chinese regulators would ban the products. rough reception for david zaslav in boston he was met with chants of pay your writers as he tried to deliver the commencement address. it is monday, may 22nd, 2023 and "squawk box" begins right now. good morning welcome to "squawk box" here on cnbc we are live from the nasdaq market site in times square. i'm becky quick with mike santoli and steve liesman. we have a lot happening today. let's check on the u.s. equities at this hour you see things are barely budging. the dow down 1.6 of the the s&p

down 2 points. nasdaq off 15. a lot happening as we wait to see where these debt default talks are headed treasury markets is a reflection on friday, yields closed at the highest level. the 10-year treasury is up to 3.65%. new this morning, eu privacy regulators fining meta $1.3 billion for sending user information to the u.s meta will appeal the ruling in an unjustified fine. it says there is no immediate disruption to facebook in europe shares down 1% double so far this year. now to the debt ceiling. president biden and mccarthy will meet at the white house to resume negotiations. kayla tausche has more good morning, kayla. >> reporter: good morning, steve. president biden spoke to speaker

mccarthy and proposed the meeting en route from the g7 summit in japan. white house deputies held talks on the president's behalf. negotiators met two hours last night and seen leaving the capitol at 8:30 last night after pausing on friday and saturday as the proposals were non starters today's meeting could produce positive results at issue is the level of spending with the white house proposing to keep all spending flat from this year to the next. saving an estimated $90 billion according to the cbo there is the length of budget caps still in play republicans proposed ten years and democrats want two president biden in japan said he also wants republicans to bend

one of their red lines not raising taxes. >> i'm willing to cut spending i propose cuts in spending of over $1 trillion, but i believe we also have to look at the tax revenue. the idea that the republican colleagues want to continue the $2 trillion tax cut that profound negative impacts on the economy from the trump administration >> reporter: president biden says the administration does not have options to raise the debt limit without challenges in the next few weeks secretary of the treasury janet yellen on "meet the press" said the treasury would have hard choices to make if there is no plan to pass congress. becky. >> kayla, thank you. >> kayla, i have two questions real quick can you say in dollars how far apart the two sides are? >> reporter: well, i think at

this point it is hundreds of billions if not trillions, steve. what the republicans are using for the basis of negotiations is the bill they passed several weeks ago which democrats calculated to be a 22% cut of what president biden proposed in the budget the democrats are keeping spending flat. it would tell you that would would be the zero rise in spending the cbo has estimated the rise of spending in the next decade they are using that data to say we would with cut spending by $90 billion and $1 trillion over a decade republicans are not buying that. saying the cuts need to be steeper. >> would you say that republicans have already won in the sense that they have forced

negotiations over the budget through this debt ceiling process? >> reporter: i would say that and also, at least, in messaging. when the concept of default comes up and blame game comes up, every time house speaker mccarthy is asked if republicans are to blame if default or if he takes default off the table, his refrain is republicans have taken the blame off the table in exchange for the spending cuts they proposed and passed in the house. because he has done that, he is able to wash his hands of it and say we have done our job it is not that easy and everybody else knows that. to the public, you know, it is a successful message even yesterday, president biden was asked if he would shoulder the blame if there was a default. he said no because we have been negotiating in earnest and

brought an honest proposal to the table and an necesgotiatingn good faith he understands maga republicans want the u.s. to default and want to tip the economy in default. >> kayla, thank you. for more on the meeting today, we want to bring in congress member french hill he is the vice chairman of the financial services committee thank you for being here. >> good to be here. >> you wind up with talking points from one side or the other. you are a serious guy. you can help us see through what is happening on these levels kayla pointed out a couple of things happening republicans have passed a bill when we had mccarthy on last week here, i asked him point blank. do you think this is going to be something that is happening?

a default? he said no by the way, that day, the markets responded to that. thought it was taken p off the table. i think that is not necessarily what he meant. he meant we have done our part. you are talking hundreds of billions of trillions on the table. one side is saying absolutely and we want more revenue and the other side is saying no way. >> good to be with you i think there are mixed signals on this. on february 1st, when kevin mccarthy went to meet with the president in the oval office to set the standards for the sensible increase in the debt ceiling, he told the president there are two red lines. i'm not going to raise taxes and i'm not going to have a clean debt ceiling bill across the house floor. other than that, let's talk. for 100 days, we were unable to do that. not we're talking.

we wasted three days over the weekend while we get the mixed message. on the airplane flight home from hiroshima, the president again said, revenues were not on the table. saturday morning, revenues from his staff were on the table. we need to stop posturing and have less name calling and get to deal making. >> let's talk about revenues does that mean extending the tax cuts from before what are we talking about? >> look at the house proposal. the house proposal did not have significantrevenue impact othe than repealing some of the aspects of the inflation reduction act. we didn't propose any other revenue changes or proposed e extending the trump tax cuts we are trying to raise the debt ceiling. we thought we did that in the responsible way. $1.5 trillion debt increase. hold spending flat have a projected spending growth of 1% per decade take easy money off the table up

front. let's not spend $600 billion on student loan, et cetera. do regulatory reform to get people back to work and get the economy growing from the supply side. >> biden talked about not rolling back the victories. is that the sticking point >> maybe it is i don't think they put a serious proposal on the table. they came to the friday and saturday meetings talking about raising taxes and spending more money. that's not the parameters of the deal the president and mccarthy talked about since that february 1st meeting. >> what do you think happens in terms of the deadline? mccarthy said he needs 11 days to get something passed once a deal is reached. we're within that timeframe from where the treasury secretary has said we will run p out of money >> she reiterated. i'm sure we will hear from secretary yellen reiterating

that point the speaker has moved. this is not a talking point. we thought we did it in a responsible way to give us negotiating room my frustration is we burned three days, friday, saturday and sunday, of not having productive talks we should have because the speaker is right we need a 72-hour rule for the bill to rest we need the week to do this in the right way and it could take into account senate action as well >> why walk out of the meetings if time is of the essence? >> they could not go back to the starting point remember, becky, the key thing politically here is chuck schumer is not engaged here. he didn't have the votes for the clean debt ceiling limit in the senate this dropped off the charts in this debate. if he had that, he could have moved earlier in the spring or nancy pelosi and chuck schumer

and biden in december when the government could have extended the debt ceiling and they didn't this isfrustrated. interest is creeping up to a high level about 13%. traditionally at 14% that's where you don't want to see interest on the federal debt on any economy because of high interest rates and unprecedented spending since the pandemic, we are back at the level of government we were after world war ii and after world war i. we want to move back to a pre-pandemic set of spending priorities and fight about how to balance the budget and not have the fight over the deficit. >> the president is willing to rollback spending to levels from last year, that's not enough >> it's a good start we talk about last year. i heard the comments about cuts. this was five months ago we are talking about the spending levels in december is

the baseline and grow 1% from there. overwhelmingly the american people are for regulatory reform and capping the growth and spending we believe we are on the side of the kitchen table of america he here because spending has contributed to inflation. >> why does this debate happen here and not in the budget process? >> steve, such a good point. that's why we started out at the beginning of the year to raise the debt ceiling and use the agreement to let congress debate the appropriations bills under that ceiling amount and decide who gets one, defense versus non-defense. that's how they are connected at the top line they don't have to be connected below that we agree to a term and raise the debt ceiling and let the congress and house and senate do their work in appropriations process. that's the way to make it more

orderly than jumble all into one. >> secretary yellen said if we default, 8 million americans would lose their job and the stock market would drop. moody's is saying if this happens, 7 million americans would be out of work and trillions of dollars of household wealth is be wiped out overnight. do you think a deal could be reached? >> we should put the premium on doing a deal they the second question is do you need a short-term extension for the deal i don't like the deal that john boehner said congress moves very quickly until it moves slow. if you can't do it in the right way, that is what we are confronted with and i'm frustrated with the hours we lost over the weekend. >> you mentioned the level of spending and debt comparing it to after world war ii with the

rush of spending there was never a moment there where it was radically cutting back expenses aside from the war costs going away the economy grew out of that if we put spending back at last year's level, it is not that the debt is more onerous >> you have to ask harry truman with the post-war president and the employment act of 1946 and layoffs after the war. >> the economy was in massive transition and turmoil >> you are right it was a tougher transition. we have to make that transition here because we added $6 trillion to spending under joe biden and the bipartisan spending in the cares act. you are talking about a federal sector 40% larger of spending.

that is war-time spending. instead of us going back to normal, we are still spending like the government is okay at that level i'm arguing that record levels of tax revenue is at a 70-year high and so is spending. >> let's say you passed a clean debt ceiling bill. i know you are not in favor of that whatever would you be able to enact the budget principles? >> we could work on those as we will in the beginning. here is the question if we enacted a clean debt ceiling, how long, steve >> i don't think it matters. you guys have agreed to this spending that's what you agreed to. that's what i don't get about the process. it seems to me it is a minority to impose a will that is different from the majority

decided. >> negotiation >> you decided to do the spending that is what congress decided. now you say we will not pay for it because we did not agree to it before. >> i disagree with the premise completely you are raising the debt ceiling for future spending. you are taking advantage of the cap to have the conversation about future spending. what that future top line is and you say we expand the debt ceiling by how many trillions of dollars which is an amount of time and then you spend up to that again you are right. we know we are paying for the bills of the past by raising the debt ceiling no one is saying we're not the question is use this moment to set that spending level in the future and that's what the debate is about. not the debate about the past. >> congress member hill, thank you for coming in. >> great to be here. coming up, micron shares tumbling after chinese regulators announce a ban on

some of the products details after the break. plus, a chilly reception for warner bros. ceo david zaslav with his speech intererupted by protesters i are you are watching "squawk box" on cnbc >> announcer: this cnbc prom is sponsored by truist wealth ♪ ♪ every day, businesses everywhere are asking. is it possible? with comcast business...it is.

