big weekend for "spider-man" at the box office. how much the film brought it it is monday, june 5th, 2023 "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 along with joe kernen and andrew ross sorkin. the three of us together it's been a while. >> it has. >> let's look at the u.s. equities on this monday morning. you see the dow futures are higher once again. indicated up 43 points s&p futures relatively flat. down 1.5 nasdaq indicated off 38. this comes after friday's big gains.

the dow up 701 points. that is the best day since early january. s&p up 1.5% putting it on the verge of exiting the longest bear market. the nasdaq up 1% hitting the highest level since april of 2022 would you consider this had, i guess, bull market, getting back in if you are exiting the bear market nine stocks in the s&p have been responsible for driving all the gains. a weak bull market >> i'm not feeling flush actually, you know, someone said how do you feel about your 401(k) now i don't hear anyone complaining. i said i'm not feeling that great. the two-year chart does not look good >> year to date looks better. >> october lows will be retested remember the guy sitting here and he was really young and

talking 3,200. i said because -- well, a recession. okay recession. well, earnings estimates >> you would have thought given all of the interest rate hikes that we were having and you were saying over and over and over again -- >> you guys like stan. >> stop the interest rate hikes. >> that is happening. >> we'll see we'll see about that >> you know, santelli said he thought it was a while ago i never thought that i bet el-erian that. >> i should clarify. druckenmiller said that. >> katie stockton will be on today. i said are you sure? other people -- trenne said it

you are really on it mike wilson. his worst-case scenario was 3,000. the guy from stifel, i think, said it. >> in the break, talking about are you sure about that? >> i said what are we not anticipating that will take us back to 3,200? it still could happen. i'm not feeling flush. it is nine stocks. do the rest improve and catch up with the nine or do the nine come back down >> we will see >> let's see the treasury yields you have the erase of the debt ceiling concerns you see interesting moves in treasuries it looks like the 10-year

treasury is 3.73%. the 2-year treasury is where you see action and concern about what happens in two years when that is done 4.539% that is a bigger inversion with the 2/10 year. we have been saying for a long time that signals potential recession. hasn't happened yet. let'stalk about a surprise signal in the oil market yesterday's opec meeting the group made no changes to the planned production cuts for the year the big but is saudi arabia announcing further cuts in july. dial back from 10 million barrels per day to 9 million barrels per day. the move was precautionary they previously announced cuts in january the u.s. criticized that decision there is a geopolitical issue here saying it would fuel global inflation. saudi sticking with its plan even if it may not have an

impact on the rest of the plan >> the high 60s back above 70. >> is this political that is the question. >> that and protecting their interests. >> i think a lot of opec nations did not want to cut. africa they need money. they need revenue. you need to sell more at $68 we just decided there is no recession tomorrow or next week. what are they worried about? what do they know that we don't? >> they look at oil prices and fall below $70 cut another 10%. >> china is not back. >> china isa concern manufacturing numbers last week for chinese manufacturing. weaker than anticipated. >> yeah. >> i think part of this is interesting and what it means is

saudi arabia is a smaller and smaller player in production relative to the united states. we produce millions of barrels a day more than they do at this point. >> yeah. merritt is coming on lingering effects of pandemic. people still spending. you know, people still go to restaurants. people still travel. europe is not back to where it was. >> that is what the fed will look at when it decides to raise interest rates. >> that was a goldilocks number on friday. >> my worry is not that -- we will continue to have some spending here. a lot of spending. it is still the yolo spending. you talk to the bankers, they will tell you people will run out of money and living in some kind of actual hellish environment. there is something that changed in the psyche as a post-pandemic approach to life people still in the yolo feedback loop.

>> the demise of the consumer. greatly exaggerated. >> until it is not >> right it happens gradually until it happens all at once. i say that more and more i don't know people really want to go places. >> i'm not saying they don't people want to do a lot of things at some point when the credit card company says you can't, it will be a problem. >> you think when you live at zero for so long, you can borrow a lot of money it is not the same as it was this is the most anticipated -- recession -- when you anticipate one, it doesn't come it comes when you least expect it you know, we'll ask katie stockton today i bet she doesn't say we're through 4,200 on the s&p i bet see doesn't say it's in the clear. she could be wrong we don't know. long beach, the largest terminal at the port of long beach won't open today as a

result of the labor dispute. the ports and workers have been in conflict over wages and safety and benefits. no daily workers reported for work yesterday at long beach union members accused of red tagging equipment for safety checks and removing it from service. no longshoremen reported work at the port of oakland since thursday that work slowed and expected to increase shippingcongestion. we will get a report in the 8:00 hour this is one issue. tough work never a work from home job unless you have remote control things that will happen >> why not ten years from now you won't need to do it yourself what are you talking about the robots will do it for you.

>> we need a lot of people taking care of the robots. i'm really worried all of the things we have to do. all of the things it means to be human. if you were just silicon based you don't have to go to the bathroom you don't have to die. they will not need us. they won't like us and they will be resentful isaac is right report in the "wall street journal" says regulators are prepared to raise capital requirements by 20%. that is different from the approach from the trump administration tougher rules reported in the failures of several banks. since then, regulators will apply the rules to wider range of banks

critics in the banking industry say the changes could raise cause for consumers and lead banks to stop offering services. others say by dropping it down to $100 billion in assets could prevent the really bad stuff at silicon valley bank because it would have forced the things they want to do that got them in trouble. the squawk planner it is a light week for data. international trade on wednesday. jobless claims on thursday we will hear from cracker barrel and j.m. smuckers. coming up, how will friday's jobs data impact the fed's next decision there is a shot of jay powell on the screen i don't know if you saw it or if it was true.

jay powell at the greateful dea concert over the weekend >> with liesman? >> it was like a bigfoot sighting >> did you see liesman's dead cover band >> different concert we'll talk to former fed vice chair roger ferguson about it and other things. we will also talk to house speaker kevin mccarthy over what took place last week that interview coming up at 8:00 a.m. eastern time. you are tcngwahi "squawk box" and this is cnbc >> announcer: "squawk planner" is brought to you by workday the hr and planning system for a changing world you are a rock star. no more calling co-workers rock stars. look, it's great that you use workday

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welcome back to "squawk box. for a look at the strong friday's jobs report to cause a skip or a hike or a pause, we bring in the former vice president of the fed and the chairman of the tiaa and someone who has been right of what the fed has been doing all along let's stick with this. hi, roger. how are you? >> i'm good, andrew.

how are you? >> i'm good. does this change your view about are more hikes >> not at all. i said they have one or two moves to go. friday is the underlining strength in the economy. there is something weaker than expected issue there, but the overall story is unchanged the question is is it a pause it time if that is a pause, it is not the prelude to the end it is a chance to take stock. >> if you thought the numbers were hot on friday, would you be more inclined to raise rather than pause >> you would be more inclined to raise. the pause story follows along three lines. first, they have done a great deal you heard governor jefferson talk about the possibility of the pause just to see where things are secondly, while there is great strength, there is also a little bit of surprise tick up of unemployment rate of

i would not put too much weight on that. that could lead to a pause the third is the debt ceiling issue behind uts. rates will rise and financial conditions will tighten there. i can imagine a pause argument i think on balance, it will probably go, or 60/40 go versus pause discussion >> is your sense increasingly that we will have a quote/unquote soft landing is that in the cards >> i think it is in the cards. as you recall, perhaps, i have been in the camp of recession more likely than not i do think the underlining strength of the economy gives one hope that the economy can withstand rising interest rates and come in for a soft landing that is what jay powell is

saying although recognizing a narrow path. we should recognize that as well >> what do you think of the strength of the consumer i have a sense and when you talk to a number of bankers, there is a sense of people spending beyond their means something has happened in the culture and everyone calling it a yolo, you only live once, where people keep spending even if they don't have the money are we at that point >> i hear the same concerns and outlook from the same bankers. the other thing to recognize is the labor market is still pretty tight. we've also seen wage increases at the 4% to 5% level of i know business leaders are pr surprised with the hr leaders. the consumer is still spending, but it is against the back drop

of the tight labor market. that is what is driving the fed to continue to raise >> what does the unemployment rate have to be for the fed to be happy if that makes sense >> right first, it sounds rather pre-vp perverse the unemployment rate at 3.7% is inconsistent with the kind of 2% inflation target you are talking about. i think we have to see the unemployment rate rise above 4% level to be consistent with the balanced economy that is not a happiness statement. >> how much does the unemployment rate versus wages >> i think you have to focus more on the wage story the unemployment rate is driven

p by a number of factors the number of people leaving the labor force with an aging population and world post-pandemic. we are not sure what labor force participation should look like the unemployment rate is not as accurate gauge as what the fed is worried about as is rising wages. the recent report on wages is inconsistent with the 2% inflation target >> roger, to bring it back to where we started you think we could have a pause, but more likely, an increase next month it sounds like a pause is coming after that >> i think is one or two more hikes for sure out of the next three meetings then a pause to see where we were not done yet if there is a because, by the way, the market should not think that is the end of the cycle

i think it is wait and see >> roger ferguson. thank you. i appreciate it. >> thank you, andrew when we come back, three chemical companies reached a settlement over forever ch chemicals on friday. now a bellwether trial set for today for 3m it could be delayed for attorneys to discuss settlement. in> and the ceo of marriott will jo us to talk about the summer season tony capuano will join us. "squawk box" will be right back. the first time you made a sale online with godaddy was also the first time

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3m shares down .30%. coming up, the ceo of marriott will join us to talk about the summer travel season that's next. at 8:00 a.m., don't miss the interview with house speaker kevin mccarthy "squawk box" will be right back. >> announcer: executive edge sponsored by at&t business at&t 5g is fast, reliable and secure make a hard left down the alley. sfx: [tires screeching] sfx: [police sirens wailing] network's got you covered. please confirm requesting back-up. changing route. go. roadblock ahead. ...back up, back up... reverse! reverse! sfx: [police sirens] next level moments. we're 30 seconds out. need the next level network. north corridor, hurry! coming through! or 3, let's go. the network more businesses choose. transplant received. at&t business.

