yesterday. i guess 50-49, not 51-49 in the georgia runoff, we'll talk about what that means for the president's economic agenda. it's wednesday, september 7th, that's a day that will live in infamy. george h.w. bush talked about december 7 it is pearl harbor day if you're alive, you'll never forget i wasn't, but i heard it from my dad. we begin right now ♪ good morning, everyone 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.

if you take a look at u.s. equity futures this morning, as joe mentioned, we're looking at it some red arrows these are pretty modest declines, but it comes after the declines we saw yesterday. right now the dow jones is down by 33, nasdaq by 33, the sup by 7. the s&p was down yesterday by 1.4% you see the declines continuing. it has been several days in a row we've seen pressure on the daily averages if you've seen what's happening with the treasury yields, they picked up a little bit the 10-year is at 3.537% the 2-year is at 4.347%. >> look at oil does it mean the fed's got to still be tougher because now the global growth looks like it could be better. >> it's still 73. >> 73. i don't understand that. >> how long is that the case

for? you talk about transitory. you have to pray that that's transitory you have to pray that the china situation is transitory. >> and l.a. might take down ch china's position as the lockdown state. >> are they back to indoor masking? >> did you see what it says? no, not yet. but it's coronavirus epidemic that koers both, rsvs and covid in addition. we may be masking forever. >> rsv, flu. especially with small kids who were never exposed some of these things like they would have been normally three years worth of infections taking place at once if you have little kids, it's a big deal. >> i'm glad to be here right now. i threw off the shackles of that jacket. >> what are you talking snb. >> so restricting? >> now i'm not going to be able to breathe again because i've got to hold everything in.

>> why don't you get a new jacket. >> you could have made the fashion faux pas i made. >> they know nothing that way this tape can be played forever and she'll be wearing a carol burnett's draft outfit. >> this can be the shirt i never forget. >> what can you say about the shirt? >> that she can hide in the jungle and no one can see her. >> i brought this on myself. this is totally my fault. >> i like it am i allowed to say that >> i'll take it. >> i'm ambivalent. >> make me feel better. >> i had a friend who emailed my wife about the tie and said never again. i love your husband, but, that tie n in the garbage.

>> they're going to move us on, i feel it coming >> talking about china and energy and everything else, covid restrictions there, that continues overnight, the parties saying the people will no longer need to show negative tests to travel to three different parts of the country the new rules bar them from shutting down businesses and restricting residents do go about their daily lives. formulating other covid controls including allowing more people to quarantine at home. in some cases, progress being made, but there could be a temporary -- some period of time that's going to be, you know, a big, big challenge there health-wise. >> it will be time for aza-know-nothing moment. maybe i'll do it in terms of the fed as they keep raising -- putting us into a recession. >> i'm ready for it. maybe wait till tomorrow so i can wear something different. >> you would be happy if this was the moment that was

preserved. you're looking good. the tie is centered. you're looking good? >> i never thought about it in the context of the clothing. >> it's more in the hair the makeup nbc projects warnock will hold onto the seat in georgia, defeating republican challenger herschel walk never yesterday's runoff election. that gives democrats a 51-49 win in the senate. they'll be on the key senate decisions and could lessen the outside wielding remember senator joe manchin and kyrsten sinema no long letter be that sort of swing vote where they had so much power a lot of senators up two years. it's crazy a lot of them. a lot of vulnerable, i guess, democrats, not as many

vulnerable republicans we're back on. an election's coming we're in election season. >> as it's been three weeks since the last one. let's talk about stocks we're watching, database, mongodb. it beat the street's expectations of a loss of 17 cents and the revenue number too. the company raised its full year guidance to an expected net loss to a profit. mongodb is a former disrupter. the ceo is up in the 11:00 hour. then there are shares of dave & buster's after they beat estimates in the third quarter and revenue rose to a record $481 million they said so far walk-in sales have dropped by 2.4% compared to

a year ago the stock is off by 3.9% pinterest has reached a deal with elliott management after they offered ideas on how to improve operations at the company. as part of the agreement, elliot portfolio manager mark steinman will join the pinterest board. the stock up. larry fink of blackrock facing calls to resign the uk-based investment firm releasing a let their it sent to fink last month. bluebell which holds roughly $250 million in assets and is known for waging campaigns against prominent companies argues that blackrock changed positions several times on investing in thermal coal production now, in a statement to cnn bc, blackrock says in the past 18 month, bluebell has waged a number of campaigns. we did not consider them to be

in the best economic interests of our clients so talk about bedfellows or strange bedfellows these folks are effectively saying -- >> coming at it from the left. >> this is what's so interesting. in the last six moths, blackrock has been taking it from the right. by the way -- and they've been taking it from the left. state of new york. i think new york controller. and others have sent in letters. now this is an activist fund effectively trying to make an activist campaign. >> they haven't done enough. loi tv response. we would not let esg influence or investment decisions and our fiduciary responsibility to maximize shareholder value that's what the whole issue is w the people attacking him from the other side the plan is to maximize your return, and by not making it all about esg, you're not

maximizing. >> i'm going to say this one time. >> you see what i'm saying. >> i believe -- i mean this as genuinely as i can humanly say it i truly believe that his -- and this is larry fink in blac blackrock's policy or pioneering conversation around climate and things, was focused on the fiduciary side of it, meaning what he was saying for the last ten years is i believe that climate is going to be a good i investment, and the truth is it has turned out to be a good investment. >> i wouldn't argue with that. because he thought public pollingcy was going to push things >> exactly but we have seen where good intentions lead. >> hopefully to good places. >> over in europe, it hasn't near term. allowing putin to have all that leverage because they aban doned the legacy energy to try to quickly transition has put us into the pickle we're in right

now. >> but i think that has put a laser focus. >> blackrock shares a lot of the blame for that. >> but i think everybody sees the problems in europe and does not want to repeat it. that's why larry fink says fossil fuels are going to be around for the next several years. by the way, a $250 million stake? it's less than a quarter of a percent. >> let's talk about the catastrophic aspect of climate change there's still a debate that goes on about that. if larry fink has a hysterical view in his own mind of what he needs to do to protect his clients from the rising seas and that ends up hurting shareholder value, i don't care about larry fink's opinion on this. >> that's not what he's saying >> he's making a decision that may be dead wrong for all these clients that -- >> what about what we hear from -- >> he's voting the shares of these proxy materials. >> what about darius adamzck.

>> where is he from in. >> north carolina. if you're somebody who's trying to do business and every ceo says they want to do this because they're being tasked and public policy and where's the money going in washington -- >> there's going to be pressure from those and it's already started. it's probably been more prevalent from the other side of you're crazyto not -- for ever darius agenda, there's a jimy dimon agenda >> i don't think what darius said and what janie said are counter counterintuitive. >> to each other. >> to each other i don't think that what they're saying contradicts i think what darius says is i'm doing what customers tell me they want. if there's a market for it, i'm going to sell it. >> the funny thing is in all politics, it's funny to see where a moderate person can be

attacked from. it can be the right or left. in this case, i read it. oh, good they're holding blackrock's feet to the fire. i'm like, oh, my god, it's from the other side he hasn't gone left enough. >> go look at the voting record. >> i know. they should be mad i've seen that criticism of blackrock. when push comes to shove, he's still in bed with fossil fuels and guns and everything else. >> he's been writing these letters, which have created a conversation in the courtroom. >> singing a lot of virtue, so much that he might be the virtuous person i've ever met. >> can we go back to the therapy? >> yeah, what happened to that. coming up later this hourer, a former secretary is going to talk about an issue we heard from several cfos. first, brian sullivan is in the

netherlands reporting on the energy crisis. brian, what have you got >> reporter: let me add another layer to the fiery discuss you had, guys. what if you're one of the world's biggest fossil fuel companies like shell and you're taking your fossil fuel money and spending a third of it on renewables and maybe the fuel of the future we'll talk about just that, the future of hydrogen perhaps and also, by the way, a big new energy security deal that the u.s. and the uk kind of quietly made involving u.s. natural gas. we've got all that live from the netherlands, a country, by the way, completely under sea level. we're back right after this.

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box. crude is down to $73.50 we'll go 61 right now big questions about what's going on in china and elsewhere. but right now i want to get over to brian sullivan because he's in the netherlands it's part of his weeklong series on europe's energy crisis. brian. >> reporter: andrew, thank you we talked a lot about oil on monday natural gas yesterday. we'll hit gnarl gas in just a second as well again let's talk about what some say is the fuel of the future. others might disagree. listen, you guys, i think, nailed it before the break there's so much debate in this discussion, not about climate but what's the best thing for the environment.

whatwhere do we pit our dollars. there's even debate whether or not, quote, fossil fuel companies should be the ones investing in switching out to non-fossil fuel sources, but, of course, they're the ones that have the money that are making money. so shell is committed to about a third of its global income to investing in fuels and sources of the future. now, we can debate hydrogen, okay, but hydrogen, shell is obviously not debating it. they're putting billions of dollars into hydrogen. that is ultimately what is happening here, guys right now it's what they call grayish blue hydrogen. gray hydrogen taking coal and methane and making it hydrogen that's been around for over a hundred years. so-called blue hydrogen gaseous coal or converting it, using natural gas to hydrogen. green hydrogen the ultimate goal here, which is gigantic offshore wind farmsing about 30 kilometers i don't know what a kilometer is 30 miles offshore, producing a

lot of electricity that would then power most of this plant which then extracts hydrogen and carbon dioxide, basically separates them hydrogen ultimately used for feed stocks and down the road we'll use fuel it's not an energy source. it's kind of a form of a battery. it's expensive it's hard to ship outside of a pipeline, but they know that shell is going to use it to ship the pipeline to europe because the goal is this it's not just about climate. it's also about energy security. and we talk about, joe, you were hitting on sort of the idea that putin had europe in his grasp which might have probably emboldened him to start the war. i think a lot of people would agree with that certainly, getting off those types of needs full-time. and in that vein this morning, kind of quietly, the u.s. and the uk announced a deal where they're going to double u.s. lng

exports into the uk. the uk still extremely natural gas-reliant. so i -- honestly, the u.s. and -- you know, the white house and president biden, kind of going all in on fossil fuels and u.s. natural gas. europe going to other way. >> the energy transition will be executed by the existing players as well as by new players, so we have great trust in shell, expe exxon, and bp, that wish to become carbon-neutral by 2050. so they will be joining us on this jersey. >> that was the ceo of port of rotterdam. he kind of potched up out of nowhere. did you hear the names he mentioned? shell, bp? the big players for the past years are going to be like shell. they have the money and the intellectual capital and the

know-how and effort to transition to thinks like a hyd hydrogen. >> thank god we say for engineers. thank god for physicists i don't know what the curve looks like on these really expense issue alternatives we were just talking about that. maybe it comes down to a one-for-one or maybe just a little more expensive than these abundant cheap natural gas that we have. i hope so some day i think europe -- you know, when you abandon nuclear and hydrocarbons at the same time and think that solar and wind are going to get you there, that's why we're in this mess right now, brian any talk about a resurgence of nuclear anywhere on the continent ore ver there? >> reporter: yes today in that announcement i just referenced, joe, and i'm not -- honestly, listen. i think the u.s. -- the white house is probably a little bit

jumpy about overly hyping something that involves fossil fuels, but that's the deal they made today with the uk, effectively saying we're going to try to double our lng exports. in that same announcement, joe, they referenced something about promoting nuclear energy so i think there is slowly sort of painfully, surely this recognition that if we're talking about no car booboncarb, carbon-free future, not just about solar and wind but hydrogen, nuclear is going to have to play that role and in the uk, like in scotland, there's that one nuclear power plant they need so much. diablo canyon in california and also the one in new york and new england. what's happening now with putin is making people have these hard realities. and here's the reality right now, joe i don't know if we have this pie chart from wwex.

