more we did find out that -- >> the phillies to knock off houston, so we'll see what happens. >> you're still mad from a couple of years ago. the year the yankees didn't extract any revenge. >> i'm mad from about eight hours ago. >> all right >> when they just beat us again. >> yeah. beat is the word i don't know might need a stronger word i don't know what that was. >> beat down >> yeah. joining us now is mohamed el

erian to talk about the u.s. markets and the political developments in the u.k. and china and the potential impact on investors around the globe. mohamed is an adviser and the president of queens college cambridge and mohamed, we'll talk about what is happening in the u.k., but first let's talk about the markets this morning equities up again and this is happening as yields are coming down around the globe. what is the message? that sounds like it is bigger than just a thought that maybe the u.s. federal reserve is pivoting >> so, we shouldn't take much comfort from the yields coming down around the world because they're come down on growth concerns the european pmi numbers were horrible germany is at 44 and in china, while the gdp numbers beat, there is a lot of question marks around it i think what happened to our market and it is wonderful to have the best week since june. it is wonderful to see the rally

continue, is that we've redefined what a pivot is. from meaning lower rates to pausing to slowing and if you redefine that, then you will have iliquidity effect rather than a fundamental effect. >> in other words we've lowered our standers we'll take anything at this point, just stop the beatings. >> and there is significant value in certain parts of the market yes, you just need a catalyst. the one thing i would caution, you heard from roger ferguson earlier today that this is not pause of inflation infl inflation hasn't turned around core cpi continues to go up. this is because of financial stability. the concern this front loading of rate hikes and the massively front loaded, will break something in the financial system so if the fed does slow, it is because we have financial stability concerns >> that is really bad.

>> well, it depends. if they stop it from getting worse and if this doesn't harm us and makes us end up in stagflation, it will be good all i want to say is this is a tri-lema this is growth and financial instability and the fed has to find its way through this as does the ecb and the bank of england. >> i like that. >> tri--lema. >> it is not a word. that is not a word. >> that is like re-feudy ate >> it is going to wind up in websters you have just wait and the oxford so let's talk about what is happening in the u.k. first up you mentioned china. let's talk about the u.k let's talk about japan because there is some really interesting things in the confusion sense of things. >> so the u.k. is a better story. after the market rejected unfunded tax cuts, we probably

have a return to more prudent fiscal policy and the market has priced that in you see that with yields and with a currency and that means the bank of england doesn't need to be as hawkish japan is a different issue keep an eye on japan it is a potential source of systemic risk. when you fix any price, against what is happening in the global economy, and in this case it is the yield curve control, you have tensions building and you have shown the currency that has been massive intension, and the japanese bond market hasn't functioned properly for weeks. so they've have to exit ycc and the market place is saying anything that happened in japan stays in japan but the u.k. reminded us that holding of as hes could create contagion. >> so you're basically saying there is still a lot of big concerns out there don't get too excited by this

pivot because we've changed our definitions so many times and don't get too excited about the 750 we saw a gain of the dow on friday and now another 250 points this morning. you're not buying it just yet? >> so i'm saying if you're tactical investors, we've probably overshot and you have some scope here. if you're long-term investor, focus on the few names you know well and have a massive appetite for more market to market risk because once you go outside of the u.s., there are still a few issues that haven't been resolved and they speak to pillovers for us >> spillovers for us but we still look like the best of -- best house in a bad neighborhood, maybe. >> yeah. we're not pristine, but we're better when it comes to our growth dynamics and entrepreneurship, and the resilience of our companies. we are much better off than others but we can't totally isolate ourselves from what is happening

elsewhere. >> all right, mohamed, thank you. >> thank you >> we have a lot more to come this morning we're go ing to talk about the celebrity business man and what happens as successful entrepreneurs approach and cross lines. joe scarborough is going to join us for that conversation. >> tri--lema is a word. >> and check out this biggest premarket winners and losers stay tuned you're watching squawk on cnbc

