welcome to "squawk box" here on cnbc we're live from the nasdaq market site in times square. i'm becky quick along with joe kernen and andrew ross sorkin. as joe mentioned, things are relatively flat. we wait to hear what the fomc has to say the fed will set the rate at 75 basis points this morning the futures up by just a point at fair value s&p futures by 3 the nasdaq up by 25. this comes after a slightly down day yesterday across the board treasury yields haven't budged much either. yesterday the 10-year was below 4% this morning, just above that at 4.04%. the biden administration planning to announce more than $13 billion in aid to moderate and low income americans to lower their energy bills it includes incentives to make

upgrades to their homes. funding would come in part from ahs department energy assistance program and also from emergency funds that the biden administration had requested earlier this year. i guess we had talked a little bit yesterday about if you're going to do have a windfall tax, how would you distribute it? maybe this is how you do it. obviously this is not what they're planning to. do obviously we can talk and debate that one forever. >> i have a little problem with 60 votes in the senate. >> that's another issue. managers at twitter have been reassuring workers that their newly investing shares would be paid in the first half of the month that's according to twitter. some employees had been bracing for job cuts and feared that they could come before yesterday's investment day. >> the day came and went and there were reports about whether they would all be fired over the weekend and they weren't. >> here's the current tranche.

the workers will be paid out as previously planned by leadership, previous leadership. musk was scheduled to hold an all-hands meeting with twitter employees today, but that meeting was canceled unexpect italy. would both of you pay 8 bucks to keep it? >> i don't know. reading what elon musk posted yesterday, if you get more reach as a result -- >> i can see why they'd want to do it. can you live without it? >> you know what the question is, though, if you're a journalist or media, is it an expense? is your company going to pay for it >> i was talking to my son yesterday. he said, oh, my god, without twitter -- it's been a blink of an eye it's been around. life was great. >> not for you but for scott. >> life was great before cellphones. >> can you imagine losing it >> yes. >> no.

you would turn around and go home. >> i would imagine. >> no, your cellphone. >> oh, losing my cellphone, no, because of maps, i guess i like maps. but the whole social media thing. >> i'm on the hook for $3. $5 more -- i'm not doing the true blue. i think it might be valuable look, i'm rootinger if this thing. i want it to work. we want it to work for lots of reasons. >> he's not going to be able to moderate to the point where -- advertisers are not going to be next to what he'll want on the site. >> wow, you turned >> i'll make it selfish for you. you can be selfish about it. >> i don't have a selfish bone in my body. >> then i can't make it selfish for you. you built over a long time and so has becky and myself and a lot of people spend a lot of time with lots of people on this platform they have followers that follow them that way. in terms of your ability to communicate with people, it's a

valuable platform for you. >> but i think about some of the stuff that comes in here on a regular basis. >> you have a three-hour tv show, "new york times," write a column, you need to communicate more with people cow don't -- >> i think it would be great -- >> you've got a weekly tv series and the new show on nbc streaming. you're not reaching enough people. >> you don't want it to work >> i don't care if it works, i really, really don't. >> i eechl not talking about needing to work as a business. obviously it needs to work as a business. >> have you seen the stuff already on there >> it's terrible >> you're not going to have advertisers. >> we'll talk about this later in the day. ipg has been advising -- they've been telling all of their clients not to invest until they see what happens. not just the companies. >> people are terrible human nature >> but i will say this, having -- >> i like dogs. >> getting back to the issue

about this november 1st besting day, we talked last friday about this date. >> you are looking at the worst side of elon again you were expecting the worst because you don't like him. >> no, no. i was on the phone all thursday with twitter employees who were going out of their mind scared that they were, a, going to be fired over the weekend, and, b, that they were going to be fired specifically before this day so they would be paid. i think this is -- at least the way he's handling it thus far -- i know there's lots of questions about how he's handling it, so to speak, give him a little credit at the moment. >> i think we're super obsessed about this it's not going to be public anymore. i will say the public square is an idea and having access to people if you wish watching shares of meta and snap both jumped yesterday

by the way, twitter would have jumped if it were still an s.e.c. company in an interview, brandon carr said i don't believe there's a path forward for anything other than a ban the social media app is currently under review by cfius and by the department over a security deal. tiktok said, commissioner carr has no role in the confidential discussions with the u.s. government related to tiktok and appears to be expressing views independent of his role as an fcc commissioner is it a security concern for u.s. citizens? >> remember will rogers?

>> the satirist? >> i never met a man or woman i didn't like. it take as what the average person -- >> i disagree with it. >> the anonymity, it brings out the absolute worst in human nature >> if you're verified forecast you have to pay the eight bucks and those people are promoted more, maybe you get rid of the bots. >> the argument is if you have paid users, a, they're no longer anonymous it gets rid of random people. >> what if you ran into some of these people on the street and they said to you what they say -- hey, sorkin -- i mean, think of the stuff you read there. what if people just walking around decided they were going to say that stuff to you what would society be like

it would be like the purge they say stuff to me, and i don't even know you. you don't know me, my family, anything about me. how dare you take the -- you know, the -- >> because they're anonymous and they can get away with it. they would never say that to you on the street. >> it's just lowered the civility. >> we may walk on the wrong streets. >> people don't say that >> i get all sorts of stuff. they worry, they don't understand it. >> if i go down to the red neck riviera in the panhandle in florida, they may say, hey, joe, i like you. let's talk about amazon for a moment they existed the trillion dollar club they've fallen it's the lowest close since april of 2020, erasing all of the stocks pandemic surge. it brought the market cap below $1 trillion. sign of the times in terms of the way the market is thinking

about the economy and some of these big company zmoos coming up, it's fed day what markets expect from the fed's decision. and later senator tom cotton who possibly can't read twitterways in on the midterm ele u'econ yore watching "squawk box" on cnbc this thing, it's making me >> announcer: this cnbc program is sponsored by baird. visit bairdifference.com for re. and you are? i'm an investor...in invesco qqq, a fund that gives me access to... nasdaq 100 innovations like... wearable training optimization tech. uh, how long are you... i'm done. i'm okay. ♪ ♪

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tim mcgraw is a great, great actor, "1883." >> i didn't know his dad was an actor. >> ted mcgraw. >> homer after homer, the first and second inning. today's squawk planning, another busy day of earnings we're going to hear from cvs, yum! brand, and others also qualcomm, roku, booking holdings, ebay it's fed day the fed is expected to raise the interest rate and slow the pace of rate hikes as soon as december joining us now cameron dawson

cameron, the jolts data, which we know the fed is watching very closely is not going their way and it kind of confirms, i think, what we all know about inflation now. you know, these -- the prices for commodities rise, they fall, energy, even that might not be quite as sticky. but when you get something ingrained in the labor market for whatever reason, it's there and it's something the fed knows and something it's going to really try to take care of this round. >> yeah. that's so very important because those -- what were truly transitory drivers of inflation have been cooling all year, but then the fed's focus started to shift this summer to the labor market, which really drives sticky inflation that inflation is far more persistent and lead to inflation expectations remaining elevated.

they called the labor market unhealthily tight at the beginning of the year. the jobs data jumped back to 1.9. back before the pandemic, it was 1.2. the fed wants to see the number move lower, but it's simply not budging, which means tighter labor market, higher wage markets and leads to higher surges and higher sticky inflation. >> cameron, just to look at the bright side, so the "journal" has a piece how they're looking at rates, expecting the higher rates to last for a while, which, really, when zero can last for ten years, are we really surprised a little bit higher might be around for a while? but they're worried that now the federal funds rate could sit at 3.5% for the long run, like for the rest of the decade

3.5% that just doesn't seem like something that's going to choke off expansion, going to choke off loans, mortgages we can go back to 3.5% that seems like more normal than staying at emergency rates is 3.5 really a big problem long term >> given the fact we've seen a big uptick in the amount of leverage of the economy, it likely could be a challenge. the question is for the borrower, if we see rates stay up at 3.5%, that would slow their ability to be able to invest in businesses for a lot of companies, they were able to eventually term out their event. they were able to take low interest rates and borrow for the long run it's a very important question how high the interest rates this economy can really tolerate if

we start to see inflation move back, not necessarily back toward 2%. but in that 3% to 4% range so it's a big question that remains to be seen i think for equity markets, a 3.5% rate over the long run means equity valuations like we saw in 2020 and 20 th21 are sim not achievable. >> you think 3900 on the s&p is a line in the sand it's a support level and a resistance level and that's where the battle will be waged you think if it gets through, we go to 4100 if it doesn't, we go back and test 35, 3600. >> it's been such a battleground all summer and into the fall, and a break above or below the 39 level likely sets the tone for the end of the year. if we break above it, the 4100 would be in play that's your downward sloping

200-day moving average but the challenge that we have if we get up to 4100 is that the market would be expensive, and mostly expensive given these higher interest rates some of if we assume earnings are flat next year, about $220 a share, that means at 4100, the s&p is trading at nearly 19 times we do not think you can justify 19 times or higher valuation given the posture of the fed, and so if we see that rally, we would use it as a rally to lighten up on risks, possibly put hedges into place because we do not see it would be susta sustainable on a valuation front. >> oh, great all right. thank you, cameron we're thinking about a 10-year period where things aren't as great as they've been for the

past 40. do you predict that? is that in the cards too >> i think it's very likely. if you think of the starting point in the last ten years coming out of the great financial crisis, you had houses being extraordinarily low and valuations extraordinarily low this set a very low bar and a long way for powerful returns that were more than double the long run average for an annual basis for equities in the u.s. if we look today, yes, valuations have come down from their 2021 peak and equity allocations have come down, but they're still very elevated, which means when we start to bake in these higher interest rates and the fact that we don't have that low bar and low runway, what we could be in the scenario of, in the next furs yesset we don't get that is skate velocity where we get into a brand-new strong bull market

where we could be stuck in this sideways trend and oscillate in a directional place where we don't really break into a new bull market for quite a few years. >> cameron, very good. thanks good to have you on. coming up, we're going to talk about a trend that's been showing up in the quarterly reports. that's energy costs taking a toll on profits. and we're not just talking about in europe. these are companies right here in the united states we're going to mention a few and why those costs are rising. later, katie stockton will join us to talk technical levels after a rebound in the markets "squawk box" will be right back. ♪ ♪ ♪ ♪

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edge and a growing trend that's showing up in quarterly reports. higher energy costs. let's start with caesars entertainment. revenues actually beat estimates and profit was returned to the quarter thanks to onlight sports betting. revenue from that digital segment grew from $212 mi2 mill. most of the miss was because of higher electricity costs which cut into earnings. so you thought it was europe that was nation it by the way, caesars' shares were up yesterday. it turns out it was not just caesars but a similar story at the cheesecake factory sales did come in with the expected range, and the company said food costs had become more stable and predictable

it attributed it in large part to keeping the lights on, citing higher costs and building maintenance. guys, this is going to be a trend people are looking for more and more. meantime, when we come back, quarterly results on deck. we'll look at cvs health and the reaction on wall street. take a look at yesterday's s&p 500 winners and losers the new iphone 14 pro is amazing. >> announcer: executive edge sponsored by at&t 5g it's fast, reliable, and secure. gets the best deal. on every iphone. uh, actually... we already do that. the plumber with the ascot! big bjorn, little bjorn, too!