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in a news alert, pacwest is agreeing to sell $2.6 billion of real estate to a globally real estate company the portfolio includes 74 construction loans and pacwest will sell additional six loans to kennedy wilson after securing consensus. you see pacwest shares responding up 6% in early trading. shares of micron are falling after the chinese regulator would ban purchases of some prots products micron products have failed the network security review and said micron posing a security risk to the chinese infrastructure supply chain china chip stocks rose overnight on the news in response to the beijing announcement the commerce secretary told the wall street journal that the u.s. opposes restrictions with no bases in fact -- no basis in

fact >> this is just pay back >> right >> tit-for-tat u.s. had their ban on chinese technology and this is them coming after us. >> this is the memory chips and trying to convey to south korea. don't help them out here >> do we have a g7 report coming up later >> china and chips >> some broad statement of unity about cooperation, but with some -- >> they never said it. it was heavily -- a lot of innuendo >> i'm not sure he got enough support. david zaslav deliver the commencement speech at boston university yesterday he was interrupted by protesters

who chanted pay your writers >> pay your writers! >> some people -- >> pay your writers! pay your writers pay your writers >> some people will be looking for a fight. >> bad timing by david, i think, on that one. bernie sanders weighing in on twitter. after the video went viral, he tweeted if warner bros. can pay david zaslav $286 million in the last year, it can afford better benefits and income. listen to the chants pay your writers >> that is bernie being opportunistic. coming up, we talk to two

young stars in the world of economics. finalists from the economics challenge. that is next you will not believe how smart these kids are. later, we have neel kashkari on the fed's next move he joins us on set at 7:00 a.m. eastern. "squawk box" is coming right back helping businesses both large and small, communities and the people who live and work there grow and thrive. we're proud to call these places home too. they're where we put down roots, and where together, we work to help move everyone's financial goals forward. pnc bank. how do we show strength and stability? (eagle call) a mountain? a tree weathering a storm? (thunder) lions? nope. (lion rumbles) we do it with our people.

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♪ ♪ the l'or barista coffee and espresso system. a masterpiece in taste the 23rd national economics challenge kicking off later today. i will be the alex trebek for the contest. joining us now are the two finalists from mt. hebron high school and the school from science and technology in georgia. thank you for joining us

congratulations on advancing >> thank you >> this is a national challenge. >> yes. >> thousands of students involved you advanced mt. hebron makes it all the time. >> i do. >> you are a sophomore you got on the team. tell me why this school is so good at this >> we have a very interesting way of teaching the lower division we have the upper division team. they coached the younger students they were able to reinforce their knowledge and spread what they know to us and we are able to learn from them. >> first time for the gwinnett school tell us about the school s.t.e.m. >> it is a charter school. it is a public school. a lottery system that you have to enter and after you qualify with a certain science and math score and you enter that system. this is a school of people that

focus on their career in academics. that is their first priority >> explain this to me. how does an economics challenge work i think of a spelling bee. >> hang on, becky. we have questions. >> this is -- >> i want to ask a quick question how did you get into economics and why? >> my dad is a businessman he used to work in the financial district i really just grew up around economics. i guess i never got into it until i took a class this year it is always like i hang on. >> i knew nothing about economics and had no interest. >> it goes for those who studied economics. >> and then i got recruited for the team for our school. i started studying and eventually i made the team from there, the topics of economics have been interesting. >> super interesting

i have sample questions, becky. >> don't ask me. i have to call up google >> we start off with an easy one. what is the twin deficit hypothesis don't answer it. >> what? >> i want people to have five seconds. >> growing budget deficit leads to growing trade deficit >> bingo >> yes >> what economic term describes slow growth, rising prices and rising unemployment and what would be the best open market operation to reduce the inflation? becky. >> i wasn't listening. >> slow growth cr rising prices and rising unemployment >> stagflation >> yes >> correct now, hana, what is the best market operation to reduce inflation? >> sell bonds. >> beautiful okay they didn't say raise interest

rates. open market operation. if inflation is 2% annually and nominal income rising 6%, how long would it take for real income to dahouble? >> 18 years. >> the rule of 70. >> divided by the growth rate. >> last month. these are easy questions relative to later today. this is more like it assume apples cost $2 and oranges cost $1. lee buys 10 apples it each gives lee 40 units of utility. what should lee do to maximize her utility? >> buy more oranges and less apples >> yes. >> or fewer appaapples >> the english part. >> that counts >> i was correcting the english.

he would have gotten full credit do we have time for one more one more if country a is experiencing high inflation relative to country b wlahat can we expect n the currencies >> i say country a currency will deappreciate it relative to country b. >> b >> depreciate. >> these guys went 5 for 5 good luck. i will see you at the contest. we will have a bit of it at the 1:00 show. the opening question what does the winner get >> a prize trophy bragging rights of the number one economics high school in the country. >> you are excellent good luck today. >> totally impressed thank you for coming out congratulations to the council for economic education of which cnbc is a supporter.

teach economics around the country. >> thank you so much when we come back, we get you ready for the trading day ahead and including jpmorgan chase investor day and economic earnings later in the week the "squawk planner" is after this break what do you see on the horizon? uncertainty? or opportunity. whatever you see, at pgim we can help you rise to the challenges of today, when active investing and disciplined risk management are needed most.

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good morning welcome back to "squawk box. we are live from the nasdaq market site from times square. dow futures up 18 points s&p futures off fractionally nasdaq off 12 points you have to think the debt ceiling talks will impact where things go and no one panted to g -- wanted to get ahead of that. now to the epstein story he discovered bill gates had an affair with a russian bridge player and threatened to use that knowledge epstein met her in 2013 and paid her to attend coding school. in 2017, he asked to be

reimbursed for the cost of the course a spokesperson for bill gates sold the journal he met with epstein for fphilanthropic purposes at the time, epstein was trying to get jpmorgan chase to set up a charitiable fund to include gates as a doner epstein tried to convince jpmorgan chase executives jes staley to tailor to bill gates the firm did not need epstein as a client and wished it never done business with him you have to wonder what will come out in the emails as a results of the lawsuits. >> you know, you can read between the lines of who is

looking to say i'm trying to explain why there is this much of a paper trail and leading back to epstein. it is fascinating. still a lot with jpmorgan chase. >> this email shows how epstein operated this shows how he went to work find something out about someone and leverage it. >> to make it clear, after he was convicted. >> right >> convicted pedophile thinking of using this as a way to rehabilitate himself the piece where bill gates was interested because he dangled the idea of lobbying for a peace prize. pretty tangled web i'm sure this is not the last. on this week's "squawk planner. minutes from the fed reserve

meeting. we get jobless minutes and the estimate of gdp for the first quarter. friday is april duriable goods and the personal income and spending friday is the last day before the house of representatives le leaves capitol hill for the recess for memorial day. on the earnings report, lowe's and nvidia and best buy and costco and gap i went to costco this weekend. the parking lot was full there were lines to get in with the shopping carts i texted my wife i said, could you do this order online i turned around and went home. >> look, if walmart is any gauge, it had much better same-store sales and anticipated earnings if you are looking at a model,

that might be the one. most of the retailers have been decent the question is this current quarter. >> wasn't the consumer supposed to have given it up by now the second month of the quarter. are we still talking about the c.o.l.a. increase that went to the seniors? i don't think the costco parking lot was full of seniors. >> you have a lot of retailers who said they saw weakness that extended to may costco is an attractive mix of people getting groceries and same with walmart. target with issues on the specialty lines. they have a different mix than the others. >> i'm having deja vu. we talked about this 20 years ago. >> we did. >> we used to be in cubicles next to each other >> cycles are cyclical

jamie dimon taking the stage at the jpmorgan chase investor conference they will have the stcrutiny of the takeover and the succession is in focus after james gorman is stepping down in the next 12 months and looming large is the prospect of the u.s. default all this as dimon is deposed in lawsuits over jeffery epstein. we have our guest with us from rbc. gerard, i don't know if jpmorgan chase has ever fetched a premium in the industry as it has right now relative to the rest of the business it is the nnot compared to regil

banks with jpmorgan chase is the inn dispensable bank in this environment? >> i think jpmorgan chase has driven to the premium valuation. i think it is deserved they have been delivering on the profitability. you look at the return on common equity or return on equity and it is superior to the peers. that is what drives the valuation which is profitability. also, growth this company demonstrated strong growth over the years and with the acquisition of first republic, that enhances the growth in the near term. >> it is fascinating that to a degree, the large banks were asked to bid for first republic in receivership. it may be reluctant. when jpmorgan chase wins it, it is too good a deal they can't lose in the environments

i wonder if jamie dimon did suggest that there could be af af aftershocks that we are not through this he has relationships with smaller institutions where are we with the stress and bank flights >> it is a good question the result of the silicon valley bank failure in march. we think it is behind us we say that because of the evidence as you know where every week the fed releases the h-8 data with the deposits and bank loans. after the fallout with the smsmat smater -- msmaller banks in march. j generally speaking, he was

regarded in saying in one or two others we don't see that right now. especially in the top 20 >> gerard, lending has held up while deposits are falling >> steve, you are right. we are seeing moderate loan growth if you look at the h-8 data, the loan growth is high single digits, but compared to easy comparisons. when you do it sequentially, you see modest to moderate loan growth history has shown in the u.s. banking industry that loan growth mirrors nominal gdp gr growth if we see 4% to 6% this year, that will bode well for loan growth in the low single digits this year. >> still muddling through. gerard, thank you. we'll catch up after the meeting. >> thank you. coming up, a rare interview with the son of bernard arnault.

robert frank we'll be back after that and get the new samsung galaxy s23 plus free with no trade-in required.

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at ice, we connect people to opportunity. time for the executive edge and a interview with alexander arnault. he is the son of betrnard arnault. we have robert frank with more >> two years after it acquired tiffany, the profits doubled s sales reopened after the renovation it is the most expensive store for lvmh arnault says the next decade, not the quarter, is looking out for the brands. >> we need the store the perfect

jewel box over being pressured by the street or others saying we have to open. i think this store is the real definition of how long-term vision >> other parts of the strategy is lvmh moving up the value of tiffanys it has higher priced profit lines. you are looking at the vip sales room of the new york store the landmark store prices to get in the vip area start at $200,000. the products go to millions of dollars. ironically, by not focusing on the share price, the price up 28% this year. >> you say to get into the room is $200,000 at the entry level do you have to agree to buy something? >> i think you have to agree to be a serious looker at the $200,000 product. >> there are stores where they lock the doors and don't let you

in unless they check out closely. >> they look at your sales history and if you bought before, it is easier >> what is the cheap $200,000 product? >> i don't know. remember, audrey hepburn walked in and asked for anything for $10. i asked if they had anything at $100 which is equal inflation today which is a perfume or a scent. >> exactly robert thank you. the relationship with china is said to improve shortly, but china's regulator announced it would n crbamion products. we talk chinese relations after the break. >> announcer: executive edge is sponsored by at&t business at&t 5g is fast, reliable and secure oh, i can tell business is going through the “woof”.