68% of the power a few minutes ago is was gas, coal, or nuclear. that means 32% isn't you're talking two thirds. you're talking about getting off that by when next year? no way. >> if you've got to choose between natural gas and coal, there's another no-brainer, brian. we should thank or lucky stars every day for the abundance that we have of natural gas it's at least going to be a transition to what maybe we don't even know could exist. i wish coal fusion were to work. remember fleischman and ponds? they said it would work. it worked once. >> making power off of power i actually wrote a murder story about coal fusion.

it never got anywhere. maybe i should resuscitate it. true story. >> a novel about coal fusion that's hilarious. >> i'm serious. >> brian, if you see a dike that has a little hole in it -- we'll never see you again. don't do that. i know that's happened. >> reporter: wait. hold on. i've got the music hold on. it's the most dutch thing ever we're at an oil refinery hydrogen plant and we've got a shell work owner a bike. that's the most dutch thing ever i love it. >> maybe he's ice skating somewhere. thanks, brian. coming up, former theranos executive sunny balwani faces sentencing for his fraud conviction details next. later, white house economic adviser brian deese is going to join us from the white house to talk about the enocomic recovery and a lot more "squawk box" coming right back >> announcer: this cnbc program

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former theranos executive sunny balwani will be sentenced today. he was convicted in july of fraud and conspiracy last month theranos founder elizabeth holmes was sentenced to more than 11 years in prison. balwani because convicted or more fraud counts than holmes, but the justice department is seeking a similar sentence to hers his lawyers contend he deserves a far more lenient sentence of just four to ten months in prison i don't want to do four to ten hours, but that's --

>> same boat i'm in the same boat with you. two women sued apple this week, this over the dangers of its airtag tracking devices. they failed to heed warnings from advocacy groups saying for the price point of just $29 it's become the weapon of choice for staalers and abusers apple said they would update airtag to make it harder to use them for tracking without the knowledge of others. they called it woefully -- >> this is a serious issue, being tracked wo it your knowledge. if you have an iphone, you can track it what if you have an android or other phone. you hear more and more stories. >> a heard of a story after a

tinder date, a women goes home and finds the air buds into her purse, two little things you can track those? know where they are? she called the guy and said what are your air buds doing there. >> he said, oh, are they there i wondered where they were that doesn't fall into someone's purse. she said, you were doing this to track me he really didn't have a good excuse for it. >> i don't know. at the same time -- i mean, there's no -- at the same time -- >> with kids >> no. i put them in bags i put them in all sorts of stuff. the utilities -- >> the safeguards, i think, are the issue of finding a way, because it's the unintended consequences >> i know parents where the iphone gets turn off with their kids and they're turning it back on without even telling them because that's a pretty powerful thing. we're well intentioned we're well intentioned.

>> the parentses are paying the bill and you say, you leave that on that's what we tell our kids you leave that on or you don't want a phone. >> they turn off find my phone >> to me, the answer is who's paying the bill? >> unless they're millennials. then you don't need to worry about it. >> @joesquawk. send all your comments there. the theme we heard from multiple ceos is america's broken immigration system when it comes to the jobs market. we'll dig into the issue with former commerce secretary carlos gutierrez right after this. as we head to break, let's take a look at yesterday's s&p 500's winners and losers

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welcome back to "squawk box" live from the nasdaq market site in times square. checking the futures, red, kind of like yesterday. i guess it was a little worse yesterday, but it hasn't been a good week so far suddenly we're riefocused on al about that friday jobs number and the wage increases, which were hotter than people thought. a lift that people thought the snapback rally might go a little further, they've changed mike wilson, i think, is starting to think we're seeing the end of it. >> which, by the way, is different from what he said last week. >> and it might be what the trading range looks like if bracket's, i don't know, 4100, 4200 on the s&p and 3200. >> for how long. >> who knows we've got time. >> we're down. s&p not quite as much. >> turn the other way.

>> oil, 73. >> 73 is weird. how do you get from 73 to 80 back >> inversion is 80 again 80, 81 10-year, back 3.5. do what you've got to do >> we've got to talk about a very important topic, and that's immigration. at the round table in washington we talked about the most pressing problems in c-suite. >> the immigration reform has to be regarded as one of the biggest economic benefits to the country and has been for years it's just been the politics that's made it hard to get it across the finish line. >> right now during this lame duck, there is an opportunity for us to pass a bill in the senate that is a partner bill to what has passed in the house

already. >> without sharing private information, i think there are a lot of companies trying to figure out what the implications of onshoring and friend shoring means for key figures in the united states. >> for more on this topic we want to bring in carlos gutierrez. he's the former commerce sec who also served as kellogg's ceo carlos, thank you for being here. >> thank you. >> we've been talking for quite a while how there's so much low hanging fruit here there's a lot of bipartisan support for certain issues and it seems like there would be easy victories here. victory's been elusive i think you have some ideas as to why this is so complicated and why it's going to be such a tough slog what's really happening beneath the scenes >> you know, this is, i think, one of the most political issues we have. you know, the problem is not how high the wall is or whether we have a wall at the border.

the problem is that our laws don't work for our economy so we have an immigration system that doesn't serve the needs of our economy. our working age population isn't growing fast enough, and the way we grow is through the number of workers and their productivity so if we keep on as we are, we're going to find it hard to grow in the future it is a political issue on the right and on the left. on one hand you have people who want automatic citizenship that is not going to fly there are things that people are not willing to give up i say people politicians, congress. in order to get a bill so we would rather keep immigrants illegal rather than

giving them citizenship. if it can't be automatic, we don't want to give them anything the bill from president bush was 700 pages. we wanted to try something simple, kick everyone else try to give them a passport. we tried to find that moderate sensible middle, and both sides killed the bill. so this is going to be tough, and today when our divisiveness is even larger and it's even stronger, i think it's, i just don't see it i'm glad tillis and sinema are doing what they're doing that's a good move but that's not immigration reform until we face up to that and get it done, we're going to have a problem. >> you mentioned that the democrats want to make sure citizens get a path to

citizenship. that's a path there. and the right wants to make sure there's serious protections on the border you're the one who pointed out there's skepticism in washington when you hear business leaders say these things because you think, yeah, you want cheap labor. >> there's a sense -- it's a very easy talking point that the only reason businesses want this is because they want the cheap labor, you know. a nice talking point it resonates but it tries to simplify an issue that is just a lot more complex. here's to give you an example. nonfarm temporary workers, that quota has been 85,000 for years. 85,000 nonfarm temporary workers. you're talking construction,

you're talking plumbing, you're talking special projects. >> even health care. >> even health care, exactly well, yes, thank you health care, especially today when our -- with our aging population 85,000, you know we need 85,000 probably in a couple of states so we can say, well, we've got a quota and we'll stick with it, but where do you get the workers you need above the 85,000? you have to go to the illegal market, farm workers the system is so complicated to get a permit for a farm worker that you might as well just go out and find someone who doesn't have the right documentation, you know by the time you get the visa for that worker, your harvest is gone so all these things that are in place that just do not work,

you're right the congress is unwilling. but i would say, you know -- the two branchs are unwilling to trust the private sector so even when you have this skill-based immigration, which everyone thought was a wonderful idea and you add up the points and the master's degrees and things like that, why should the government be deciding what people a company hires a global company may have someone in malaysia who's a real talent and they want to develop them they don't want the skills-based list that the government gave them they want that person who's already in their company it's just unrealistic and it's getting worse. it's like we don't see it, you know i'm sorry, go ahead. >> we're almost out of time, but what's an answer i understand what you're laying out how do we -- >> i'll tell you what we had, becky.

what we had in the bush era, kennedy, they would come forward, raise their hand, i'm here legally, raise their hand, background check, pay a fine, all those things, penalty, and even a z card. that z card means you can work it's a biometric card. you can work you're not a citizen, you're not -- you don't have any further status, but you're legal to work then you could say the punishment is you'll never be a citizen, but you can stay and you can work and that is the guts of the system after that, you start sweating the details. but you have to be willing to confront the fact that you are going to allow certain illegal immigrants to stay in the country if they meet certain requirements if you don't, then you're going

to say, let's get a bun p of 747s and ship out 20 million people we're not going to do this either so we just stand still and not do anything. >> carlos, i hope people are listening and they come to you and ask for some more advice thank you very much for your time carlos gutierrez. >> nice to see you. >> nice to see you too. coming up on the other side of this, a read from the housing market, toll brothers. we'll talk about it next later we talk to nec director brian deese about the chip manufacturing and so much more a reminder watch and listen to us any time literally right now on the cnbc app. we're coming right back.