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good morning welcome back to "squawk box. we're live from the market site in times square. futures are looking bemixed. dow futures up 37 points nasdaq off 35 points summer travel expectations remaining high the u.s. travel association say half of all americans have a trip planned in the next several months joining us is tony capuano i cannot believe how the company has performed since you took over does it have anything to do with the pandemic ending or you

pressing the right buttons >> the team is great the travel is resilient. those have been answered over the last couple years. those questions. you think about where we were two and a half years ago and fast forward to 2022 all-time record ebitda for the company. what is really encouraging to me, it is across every segment and every part of the world. the recovery has been consistent >> still some pent-up demand for europe >> there is. >> it hasn't rebounded u.s./europe travel >> if you look at the airline statistics, demand for airline seats going to europe for the summer is up 50% the statistics i saw is a 46%

year over year. >> what is it before >> almost a year back. >> are people out over their skis this is what andrew was talking about. did you hear the discussion of yolo you only live once people will spend if they don't have it of the. >> -- have it. >> there was a shift away. it feels like the pandemic acted as an accelerant and spread that across generations that is a trend that existed for younger generations. now it is panned generations some people say i don't know when i'll get locked down again. >> we could get locked down again? don't say that we could, yeah >> do you feel like you are seeing this across all strata? >> across all price tiers? absolutely. >> you are not seeing any step

down that is what we keep hearing different people say at amazon and buy 75-inch tv and now 65-inch tv >> luxury had an all-time rate performance in 2022. we we see strong rate growth in luxury. >> how far out can you see do you see bookings to the holidays or next summer? >> on the transient side, we still have a booking window of 21 days. it is a relatively short booking window use fourth of july weekend as an example. we have pretty good visibility in the u.s., we see revenue up 10% year over year for fourth of july holiday >> that is impressive. we keep saying things are great until they are not it goes bad all at once. if you have a 21-day window, what would you normally

anticipate we look at the yield curve flashing signs for recession it hasn't caught up with anything >> it hasn't one thing that gives me comfort. that 21-day transient is an encouraging sign with the group business which books much longer we talked in the first quarter earnings call and based on the forward bookings in group, group business for the last three users for the year is up 26% year over year group visibility is strong through the year that gives us some comfort and, in fact, based on that strength, we upgraded forecast for 10% to 13% for full year. >> that did not weaken >> not at all. >> around the world, how many marriott hotels open everyo month? >> we open 40 to 50 hotels a month.

>> concentrated in what parts of the world? >> u.s. and canada is the largest market followed by china which is the second market. >> how is it there >> it is getting better. in mainland china, demand is back back to pre-pandemic demand levels it is domestic demand. as of the end of april, international airline seats were only 40% of where they were pre-pandemic international demand has really only not recovered 50% >> what is it? >> mid-x studio. a month ago, we added the 31st brand. the mexican brand express. we will bring a version of that to the u.s., an extended stay version of that. midx studios is the name

we have been a dominant player with residence inn and town place suites this is an offering for extended stay 20-plus night. >> nicer >> it is mid scale a tier lower it will be terrific quality, but lower price point. >> on the residence inn, don't try to mess with me here i have recently i love them i like to drive. i havehave cruise control. the prices were compared to a year ago, you raised prices. how much >> well, rate last year was up double digits. >> residence inn average, how much did rates go up >> teens >> is that it? >> you have to look market by market if you were in a drive to

leisure destination, it was up 20% to 30%. >> it was up 30% i understand and it is fine. it is what i need and it is pet friendly and everything else i was amazed how that stuck. you don't have a problem raising prices and it was booked >> compression drives rate particularly early in the recovery, it was the drive to markets that saw the most rapid recovery when folks with skittish about getting on airplanes. it was the drive to leisure are destination that led the recovery >> you wouldn't say luxury has led the way and is now declines slightly >> luxury leisure was strong out of the box luxury urban has recovered more slowly luxury continues to be strong as i said to andrew our ability to push rate in luxury is moderating a bit

it continues to be strong. >> so, when you try to hire people, how hard is that >> pre-pandemic in the u.s., our largest market, our run rate at any given point, we might have had 6,000 job openings early in the recovery, as high as 13,000 job openings last month, down to 5,800. back to where we were pre-pandemic the caveat i would give you is more concentrated in the leisure destinations pre-pandemic, the 6,000 openings would have been evenly dist distributed. >> what is the profit margin today? >> at the house profit >> house profit. >> 30% to 40%. >> what was it in 2019 >> about the same. >> about the same. that is what i was trying to get at an before >> what has happened is through

the pandemic, we identified a bunch of operating efficiencies. those efficiencies have, in fact, been able to be preserved in a way that has offset the wage and utility inflation we have seen. >> you actually haven't been able to capture any higher margin post pandemic >> as a result of the wage inflation we have seen and some of the cost to goods sold. >> i appreciate that i was assuming, maybe wrongly, that would you say you are able to capture additional 10% margin in this requienvironment. >> you remember, you had very severe drops in rev par over the last two years of the pandemic wages were still rising during that period. as a result, you see the stabilization. >> how much is because of

operational changes you have in place and how much you have been able to raise rates? >> a combination of both. >> more to one or the other? >> i would say even mix. >> if you hadn't raised wages, you wouldn't have all these employees, would you you wouldn't be fully staffed? you had to induce them with something? >> we have to continue to offer competitive wages, of course >> why is opec feeling the need to cut output? you are describing a world that is going gang busters. i don't know why oil can't hold up on its own with the demand? >> to drive pricing, learly. >> why isn't it already driven >> it's a head scratcher >> for you all right. you don't know what it will be called

why mid-x studios? >> with 31 brands, one challenge is launching a brand and sometimes perfecting the idea. >> you open for suggestions? >> do you have one >> i'll think about it >> he wants royalty. >> that goes without saying. it could be an upgrade >> i like studios. that's a good name >> we have could come up with mid-x studios? that won't work. something studios. will you work on this? becky? >> this is below my pay grade. it's a barry diller line tony, thank you. >> thanks for having me. coming up, a big debut for the "spider-man" movie at the box office. don't miss the interview with the ceo of astrazeneca and latest on the cancer treatments.

you can follow "squawk pod" and listen any time. "squawk" is coming right back. >> announcer: squawk ceo call is sponsored by truist wealth where meaningful relationships matter most. right. yeah. and i don't think at that time- i think you're the one to tell me that we had the same birthday. yes. it's really unbelievable when you think about it, because it's been, like, really over 20 years that you were my mother and father's banker, you became my banker and now fran is in her third year of college and you're her banker. it's so unbelievable because i'm just 20 years old. [laughing]

welcome back

u.s. equity futures are down this morning s&p is unchanged at the weekend box office, "spider-man" had the biggest weekend opening. bringing in $125 million in north american ticket sales. that second to universal's "super mario brothers" movie. this is exciting news in nbc land you ready for it "meet the press" host chuck todd announcing he was stepping down after nine years we have a new host which is exciting it is big news in nbc land he has been hosting that public affairs show since 2014. he plans to remain at nbc as chief political analyst and focus on journalism and kristen welker will take over the duties

of "meet the press." we're excited for her. great job with the debate. she has been hosting, if you watch on nbc news now, "meet the press" daily on mondays and tuesdays already >> good move i saw her at the christmas party. i was with my daughter my daughter gets excited about women in journalism and things like that. she was very gracious. very cool. >> she's is a mom herself. when we come back, the pause on student loan payments is set to end before september. we will talk about the economic impact of that next. reminder for you, you can watch or listen to us live any time on the cnbc app

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mediterranean restaurant chain cava is planning an ipo. it is planning a list between $17 and $19 a share. the high end of the range could get $2.2 billion for the company and that could bring shares for investors tomorrow out with the goal of listing next week o i know nothing about it. >> i know a little bit about it. >> you do? >> i know this can we talk about this