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in recent months there has been an increasing amount of scrutiny on the potential for

conflicts of interest when power and influence are wielded in washington in september "the new york times" reported 97 senators or representatives who traded tocks or assets that intersected with the committees on which they seven. this month the "wall street journal" revealed officials across the executive branch who owned or traded stocks that could be impacted by the agency's where they worked and now a new cnbc investigation finds that the former head of google, eric schmitt, made investments in ai companies while chairing the ai commission >> dr. eric schmitt. >> eric schmitt. >> former google ceo political advisered to presidents billionaire and now a shaeper of government policy. in 2019, congress tasked schmidt with chairing the national security commission on artificial intelligence. that federal commission produced

this 700 page report advising the government on how to spend $40 billion taxpayer dollars on ai. >> the nation needs to be ai ready by 2025. >> a investigation found that at same schmidt was influencing the industry's future he was making personal investments in ai companies that stood to generate profits for himself. there is no indication schmidt did anything unlawful or against the rules, yet industry records show he made five direct investments in ai companies during his tenure and more than 50 through other entities he invested in or controls. total dollar amount of his investments is not publicly available. >> it is absolutely in conflict of interest. >> a senior ethics fellow at a group and former director of the u.s. office of government ethics >> but his side will say, look, he's a patriotic american and brings this expertise, why shouldn't he seven in this

capacity. >> maybe he's the right one to be in this commission but not while investing in the very thing that is the subject of the commission's focus. >> schmidted filed a financial form with his appointment. the media an the public don't get to see it. a spokesperson for schmidt said he revealed his ai investments on that document the spokesperson said that eric has given full compliance on anything but shah believes his private disc disclosure isn't enough. >> he could have personally released his financial disclosure report. there is nothing preventing him from doing it and he could have made the decision not to invest in ai while chairing this commission. >> but schmidt's situation isn't unusual. the capital hill lobbyist say a lack of government over sight allow this is to happen. >> the executive branch is broken it does not work.

>> he said the staffers that who are supposed to review the forms have a poor track record of enforcing the rules and often times they don't have the training to do so. >> so if you say the ethics progress in washington is broken who broke it. >> it was designed broken. >> what do you think washington doesn't understand. >> schmidt said at the washington's idea forum. >> it is shocking how the system actually works and it is obvious that if the system is organized around incumbencies they'll benefit from the laws written. >> and google is one of the most in america. >> perhaps, but we don't write the laws. >> but today schmidt is proud the commission he chaired wrote legislation. >> not only should we write down what we thought, which we did, be we have a hundred pages of

legislation that could just pass. >> we found full paragraphs are almost identical to the 2021 national defense authorization act and that same bill budgeted $75 million for implementing the national security commission on artificial intelligence recommendations. >> so what is the toldal effect of all of this. >> the impact is we allowed the wealthiest special interests and the business interest to dominate our policy arena and the public interest tends to get drowned out in this type of broken ethics process. >> and guys, just to give you a feel for the scale of all of this, the federal government counts a total of 57 active federal adviser positions from the clean air act and global commodity markets. so there is a lot of commissions out there. >> i think when i hear through this, we had judd greg on talking about whether you should allow elected officials to continue to trade. his point is you shouldn't say

no trading for anybody then you wind up with people with no expertise in any of these areas. i could understand that. what i don't understand is maybe the system itself. why do you allow for disclosure that is not made public because that is not disclosure. >> these are confidential filings thatthey make to the government so the media and the public never get to see these disclosure reports. >> that seems ridiculous do the senators and congressional members who are acting on this know what each of these people hold? or is it so secret that they don't know. >> we don't know the schmidt team that we worked with on preparing this story told us he did disclose his ai investments but we can't check that. >> but we should know if you're recommending a stock, we should know if we're shorting it and then i could put that into whether i believe or think you have nothing to gain or lose. >> but could i ask a question. and this is the problem, look i'm all for disclosure but this

report, i doan question the report, what i question is the idea that somehow people don't know what is happening on this commission so if you look at the board of this commission, take eric schmitt out of this for a second stafford cats from oracle and andy jaffrey who runs amazon and aaron koshitz is on the commission and dr. andrew more from google is on the commission they're all in the ai business all of them. >> it is an outside industry group. that advises the federal government. >> that is what it is. so the idea that somehow this -- i would love all of these individuals and the companies to disclose exactly what they're ai pursuits are. >> right >> but the point is it is obvious whether anyone looks at these commissions. but if you look at these commissions. if you want the expertise, the

idea that somehow amazon is going to tell you it's strategy for ai and what it is buying or sel selling or what it is going to invest in or not is coo coo for cocoa puffs. >> if you don't know what someone is investing in, it is a problem. >> and i'm not blaming him he followed the rules. he didn't do anything wrong. but it is a broken system. >> he plays the games as the rules are set up right now. >> but the question is what should the disclosure policies be i don't think if you looked at this commission that you would say this is some kind of objective position with no outcome. every single person on this commission has the -- >> the federal ai commission shou should be investing in ai and the public should know that. >> but i'm looking at all commission members and all of them are invested in ai.