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we're watching toll brothers home sales beating after its back line helped sustain markets. warn manager home buyers are on the sidelines waiting for clady on the mortgage rates and overall economy. toll brothers expects to deliver fewer homes. coming up this hour, latest bonuses on wall street at a time some big banks are cutting jobs. that's next. and a reminder to follow us

on squawk pod on your favorite podcast app. what's the best one? is spotify -- where do i find? >> you can get it on spotify >> do i have to to download something. >> put your credit card in the back of the phone, joe, and see what happens. >> we'll be right back power e*trade's easy-to-use tools like dynamic charting and risk-reward analysis help make trading feel effortless. and its customizable scans with social sentiment help you find and unlock opportunities in the market my dad was a hard worker. he used to do side jobs installing windows, charging something like a hundred bucks a window when other guys were charging four to five-hundred bucks. he just didn't wanna do that. he was proud of the price he was charging. ♪♪

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. wall street bonuses might be a little less sweet this season thanks to the challenging economic environment that markets are anticipating is it -- they're already preparing for something that's not here which is kind of interesting. banking advisers could see bonuses decline. goldman sachs warns traders that

while revenue is on track, year-end bonuses are being cut joining us now, "new york post" wall street reporter do you know what i mean? they're preempting bad times that's a good idea if you want to cut bonuses -- >> it's going to be a brutal surprise, but maybe less of a surprise if you're given a little bit forewarning i don't think it's any surprise that investment banking revenue which is down 50%, very few spacs, ipos, no surprise we're going to see those bonuses dip 35 even 50%. but it is a surprise that that trading and sales revenue, even though they're outperforming, we expect to see those bonuses dip which seems pretty clear that banks are trying to say, we're alarmed about the future we need to prepare potentially for a downtown looking at the tea leaves, it could get a lot worse.

there's been reports about job cuts but we're hearing that could be closer to 5%, that culling could be the first wave and i think it's going to be a much leaner workforce. there's going to be fewer people working hardener the old days of investment banking i don't think you're going to see an md putting paper in the printer. >> were there a lot of people getting these huge bonuses what happened to keeping and retaining talent rail workers and pilots can command 34% raises, 30% raises, you can't do it on wall street it's a -- it'san employer's market -- >> they already got the 30% raise a long -- >> you know what i mean, though. >> the rail workers are not anywhere near wall street -- >> in this labor market, labor

is tight for highly skilled people. >> i don't think these banks were culling people like they traditionally do because of covid. >> and they were trying to beef up all of their, you know, divisions. they didn't have enough people to get the work done now there's not a lot of work to get done at all. >> if you come back to the office one day a week, do you get an automatic bonus just for showing up that doesn't -- is everyone back does that earn you any goodwill? >> fear is the ultimate motivator and it was difficult -- we did reporting that morgan stanley, they were struggling to get people back to the office and it's only really within the last month, two months where people are back at their desks for even five days a week when you are afraid of losing your job, you want to be near that center of power if you're out of sight, out of mind, you are much more likely to get cut and it's so much easier to pop into your boss's desk and say "hi" and check in

as opposed to trying to schedule a zoom meeting through their assistance i think the perks -- >> the real rainmakers still get the big bonuses, though? are they afraid of losing the key talent. >> it's going to be a much more you eat what you kill environment. i don't think you're going to see them making the bonuses that they did last year i think it will be still very generous, much bigger than my bonus, but it's not going to be what we saw in 2021 because they don't have the revenues. i also think all of those perks that we were talking about last year because it was all about banks trying to make sure that employees had good experiences and now the tables have turned, so the free coffee, the free car rides, the free food, that is all gone you're going to be flying coach. if you're flying coach, you might be -- >> greyhound >> i don't know. >> schadenfreude it's called

epicaricacy in english it's a really good word -- >> are you not fluid in german >> what is the average bonus remember before the financial crisis, analysts, remember what they used to make -- >> the analysts were part of the ipo process. >> what was a good average bonus last year for an investment banker is that the -- >> a first, second-year investment banker, we saw their base comp jump to 110 and bonus you could look at the entire compensation package, it could be 2, 250. >> and real rainmakers still make seven figures. >> of course. >> how much less are we expecting this year? >> i think we're looking at bonuses that are going to be half of what they were last year. >> so the vice chairman who used to be making ten gets five now

>> million >> yes where are you? >> oh. i'm a journalist -- >> typically the people at the top -- >> i think the guy making ten is still making ten. >> no. >> maybe eight, nine. >> when you haven't let people know in advance -- >> no one is -- >> they're clearly signaling -- >> no one is waiting for a check and getting a jelly of the month club, right? they wouldn't do that? have you seen "christmas vacation"? and i follow cousin eddie and he follows me. >> another difficulty this year, it used to be the silver lining when bank stocks were under performs, compensation was a heavier mix of stocks and not just cash. and the stocks are performing better than the s&p 500.

and so the opportunity -- >> that's your homework for this holiday season, the movie. is it not worth seeing it once. >> yes jelly of the month, it keeps on giving >> thank you >> or a pet rock, that's another great gift >> when we come back, will inflation be the grinch who stole christmas? steve liesman who be here. that's straight ahead.

good morning with next week's fed meeting looming, futures are pointing to a lower opening. we'll talk about what to watch in today's sessions. ceos making comments about the recession. can jay powell engineer a soft landing? we will debate. we're in the thick of the holiday shopping season and a new survey shows shoppers are pulling back on what they spend. we have the details. and michael ruben on the state of the consumer. second hour of "squawk box" begins right now ♪

good morning and welcome to "squawk box" right here on cnbc. we're live at the nasdaq market site in times square i'm andrew ross sorkin along with joe kernen and becky quick. down about 67 points on the dow. nasdaq down 65 points and the s&p 500 off just about 15 points for now. meanwhile, treasury yields, the ten-year note sitting just at 3.544. the two-year at 4.362. we've been talking about the oil complex or energy complex all morning as we've been thinking about the price of oil wti crude is standing at $74.36. crypto right now, you're looking at bitcoin, it's now fallen

under $17,000. ether, $11. i have an international travel theme this morning. shares of airbnb down 3.5% analysts cutting the stock with an $80 price target. it was a neutral one and what they're saying is they're concerned about the future supply of rooms or homes available for bookings starting to slow. it's still growing but not growing as quick a pace and it could provide headwinds for those particular businesses going forward. airbnb shares reacting to that downgrade. due to analysts at wolfe

research downgrading them. what they're concerned about is the europe exposure for their business at booking.com. also expedia downgraded to underperform or sell concerns there about a possible resilience to an economic downturn and whether it can with stand as much there and then trip adviser down to an underperform as well they're trying to figure out if there's a compelling value proposition compared to other travel sites for there were more competitive pressures brought to bear those shares down in the premarket trade. one interesting one, crosscurrents here with regard to u.s.-listed chinese tech stocks, all moving lower despite the fact that china has signaled more easing. that is being undershadowed right now or overshadowed by some of the trade data that's coming out of china which is showing a little bit less economic activity than economists had forecast for.

those economic crosswinds in china leading to declines. you can see alibaba. some of the biggest u.s. listed stocks here that are domiciled in china watch the big eft like the crane shares >> all right you come with that yourself, don't you? >> yes i see a lot of stuff but it becomes a negotiation with our editors and producers here at the network. there's a lot of stocks to talk about. but which ones fit with the discussions this morning, or the heavier volume ones are the ones we hone in on. >> what did you want to talk about that they said no to >> there's a number of different downgrades or upgrades we could have talked about some news from yesterday about blackst blackstone -- glaxosmithkline.

we could have done some of those things but those were nixed a little bit. >> never mind. >> a method to your madness -- >> i would say this, i have a lot of say, but i don't have the complete and utter say about what we put on our air. >> neither do we they're yelling moving on. >> exactly >> thank you we will see you soon. shoppers are planning to watch their wallets this holiday shopping season. steve liesman joins us now what are you hearing >> what we're seeing, the all america economic survey forecasting a softish christmas. it comes after hitting the malls last year with some abandon. i love this chart, showing the spending over the last four years. let's go back to 2019. before the pandemic, we were still in kansas. 987 was the spending per

respondent 2020, it falls down to 886 2021 goes up above thousand and here we are now down 11% from last year $907 above the level of 2020 but not back in kansas yet 987. so a softish christmas coming down and you can see that when we look -- we asked specifically are going to spend more or less than last year take a look at this next chart you'll see 46% about the same. that was down from 51% that was in kansas there 41% will spend last. 11% will spend more. you can see here some of the metrics here you want to go back and see when things were really bad take a look in 2008 when 37% were just the same, 55%, were going to spend less and only 7% were going to spend more not as bad as it was, say, for example in the great financial crisis, but not as good as we were before the pandemic

why are people spending less you can imagine down beat news on the economy because the economy is in bad shape. higher numbers from last year. inflation is a big factor. interesting number, we'll come back to that in just a second. the next chart here which looks at the inflationary impact we said, okay, you're spending less, what impact directly does inflation have 70% say they're spending less entirely or mostly because of inflation. 27% saying not a lot one other thing we noted here is an increase in use of credit cards. that's a reason for some concern but measured concern 30% compared to 22% are going to use credit cards or debt that they're not going to pay off immediately to buy holiday spending big jump but that 30% is more normal. it was not -- it was down to 22 last year because people had a lot of cash. so, becky, let the holiday

consumer debate begin. we have inflation on the one hand, poor attitudes about the economy, but i just looked it up this morning 4.3 million employed americans who have paychecks to spend. that's the debate i think right now. >> yeah, i mean, i think any time you start to hear about pulling back and concerns about a recession next year, you're going to hearemployers start talking about the potential for layoffs and cutting back in terms of their spending and you're going to hear people talk about how they're going to plan on spending less money i don't know how that translates into reality with it if you're thinking you're going to spend less money, you're thinking you're going to buy a lot less just because inflation means that even if you spent the same amount, you would be buying less in volume terms i wonder how that works out. >> actually, we have data on that, becky, among those who were spending more, the 11%, a big chunk or the biggest chunk say it's because their paychecks are higher the next answer, the next highest answer is because of

inflation. so inflation shows up on both sides, on the spending more and the spending less. people are aware of it people know it we did ask about job security for the first time 17% of the public does have some concern about job security only 6% are seriously concerned. so i don't know that that's a big factor this year if you think the economy is going to be slow, that's also a factor i think that might hold people back. >> steve, thank you. >> pleasure. we got a lot more coming up. the future of digital advertising on twitter in the past few weeks, a number of companies suspending ads on the platform tryingto protect their brands we're going to hear from the ceo of tebulah let's get a check on the markets. the dow off 90 points now. still got some time before 9:30 rolls around "squawk box" coming right back ir everyone on your list. the hottest footwear from jordan, nike, and hoka.