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g-7 leaders condemning china at last week's summit in japan over beijing's militarization of the south china sea and its use of economic coercion the coalition also urging president xi to advocate for russia's withdrawal from ukraine. all of this coming as the world's wealthiest kdemocracies look to de-risk their economic relationship with china. joining us author of the new book called "party of one. he was expelled from china in 2019 for his coverage of president xi and his family. thank you for being here today >> thank you for having me.

>> let's talk about the relationship between china and the united states. president biden on his way back today was -- or yesterday was talking about how the u.s. is not looking to decouple from china but looking to de-risk and make sure they're not too reliant on one country, especially when it comes to supply chains. is that a view that sits well with china >> well, i think we have to take a step back and look at how china sees the relationship. so i think if we look at how china defines itself and its place in the world, china under xi jinping believes in this idea of the china dream and it has to restore its rightful place in the world, which means creating a nation that is prosperous, exuding economic strength and military power for a long time the chinese leaders have seen the united states as sort of a poartner the can work with.

so for china to actually achieve its dream of its national rejuvenation it has to push back more firmly against the united states it has to challenge the united states across trade, economy, technology, so in this backdrop, i think it's safe to say that, you know, to some extent whatever president biden says for now in terms of the relationship, the longer term trajectory is still locked into this more confrontational track because the chinese view of the relationship is now locked into this view where for china to attain its dreams it must push back against the united states' efforts to defend its dominant position in the world. >> we see some evidence that they're going to be pushing back against some micron products and banning things how do you see this playing out in other manifestations? >> the micron ban is one step in many the chinese have taken in recent years, in fact, in recent

months in the last few weeks there was a series of law enforcement raids against foreign countries. that sort of reflects this continuing view that's growing in beijing that, you know, foreign companies and foreign businesses in china, they actually have to operate on china's terms in china, so when it comes to being able to do business in china, you have to operate by their rules, and one of the key parriorities for xi jinping is national security when it comes to dealing with china, more and more businesses are coming on to the fact that you have to accept this is the environment, chinese cares more about national security than ever before. they want to make sure chinese interests are protected before they consider what foreign businesses want. this is the environment we are operating in we should expect to see more pressure that the chinese state wants to put on foreign

companies doing business in china. >> i want to thank you for being with us today. love to have you come back, talk a little bit about why you got kicked out of china, what you were writing about the book is called party of one. the rise of xi jinping we appreciate your time? thank you very much. thanks for having me. coming up, minnesota's fed president neel kashkari will join us right here on set after the break.

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good morning, investors putting the debt ceiling talks front and center this morning as president biden and house speaker mccarthy get ready to meet again today we'll have a live update from washington. plus, a wide ranging interview with minneapolis fed president neel kashkari is just minutes away we will talk about the implications of a debt default on the nation's economy, the state of the banks and where rates are headed. and meta fined $1.3 billion by the eu privacy regulators for sending user information to the united states. that story and other corporate headlines are coming up. the second hour of "squawk box" begins right now ♪ good morning welcome back to "squawk box" right here on cnbc we are live from the nasdaq market site in times square.

i'm becky quick along with mike santoli and steve liesman. we've been watching the u.s. equity futures people waiting to see what happens with these debt default talks probably dow futures off by nine points s&p 500 futures down by two, the nasdaq down by 14. treasury market is a different story. the yields on friday closed at the highest levels we've seen since march. the two-year is at 4.234 person. > president biden and kevin mccarthy are expected to meet. kayla tausche joins us from washington. >> president biden spoke to house speaker kevin mccarthy and proposed today's meeting while he was on air force one on his way back to washington from the g-7 summit after those talks hit repeated snags over the weekend while white house deputies held talks on the president's behalf,

negotiators met for two and a half hours last night. they're seen leaving the capitol around 8:30 p.m. after pressing pause on friday and again saturday as both sides proposals were seen as nonstarters and while today's meeting could produce positive results, there are still issues over two of the most basic tenets of any deal. first the level of spending. the white house has proposed keeping all spending flat from this year to next year saving an estimated $90 billion. republicans proposed an increase in defense spending and much steeper cuts to other discretionary programs and then second, the length of the budget caps is still in play according to the speaker republicans have proposed ten years, democrats want two. president biden said in japan he wants republicans to bend one of their red lines of not raising taxes. >> i'm willing to cut spending, and i proposed cuts in spending of over a trillion dollars but i believe we have to also look at the tax revenues

the idea that the -- my republican colleagues want to continue the $2 trillion tax cut that had profound negative impacts on the economy from the trump administration >> president biden says the administration does not have any options to raise the debt limit yunilaterally without challenge in the next few weeks. and treasury secretary janet yellen said treasury would have some hard choices to make about which bills to play come june 1st, if there's no plan that can pass congress. steve. >> thanks very much. minneapolis fed president neel kashkari said instead of doubling down on a complex system of rules for banks that provide the illusion of stability, we should adopt a far simpler and more effective solution, more equity capital. you've been talking like this for a long time. >> i have. >> didn't you have a number like 40%? >> well, we said for the largest

banks we thought -- and this is consistent with board of governor's own analysis. >> this is several years ago, right? before the -- hit the fan. >> that the biggest banks needed north of 20% real equity capital to protect themselves against the shocks that hit the economy, and what's funny in america is that the biggest banks have much lower levels of capital than the small banks. just take silicon valley bank if they had a lot more capital, their depositors would have been comforted. we wouldn't be in this right now. banks hate higher capital because it directly limits their profitability and their stock prices then we're in a situation where the government three times in 15 years has had to run in and stabilize financial markets. >> it would also mean less lending. if they had to hold more capital against those loans, then there would be fewer loans the idea of the banking system is you take in a dollar and lend out $12 or whatever the number

is. >> like everything there are tradeoffs. we have a system today that in three -- in 15 years, the government has to step in three times to stabilize the financial system, 2008, 2021 covid hit and now 2023 again that strikes me as an absurd system if that's the balance we've drawn. >> what's wrong with the bankers? why do thiey put themselves in these situations are they student or they know there's not going to be any repercussions against them >> you want to make money? you want to have bigger bonuses. you want to have your stock worth more so you roll the dice. i don't think they're actually saying i'm going to roll the dice and get build out i'm going to roll the dice and the downside's not that bad. it's not very like lily it's not going to happen to me the best analogy i have is nuclear power. if a nuclear reactor melts down, governments will spend unlimited amount of money to stabilize it, not for the sake of that power plant or their executives, but for the rest of us who suffer the consequences

it's the same situation in financial markets. >> let's bring it to the current situation. where are we in this unfolding turmoil that we've had out there. is -- what are you hearing from your banks in the minneapolis area, there's quite a few large financial institution thes ther, and what are we hearing nationally >> in our region we see very little impact. they're not experiencing their strains directly borrowers are not experiencing it but my experience had in 2008 has taught me every time we thought we were through it, every time we said this over smooth sailing z the stressors reemerge if inflation continues to be entrenched at high level and the federal reserve has to keep rates to bring inflation back down, then the yield curve is going to be inverted for an extended period of time, and then the stressors will likely continue and maybe get worse

if markets are right that inflation's going to fall quickly, then you could imagine policy normalizing the yield curve uninverting and then the stresses in the banking sector become smaller. >> the inverted yield curve creates direct stress in the banking system, which is supposed to borrow short and lend long, correct >> correct >> and if long is lower than short you can't make money where are you in the -- how do i say this the planning for or the influence of the banking turmoil on your outlook for rates? is it a time to pause because of that, or is it a time to keep going and fighting inflation >> well, we have to keep going and fighting inflationmen the question is what rate do we continue to raise the federal funds rate we are still trying to get data on what other stressors in the banking sector others have talked about this a lot. when the banking system comes under stress that its can be a damper on

inflation. we're not yet seeing the evidence that the stressors in the banking sector are doing our work for us to bring inflation down that doesn't mean that channel isn't there. that's something where i'm open to saying let's see if we can get more evidence. are these banking stressors having some imprint on inflation. if they're not, the job is solely up to the federal reserve to continue to do our part to bring inflation down if the banking stressors are going to bring inflation down, we should take that on, so i don't know yet. >> if you had to vote today, how would you vote >> it's a tough thing. it's the reason we vote every six weeks or so. i think right now it's a close call either way versus raising another time in june or skipping some of my colleagues have talked about skipping. important to me is not signaling that we're done. if we did -- if we were to skip in june that does not mean we're done with our tightening cycle it means to me we're getting more information, that's the

most important thing that we're not taking it off the table. >> what do you see when you see the market pricing in the idea that the fomc is going to have to cut rates before the end of the year >> they've been thinking that for a while, and even though we keep getting surprised about how inflation has been, how entre entrenched it has been, markets seem very optimistic rates are going to fall. i think they believe that inflation is going to fall, and then we're going to be able to respond to that. i hope they're right, but nobody should be confuse about our commitment to getting inflation back down to 2%. >> 3%, 2.5% doesn't cut it for you? >> if we move the goal post when we're behind, there's no reason for you to ever trust us in the future we have to get inflation down to 2% >> where are you at now in terms of how far you think the fed needs to go? >> honestly i don't know the tough part about june, i'm going to have to put something down so far services inflation seems