in some form or another. >> and in this case we're that y -- we're talking about schmidt. >> and they may be investing in ai themselves. >> it would be nice to know. >> and the company -- but isn't that what is happening. >> we looked at the other members of the commission to see if we could find any investments from them personally we didn't find that. it doesn't mean they don't exist because they could be through llc. but we didn't find them. >> because they have expertise in ai and making investments on behalf of thur company in ai so whatever their recommending, may very well be self-interested on behalf of amazon, oracle, or google. >> abbut if you see the guy's nm from amazon, when it comes to personal investments, you can't see that so you don't necessarily know. and so the question is should somebody involved in this commission be making investments

while serving in this capacity if you want to be an elder statesman, do you have an obligation to step back. >> i'm all for disclosure but what is the disclosure would look like because you have companies. >> but he's the only one not representing a company. >> that is not true. i could go through the list. >> the chairman of the list. he's not -- >> jet propulsion lab, mlc laboratories florida institution for human commission and dakota state university there is a huge number of people here all of whom are playing in all sorts of different ways. and this is just this commission there are -- >> we said 57. >> 57 industry commissions there is a question of whether you want to have the industry commissions. >> i think you do want industry experts and you should understand what you are dealing with and think there should be a higher bar for the congressional elected leaders that are making

the decisions not just offering recommendations. >> the question is, is it -- where is the line on conflict of interest at some point are you feathering your own nest. >> we're going to break. coming up. who are you? i don't know you fair is foul and foul is fair i have not seen. cats and dogs living together. >> we've been talking about this story for a long time. we've been talking about going back and forth about this. >> andrew and i have discussed this. >> what are you talking about? >> you're defending these profit mongers. >> no, i'm saying that the whole thing is conflicted to begin with you have to decide whether you like them or you don't like them. >> you have met andrew >> nice to meet you. >> we'll take you to china after a wild weekend xi jinping breaks with recent precedent to another

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welcome back to "squawk box" right here on cnbc futures are higher this morning but not as high as they were 20 minutes ago. dow futures up by about 151 pipes and when we started the show we were up about 30 points. s&p up by 16 and the nasdaq up by 15 and treasury yields have been the driver for all of this. the ten-year back at 4.2%. that is below its close from yesterday but we had seen 4.16% every time the yields drop, equities futures rise. the dow leaders if you wan to look at list one of the names is one that is reporting this week, boeing had been there earlier salesforce up by 1.4% and i have amgen and then oil prices have been lower energy, wti off by about 2.25%

$83.13 is the last tick. >> joe >> all for that. a new era beginning in china with the country's lead xi jinping firmly ensconced at the top and eunice yun joins us from beijing. hello, again >> hey, joe. well please xi is now the most powerful chinese ruler since founder chairman mow at the congress over the weekend, president xi has secured a third five-year term and broken a lot of other precedented including naming a successor. as for his seven-man leadership team, investors need to xi loyalists are in and reformers are out and president xi's number two who is a man who is set to become the premier, it was currently the overseer of shanghai's brutal lockdowns.

now president xi's dominance included a flex move against one of his pred saysors, hu jintao was escorted out of the congress toward the end and that has a lot of people talking that president xi wanted to show the world as well as others here in china and the congress that he is firmly in control andrew >> meantime, let's stay on the topic of china want to bring in the co-host of msnbc, "morning joe", joe scarborough is with us. >> not the real morning joe. the other morning joe. exactly. >> could we be co-morning joe's. >> let's share >> let's talk about this -- do you think it was a flex move in china and how do you think we should think about in terms of these autocratic regimes