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this digital age we're living in, it's pretty unbelievable. problem is, not everyone's fully living in it. nobody should have to take a class or fill out a medical form on public wifi with a screen the size of your hand. home internet shouldn't be a luxury. everyone should have it and now a lot more people can. so let's go. the digital age is waiting. welcome back to "squawk box. advertising on social media has been increasingly scrutinized environment with the rise of misinformation online since elon musk's takeover of twitter and announcing a relaxation of the moderation of the platform advertisers have pulled their spending here's mary barra on how she came to that decision. >> well, we pause, which i think when there's a major change in a company, we look to make sure we

understand what the new philosophies are going to be you have to remember, it's also a competitor we want to make sure our advertising strategies, you know, are kept confidential. the teams are having ongoing conversation >> joining us right now to discuss this the tabula ceo. before we get to it, a lot of folks who watch the broadcast yesterday seem to not understand when mary barra said they're a competitor, elon musk is to a competitor on the tesla side that's what that was about we had a lot of people who seemed to miss what that sort of component -- competitor piece was about. how much do you think that this pause that you're seeing is actually from competitors verses those who are genuinely worried

about content moderation >> i don't think it's about competition. i tell you, i'm optimistic about twitter. it's a good product. elon musk, i think -- you can figure out advertising i'm optimistic about that. the main question which i'm not sure people really spent time on, it's not about whether or not advertisers are back or not. to me, the right advertisers were never really there to begin with because twitter also, you know, underinvested and never focused on building a great business for marketers so the biggest really upside is, can elon do that can he build a top tier product like facebook and google and grow from 5 to 20 in revenue >> do you think what he's doing thus far, from what you're seeing, is that in truth the emphasis for him right now he seems to be focused

very much on the user experience, maybe behind the scenes he's working on building that platform. and you're right, the experience on an instagram, for example, you know, i find myself clicking on those ads i don't know if it's the environment of twitter that creating an environment where it's harder to want to click i don't know what's preventing that from happening. >> i think it's about -- it's mainly about technology and relevance. i think it can be done we love twitter. we all spend so much time on the platform if they show you things you want to buy, you would click on it and buy it instagram, advertising product is so good from a performance advertising perspective, i would pay instagram to see ads so that's how good it can be and i think that's the biggest -- if i would compare twitter to tesla, this is the battery. that's what elon needs to do and i think it can be done i do think, you know -- this is phase one of his company running journey. he spends more time on the user

experience, product, moderation and i think the jury is out on what decision -- >> it sounds like one of the things he wants to do is not be reliable on advertisers, right part of his argument around free speech is he wanted to turn this into a subscription product with twitter blue and the like, if you could move the revenue piece to the user, then you wouldn't be beholden to the advertiser and maybe this idea of creating either safe spaces or moderating content one way or the other to try to placate the cmo of some fortune 50 company. >> of course he speaks about making this a universal free speech stage. and advertising will allow this to be free anywhere for anyone there's no other way advertising is needed. one, because it's the only way you can make twitter fulfill his vision, the way he speaks about it, accessible and free for

anyone in the world. and, two, i think it's the only way twitter goes from what it is now to $20 billion in revenue. it's a business. advertising is the only way it happens. while i think we'll see that -- we see it in the open web. we see different types of revenue mix. but advertising will always be, in my opinion, the neighborhood for free great products. >> how do you think everything stacks up right now? >> i think search is the best. you look at google, even right now in 2022, they grow 13% on a basis of $130 billion in revenue. amazon ads grew only 20% on a base of $30 billion. those are the best ones. i think facebook and social companies in general are going through a challenge because of privacy. we're seeing what they're doing,

i don't think that's the end of it for companies, that is -- they've been used to tracking consumers. those days are gone. we're not going to see -- i think they're challenged. >> i don't know if you focused on -- we briefly mentioned it earlier in the week on the broa broadcast. chat gpt, it's a remarkable beta service right now that can write all sorts of things. you literally can put into it, write a script -- a seinfeld script about this and they'll do it there are a lot of folks in the valley saying that type of product can overtake google search, given it's understanding of content and language and the context that that actually could become a competitor in some way. do you see that? >> i don't think so. many companies over the last two decades have tried to be, you know, half as good as google search it's uniquely hard

the relevance, how fresh information is i think we'll see, you know, great entertainment coming from that and new information and new services coming out of that sort of ai services, but i wouldn't -- i wouldn't think it's an easy job to do to replace something as good as search. >> where is snap and tiktok right now in the advertising game for you >> how they can reboot themselves, privacy is just a huge headwind for them you have to assume that the days that you can trap consumers will be gone. i used to opener an uber app on my phone and an advertisement would appear in any search they've been using those techniques we'll see social companies

rebooting themselves they're senmart people. they'll do it for sure. >> netflix is in the advertising game and there's a question about can they make advertising contextual given the data that they have on you but maybe not be able to use some of the other data but microsoft is powering that maybe they'll be able to vacuum up data from other places. >> i'm optimistic about that just showing ads on this amazing user experience on a big screen, even if the targeting at phase one and phase two and phase three is not that great in terms of what we expect from digital advertising services today, it still will be a huge business in my opinion it's an amazing supply exclusive supply and it will be a long journey to me, if you're an advertiser and you can reach me while i'm watching seinfeld on netflix, this is second to none value i think between disney, netflix, like i said on this show before,

andrew, i think eventually everyone will be in advertising. we'll see advertisements in cars it's a way to diverse their experience -- >> start giving me ads in my car, i'm going to complain. >> you know the cheap kindle, the kindle that shows the ads instead of the kindle that has a blank front, i -- i was cheaped out and i bought the cheap one and now i get the add and i prefer not to get the ad i'm just saying. >> what are we talking about >> what is the difference in price? what are we talking about here how much did you save? >> 20, 30 bucks, 40 bucks. i don't know what it was >> a lot of money -- >> adam, always appreciate it. >> all right >> thank you, sir. >> paid for half of your uber ride that you didn't take because it was too expensive.

>> you're looking at a proud, frugal cheapskate. >> coming up -- i saw you take your wallet and there were these moths flying out yeah it doesn't come out much. >> i try to -- >> your crocodile arms, can't reach it >> i go to the bathroom when the bill comes. >> do you really >> no, i don't >> the chance of a recession and the -- >> oh, my -- okay, all done. >> later try and get a viral moment for becky's shirt at some point today. brian deese will be our special guest. >> announcer: time now for today's aflac trivia question. how many employees bdoesalrt wma have worldwide the answer when cnbc "squawk box" continues what's this, a hospital bill? mm-hmm. for 1,100 bucks? ga-a-a-ap! looks like your wallet may need a sling too.

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>> announcer: now the answer to today's aflac trivia question. how many employees does walmart have worldwide the answer, 2.3 million. biggest employer outside of the federal government in the

united states. still to come this morning, fanatics reaching a new $31 billion valuation. we'll talk about the company's latest news and the state of the consumer with the ceo michael ruben. that's next. later, brian deese on the latest out of washington on chip manufacturing, recession risks and more you're wchating "squawk box" and this is cnbc if you wake up thinking about the market and want to make the right moves fast... get decision tech. for insights on when to buy and sell. and proactive alerts on market events. that's decision tech. only from fidelity.

inflation risk and -- inflation and recession risks were front and center at the business round table conference yesterday. >> they're still stressed. we serve everybody, americans come to walmart. we've got some customers who are more budget conscious who have been under inflation pressure for months that started changing in march, april of this year and that pressure is something that customers are having to deal with as we approach christmas. >> i'm not going to call it a recession. right now we're still seeing a strong consumer. >> the consumer spending 10% more than last year and 40% more than pre-covid they're spending in different things that's a tremendous sum of money and they have a trillion and a half dollars in their checking

accounts inflation is eroding everything i just said. and a trillion and a half dollars will run out sometime midyear next year. when you're looking forward, those things may very well derail the economy and cause the recession that people are worried it >> the word recession wouldn't be my vocabulary just looking at our data. >> we're going to talk a little bit about more about this. dana, what you hear from ceos i think is shocking. what percentage of ceos are expecting a recession in the next 12 to 18 months >> 98% and that's up from roughly 95% earlier this year. ceos have been signaling recession since the springtime in our surveys. >> what is causing the recession? i wonder, is this something we're talking ourselves into if you think a recession is coming, you're going to cut back

on spending, or is this the fed's doing? >> i think a lot of it is in interest-free tightening by the fed. and the fed is trying to tackle inflation and keep inflation expectations anchored. our own measure of inflation expectations is quite high for next year and certainly consumers are starting to worry about their personal finances, they're hearing bad news about companies, and they're concerned about their own job prospects. >> and, steve, what the consumer is thinking and doing as a result is something that you've been tracking pretty closely with your latest survey. >> yeah, undoubtedly inflation is weighing on the consumer negative views on the economy are weighing on the consumer as we talked about in the last half-hour, offsetting that is 4.3 million more employed americans. i want to go back to the ceo surveys which i think are so interesting. i think a lot of the downbeat views of the ceo can be laid directly at the feet of the -- not because of the rates they're raising to, but the uncertainty around the effects of it

if the fed had gotten its act together, and raised rates sooner and come off the pandemic era stimulus sooner, it wouldn't have to be so aggressive if you're in the c-suite right now and you're trying to gain out next year, you don't know what it means for the economy to have endured four 75-point basis points and they're going to go another 50 points next week and an uncertain amount next year. it's something they could deal with if you told them what it was. right now, you listed david solman from goldman sachs, and he's gurting for a tough year next year. if i'm david, i think i'm probably gurting for a recession next year. >> why because -- >> because the risk -- every ceo

has to solve this problem which is, is there more risk leaving business on the table and not having the people in place, or is the greater risk having too many people and right now, of course, there's some bespoke reasons that are going on in the financial industry right now that are not for the entire economy, but in general, i have to think that the risk is to the downside, and so you prepare for that risk because you're better off if you're ready for it >> but, steve, that's why i ask if this is just a self-fulfilling prophesy of some sort, if you think it's going to be bad, your ceos of major companies are preparing for that because you have to do a risk assessment. >> precisely >> then it becomes a recession of your own making because you're concerned -- >> if paul were here, he would give us a less in thrift the actions of ceos to prepare for a recession to do what they think is right by their company, creates a negative impact on the overall economy and, by the way,

