stunning end of the schism of golf in the pga tour who now plans to merge with liv golf reaction from the sports world. and the business world is straight ahead it's wednesday, june 7th, 2023 "squawk box" begins right now. ♪ good morning welcome to "squawk box" here on cnbc we are live from the heart of the most polluted city in the world rightguys. thanks to the canadian wildfires, we've seen the worst air quality than anywhere in the world, beijing. >> we don't have toxic chemicals. >> pollutants in the air. >> it's not sulfur dioxide.

>> did you smell it last night i saw the moon the night before. i thought it was the reflection of the sun that's not the case. this is snorks so welcome i'm becky quick along with andrew ross sorkin and joe kernen we've got a slightly clearer picture. dow is off by 50 points, nasdaq by 15, s&p by 3. you'll see right now the 10-year is yielding 3.67%. the 2-year at 3.5%. new overnight chinese exports fell by 7.5% year over year in may. that's worse than economists expected imports for may dropped by 4.5% from a year and a half ago not at what the economists were looking for, but, again, much worse numbers than had been anticipated on the inen irritable lines. meantime the s.e.c. is

filing an emergency action asking the judge to freeze the assets of binance u.s. platform. that would be for anywhere in the world. it would apply to the u.s. holding companies, not the regulated international. the restraining order was necessary to, quote, prevent the dissipation of available assets given the defendant's years of volatile conduct the order also seeking to prevent buy nas from destroying evidence buy binance's ceo says it would not affect binance.com we always talked about there's binance and buy nas usa. they've proxied people in the u.s. to use the unregulated service abroad. >> the u.s. regulators can't stop anything, but the u.s. arm -- >> that's all they have.

>> the court hasn't granted that yet. we know they've been accused of co-mingling funds and moving funds. you have to wonder if there's any more movement taking place. >> interesting we're watching shares of coinbase after a 12% decline in yesterday's session. it comes after the s.e.c. accused them on operating an unregistered securities exchange this is yesterday on "squawk on the street." >> in the coinbase complaint we know you can trade 16 pounds to tokens whether there's any there there, look, we don't need more digital currency we already have digital currency it's called the u.s. dollar, it's called the euro it's called the yen. they're already digital right now. you have digital investments,

and you have entrepreneurs visiting all day long, and it's whether it's a big tech companies, the automobile companies, you name it it's all digital right now, the investing world. so what is the real underlying value of these tokens? that's why you need full, fair, and truthful disclosures. >> coinbase's ceo said in a tweet the company would be proud go fight the suit and he's going to join us at 8:40 eastern time in a first cnbc interview. >> it's a long waste of time we've got that there are differences between dollars that are denominated digitally and what we're talking about. when this deal came out and all the investors ran up coinbase to $60 billion, it was unregistered they were un regregistered

securities this is your point. >> right. >> it was well known by all the regulators that they were not registered, right? >> look, there was a new cop on the beat if you look back, coinbase went public when gary gensler took over at the s.e.c. >> what about $60 million. >> he was pushed by this yesterday by the crew of "squawk on the street. they said, why didn't you do something sooner he said it takes time to build an investigative piece and go after this and put it all together. >> here's what's on my mind. >> move the goal post, pull the rug out. >> you're right. gary gensler shared it was three days after it all happen and jay clayton had been gone before this happened. >> there was nobody. >> yes, yes, and no. there are commissioners at the s.e.c. it's supposed to be stable and not political orientened

situation. >> you can't do it. >> the idea if there's the credibility of the marketplay, that's the entire business of the s.e.c., and i would argue what's happening right now unfortunately is undermining the credibility of all of it. >> right if you start doing that, how do you ever have any confidence of anything you do in the future if the next guy who comes in -- >> it happens all the time look at at&t and the s.e.c. changed the rules. >> this is different it's saying that all of a sudden the unregistered nature -- >> it's brand-new stuff. the rules have not been developed here. >> what do you tell people who have $60 billion invested? >> buyer beware. >> to me, here's the one distinction. if we were talking about a company that was not in a financial space n the financial sector in exchange unto itself, which is what coinbase is, if we

were talk about a lawn mower company, you don't assume that the -- the s.e.c. could allow the lawn mower company to go public and they're not making a decision about whether lawn mowers that they're selling are great lawn mowers or bad lawn mowers houv however, when they're blessing an ipo that's going public, effectively a financial exchange, i think there's a different -- maybe there shouldn't be but i think there is in the mind's eye people who are involved in this. >> that's fair brian armstrong has a much stronger case. there's no comparison between the s.e.c.'s complaint against coinbase and what they're saying about cz. >> that undermineds them too it looks like this to everybody. scattershot, anybody in crypto. >> brian armstrong can probably make a very good case about how they can go along with this and