>> well, i, again, very bad for china and of course for human rights in china. i've got to say, though, xi is being rewarded for just one problem move after another over the past five years. he's declared war on entrepreneurs. he's declared war on capitalism. he's gone in and shattered hong kong's standing as financial center that is vibe rarant and growing. you look at his zero covid policy and this guy has done more to help the united states stay competitive with china and the other morning joe is old enough to remember the late 1980s. we heard about the japan that could say no >> pebble beach. >> yeah. i get so tired of hearing it and then when i started hearing ten years ago that china was going to overtake us and turn

america into -- i rolled my eyes because authoritarian regimes are inconsistent with capitalism and xi has proven it again and he's being rewarded for declaring war on the private sector, on entrepreneurs, on the things that will help china grow >> joe, i want to tie this back to russia. we were talking to gary casper earlier about what is happening in ukraine he went after the elon musk's of the world, that we have to find a settlement what do you think should happen here and what do you think the biden administration should or should not be doing? >> well we've got to do two things at once we have to continue supporting ukraine and we have to understand that russia and putin control nuke weapons and like xi, putin doesn't have any checks an balances on him. you go back to cruise chef days after the missile crisis, he had someone that could check his

power and when they believed he was unbalanced, they pushed him out. there are no checks an balances on vladimir putin. so again, with we have to support ukraine and at the same time we have to be looking at opportunities down the road for ukraine to make peace. >> casperoff said that the ome way this ends or should end is for ukraine to win and what does that even mean because for them to win could put a lot of other people at risk and that is sort of the question which is the bigger risk >> well, i love gary and i've got the greatest respect for him. and i also, i think we have to be all in on ukraine and in supporting ukraine. that said again, vladimir putin has nuclear weapons and he's talked about the fact that he could use nuclear weapons. two things could be true we could support ukraine but that support has to be to get as

much of their land back as possible and make sure they're secure in the future but, there is not going to be a uss missouri moment where vladimir putin is going to sit and sign documents surrendering to zelenskyy that is not going to happen. so we have to find a middle ground >> hey, joe, i want to pivot the conversation to a totally other place. something that we were talking about i think late last week and this is kanye west, but it is also a little bit maybe about the concept of cancel culture, the concept of when you cancel, when you don't cancel. over the weekend you saw balance canceling with kanye west and adidas has not after kanye west remarks what do you think business is supposed to do in these kind of situations >> i think businesses needs to do what is in the best interest of business. they need to look at the bottom line everybody whined what the nfl did a couple of years ago.

nfl knew what it was doing there are a lot of things that the nfl did that i didn't like i thought major league baseball overreacted by taking the all-star game out of atlanta perhaps mlb should have read the voting bill and understand it is hard to vote in new york state than in georgia. and if you look at the early voting numbers it proves it. in the case of kanye west, emanuel wrote a letter saying there is no middle ground. this guy continues to inspire anti-semites across the country. like mel gibson, he's made anti-semitic statement and arri manual and others began working with mel gibson when he understood that he had stepped over the line. he asked for forgiveness and apologize and move forward kanye west seems to be doubling down so what company wants to be

associated with him. at end of the day, it is their business but the mark place should punish anybody that continues to -- to team up with an anti-semite. >> ari, the shrinking violet i remember oliver stone did similar things to the mel gibson he is there for that defend -- there is to doubt he's going to step up when he has to. >> yeah. and i will say this, too, also, joe, you look at he also stepped up with -- when you had -- when you have khashoggi, who was tortured and then chopped up in little pieces. he just said we can't keep working with mbs and he got out of there he made the decision they've actually, think it was right decision for them to make. >> right i should disclose, he's my age and i think you might know him well, too. i don't want to speak for you.

but i thought that you know what i was thinking -- >> yeah. but hold on joe. here is the difference between you and me ari may be your agent and he's my agent too, but i still negotiate all of my deals. i say go ahead i'm a -- >> we go back so far scarborough country was a great show and it was a great name back then you've had two great names if you have branding specialists or something but you are morning joe now. it is known as coffee. but it is pretty powerful. and in scarborough country, you are lucky you get rid of that and it sounds like marlboro country and you can't that talk about that any more. and you were a fledgling broadcaster. and look at you now. >> you know what i did i went home and i locked myself in my room and i just watched tapes of "squawk box."