pretty darn entrenched i mentioned to you before we came on camera, my flight to new york not an empty seat is there any evidence that the services side of the economy is slowing? i haven't seen it yet. >> or the jobs market. >> jobs market continues to be very strong. it's not quite as frothy as nine months ago. >> were you a 5 and 1/8 on your prior -- >> no, i was higher than that. >> do you still feel good about being higher than that >> we've seen 6%, 6.5% some people say if you look at the taylor rule you need to go to 6%. >> the taylor rule is such a crude instrument when you think about what is changing -- >> hold on, i got john taylor on the line. >> he knows my views on this. >> okay >> right now since the seven or eight years i've been on the committee this is the most uncertain time

we've had in terms of understanding the inflationary dynamics i'm having to let inflation guide me, and it may be we're letting inflation guide us let's see what happens in the underlying services economy, what's happening in the inflation dynamics if the banking stresses start to bring inflation down for us, maybe we're getting closer to being done i just don't know right now. it's not very helpful if you're trying to bet on -- >> if you're uncertain, you're uncertain. >> you mentioned the inverted yield curve, which has been that way for some time. things like the leading economic indicators, a lot of people are giving people in the markets some confidence that we have the conditions in place that lead to recession. a broader recession, which may also be why the market is sort of anticipating a cut down the road how much weight are you putting on those prospective signals in this cycle >> we look at them i look at them i don't put a ton of weight on them

the same indicators didn't see high inflation coming. financial markets can be wrong and can be surprised then i go and balance it when i travel around my region and the ninth federal reserve district is not the whole country, but most sectors of the national economy are represented in our district there's very little conversations about a weak job market, about a real falloff in demand, about prices starting to flatten out. it still seems to be a robust economy from what i can see as i visit with businesses. >> how do you prepare at the federal reserve for a possible default on the debt ceiling? >> a lot of conversations happening behind the scenes on what parts we can do to try to keep the financial system resilient, but we absolutely cannot protect the economy against a recession. you know, from a debt default. when i travel arnound, one of te most common questions i get from audiences, am i worried about the dollar and the dollar being the reserve currency, not just about the debt celling in general. what i always tell them is the

reserve currency is determined by investors all over the world. they're voting which economy do they have the most confidence in what happens in these debt ceiling standoffs is it erodes confidence in the u.s. economy and our u.s. economic system and makes our competitors look a little stronger on the margin. it's a relative game, so europe can get stronger or we can weaken ourselves this type of brinksmanship weakens ourselves relative to our global competitors. >> you know, aside from the globe kind of voting as to which economy is the most stable and trustworthy. treasury securities are like the water in the pipes of the global financial system i think a lot of people here don't recognize that roll right there. if you have these contortions with short-term treasury bills, you know, having a much higher yield than you would otherwise think because of this, we may miss a payment have you modeled out how that would play

>> it's very hard to model out something like that. it's like trying to model out the lehman event it seemed like the first day it was kind of bad and then it got really bad over the next several weeks. one of the things we keep learning over and over again, all of our modeling is helpful to do, but it never actually captures the underlying dynamics that hit us. and it always hits us in a way we aren't expecting. >> do you have a break the glass emergency plan if they do default? would you still raise rates in june if that were the case >> i'm not going to speculate. i'll just defer to our chair we do not have the tools to protect the economy. >> it was a break the glass plan back in the last time it happened they don't like to talk about it it makes the politicians seem like. >> like they have an out >> like they have an out >> talk about outs >> it always struck me that in order to bring down inflation, you have to have the monetary authority doing the right thing, and the fiscal authority doing the right thing.

there's been no help at all from the fiscal authority why don't you guys make more of that that you can't fight inflation on your own as certainly as you couldn't fight the pandemic on your own >> first of all, we do try to stay out of the specifics of fiscal policy. we do say very clearly that whatever fiscal policymakers do will be an input into our forecast that we have to adjust in response to that. many of the challenges we've been seeing, whether it's the war in ukraine, that's been a big contributor. the fiscal authorities are going what they can. supply chains is another factor. covid is another factor. there have been a lot of dynamics that have led to this high inflation i do think on some dimensions, the fiscal authorities are doing what they can. covid, knock on wood, is mostly behind us at this point. that helps a lot. >> do you see inflation coming down what's your outlook look for inflation? >> i do see it coming down i do think we're committed the good sector of the economy, inflation has fallen quite a bit in the goods economy, housing we

know should be coming down new leases have come down. it's right now the underlying services part of the economy, which is stickiest and we're going to have our work to do to make sure that that gets back into balance >> what about the possibility of recession and what you would do as a policymaker if there was a recession? would you be cutting rates if there was a recession? >> that's too simple an example. too many factors would have to go into determining whether cutting rates was the right response, depending on how deep the recession is, twhat sectors of the economy are getting hit last year, a year ago at this time the debate was are we in a recession right now? first two quarters negative gdp prints while the job market continued to create jobs hand over fist. could we be in a technical recession with a strong job market i would look at that scenario very differently than if we're in a recession and the country is shedding jobs at a very rapid pace. >> and if inflation was still high >> and if inflation was still high. >> you wouldn't necessarily cut

rates if inflation was still high and there was a recession >> not necessarily. >> guess we got to heavy it there, folks. >> neel, thanks for coming in. >> thanks for having me. always good to be with you. when we come back, ryanair reporting results over night the ceo michael o'leery will join us to tk out alabthat and the state of the airline industry "squawk box" will be right back. >> announcer: this cnbc program is sponsored by thruist wealth where meaningful relationships we got this. we got this. we got this. yay! we got this. we got this! life is for living. we got this! let's partner for all of it. edward jones

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welcome back to "squawk box," a couple of corporate headlines. shares of meta are slipping. eu privacy regulators are fining facebook's parent company $1.3 billion for sending yuser information to the u.s meta says it will appeal the ruling in what it calls an unjustified and unnecessary fine. china telling tech manufacturers there to stop using micron chips the move is seen as a move to step up a feud with the u.s. over tech and security the cyberspace administration of china saying micron products have unspecified, quote, serious network risks. micron's stock down sharply almost 5% in the premarket. and ford plans to announce new deals to source battery materials as the automaker ramps

up its electric vehicle production that announcement is spexpecteda a capital markets event later today. the ceo of ryanair group on the state of the airlines post high temperature pandemic, and later, while generation z is embracing what's being called fun employment cnbc contributor suze welsh inus tjos o discuss the topic in her new op-ed in "the wall street journal." "squawk box" will be right back. you need cdw, who gets to know your business and can design and deploy custom solutions, with pre-configured hp notebooks with hp wolf security. ai-enabled threat detection and remote management protect your endpoints 24/7, giving your defenses some real teeth. bummer. hp makes always-on remote security possible. cdw makes it powerful.

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welcome back, everything memorial day weekend is the unofficial start to summer, and it's just days away. for a look at the state of the airline and what's ahead for the summer travel season, we want to bring in ryanair group's ceo michael o'leary. it reported full-year results this morning the airline reporting $1.5 billion net profit, also saw a 74% increase in full-year traffic. that stock up by about 1.6% right now. thank you so much for coming in. >> pleasure. great to be back in new york >> strong numbers and it was a number of things you're getting higher prices and demand is strong too. >> there's been a strong post-covid recovery in europe. we are by far and away the largest airline in europe. this summer looks even stronger still. there's a huge inflow of americans coming to europe this year you can't get on a golf course anywhere all summer long the asians are starting to come back to europe as well people who have been locked up

for two years during covid are back traveling and traveling is being seen more as a necessity than a luxury. >> you pride yourself on your low prices when we raise prices -- >> what's actually happening in europe, europe this summer will be operating at 90 to 95% of precovid traffic demand is fundamentally strong, the competition, the legacy guys, the lufthansa, the air frances are pricing up 20 to 30%. we're less than that we're seeing stronger pricing. we think prices this summer will be up a second year at double-digit price inflation we're not quite sure what digit it will be yet, and we're one of the few airlines in europe we're taking 50 aircraft from boeing each year for the next couple of years. we have significant growth into a stronger pricing environment, and hopefully that will result in stronger profitability over the next year or two. >> boeing's your buddy again

>> we're in love with boeing again. we will grow double in size. we had 149 million passengers pre-covid. in the next decade we'll grow to 300 million passengers, about a 33% share of the marketplace >> what kind of discount did they offer to win your love back >> not enough. it's never enough with boeing. >> why are you at 90, 95% capacity, why is the industry only at 95. >> because covid shook out so much capacity. norwegian effect ively failed the european airlines had to gauge huge restructuring if they didn't go bust. >> you're keeping capacity low so you can keep raising prices. >> this summer we have 25% more capacity. >> the industry keeping capacity low so they can -- >> yeah, i think the most egregious example of that is

lufthansa, only operating about 80% of precovid capacity >> where are the regulators in europe getting on their case about that >> there's not a lot regulators can do there is material -- the real challenge for us as an industry, but the advantage of the airline industry is an investment for the lonely guys is the many evee manufacturers are constrained. they can't double production because the supply chains are all challenged, the engine avio. >> how about you getting workers in order to increase your capacity, can you find them? >> we pay high we have about a thousand pilots, about 2,000 cabin crew continuously going through training this year we'll see our labor go from 80,000 people to about 21,000 people because we're the only -- >> 80,000 -- >> 18 to 21. my apologies, 18 to 21,000.