>> $3,000 thing? i'm super excited about apple. apple is kicking off the developer conference today to unveil the mixed reality headset. it is expected to cost $3,000. ten times of the i know you guys all think the metaverse is a joke. maybe i'll be wrong, we will see. >> are you going to buy one? >> i don't know. i'm not arguing this is the game right here right now it just to me it sort of again pushes you into a direction of where technology could travel effectively. >> priced at $3,000 because it must be good >> no, no, no, no. if you see what apple's done over the years when the watch first came out, it was a very expensive product and, a, prices have come down and, b, they've gotten a lot

better they're not trying to sell a bajillion of them. >> could be gaming, could be travel >> could be gaming, could be office, could be all sorts of stuff. there's some speculation around how facetime could work inside a metaverse kind of product so you're wearing the headset, you're wherever you are and really actually seeing the other person could be cool i think there's stuff here you're not thaet excited about it >> you can dream >> i remember seeing tim cook and i thought it was crazy that anybody would ever pay $200, $150, $250 for a pair of headphones why? because it used to come free with the phone people thought $200 was

insanity now this is one of their runaway products >> you can sell me on the experience itself versus regular reality. that's where you can failing me on this level. >> we will see the other flip side is the likelihood is this is going to generate even more interest for this whole universe and at a $3,000 price point, i would argue this should be good for meta >> you don't think apple should change its name to meta, right >> can i do this we have a guest. congress may have averted a catastrophic default but the clock is now ticking down on student loan borrowers who will have to start monthly payments in september >> we want to bring in the senior policy director for the committee for a responsible federal budget mark, let's talk a little bit about this how did we get here? it's been more than three years since people have had to pay on their student loans. justified do you think >> well, i think that when we

were in the depths of the pandemic/recession and we were doing everything we possibly could to make sure people had cash flow, this student debt repayment clause made sense. but we've extended it again and again. each time it made less sense than the last. we should have ended probably two years ago. >> the pause has caused the federal government more than $200 billion what does that mean just as part of the budget? >> well, it's $5 billion a month. that's nothing to sneeze at. $200 billion is not going to break or $31 trillion debt but it's a sizable difference at a time inflation is surging and it really is adding to it >> now you've got $5 billion a month that consumers are not going to have to put into the economy. is that going to make a difference when it comes to the economy? >> i think it will i think actually there's more up side than down side here it's going to soak up some of

that excess demand and student debt adds about 20 basis points. i think it will make the fed's job just a little bit easier >> meaning the economy will suffer a bit as a result >> spending may be reduced when you have demand so far in excess of supply and you have these inflation spy irals, it's going to be one less rate hike or one sooner rate cut going forward. >> let talk a little bit about what's happening just with the idea that the government is forgiving up to $20,000 in student loans for couples. that goes before the supreme court. what happens if the supreme court rules that it is constitutional, what happens if it doesn't what are the impacts just in terms of the budget for that >> so it looks like for the most part people are waiting and seeing they haven't spent all that

money. if the courts say the president's student debt cl cancellation is legal, that could worsen if it rules it is legal, it will be pretty much status quo. a lot of folks wouldn't end up paying anything if this $20,000 cancellation goes into effect. >> you think that just in terms of what it means maybe not that big of a dealing for this one off, i think other people say if it can happen once and it's constitutional, maybe it will happen again and again >> oh, no, i think it's a big deal i think people are assuming it will be ruled illegal. most people are not spending, assuming they have cash on hand. if they do have 10, $20,000, we're going to see them go out and spend it, see home and car prices go up a little bit and there is that very real risk

this cans cellation costs $300,4 billion. it's going to make students twice roulette some people have to pay it back, some don't >> the reason this is going to the supreme court to begin with, the argument is it should go to congress if you're going to be spending that kind of money, it needs to go through congress as they get to be the ones to determine the purse strings. >> the president is arguing some kind of emergency power because of the devastation of the pandemic that just doesn't match the reality of the situation folks are going to restart payment, that's going to be tough. but that's the consequence of the payment pause and the disruption it's caused, not the payment itself >> marc goldwein, thank you for your time today. >> and coming up, updated

probabilities for a rate hike at the next fed meeting or will it be a skip? and speaker of the house kevin mccarthy will join us live "squawk box" will be right back.

good morning a mixed picture for markets today following friday's stock surge. steve liesman will tell us about the new expectations for the fed following the employment report. oil prices gushing opec and saudi arabia dealing the world a surprise

voluntary production cuts expected this summer and apple is taking center stage today with its annual developer conference new products on the way, a vr headset widely expected. will it move the stock even higher all that and even more as the second hour of "squawk box" begins right now. . good morning welcome back to "squawk box" right here on cnbc live at the nasdaq market site in times square take a look at u.s. equity futures at this hour on this monday morning opening higher on the dow, s&p 500 up about 1 1/2 points, nasdaq looking down this morning, this follows friday's 700-point surge, the s&p 500 rising nearly 1.5%, on the verge

of exiting its bear market run since 1948 to close above 4292.44, year to date the index is up 33% this is something we'll tackle with kay stockton at 7:30 a.m. eastern time as she gives us her take on the charts this morning. let's take a look at treasuries. the 10-year note at 3.749, 2-year at 4.549 and take a look at crypto, now 26,733. it's actually sort of in level for a while now. >> high 26, high 27. a surprise from the opec meeting, pushing crude prices back above 60. the group making no changes to its planned production cuts for the rest year but saudi arabia plans a

further voluntary output cuts in july from $10 million barrel per day to 9 million we'll see what kind of summer it will be in the market. the largest terminal in the port of long beach in california will not open today as the result of labor disputes they've been in a contract dispute over wagess , safety and in innovation union members have been accused of red tagging equipment for safety checks, removing it from service. no longshoremen have reported to work since thursday. the work slowdown is expected to increase shipping congestion on the west coast in "the wall street

journal," larger financial firms to boost their overall capital environments by roughly 20%. about 10%, biggest increases expected for mega banks. they say regulators could unveil new rules as early as this month and they would be there to try to prevent what happened with scb. >> a stronger-than-expected jobs reports. steve liesman joins us i thought we settled on a skip, steve. >> we did, we did. >> can you also in your view, and it will be just one man's opinion, but tell me what about that number on friday, whether it was the 3.7, the increase in unemployment or whether it was some of the wauge data, what do

you think was really responsible for 700 points in the dow after such a strong number what was the nuance that did it, in your view >> you know, joe, i would just as soon throw that back at you i mean, why and when the stock market moves is -- you're smarter about that than i am >> you want my fantasy we don't have a recession, we don't go to 5% unemployment and this is my fantasy inflation moderates but we stay -- we don't hit a recession. we don't need to induce 5 or 6% unemployment, we keep strong, wage prices ease and we get the best of both worlds. >> what i want to know is if the stock market today or on friday is aware of sort of how the market for the fed changed because what happened is the beat on jobs, just as you said, joe, it didn't price in a hike

for june as you might have expected what happened is as of this morning there's now a better than 70% probability of a pause. why that is, we'll talk about that in a minute, i expect but what changes for rate cuts this year, they have now practically been priced out. take a look here before the jobs report the fed funds future had seen at least one rate cut this year to 4.85 but the yield rose about 5% after the jobs number suggesting the feds will remain at the current level. this is what's interesting the gap between where the fed expects to be and where the market thinks the fed will be, it's now narrowed to almost nothing. it had been a full percentage point earlier last month it's now just 11 basis points. in england you might say never mind the gap among the reasons for the change, this stronger economy, stubborn inflation, treasury rebuilding its conference with

some estimates it needs to send a trillion in bills, all of this leading markets to believe it may pause in june. b but ian shepherdson says it's not done yet shepherd's opinion and economists are skeptical because of other factors that may have boosted it but for the moment markets are taking the straengt at face value. they have been buoyed by expectations and now looking to hold at 5% i'm assuming the market was aware of how the fed fund futures priced and if they changed their expectation. maybe it's all the excitement

about a.i. maybe there was an all-clear with that raising unemployment rate >> we don't want an economy that causes us to cut rates this year or early next year that was always implicit in that maybe the market likes lower rate stock market, but we don't want an economic backdrop that causes the fed to cut. that's why it's always worth to try and interpret. you see what i'm saying? what would cause that this year? it would be something bad. >> i think the fact that you and i have been around for a while is useful. kristen forbes out of brookings institution report at a conference a week or so ago put up a chart of interest rates and they looked a lot like interest rates now. they're interest rates from '03, '04. people got used to this ten-year period or whatever of low rates.

that's not normal. remember when we had a tech boom remember what the rates were then i was wondering if a.i. would be hurt by traits i called around and people said what were rates in the nasdaq? if you do have this incredible need for capital, one thing that could happen is rates could rise if there are all these opportunities for productivity investments. >> did cal come to your concert? >> he didn't come to mine. no, he did go to -- >> where did he supposedly go? a dead and company concert >> dead and company, yeah. it's a very good band. john maier on lead guitar and my good friend john lane on drums >> you must hate a lot of guys