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good morning and welcome back to "squawk box" from the nasdaq market in times square. it's the dow that's in the red, but just 20 points the nasdaq indicated higher , an

the s&p flat up. as we await earnings from cvs, news from that company and some other pharmacy chains, cvs, walgreens, and walmart have agreed to pay $12 million in a big global settlement that settles claims that they contributed to the opioid epidemic bloomberg report they'd would resolve thousands of lawsuits. it will amount to just under $5 billion. some other stocks to watch as well. amd shares are higher after the earnings came in slightly be low estimates. a 93% drop in net income was mostly attributable. it came in roughly in line with what the street was expected and the ceo lisa su says she expects to see growth in the cloud market in 2023 the stock is up by about 23%

airbnb reports nights that were booked in the recent quarter. the company's outlook for boxings in the fourth quarter also came to light and its expected revenue range was mostly short of what the street had been expecting, the stock off by 5.84%. meanwhile banks and institutions profiting after ransomware payments last year. it's part of the government effort to try to identify and report ransomware attacks. and, by the way, i didn't think a lot of the ransomware payments were paid with crypto. bertha coombs is at the table. >> good morning. just getting headline numbers right now. both profits and revenues above

expectations adjusted earnings of $2.09 per share, ten cents better than the analyst. $81.2 billion. analysts had been look upwards of 4%. raised to between 855 and 865 a share. the analysts' estimate is for 855. we've seen a number of companies benefit over the quarter particularly from the insurance side from normal utilization you haven't seen that huge bounceback even as a lot of these have also lost that tailwind of the big -- tailwind from covid vaccinations. again, on that settlement, cvs agreeing to pay about $5 billion over the next ten yeaears to settle outstanding state, local,

and tribal litigation. bloomberg reporting it's part of a tent active $12 billion settlement that includes walgreens and walmart. neath over them has confirmed that report. last august a federal judge ordered the three. they were the largest pharmacies in the country to pay $650 million in damages in a suit brought by two ohio counties the major drug distributors reached a similar sentiment last winter that will see them pay about $19.5 billion. so we're starting to see some really big settlement amounts starting to go these will be paid over several years. elizabeth anderson who's an analyst with evercore says this kind of helps take a little bit of the overhang because it givens investors a view to how they're going to pay these. >> who still has exposure? we saw who's part of this settlement, but i assume there are lots of others who are not part of this deal.

and then are there other lawsuits >> there are other lawsuits, other states still outstand. walgreens still has a couple of states where they're facing lawsuits obviously that $650 million is not part of this global settlement, and cvs says it's going to defend against settlements -- or suits that are not part of the global settlement, but the hope is others will join in and the numbers will rise and they can sort of get this resolved. >> bertha coombs, thank you. a programming note we've got the cvs ceo karen lynch who will be on "closing bell" today at 3:00 p.m. in an exclusive interview you do not want to miss. all right. when we return, an advertising giant is advising its clients to suspend its ads on twitter, at least temporarily. we have that story right after the break. later, senator tom cotton will join us to talk about

president biden's proposted meeroull tax remb y can watch us any time on the cnbc app we'll be right back. ♪♪ ♪♪ ♪♪ be ready for any market with a liquid etf. get in and out with dia.

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godaddy. tools and support for every small business first. welcome back to "squawk box. take a look at u.s. equity futures. a bit mixed. the nasdaq looking marginally higher the s&p 500 up just slightly becky, we were talking about

twitter and the advertising game or lack of game that's happening right now. >> it's a huge story we started hearing about this yesterday. advertising giant ipg has recommended to its clients including american skprerks coca-cola, johnson & johnson and others to temporarily avoid advertising on twitter joining us to talk about this and the larmer digital advertising slowdown picture is axios ceo dan p it was concerned because gm competes with elon's other company tesla, but what do you think this kind of spells out just in terms of what big companies are going to be thinking when it comes to advertising on twitter >> i think what companies are seeing, it's not so much the concern of the hell scape right now. it's the chaos

he came into this without much of a plan. i understand any time you take over a company, obviously things are going to change, executives leave, et cetera he seems to be making this up as he goes along. when it comes to advertising, that is the core of twitter's revenue base and it seems like elon is focusing on other things you talk about blue marks and verification, that might become an important revenue stream for the company, but even if every blue checkmark paid $8 a month, it's small money compared to what they're getting from their big advertisers. >> i've been following the head of safety and integrity at twitter, kind of what you're talking about. you did see an increase in some of the hate speech that was there, but they looked like they moved pretty quickly to try and address those things it seems at least from right now, they're taking this pretty seriously. they don't want to see this happen either. t if advertisers are waiting and seeing, what would they have to

see, i guess, before they would feel more comfortable and ipg would say, go ahead and continue advertising? >> i'll give you a couple of examples first, elon talked a couple of days ago and will reiterate tonight about a new reiteration team twitter had one of these, but he wants a new one. elon has effectively known for months he was going to have to buy this company i think people would like to see the policies in place, which is stuff, honestly, he could have done already or at least the conversations could have started. >> i'm not convinced he was definitely going to buy this until a week before it happened. >> if he didn't think he was going to buy it a week until it happened didn't listen to those around him who said, look, you're likely going to lose this even if he thought there was a chance he was going to go to trial and win, there was a good chance he was going to lose and he should have made some contingencies for that. >> dan, is it possible that the

hellscape? mercedes -- pick a blue chip company, there are certain cable networks that i don't see any decent ads on. i've seen a lot of pillows, i don't know, stuff for my knee joints they seem to do really well with sort of the bottom feeders in advertising. is that what he'd be stuck with, elon, if he decided to stick with the advertising model >> he may be, if you got to the hellscape, joe. >> we're there, man. we're there. i looked at it. >> i mean, the big problem for elon, remember, he paid $44 billion, which means he needs to -- it's not just that he has to maintain the status quo. he has to make it much more

successful. >> it won't need mercedes and coca-cola ads. >> no. i agree with you it can't be all craftmatic beds. >> dan, what is the chance it could emerge into something larger though? we talk about it almost unconventionally what twitter is today. i think for this to actually really work it has to be something totally differenten from what it is today. it has to be a front end for a sort of super app he's talked about, the reach-out-type product. part of my thinking to get people to pay $8, he needs people's credit cards. if he can get credit cards into the system, he has an opportunity to turn it into a payments network of some sort. >> that's interesting. i hadn't thought about the credit cards one thing he bought was an installed user base. spacex doesn't obviously sell to

you and me tesla is consumer-specific, but very high end. he's already in our phones yeah, he needs to grow this into something bigger i'm surprised in the short term he's focused so much on the existing blue check twitter mark, which is a small group he needs to turn it into something bigger i've got a 12-year-old kid she's asked for every social media app except for twitter he needs to appeal to her. right now he seems very, very focused on existing power users and not focused on how he's going to grow that base. >> we mentioned earlier meta shares and snap shares were higher yesterday on the idea that maybe tiktok gets banned after one member of the administration said this -- or one commissioner said this in an interview. what about just the overall picture with ad spending right now? the market was pretty spooked by what we heard from google in terms of weakness in their ad

growth and youtube seeing a drop in online ad spending. it's that old story, if we're headed into a recession, ad spending is going to be the first place you see a big accident in this, trying to do this at a time when just the overall economy has a lot of questions. it might raise the stakes a bit. >> absolutely. i think that's one of the reasons why elon tried to back out of the deal or at least renegotiate it everyone thinks he overpaid. the twitter business is in the ad business. it might ee subsequentually be in the pay built and commerce business and all these other things, but right now he's in the ad business. he needs cash flow to come through, and that's for the short term, at least it's got to come from advertising. yeah, the short-term, midterm outlook for the ad market is not good meta shares and snap shares going up, that's more them doing

good. >> the one thing we all talk about as a sort of fate accomplice he's wondering onner thinking about a business plan that could be a two- or three-year out problem that might cost him addition at money in the next two or three years it might not be the ohm payment he has to make maybe he loses a billion dollars each year for the next couple of years. he said at least initially he didn't care about making money >> there's two things about elon musk one, none of us know about the actual cash. none of us know how much krimm toe he has, how much money literally is in his bank account. a question, andrew, you wrote about and others wrote about going into this big deal there was a big equity hole and

who was going to pay that. we still don't know how it got paid honestly, i don't think he's really thought about it. i think what we've seen over the last week since he bought the company or six days since he bought the company is evidence of that. he's reiterating on the floor and make it up as he goes along. again, i feel like i have more plans tonight for whey i'm going to do for my kids' dinner than he did when he walked into a $44 billion company. i think he's legitimately making it up as he goes along by the way, it's evidenced by the fact he does not have any new executives he has friends that are coming in to help for a week or two. >> prove it. what are you having for dinner >> tonight is going to be mac and cheese with bacon with crumbles it's the thing she likes the most it's bad for her, but she likes it. >> it sounds delicious dan, thank you good to see you today.

>> thank you. on the ballot, we're going to talk about the midterm elections and the impact on the market we deal it next. a reminder, we'll do the best of "squawk box" on "squawk pod. listen any time. we're coming right back.