this creates another risk we maybe don't talk enough about which is if you do have a recession, classically, the federal reserve or the financial authority would step in, that may not be the case next year. it could be the case that because the fed is more concerned about inflation, because congress is more concerned about deficit that they're not able to help in ways that they normally can during a recession. >> a lot of people would say it was the stimulus that caused the inflation, which caused the high rates. i think recessions are always self-fulfilling. stock market goes down, and then you fell like you got less and then you don't spend as much it's a circle. that's why the fed needs to be so careful they can talk and do everything or accomplish everything i'm back to saying that they should be getting near a peak, steve, because all the self-fulfilling prophesies, david solman he gets to cut

bonuses. why wouldn't he pretend there's going to be a recession -- >> because he risks losing people dana could talk at length about what's going on in the job market right now i think they've had -- >> do you -- you don't risk losing people if everybody is doing it at the same time. >> exactly. >> fair enough >> the rainmakers who are still making 10 million a year. >> if there is a recession next year, how deep of a recession will it be >> we think it's going to be short and shallow. and we're already starting to see slowing in the economy due to interest rate hikes a lot of it is in housing activity which is where you would see it first we're also seeing consumers shift their spending away from goods towards services but we think services will probably be under threat, certainly when we look at expectations, they've been sailing for a recession for a long time. consumers are -- consumers are still getting pummelled by

inflation and we're seeing expectations weaken across the board, especially in that middle income group we think that this is going to be a function of slowing consumption but also housing and also business investment >> dana, what do you do with the idea that so many more people are employed i know that comes up against sentiment. you have the one -- on the other hand you have 4.3 million americans have jobs. >> yes and the labor market has been holding up but a lot of that has to do with labor shortages. you still have entire industries, especially those that require people to report to work, that have not finished hiring in our same survey of ceos, they're saying that they plan to higher or keep their labor forces flat. only 16% are saying they're going to let people go it's a function of labor

hoarding because companies spent millions of dollars retaining workers and also trying to attract workers. why would you undo all of that and have to come back six to nine months later. >> it's hard to have a recession without a big jump in unemployment i got to tell you that, guys >> yeah, steve, dana, thank you. >> thanks. coming up, taiwan semi making one of the largest foreign investments in u.s. history in arizona in the wake of the chips and science act signed in early august we'll take a look at what it means for jobs and chips made in america. a look at this morning's winners and losers in the s&p 500. be right back.

welcome back to "squawk box" this morning announcing plans for a second plant in arizona i want to get over to christina. she joins us now with more good morning >> good morning. so import advanced manufacturing to the united states, that's what tsmc is promising with this $40 billion investment for two

manufacturing fabs in phoenix, arizona. so small, found in iphones by 2024, the second fabric should produce more efficient wafers by 2026 that's a fraction, though, of what is being produced in taiwan but the united states is determined to diversify away from asia. president biden attended a ceremony yesterday afternoon accompanied by the ceos of amd, micron, nvidia and apple highlighting a signatificance o an investment on american soil many have made promises to spend billions of dollars on plants in the united states over the next five to ten years. they're incentivized not only by state and federal subsidies, but also by customers like apple, for example, who want to diversify away from china. even as chip demand wanes, which you can see is reflected in the

stock price of a lot of these chipmakers and the smh down 5% in the past week or so fabs take at least two years to built. they plan to bring production much closer to home. andrew >> christina, thank you for that report appreciate it very, very much. we can keep our eyes on where all the chips and the chips debate goes. >> where the chips fall. >> thank you >> you're welcome. when we come back, fanatics chairman and ceo michael ruben is going to be here. and, yes, the company's latest round of funding, it's a big number we're going to get into all of it after the break in the next hour brian deese will be with us. reminder, follow "squawk pod" on your favorite podcast app. we're right back

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predicted as -- as predicted, "time" magazine naming its person of the year, ukraine president volodymyr zelenskyy in the spirit of ukraine. shopping season is under way for retailers. but at the business round table annual meeting, we asked walmart ceo doug mcmillon whether inflation could dampen the holiday spirit for consumers >> they're still stressed.

we serve everybody americans come to walmart. we've got some customers who are more budget conscious that have been under inflation pressure now for months really started changing in march, april of this year. and that sustained pressure in some categories i think is something that customers are having to deal with as we approach christmas. >> joining us now with more on the state of the consumer, michael rubin, ceo of fanatics i don't know whether you have an elastic demand business. you got another funding you can talk about today you got a billion and a half that values your company at 31 billion. it just keeps going up, up, up. >> we think we're just getting started first and foremost and we think we have an enormous opportunity in front of us and, you know, we've been at this for 11 years now but we're truly in the first inning of the game we've built a nice business in if a -- fanatics

we're going to be enter gaming. >> let's say first quarter might be -- mnine more of these >> we feel like we're in the first inning. >> does a recession, does it cool things off -- >> of course look, yeah, our business this year -- our biggest business which is fanatics commerce, you know, that business is going to grow nearly 20%. but i think we're going 25%, maybe 30% had the economy even stronger every business that sells to the consumer is affected by what's going on right now -- we've been seeing it since, you know, kind of may, june you saw a deceleration it's a strong business e-commerce sales this holiday

season, we're up about 20% but we're supercautious every day. you need to be conservative -- >> is it different in terms of volume, number of products, or the kind of product? we were talking to andy jassy last week and he was saying, people are buying crazy big tvs, they're still buying the tvs, they're just buying -- >> there's no question that any consumer -- every consumer business is affected by what's going on right now but i think what's different is that sports has so much secular growth and i think that is probably the one thing -- >> second derif vative problem r you. it's not that the sales are down, it's the sales growth might be moderating slightly. >> we were into the year thinking -- we went into this year thinking logistics would be more challenge and when the government stopped giving away free money, the comps would get

more complicated there were no surprises for us this year. >> i wonder how that plays out in the gaming industry it's a huge industry, there's a lot of competition there we watch it in our business too. people who are day trading have a lot of excess cash sitting around during the day were willing to that money in the ma. almost in a gambling sort of mentality. >> gaming is more of a recession-resistant than other businesses so, i just think if we would have been up 25%, now 20% in the core of e-commerce i think gaming would fill a little bit but a little less, to be honest. >> do you see any bump in -- when you had to replace your whole wardrobe with clothes three sizes smaller, did you see any bump in -- >> i'm definitely still -- >> are you a wardrobe whatever? >> 100%. i'll be the first to say - >> looks like a million dollars, a couple billion, actually

>> he looks great. first of all, weekly shot is amazing. the doctor who prescribed it to me is awesome, amazing he's the most innovative weight loss guy i started it a year ago. it's been amazing. >> i want to get a shot on my wrinkles i may never do it. >> i have a question about the gaming world do you think it's too competitive, a lot of companies have gimp away a lot of money trying to get market share there are questions whether espn, bob iger, will get into the gaming business and what that will do to the larger landscape. >> let me say, i went to our board of march 2021, when valuations were at the highest and i walked in with a thesis that said, we desire to be the number one gaming business long term, a decade from now. globally and i think people thought we were crazy if we hadn't already done that in the merchandise business and the collectibles business. our thesis was, if you look outside of the u.s., there's so

many companies that are really profitable good businesses, for a lot of their entain, $10 billion plus ebitda. then you look at casinos in the u.s., really good businesses, mgm, caesars, penn game, et cetera you look at the economics. and what you saw was the whole environment started giving away free money with crazy market costs. so what you see, in the beginning, anything gig, when we started the internet in 1999, nothing made sense in 2001, it started making sense. what we're seeing now, markets starting to rationalize. and a good long-term business here you say, what are they going to make, 12, 15 multiples, that's what it's worth. >> then the answer is you're only as smart as your dumbest competitor, just like in the

airlines, right? if you're going to give away money to acquire customers >> definitely. our belief, what is very different about fanatics, we have half a lid that owns 1300 stores that's great for acquisition we have close to 100 million customers in the fanatics database we're going to do 50 million orders in north america, e-commerce we have the most driven sports digital brand. on top of that, we have a big customer database. we have the customers, relation to sports. so, i'd say the biggest cost of online sports betting and online gaming is marketing. and we have the best marketing advantage. >> what's your gamble on espn of it all >> i think espn has great contact, great content, you know, this is -- it's going to be a big business long term so do i believe that espn will be a viable driver of a gaming business, whether they do it direct or indirectly absolutely >> would you ever want to partner with them? >> we'd partner with anybody we

can make money with. different with most people, we don't want to partner with people we can't make money with. we believe we actually want to be a profitable business for that real free cash flow in 2022, all of the money you talked about us raising is m and a. >> you're approaching monopoly -- >> no, not >> we watching, see the bengals hat -- >> hopefully, it was the -- >> it was, and my wife said i want to get you that hat for christmas. she sa i said, no, that will ruin the bengals. she looked it up and it was a fanatics hat >> every business we get into, we say we don't want to be in it if we can't do it much better for the consumer if we can't make a great business for the sports properties and athletes we work with and players association and we can't make a lot of money for the long term.

we believe there's a lot of innovation still to come you look in that core merchandise business, i just went to the newest fulfillment center in maryland a few weeks ago. we used to spend $30 million to operate now we spent $80 million and it's totally robotic it's out the door instead of a day and a half we automate everything we do >> i have a nike question. when you guys do a nike-branded product, how does that work? >> nike is the most incredible brand in the world most of the products i wear are nike shoes, i'm a pretty big shoe guy what i'd say with the sports profiters, they'd say they're excited to be in business with nike because of the market they bring to the sport and the creativity they bring, but licensed sports is a quarter of what they do, it's a very small

percentage of their business a lot of people know this, anything made with nfl, major league baseball, now the top colleges 2024, the tokyo giants, that's all made by fanatic >> right that's so fascinating to me. i don't know how many people appreciate that and know that. >> they do the reason that the sports is doing that, everyone feels we're all together nike gets the sport marketing benefit to help drive their massive footwear and apparel business what the sports property and team owners and fans get, we're growing the business because we wake up and having been obsessed with it. with the fanatics, we've been able to grow the business and satisfy the nike sports. >> people that do have fu money -- i think i saw that on "billions" the people that do have, they love buys sports

themes it's fun all of these guys that bid on sports teams any way you can structure this and maybe get back into that some day >> for me, it was actually an easy decision. for me to say, look, the only sports teams i really believe is the sixers at the end of the day -- the opportunity we have at fanatic was so -- >> there's no way it's structured so that you could -- >> you know, for me, you know, we had so much conflict in the league rules you can't have individual deals with athletes. we have 3,000 deals with athletes you can't take bets on your own team you can't have players that are investors in your business >> you could open a record company, too, with all of your -- you could do so many different things you only want to make money, though >> actually, i'm not driven by making money, i'm driven by being invnovinnovative we have a massive opportunity,

do it on a true platform with gaming >> with the synergy versus bric and mortar >> i don't think brick and mortar is what we want to own. the biggest thing that i did at my old company gsi commerce that ebay bought, i wake up and go to bed every day virally focused on how we do great in the business brand. we say no to 99% of what people ask us what that does, brings a better experience for the pan here's the good news, you know, all last night, i talked to james and josh highly -- researchers believe the first person to live to 150 has already been born. it could be you! wow. really? of course, you'll have to eat your greens, watch your stress, wear sunscreen... but to live to 150, we're developing solutions that help doctors listen to your heartbeat while