>> messing me up there. >> english is only a second language, steve. >> i think you said earlier today that you think the industry is going to undergo major consolidation. that's one thing the regulators could stop and are stopping here in the united states. >> they are. the industry is still fractured. the european industry is financially broken, you know the alitalia is bankrupt the 55 bailout they're going to sell it to lufthansa by the end of the year thp, there's only 10 million people in portugal, they put 3 billion into tap to keep it alive, and yet it's emerged out of covid only half the size it was pre-covid. europe is moving towards the same consolidation the industry did in north america a decade ago. there will be three large connecting carriers, lufthansa, and the one good guy, which will be the irish ryanair. >> the other issue a lot of people are facing, the industry is facing is higher fuel costs

you benefitted this most recent quarter from hedging that went your way dead on you expect that price wills go up from here, how do you handle it what kind of hedges do you have for the future >> we're 80% hedged out. last year we hedged at $65 a barrel this year we're hedged at $88 a barrel oil going up by about a billion euros in the next 12 months. >> you're hedged at oil above the price it's trading right now. >> we are. sometimes you get it right sometimes you get it wrong ultimately we hedge so we have certainty for the next fiscal cycle, for the next 12 months. the higher fares in europe, and our fares are lagging behind most of our creditors will pay for that increased oil this morning we expect to grow traffic 10% to the next 12 months to 185 million passengers we are modestly expecting profitability. we will follow that increase of 10% -- >> what are those more efficient

boeing planes mean for the bottom line. >> they are transformational we can carry 20% more passengers per aircraft, but burn 20% less fuel it's at 33% reduction fuel. >> it's only going to be a small part of the mix of the total nu number. >> 60% of that fleet will be the max aircraft, which are transformational the engine technology -- and people give out about the airline industry and our impact on the environment, what we're doing and what the industry is doing in terms of technology transformation, the engines are so much more efficient now, i do it because i'm an account tenant fuel is my bottom line we have an enormous environmental upside that we're going to carry millions of passengers across europe, but only about 50% of the emissions that people are creating when they travel with the old high fare failed legacy airlines. >> speaking of how did you fly here you complained when you sat down --

>> i flew united out of lisbon yesterday. i had to pay $5,000 one way and people condemn ryanair fares >> you don't come to new york with ryanair. >> can't do it we've got 737s and there's too much growth opportunity in europe somebody else can do the transatlantic. transatlantic air fares this summer, somebody needs to shake up that industry. >> thanks for coming in. >> great to see you. still to come, debt ceiling negotiations set to resume today. what's on the table and weill both sides finally strike a deal. plus the wharton school's jeremy siegel joins us with his reaction, what neil ckashkari just told us about inflation and will the fed pause in june we'll be right back. ll prescrip? reduces inflammation? thank the gods. don't thank them too soon. kick pain in the aspercreme.

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president biden, house speaker kevin mccarthy resuming negotiations over the debt ceiling later today. this comes as talks continue to flounder after nearly collapsing this weekend the president calling the gop stance unacceptable. speaker mccarthy took aim at the socialist wing of the democratic party saying it appears to be in control of negotiations and the white house is, quote, moving

backwards. joining us now former u.s. congresswoman donna edwards and mick mulvaney, former white house chief of staff and strategic advisers cochair i'm going to start with you, mick, you had this job, right? you had to be in control of the budget how would you feel right now if the other party was pulling this on you >> oh, they did. i mean, that's how washington works, right back in 2017, 2019 we were trying to get a relatively simple debt ceiling, extension the democrats held us up if you ask me how i feel, it's washington business as usual i think they made some progress this week. i talked to kevin last night he was concerned about what you just mentioned he was worried about the president's left flank kevin has been able to get his whole party to come together to pass the bill to raise the debt ceiling. but he was concerned about the democrats' progressive left,

said things moved backwards when the president left the country they were talking about small spending reduction changes they seemed to be making progress on thursday is and friday the president left and they showed back up over the weekend and the democrats wanted more spending again they'll meet today and we'll see if he can make progress one on o one. >> donna edwards, is there going to be a default? >> well, i mean, i've said all along that i think like mick we know how washington works and that they're going to come to some sort of kdeal i do want to take issue with the fact that we know that republicans passed a bill in the the house that they knew was not going to go anywhere in these negotiations, and so to say that they passed their bill and they put their ideas forward knowing that it wasn't going to go anywhere means that they've got to sit towdown, republicans havt give, democrats have to give and

just avoid default we're in that window right now, though, where whether there's a default or not, it could have still tremendous impacts on the economy. they basically have this week to get this done. >> i want to stick with you on what mick just said. he's sort of posing this business as usual, that they come in and do some negotiation in the debt ceiling process. i'm just confused as to why are we doing any of this in the debt ceiling process? why isn't this in the appropriations process where you think they should put the budget together >> tosteve, you raised the question in the last hour and i think it's an important one. the debt ceiling about avoiding default is about paying our past bills, and the appropriate place to raise these issues are pass a budget that is going to go through, and then set your spending limits, and then use your appropriations process within those spending limits that's about future spending

and i think conflating the two has actually put us all in a really precarious position, which is why the position, the administration is like don't negotiate over whether you're going to pay your past bills pay them and then, you know, set a target for your spending and use the appropriations process to meet that -- to meet that target, and so these are really separate conversations, and unfortunately we are being put in a position, all of us as americans being put in a position potentially defaulting in a situation that is completely congress created. >> mick, if you could just respond to that. why is this the forum to have this debate? you can't give them the credit card and then the bill comes and i'm not going to pay it. >> yeah, first of all, we never pay off the credit card anyway all we do is pay the minimum payment. we can have that discussion another day. two reasons, number one, it's the law. there's a reason we have a debt ceiling, and we negotiate

spending when we talk about the debt ceiling we have done it for the last 30 years. keep in mind that the balanced budget deals of the 1990s came from debt ceiling discussions. the spending reductions the in the early 2000s, teens, came from debt ceiling discussions. yes, spending went up in 2017 and '19 because of debt ceiling discussions. we always do this. it stuns me when people in washington go -- when people want to negotiate the debt ceiling. we do it every single time but steve, i guess another reason i think why we do it is the republicans, if you're interested in spending less, it seems like there's never a good time to talk about spending. if you try and do it on the debt ceiling, people will go, oh, my goodness, if you try and do it on the appropriation bills, we can't do it now because the government's shut koun there's never a good time to talk about spending in washington i hear all the complaints and people wailing and gnashing their teeth, this is how it works in washington.

sometimes it works for the best. let's hope they get a deal put together it's going to have to be bipartisan because it requires 60 votes in the senate let's see if we can get good reform legislation like we have in the past. >> donna, while it is true that historically this has been the routine where a lot of these issues get bound together, it seems there's a lot more attention on the debt ceiling itself, the legitimacy even of having a debt ceiling. the president even saying he thinks he may have the authority to just continue to spend at the prior levels as appropriations dictate leading on the 14th amendment, but maybe there's not enough time for that do you think we should be having that kind of discussion? >> well, i think it's time to stop this silliness that goes on every year around raising the debt ceiling it's an unnecessary hostage taking that takes place, and i am crincreasingly in favor of testing out the 14th amendment

we don't have necessarily the time to do it, but the fact is, when push comes to shove, we got to pay our bills because it could send our economy into a tail spin as well as the global economy. i think that's why the president was trying to reassure our allies in the g-7 because so much hinges on what takes place over this next week and a half, and i am for taking whatever extraordinary measures there are to pay our bills, to avoid default, and then to have the future negotiations over what our spending is. >> mick, what about the 14th amendment? >> steve, i think what you just heard is the reason we're not making any prosthgress. so many of them are talking about oh, my foodgoodness, the l is going to end. the 14th amendment, it doesn't solve your problem because it's untested and who's going to lend us money on an untested basis. interest rates would have to go up in order to cover the -- it sort of defeats the purpose

anyway if you really believe the 14th amendment allows you to do this, to ignore the debt ceiling, then you have to admit it allows you to prioritize payments face it, we have plenty of money to pay our debts we have enough money to pay the interest on the money we've already borrowed to buy the stuff we've already bought this is actually a discussion about buying stuff tomorrow, not about paying for yesterday because we don't pay for yesterday. we pay for the interest on yesterday and there's plenty of cash to do that. so every time i hear folks say 14th amendment, i say, hey, that's great, why don't we invoke the 14th amendment to support prioritization the treasury pretty much believes that it's legal they say their computer systems can't handle it. that's not much of an excuse when you're looking at a possible default on the nation's debt let's prioritize payment and take default off the table so markets can calm down. >> thank you so much the music's playing us out unfortunately the issue doesn't end with this segment.

>> not yet when we come back, for generalization z unemployment can be a blast, with the summer coming and college graduations underway, some entering the work force are going to enjoy what they call fun employment, kind of like mountain climbing in peru or a vegan sanction wuary madrid. you can get the best of "squawk box" in our daily ll sawt. foowquk pod on your favorite podcast app, and you can listen anytime we'll be right back.

coming up, fun employment. it is all the rage among generation z the idea of not having a job and being okay with it yes, it's a thing, and suzy welch of nyu stern school of business will be here to explain the concept and what she's hearing from her students as summer approaches. alt the top of the hour, jeremy siegel will tell us if he agrees with minneapolis fed president neel kashkari. "squawk box" will be right back.

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for the young members of generation z, unemployment can be a blast suzy welch exploring the mind-set in a wall street op-ed. >> brunswick group adviser and cnbc contributor great to see you explain how you counter this concept of fun employment .

>> it happened in a typical class. i was teaching my mba students and one student was talking about what she would do after graduation she said i don't have anything just yet, but i'm just going to do some fun employment, and at first i thought, well, i must be mishearing her because she put the words fun and unemployment together and i literally literi was like, what stop fun employment i was like stop the class right now and they told me all about it >> this would be joblessness by choice for periods of time or is it a little more loose than that >> it's looser it's more of an attitude, which is that, okay, i'm not going to be the way your generation was about unemployment, i'm not going to be scared, i'm not going to be frantic, i'm not going to lose my mind about it if i'm unemployed, i'm unemployed i'm going to have some fun, i'm going to have a great life and i'll go to my next job when i go

to my next job, i'm going to enjoy it >> is it because we have such a strong job market that they can do that? how do you funind a job when you're out of a job? >> i think it's about an attitudinal, generational change they don't see it's a strong market i think it's about how the newer generations feel about work and about employers. they don't trust them, they don't believe, okay, i'm going to have a job with this company for the rest of my life. they think we're going to be together for as long as we're together and i'm going to be unemployed and move on to my next engagement. it's a little bit like the gig economy that has been done in hollywood in decades it's about i'm going to live my life the way i want to live it and the man is not going to tell

me how to do it. >> do they do this until they have kids in. >> most of my kids are mbas and many of them don't have kids it was all about wait till they get a mortgage and have kids and they're going to wake up and experience real life and all of this will change and maybe it will but until then, they don't have kids until they're in their 30s anyways so we've got some of this to come >> and also it's how people are viewing work through the pandemic, either you want to work from home more or you're not willing to keep the job if they require to you go back in the office or all of that >> it's definitely part of a piece of working from home i always do this informal survey, how many days a week do you want to be in the office i say five days a week there's never any hands. nobody wants to go back to that model, my students you really start to see hands at three days, most hands go up at two days and i still have hands

showing at one day and i say who never wants to go back in and you get some hands why would we put our trust and energy and commitment -- >> that's fair trade but i can't help but worry that they're going to be behind the eight ball at some point because they won't have the savings, they won't have the retirement accounts would they have those things if they stuck around at employers or are employers not giving them those things anyway? >> they have this generational mindset that the world might not be around because of climate change or some disaster. there's an attitude, the future, how long is it going to be >> turn that around. it is not a fait accompli if

employers start making changes in order to gain that loyalty. nobody talks about that. >> many employers have made those changes. if you have gen-z children you see what their employers have done to accommodate them, not the experience i had as a young working person i think they have. many big, successful companies are meeting them where they are as far as work from home and experiences in the office and understanding about emotional stuff going on, you can take a day, you can have a day to process that and so forth. i think that more what's going on is they feel like they're never going to be with an employer long term up could love your company and they could still lay you off i'm not sure it's in any way about the companies needing to meet them where they are it's more about a generational shift. i don't know anybody who goes into any job and says i'm going to stay there long term. >> but the companies brought that on themselves, right? they let people know and created that whole atmosphere, right >> some did.