stren ter. >> that hurts your case against buy nas. >> no, it doesn't. >> which is it they're going after even they ought to just focus on that. >> binance is saying they're a fraud. if you look at setting rules to the road, congress has enacted i don't nknow why they can't agree. >> they're not going to ever, ever so you're going to be left to a judge who was appointed by somebody to decide these things. >> in this case i'm glad there's a judge who can rein it in you hear about guys colluding with foreign agencies. you stop the activism deal so we don't have to. you can't do it this way it's not good. now to the stunning deal between the pga tour and liv golf

phil mickelson tweeted yesterday it was a really good day. >> so happy for him. every incentive is totally wrong about what happened here, but keep going. >> you know what else is weird, is that the -- before they did this, people are saying, you know what, none of the liv golfers have completed in the majors then he won the pga and cam smith. >> let's move away from the u.s. op open what does it say to rory mcilroy. >> what does it say to tiger woods. >> rory mcilroy who spoke out the most, this is wrong, we're not taking the blood money. >> reporter: he said, i don't consider the liv players as part of the game. he said that three days ago because it was his tour. i understand 9/11 -- i understand everything about it, but the world is so complex. you throw in china and people

are trying to navigate what you're going to. do i mean money make people do strange things it ends months of litigation and accusations and bring together the biggest names in sports and controversy, thank you the pga tour has been criticizing the breakaway league over the saudi league ever since its inception. they claim the kingdom has been using the popularity to sports wash they believe they were illegally using monopoly power to block it and the new league will be renamed by saudi's fund. jay monahan will serve. >> to have this capital at this point in time with the strength of this game, here's just -- there's so much opportunity.

it ice an opportunity we haven't been able to activate, but we will do it now and we'll do it in a vigorous way. >> they'll have a process for players who desire to reapply to membership at the pga tour at the completion of the 2023 season everybody's got an opinion on this we know what they're all worth i guess five years from now golf could be maybe even a bigger deal now it's going to be run like a business but what they were saying is it's all about the trophies and the history. now we know it's not just about the trophies and the history. >> what's going happen to the players? look, this is about trying to stop the animosity between the 400 top players and finding out

where they were going. you see the animosity is still there. >> did you see twitter yesterday. >> they superimposed someone's head over a dancing figure so i saw where every liv player was coming out p dancing anybody who took money and it looked greedying but they did it for their families what would you do you fear phil mickelson and they offer you $250 million. >> my question, the p fw a some kind of natitional asset lie the nba. >> don't bring nba in it bs walks too. >> we've had this great soft power in the world actually through sport, through sport and hollywood. are we -- are we happy would we be in a position to

say, okay, come on in and do this again do it to nba by the way, those are 501(c)(3)s we've given them special trust golf courses interestingly in the united states have some very remarkable tax breaks that are involved and how they're structured if you know what's going on we do a lot of things for sports in america and i think we have to make some decisions i'm not saying sports are necessarily as important as microchips in terms of our natural security i wonder. >> this is not a new decision. i remember when they didn't want yoplait going into foreign hands and chinese bought our bacon yogurt is one thing, but we don't want our bake snoon what about sports. >> why is sports different than bacon? >> what about media? >> look at the whole tiktok

thing. you look at infecting the youth. >> you're worried about taking information on american citizens and storing it in china. >> by the way, if you're the doj which is looking at this already, to me it doesn't make it go away it makes it worse. >> if you look at it, for years we said you can't even question that we're going to do this. it's just obvious for the good of the world and growing a pie that we do this, look how that's been reigned in. >> i i'd be very happy if she tries to block this deal. >> nuance might be the most important word in the diggs anyway it's gray. it's an absolute it's one word i never use. any time you ask a guest, they

say absolute i say is it really absolute? absolutely not in this case i am absolut, but there are no absolutes i like seeing -- it was a shocker, i've got to admit it was a shocker but then again if you're going to deal into the hypocrisy that's so thick, all the deals of china and the other way uighurs are getting kidneys removed, you know, pick your poison pick what you're going to take a stand for. >> look, as i say, they have a problem with the players who didn't sign up, who listened to everything they told them, that this is morally wrong. >> it's about trophies and history, notten money. it's never about money

tech stocks could be long in your partnership there are picks off the break. later, don't miss the name for it janet janet yellen will be joining us at 8:00 a.m. you're watching "squawk box" on cnbc