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russia says that it will rejoin the ukraine grain export deal. it threatened the flow of grain to the u.s. markets. they said they have promised not to use the grain sea headquarters for military operations wheat prices dropping precipitously after this news came out, down by about 5.5%

that's the last tick and that's based on the news this morning so we will continue to keep an eye on this. meantime, the midterm elections a week away with the balance of power in congress at stake. joining us now is the head o morning. i think everybody is a little bit trying to handicap what's going to happen here and what it's going to mean for policy. where do you land right now? >> our view is it's very likely republicans will take control of the house. we're expecting something like 20 or 25 seats we'd also expect republicans to take the senate as well. the betting markets all shifted in that direction. we would expect 51 to 53 republican seats in the senate >> if you're right, walk through what you think the next two years look like in terms of policy

what kind of policy changes or maybe just policy that doesn't happen happens >> yeah, i think it's mostly upside for markets and a lot of it has to do with very little policy getting done. i think whether you have republican control of the house but also the changesenate as wet changes some of the dynamics it takes all new tax increases off the table, the prospects of pro inflation budget-busting bill are gone. some of biden's threats become toothless in terms of wind fall profits. i think on the upside, you see greater defense spending, expiring corporate tax provisions there's better odds at resolving some of those. it takes risks off the tax

sector from any type of antitrust legislation. you'll recall back in -- when senator warren has a -- led the democratic primaries, health care stocks sold off if republicans were to take the state with 52 seats, the map is superfavorable to republicans in 2024 the states you could consider toss-ups, for example, would be texas and florida that republicans are defending. if republicans win the senate now, it's going to put a lot of certainty into the markets through 2026 at least when you have divided control of government if democrats win the white house in 2024, they're unlikely to have the senate. >> i want to go to two things you said, one about taxes and the other about antitrust and regulation the tax piece, you made the comment that you thought, well, like, biden's windfall tax comments would be toothless.

you actually -- you think there would be additional taxes over the next two years if democrats were in power? >> if democrats were somehow able to win the house and the senate, i think in that case, the democrats are winning the house. sinema and manchin are no longer the marginal votes they would be picking up seats there as well. and i think then biden's agenda would be right back on the table if the democrats were unable to pass the childcare expansions, paid leave, expanding the tax credit there would be a host of priorities that would be witnessed by all the tax increases, taxes on multinationals >> you also made the comment about antitrust policy first of all, the possible breakup of companies or things that can happen to companies in

the immediate term would be a function of the department of justice and that would be irrelevant of who is in power. you think there would be antitrust policy that we get past during the next two years that would change that policy and that doesn't seem to really be on the table and hasn't been, obviously, even despite all the talking about it over the last two years. >> there's actually one piece of legislation that was supposed to come to a vote in the senate that republicans agreed to this would end self-preferencing which is a pillar of tech profitability, or so-called. you saw chuck grassley sponsor legislation with amy klobuchar and a lot of republicans supporting it. i think it would be hard to do even in a democratic-controlled

congress b i think the odds of that would then be killed >> i want to ask you sort of -- i don't know if it's a philosophical question the assumption in the conversation we're having is that republicans -- that if republicans win, that's good for the stock market and historically, it's actually been the opposite. >> i think it depends on, you know, how -- the economic cycle -- >> that's not true >> no. >> looking at it in a -- in a vacuum how do you know whether -- >> i'm just -- >> it's just not -- >> we've been -- >> does it seem plausible that democrat policies would be good for the stock market does that seem like a plausible? >> arguably -- we walked into -- >> did you notice 40 years after

reagan what happened in the stock market. >> if republicans win by default, that's good for the stock market that was the implied conversation with donald as we've been talking about here -- >> when newt gingrich took back -- they got welfare reform, was that because it was a democratic president or a republicancongress when he did everything in 1980 and ushered in 30 years of prosperity, was that because of the -- >> like it was water -- >> feeding the soviet union. ending the cold war. >> we don't need to debate this. the point is -- >> when you give this pantently false narrative that democrats are better for the stock market, that is just -- >> go look at a chart about who is -- >> okay, okay. i think we know whose policies -- >> it's factual. >> donald, do you want to weigh

in >> in any world does this make sense to you >> it's factual. >> i think we're going to continue this conversation as we head to a break. >> you can't -- >> thank you we'll have you back. >> it's factual. >> how do you explain it any other way. >> when we come back, more quarter reports on the way paramount global and yum brands are set to report just in the next few minutes cvs health is sharply higher we've got more right after this break. and later, senator tom cotton will be here to weigh in on the midterm elections. stick around, it's going to be a long morning "squawk box" will be right back.

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react to fast-moving markets with dynamic charting and a futures ladder that lets you place, flatten, or reverse orders so you won't miss an opportunity ♪ good morning, earnings, the fed and october jobs report on the minds of investors this week we've got the futures hovering right around the break even mark this morning nobody wants to move before the fed decision the fed is expected to raise rates today by 75 basis points but will chairman jay powell send a signal to the markets that a rate hike slowdown is coming i don't know if i would hold my breath on that we have a breakdown of what you

should be listening for. the president calling out oil companies for oil profiteering and threatening them with a windfall tax the second hour of "squawk box" begins right now ♪ good morning and welcome back to "squawk box" right here on cnbc. we're live in times square i'm andrew ross sorkin along with becky quick and joe kernen. take a look at u.s. equity futures stand this hour. dow off 39 points. nasdaq looking higher. looking at the s&p 500 off just marginally right about now treasury yields which seem to be -- well, we'll see whether pushing thing one way or the other this morning we're expecting the fed's

decision later today 75 basis points. we're going to show you that board if we can. if we can't, we'll see about that meantime, you're looking at crypto, by the way we haven't shown crypto in awhile we're sitting at about 20,000 or so on our bitcoin board. $20,424. >> let's get to dom chu with a look at this morning's premarket movers >> joe, like andrew pointed out, it's a big day for earnings. we'll check on cvs health. those shares are up 5% just around 10,000 shares of premarket volume the retailer reported better than expected profits and revenues and raised its forecast for the third straight quarter cvs health also announcing that it has agreed to pay $5 billion to settle outstanding state, local and tribal litigation over its role in america's opioid

epidemic part of a settlement agreed to by walmart and walgreens as well it's led to a 5% gain in cvs health shares. next up you've got estee lauder which is down 9% or so now it's down 13%. the cosmetics maker reports profits that topped estimates. revenues were in line with expectations but it cut its full-year sales and profit outlook due in part to the ongoing covid related lockdowns in the china market. estee lauder said it would raise its dividend 10% but those shares down 13%. we'll end on shares of generac they're reporting worse than expected quarterly profits a couple of weeks ago, they had

previously preannounced its financial results. so maybe they were expected. generac said the industrial business continues to see strong demand but the residential products begin to slow because of things like insulation capacity constraints those shares have lost two-thirds of their value, around 76%, joe, over the last 12 months. taking it on the chin again but getting a slight bounce this morning given the results two weeks ago and the formal results this morning. >> becky is trying to talk me into the notion that the pandemic was good for generac. you know what i think was good for generac, the fed during the pandemic. the fed during the -- >> you can say that about -- >> you need a generator when you're staying at home i see it coincides with that >> everybody is at home all the time. >> there's different coincidence than cause i think everything got bid up. >> that's fair >> i don't think that you can make a logical argument that,

okay, i'm home because of the pandemic, in case the power goes out i need a generac generator. >> there was a big storm, i remember, because it happened, there was a big storm -- >> we see i didn't make sense because it was at 400 and now it's at 100. something didn't work -- >> you know who we can ask about that -- >> the three of you folks -- >> he owned it for a long time. >> i can see zoom, i -- >> no. it was like zoom >> docusign. >> did any of you get a generator installed? >> i got lined up for one. you couldn't get one i put myself on a waiting list for six months. >> i assumed that the three of you guys would all have generators already i did not have a generator i talked about putting a generator in our house before the pandemic started i finally got around to doing so, but then the pandemic hit and to becky's point, i had to

wait a year before i could get an actual generator and the installation -- >> it was also everybody fixing their houses up. >> but i was part of that generac story. i got one installed. >> long term, it's obviously, obviously, you're going to -- obviously -- >> it is obviously >> those are facts to. you got a lot of facts today. >> now the time to talk about -- >> those are facts too >> all right, folks, we are counting down to the fed rate decision jay powell and company expected to raise rates by 75 basis points steve liesman joins us right now with more on what investors should expect. good morning >> good morning. i also have a generator. it's the best way to guarantee you'll never lose power in your house. they hope the fed will deliver the last of the rate increases today. beyond that, there are

expectations the fed slows the pace of increases while it pursues higher and this morning they think much higher rates the funds rates rising by 75 today. another 50 dialed in by december even after december markets are pricing in an additional 50 basis points through the spring of next year you can see the funds rate trading above 5% after that hot jolts number yesterday we're about to get our last 75 base point rate hike at the next meeting and they'll start to begin hinting at slowing the pace of hikes and becoming much more sensitive to data and less focused on frontloading rate hikes. there is no guarantee it will bring down inflation the recent strength in economic data, stronger auto sales, and that increase in job openings yesterday, just little impact so far beyond housing and bringing down inflation and the fed now faces political pressure as well from the other

side a group of democratic lawmakers writing to powell saying the fed's focus on inflation shows a disregard for the livelihoods of millions of working americans and we're concerned that your interest rate hikes are slowing the economy to a crawl while failing to slow rising prices that continue to harm families so the risk now two-sided that the fed does too much putting the economy into recession and that bowing to political pressure or a false sense of accomplishment, it does too little, becky. >> i think there is the market kind of looking for any flinch, right, to signal that there is going to be a turn and that's going to undo all their good work they may want to stop and pause and keep rates higher for longer, but the second they do that, the market is off to the races thinking, yeah, we broke them >> yeah, i mean, i think the market is very prime to hear good news and up i'm afraid it's going to hear better news than

may be coming from powell. i don't think powell knows how high he's got to go. i think he knows he's got to go higher and i think the market is ready for any kind of news that could jump on it and buy that news i'm afraid that they may get disappointed with the funds rate trading above 5% and some people telling me that 5% may be too low for how the fed has to go. >> one of the guests earlier, steve, said if the fed gives any indication at all that it's not going to be strident, the markets would take solace in that, the markets would love it, they would go up and that would be counterproductive for what the fed wants. it's all so warped it's all so warped >> it is so -- you're right, joe. >> we messed up. >> jobs are good oh, no ease up. >> wages are up! we need to raise rates it's all -- but the only thing -- it all makes sense, i

understand that's the only tool they have, but there's no guarantee that that tool addresses the actual cause of inflation and works on it. it just -- you hope 10% of -- >> i don't want to ruin your morning, joe you sound a lot like the democratic lawmakers who wrote to powell. >> now you're piling on. >> i'm sorry, joe, it is factual that that is what -- >> i'm not a -- >> i know. >> i'm not monolithic. i have a few independent thoughts occasionally. >> i know, but that's what the democratic lawmakers said, you can raise rates but not necessarily address the inflation problem. and it is an interesting question, joe, because i think putting more people to work is a good thing more information on jobs. >> in just over an hour. >> people would be happy, the market would go up we don't want that.