some people laid people off because they felt like they had to i don't know of any companies promising long-term employment when companies recruit, they say work two, three years and then go on to your next thing, we don't expect you to stay here forever. they're staying it right out >> you hear people saying this is a group, they're getting nyu mbas they can afford not to rush into the first kind of rat race job and i imagine it's cyclical. five years ago silicon valley's startup culture was you're never not working. >> i asked around and i poked around to see how widespread this was and i was amazed there was this quiet culture of everybody talking about unemployment is this just the kids that got money from their folks i found some of my students on scholarship and said do you know

about fun employment, what do you think about it, how do you make it work >> and the answer was you just do it very rare to hear a student say i want to make a ton of money. back when i was in school, people were quite open about that being a goal. it's like, okay. now they're there to make meaning and make an impact >> do they live at home with their parents? >> obviously some are getting a lot of help from their parents and many of them step into these jobs where they're making nearly $200,000 a year if you go into consulting so they may be living close to the margin right now but they know the gravy train's coming >> i always am skeptical that one generation is different from another generation, all things being equal. so it just strikes me there's

some economic thing at the root here is it the inheritance they're getting, is it the job market? there's something -- >> no, i think this is different. i like to say also we're all the same underneath it all but i really think something different is going on here i really cared about work, i still care about work and it's just not central to their lives. that's actually a change in the zeit geist maybe that change in ten years when they have kids but right now they've got different attitudes. >> suzy, great to see you. >> when we come back, we'll talk markets. fuz are up and strauss zelnick joins us for an interview you don't want to miss "squawk box" will be right back. absolutely. they've invested over $2 billion in tech. that could really help us manage inventory. and save us a ton of dough.

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introducing the lucid air. experience the best. ♪ good morning debt ceiling drama no agreements overs weekend but president biden and speaker of the house kevin mccarthy set to meet again in person today at the white house. a key fed member warning us not to question the central bank's commitment to fighting inflation. we'll talk rates and the market impact with jeremy siegel. and meta slapped with a

ten-figure fine. the final hour of "squawk box" begins right now good morning welcome back to "squawk box" here on cnbc we're live from the nasdaq market site in times square. i'm becky quick along with mike santoli and steve liesman. you'll see the dow futures are off 31 points, nasdaq up by 2 points, too. not a ton of movement but you are seeing solidifying in the meantime we've been watching the treasury market two years at 4.262%. steve? >> you have the one-year up there. that's also where the debt

ceiling is manifesting itself or not. >> one month, two months -- >> those are the places where you wanted to -- >> meanwhile, european privacy regulators hitting facebook owners meta platform with a $1.3 billion fine it concerns the transfer of european union data to the eu. the commission argued the company's infringed on data protection regulation money, continued sending personal data of european citizens to the u.s. despite a 2020 court ruling. meta said it will appeal the decision and the fine. >> chip maker micron has failed a security review. they barred operators from buying micron's products saying

we oppose decisions with no basis in fact. chinese chip makers are jumping this morning >> kayla tausche joins us with more on discussions on the debt ceiling. >> reporter: good morning. president biden proposed the meeting with kevin mccarthy in a car with the speaker on his way back to washington after hitting multiple snags they're seen here leaving the capitol at 8:30 p.m. both sides still at odds over where to set spending levels and for how long the white house proposed keeping discretionary spending flat into the next fiscal year that's a 9% decrease from the budget it had laid out republicans proposed imcr incren

spending >> i'm not going to agree to a deal that protects wealthy tax thieves and putting food at risk for millions of americans. there's no bipartisan deal to be made solely -- solely on their partisan terms they have to move as well. >> reporter: president biden says the administration does not have any options to raise the debt limit unilaterally that would be without challenges in the ten days that stand between now and june 1st and without a deal, secretary janet yellen says treasury would have to make hard choices about which bills to pay steve? >> all right, kayla, in your fan

duel bet, where is your bet? does it happen by june 1 where are you leaning this morning? are you more pessimistic or optimistic on this monday morning than you were, say, friday at 5:00 >> it's hard to know without being able to be a fly on the wall without knowing how close they've gotten on some of these issues only to walk away and leave it to the principals to finalize them. but what i laid out in that segment, the fact that they haven't agreed where to set the spending limits and for how long, those are two of the central ten yets. you could get closer to the deadline, perhaps the market sells off and provides more urgency as well but right now it doesn't feel like the negotiators have that and the senate's out of session. they can get an agreement this week, perhaps the house could pass it but then senate comes back after memorial day and

they're right up against that deadline >> but some of this is sort of the normal theater and some is kind of explicit theater or unique theater in the sense that we get to this place, looks like things are going well and somebody walks out that seems to happen quite a bit. i had a discussion with somebody the other night and i said i'm not going to be charlie brown, kick that football and get really uptight about the debt ceiling because the football is just going to be taken away from me the last minute and somebody said, yeah, but lucy this time around is marjorie taylor green. >> perhaps i guess it depends on the eye of the beholder i think a lot of people are drawing the comparison to 2011 even in 2011, negotiation himself been going on for three, four months and they still had a hard time reaching a deal by the deadline and it still ran into

11th hour issues that caused the market to sell off we'll see what comes out of the meeting today at the white house. >> thanks. >> chevron is buying pdc energy at $72 a share the acquisition will give it assets expected to deliver higher returns and low carbon intensity basins in the united states, whatever the heck that means. this is a company that's $6.3 million. pdc shares are halted right now. that closed at 65.12 on friday if you blow that out to 7.6 billion, that's a premium of about 33.5%. chevron says it expects that deal to add a billion dollars to its annual free cash flow.

>> this year >> this year >> and 10% for reserves for under $7 a barrel. i don't know what lower carbon basins means but a stock swap value at $6.3 billion. sales of shares were at that timed before this deal came out. mike, what are you thinking about and what do you think about this deal, first of all, too? >> a deal we should expect, more of the consolidation of exactly this type, which is the big balance sheets in the industry e acquiring assets somewhat on the cheap. in terms of the overall market where we start the week, kind of quiet tentatively and also at a nine-month high. we only been higher for ten trading days back last summer in august and i think another thing to

keep in mind, first of all, kind of a low momentum move that we've seen just recently up to these highs but we have a 7.5% one-year price return. call it 9% annualized all in, total return including dividends. you wouldn't have necessarily thought that last may that you had basically the historical rate of return coming from stocks now a lot of criticism, a lot of recent gains have come from the mega stocks. here's how it shapes up over 18 months 18 months basically gets you back to the nasdaq all-time high in november of '21 this is the nasdaq's really serious out performance of this year and it's a catch up move. this has done almost nothing on a year-to-day basis. this is the coming together of a lot of that excitement from the

favorite growth stocks, a lot of them viewed as also safe plays finally, look at nvidia relative to the broader, equal weighted semiconductor sector here's liftoff it was right after chat gpt was unveiled all the big nasdaq stocks, it's really only nvidia that has reclaimed almost its full precrash price but also the valuation. if you think it's all hype and think it's overheated, that's the stock that's almost a poster child for all of that. now, a short while ago, minneapolis fed president joined us and had this to say about a potential pause in rate hikes on the way. >> i think right now it's a close call, either way versus raising another time in june or skipping some of my colleagues are talking about skipping important to me is not signaling we're done if we were to skip in june, it

does not mean we're done with our tightening cycle do we start raising again in july that's most important to me, we're not taking it off the table. >> joining us is jeremy siegel, professor emeritus at wharton school of business what jeremy mhad to say is the target is not too far yet on the other hand inflation not down to its goal does that make sense here? >> i think it's very data dependent. i think it's dependent on that payroll data that we're going to get a week from friday if that is really hot and the unemployment rate ticks down to a new 70-year low of 3.3%, the

hawks will be very active at the june meeting however, if there's a slowdown as expected, if pay roll growth is under 100,000 and the unemployment rate goes up to 3.5 or even 3.6, i think that absolutely means a pause so i'm looking at that pay roll number as probably the key siding number. i do know they get cpi on the first day of their two-day meeting for the month of may and certainly that will factor in. but i think employment is the key to fed decisions now >> it's fascinating in the sense, professor seeiegel that we've had no response in the observable metrics after 500 points of fed hikes over a little more than a year. i do wonder if that still seems to be the swing factor that has always been historical >> well, i say no slowdown is a

little bit of an overstatement if you take a look at the increase in non-farm pay roll, you do see a downward trend. it isn't as downward as we thought, not as downward as i thought. i thought we'd be getting near zero or maybe a negative print, that may have to wait until fall, but definitely there has been a a slowing of that rate. it's just been a bit slower than we thought it and i think that's what's encouraged the market, hey, i don't see a recession there, earnings are holding up at this point, and by the way, i don't think there's going to be -- not only do i not think, i'm virtually certain there's no default and no one wants to be caught short on the market on the day a deal is made so i think we have a lot of shorts are covering for that potential outcome in the next