narrator: the man with the troublesome hemorrhoid enters the room. phil: excuse me? hillary: that wasn't me. narrator: said hillary, who's only taken 347 steps today. hillary: i cycled here. narrator: speaking of cycles, mary's period is due to start in three days. mary: how do they know so much about us? narrator: your all sharing health data without realizing it. that's how i know about kevin's rash. who's next? wait... what's that in your hand? no, no, stop! oh you're no fun. [lock clicks shut]

time now for some squawk

fix. our next guest thinks that the 2023 tech rally will come to an end, but there will be a buying opportunity later in the year as new picks amd and uber grow. paul meeks joins us. portfolio manager at citadel you still own it, but i think in your view it's gotten a little frothy in ai stocks and, therefore, maybe, to a lesser extent, to tech in general. >> yeah. i think at this ai rally that we've seen in which nvidia has been the biggest beneficiary has driven the value of the stocks deployed where if you own tech stocks and run it like i do, you have to own them would i add positions today, absolutely not joe, i know that's your favorite word if i was told to buy that stock fresh today, i absolutely would

not. i hold them. hopefully we continue to rise with the tide, but i think there's probably some comeuppance in some of these names and maybe the ai rally pidles if you want to get these stocks, i bet, later in 2023, you can get them for at least a bit lower. >> a lot of your informed opinion right now has to do with the fed right now and how difficult it's been at this point to really get inflation under control. and you think there will be no cuts you think cuts would be the best thing. cuts in interest rates until late next year and there may be more increases none of that's good. it could cause some type of correction not a significant one, not to the october lows, but one you might be able to buy. >> yeah, that's right. everyone is talking about ai in short that's ooh driver for

the tech names and other companies related to that. joe, the biggest driver of all, the most powerful factor for all these techs and growth stocks that have caused the rally in 2023 is the expectation that the fed will pivot and start it rotating i don't see that happening they may take a pause but they may go badge and race it later on this year when the market is tight, you can't win the inflation game, and you can't be comfortable turning around and lowering rates. the problem is these tech stocks regardless of the investment theme, how great it is really crave low and falling rates. if you don't get that, think i you'll have to push out a really great case to buy these stocks into next year when we do get the pivot. >> in the last couple of years,

we did make the point when you look at the five or six horse meb of tech. that performance has been in the face of 5 h00 basis points of increases. so we said that that entire narrative already has -- is sort of in dispute. you're saying, okaying from here higher rates are going to be a problem. why haven't 500 basis points of increases -- how they've been able to do so well, those tech stocks, in that period because it didn't affect it. we heard it would. we heard multiples will have don tract, rates are going up. nasdaq is the best performing average. why? >> i think today is not about investing if you take a look at least until recently at fed fund's futures, the fed consensus that rates were going to fall and have a couple of

cuts before we get to december 31 of this year, i think they is the deal, and i think that one of the reasons we've had a little but of retracement in tech is that it's becoming a thought that is increasingly might be taken off the table because the pivot may not happen l plateau rates here we probably won't start to lower them to next year. and when that becomes a for gone con clulgs, i think we'll have problems in techland it's what it had been and will change to. >> like the three stocks we mentioned. i when the der if it really -- i beat you imnvidia would say something. i don't think that's absolute. there's probably something hay could say where, you know what okay, i would buy invisited ya

the once you look, uber and -- >> if you're buying amd con cond conductors, they have the same drives, but it's not nvidia expensive. uber, at long last uber has been floundering fehr years they've taken a ton of shares from lyft. lyft is a troubled kpaechl uber may go from making a buck, and next year you could buy them. >> i've got this flyer i don't read, this is a mon-colored thing. paul meeks, thank you. coming up, shares of boeing

after nearly discovering awill force a delay. phil lebeau has that story next. >> announcer: squawk picks is sponsored by wisdomtree, the modern alpha pioneer

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welcome back to "squawk box. boeing deing delaying the comint of the dreamliner with yet another defect. >> it owes over the stabilizer they said near-term deliveries will likely be delayed as they inspect inventory. these are aircraft that have been built but not yet delivered. you can't deliver aircraft that is not yet in full compliance. here's exactly what's happening. they're going to be doing inspections and looking for what they say is a fitting on a horizontal stabilizer. it's not a flight safety issue the dreamliners in service continue to fly. near-term deliveries may be delayed. they've got approximately 90 dreamliners that are built but not yet delivered. they're going to have to do inspections here if they find the fitting is not

in con performance, they'll have to do a rework depending if they find a defect or not by the way, this rework, it takes a couple of weeks. they still think they can hit their guidance of delivering 70 to 80 dreamliners this year. so if you're a boeing investor, it comes into if you buy into their assurance that it will not impact full-term delivery, by the way they build four dreamliners per month. they plan on moving that up to five per month later this year yet another issue when it comes to boeing and manufacturing. >> you raised the question what do you think the answer is? >> to which question to whether or not they can hit 70 to 80 this year >> yep. >> i take them at their word that they're not going to have to change their guidance at this