>> over an hour. see you at 8:15. have a good morning. >> i'll try. okay coming up, people are returning to work, why is a serial entrepreneur and former disrupter making a big bet on remote work? we're going to talk to the founder of roam next before we get to that break, let's get a check on the markets. "squawk box" coming right back

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new mortgage data out minutes ago. let's get right over to diana olick. she's got the numbers and more what's the pain? >> well, mortgage rates fell last week forthe first time in more than two months, but don't get too excited. they did nothing for mortgage demand it was essentially flat for the week the average contract rate on the 30-year fixed fell to 7.06% from 7.16%. that rate was 3.24% the same week one year ago and that's according to the mortgage bankers association. it did move the needle slightly on refinance demand.

those applications rose but were still 85% lower than the year before there are few qualified buyers who don't already have a rate lower than today's and mortgage applications to buy a home fell 1% for the week and were 40% lower year of year, h homebuilders say traffic has slowed to a crawl. buyers are seeing no sense of urgency. mortgage rates started this week slightly higher again, according to mortgage news daily but all ears are on the fed later today. analysts say if they say nothing at all about slowing or stopping the rate hikes, that may mean it will be ugly for mortgage rates later today. becky? >> that explains a lot slight pull back on the chance that we'll read something into what the fed is saying today. >> return to the office is back in full swing. while is a serial tech

entrepreneur, why is he going into the remote world when we're trying to get back in person he started a successful venture and making a new bet on meeting technology zoom stock trading for below it's all-time high when people worked remotely during the height of the pandemic joining us right now howard lerman howard has been a successful entrepreneur over the years. but you showed me this new program, roam, which is a competitor of sorts of zoom, in a remote world what does it really look like to have a hybrid or remote workplace? and it's the first version of this i've ever seen that actually feels like you are close to replicating the

experience of working, frankly, if a physical office, but doing it online. my question to you, before we get into what it is, though, is why you've pursued this and are you a believer, ultimately, that we will -- for a very, very long time, if ever, move to a hybrid, if not completely remote world >> well, right now, andrew, there's a lot of debate about what the future of work looks like and i think nobody knows for certain exactly what that's going to be. what we do know is, it's never going to be the same i was at a dinner with 20 ceos and the topic of future of work came up. unanimously, they're all thinking about this. of the 20, about 10 said they're going back to the office, return to the office. but upon probing what return to the office really means, it turns out that means two or three days a week. one of them said they slack on monday to decide which day of the week they're all going to go in for the rest of the week.

one thing we know is that this 9:00 to 5:00 that we used to see is never going to return. >> are these ceos of small companies? >> small and medium-sized companies. when you look at the big companies, airbnb, they're fully remote forever, apple has said, let's come back to the office three days a week. what you're seeing is a different approach from these different kinds of companies and i think as we can build technologies that make the workflow more human, we're going to enable more remote work >> let's talk about roam there's some zoom elements to it there's some slack elements to it, and there's some new elements to it i don't know if we can get back on the screen what it looks like i was trying to explain to becky before what it is. i'm going to try to explain to our viewers and to you what it looks like this is -- maybe you can do the explanation. this is what the program looks

like -- >> who is -- >> this is what it feels like to be in an office. >> roam is a cloud headquarters. it lets companies be in the same hq from wherever they are. people can be remote, people can be in the office together, people can be in the field together any successful companies distributed and roam has three parts. it's configureable in your hq. you can set the number of floors in your floor plan you can set where people's offices are, the brand colors and all this stuff the map lets a user, all members see where all the other people are, so that you can go around and chat with people ad hoc. that is one of the huge problems with zoom. right now today, zoom is, you know -- things that should take two people today five minutes or scheduled for a zoom call for 30 minutes with five people next week >> that is a fair point. >> let me ask you this we were talking off camera too, and as we were trying to figure out -- as i was trying to figure out what this was, my question was, it sounds like a great

thing for employers because they can track where people are and who is really working and who is not. for employees maybe not so much. especially if you're somebody who gets your work done but maybe you're doing it at odd hours, you're going to know when i'm in front of my camera and when i'm doing my laundry or when i'm in the bathroom, walking my dog what happens you pop in and see if i'm sitting there. >> this is not about surveillance this is about being able to find and locate -- when you walk into an office, you can see all the people there and you get to choose, you can see two people talking and you can choose who you want to speak with the average meeting time, becky, in roam is 8 minutes and 34 seconds. imagine if your work life was eight-minute meetings -- >> that still sounds bad take out the meetings part. >> the average meeting is eight minutes. i agree with you i agree with you what we want to do is provide an office for people to work together without meeting

the problem with zoom, they've solved video conferencing but there's no ad hoc conversations. nobody can see what's going on there's all of these long prescheduled meetings for next week we want to work together -- people schedule zoom meetings because they can't work together without having, you know, a zoom meeting. we need to be able to find a way for the technology to support the human work flow -- >> this works best, i think, for offices where people have really at least prior were in house typically not necessarily for salespeople who are out of the office all the time. if you have engineers, if you have management, this works best for that kind of work right now. >> this works best for folks who are at a desk generally speaking that could be in an office, that could be, you know, remote, in a shared space, a flex space like a we work. what we want to do is provide one hq for everybody to work together under the same roof meeting times have tripled,

people aren't better at what they do when they spend all their time in video conferencing calls. we want to provide a way for folks to work together in one shared space without having to be in a meeting. >> my question about roam, long term, is, you've had a bunch of successful companies that you've started, some that you've taken public, some that you sold, some that are still independent, is this something that you want -- that you think gets a -- this is a ui layer that ultimately gets sold off to, like, a zoom? is this something that you end up buying -- in you're looking at some of the prices come down. how do you think about the future of this company >> what i'm so excited about, andrew, we're in the top of the first inning with the abilities and features that we've created. we have theaters, conference rooms. we're going to build interview rooms, we're going to build roam bots that let agents roam around and andinteract with employees.

we want to help people do a better job and ai can do that and different bots in roam can assist you if that happens think about an interview bot, sales bot. the sales bot to help you figure out which key words to say think about the ability for an interviewer to know which things to say in a meeting that can help assist you. and so these are the kinds of things that i'm so excited to build in roam. and the reason we're going after this is because the total adjustable market is massive every company on the planet needs it and we have the opportunity to redefine an entire market here. >> look at the publicly traded companies that are in this space right now and the valuations have come down do they make sense to you? >> well -- >> you would be happy to have that valuation, maybe? >> i'm not an expert what i know, we raised $30 million from a marquee investor who partnered with me for a decade has led the round i'm totally focused on building

a small company first. you have to build a small company in order to build a big company. see you on roam. appreciate it. coming up, president biden accusing big oil of war profiteering we'll talk about the idea of a profit windfall tax coming up now. futures are mixed. s&p flat, dow down, naup. according to the consumer price index for urban consumers, how much did candy and gum prices rise ahead of halloween year over year the answer when cnbc "squawk box" continues what do you... got there? a hospital bill for me? mm-hmm. for $1,200? ga-a-a-ap! did you say "gap"? yeah, he did. he's talking about expenses that health insurance doesn't cover. ga-a-a-ap! uh-uh. aflac! that's why there's aflac. it pays you money to help close that gap.

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>> announcer: now the answer to today's aflac trivia question. according to the consumer price index for urban consumers, how much did candy and gum prices rise ahead of halloween year over year? the answer, 13.1%. still to come, we're going to talk about president biden's oil windfall tax and everything

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president biden repeating his call for a windfall tax on the oil companies tweeting that they should stop war profiteering and give the american people a break at the pump let's bring in donna edwards, former acting chair. congresswoman, i'll start with you. the majors, the big oil companies, there's global supply and demand that sets the price of crude that then -- it goes out of the door, everything they've produced so they make them -- refiners and other companies for a lot of different reasons, everything else, that's where the gasoline prices come from so the majors aren't even involved with that does that factor into this idea in your view >> no, it really doesn't i mean it's a -- it's an entire system let's be clear

the president and i are not economists but what we are doing is expressing frustration that major oil companies have had not just profits, but ridiculous excess profit and it's at the expense of the american people because there's a war going on in ukraine and because russia and saudi arabia have colluded to keep oil prices down. and so nobody should be allowed to make excess profits over that and i think the president -- this is far from a proposal. but it is an idea that i think the american people share that there should not be this excessive profiteer that's going into stock buybacks, doing into dividends for shareholders instead of going into production so that the american people can get a break at the pump. >> right there's a lot to unpack there. it's not a serious proposal, obviously, because you need 60

votes in the senate. there is an election coming up so i guess carping about it is one thing. silicon valley companies have much higher profit margins, many, and there's -- maybe you say, well, it's not an essential service that they make, but moderna and pfizer made essential things during a pandemic and profited from that. the oil companies lost billions of dollars during the pandemic when a lot of production was shut in. and just in terms of a tax on something, congresswoman, there's an old expression, if you want less of something, tax it and regulate it we want more oil why would this be a time to penalize the producers who are the ones who need to help us alleviate the supply problems? >> what the producers need to do is to put some of that profit into production. i mean, i think that's what the president really said. there's not an idea that you're going to just tax profits.