>> oh, my against. >> and i get a band on and it said wwjd. what would joe do. so i owe everything to you no it is funny in the early parts when we were trying to figure out how morning joe was going to work, we were sitting around the table and somebody said it needs to be like "squawk box." you need to wake up and start the show and bring people in and you need to move it across three hours and just have a continuing conversation and so that is -- >> what brilliant person said that >> well, i don't know. i can't really say his name. okay, jeff quantumus, there is another blast from your past. >> the chyron said 15 days to midterms what do you think is going to happen >> nobody knows. the saying is that a week is a lifetime in politics you've got six, seven of the top senate races within the margin of who

when i was running for office, i looked at trend lines. i was a republican then and i'm n independent now and they need to look at trend lines and most of the trend lines are breaking toward republicans we don't know what is going to happen we were surprised in 2014, we were surprised in 2002 and 198. and two issues breaking against democrats in key races, i'll say three, actually and one of them is a sleeper you've got the economy, the new nbc poll shows that most americans think that the country is headed in the wrong direction. that is going to most likely hurt democrats across the board because they control washington right now. the second one is crime. it doesn't show up as high on a lot of polls, but you look at what voters are saying in pennsylvania, and i really think it is going to have a real impact in the philly suburbs and it is going to help doctor oz, it is going to hurt fetterman who has not been as tough as crime as a lot of voters would

like him to be and the sleepers are something that you hear republicans talk about a lot. but may not have as big of an impact on race i think actually the chaos at the southern border is going to have a big impact on those arizona races. i think kari lake may win in part because of it also because she's got an opponent who is afraid to debate here but i also think mark kelly's race in 2020 was a lot closer than most expected it to be. i think it is going to be tight again. and i think in part because there is more chaos at the southern border than there has ever been. >> two joes hanging out this morning. a little simulcast here. >> we never did it but here we are. and we touched like a million topics in five minutes so joe scarborough >> patting your head >> i see what is going on. joe probably can't see maybe he can when we come back on other side,

get down to jim cramer and get his first take on the marks. the huge week ahead for reporting. stay tuned you're watching "squawk box" on cnbc where's regina? hi, i'm ladonna. i invest in invesco qqq, a fund that gives me access to the nasdaq-100 innovations, like real time cgi. okay... yeah... oh. don't worry i got it! become an agent of innovation with invesco qqq

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including up to $800 off iphone 14 pro. (♪ ♪) let's get down to the new york stock exchange and check in with jim cramer. there are so many things i want to ask you about this morning. we could start with what is happening with the futures because of lower yields moving things but i'm really interested to get your thoughts on china and japan, too

>> okay. well i think that the difficult part of what is happening with the futures is almost all of the research is negative this morning. as the stocks go up, people will pick them off and start selling them because the futures are out of whack with the individualresh it has been i'd say sub optimal for people trying to trade the futures. i don't know, maybe the dollar is peaking that would be some incredible call if the dollar was peaking and then we'd really have ice, and we'll also have numbers go up so i really like that setup. i don't know, becky, i mean -- >> if the dollar is peaking, is it because we're getting close a fed pivot or is it that the other central banks arestartin to catch up with us? what other underlying currents are here 1234. >> first because i think november 2, it is really hard for powell oig to to give one oe statements that you have to keep tightening because to me that is

political and he is not political. if the trend lines are going toward the republicans, that could tip everybody. so i think that we could not have a pivot, maybe have some quite time and quite time is really good for the bulls. if we have a weak dollar, you could look at all these companies that have been annihilated. and everybody says everything negative on meta, but if futures are up and you have a chance to sell it, it is the kind of thing that is happening where the futures are again said stock and futures will take it up and then you can go sell it if you want to that will be a lot of stocks that are like that >> one more thing. if the fed tries to not be political so maybe they don't sound as hawkish before the election, are you getting subbered into it if you buy that because it is really just a temporary pause and then after november, beginning of november, they are back on >> well, i think that if you get to the beginning of november, we'll be through earnings, maybe earnings won't be that bad,

maybe get an end of the year rally. i d i don't think that we'll have a 2018 scene where we have the federal reserve chamber who does it wrong i'm pretty optimistic going into the next month just because it is midterms, always been good after. we're down so much this year we can bounce. i think the fed goes quiet i don't know usually a decent time. >> jim, thank you. as we head to a break, a programming note for you don't mis-c nbc's work summit this week. among the headliners, i'll have a conversation with an author and inspirational speaker. and the cotdn t oniunowtohepeng bell is coming up.