point, andrew, but the track record here is that some of these issues, when they have come across them in the past with either the dreamliner or 787, they say -- going back a year when they said we can take care of it quickly and it lingered the flights in service continue to fly it's a manner you can't turn over an airliner to a customer if it's not fully in line with all the engineering specifications. >> phil, thank you for all the news and contents. when we return, the house unveiling a bill set to create a framework. this comes as the s.e.c. sues exchanges coinbase and binance we'll talk to congressman french hill for the latest out of washington right after this.

right now as we head to a break, let's take a look at s&p 500's winners and losers >> announcer: winners and losers is sponsored by state street global advisers. ♪ the biggest ideas inspire new ones. 30 years ago, state street created an etf that inspired the world to invest differently. it still does. what can you do with spy? ♪ ♪

good morning welcome back to "squawk box" at times square the s&p off, we'll call it marginally it might turn around and put us on the green, maybe not. the s.e.c. lawsuits against coinbase and binance are renewing calls from capitol hill they're releasing an initial draft of a new bill seeking asset regulation joining us now for all of this is congressman french hill he's the chair of the finance services committee and chair of the subcommittee also the co-sponsor of proposed

legislation. congressman hill, thank you for being here today let's talk a little bit about what you think about the s.e.c.'s actions against these two exchanges. >> well, becky, it's good to be with you you know, law enforcement planning and action by the commission takes months to plan and to consider, and i think it just speaks that we have confusion in the marketplace both in the commodity marketplace and the securities marketplace about how to have the rules of the road for digital assets so both the action on coinbase, on binance, and the collapse of ftx last year, it seems to me we need this clear, con is size statutory framework. that's why we introduced this bill we think it will bring clarity and set up the proper oversight and function for the commodities markets as it relates to digital over at the cft c. >> what do your proposals do

should the s.e.c. be allowed to take the actions that they've just taken >> i think if we had this bill in place t s.e.c. wouldn't have to take the actions that they've taken because this bill tells investors, consumers, market innovators and distributed ledger technology and digital assets how to become a decentralized digital asset company. how do you become a dealer how are you a broker how do you do custody for these assets how do you have a secondary market for these assets? >> so it lays out that fit for purpose framework that we think is the right way to approach it both at the ftc and cft c so there is clarity and we can bring it back to the u.s. and people can consider how to do digital asset projects with a framework, with some rules that will reduce confusion and certainly reduce enforcement

actions. >> congressman, it's been years. congress hasn't taken any action on this in any time. as you men mention, we've got everything happens with binance. the s.e.c. laid out these charges. it looks like there with was terrible activity taking place they were moving and co-mingling funds, washing through like they had much higher trades these are accusations of flat out fraud while congress has done nothing to do anything is gary gensler right to step in and try to fill that void? >> becky, that's a good question the question is last year where was gary gensler he said he was the cop on the beat and he was out prosecuting and condemning kim kardashian for promoting crypto, but he didn't take any action in my view to prevent the ftx matter from taking place. >> does he have the authority to do that or not i mean the argument has been that he doesn't have the

thought. it's hard to say why didn't he do something sooner and at the same time say he doesn't have the authority. >> he's the one who says he has the authority. he's determined in his view that every digital asset that's out there trading or token or otherwise other than bitcoin he considerses a security he's taking that approach. others don't believe that to be the case he's urged people to come in and register, but no one's gotten satisfactory answers what that tells me, there's confusion. we had this famous howie test of what's a security and is not a security we introduced a discussion draft last friday. we actually codified that. we explain how it works for digital assets >> flat out fraud. >> flat out fraud -- he's got the authority and he should exercise it on pursuing flat out fraud as he did. no one here is excusing fraud or

bad behavior what we're suggesting is all these examples indicate that we have to have clear rules of the road. >> we understand congress and, you know, look, we all watch it. we all watch what goes on. look at the debt ceiling thing we get i so this is a hot mess, really. it's like a -- sort of like dumpster fire. >> i agree. >> we understand it's the wild wild west, crypto, oh, gee, there's nothing with could have done for three years we watched it fester and they don't do anything the s.e.c., i'm not going to totally point fingers at them. there's plenty of blame to go around, but to sign off on the coinbase offering and to say, yeah, we've looked aet it and for anyone who bought into it, the s.e.c. is there and they should know and watch it go from $60 billion to the $70 billion market, who do we blame? there's plenty to go around.