if companies are putting money -- these energy companies are putting money into production, then i think it is appropriate to make sure that you provide the american people with a kind of relief that they deserve at the pump. >> you want to -- i don't know what you want to start >> so i think, you know, an oil cartel like opec, they raise profits by cutting supply, and there's a problem with the cartel is that you want to cheat on it, you want to sell lower and make a lot more than your buds what the biden administration essentially has done is enforced this cartel by mandating cuts in supply with their policies, essentially. that's why we're ending up here with very high profits it's basically a government enforcement of a cartel-like behavior if you look at these policies

they're proposing, it was tried by carter in 1980, he had a 70% tax above a certain price on profits, and we observed exactly what you predict would be observed when that happened, one was that domestic production went down, like you indicated. second was that imports went up. imports went up less than domestic went down so prices went up domestically as well. on top of it, such a policy substituting u.s. energy with foreign energy raises global warming which i don't think the administration is interested in. u.s. new jersey is a lot cleaner than the energy we get from abroad i don't know who is running the energy policy in the white house, but it's malpractice kind of material. >> congresswoman, it's a little bit odd to hear -- i agree we should increase production as

well one of the reasons there's been dividend increases and you can argue about whether share buy backs return money to shareholders, but the individuals that took it upon themselves to invest long term in the fossil fuel industry, they've had a real tough ten years politically and culturally and everything else. so they're almost forced into a position to cut back on long-term plans for production because the biden administration and president biden himself said he's going to end the fossil fuel industry. so it would have been crazy for your shareholders to just go ahead and keep producing that's why they return it in the form of dividends and share buybacks now there's a war, and the president -- instead of saying, i will end the fossil fuel industry, now he's complaining that they're not producing enough do you see the inconsistency in the -- in what this administration has done and

said >> no. not at all look, i -- neither i nor any american consumer is weeping crocodile tears for the energy industry they have known for decades that we need to wean ourselves off of fossil fuels many of them have actually started investing in renewables for that reason. because we do want to have a planet that we can live on but the reality is, if you make $20 billion in the last quarter, then surely some of that could be put in to ramping up production and that is the problem, we're at -- in an environment that is actually ripe for increasing domestic production precisely because companies will still get their profits, shareholders will still get their profits and just carve off some so that the american people get the benefit of that bargain too. >> as you just heard, i can't

say that the congresswoman speaks for all democrats, but let's say democrats now want a lot of production of oil they really want to drill, drill, drill, drill. if you were an oil company executive, would you have a lot of -- do you think that that's going to be what they're saying two years from now, three years from now, five years from now. would you make ten-year plans to increase production knowing you're going to be in a favored industry after they just said they were going to put you out of business last year? >> no, i mean, it's very frustrating for the companies. you have policies to lower their supply in the long run and now you're calling them war profiteers for not raising supplies i think it's more rhetoric before an election and i don't think even the white house can believe that this is a good policy to solve the problem they want to solve of lowering prices and increasing output. it's the exact opposite. on top of it, they're funding a

lot of demand subsidies, about 12 billion of which 4 1/2 billion is roughly going directly to consumers. that will presumably raise profits as well and lower demand prices, but supply prices of the sellers will likely go up through those subsidies. so i think, you know, i wouldn't -- if i was in a company, i wouldn't, you know -- this is kind of just rhetoric, i think. so i think -- i would just take the stance that they're going to continue to hammer down on me after the election >> okay. congresswoman, i'm trying to -- there must be -- i'm just trying to figure out how it would actually work, if there was a windfall profit tax. would you give a rebate to consumers or what would -- after you raise the taxes from the industry, then what do you do with it? i would -- i wonder whether you think it would be better to leave it with the oil companies to produce instead of the government trying to figure out something to do with that

windfall who would you rather have the windfall to use, the government or the oil company >> look, i think that there's -- the discussion around the windfall profits tax really only goes to those who decide that they are not going to invest in production if companies are doing that, there's no -- that is not a windfall that would not be taxed. and so i think that this is -- i think this discussion has gone the wrong way. what the president was saying -- and this is not -- i wouldn't say it's not a serious proposal. but obviously it's a proposal that would have to go through both chambers of the house and come back to the president for his signature. but the idea is that you incentivize production and you don't tax that production. i mean, it's pretty simple it's not like the government is going to take all the money from the -- profits from the oil industry, put it into production

and you don't have anything to worry about. >> congresswoman, thanks i don't think we've heard the last word on this. maybe the last word until next tuesday. but appreciate both of you being on what >> nothing that's right next tuesday we have election day coming up and election night special that we are looking forward to. we're going to talk more about it because we'll see you election night when we come back, though, we're going to run you through the names and results of companies reporting this morning plus, the federal reserve expected to raise interest rates by 75 basis points but also it could signal that it might begin to slow down the size of rate hikes in december. i don't know i'm skeptical about that we're going to find out what investors should be looking for, though you can get the best of "squawk box" in our daily podcast. follow "squawk pod " and you ca listen to us at any time stay tuned

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earnings' names which is down 8% or so. this is the maker of those high-end ski jackets the profits came in above estimates but it's the outlook that has the stock lower it cut its forecast due in part to a slowdown in china so those shares cutting some of those losses now, down 3.5% premarket. you have shares of paramount global roughly 160,000 shares of premarket volume the movie and tv studio missed both profit and revenue estimates, paramount was helped by big successes at the box office like "top gun: maverick." but it still had to spend more money on things like content and marketing. they're down 9% right now in the premarket trade. we're going to end with a check of yum brands which is up 1,000 shares of volume right now very thin trade.

this is the parent company of quick service restaurant brands, it reported profits that missed estimates. revenues were better than expected, though, and sales growth add established restaurant locations came in better than expected sales grew across each of its brands and just one more check for you before we leave, not earnings related. over the last couple of days, we've seen a jump in chinese internet tech-related names. shares of jd.com, baidu, pin duo din owe, among some of the gainers. of course, all of this, joe, was on those unsubstantiated reports, social media reports about possible easing of covid redu restrictions in company. agencies have denied it. we'll see if the momentum sticks up there if it was a positive day, joe, it would be the third winning

day in a row we'll keep an eye on those shares. >> cramer is not here to talk right now, but what do you think those philly fans are worth in terms of just -- what do you spot them because of those fans? i think it's like three runs a game you start 3-0 with those fans. >> not just that the astros got to get the bats heated up. >> when the people are screaming at you, i don't know if i would want to get ahead -- >> problem is they're used to what's happening with the eagles right now. hurts has all the time in the world to throw a ball. >> you got to hand it to them, that's a home field advantage. you would love to play there. >> and tim mcgraw was there. >> bryce harper, man the yankees could use bryce

harper oh, it's time for me to actually do something maybe i will coming up, it's fed day. we preview what investors should be listening for from fed chair jay powell this afternoon. and tom cotton joins us to talk inflation, u.s./china relations and much more. we'll be in studio in studio. sitting right next to us get your twitter accounts ready. we'll be right back. >> announcer: stocks to watch is sponsored by cla business takes balance we'll get you there. you ride the line between numbers and people. what's right for the business and what's best for everyone who depends on it. solving today's challenges while creating future opportunities. it takes balance. cla - cpas, consultants, and wealth advisors. we'll get you there.

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we're counting down to the fed's decision on rates today. that will be followed by a press conference and the tone and language at the conference will be the key for capital markets for more we want to bring in johnny fine, the americans for goldman sachs, and everybody knows this is going to be 75 basis points i think it would be breaking news if it was anything but, but everyone is waiting to hear what the next step is going to be and what the tone of the fed is. what are you hoping to hear and think is likely? >> 75 basis points clearly in the bag. i think what we're looking for is indications that the fed will moderate its hiking cycle from here, and instead of going in 75 basis point increments, moving tighter but in more standard

increments we'd be used to historically i'm looking for language that would suggest the fed is saying 75 basis points is extraordinary amount to hike, and they will be moderating from there albeit, continuing to hike further and further into 2023. >> what does that tell you let's say that they do something that explicit and say we're going to moderate from here, is that really a pivot or a pause or are they going to then emphasize that by the way, not only are we going to continue hiking rates, we're going to keep those rates higher for a much longer time if that's the message, how do the markets react. >> i agree, i don't think it's a pivot. i don't think it's a pause as of right now, the market is pricing in a combined 200 basis points of hiking between now and the march meeting. and the market's also pricing in 50 basis points of cuts in the second half of 2023. my guess is the fed is going to move more or less in line with how the market is expecting the next several months to look, but

i think he's going to be, as we get into '23 with the fed's hands cut to spur growth i think as you probably know, our own forecast is for another 175 basis points of combined tightening, and then a pause of activity, we see roughly a one in three chance of there being a recession in 2023. >> that doesn't necessaril sound you're in the camp thinking they're going to cut 50 basis points in the second half of next year if there's no recession, why in the world would they do that >> the u.s. economy has proven itself to be resilient at higher rates and i think i have an expectation that the u.s. economy will continue to be recentrev resilient. it probably gives more credence to the soft landing thesis, and gives credence to a thesis that

interest rates remain fairly stable at elevated levels throughout 2023. >> we're in that weird period where good news can sometimes mean bad news because if the economy is doing okay, if the jobs market is okay, that means the fed might have to continue to keep rates high, continue to hike how do you play it all out if they don't cut rates next year, is that good news or bad news what do you do when it comes to investing, either in the bond market or stop market? >> i think that even with an environment where we see continued growth, i think that there's real evidence that inflation can come down in 2023. i don't think it's going to come down dramatically, i don't think it's going to come down super fast i think there's an opportunity that the thread has to thread the needle and engineer a soft landing of a gradual closing of the workers gap without tipping the u.s. into a meaningful recession, and i think clearly if they do over tight sen and w move into a recessionary phase,

i think that could be fairly short and narrow, so in terms of opportunities, i think the fixed income will continue to be a place that will attract capital in 2023. it's obviously been a tough year in 2022. given the level of yields, i would expect the capital flows that have been sharply negative in '22 to become reversed and a tail wind for fixed income in 2023 >> one of your biggest market concerns is the phillies winning the world series >> i mean, becky, firstly, i'm a new york met fan so that would naturally give me a concern. secondarily, i think we know that the history of the phillies winning the world series and then obviously bad things happening in financial markets, that would be my chief concern >> 1980, 2008 and the philadelphia athletics in 1989, not a good track record, but really >> it's not the primary thing

i'm concerned about. there's things we think about moving into 2023, the reality is i'm going to borrow a phrase from donald trump, the unknown unknowns i don't think anyone had on their bingo card there would be hidden leverage in the uk pension system that would cause ripples in global risk appetite and global capital markets that obviously is something that played out those types of events, clearly you can't predict. i'm on the look out for these unknown unknowns >> johnny, thank you, and i'm sorry about your mets. >> thank you i appreciate it. great to see you thank you for having me on. >> take care. coming up, senator tom cotton is going to join us about president biden's proposed oil wind fall tax. and katie stks iocons going to tell us what she's seeing in the charts ahead of today's lock back decision. after this

good morning, it is fed day, investors primed for a rate hike from the central bank. we're going to tell you what to watch before and after the big decision new results from

glaxosmithkline, houmana and more less than a week to go before the midterm elections. we're going to talk about the gop priorities, if the party does take control in d.c. with arkansas senator tom cotton. 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, i'm joe kernen along with becky quick and andrew ross sorkin u.s. equity futures about what we have seen, wait and see mode. actually, the dow now is actually positive, had been down nothing much going on. nasdaq has been up 20 or so points for most of the morning. >> nothing to see here if there's something else on another channel, maybe a chicken