couple of weeks. >> jeremy, you've been right about inflation coming down, and it has come down nicely with what you've talked about for a long time, which is the decline in some of the monetarying a congratulations. but what we're hearing from the fed is, one, the progress has slowed and the other thing is that it hasn't come down enough, at least even with, you haven't got i don't know back to the 2% target is your advice to the fed just let it run and it's going to come back or do you think they might have to do more to bring down inflation to their target >> no, they are shouldn't do more if you took a look at sensitive commodity prices, they're still in a downtrend i keep current cpi and core using the willow, the apartment list rental, the case shower

and, by the way, i get core now at year over year, too and in fact, powell acknowledged that the lag housing data shows the dough klein they're going to get near their target. i think by continuing to raise, they're adding way undue risk. sentiment isn't good, there is that downturn and, boy, i'll tell you, if you get a negative print on payroll, it's going to hit the headlines. and that could my feeling is they pause and hopefully i think they're actually going to be reducing by year end >> i have to ask you about the earnings outlook are earnings now price pd for a recession at this point or do you think there would be further to go if indeed there was a

recession in terms of marking down earnings? >> well, interestingly enough earnings are holding because what we've been getting so far on the first quarter has been good guidance has been mixed. listen, if we have a severe recession, it will be hard for the stock market to make progress you know, then i said you're at a 0 to 10 for the year we're at that 10, as mike said, with dividends we're 9 right now. we're at that upper. recession would keep it bouncing around there but i still think 2024, even with a recession, looks like a very good year for the stock market >> professor siegel, thanks very much always good to check in with you. >> mike, i just want to point out behind the scenes stevie magic did a pretty impressive job. we had you running back, standing in front of the telestrator, you did a report off the to top of your head. next time we're going to ask you to tap dance and juggle at the

same time. >> or trip over the cords. >> you got to haze the new guy >> well done >> and he dodged the camera. coming up, an exclusive interview with strauss zelnick but next it a big day for ford and for that company's growth strategy, phil lebeau is in detroit. what do you have for us? >> it's the beginningof the ford capital market day. we talk about how the company expects to get to 10% profit margin by 2026 and why some on wall street are skeptical. that's when "squawk box" returns.

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all right. welcome back, everybody. we want to update you again. chevron is buying pdc energy in an all-stock transaction valued at $6.3 billion. total enterprise value is 6.2 billion when you add the net share. i said it was a 33% premium before but that's because i was doing the math based on what they said the enterprise was,

7.6 billion versus the 5.6 billion that the stock closed at on friday. $72 a share, enterprise value of 7.6 but the premium is only 14% because that does include net debt pdc energy was halted before that news came out can closed at 65.12 on friday. chevron 154.49 down about 74 cents. >> 20 years ago we debated this issue. do you include the debt? >> we say no >> remember we used to go back and forth? >> the "times" would and the "journal" wouldn't >> but that's in the past. we've finally come to an agreement on that? >> i don't know. >> phil lebeau at the auto giants capital market day. phil, what do you got? >> they're just outlining their targets for 2026 and getting to

a 10% profit margin by 2026. they split the company into three divisions. here's how they expect to get there in terms of each division and the margins they're expecting by 2026. internal combustion, low double digits, commercial vehicles in the mid teens and evs with an 8% profit margin. how do they get there with the evs in particular? jim farley says it's been using software as a service. >> digitization changes a lot of that we have the chance to grow with 6 million vehicles but most importantly we can start to get attach rates for physical service like repair and also the software revenue, which we now have in like three buckets, it's very clear the stuff we're going to ship to vehicles. we've never had that chance to have an annuity over the course of a whole economic down cycle >> remember ford is in the

process of selling or producing about 600,000 evs this year, expect to get up to 2 million by 2026 more than a few on wall street are questioning whether they can ramp up production there a big part, ford building battery plants in the u.s. many question if they can ramp up production that quickly >> i don't think everyone is going to have full-size trucks, electric commercial vans i don't think people are going to have the same electric lineup we do. these are segments that we know really well and we have already proven we can conquest it's true, we're going to see more price pressure on evs >> take a look at shares of ford what you're noticing is this is a company that's down considerably from where they were a couple years ago, guys. it will be interesting to see whether or not analysts buy into the road map that jim farley and his team will be outlining over

the next couple of hours ambitious in terms of ev production but they do believe they can reach those margins and those targets i just outlined for you for 2026 back to you. >> phil, they're doing really well with the electric pick-up trucks where else do you think ford can be a leader when it comes to the ev market? what particular slice, the suv, the crossover, the sedan, where else can it be a leader? >> you're thinking about the commercial business market, they're already number one in that market. they lead by a long shot here in north america. and that's where they expect to really drive the profits in the future in large part because we look at some of the software ideas and the services that they're going to be putting into their electric vehicles, think about somebody who has a fleet of vehicles that become electric and ford, they're in that ecosystem. that's really where they're planning on driving big growth

the commercial side, pickup trucks, suvs, they're going to focus on the narrow part of the market >> phil, great report. really interesting stuff when we come back, we've got some top stocks on the move ahead of the opening bell. plus, how the fight over the dealt ceiling in washington could impact the fed all that and more is on the way. "squawk box" will be right back. you founded your kayak company because you love the ocean- not spreadsheets. you need to hire. i need indeed. indeed you do. indeed instant match instantly delivers quality candidates matching your job description. visit indeed.com/hire let newage products transform your garage into an area of your home you can be proud of. modular steel cabinets let you pick and choose the storage solutions to keep your garage organized,

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it comes it might come faster than you think. >> welcome back to "squawk box." we want to get over to dominic chu. dom, what's up >> becky, we're going to kick things off with a couple of analyst calls getting some attention premarket here shares of apple are down by just about maybe a percent or so over half a million shares of volume. the iphone maker and services giant are keeping their $180 price target they cited lower guidance for iphone shipments and potential for revenues those shares down about 1% elsewhere on the analyst front, you got analysts at citigroup. they've taken a more negative view on athletic footwear. shares at foot locker and nike are down they cited foot locker's recent

disappointing earnings report as indicating a slowdown in inventory overhang could still be notice cards for nike foot locker is outright getting downgraded from neutral to buy and they cited amongst other things that less healthy athletic market in the u.s. and less visibility for foot locker in future trends so they're down 2.5% and european budget airline ryanair, european shares are flying higher thanks to a better-than-expect outlook support. take a listen. >> there's been a very strong post-covid recovery in europe. we are by far and away the largest airline in europe. this summer looks even stronger still. there's a huge inflow of americans coming to europe this year you can't get on a golf course anywhere all summer long with

the very strong dollar the asians are starting to come back to europe and people locked up for two years with covid are back traveling and seeing traveling more of a necessity than a luxury. >> i know what he's talking about. i'm going to ireland for golf next week. it took about eight months of planning thanks to all the boys who put that trip together but i'll be going to ireland >> i'm not up to the task of talking about weekend golf, i'm sure joe would be better have a great trip, dom coming up, the future of a.i. and gaming we'll talk more about that with the ceo of take-two interactive. stay tuned, you're watching cnbc

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we told you earlier about an announcement from china's cyber space regulator saying micron failed its network security review and some products would be banned. micron's cfo says the company is working with china to understand

details of their security concern and they estimate the impact in the range of the low si single digit percent of total revenues and will provide an update during the earnings call in june. the stock up a little bit than earlier but still down 4%. >>. >> we asked neel kashkari for his thoughts >> markets seem optimistic that rates are going to fall. i think they believe inflation is going to fall and we're going to be able to respond to that. i hope they're right nobody should be confused about our commitment to get inflation back town to 2%. >> good morning. the gap between the fed and the

market year end is kind of closing this morning it's only at 47 basis points is the market starting to see things the fed's way now >> so i think there are a couple of things going on the first is that how does that market pricing that used to have a lot of fed rate cuts by end year was really driven by tail risks. so the tail risks relating to the debt ceiling, tail risks relating to the banking stress as those tail risks moderate, that in itself pulls down the amount of cults the fed is expected to deliver on a probability weighted basis i think the other thing that is going on is that people recognize that while the fed is not likely going to be hiking in june, they will deliver a hawkish pause that holds out at least the possibility that they could come back and hike rates further later in the year. >> let's talk about the state of

play because a little whip saw last week. we had a couple folks say they thought we ought to go higher. bullard was among them you could probably put bowman in that camp from a week earlier, laurie logan made me think we could go higher and not pause in june and then the chairman comes in with, my take, take a pause here what was your take on the rhetoric of last week and what mattered >> you're right, steve there was some confusion around different signals from different fed officials, but i think the takeaway was pretty clear even before powell spoke that most fed officials do think it's going to be appropriate to take a pause here, see how the world evolves over a few months before making a call as to whether they need to do anything beyond that. there is a hawkish minority that

is pushing back a little bit against that i think the rest of the committee is continuing to maintain a somewhat hawkish tone because they need hawkish air cover for the cause. what we got from powell i think friday was a pretty strong implicit signal. if the fed was preparing to raise rates in june, powell would have laid the foundations for that in his remarks friday he didn't. they're not. >> except there's still an inflation report to come you know, i have the pleasure of talking to some current -- well, former hawkish fed members who think, you know, we could go up near 6%. where do you stand on that issue of a hawkish pause in june, does that mean they're done >> so if the world evolves in line with my forecast, they will be done in june, and, you know,

when it comes to the sort of september timeline where i think it's the appropriate timeline for making that assessment, they'll be able to harden up the idea they don't have more to do. and i actually think they will be rates by the end of the year. getting back to your original point, one quarter cut point in december is really in play outside of the big event so i do agree with the idea that the market should be shaving back, even though we should not be head faked over near-term who lights >> do you expect that you're going to have a dramatic worsening of the employment picture or some other thing that's going to happen that's

going to cause the fed to cut rates later this year? >> i think neil's point from your show earlier on is well taken. if the economy continues to be very resilient, if inflation, particularly services outside houses stay sticky, then they won't be cutting this year in fact, they may not be cutting until somewhere into next year my baseline forecast has the economy slowly weakening over the coming months as the lag affects of the past tightening take hold and we start to see credit tightline and i hope to see the disinflation process in the second half moving faster than the fed anticipates that's what can get you a cut. >> all the fed officials are

downplaying the banking issue. so tell me what you've planned for each one of your summer weekends coming up are you going away or are you going to be home waiting to see if there's some weekend crisis coming up? >> well, let me put it this way. i want to make sure they have a good internet connection every weekend through the summer i think there is a reasonable prospect we are through the acute phase or the turmoil of failure phase of this crisis but it's not a done deal beyond that, i think the can he thing to understand for every bank that fas, you'll have a hundred banks acting more conservatively to make sure they don't end up in the same place money. >> we'll have you back to talk

about that next time i think i need a satellite phone if i'm going to do any fishing this summer, right >> probably. we'll take that. when we come back, we do have an exclusive interview with strauss zelnick on the big upcoming release he's already talked about. we'll talk about a.i. and gaming and regulators throwing cold water on microsoft's bid for activision hospital bill? but i have good health insurance! gaaaaaap! did you say 'gap'? he's talking about the expenses health insurance doesn't cover. but with aflac, you can get money to help close that gap. aflac, huh? gaaaap! aflac! gaaaap! get help with expenses health insurance doesn't cover at aflac.com electric dream days are here. come in now and experience the intense thrills