it's congress's fault. it's sort of arbitrary and capricious agencies deciding when to do something, when not to do it, depending on who's the head of the agency who's fault is it? >> yeah, joe, so this is another key question it sort of answers becky's question, which is, look, the s.e.c. approved s. 1 for coinbase to go public. you can't have it both ways at the s.e.c. that's my point. that's why i think it's not clear what the rules of the road are. >> can i ask one question? >> sure, andrew. >> i apologize one point. i take the position you have, which is if the s.e.c. effectively authorizes the ipo of an exchange, they are sort of blessing that the exchange is okay however, we used a different example in the program earlier saying if you were a lawn mower company and the mower company went public, it's not clear whether it's blessing itself how

good or bad the lawn mower is that they're selling it's possible with many assets they're selling when they go public third quarter sell products that are false or positive or go worse or something else and we typically don't look back at the s.e.c. and say it's your fault. >> yeah. fair point and that's why i think whether you're arguing either joe's point or becky's, it requires you to bring statute here. we want it regulated to protect consumers, protect investors, create innovation, and it's currently not happening under the current securities law, the current commission, as well as the confusion in the kmolds space this bill brings clarity to that. should we have done it earlier you bet. did many of us argue for that several years ago? sure we made a little bit of progress last year when maxime waters worked with patrick mchenry on a

stablecoins bill, which we also introduced, which also has democrat and republican support. we're going to work on that to bring clarify. what is stablecoin assets who oversees them? who regulates them what's the role of the states? what's the role of the federal government we want to get this right. with don't have an environment where we can innovate and protect investors and consumers. we want to get it right, and that's why we've introduced this legislation. congressman, thank you i feel like we have a lot more to discuss on this i hope you come back again soon. >> you be. will see you soon? the lawn moer is just like the vacuum cleaner. >> i haven't followed that. >> i'm not surprised what does your yardwork entail

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welcome back to squawk yesterday i spoke to apollo global management at the economic club about the transformative role of global equity apollo has almost $600 billion under management i asked him about the state of the economy >> i see us as having a nonrecession recession i just don't see any sign of the underlying economy of the kind of demand construction that's going to put employment -- unemployment, excuse me, back to levels we would think about as recessionary we were at 3.4% unemployment and people are talking about, oh, my god, 4.5%. that used to be full employment like a year ago, and i think that's exactly where we are. >> we're extension a nonrecession recession investors have lost the tail wind of the fed's previously accommodated policies. how can we make money? here's what he said about

finding alpha. >> there's no alpha left in broadly traded or syndicated markets and there hasn't been for 20 years we know this because you can buy it from managers we know this because they've failed to meet the market for 20 years. if you want to be liquid, you're getting beta markets that's not bad that's just what you're getting. i'll flip the machlet. five growth stocks are 20%, 30% of the s&pel we're essentially all locked in 85% could meet it i would say that's a beta market too. where's alpha? alpha is not a publicly traded market. >> i asked him about the association of leon black and

the late sexual predator jeffrey epstein. >> you know, people make choices, and leon said he made a bad choice in his association with jeffrey epstein and that has in the market we live in disqualified him from the business and he stepped away if you asked him, he would say it's unfortunate, a mistake, and he's very happy to have me running the business. >> it was a fascinating discussion about so many different things it was just a very small part of it the markets were in many ways more interesting but his take that there's no alpha in the public markets is sort of a fascinating effort he would get into a policy forecast that's the case, we have to figure out a different way to get public investors to either invest in private equity or you have to change how all this works. >> a big man in the organization that are suppressing everything

else that's why -- i'm not sure i want alpha if it means 30% up and down i haven't minded this, you know, sort of -- >> he's done a remarkable thing. i don't know if you guys follow this apollo, the $600 an incredible thing. this insurance company which backs all things that started with $16 million is now trading $20 billion. >> there has been alpha even in the major averages this year, though, year to date. >> yeah, but i think he's saying, he's saying true alpha relative to the private markets are totally, totally different >> way up and sometimes it is not. coming up, implications from the surprise merger between the pga tour and liv golf. that's next. (sirens) [due at target in 5!] copy that. make a hard left down the alley.