recipe or something over on the "today" show >> you never know what could happen >> at 2:00, something is going to happen. we know that the fed is meeting, and really you should be listening to our analysis of how we try and make a 75 basis point for sure increase interesting also. >> is he going to flinch >> is it 50 next time? i think it is. >> maybe. >> depending on what they say, i think it could be back to 75 >> or it's just the question of how long those rate hikes last we were just talking about how the market is betting on rate cuts in the second half of next year good luck with that. >> the fed is very aware, if it says anything that makes people question how strident they're going to be that the stock market could be up that's the last thing they want. the wealth effect and it makes it harder to, you know, slow down the economy so, you know, they're very aware. we certainly don't want any

stock market rallies >> it's just the perverse nature of news and the way things work, bad news is good, good is bad. fair is foul, foul is fair >> we've also got new earnings out this morning we want to show you a chart of cvs. that company posted third quarter revenue or profit, better than expected and raised adjust the full year guidance. that excludes charges to a settlement with the opioid litigation the company says it's going to pay $5 billion to resolve all existing claims related to the distribution of those drugs. the stock up 7/10 of a%, and by the way don't miss the interview with karen lynch and estee lauder, tumbling after a weaker than expected outlook they noted higher costs, stronger u.s. dollar and covid lockdowns in china they did report earnings above the street's expectations in the

latest quarter you've got deal news that's fallen through dupont ending its $5.2 billion buying material for engineering materials maker rogers it was terminated because the two sides were unable to obtain necessary regulatory clearances in china rogers, that stock off by more than 41% this morning. let's get back to the broader markets, joined now by mike santoli what are you watching this morning? something going on this afternoon, i don't know if you caught wind of that. >> it sort of held the indexes in check the last couple of days we're sitting on a 10% rally off the new bear market, also hovering right around the same level, 38.50 in the s&p where we were before the last fed meeting in the third week of september, so for now, you've kind of left behind that kind of messy area down by the recent lows. remember, that was helped along by the uk, pension issues, the

yen crashing there was all this sense out there that there was bigger systemic risks involved, proved not to be the case, at least in the moment, and we have managed to rally from there. so obviously market is very sensitive to the tone of what jay powell has to say. they keep talking about this has been a front loading effort of rate hikes at some point, you have done front loading. we'll see if that's today or in december take a look at smaller stocks versus the larger ones this has been a theme emerging as well. the 50 largest stocks in the market you see roughly until recently, and that's an aggressive move especially on a relative basis by smaller stocks. seems like they have taken their valuation hit on the earlier side a little bit of traction in the non-mega cap growth areas of the mark energy continues to be the very clear leadership sector along with some parts of health care in equities. take a look at the xle, the energy sector spider, against

crude oil. this is the last time we were at the xle. obviously we left behind the commodity itself, though, you can explain that by saying companies are very profitable at this level of crude. they're making more of it. production is actually quite high, higher than it was domestically except for one year, pre-pandemic, and natural gas until recently was also helping. i think it's also a little bit of a momentum situation. people are kind of crowding into energy, which is now very heavily weighted in the momentum strategies out there, joe. you can take that as a warning, or you can take that as, hey, energy's got it figured out above all else. >> i have the big overriding question for you we have a lot of good market activity in this great bond market rally that might be ending now i'm talking going back 30, 40 years. we've had great stock market

returns. could that shift over a ten-year period or because our technological advances come so fast and furious across the board, i.t., health care, retail, you name it, are we guaranteed 7% a year stock market appreciation over time or could we be in a reversion of the mean for ten years like some people think >> i wouldn't say you're guaranteed anything, and i don't know if you have to rely on a this time is different ant innovation moving things faster. i don't think the market is pr priced for particularly lousy returns. if you look at the models, the 60/40 portfolio, if you run the numbers, it's starting to look like it's going it give you 6% part of that is you're getting the help of having safe yield available to that portfolio right now. it's not just what stocks are going to do.

i don't know i don't think that we necessarily are in for some kind of prolonged ice age in returns. you're looking good on a three-year, two-year basis the market has done nothing. we never got not point at the peak where you were looking at a trailing ten-year return of the s&p at 18 to 20% that is when you had the lost decade coming after that. >> i don't want 6% in fixed income i'm wondering about equities themselves >> in that model, equities are 7-ish. >> okay. all right, we could live with that thanks, mike >> okay. meantime, we are expecting another 75 basis point interest rate hike from the fed today joining us to talk about how investors should try to position their portfolios ahead of the big decisions, sarah malac is here, chief investment officer i'll just ask you the question, how would you set yourself up? >> we expect two things today,

the 75 basis point hike, and any rally should be short lived, components remain sticky, particularly rents and that leads to the key risk in 2023, which are earnings growth estimates, unrealistic, over 5%. growth, we don't think that's attainable next year given that you need to position your portfolio in equities and companies that are resilient to earnings and have pricing power, so for example, companies in technology, like software area, and also defensive companies within the materials and industrial space those are areas we think can have pricing power passed through contracts and also resiliency to earnings >> what's your gamble, not just the 75 basis points, which i think is already baked into the cake, and would be a surprise obviously if it was more or less than that. but what jay powell ultimately says about what he's going to do next >> i think it's going to be a balance because if they're two dovish, that leads to a market rally that could be

inflationary i think they're going to be balanced, the peak in terms of hawkish rate hikes and 75 basis points i don't think they're going to guarantee a pivot in 2023. it depends on the data, and the path from inflation to 8% toward 5%, may be easy. but getting their target rate is challenging. that's why we think there could be up side to the terminal rate when it comes to the fed funds rate we could get the moderate tail of moderate rate hikes and that leads to lower earnings growth, manufacturing data that continues to slide into recessionary territory and finally employment crackings. >> so i don't misunderstand you. it sounds like you're saying the market is too high right now . >> yeah, i think that's because of earnings that are too high going into 2023 and that leads to valuations being too high what we just witnessed is likely a bear market rally. any rally going forward because of fed commentary, and another bear market rally. >> what's your downside expectation? let's say over the next 12

months and to the extent you have any up side expectation, which sounds like you don't, but if you were to, and what percentage you sort of put on something to do happening? >> we can see the s&p 500 going down to the low 3,000s, based on earnings cracking and manufacturing and employment data on the up side, it really depends on inflation if we can get that inflation number down to the fed's target level, then the fed pauses if we hit a recession, the fed pivots in that case, if inflation is low enough. our risk is that inflation hits a moderate level in the 4 to 5% range. we do hit a recession as we see manufacturing data move to traction naterritory. >> when you think about being a long time investor, we're talking about short-term, how do you position yourself right this moment if you were to position yourself two to three years out, there's people that would say things should get better, and you would hope that they would, but then

there's others that have a view that we will be living in some version of stagflation for a very long time. >> there's still going to be companies that can outperform in the areas. we talked about software and materials. linda, which is an industrial gas company. we saw them raise last week. they think their guidance is conservative they have pricing power, margin resilience they have a clean energy growth story, and they pay a nice dividend yield of 1 1/2% service in another company, beat and raised 98 renewal rates. low m and a. as vendors consolidate in a potential recession, they're going to move towards companies like service now you can find companies that will continue to do well in the environment but you need to be more selective. >> saira, it's great to see you. we'll see what happens a little bit later. thanks. we've got breaking jobs news, the october plmeemoynt report that's right after this. we'll be right back.

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box," you're looking at relatively flat futures. dow down by 20, s&p up by less than 1 the nasdaq up by 12. we're keeping an eye on the small caps today the russell 2000 has posted seven positive sessions out of the last eight we'll keep an eye on that as well obviously the fed decision later today is a huge issue. also any report we can get telling us about the health of the jobs, and that's what we're getting right now. it is time for the october employment report. steve liesman is here. >> 2,089 pieces, in the month of october, rise big 239,000. they revised down their estimate for september, 292,000 from 208,000. this is the revamped adp number where it's not trying to forecast the government's payroll. just saying what happened to the universe of employees went up or down what you'll find here is that it was very focused on one

particular sector here leisure and hospitality. we'll get to that in a second. the good sector fell by 8,000, service is up by 247,000 you can see that against the 205,000, which is the forecast for friday for the payroll number in line, but remember adp here is not gauging what happened to the government finally going on looking at the individual sectors here. leisure and hospitality by 210,000. trade transport and utilities up by 84,000. i skipped over business side natural resources and mining, maybe some additional drilling going on that's a good sign 11,000, and information and manufacturing declining by 20,000 we also are now getting a gauge of pay increases you can see they're still pretty healthy, those remaining in the same job, up by 7.7% job changers up 15.2%. adp says both numbers are down from where they were previously

but still pretty high. these are still, becky, pretty strong payroll numbers you have to say going along with the jolts number we got yesterday. it's hard to see in these numbers, and even if the bls number comes in on friday, it still says the job market is pretty strong. >> that's certainly the picture we're getting. markets down not by a lot dow went from down a little to down 46 points s&p was up a point, now down by 4. the nasdaq off by about 12, but of course the big read for the market is going to be what jay powell has to say about this later today and what his sentiment seems to be. steve, thank you. >> pleasure. official chinese media dismissing speculation about a possible exit plan from the country's zero covid strategy. excited about it yesterday now you're going to throw some cold water on that, huh?

>> reporter: well, it wasn't just me. it's also the official news media here just kidding the reports were unverified and of course had goosed the markets, and today the markets had rallied again on more unverified social media posts about a potential easing of zero covid restrictions some of the official posts suggested that there were two chinese brokerages reporting that there would be upcoming changes, including a possible meeting this friday to a shortened kwquarantine for overseas travelers both brokerages have dismissed the post and an influential financial news outlet dismissed those reports without actually referring to the content of the report this comes as the foreign ministry also had been asked about some of these rumors and even though they said they weren't aware of these rumors, those words and the question

were not included in an official readout from the foreign ministry in chinese and english. all of this suggests beijing does not want the information out there for the chinese public to see separate to that, the zero covid controls continue to constrain business it was only a day after the city of of zhengzhou, the iphone plant, had its effective lock down, and said it would, and now the industrial zone that houses the foxconn factory is imposing a seven-day lockdown on the area it's very very strict. you can't even long beeave your at all, even to buy groceries and the only reason why you would be able to go out is to take part in some of the mass testing, which is going to happen every day in addition to that, neo, said

that it suspended production for its factories in a different part of the country but still because of these covid curbs. >> eunice, leave it there. we'll check back with you if not later today, tomorrow, good to have you on. thanks we got a lot coming up arkansas gop senator tom cotton is going to join us right here live on the set. we'll talk to him in a minute. midterms, the balance of congress, less than a week to go before election day. he's going to respond to president biden's call to hit oil companies with a windfall profits tax if they don't pass savings on to consumers. a reminder, as we head to break, you can get the best of "squawk stas on our daily podct. lien anytime a beautiful shot of the capitol right there. we're back after this.