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. welcome back to "squawk box. futures have firmed up in the last little while. s&p 500 barely green the nasdaq up five points. >> artificial intelligence has been one of the biggest themes throughout earning seasons is is his first televisiony' y reported first quarter results last of a very strong future slate of games i think that's the headline here, strauss. thanks for coming in today >> thanks for having me. good to be here. >> this is huge news you're not someone big on thee at trubs or big on hyperbole but last week you said you're going to be looking at more than $8 billion in revenue next year for

gains and that's 45% ahead of the street's estimates that's huge news and it's got people speculating you've got to have "grand theft auto 6" coming out. >> we said we're working on grand theft auto but it hasn't come to market yet we have high expectations. we future try to go right down the middle in this instance we and so we basically gave an outlook for thises if call but we also expect sequential growth in fiscal '26 >> the stock was up more than 10%, more than 11% i think this is huge news because you have a lot of properties coming out and you're usually pretty conservative about new things.

>> generally we like to have success before we talk about it. >> and we have a pretty good ability to predict the performance of new iterations of predicting and prizes. >> we have 14 franchises that have each sold over $5 million units. >> part of what you've been able to to do, what have you seen in terms of your ability to connect with people and have pricing >> for -- we haven't even kept up with inflation, not even close the last 20 years. people will play an individual game for 30,50, 100 hours or more people price their entertainment on price per hour flrng and we

think the price per hour is very >> $70 for software. >> you could be flying for hundreds >> i want to know where we are in the process people were playing a lot of games during the pandemic. and then it came off >> i was asked actually here during the pandemic, what do you think is going to to happen and that's exactly what happened >> so you're up rel if i have it so the market was actually down about 10% in 22 and things saw we all took a be that said we're beginning to see better comps now year after year. we're seeing that in mobile, i is now about 50% of our

business but it is a motor vehicle challenging market than it was a year and a half ago. >> no and 45% female, 55% parkthat's why we're exposed to both mobile and console. we're thrilled that we are. >> with a.i., there a some is there stuff that's really there, really meat on the bones >> usually i'm the skeptic in the room but i am a true believer we are the intersection of entertainment and technology ra and what i think will happen with these new revolutions that you're seeing how is it going to be a rising tide these are new tools, they're going to benefit everyone, make

our work easier, especially the sort of work that no one really enjoins. >> goom in on that when you talk about a new game and you're having a a.i. do the but what's going to happen is everyone's demands for kwaurm very little evidence in the history of entertainment that technical tool development has tulg indeed in recorded music, the cost of making mousse be parkand that was simply not the case po years ago. but apart from the music business, production costs continue to rides because. >> rng the tool set will allow us and everyone else to do things better, faster, cheaper

and then wrmg and what we can do to deliver to consumes are in tharj of quality and engagement. >> what does it man to have the deal shot down by deal is a good thing and makes sense, and we don't think it makes sense for the deal to be precluded by regulators i don't think it affects us much either way we've said that. but certainly, it's not a bad thing. >> when you say it doesn't affect you much, does that mean that you don't feel that you need to participate in consolidation in any respect because part of the argument here has been, you know, at least from the microsoft and activision point of view, it's not exactly like there's a whole lot of synergy, really, or overapp there, but meanwhile, gaming companies are now all of a sudden very large relative to some traditional media companies. >> we do believe that scale does

matter, and in fact, that's why we combined with zingo over last summer that was a $12.7 billion transaction, and it now makes us the number three pure play in the business after ea and activision and scale will allow us to enhance our margins and create more value for shareholders. and create more interest for consumers. and of course, more interesting things too for our colleagues. so, right now, the deal has turned out to be a big winner for us it's highly accretive to our business, and no, we don't think it would have made sense that had that been stopped by authorities. >> i was wondering what mike was alluding to, something like "last of us," where the game becomes a movie do you have things like that in the works? >> we do we have the "borderlands" movie being made by lionsgate and bioshock is also in development. we're not believers that will change our business materially, but it sure is fun to talk about. >> strauss, i want to thank you for coming on. up next, what to watch ahead

of the open on wall street stay tuned "squawk box" coming right back ♪ ♪ the biggest ideas inspire new ones. 30 years ago, state street created an etf that inspired the world to invest differently. it still does. what can you do with spy? ♪

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just over half an hour to the opening bell on wall street. joining us now on the markets in

the week ahead is julie beal, portfolio manager and senior research analyst at cane and anderson rudnik. good to talk to you this morning. again, we have kind of a quiet market to start things resilient kind of near multimonth highs or 52-week highs if you want to look at the nasdaq 100 does it make sense to you that we are managing to hold on to these gains, given what's happening in the debt ceiling and we're having a debate here about whether the fed is done or not? >> you know, i think it does because everyone that i talk to, every investor i talk to talks about the risk of the debt ceiling as being, yes, this is really embarrassing, and i head it, but i'm sure it's going to get resolved because it gets resolved every time, and for sure, the incentives are very strong on both sides mostly, it makes us look really bad. what i worry about is that i don't think people are talking about with the debt ceiling is that with once it does get

resolved, if it does, goodnness there's going to be a massive inflow of treasuries that need to kind of replenish the coffers, so that alone is going to put so much pressure on yields like you could see another 25, 50 basis points just from that, and i think people aren't really talking about that >> well, i would say you're right that it hasn't been talked about, in my view, until about the last week, and in the last week, people have said, actually, there's been this huge net liquidity contribution from the fact that the treasury's been spending down its account at the fed and they haven't had or been able to sell more debt do you really think that would be a game changer, to have yields kind of migrate higher by a quarter percent, is that going to be a shock to the equity market >> i don't think it's a shock to the equity markets by any means, but i think you're seeing that businesses across are dealing with a lot of pressure, and so as we continue to see stresses in the banking system, i don't think we're done yet, right?

i don't think that 25 to 50 basis points of more pressure on yields is going to be very helpful for any kind of credit conditions the thing that shocks me and continues to shock me is how many ceos and cfos refinanced their balance sheets in 2020 when interest rates were at record low levels, and they used variable debt, and all of that refinancing is going to start to have to come through in the next couple years, and it just shocks me because it's going to be very difficult for them >> i've got a question for both mike and julie quick one here is the market priced for the recession that the economists are sure is coming, or are they going to freak out when or if it happens? >> i would just -- quick answer, i doubt the market is priced for an outright broad recession that really kind of takes earnings down to the degree that it has in the past, but i mean, julie, how do you think that the market is navigating the recession question because if you look at cyclical stocks, they price in a bunch of risk, whereas you have some of the big growth stocks holding up

the indexes. >> i think it's really depends, and you can see it varies across small, mid, and large cap, but what's interesting is that before, in the last two years, everything was driven by narrative. it was just a question of what was going to happen at the fed, and now, you're seeing more dispersion and how stocks are behaving based on how their earnings are, so companies that are reporting very weak earnings, think of foot locker, are just getting annihilated, versus businesses that are holding up really well and able to get any kind of guidance. they're actually doing okay. businesses that are being really proactive and starting to cut back on their expenses, you know, the year of efficiency, et cetera, they're doing really, really well. so, i really think it's actually starting to be more of a stock picker's market which is great for active managers like me, but i don't think that real recession is priced in there not really >> so, what opportunities for a stock picker, for somebody who looks to, i guess, weigh the risk and reward, are there for you? i mean, i could see some people saying, look, these big growth stocks, best companies in the world, they're breaking out.

it's clearly the leadership of the market let's go there whereas -- or you could say, a lot of cyclicals are really at depressed valuations and also present a good bargain >> yeah, i think for us, you know, we really kind of hew to the statement, you can't predict, so you better prepare, and i think for us, we're most interested in businesses that have really durable earnings, because we're long-term investors, and we can't predict, right? it's really impossible, and would you have been able to predict where we were three months ago i wouldn't have. i think businesses, some of them in the health care services that have really durable earnings through a recession, so i don't have to predict when the bottom falls out. those types of businesses are compelling software businesses that have recurring revenue and that are really high switching costs, those, i really think, are more compelling >> all right julie, good to talk you. thank you so much. >> thank you let's get a final check on the markets here as we get to the top of the hour. see the s&p 500 looking to be up

almost three points at this point. very modest gains but at about a nine-month high. ten-year treasury note has been retreating just a little bit now it's perked up again back to 3.7% take a look at oil been very sticky in this range now back into the low 70s, $71.45 on wti crude. join us tomorrow "squawk on the street" is next good monday morning, and welcome to "squawk on the street," i'm david faber i'm live from the new york stock exchange jim cramer, it's a little bit earlier for him, because he's in los angeles. thank thankfully, the man never sleeps carl's on assignment let's give you a quick look at futures before we get started here let's call it a -- i don't know. i'll leave it to jim to figure out what that tells us, if anything let's get to our road map this morning as well. it starts with d.c.'s debt drama, the p