>> i don't know why he has to be so mean. >> a lot of breakup songs. >> but why does he have to be so mean is my only question was he really there, jay powell? >> yes look, joe, the band called me and asked me what they should play for powell. >> seriously >> yeah. well, no, they didn't ask me -- somebody from the band called to tell me that he was going to be there, yeah. and i suggested some songs like "estimated profit. i don't know if he went there. >> that's like the photo i saw circulating on twitter of supposedly jay powell being there. looked like a big foot photo very grainy and very -- >> he was there. >> did you not get stoned from the ambient smoke around you >> i think it's all legal now,

joe, so it's okay. >> all right we're moving on. >> steve, we'll see you a little later. >> for more on the markets, we want to bring in cameron bawcett. was this a goldie locks number >> i think it definitely was a goldie locks reaction. it's really a market that could have it all, it could have an easier, more dovish fed but didn't have a pause. but it didn't come with a slowdown in growth that would hit earnings that does explain why the reaction in the market on friday was very different than what we've seen in recent months, which was really just led by tech names and really a flight to safety. instead friday was much more broad. it was including names like cyclicals and we had much better performance out of the dow than

we saw out of the nasdaq that does reflect this optimism that growth is going to hold in better than expected but then we asked the question that if you have better growth, really would you get a more dovish fed and we don't think the answer is yes, just because inflation is remaining sticky, which means that there is still upward pressure in interest rates likely to be had >> do you think the fed is going topause at this next meeting o no >> i think they will just because they've messaged it so much but it might not be the biggest story coming out of the meeting. we'll get an update to the summary economic projections, which will likely include them raising their growth forecast being even though they might being pausing and maybe lowering their unemployment forecast. they have a 4.5% unemployment rate for '23 that likely is too high. we'll also get an update to the dot plot, which will likely show more raises and let cuts in '23.

so it's likely that the messaging coming out of the meeting might be more hawkish than the actual decision itself. we think if they pause in june, a july hike would be likely. >> so a pause is really just a pause and not a reset. >> exactly >> and you're talking about a huge run with the s&p now up almost 20% from the lows that we had seen back in october is this something you'd by into at this point or not >> well, we think that the onus for up side in the markets from here has to come from the earnings line because to your point, when you have a tighter fed and you have tighter liquidity, which is likely going to come as well now that we're on the other side of the debt ceiling debate, when you look at valuations we're trading at 18.7 times, the higher end of prior valuations and we don't think

you can press much higher from there. so really you would have to count on earnings coming in much better than expected there it's more of a question of is every company nvidia? we don't think every company will see the big boost in a.i. like you're seeing with some of these semi-names we would look at earnings expectations today we have 10% growth marked down for 2024, which would lead us all to the conclusion that likely some patience here is warranted and a digestion of the recent gains given we've moved so far so fast >> you're missing the rally, cameron. you're missing the rally you missed about 20% of it >> we've been invested, and i think that's the key point here is that it's not as if we're sitting in cash and clipping 5% coupons. where we've missed the rally and where we've been the most

surprised is in those growth and technology stocks and reaching toward the highest multiple parts of the market. that's the area of the market that typically has been more sensitive to interest rates. so we have seen interest rate go up how, we haven't seen that devaluation. in the very near term the technical calls are strong we see momentum and see within the growth and technology parts of the market very strong trends but when we look in the medium term, we have to remained valuation disciplined. we're not going to chase names because of strong momentum in the near term and ignore valuation because we are long-term and quality investors. >> all right, cameron, thank you. good to see you this morning, cameron dawson >> and we'll have more with

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joining us is senior research analyst. what do you think? my colleagues are much more skeptical than i am. >> i'm not skeptical about the future >> i like reality. >> what do you think, dan? >> good morning, andrew. i think we'll see the first in what is going to be a series of enough devices over the next several years. this is really about launching the platform and really beginning to enable developers to write applications to the platform so that as users we have a lot we can do it could be in terms of content, video gaming there are a lot of things we can do if we step back and think back to the iphone about a decade and a half ago, it was really the app store empowering all the developers to build on top so that to me is really the magic of this story here

>> some people are worried that this is going to turn out to be a very expensive flop. >> i think it's going to be an expensive device they're putting in or likely to put in an extraordinary number of sensors, cameras. the actual technology is still maturing so it's going to take time i think what they're trying to do is really start somewhere, get a lot of experience from users but really developers and see what they can do with the device and really how they can evolve the florm if we think back to the watch self years ago, it took some time for it to really find its place in terms of areas like fitness, health with the electrocardiogram app. i think we'll see something similar here it is going to be a new user experience in terms of having a device in front of one's face so it's going to take a bit of time >> are there other things you think are in the offing that are going to be more, if you will,

accretive on day one >> i think what we'll continue to see is a focus on the product road maps, as we've seen from the company over time. we'll have a new iphone, you could see a new air book today those are going to be more meaningful drivers and their service business, which they've done a tremendous job in in terms of building out, extending to new areas like fitness plus the main engines are think are continuing to broaden and virtual reality will be a smaller engine that over time can contribute a bit more. >> at 182 right now, what do you think fair value is for this company? >> i think fair value is significantly higher i can't give you a specific price. the company is generating about $100 billion annually. we see strong growth in the nest

few year sure we're in a cyclically difficult environment right now but if it company can continue to innovate and see good growth coming out of this period, i think the shares will be substantially higher over the next one to two years. >> what's the risk to that price at this point? this is near an all-time high here >> the risks are being competition remains fierce, the macro remains challenging, important markets like china are still soft the ability to and navigate thi very choppy chienvironment is critical >> we'll leave it there and maybe i'll see you on the virtual headset at some point if we both get one. >> sounds good >> next, a rundown of this morning's early stock movers and then speaker of the house kevin mccarthy will join us at 8

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we'll take a look at this morning's premarket movers hi, christina. >> good morning. after a three-year pause, borrowers will need to resume student loan payments this fall and that could impact u.s. retail sales by 2% and have an impact by target's margins the stock is down 3/4 of a percent. they downgraded this name to sector weight from overweight. >> despite the downgrade from oppenheimer analysts, estee lauder are still in the green. they cited concerns of more muted growth in the united states

shares are down about 24% year to date while competitor ulta is only down around 10% and look at elf, up at 90% competition is fierce. and citi says the memory ban should put them on better footing to get even more money from the $52 million chips act they moved micron to a top pick, although shares are slightly lower this morning guys >> christina, thank you. twitter's ad revenue between april 1st and the first week of may was $88 million. that's down 59% year over year that's according to an interm presentation and the presentation said that ad performance is unlikely to improve any time soon.

still to come this morning, the market soaring on friday what the charts are saying about the next move for stock. fairlead strategies katie stockton reads those charts for us next. plus oil prices popping this morning after saudi arabia pledged more production cuts, about 10% from 10 billion barrels a day down to 9. the opec plus meeting and what it means for the energy sector stay tuned you're watching "squawk box" and this is cnbc

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welcome back to "squawk box. our next guest has gotten more constructive on the marks after the s&p has confirmed its breakout above 4,155 joining us is katie stockton, managing partner and cnbc contributor. i've been waiting for this, for you, because i put a lot of stock and faith in what you say, katie, but one of my criticisms of technical analysis is that by definition, it seems to be kind of trend following so now because the markets have probably performed better than the charts were indicated, it's suddenly self-fulfilling because the charts have gone up, they look better now and maybe are indicating further gains but you weren't necessarily, when you could have bought, the most

attractive time to buy wasn't showing. >> it is an attractive time to buy. we following momentum. we want to make sure we're capturing major shifts the difference in the rally has been the breadth the waiting, it requires a lot of patience at times and unfortunately sometimes the breakouts do come from levels at which you don't want to wait for but we always look for that confirmation because gives us that some breadth will kick in on friday the breadths something like 6-1 up-to-down value and that marks a shift if we saw another week or so of that, we're going to get a pretty big breakout in the advance/decline line >> the narrowness of the advantage had been one of the things that kept you skeptical

>> yes so we have the breakout of this cloud based resistance of 4155 and the day after that happened, we got the confirmation, the percentage of s&p 500 stocks above their 50-day moving averages reached only 30%. so it went down, showing how breadth contracted and that sets us up for up side. so it was an oversold reading in market breadth, very rare to see that with a breakout in price terms but we'll take it. we expect russell 2000 s&p 500 equal weight to kick in. i have to be clear on the time horizons by that i mean it's three, four months maybe and i think the rit would be somewhat conducive to

that time frame. but on the back of that, we might just be in the big trading range. >> that wouldn't get us that high >> that's right. the price objective is about 4510 from the breakout it does seem realistic it about 5% of levels after friday's big gain. we really have no signs ofup set and continually ask the question l i referred the generals and then the troops. we said could the generals come back and leave the front lines and go orsaying that may be shifting and we may see the troops start to catch up with -- >> right >> because normally that would be suspect if it was too new >> they are so relatively oversold you see it on the sector front, on the small versus large cap front and i think there's going to be appeal to that when we

have confidence in with that breakout, that instills confidence. so that's what we're looking for. we think it will be easier to take advantage of the up trend in the next few months and yet we'd remain noncommittal even among the mega caps we don't have a lot of those indications of exhaustion. we. >> so we may not go to new highs, but the probability of us testing the october lows or some at 3,400 or 3,200 or my most bearish case is 3,000. we're getting less and less likely that those ever happened. >> for sure. with any kind of breakout, it helps you ratchet the support levels igher. >> where are they now?