. when we come back, are the markets setting up for a strong finish to 2022, coming off the dow's best month in more than 45 years. this morning down a little bit we'll see what happens after the fed decision we're going to ask our chart master, katie stockton what she sees. next, republican senator tom cotton joins us to talk energy, inflation, the midterms and much more right here on set nvsas get to join thi coertion in just a moment. you're watching "squawk box" and

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six days until the midterm elections, a new "wall street journal" poll shows republicans edging ahead of democratic candidates, a reversal from back

in august. a new poll was taken between october 22nd and 26th. joining us now, senator tom cotton of arkansas, and his new book published yesterday called "own the strong, reversing the plot to sabotage american power," we'll see what he really thinks in a second it's good to have you. i saw the latest rcp senate poll it has 54 republicans at this point. 46 democrats, that's a big change in the last month. >> yeah, i mean, i think the american people are about to deliver a very resounding verdict against joe biden and the democrats ideological agenda they're struggling to feed their families, to fill up their gas tanks, to afford their rent and utility bills. they're worried about their safety on their streets and kids to parks with the drugs and crimes and homelessness we have. the democrats don't have answers for this, and in fact, the democrats are behind a lot of these problems i think you're going to see a very large victory for republicans next week. >> the house, similar numbers

or >> sure. when i got into new york a couple of nights ago to launch my book, only the strong, i turned on the nightly news and it was wall-to-wall commercials for house districts in new york, and connecticut, in new jersey, that joe biden won by 15 or 20 points. >> you think new hampshire. >> i think don bolduc is going to beat maggie hassan. a rubber stamp for joe biden, just like all the senators have. kyrsten sinema has on occasion, could have put her foot down, the same way raphael warnock or scott kelly, but in the end, they went along with the democrats' ideological agenda. >> we want to talk about the book, and you know, what your basic points are can we just talk about the latest news and that was the windfall profits initiative. you need 60 senators, wouldn't you? was it a serious proposal?

>> it's not a serious proposal it's joe biden trying to salvage a little bit before the election because the american people are worried about gas prices the plot to sabotage american power, so much of the progressive left is ambivalent about america, certainly about our history, and therefore they're openly hostile to sources of power to include american energy which powers our economy. when the lights go out, the power is out and joe biden promised to eliminate fossil fuel production in america, and this windfall profits tax may be the latest gimmick, but there's a reason why production is so strained in america, why you're pay 3.50, $4 for gas, $5.06 in the coast. the progressive left has waged a campaign against fossil fuel production in america. the gas prices are not an accident this is what the left wants.

>> how much of that is a function, and i don't disagree that clearly the biden administration's policy has been to end fossil fuels as quickly as possible. i don't think he was planning to end it tomorrow, but if he could have, he probably would have the question is how much is a function of what's happening in ukraine, what's happening in europe, what you think is flowing over here, what you think in terms of -- i'm not arguing for a profits windfall tax, you look at the procfits te oil companies are making, there's a lot of parts. >> most is the result of bad policy choices by liberal democrats what happens in global markets and ukraine has some effect democrats have been waging a war on energy for a long time. barack obama said he wanted to bankrupt coal companies. you talk about profits of oil companies. the simplest way to get oil companies profits down is get the price of oil down and the way to do that is produce more oil and refineries

the reason we have a challenge with refineries is we haven't built new refineries in a long time >> are you an advocate of clean tech at all, and how do you get to that? advocate the transition, how you do the transition, you think there's no transition even needed. >> we're not going to transition from oil and gas and coal and nuclear power. >> ever? >> no, we can never get entirely off those sources of energy, certainly not in our lifetime. wind and solar can provide some supplement to our grid, but they're never going to replace oil and gas and coal and nuclear power, which provide reliable, stable, affordable base load of power. i mean, a lot of times the sun doesn't shine or at nighttime or the wind doesn't blow or snow covers your solar panels, i thought a good kind of parody almost of the progressive's left energy policy that i write about is california one week passed a

law mandating that gasoline power vehicles be eliminated and the next week, don't charge your electric vehicles between the hours of 4:00 and 9:00 >> because of strains on the grid >> these people couldn't change a lightbulb or a tire, much less redesign an entire electrical grid. >> i didn't look at the source, and i didn't confirm, but i saw that you need 60,000 miles on an electric vehicle you need to get to 60,000 before your carbon is less. 60 and above that, it's lower. >> do you believe in climate change i think he does. >> i'm not talking -- i didn't say one thing about that do you want to start something all i said is if it takes 60,000 miles to get to where you're benefitting the carbon footprint, know that that you need 65,000, 70. the first 60,000 miles, a gas powered vehicle is just as clean or cleaner >> the climate is always changing and the best evidence

suggests that it's been warming up some over the last 200 to 250 years, which is to say the period in which human productivity and quality of life has increased exponentially, and the reason it has is the development of coal and turbines and 18th century, oil and gas, the nuclear power in the 20th century but continued production of fossil fuels here in america where we produce it more cleanly than anywhere else until the world and the innovation and productivity growth we get from that is the best way to address any challenges from a changing climate. quality of life and living standards for our founders and jesus' disciples aren't that different. only in the last 200 years that you have had normal working citizens be able to enjoy the benefits of widely shared prosperity, and it's literally because american energy powers our economic growth. >> let's just switch gears

completely the election season starts wednesday. >> feels to me like we're in the middle of an election season joe. >> the next one. already the next one, i'm talking about for 2024 some people are saying they're predicting a trump-biden rematch. do you think that's possible >> let's wait until wednesday to talk about the next election >> not wait until next year. just wait until wednesday. >> i'll say this, anybody who wants to -- >> who's the leader of the republican party right now >> anybody who wants to run for the presidency should get a copy of "only the strong" to restore it. >> when you're in the opposition, don't have the white house and don't have the congress, off lot of voices blooming when you get into a presidential election season, a party develops its nominee, that person becomes the leader and the spokesperson of the party. >> are you surprised that he, i think there was an appeal from

other republicans to not declare if you're going to do it again in 2024, former president trump, wait until after the midterms, do you think he actually listened and waited for the good of the party i'm not saying it's uncharacteristic, but normally he would do something that he thought would -- >> in my conversations with the former president, i know he's very committed to winning back majorities in the house and senate he has been focused on that. >> what about winning back the white house. >> i'm sure he wants to win back the white house for the party, but i know he wants to win back the house and senate because he sees the damage inflicted on america. >> if he was the eventual nominee, you would support him again, even after everything that happened. >> i'll support the republican nominee in 2024. >> i want to ask you about breaking news "the new york times" reported this morning, suggesting that russian officials, russian military leaders, not including putin have been discussing the use of nuclear weapons. i think these are tactical nuclear weapons. putin wasn't involved in the

conversation i wonder how much to worry about this is this more than putin's bluster. >> we need to be worried about our nuclear adversaries, as we were throughout the cold war thus far werchl haven't seen rua moving tactical nuclear weapons. smaller nuclear weapons that can fit on a mortal shell, but it's something we need to be mindful of at the same time, as i explain in "only the strong," we also can't be scared into submission about it, just like we weren't during the cold war. the way to deter aggression, whether it's the conventional aggression of tanks and artillery and aircraft that you see in ukraine or nuclear aggression, is to be strong and resolute. >> let's talk about immigration in that i was watching last night, saw j.d. vance at a town hall with j.d. vance and tim ryan, and all j.d. vance talked

about, he parroted exactly what you want to do with immigration. what's your plan how do you want to fix illegal, and how do you want to fix legal? >> first off, we have an emergency at our southern border we have had 5 million illegal aliens cross since joe biden came into auchs. i -- into office last year we had over 100,000 drug deaths in this country, almost twice as many people died in the entire vietnam war. it is an emergency ch w we have to secure our border we have to crack down on fentanyl traffickers in america. i would suggest we need to take the fight to the cartels themselves >> designated a terrorist organization >> let me ask you this, what would you do if al qaeda or isis set up shop in monterey or tijuana and was responsible for killing 100,000 americans a year there is a precedent for this. it's well known that american

special forces were present when el chapo was captured a few years ago. they were present when pablo escobar was killed in the 1990s. we overthrew an entire go government in panama because of drug trafficking. >> you don't think -- >> i have long advocated that we need to remake our legal immigration system almost all the green cards we give out are almost by accident or luck or chance. either through chain migration, for extended family members, or for the diversity lottery. 1 in 14 do we give out because of the skills one brings to the country. i have legislation that would change the system to something more like what canada and australia have. >> is it possible it ever passes >> right now, until we address the emergency and the crisis at the border it's hard to address any other facet of immigration. >> senator, i want to ask you about the polarization in the country, and we talk about social media, we were talking

about twitter and what's going on there but not just what's happening on social media but how it's manifesting itself in reality. the attack on paul pelosi obviously was intended for nancy pelosi, the way certain sides of this have reacted, i think you saw kari lake effectively making fun of paul pelosi, putting this whole thing in light, as opposed to taking it as seriously as i would think you would want, i'm sure that the other side would say, look at kavanaugh and others >> he didn't even have a gun they discount it had. >> what's going on and what do you think of this? >> well, i mean, first off, i'm very sorry about what happened to paul pelosi, and i wish him a full and rapid recovery. political violence is serious. violence is serious. if you look at paul pelosi, first off he shouldn't have been in the country he was an illegal alien who had overstayed his visa.