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to have this capital at this point in time with the strength of this game, there's so much opportunity. and it is opportunity we have not been able to activate, but we will now. >> pga tour commissioner jay monahan defending the deal with liv golf yesterday joining us is patrick risch, director of the sports business program at washington university, founder and president of sports impacts. five years from now, will we look back and say this was a good deal or a good development for golf was it good for the united states was it good for the individual players? >> joe, i don't think there is any question that it is going to be good for the global game of golf, for growing the business of golf. you want to have the best players at the same tournament we have seen that recently with the masters, with the pga championship, all the majors have welcomed the best players you want that. you want to have opportunities

for now fans to watch golf in different venues all across the world. you're still going to have your classic pga events that have the history, that have the cache, but why not have some of these team events that can bring in some of the younger fans the top golf crowd, they're not going to pga tour events they want to seeing some more fun and dynamic. but, joe, the way this was done, there is going to be hell to pay and from the media reports out yesterday, there were certainly a lot of unhappy campers among the pga rank and file. >> yeah. what about for -- the cat was out of the bag once liv did that and you started seeing the money flow to for example phil or some of the other players and then the litigation on both sides. so, then there was no way -- no way to put the genie, as we say, no way to put the toothpaste back in the tube so maybe something like this had to happen, but as you say, it is messy. >> well, it is very messy.

>> those guys get to keep that do they get to keep all that does that mean tiger could have gotten $800 million and could have kept that, so he never gets that now i mean, no one -- tiger is doing pretty well. >> yeah, so let's come back to that in a second that's a great point you raise that's one issue they have to resolve. but there were mounting pressures financially and legally. it is not surprising to me in a way that this -- it led to this result because you had mounting legal costs on both sides. you don't want to have disclosure, which certainly was going to be part of this going forward if the anticompetitive suit continued and i think, joe, there was likely also pressure, though it may not get talked about, from the media networks and corporate sponsors because ultimately they have invested a lot of money, the p&g tour ga tour was on theo have higher purses like the liv

tour and they want to see the best players, the highest ratings and the best lieutenants. now, what do you do as you mentioned, joe, a lot of guys are ultimately not going to be rewarded for their loyalty i'm not worried so much about the rory mcilroys, the justin thomases, the collin morikawas, all doing extremely well financially, but there are other rank and file guys that could have gone to liv and we see that there is some that did guys like kevin na and harold varner iii there are plenty of guys on the pga tour that could have taken the leap but didn't. so how will jay monahan, how will they be compensated for that that is going to be a tricky step going forward for them. >> yeah. and maybe, you know, the pga tour owned the, you know, it was staid and maybe it was ripe for this, like a company that activists come into and say, look, you're not monetizing what it's worth >> a company it wasn't a company. >> i know. but it was like a company that

was stuck in its ways, players weren't making as much, no one was doing as well as they could have the way that it was that's why it happened that's why it happened thanks, patrick. >> activist. >> they left it and said this is worth so much more, the brand and everything else. >> shod e mmsierulthcoison of the pga still be the commissioner of the pga?

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good morning turmoil in the crypto world. the government asking a federal judge to freeze the assets of binance's u.s. subsidiary. we have new details ahead. all seems to be forgiven in the fight between the pga tour and the liv golf but will the merger stick? what does it mean for the players too? we'll ask former s.e.c. chairman jay clayton for his take. and we have talked about what ai could mean for investments in jobs. but what about what it means for the fed? and eerie parallel emerging to one of the last times tech made a giant leap forward we have that story and much more as the second hour of "squawk box" begins right now. good morning welcome back to "squawk box" right here on cnbc we're live at the nasdaq market

site in times square i'm andrew ross sorkin with joe kernen and becky quick u.s. equity futures moching ar moving around a little bit s&p 500 was in the red now marginally in the green, up two points let's show you treasuries. right now looking at the ten-year note at 3.685 the two-year at 4.512. we'll talk about the interest rates and what happened to them with an exclusive interview with janet yellen in the 8:00 hour. on the s.e.c.'s new front against crypto firms, the agency asking a federal judge in washington, d.c. to freeze the assets of the u.s. arm of binance. this came late yesterday after the s.e.c. filed suit against the company on monday alleging it defrauded investors andly co. coinbase, the s.e.c. suing this company yesterday, caused the big drop in its stock and we're

going to get to first on camera reaction from coinbase's ceo next hour, right here on -- in studio in other business news, boeing, again, here, warning of a new defect on its 787 dreamliner plane saying it will delay deliveries of the wide bodied aircraft boeing says the issue is not related to flight safety how come it is never related to flight safety? but there is a defect. >> can't have the planes anyway. >> planes in service can continue operating okay and elon musk meeting with the prime minister of mongolia the virtual get together happened earlier this week a statement from the mongolian government said the two men discussed the possibility of a tesla battery factory in that country as well as the country's large supply of rare earth elements all right, let's talk markets with our first guest of the hour he says the fed might skip a rate hike next week and that has historically been positive for