>> now with the former resistance 4150 books the support. >> that's 15% from the october low. >> it is, yeah >> all the people will be wrong. >> i hope not. >> what do you mean you hope not? we hope so we hope they are wrong >> i just don't like being wrong so i feel the pain >> wow, that's interesting bitcoin kind of was early and then petered out, right? >> it had broken up from a basing phase i think that was an early indication of that kind of risk. >> now it's an indication that this could peter out >> another thing to watch is the volatility index or the vix. the vix broke down and it looks like it might break out again

here >> what do you think and -- >> i think it's an opportunity with an interim time rising. there is resistance. we have such a high beta move here i would say around 32,000 is where we're looking at some strong resistance for it >> and the resistance on the bottom end is? >> the report is around 25,000, or very close to it, but we can't say we've entered this secular bull trend again it's probably more of a route. can we do oil? wti up by about 7 p $73 based on the saudi arabia report. >> there are so many people that welcome that bounce in crude oil because energy has been so under pressure

we think this bounce will persist. we think up side is limited. there's some good resistance for crude around $82 per barrel. we think that might be a struggle to surmount and the energy sector has seen long term momentum and strength. our techs picked out technology and replaced it and we're giving you long-term momentum energy to us, we welcome this bounce as a selling opportunity. >> do we have to revise our thinking about real lows only be made when the vix lows out that's never happened. or if we only get to 45, we can eventually i guess get a vix blowout. but if we don't get the new highs and maybe in a trading

range, do we say that's maybe in the future >> listen, the viks is like a certiorari metric for us we always start with price and momentum and then we go to the market internals, i with of if it isn't, we're not going to give it a terrible at of and -- >> well, i've had so many mentors. i have to credit louise yamata, she's a dear mentor and friend we've had some great mentors along the way. >> phil graham, though, was great, until he started dressing up like a pharaoh, predicting earthquakes. we were right a few times. ooh. thank you.

>> good to see you. >> when we come back, several corporations settling a major lawsuit from those so-called forever chemicals. and 3m could also be talking about a deal you see 3m shares today up another 32 cents to 102.85 plus you can get the best by following squawk pod and you can listen any time. stay tuned

welcome back to "squawk box. take a look at futures this monday morning you're looking at some green and some red the s&p off just morjarginally right now. treasuries, you're looking at the 10-year note, 3.75, the 2-year at 4.56 three other chemical makers reached a deal on friday to settle thousands of claims that they contaminated u.s. public water systems with those forever chemicals. 3m may also be near a deal

sima, what's happening >> all these stocks moved in a big way onfriday 3m is the biggest link to cancer-linked chemicals. financial and legal experts say the potential settlement do not cover all the claims hand don't take into account possible litigation from european countries. capstone is estimating that 3m in total faces $3.5 billion and that the stock is uninvestable >> we do consider 3m to be uninvestableable >> over 15 states from washington to maine filed

lawsuits we traveled to one school in maine where their water fountains are taped shut >> we had the science that showed how dangerous and toxic they were and how they were going to last forever. >> 3m said they would phase out the production of these toxic chemicals by 2025 and it says it remains committed to water treatment and as you can see, stock ended up higher by 8% on friday, becky, but still down about 30% over the past 12 months it's been a big overhang >> it was rbc said they considered the stock uninvestable >> that's correct. >> could they change their mind? >> we checked in with them on

friday and they stand by their claim that the stock remains uninvestable they don't think this settlement covers all the claims, personal injury the state attorney generals launching lawsuits against this company. from their standpoint the legal liabilities are far too lodge. there's also the military here plugs. >> where soldiers say that their ears were damaged because they were defective >> exactly that's expected to be a $5 to $10 billion potential liability cost as well >> mess mesothelioma is still a factor >> what about all the companies that are using -- >> i threw out my -- when you

start reading into the stuff, really >> that's why they started an arms race. it just takes so long to come up with something >> i'm going to use butter load it up with butter to keep it from sticking >> stainless steel is what they say is the best option >> coming up, saudi arabia's decision to cut production, we'll see $80 a barrel or more in the near future that's the question and how will that impact the market and as the nation's supply chain recovers, labor disruptions shutting down some of the largest ports. more after this. what if we use ai-driven insights to pinpoint inefficiency? yep. and act on it. saving energy, money... ... and emissions.

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welcome back to "squawk. saudi arabia with voluntary cuts of 1 million barrels a day in july now at 73.39 good morning to you. saudi is on its own here the question is how much of an impact that's really going to have >> well, i think it will have an impact in getting prices to a higher level whether it gets to the level that they're looking at is another matter the market, you know, is down and was down because fundamentals have been extremely weak, far more than what the claim was on people in managed

money shorting the market. it is a really weak physical market and there's nothing showing strength demand is down actually and supply is up so we expect that a one-month increase in the cut is going to be meaningful. we don't know exactly what the 1 million barrels a day means, by the way. they have about a 400,000 barrel a day increase in demand for oil, for power generation starting right now you go through september. how much are they going to be drawing out of inventory to deal with this cut and what are they going to do about their exports? >> what do you think is driving this still some are speculating about politics with the united states on one side and there's others who have views that they know something about the economy that the other opec countries don't i mean, what do you think is underlying all this? >> i think what underlies their action is they boxed themselves into a position where they said people have to act and they said, okay, we'll do it

and take the action that we think is needed. now the original action not for the year as a whole but the extra things that they did in may was a real concern that the market may be repeating. they are considering what's happening with a back drop i think there's a little bit of a free rider issue here. what others are saying is the price of oil that was well within their fiscal break even position, even iraq has $70 oil as the fiscals break even. the other gcc countries could wait, qatar and egypt down much lower that than. the saudis are above 80 and even above 90 they are in a unique position when it comes to a desire to balance their budget they did back themselves into a

position where they had to take some action. the others i think would take action if they saw oil go down to 60 and this was going to be a really weakened marked but they haven't seen that yet. >> so clients are calling you and asking what is going to happen to the price of brent or wti crude, airline, what prices do you hedge at these days look out 12 months what do you see in. >> 12 months we see an even weaker market than we see now. we had been suggesting hedging of petroleum products but put a floor under it that's much lower than where the market is now pricing. yes, it's an opportunity for the ceiling price if you're a buyer and it could be a good opportunity for producers to hedge as well. but, yeah, we think the market is range bound, far more than

the opec countries think it is they would like to see a higher price but they're not all squeezed to the degree the saudis are >> always appreciate you joining us, especially on a day like today. >> pleasure to be with you >> speaker of the house kevin mccarthy coming um on the impact of the debt ceiling deal, on future spending on capitol hill and the support from his party and we kick off the market week with mohamed el-erian following friday's big jobs number "squawk box" will return in just a minute hen we metamorphosize into our new evolved form, we carry that spirit with us. because you can take alfa romeo out of italy. but you best believe, you can't take the italy out of an alfa romeo.

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futures mixed as we approach the first opening bell of the week coming off a monster friday. the dow's best day since january. and oil prices rising. details from a busy weekend for energy straight ahead. and how did the deal to raise the debt ceiling come together and what does it mean for the future of bipartisanship on capitol hill speaker of the house kevin mccarthy will join us live the final hour of "squawk box" begins right now

good morning welcome to "squawk box" here on cnbc live from the nasdaq market site insometimes square. i'm joe ken yrnen along with be quick and oil prices following news of saudi arabia's decision to cut production this summer, above 70 again, 7341 but kind of at the high end also of the range. brian sullivan will join us later in the hour. investors breathing a sigh of relief now that a deal to raise the federal debt ceiling has been passed and signed into law.