san francisco is a sanctuary city he's a deranged lunatic, he shouldn't have been on the streets. everyone should be able to walk the streets safely, not just the speaker's husband. not just a supreme court justice. these men and women outside your window should be able to get on a subway, without being shoved on a subway train without having to worry about being carjacked we need to crack down on crime, and get tougher, not just here in new york or san francisco but all across the country. >> i guess we can wrap in a twitter conversation with a big tech conversation with a china conversation we put it all together is that in the book as well? >> talk a lot especially. >> what do we need for content moderation, should there be content moderation, is it all covered -- >> i think elon said last week, after he closed on the deal, it's not going to be a free for all, he's not going to allow incendiary speech. >> will you pay $8 for an

account? >> i haven't given it any thought yet. >> will you pay $8 for an account? >> we were talking about it. i might. could you expense it. >> you can't expense it. >> could you expense it back to the taxpayer as a marketing vehicle, or not a marketing vehicle but sort of communication vehicle the same way i assume your office would expense the telephone. right? >> it's $96 a year, andrew >> this is a question, but then you do it for the whole staff. >> no, i know. he's got a budget. everyone's got a budget. we're trying to figure out what works, what does do you think $8 makes sense? there's a separate issue if it's a town square, you made this point earlier, if you have to pay to be part of the town square, it's not a town square. >> it's an elitist institutions at that point. >> i think the $8 just for your coveted blue check mark, not a matter of being part of the town square. >> but you get a louder amplification if you pay >> i wish elon all the best and success at twitter and being able to turn it into what would

be a genuine viewpoint neutral forum for people to have debates, it's clear that twitter, especially some of the information we have seen coming out about their collusion with left wing officials at the department of homeland security are designed to suppress information that the administration doesn't want out there. that's not what a town square is that's not what genuine free speech should be. >> sell and make a lot of teslas in china >> they do >> how can elon musk be as tough -- i mean, that's a nice way of putting it. how can he be tough on china how do we know he's not nicer to china? >> be better to make here in north america. >> do you think china's all over big tech in terms of their interests? >> so big tech has a complicated relationship with china because in many cases china has kicked them out some companies like apple are deeply intertwined with china. some are largely banned from

china. china's tentacles throughout our economy and our society, i speak about the china lobby, and it's not multinationals who have outsourced production. it's university presidents who depend on full freight tuition paying chinese nationals. >> tiktok be banned. >> i don't think we should have tiktok, no. >> you don't think tiktok should exist. >> obviously it's under the thumb of the chinese communists it, it can be used in ways to harm americans, especially young americans who don't know any better i think parents in this country deserve protection for their kids from harms that may be lasting for their entire life. >> i was going to ask you about antitrust and sort of regulatory -- the regulatory scheme in this country do you think there's enough or the right type of competition just yesterday, symon and sh--

simon & schuster how do you see what this administration is doing and how you would do it. there's some bipartisan agreement. some people think big tech is too big. >> i haven't gotten deeply into simon & schuster things like the kroger, albertson's merger. >> you're an author now. they were trying to protect authors in that case, more than consumers. >> what does worry me is the prospect of trying to use antitrust for something other than promoting consumer welfare and the health of the markets. there's some in congress, especially in the democratic party who are agitating the department of justice and the federal trade commissions to use antitrust laws, again, to kind of regulate viewpoints and content, and that's not the point of our antitrust laws. >> are you going to run for president in 2024? >> well, we've got an election six days away, so i'll focus on that election for now. >> the house would be tall

it's helped to be tall you're 6'5", right. >> as i said earlier, anyone who wants to run for president should pick up a copy of "only the strong,". >> goold to d to have you. the book "only the strong" senator tom cotton, thanks. >> thank you for having me men we're going to get jim cramer's take on the trade ahead. and katie stockton, whether she thinkings the market's october momentum can roll on through the end of this year u' wchuned yoreating "squawk box" here on cnbc we're live from the nasdaq market site in times square. i promise to serve, not sell. i promise our relationship will be one of partnership and trust. i am a fiduciary, not just some of the time, but all of the time. charles schwab is proud to support the independent financial advisors who are passionately dedicated to helping people achieve their financial goals.

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jim cramer joins us now, lots to chew on, the big thing we'll be chewing on, the federal reserve and what jay powell may or may not say what are you looking at? >> i got to tell you, i just keep thinking that things are too hot. everybody expects things are too hot. i want to see three quarters and data dependent i think that moves the market higher if we get three quarters and then we continue to be very concerned and we'll have to continue to take action, then i think we're going to give up a lot of what has been the nontech selloff increase remember, tech has been bad. but nontech has been good. i would hate to see nontech join

tech in the decline. so 3/4 and data dependent, and i think we're home free. but 3/4 and more vigilant, then i think we have a sell off >> and why do you think he won't say more vigilant? i mean, he's been on the vigilance curve the whole time you think this is the time he's going to let up? i'm not so sure. >> well, i know. i mean, i'm hoping for 94, 95. take it up, take it up, and say, look, let's just see what happens, and then it turns out that things started running cooler there's nothing that indicates right now that things are running cooler, other than the decline in refinance i hear you i guess that maybe i'm being too bullish and even hoping that he'll give us data dependent >> right >> because there's no data that is going the way of the bull ship but there just isn't there just isn't. >> different data point this

morning, you like cvs? >> yeah, i think that she continues to impress the stock was up very big, maybe came down on the opioid. here's a person that has converted what is without a doubt a terrible, we know, pandemic into sales, and we didd not see the same thing at walgreens. i'm trying to figure out why walgreens has not been able to capture share, and cvs has i think that krfz is in good shape. the earlier rally was terrific i want to see walgreens bounce here because i'm rooting for them, but cvs is very good that will be a great interview >> we saw meta move higher there's been this debate about tiktok if tiktok gets eliminated, maybe it provides opportunity for the others, but how do you even bet on that one way or the other >> well, i mean, you know, meta is -- i don't want to call it a sinking ship, but obviously, meta is taking a very long-term

view, too long for everybody the big break would be if tiktok were limited holy cow that's too much to hope for. i just -- it's just too much to hope for i don't think that the government's more interested in data center than it is tiktok. >> we got to run you paying $8 for a blue check mark on your twitter account >> i'll say yes, okay? it's a very little bit of money, and it does matter to me >> jim cramer, we'll see you in just a couple minutes. up next, we're going to talk to katie stockton. she'll tell us what the charts are telling her when "squawk box" returns ♪ ♪ ♪ ♪ introducing ihg one rewards. seventeen hotel brands.

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our next guest says the recent relief rally has some legs joining us right now for what she's seeing in the charts is katie stockton she's the founder and managing partner at fair lead strategies and now a cnbc contributor, and katie, first of all, welcome it's great to have you here as a contributor. good news for us >> thank you so much, becky. >> second of all, good, welcome news to a lot of people if you think this relief rally really does have legs what are you reading >> yeah, i think so. i mean, it definitely has the support of positive short-term momentum and for that, we have an indicator that we watch very,

very closely we're putting a lot of weight on that indicator right now as soon as it rolls over, we'd be quick to reduce any countertrend positions, so we're keeping that on our side, and for now, it does pointed higher, even if we see volatility today on the back of the fed meeting, we don't expect it to impact this one indicator in particular we've already seen a nice little break by the s&p 500, and 3914 resistance, which is what we've been watching, does look surmountable, and that will turn our attention to the 200-day moving average which repelled relief rally over the summer we're looking for a retest of the 200-day moving average but really adhering to that momentum indicator to help us know when we need to start managing risk again. >> what are the two paths? if it breaks through, if it doesn't manage to do that, what's the next reaction for the market >> yeah, well, listen, initial support is still around that

35.05 level that was tested successfully at the end of september. that's an important level but not as important as 3,200, which is targeted from a previous breakdown, so we still think that will see 3,200 before this bear market cycle culminates and that's based on a previous breakdown. but in the interim, we do think that we could see even several weeks out of this relief rally, and we say that not just because of that short-term momentum but also because we have some positive seasonal influences, an election, and just the time of year where i doubt we're going to get that volatility spike before year-end. but unfortunately, the analog to 2008, according to the vicks, is still holding true, meaning that we could see on the back of this relief rally a pretty decent move in volatility >> when do you think that would pick up, if volatility does spike further? >> yeah, you know, there's no way of knowing, but i would say it would be natural, maybe at the start of the new year. so, we'll be watching, again, those short-term momentum gauges

to sort of help us trigger that volatility event, and we'll be positioned very much riskoff when that happens. for now, i feel we have a bit of a gift from the market, selling opportunity for stocks that have broken down, of which there are many >> you know, one of the things we're kind of watching in the month of october was thinking it could be a spooky, scary month, just historically, you see bad things happen in the month of october. that was not the case. the dow actually put in its best performance, up 14%, best performance since january of 1976 what were you watching for in october? was there a point where you said, okay, this is really good, and it's not coming back >> yeah, well, we were looking for some kind of low, not a major low, but a minor low, which is what we we have now, and even though october does have a bad reputation, just like september, it also tends to be what they call a bear killer we don't think it's killed the bear entirely, but at least temporarily, and you know, the old adage, sell in may, go away,

it would suggest that you come back in october. so, off an october low, you tend to get decent follow-through in q4, so october, we're glad it's over with all that volatility and we hope to seeless volatility, of course, coming into the year-end positioning. >> all bets could be off with the fed decision today i think the markets are anticipating some sort of signal that the fed is going to be down with 75 basis point hikes or they're not long for this world with those sort of hikes what would you see that would kind of change your mind entirely i know you're planning on some volatility coming up, but what would make you say, uh-oh, you really got to rethink this >> it's that one trusty short-term momentum gauge. if we see enough of a reaction that it leads to a downturn for those of you that are chartists, it's the dmac indicator. that would be a risk metric. if it's a big enough volatilit event that it does lead to that kind of sell signal, we'd certainly respect that but for now, we're just looking

for the mega caps to start to come back into those gaps down in response to earnings, and we do feel that overall, earnings have been generally well received, except for those high-profile gaps down, so we think this is a market that is somewhat hungry for good news, or they might read some bad news and have a shred of good news in it >> yeah. >> wow so, you feel -- you do feel a little better? i'd ask you about, the ten-year, near high or no? >> the ten-year, i mean, it's doing what we would have expected because it had this countertrend signal so we're looking for more consolidation there, sort of sideways to lower with initial support for ten-year yields around 3.5% so we could see a continued bid, underlying bid to equities jus as a bit of a boost. at the same time, we're looking for more consolidation from the dollar so, at the same time, you could see that trade, bit of a tail

wind near midterm. >> katie, thank you. we will talk to you again soon >> sounds good >> by the way, folks, let's take a final look at the markets this morning. right now, the futures are a little weaker for the dow and the s&p, little stronger for the nasdaq you have the fed meeting coming up we just heard from adp that number was stronger than anticipated. we will see you right back here tomorrow right now, it's time for "squawk on the street. ♪ good wednesday morning, everybody. welcome to "squawk on the street," i'm david faber with jim cramer, and we are live from the new york stock exchange. carl has the morning off let's give you a quick look at futures. we start trading one half hour from today jim and i like to call hump day. let's get to the road map. it starts with the decision day for the fed and of course another big rate hike is expected this afternoon. one question, though, is, will policymakers moderate tightening in the future?