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♪ good morning, futures have deteriorated we're now pointing to a lower open on wall street. just 90 minutes away, the s&p 500 on its longest losing streak in a month. but likely some good news for companies doing business in china. the country is instituting its biggest rollback of the covid curve since the disease emerged. we're talking about that what that means with the global

economy and odds of the u.s. recession that ceos telling us could be on the way. we've got national economic counsel director brian deese on "squawk box" this morning. the final hour of "squawk box" begins right now ♪ good morning and welcome to "squawk box" here on cnbc live from the nasdaq market site in times square i'm joe kernen along with becky quick and andrew ross sorkin 40 degrees and rain. ew u.s. equity futures up -- i mean, that's unsurprised we're down that much, with how miserable it was yesterday and today, really. >> tomorrow is going to be sunny again. >> the sun will come up tomorrow we're down 109 on the nasdaq this would be what did you say, eight out of nine days >> eight out of nine it's come down, it's less for the nasdaq, yeah, but gloom and

doom is extended longer. >> a new bull market in the dow stocks it was up 20%, but dropped below. it makes a lot of noise, doesn't it -- treasury yields, 3.546 on the tone-year, and oil way down. >> yields keep moving but still 81 bases points between the yield and the ten. china making a most significant rollback of covid restrictions among the changes affected people with only mild symptoms will be allowed to quarantine at home and domestic travelers won't have to test for the disease the move follows last month's antilockdown protest the biggest public challenge to president xi jinping since he took power over a decade ago shares losing ground in

shanghai, believe it or not, as well as in hong kong, although chinese trade data did come in below trade expectations and there are questions about what happens once you finally release some of the covid restrictions what happens on that level are their short-term issues in the country or does this go off without too many bumps in the road isn't the meantime, microsoft brad smith expected to meet with the chair and others today as the company pushes for a $69 billion for activision blizzard. that's cock to several published reports. the "new york post" said commi commissioner have agreed to talk about that deal tomorrow activision/blizzard shares up 0.8% and europe san know fifth shares and claiming that zantac causes

cancer roughly 50,000 claims were dismissed. although tlr thhere are thousans more in state courts around the country. all of the drugmaker who have sold zantac have denied it causes cancer. >> getting back to the broader markets with mike santoli. the last time we spoke, i don't know, i thought things would be moving better. we're going through 200-day averages moving higher but now we're not. >> yeah, joe, the rally was sort of making the bid for perhaps being a little more than a reflex bounce. it could still do that but you're right, it didn't win back the benefit of the doubt the s&p 500, the index fund, never broke above the overall downtrend line we've been talking about getting up 4100, 0.4 on the etf. what we're doing now is trading below the levels from which the rally that jay powell's remarks

started. that was in the low 3900 we're testing that area and that leaves a chance that can kind of shape up to something like that. but maybe it doesn't it has to go towards the old lows. very much a bear trend in short term because we've set off the decline in the treasury and loosening and negative positioning in october we'll see if we have to win that back a lot of people are essentially going into 2023, a large expectation for the economy which i guess at some point can turn into a positive look at banks, though, folks getting a little concerned about the relatively dramatic underperformance of the banks relative to the s&p 500. kind of making a new low on a relative basis for this year and never really managed to participate fully in that rally that we got. clearly, it's economic concerns. worries about regional banks losing deposits. commercial reality whatever you want to worry about, the banks are at the center of it, now, longer term take a look at this interplay

between consumer discretionary and energy it's not a sum zero end game but obviously they have offset in terms of one outperforming the other. this is four years now, equal weight against energy. here you see the sort of consumer binge in the recovery off of the covid low all of the stimulus, energy was keen remember when crude oil went below zero for a moment? now you have this and a moderating trend and those topping and bottoming formations in energy and consumer discretionary, still can't declare that at all. it's interesting both are converging in the short term here's the discretionary, otherwise amazon and tesla overwhelms that sector, joe. >> all right you're right, mike thank you. what is it -- one day where there's hope -- we've got time we've got the day. >> time, we've got a lot more coming up. the gop's playbook for

taking on wall street asset giants and their commitment to esg. we'll tell you what top republicans are thinking ahead of next month's power shift. and we'll follow up the talks with america's biggest ceos by asking national economical council's brian deese. a surprise quarterly profit forecast, another profit for the current quarter. that's the company's ceo at 11:00 a.m. this morning on "tech check. stay tuned we're coming back here on "squawk.

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welcome back to "squawk," black lives ceo robert fink facing calls to resign the u.s.-based production firm blue bell capital partners with a letter they sent to fink last month. bluebell $50 million in assets waging campaigns against companies argues that blackrock changed from thermal coal production in a context in widely publicized and in a statement, in the past anticipate months, bluebell has waged a number of

campaigns to promote their climate and governance agenda. blackrock did not support their campaigns as we did not consider them to be in the best interests of our clients and on both sides, apart from the gop side, sort of the republican red state side. and now, taking it from the other side is effectively saying they're not doing enough i mean, that's, i think, maybe what is probably the headline here >> yeah, i agree i agree. and it's unfortunate they have to say, you know, political party here there's two sides to the whole idea, to the argument. that involves espn but it is red states, typically, they do -- they're correlated but not fully. i'm sure there are people that are democrats that don't want -- >> the question is, you're getting it from both sides, maybe doing it right >> no -- >> elon musk -- >> that's great. that's why everybody hates a certain person because the worst

people on earth, you say, well, they're doing everything right, everybody hates them, that's not -- by the way, elon musk will say online, he'll say if i'm getting it from both sides, i'm winning. >> that's -- there are specific instances where that saying makes sense. there are certain instances where it makes sense i don't think it makes sense in this instance. staying with the topic, republican lawmakers are getting ready to take on asset managers like blockrock with commitments like esg e uihlein mew joins us >> good morning, blackrock, vanguard and statestreet, the new emperors because of the 43 they yield over big corporations in a white paper, they argued, quote, these asset managers aren't actually passive investors because they're trying to shape the economies of

companies. they're calling for exposure and more voting authority for retail investors who hold 401(k)s and more into congress to the power of asset managers. here's the quote from the report, it says each of these firms proudly uses the voting power gained from their investors' money to advance liberal social goals republicans say one of their priorities in this new congress is to hold them accountable. so far, there's been a lot of rhetoric this is one of the ways they could turn it into reality. there's a bill from outgoing pat toomey and alaska senator sullivan that have addressed those concerns we have reached out to each of the three for comment, vanguard has responded, quote, our interests are squarely aligned with empowering everyday investors to reach their long-term financial goals leaving management decisions to companies and public policy decisions to policymakers.

the company says it wants to work with lawmakers on proxy voting and on transparency guys, we'll let you know if and when we hear back from the other companies. >> thank you very much meantime, i want to stay in washington but pivot to the broader economy. take a look at what jamie dimon told us here on the broadcast at the business roundtable. >> if you look in the short run consumer spending more than 10% than last year, and 3% more than covid. that's a tremendous amount of money. and they have more in the checking accounts more than pre-covid. the spending is down and companies are in great shape, the other news which is not good, rates are now 4% on the way to 5%. inflation is eroding everything i just said. and that $1.5 trillion will run out sometime next we're. when you look forward, that will derail the economy for the mild

to hard recession people are worried about. >> here to talk about the economy, white house council director brian deese brian, the parameters that jamie discussed were mild to hard, in terms of the landing it wasn't easy, it wasn't soft, and it wasn't that there would be no recession. so where are you right now >> well, it's good to be here this morning let's start from where we are right now, we have an economy that's showing continued resilience resilience in the labor market resilience in the consumer balance sheets as jamie was just mentioning but beyond the savings rate, we're seeing historically low rates credit card delinquency and mortgage returns so that suggests a resilient in household balance sheets as well we have a slowdown that is under way. we've been talking about this for months we need to see a transition towards a more stable growth

trajectory i think if you look at the key elements that you need as part of that, some easing on the inflation side we're starting to see, tentative, we need to see more data, we're starting to see evidence in that direction we've seen gas prices come off significantly. we've seen some movement on food prices as well so, we're seeing some movement in that direction. but the other thing i would underscore and i think jamie agrees with this and broadly, the community agrees with this as well, if you look through to the next couple of year, united states is incredibly well positioned to be the place where investment, productivity and innovation happened. we were out in phoenix yesterday with a set of ceos who all underscored this that even as we're looking at this transition and navigating through this historically unique transition, united states looks better as a prospect to invest that's going to be a driver. that's we we get our innovation and productive capacity beyond the next month or two. >> hey, brian, one thing we actually talked about yesterday, we're showing an image right now

of president biden in arizona. we were talking about chips. what is the view of the white house when it comes to working with taiwan semiconductors the reason i asked, there is of course, the question, one of the reasons we're trying to bring chips onshore here is, frankly, because of the anxiety that so many have about whether china ultimately does something to try to take taiwan and we want to have national security the question is if in fact something like that were to happen, what would be the implications for a business based here, that's owned by taiwan semiconductor >> well, you start from a broader perspective which is why are we so focused on these leading edge chips the smallest chips we talked about them yesterday, 4, 3, 5 nanometer chips. the reason is these are the chips that power the most cutting edge technology. in some cases it's military in other cases it's other