speaker of the house kevin mccarthy calling spending cuts historic but some lawmakers wanted a lot more. speaker mccarthy joins us now. we heard it again and again. we heard most recently from patrick mchenry. don't let the perfect be the enemy of the good. i guess again and again that kind of describes what happened to some extent >> well, thanks for having me. but, no, i think this was a turning of the ship, a movement in the right direction think about what we were able to achieve. for one of the first times we're going to spend less than we spent last year. the center for fiscal responsibility, this is the biggest cut in american history, $2.1 trillion. we were able to pull back the covid funding that we had, the largest rescissions in american history. you can add up all the rescissions, this is larger than all of them accumulated

together what you found going forward, cutting the red tape while eliminating how long you can study something so you can build it i think you're going to see a growth in the economy based upon that restructuring congress and the point that i get so frustrated that we don't do the most basic things we're supposed to do so we changed the structure if we don't get our job done, there's a 1% cut across the board. everybody has an angst about that what it means is it will force to us do our job i think these are healthy movements in the right direction. it doesn't solve the problem by any means but it does put us on a new path of moving forward >> you wanted to freeze federal spending for ten years what we did get was non-defense spending flat in 2024 and an increase of 1% in 2025 that's not close to what you'd like you'd still probably like that, wouldn't you how do you -- what do you do

now? you caught the bus, you're the dog that caught the bus. now what we still have major issues >> we have major issues but remember what we were dealing with, that we weren't able to look at the entire budget. we dealt all of this with about 11% of the budget. what we did was we increased spending on defense to the president's level. we increased veterans, but non-de non-defense we lowered back below '22 levels this is a bill that has to get through the house, the senate and signed by the president. in the senate, a number of senate republicans wanted to spend more money on defense. so we had a challenge there but i think we thread the needle we put caps on this for six years. we didn't get ten but we got six. so there were a number of things we won in this process what was really important is the president wouldn't even speak to us for 97 days i'd watch your shows every morning you'd have republicans and democrats on and all the

democrats said they should raise the debt limit and do nothing. we ended up with the largest cut in american history, which is the right start. but there's so much more we have to gain. you have to look at the entire budget to do the job correctly to put us on the right path. >> 90 days you went back and forth with the president this is from the white house, maga house republicans default on the act there were hostages taken, terrorist negotiations and the rhetoric was beyond belief when it was all said and done, the president said that, wow, he couldn't have said nicer things about you he said, wow, he negotiated in good faith, it was awesome. you were pretty complementary, too. is this the beginning of a beautiful friendship to reference "casablanca" >> if you're in the meeting, it's not always beautiful inside you have to fight for what you

believe in at the end of the day we were able to come to an agreement, which is important for the american public. i think in the end the american public won on this debate. they never wanted to negotiate there are no new taxes, there's no new spending that the president wants, there's no new government programs that the president wants. i thought at the end of the day it was a good negotiation. >> maybe you don't want to say this on the air, how much of the initial proposal was a negotiating tactic, if you will, that there were anchoring devices happening on your side and by the way, on president biden's side as well that made it look like you were super far apart and that's what actually led you to get to the middle or did you look at the initial proposal as a -- not to say it wasn't a genuine proposal but recognizing that there was going to have to be compromise to get there? >> i always knew there was going to be compromise

remember, we only have the house by a five-seat majority. they have the senate and they have the presidency. so it's very difficult as you're moving forward their whole plan was to take us to the brink and just raise the debt ceiling and dare us to go over the cliff i thought a more appropriate way is to sit down and negotiate that was february 1st. >> in fairness -- >> in all due respect, andrew, let me finish the answer to your question when we finished the bill, it was exactly what we wanted to get temperature we didn't go over the top we said we want to go back to 22 levels, cap it for ten years and put covid money back i knew i would not get 100% of that but i wanted to base our negotiations off that bill that's what we were able to do and that's the framework of the final bill and i believe at the end of the day that was a success for the american people. >> i'm not sure if it's the framework for the bill

"usa today" saying initially, this is you, initially mccarthy caved to the maga demands that would have gutted much of what biden accomplished in his first two years but the final deal that the speaker hammered out with biden was not close to what the maga lawmakers wanted. this is the language of "usa today" but how do you react to that sort of description >> well, whoever wrote that article apparently didn't read the two bills. let's walk through what the first bill said and final bill said we said we wanted to go back to '22 levels i didn't get that on defense but on non-defense, we got below that we pulled all the covid money back we said we wanted work requirements but we got work requirement and welfare reform but we didn't get it on medicaid we said we wanted to pull back the irs money. we didn't get all the money but we got all the money, 1.4 billion they wanted to use for this year and 20 billion going forward. so we got a big chunk of that.

we said we wanted reform especially when it came to energy we also got to limit the scope of how far we can study the program. so i thought those were big successes. we wanted to rein in the president when he wanted to put new programs in and regulations called the rain act. we didn't get that but we pulled something from president trump's executive order that does pretty much that in the essence that it scores more than $100 million. so, no, we frameworked around our entire bill. did we get 100%? no so whoever wrote that article didn't read either bill to come to that conclusion >> i guess if you were a right leaning caucus member in your caucus, let's say you're a freedom caucus member, you'd look at sort of the embrace of the bill by a lot of democrats or a lot more democrats that

voted for it than republicans and they would, they all like it, obviously we gave away the store. but, on the other hand, in the past i think none of these guys ever voted for a debt receiling increase and many of them did this time. what did you get, two-thirds of them in the past some of them were 0 for 100 on debt ceiling increases. >> that's correct. you're one of the smartest shows on tv. you study the data we ended up getting 67% of republicans voting for this bill if you take the average of what normally republicans vote for, especially when you have a democrat president, it's about 24%. so you tripled your vote with that basis now, if you look at how do republicans vote for a debt ceiling when they have a republican president and a republican house, it's less than that at 65%. so we surpassed all

expectations if you want to measure the bill based upon that, we achieved more than we've been able to do in the past. i think that's reflective about what's in the bill if you want to talk about different members, you can look at who what democrats voted against the bill democrats normally vote for debt ceilings but bernie sanders and aoc did not. they didn't just vote against the bill, they argued against the bill they said it was detrimental they said work requirements were a red line but ended up voting for it, said they would never do anything on irs agents but they gave up 21 billion and reversed course they said they didn't want to give up the covid money. they did they are always going dollar for dollar with defense and now nondefense is below '22 levels they voted for that and signed it into law. now the democrats are on record

doing thing they never said they would do, especially at the beginning of this negotiation. >> i've seen some polls and you got, i don't know, they were crowing you got a 10% bump, 50% approval, 39% disapproval. that's like that would be the envy of most current politicos i'm wondering whether this puts to bed from freedom caucus members. do you feel like at this point -- i wouldn't say vanquished some of that but are they still laying in wait for the next fight are they still there and would they have voted no if it would have caused a default would they have gone all the way to the end and defaulted because they didn't get everything they wanted in terms of spending? and, if so, is that contingent of the republican party a real

problem in terms of how divisive politics are right now i mean, no one really wanted to get there, did they, speaker or did they? >> i believe at the end of the day you can be conservative and govern i want to show the american people how conservatives will govern i think this is a prime example. but there are members but they didn't even vote to limit to save growth. i'm not sure what they wanted to achieve. did they want to go into default or did they have the same position as democrats, wanted the debt limit raised with no reforms? that's the only two options we had moving forward they're entitled to their position but i don't think it's right. i like the idea of debate and people having and at the end of the day you have to govern, the democrats would stake out a position that just raised the

debt i did not think that was the case i spent of day from february forward let's negotiate in good faith. when they didn't want to negotiate, we got our own bill think about how much better the bill could be if we had the senate and the presidency as well that's an example i wanted to lay out for the '24 election >> democrats are talking about some ways to make sure this doesn't happen again, i guess. i would think until there's a republican president and he wants to do something and at that point they might do the same thing but was it a bad precedent is it bad to hold the debt ceiling, for lack of a better term, to hold the country hostage in terms of defaulting on its bet to this next time they're in a similar position. >> it's not to get something i want it to surf the runaway spending. is this a revenue or a spending

problem? we bring in 17% of gdp we're about 20%. only two times in history have we ever brought in this much revenue, 1944 and 2000 normally we spend around 21% of gdp, we're over 24 this is the most amount of debt we ever had. it's not about about getting something i want, it's about changing the course that america is on in a very bad path you can't look at the entire budget i don't want to whack for i'm going to put together a commission, a little bit like what we did at world war ii. let's look at places that there's duplication in every single department of america let's look at areas where we, eliminating race that we have and also curving our expenditures in places we know is not right

are there ways we can do that together so there won't be a problem? that's a better way to handle the debt ceiling challenge, instead of the only avenue that you have to curb the spending that's out of control. >> when does the third rail, the entitlement rail, when does that become front they seem to don't want to touch it the last republican president took it off the table. i think you took it off the table in these negotiations. can we take it off the table forever? >> well, you can't if you look in the ten-year window, for the first time in the congressional budget office, you've got three trust funds going insolvent from transportation to medicare and social security. so they'll automatically get i think both sides should come together to try to save these because they're so important to america and to the future.

if you ignore it, you're actually cutting it. i think it's more sore and find a way to put ourselves on path to balance and becoming stronger every great society has collapsed when they overextended themselves we're at a point where i think we're at no return that's why we fought so hard to turn the ship around and prove nobody would believe democrats would ever vote for what they just voted for or the president would sign into law and reverse you course of what he had in law. that's a kind of a -- i don't feel good about much that happens politically but that's actually kind of a feel good system and the president's people getting in line and

arguing about where they are and you getting in line and arguing. i saw an art can from "the daily beast" that said "are sane republicans making a comeback? "and it was your picture so the implication is that there's been absolutely off-the-wall insanity heretofore, i guess. but do you see what they're asking, i think? do you think former president trump is the right nominee >> let's put it in reality if you read that same mr. they would never say i was sane for what i actually achieved they say it was maga crazy for -- >> ultra maga crazy. not just maga crazy. >> i think it goes back to al davis, just when, baby, and then they'll change their perspective. the one thing you know about me is i never give up it doesn't matter what they write today.

i think in the long run what really matters is who is able to direct the history and they direct their own history i think they're on the right path, right now. and when you govern, people write good articles about it because truly deep down they want better government >> i know you got to go but this is as good as it's going to get for you. >> this, too, shall pass >> i might not be totally insane so take the win and move on. thank you, speaker mccarthy. >> thank you. >> good to have you on >> coming up, we will talk markets and what friday's hot jobs number could mean for the fed with allianz adviser mohamed el-erian you're watching "squawk box" and this is nbc.