stocks he also thinks ai is emerging as the biggest catalyst for the chip sector since the advent of the internet there is some big thoughts we want to bring in sam stovall, chief investment strategist at cfra research and, sam, let's first start with what we expect from the fed and what that might mean for the markets a lot of people talking about a pause or the more apt way to put it was a skip of this next meeting coming up this month what traditionally happens when the fed skips in an interest rate cycle hiking? >> well, good morning, becky there have actually been 16 rate tightening periods that have had skips along the way going back to 1990. and what is interesting is that the market, 88% of the time, has risen in that eight-week period, meaning from the skip fomc meeting to the subsequent fomc meeting with an eight-week advance of little more than 3.5% so, the implication is that where the s&p 500 being so close

to establishing a 20% advance off of the october 12th low that if it doesn't happen before the fomc meeting, chances are that it will happen shortly there after. >> in the past, when this has happened, has the fed then hiked rates again at the next meeting, eight weeks later? >> there have been times when the fed has raised rates and then the market digests some of those gains but there have also been periods in which there have been a several-month pause and then other periods in which the fed basically said the first time they skipped was the end of the rate tightening cycle. and in those conclusions of rate tightening cycles, in that traditional nine-month period between the last rate hike and the first rate cut, the market was up an average of 13% with all sizes, styles, sectors and 99% of the subindustries in positive territory on average. >> seems like it would be pretty important to separate out those

different examples if you're looking at averages and how much they go up over those times. the fed, we expect, is going to be pretty explicit about the idea that if they pause rates this time around, that it is just temporary potentially and you could see a rate hike again at the very next meeting in july >> that's certainly -- >> similar situations like that, what are the odds, what is the average for the rate -- for the market increase over a situation like that? >> well, over a situation like that when the market -- when the fed does end up tightening once again, still the average is fairly positive because the expectation is that at least by the fed having paused or skipped that they are getting closer to the end of that rate tightening cycle. but the advance is muted i would say, however, that we do not expect the fed to be cutting interest rates anytime this year, and the market might be a bit disappointed that the first rate cut could actually take

place sometime early in the second quarter of next year. so, it will be a more traditional period of pause between the last rate hike and the first rate cut >> let's talk about your thoughts on ai you say that what is happening right now with artificial intelligence is the most important catalyst for the chip stocks that you have seen since the creation of the internet what makes you say that? >> well, first off, let me give credit where credit is due angelo zeno is the sector group head and the analyst covering the semiconductor space. i'm parroting his thoughts the thought that ai being so important, i mean, think about how ai first got started it was the auto correct on your typing device. now with auto driving with automobiles, but then with the chatgpt, et cetera, that basically there are new opportunities around and so our belief is that while nvidia is likely to be the poster child

for this ai revolution that our belief is it will last for decades, not just a flash in the pan, that there are other companies such as advanced microdevices, marvel and broadcom that are likely to be beneficiaries as well. >> all right sam, great to see you today. thank you for joining us >> my pleasure coming up, we're going to go inside the s.e.c.'s latest crypto crackdown with the former head of the agency's office of internet and all of that coming ahead of our interview next hour with coinbase ceo brian armstrong plus, mr. dimon goes to washington, we'll talk with one of the lawmakers that jamie dimon met with yesterday here is a little bit of what he said on the economy. >> the thing about the economy is that today is still doing fine, assets have gone up, the debt is in good position, it is

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i think there has been clarity for years. the investing public has the benefit of the u.s. securities laws

crypto should be no different. and these platforms, these intermediaries need to come into compliance and protect the investing public >> that was s.e.c. chair gary gensler talking about the crackdown on crypto giants. joining us right now for more on this is john reed starr, a senior lecturing fellow at duke university good morning to you. let's start with coinbase, we'll talk to brian armstrong at this table in the next hour i'm so curious how you think about the s.e.c.'s case at the same time and we have been talking about it all morning that they did green light the s.e.c., the ipo of the company, and it is a company in the finance space and i think there is a lot of people scratching their heads about all of this. >> thanks, andrew. good morning, everyone i can understand why people scratch their heads because it sounds like, hey, they registered with the s.e.c. as a

public company, the s.e.c. must have blessed everything they're doing, so how can the s.e.c. come back and charge them? that's a complete, not just a misreading of the securities regulation, it is completely untrue the s.e.c. goes through an analysis of an ipo of looking at your perspectives and registration documents and registration statements, but they don't make any approval based on merit in fact, there is a legend on every single s.e.c. offering for precisely that reason. here it is, i'll read it to you. the securities and exchange commission and the state securities regulators have not approved or disapproved these securities or determined that the per spectous supplement is true or complete, any representation to the contrary is a criminal offense. in my opinion, that's what coinbase -- >> brian comes on and says that, it is a criminal offense to say the s.e.c. blessed it? >> yes i'm not -- this is my opinion. i'm interpreting the legend that was written on the coinbase