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35 minutes to the opening bell on wall street. futures right now up 234 points. liz young head of investment strategy at sofi i was looking up sin know mims for pivot because i want something less than pivot. and i found oscillate to be a fed oscillation, or what about

swivel a swivel is not as far as a pi pivot. did you glean anything from friday that was more positive than we heard thursday, maybe know 75, 50 and then take a step back and get more data dependent, any solace from that report that came out friday that moved us a thousand points >> well, i'll be stubborn on the definition of pivot. to me pivot means that we reverse course or we change direction. so if anybody is expecting a pause or maybe a down shift in the level of hikes, i still don't call that pivot. what i took from last week is that it is now -- the thing that matters now is the path. so the terminal rate really hasn't changed we're still looking at 4.8 -- between 4.8 and 4.9%, somewhere between march and may of next year but the path to get there is what matters to the market right now. and i still think that this rally, although it has been attractive and everybody loves to take part in a rally, i still think that it is pretty fragile.

however, it could last a while because we've got as everybody knows seasonal tail winds behind us usually the market likes it when we get past a midterm election we've got gdp coming this week that is expected to be back in positive territory and so far earnings season has not been that bad. but what i would look at in 2023 is that to get to that terminal rate and really start to take care of inflation, i don't think the fed stops hiking anytime soon i think they just hike maybe at a slower pace. >> i'm trying to visualize what an actual pivot -- see, i can swivel inmy chair. and i can swivel a little. doesn't mean that -- the pivot is all the way around, i think, right? so can't we change it to -- can we call it a swivel? maybe they will do a fed swivel. >> i grew up with a dad who was a basketball coach for 36 years. i've been to a lot of camps. when you pivot, you mean directions doesn't mean 180 degrees, it

could be just 45 degrees, 90 degrees. but you change directions and you go a different way >> well, i'd like to just talk about the fed since they are still a big part of our life, that is all that matters in the entire universe is the fed, but we do have earnings coming this week, liz. >> well, the fed matters for sure this week i actually think earnings matter more so when you look at the rally that we've seen recently, i think that it is fragile and earnings is something that could change it, could change the trajectory of it, could change the strength of it. also remember we're looking at an earnings season where we're really only expecting about 3% to 4% growth and if you take energy out of the earnings season, growth is negative and we're at a point where earnings have been revised down. maybe not as much as everybody thought but revised down for 2023 that we don't have a ton of year over year growth looking forward either so looking at earnings season this week, i think that we'll get a lot of information about 2023, we'll get a lot more guidance and the other thing

that i would tell investors is that we're in a time where sales growth is outpacing earnings growth and that is abnormal. the reason that has been handing largely is because of inflation. so as inflation comes down, the margin and the buffer that we have from that top line also comes down so although we haven't seen down revisions in a big way so far, it could be that we haven't seen them yet >> do you think the labor marketing is loosening up at all, will it continue to be stub bosh stubborn? >> i think the labor market is the last thing to crack and i'd expect to see weakness towards the end of the year. it was a big shift downward in august, the amount of jobs open. and so now we're looking at a ratio of about 1.7 jobs to every unemployed worker. if we get that back down to pre-pandemic levels which was about 1.2 jobs for every unemployed worker, that is where things get a little bit iffier because then that is when you will start to see unemployment

tick up. so i'd expect weakness to start emerging toward the end of the year and that is when the fed has to decide whether or not they slow down or do a big pause. >> big swivel. all right. liz, thanks. >> all i'm hearing in my shed is happy normal let's get a final check of the markets which look pretty good who knows by 4:00. we'll see. make sure you join us tomorrow "squawk on the street" coming up next . >> monday morning. welcome to "squawk on the street." week starting off with optimism on lower yields, hopes for a slowdown in hikes, decent corporate result so is far 150 more just this week, nearly half the s&p market cap. u.s. stocks look to build on the best week since june, but hong kong suffering the worst single day rout since '08 as xi tightens hison