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>> just a little more than an hour to go before the opening bell on wall street. we are coming off the best day since january. mike santoli joins us with more. what are you thinking as we mull over the numbers we saw on friday, looked at big gains we saw on friday and now it's a new

week >> a somewhat persuasive breakout in the s&p 500, four closes above that level. it looks a little bit overstretched in the very short term but here's a two-year chart. i like to tell you kind of where we've been on the ups and the downs. if you remember back in the early part of this year, everyone was focused on are we going to be able to break this big down trend august highs, 4300 that's basically where we topped out when jay powell tried to throw cold water on the market expectations we had more rate hikes ahead of us, now we don't there's still that call out there we're going to have a reckoning on the earnings side it's just not happening. tech stocks are not matching index performance. friday did you see big bounces in the russell 2000 and other parts of the market that have been languishing

look at energy exploration and production we got the news over the weekend where saudi might be cutting production what's and you don't know whether that's going to turn around and make up a lot of that ground small caps looked like this, too, almost falling out of the range and they also firmed up. so a lot has to be proven here in the other part of the markets. interests the question is is 15 low or high? 15 is roughly average, maybe a little bit below average on a very long term basis but in up trending market, it's basically where we trade if you go back to 2019, you rarely got above 15 for very long this says the index has been stable, a lot of people don't

feel they need to pay up for 30 days of protection on the down side, which is more or less what drivers it >> you said at the beginning the s&p looks like it might be stretched a little bit with this almost 20% gain. we've had a lot of discussion this morning about the lack of breadth. >> yeah. i would say it's really just a short-term momentum that has kind of gotten it what it means is it's bullish if you've got a little bit of acceleration to the up side, longer term if it backs off, stays 4150 or something like that, that's the middle of this new up trending range, no big deal the point being the nasdaq itself has looked like it's done a who. >> mike, thank you

we'll see you later. >> coming up next, the ceo of astrazeneca will join us stay tuned you're watching "squawk box" on cnbc.

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>> astrazeneca saying it could replace chemotherapy for some patients and after they announced treatment for a lung cancer drug. it's good to see you, sir. there are a couple of noteworthy or most noteworthy study that you presented, can you tell us in layman's terms what each of those meant, pascal? >> it's very exciting to be here there's so much innovation coming up here every year. but this year is a very, very important year for cance patients, lung cancer patients in particular. we presented at the plenary session, which is where we present the most important data sets, we presented a study that

shows a product given early in the so-called lung cancer, patients diagnosed early, that led to a 50% reduction of the risk of dying. 88% of patients were alive at five years it really is very important data because it shows with this study by being diagnosed early and getting the right treatment, you can have a chance of being alive at five years. that is very high, 88%, almost 90%. >> can you just so we know what we're talking about, i think it's small cell lung cancer and there is a genetic mutation associated with it what percentage of what we would call lung cancer would be eligible for this? and you have to get it early, remove the tumor and then

instead of chemo, you take this targeted therapy, which is and a more effective way of preserving life >> certainly and within the cancer, the percentage of people with this mutation, your chance of being alive at five years is 90% but there's also additional news for the patients who are not -- the studies show if you take a check point inhibitor in combination with surgery, in the early setting of lung cancer, you also have a very substantial

reduction, reduction of cancer event. so in totality, what it shows is that if you're treated early, your chance is very high so the course of action for me who listen to us, if you're a smoker, if you're older, if you have a history of lung cancer in your family, go see your family and ask your doctor if you should be checked with a very early scan being checked early and regularly is fundamental and her to, what is the data and what was it designed to treat >> yeah. her to is a duifferent product

it's a combination of an antibody with a toxin that will kill the cancer cell it detects the killer of the war head and this product is an amazing product that keeps giving it has been programmed very effective in breast cancer last year we presented a set of data and received a standing ovation by thousands of physicians with this data. >> and now we have shown in a phase two study the patients that have this elevated her 2 in their cancer have a good chance of getting a good response so it's across gynecological

cancer and when standard of care there's very much not much to offer so we hope this will be a very new option that will be very useful to those patients. >> what percentage of those cancers of her-2 positive? >> it varies according to the tumor but i would say on a -- it's a substantial faction of patients >> very good astrazeneca at the conference. thank you. >> when we come back, former fed governor dan tarullo will join us and next, jane wells is live in los angeles and will join us next jane, what are you going to tell us about >> well, becky, the largest

terminal here at the port of long beach will not be open for business this morning according to an e-mail scene by cnbc but is that because dockorrs wke are staying home we'll have the latest when we come back. with two max-strength pain relievers, so you can rise from pain like a pro. icy hot pro. conventional thinking delivers conventional results. at allspring, we break away with purpose. harnessing data-driven insights and boundless curiosity. we dissect the market from every angle. helping to build portfolios that redefine what's possible. because investing isn't one size fits all. allspring. purposefully divergent.

welcome back to squawk jane wells joins us this morning with l.a jane, how are you? >> andrew, i'm doing well. better than perhaps the port is doing this morning cnbc broke the news that tti, the largest terminal at the port of long beach sent out an e-mail saying it wouldn't be open this morning, possibly not all day. there are three ships over there right now. this could possibly disrupt traffic and operations at the largest container port complex is it because dock workers are staying home we don't know but they've been working without a contract for nearly a year. labor disruptions did shut down due to a lack of workers managers claimed union workers were staking disruptions at

several places up the coast and red tagging equipment unnecessarily for equipment, slowing down operations. this is all happening as cargo numbers are dropping at these ports and shippers started how thing stuff away from here the container total vol down 20% in long beach, down 7% in oakland. perhaps shippers are not as flush with cash as they were at the beginning of negotiations. talks do condition but after 11 months, it looks like some dock workers are getting frustrated look at this this note went out on thursday night from the local union hall handing out assignments. it said on that note, stop work meeting. next to the port of los angeles,

they were saying they do not expect to have any slowdown. at least that's what they were saying yesterday historically the west coast costs have been costly and contentious. how much this one has cost right now is hard to say but definitely caught in the middle again as usual today are the truckers those are the three. that's the terminal right over there, tti, largest in this port of long beach, three ships there doing nothing this morning >> no people >> no. >> none? >> oh, i'm sure they got security over there, but they're not doing -- according to the terminal, they're not doing anything let me tell you, over here it's not quite open yet but this is the new modern automated terminal here. this has been a real bone of contention in these negotiations, but there are reports that both sides have

come to an agreement on automation we have not had that confirmed what is the holdup perhaps it's still pay and retirement benefits. but this is something to watch how much -- u.s. ports, particularly on the west coast have been criticized at times for not being as modern as other countries, not being automated that's because the dock workers doesn't want to lose jobs. perhaps that's one issue in this contract that's already been decided. >> the one and only jane wells in l.a. this morning thank you. great to see you >> you're welcome. from port jobs -- joining me now is daniel tarullo, a

professor at harvard what did you take away from the meeting? >> i think where one started is where one ended up when finished reading it if you were inclined toward a pause, you saw a little bit that would reinforce your instinct. if you were inclined to think another 25, 50 basis points is needed, you would probably find something in there as well >> as somebody who has been in the room, how do you think the fomc will read it and how do you think they'll react at the meeting this month >> so here, becky, i think they've got a bit of a communication issue. a couple of weeks ago there was a fairly widespread expectation that there was going to be a hike it seems the vice chair designate seemed to have gone out with messages that a pause was quite likely and people shifted to an expectation that next week we're going to have a

pause or a skip. if they turn around now in the light of one print, the employment print on friday, i think that's going to make it look like they're sort of shifting back and forth based on just one piece of data, which isn't great for their communication strategy overall >> so we had someone who said -- is that what you meant >> hawkish pause is the phrase people are using one will be powell's press conference but the other is what's the dock clock going to look like? will you see a higher projected end of year point for the federal funds rate and i -- you know, it's difficult to predict but i think probably right as we sit here this morning this is the most likely outcome, that you do have

no increase in fund's rate this week but a pretty favorable turn in the data coming in over the next six weeks or so >> were the regulatory leader in terms of the reform over the financial crisis there's a story in the wall street journal that predicts the bigger banks could face a 20% boost to their requirements. i don't know if you saw the actual details in the story. >> yeah, i saw the story the word details is the key won here, becky. the basel iii end game regulations are complicated even by basel standard. how they get implemented may make a significant difference from bank to bank. it's pretty clear the biggest hits will be to the trading book and to the operational risk of

banks that rely substantially on fees as opposed to interest rate margins, how much those are and impor importantly. the details i think we'll only know once the agencies come out with their formal proposal everybody who's been looking at the agreement that was reached a number offees agof years ago in basel think they're going to be double digit increases how much variability across banks remains to be seen >> it also mentioned today one of the things they're considering is knocking it back down, the amount of assets if you're $100 billion instead of $250 billion, which would be more in line with what you did with dodd-frank, that seem like a good idea to you >> yeah. well, for sure on two counts

i think absolutely have to do something with the 100 to 250 billion and security regulation, the things at the heart of the svb and signature problems whether and how much capital should be raised i think is an open question that, you know, in my preference would be decided by a good stress test that they would take every year. i should say, becky, i wouldn't expect that the basel three end game changes would have an especially big effect on the smaller regionals, the $100 billion regionals, even if they're bag into these capital regulars and the stress test, just because they don't have lots of trading activities and they don't have -- well, some of them do but most of them don't have a lot of fee-based income >> dan , thank you, sir thank you, becky.