applications today, we don't make any of those chips. zero percent in the united states that's an economic international security challenge so the reason why yesterday's announcement was so significant is tsmc is the world's leader in both the innovation and production of those chips. yesterday, they said, we are going to build up that capacity in the united states that's good for american economic security. it's good for national security. but it's also good for tsmc's customers. this is one of the things we heard around the table when we had tim cook from apple or lisa suh from amd, underscoring they're looking for more reliable suppliers tsmc having them based in the united states, building this capacity here becomes a more reliable supplier as well. >> brian, i want to touch on two other big headlines right now, one is china, the covid policy which is shifting now. may be good long term. but i'm curious what you think the implications are going to be short term, especially given the

health challenges and the health challenges as it relates and i hate to be less humane about this, as it related to the economy and supply chain >> so, it's something we're looking extremely closely at obviously, the markets are very focused on this issue, trying to get a sense how much that incremental opening will actually ease conditions how much it will produce more viral spread we've seen and we know that without an effective vaccination campaign, the challenge with this virus is that you very quickly get to significant levels of transmission and that's -- you know, that's science. and that is hard to overcome so, one of the things that we've been trying to communicate to any counterpart country is the lessons we have learned and the tools that we have to try to be supportive and helpful so, this is going to be -- this is going to be a challenge that they've got on their hands we're looking very closely at it, particularly with respect to as you say, elements of the supply chain we've seen over the course of the last several months, a lot

of the concern that there would be a more sort of significant bottling up of supply chains when we see this kind of back and forth in the chinese economy and haven't come to pass that's not a reason to be completely complacent going forward. but it's certainly one of the big things that we're focused on and we're open to trying to provide any lessons learned in any capacities that we have. >> right related to that, is it a head fake for folks, this is a temporary phenomenon, given what's happening in china the next several months, but on the other side will be a much higher price point? >> well, look, in the global energy markets that we've been talking about for months there's continued pressure on the supply side we continue to believe that the significant challenge in ohio markets is to maintain sufficient global supply we've made progress in the last couple of weeks, the price cap

on russian oil going in effect and so, that's something that we need to stay focused on. and that needs to be resilient to a global recovery and to a china reopening path i would say at the same time, though, there have been a lot of folks putting a consistent call on saying we're going to see $150 to $200 a barrel oil. we've been doing that to make sure that doesn't happen one of the big implications in the united states, you see gas applieses are down $1.50, 1.is $ $1.75 in the country >> brian, with this esg, you worked at blackrock, your boss was asked he's not doing enough when it comes to esg of course, blackrock got it on the other side for a number of months, six months to a year,

from red states pulling out of the firm, arguing that they're doing too much where do you land? >> well, look, companies will make their own individual business decisions based on what's in the fiduciaries of their stakeholders that's what we expect them to do we think about it from a policy perspective and the united states has not had for years clear, effective policy when it comes to, for example, decarbonization, now, we have in place, this is a big part of why we worked on passing the energy provisions of the inflation reduction act is you now have a policy framework of long-term incentives from the government to try to produce more energy domestically but to encourage the production of lower carbon energy going forward. that's the kind of work we need to do on the policy side and companies need to make their own individual decisions based on their interests. >> to that point, those policies ostensibly, should make it more

attractive, and should be an opportunity for greater returns in these spaces. so when people -- when people look at the investments that a company like blackrock is making or not around climate, do you think these are economically driven decisions or do you look at them and say that these are decisions made for other reasons? >> well, as i said, any individual company decision, i'm going to leave to the companies. i assume they're going to be made in the fiduciary interests of that company. what i will say is that the policy environment of the united states is encouraging investment in the united states, in clean energy capabilities and clean energy technologies at a rate that we have not seen in recent history. i've talked to ceos of operating companies across the board who say now that we have certainty over the long term of what the tax regime is going to be in the united states. the kinds of incentives you that get for investing in the united states, i find this an attractive place to build out

battery capability and carbon capture, we're going to have the largest carbon capture in the world in the united states all of those are decisions based on economic interests but on to a policy environment that's trying to encourage that kind of investment and opportunity here in the united states >> hey, brian, real quick, one of the things larry did say last week at the conference, he said that he expects fossil fuels to be part of our life for at least the next 70 years. do you agree with that and do you believe that is a consistent message from him, given that you spent a long time with him over the years? >> i'll tell you what our view is, which is we need to rapidly hit our climate goals including a 50% reduction in emissions by 2030 as you do that, you still see a reliance, and you still see a maintenance, for example, of oil in the energy mix. that's something that will be true for the next several years. but the real opportunity here, and i hear this from companies across the board, the real opportunity here is to now move

as quickly as possible to develop and to expand and to scale these new zero carbon technologies the new clean energy technologies, again, clean hydrogen or carbon capture or energy storage that's where the opportunity here is. that's where we'll see the bulk of the investments over the next several years. >> brian deese, at the white house this morning great to see you i sey you're going with this, the subsidies that renewables are now going to get make it a fiduciary responsibility for companies i know what you think, but i just harken back to when president obama got elected, they decided to refocus on equal imagination. a $500 billion is now about $80 billion with his ecoimagination, whatever it was called. >> but, yes -- >> i know, it's like, okay,

obama is president, i'm not going to cause -- you run into a headwind, try and get behind it, $80 billion company. coming up, breaking productivity data, and the numbers and market reaction are next as "squawk box" returns

welcome back to "squawk box" on cnbc. but i don't want to hang around

with mr. pillpillow. my pillow. we are seconds away from a revised look on productivity that was an off-camera discussion we were having. the futures are down 80 points or so. he seemed fine he seemed fine with it santoli is standing by in chicago. any. numbers higher, rick >> yes, i'm standing by waiting for a third quarterfinal on productivity, the secret sauce for any economy. up 0.8 of 1% that replaces up 0.3 for the third quarter final. that's pretty good and actually if we consider up 0.8, it's the best going back to the last quarter of 2021 and primarily because quarter number one and quarter number two were so highly negative. and if we look at the accompanying unit labor costs, we see that 3.5% moderates the

2.4% that isn't bad news either and 2.4 is the lowest unit labor cost since -- well, first quarter '21, when it was a minus 4.2% so, these numbers are better than expected. are they great numbers? no, productivity really has not done well lately, joe. and many try to bolster it as if it's going to come back. i really don't see the efficiencies showing up anytime soon just simple things like your last discussion. i don't think industrial policy is highly productive in my opinion, to maybe a point to be argued but there's other points in the economy that are suffering and productivity globally is suffering. and this all matters because output or gdp globally has obviously been volatile due to covid supplies and more. as it settles out, we can see that the long-term trends remain the same and that is the less

productive we get, the less horsepower the global economy has. back to you. >> i hear you, rick, but we were talking. andrew is on to something, i mean, the growth capital of the world is washington, d.c it's just -- >> it's everywhere >> it just ooze -- they don't know where to put it, it's just in the water there's so much. largess. how much fell through the cracks with taxpayers -- >> oh, my, when you watch, when you see the stories about how much fell through the cracks it really tears your heart out. >> right >> when we look across our country and we see all of the spots that need fixing of people that need help, the people that need to be re-educated to fit into a new type of economy >> right >> and we look sat all of this money that just disappeared, some of it in foreign countries, that's the problem governments were never made to pass out money, i'm sorry. >> but you've got -- >> tax credits -- >> if you know about it --

>> that's right. >> you've got to be crazy not to take, lean into it, and take advantage of it, if it's going -- do you think al gore had $500 million when he was vice president no >> you learned a lesson the other morning, joe okay and the lesson is i was actually -- i liked your rendition -- >> i learn every day from where i sit. >> to the news but here's the problem i have if the twitter files are enlightening to a large chunk of the population, to me, that's the most depressing thing of all. truly is because where have these people been asleep joe, you remember the grant of february '09, it's about the same thing, governments taking control, usurping rights and the explanation. we're going to get the same thing about the covid money, you mark my word >> all right

rick, some people love this show you're doing economic numbers and somehow we ended up here which is why -- >> it's all economics, isn't it, joe? >> in fact, some of it makes absolutely no sense like when i said mr. pillow, or my pillow. steve liesman joins us, everybody knows him, there's nobody that doesn't know him, right, steve actually, my pillow is a pretty darn good product if you've got any nick pain, i don't know about the slippers? >> where do you want me to go with that, joe >> you're going to do wherever you want i know that's going to happen. you did the all-america thing. in this world, the fed is always relevant >> do you want me to address the idea that governments aren't designed to give out money which is what rick said? i think we should have another debate on that some other day. because, let me talk about product produ

productivity two things happened. it came back a bit and labor costs fell year over year, i put that up, it's not the way we normally look at it because it really shows you what happened. look to the left of the pandemic in 2020. it was humming along okay at 1.8, 1.7, year 0 over year rate. as we shed workers, and pro productivity surged. and then we brought the workers back and productivity came back, relatively to the climate. and we're clawing our way back year over year look at the year over year costs and this is something that specifically spooked chair powell the number has come down, 3.4 if we were to update it, not the 3.5 on the chart there that's headed in the right direction. guys, everything has been changed. i showed you with the in and out

survey, in and out, up and down, we've put the people to work, now we've got to make them productive, get them to where the businesses need them to be in terms of efficiency levels and that's going to take time. it looks like we're on our way back here. >> we all decided the other day that's what we need. it is -- anyone that doesn't watch all the time, even i watch all the time, i still don't understand it. we want higher wages, but higher wages cause inflation. >> right >> and then you need higher wages to keep up with the inflation. that causes more inflation >> right >> we really don't want higher wag wages, but we really don't want lower wages because the income gap is big >> joe, it's this idea, we share this idea that businesses aren't stupid they don't brink people on at a loss, right? the idea must be, if you're hiring the people, people make

mistakes, you bring them on and you think you have business for them that's going to lead to productivity and you have a means for making them more productive than they were in the past maybe everybody's made a big mistake by bringing these folks back on or maybethey know something that we don't know which is the ability to bring productivity to a certain level. my point is don't make the sweeping -- i'm not saying you're doing this, don't make the sweeping analysis about the economy right now when we're in the middle of this back and forth and swing up and down when it comes to the read leaddown o pandemic >> you really think companies don't do stupid things? >> i trust their ability, joe. >> the buyback -- >> no, look, people make mistakes, first of all, it's better than government and economics. >> oh, i'd never thought i'd hear you say that. >> better than economic reporters sitting in chairs judging them >> you just said companies are better than the government >> on some things, joe i have a rule about that,

government does things that businesses can't do as quickly or as equitably as governments can. >> thanks steve. see you later. coming up, we've got a lot more on the markets recession fears that have been dogging investors. we want to know if tech stocks are in for another beating, we'll have analysis dean muster is here right after the break. you don't want to go anywhere. we're right back after the break.