>> "squawk box" will be right back

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welcome back to "squawk. oil prizes rising this morning after saudi arabia said they would cut production a million of barrels a day this summer brian sullivan joins us. >> good morning. no opec but saudi arabia on

their own, unilaterally like they did in january 2021 a cut for the month of july and that cut could being extended further. saudis very frustrated with the fact that oil prices remain soft traders and investors have been betting largely that oil will fall and indeed it has, down about 40% from this time last year the saudis sending the market on notice in an interview with cnbc international, the saudi minister suggesting the group, opec, led by him and the saudis remains rock solid listen >> this is the most effective international organization that is attending to a serious commodity and doing it with a great deal of responsibility and interest, gigantic deed cannot

enforce that i don't know what else we can do >> so, andrew, you read between the lines there, basically there has been talk for years about opec fracturing, is the group coming apart, the uae has been frustrated they haven't been allowed to pump more oil they got that in this deal the meeting was actually six hours long, reasonably longish next year the uae was about getting next year's levels done, the uae getting to produce a little more oil, saudis announcing that july cut there was a lot of talk that russia may be putting more oil on the market, maybe going above their allotted quota, then even opec believes and doing so of course at a discounted price, the saudi cut in july that could be extended may be a little cover for what russia might actually be doing sort of behind the scenes in the global oil

market >> you think this is political as much as anything else >> it is i think -- well, first off, it's opec and it's global oil, so everything is going to be inherently political because these are sovereign nations who are looking out for ultimately their own interests. >> opec is operating in one way, sa saudi is operating in another way. a guest earlier said there's a free rider issue around what's happening here in that saudi is moving, the rest of opec is not. of course they will benefit potentially from what saudi is doing. but what i'm suggesting or i thought you were suggesting was that there's a more, um, i don't want to say sinister but a more complicated issue around the relationship -- >> there is. >> -- between saudi, the united states and russia if youthink about it as some kind of political triangle >> yeah. i'll say it directly i think russia adds a great wild card the uae has been wanting to

produce more oil in a long time. they got that in this deal but the uae oil minister who is usually very measured and a sm smiley guy came out at the meeting and said we're not sure if we if we trust russian data each country submits their data. then you've got third-party companies like ihf that analyze it sometimes the numbers match. sometimes they don't there's some kind of discrepancy. so, is russia effectively not telling opec the truth about what it is producing because opec -- russia's basically, quote, allowed, under the quo ta, to say 9.8 million next year. but if they're putting 10.2 million on the market at a discounted price, that kind of hoses, for lack of a better term, some of the other opec nations, and then they get agitated why is russia putting more oil on the market, breaking their quotas i think it is inherently

political, and i think there is some, in the opec language, gentle frustration being expressed publicly, which you normally never hear, about what may truly be going on with russia and russian oil as chinese and indian demand remains almost insatiable. >> thank you for the analysis this morning provocative. we'll see what happens next. thanks coming up, we're going to talk markets ahead of the monday morning open with elian advisor. with two max-strength pain relievers, so you can rise from pain like a pro. icy hot pro. sfx: [police sirens] due at target in 5! copy that. make a hard left down the alley. sfx: [tires screeching] sfx: [police sirens wailing] network's got you covered. please confirm requesting back-up. changing route. go. roadblock ahead. ...back up, back up... reverse! reverse! sfx: [police sirens] next level moments. we're 30 seconds out.

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little more than a half hour from the opening bell. joining us to talk markets and what is next for the fed, chief economic advisor, and president of queens college cambridge. we had a big market on friday. we'll see where things stand today. the big question is, what do you think the fed does next, more than anything else >> so, the markets think that the fed will -- >> i think we're losing you there. >> can't hear you. >> can you hear us >> i can now >> you can now

you were saying the market thinks >> that the fed is going to skip, meaning that it's not going to raise rates here, but it would be inclined to do so again in july. that is, resume hiking that, i think, some federal officials believe gives them optionality, gives them a month more of data, and then they can decide i don't think that is the right approach i think that's a muddled middle. i think the time has come to either go after your 2% target for inflation and therefore hike again or acknowledge internally that 2% is the wrong target and therefore pause. what they are likely to do, according to what they guided and according to what the market believes now, is going to end up being the muddled middle >> and the muddled middle is you think a pause? we had roger ferguson on before. he said he thinks there's a better chance they actually raise. >> so, if they truly are

committed to that 2% target, they must raise, but that's not what they guide to they waited until the very edge of the blackout period and guided to this notion of a skip, and you see that in market pricing. at some point, the implied probability of a hike in june was 70%. it is now below 30%. so, the market has heard what the fed has guided, and that's why the expectation is for skip. i don't think it's the right move, andrew, i want to stress >> what's the prospect they raise and then pause if they do raise, what does the market do? >> i think you ask the right question earlier, which is, if you're going to -- if you're likely to hike in july, why would you hike now it doesn't make any sense. if you think you're going to have to hike in july, you might as well hike now >> let me go back to your premise of this muddled middle and the idea that at some point,

the federal reserve may have to say, you know what this 2% goal line, we're moving the goal posts what do you think the chances of that happening really are? >> so, the chances of them talking publicly about it and doing it is very, very low the fed has lost a lot of credibility. the last thing it wants right now is to risk more of its credibility. what they should be doing is studying it inside, seeing whether the case, which is based on the supply side of the economy, not the demand side, the supply side, on change in globalization, on the rewiring of supply chains by companies, on the function of the labor market, whether that case is strong, which i believe it is, and then what they do is slowly guide the market by having the 2% pushed out and then seeing whether the market can adjust to a stable 3% to 4% inflation, which i think it can >> are you now in the camp that we are in some kind of bull market, or do you think this is

a head fake? >> no, i think, given that we've lifted two major concerns, the debt ceiling and, more importantly, the spread of the banking tremors, given that the labor market remains strong, what the market is doing, and you've heard me say this for weeks, i think is appropriate. but there are things that we don't know yet, and the big issue is the fed if the fed goes off this 2% target because it's convinced it's the right target, then there will be lots of headwinds for this economy if the fed, however, acknowledges that 2% is the wrong target, then the market is fairly priced. >> do you have a takeaway from what saudi arabia did over the weekend in regard to whether this is -- we were talking to brian sullivan earlier he has an argument that this is political between the u.s., saudi, and russia, frankly or do you think that they know something we don't and are concerned and rightly so about which way the economy's headed >> so, my take is a lot simpler

than brian they've got an $80 break even. they need to get the price to $80 to break even. other countries are neither willing or able to join them in a cut, and therefore, they've gone forward on their own. but keep an eye on the break-even price for saudi arabia, because they've got lots of things going on internally that they don't want to derail >> fair enough mohamed, always smart analysis we appreciate you joining us on this monday morning. look forward to talking again very soon. >> thanks for having me. all right, let's take a final check on the markets as we get ready to hand things over to "squawk on the street. you'll see the futures this morning have turned a little lower for the dow. we've been in positive territory all through the morning, down only by about 15 points. s&p has been basically flat throughout the morning, and the nasdaq futures are down by about 13, but remember, friday was a very big day after that jobs report you did have the dow up by over 700 points s&p was up by 1.5% take a look at what's been

happening with the ten-year across the board here. looks like the ten-year is at 3.743% the two-year is all the way up at 4.554%. i don't know if you saw on the short-term bills we were looking at, the one-month is basically yielding the same as the one-year, which is interesting just keep rolling it and have that money available whenever you wanted it. that does it for us today. join us tomorrow right now, it's time for "squawk on the street. ♪ good monday morning, welcome to "squawk on the street," i'm carl quintanilla with jim cramer, david faber at post nine of the new york stock exchange coming off the best week for stocks since march as we now head into a fed blackout, and today, an event at which apple is said by some to unveil its most important new product in 13 years. our road map begins with market momentum, though s&p, best week since march, highest level since august, but some strategists now warning of risks to the rally ahead plus, apple is expected to get in -