♪ breaking news for you in the motorsports world, yankee slugger aaron judge has reportedly signed a nine-year contract worth $360 million to remain with the yankees. that's according to "the athletic." he was being aggressively pursued by the giants. the san francisco giants judge is the reigning a.l. mvp, coming off the soap in which he hit 62 home runs breaking roger maris' american league record. >> have you seen him >> you can see him standing at

the point -- >> you're in the wrong sport we thought football, right look out >> yeah. he was being courted by the giants, maybe the new york giants no, san francisco. >> he's great. he's a great player. >> i like him, he's fun to watch. >> i don't know, you need a guy that, you know, in the postseason, that's when you peak, you got to peak in the postseason >> yeah, but you can grow into that >> yeah. >> maybe >> watching him in the stadium, the whole stadium stops to see what he's doing. anytime you have a player that everybody stops to see what he's doing, stops talk to see what happens, that's worth the price of admission >> i'm back to thinking even though it might be boring, guys like verlander, max scherzer >> like pitching >> verlander in the first game of the series, the series final, the world series -- >> i know, you want him for that, too. but the yankees, the yankees had

gerrit cole, you anyway guy for the postseason then when it doesn't happen, it's like why. >> aaron judge seems a little young to me. give him time. >> right >> nine years, you end up doing that it was an entire season's worth of pack be people in the seats >> if i get you a draftkings account you'll be so -- like it's made me exponentially made me interested in everything. everything for $5 a bet fun. >> and you call him cheap. >> i didn't call him cheap >> i call myself cheap >> i agreed with him when he said he has frugality. the s&p 500 on a four-day losing streak. the nasdaq is down for three straight days. yesterday it was recession fears that helped drive tech stocks lower. meta lost close to 7%. other megas were down 2% our next guest is here to remind

us to pay close attention to earnings expectations. let's welcome gene munster you say tech stocks must be cheap, you say not necessarily >> exactly right, becky. this is not rocket science had the conversation shift in the last segment talking about productivity numbers, focused on the fed commentary, fed interest rate, all of that is kind of the vortex that we've been orbiting around the next few months i expect a shift in the next few weeks, next few months, as we focus on earning as you look at earnings, s&p 500 looking at 4% earnings growth which begs the question, if we are going into recession, what's going to happen to earnings. and you can pick your degree of recession, if we assume there's no recession, then 4% is probably right the markets got this right

if we assume a mild recession, it's probably flat to down slightly which ultimately gets to us a point which is, i think, just the reason why this is straightforward. is if earnings are coming down for 2023, will stocks go up? and the answer is probably is not. they probably will continue to go down. i've been -- our fund has been largely in cash. we were 45% in cash. what keeps me up at night is missing a big rally here just getting this wrong. but i think you don't need to overthink this i think we should sit tight, wait for some of these earnings to come down and then ultimately, you probably want to buy the market when these earnings have come down one set adjustment has come down and just a final thought on this, becky, is the timing on this it's like when is the bottom of the market that's the question i keep asking myself. and it could be tomorrow if ultimately these numbers come down quickly if the market quickly adjusts

for 2023 earnings down but if it takes the market, three, six months to make that adjustment, then we're probably going to be sitting in this funky to downperiod for a while. >> how much further down would it have to come anyway i guess i'm asking what's your base case? are we looking at a recession next year, how deep of a recession, as a result, how much of a drop would it need to be before okay, this is it? >> i think it's going to be a mild recession and that still implies that earnings need to come down as i mentioned, s&p that the down slightly, how does that impact the market. i think we still have another 10% downside to a lost of these tech companies and even some of the best ones i think are going to go down i don't think there's any commentary about the strength of these companies, but they're probably going down, if in fact the numbers are going down i think that's the central question the specific question that

you're asking i think is probably 10% downside here >> gene, thank you i mean, that's a really good analysis of what's happening here kind of reminds us to keep our eye on the ball. we'll talk to you again. >> thank you coming up after the break, jim cramer's first take on the trading day ahead. stay tuned you're watching "squawk," at the nasdaq market site in times square opportunity is using data to create a competitive advantage. ♪ ♪ it's raising capital that helps companies change the world. it's making complicated financial concepts seem simple. opportunity is making the dream of home ownership a reality... ♪ ♪ ...writing new rules and redefining the game...

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winding it down to the new york stock exchange, our good friend jim cramer joins us now jim, the markets seem to be headed towards another day of red. i'm also curious how you balance that with what's happening in the energy complex in china? >> well, look, i've got to tell you, the red is a trend followe of the red how many analysts downgraded oil stocks today how many people feel like the banks are no longer any good when they love the banks the level of lack of rigor -- and i'll tell you why it is. no one's ever really dealt with inflation, so they don't know how to talk about it these ceos don't know how to talk about it, the analysts don't know how to talk about it, so it becomes this, we don't know what to do, we're too young, we've never experienced it of course, they won't say that, but that's what i see. >> what do you make of what jamie dimon said yesterday he sort of -- the parameters he set up was a mild recession to a

hard landing, but there wasn't a conversation about no recession. >> well, look, i think that he's got good data, and jpmorgan's got good data, so i defer to him. dpu but i did not like his attitude, and i did not like the way he spoke. i think we have to be very conscious of the way we speak at this point and the way, the tone that he gave us basically said, i would put my money back into my cash account at jpmorgan, and i don't like that. i think that he can do better. i think he recognized that he's being too glib, and i'm willing to criticize him because i don't play for dinner. and a lot of other people are not willing to criticize him because they're scared of him or think that he's the deep i have no tolerance for his kind of fearmongering, when i don't think he really has that view. >> jim, before you go, somebody else who, by the way, has taken a lot of criticism, larry fink, what do you make of this >> oh, larry fink, just

nonsense nonsense he's trying to offer his customers what they want in a considered way he allows my kids to be able to say, listen, i want to vote against all the people who i think are bad, you know, bad on fossil fuels he's giving you exactly what we've always dreamed of, and he takes heat for this? it's nonsense. he's one of the good guys, for heaven's sake. it's upsetting >> jim cramer, never one to hold back we will see you not holding back, i'm sure, in just a little bit on "squawk on the street." the holiday season is in full swing.

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little more than half an hour to the opening bell on wall street joining us now, global investment strategist at jpmorgan private bank and lead writer for markets live at "the wall street journal" as well as a cnbc contributor you're aging before ours eyes, i think. happy birthday that was in the notes that it was -- i was kidding >> you scared me for a second. >> i was kidding i meant, i can tell you're a year wiser, how about that >> thank you >> so, given that wisdom, are we back in some type of, i guess, a trading range? we don't have to see we're in a new bear or it was the end of that brief bull we had in the dow jones? it's a trading range, and we're just seeing more of that, i guess. >> look, joe, i'm getting deja

vu to so many other points in the year where it's been one step forward, three, four, five steps back for the stock market where every time people get excited, they pile into stocks, high-yield bonds, meme stocks, some of the most speculative trades out there we get comments from powell or fears about rising rates, and those hopes are quickly quashed, and that's what we're seeing this week, where the s&p is down around 3.2%. it's erased its post-powell gapes from last week and as you said, we seem to be back where we start >> we, elise, yesterday, and i actually saw articles written that jamie did not say there was a hurricane coming i tried to get him to say, will there be a recession, won't there be will you weigh in? will there be some type of recession in 2023? can we call it real back-to-back quarters of declining growth >> we think so

that is our base case, that the united states is going to enter a recession, probably in the third or fourth quarter of next year and that's going to be accompanied by two, three quarters of -- gdp growth. if there isany sort of silver lining to recession, which is never going to be good news for economic participants, is that we think that's going to be the final thing to help bring inflation down, particularly that component that's being driven by wage growth. >> yeah, that was one of the -- the other things that jamie said was that inflation is so insidious that -- and lot of the ceos, all, kind of say the same thing, that they're willing to let the fed do what it needs to do, even if the it does cause a recession, because inflation is more concerning long-term than maybe a brief recession. >> we would agree with that, and we think about inflation kind of in three different components. you've got the goods inflation piece, which has been coming

down, and you know, is rolling over convincingly. you've got the shelter component, which, per the higher frequency data that we're starting to see, we would expect to fall over the course of the next three to six months, and then there is that labor market component that chair powell called out when he spoke last week, and for that piece to really come down convincingly, you're probably going to have to see a rise in the unemployment rate the fed has conveyed they're willing to tolerate a rise in the unemployment rate, and so we're preparing for that to be the case >> gunjan, in terms of these data points that, i mean, we really are sort of going from one of the next, the most recent one that was concerning was the jobs report on friday. before that, we had a couple of inflation reports that were cooler than expected and the market just seems to, you know, depending on whatever the news of the day is, it moves one way or the other what should we be watching between now and the holidays >> definitely cpi next week.

any fed speak out there. what i think what you described is part of why wall street is just so, so bearish right now. in futures positioning, people are far from bullish, and among the most bearish levels we've seen over the past decade, mutual funds have increased cash balances to around 2.5% of their portfolios, up from 1.5% at the start of the year, and hedge funds have been decreasing how much leverage they're taking so, all these different economic data points where, you know, one is a sliver of good news, then those hopes are quashed once again. you know, i think that's what's really put people on edge and made them reluctant to kind of bet on this santa claus rally through the end of the year. at least among investors i'm talking to people are afraid of, you know, getting contrarian and getting bullish out there right now because of that. >> and elise, we only got about 20 seconds, but do you need to be -- have a new viewpoint on inflation? this is labor. i mean, commodities are coming under control. rents, shelter, seems like it's

not the issue. you need to be an expert in labor. we got about ten seconds but it's different, isn't it >> that is different and we, again, expect that labor component to do its part in bringing inflation down and see plenty to do, which we lay out in our 2023 outlook that was published this week. >> very good thank you both good to have you both on make sure you join us tomorrow "squawk on the street" is coming up right now ♪ good wednesday morning, welcome to "squawk on the street," i'm carl quintanilla with jim cramer and david faber. china loosens those covid restrictions, but the trade data add fears to worries about global recession we did trim some losses on this continued decline in labor unit costs. those easing covid restrictions, china is pulling back from that zero covid policy. >> plus, morgan stanley is joining the chorus of layoffs. we'll give you some detail