offering materials you can't -- think about it, becky. if you tell investors, the s.e.c. made us public, our drug must be perfect, the s.e.c. made us public, our technology must be perfect, the s.e.c. made us public -- >> no one is saying it was a good lawn mower, good drug or great way to invest in bitcoin they're saying it is legal to do it this way. that's -- no one is talking about the merits of the investment >> but, joe, they weren't saying that if you go through and look at the s.e.c.'s 136 or 101-page document on coinbase -- >> 101, reading it now >> -- specifically stated in their per spectous, we might be charged by the s.e.c. for selling unregistered securities, we might be charged by the s.e.c. for being an unregistered exchange, we might be charged by the s.e.c. for being an unregistered broker dealer, we might be charged by the s.e.c. for being -- >> don't you think that raises all sorts of questions though more generally about whether this company should have, therefore, been given the green light to go public if i was a company -- if i said

i was going to start -- i sell cocaine and i'm going to try to make my company go public, i think the s.e.c. would say that's illegal, that's an illegal business you're in, we can't have this. and if i said there was a variation on the drug, and we haven't gotten full approval yet, it would be a different story, right >> i don't agree i think it is a fair point, andrew, don't get me wrong, it is a fair point. there is all sorts of gray area when you're doing an ipo, whether it is, like, uber and you're operating in some states that they say might be illegal it is a cannabis or online gaming, you go public. and if you go public saying you're going to be a heroin manufacturer and put that in your filings that's what you're doing, you're also automatically going to go to jail. think about it, andrew, the s.e.c. doesn't have -- they don't have the capability, they don't have staff attorneys or analysts who are experts in every single field, so that when your company goes public, they look at this ipo and say, did you represent a fair and

accurate depiction of your financial condition and are you saying everything in plain english so people can understand it is not -- >> they're still changing the rules in the middle of the game. and the s.e.c. is there to protect investors, to allow a $60 billion market cap company to come and then now it is a $7 billion, $8 billion company, that's completely -- whatever their goal was or whatever their, you know, whyever, the only reason we have the s.e.c. is to protect and they failed miserably. they shouldn't have let it go public then. >> that's not true either, joe here's what i think. i understand you're not making -- you're not making the argument the ipo should have gone public. i wrote an article in 2019 saying all these entities were operating as unlawful exchanges. hold on. hold on. >> halfway. >> no, i get it. look, the s.e.c. brought over

now close to 150 crypto-related enforcement actions. initial coin offerings, that stopped that practice, they brought cases against simple agreements for future tokens, sas, stopped that practice, they brought cases against lending programs like block phi and celsius and stopped coinbase from doing it because it gave them a wells notice when coinbase was trying to do it, they stopped that practice they went into staking, they stopped that practice. so, you know, you can criticize the s.e.c. all you want and i do it quite often in fact, 90% of the time i'm criticizing the s.e.c., but in this instance, they brought 150 cases, they're a civil agency. the subpoenas are not self-enforcing they served a subpoena on duke kwan in new york and the guy called the s.e.c. lacked personal jurisdiction from over him and they brought that to the district court and circuit court and now the supreme court. so the civil agency without self-enforcing subpoenas can't do the kind of things you want them to do

>> right help us with this, though. >> sure. >> do you fundamentally believe that the laws on the books are enough for a judge to fairly deal with crypto technology and we should be leaving it to a judge to use the rules that have been in place to address these issues or do you think that washington should be addressing those issues and if that's true, do you have any hope at all, i don't, by the way, that lawmakers in washington could figure that one out? >> right i have no hope at all as far as washington goes. i don't know they'll figure anything out with respect to crypto with respect to the first question, of course the laws are perfectly clear. again, securities regulation is not meant to be precise. it is intentionally drafted to be broad and all encompassing. and an s.e.c. case, s.e.c. versus reefs chief justice thurgood marshall made this point absolutely clear clarity is not just uncommon in securities regulation, it is

deliberately avoided so if you look, the s.e.c. brought insider trading cases, derivatives cases, municipal bond fraud cases, ostrich farms, orange groves, everything, whatever the concoction, whatever the iteration, ico, sas, lending programs, staking programs, they're all securities if you wrote it specifically prescriptive, that would be a terrible thing you use lawn mowers as your analogy. if i steal my neighbor's lawn mower to mow my lawn and i say there is no law against stealing lawn mowers, that's what works in securities regulation >> i've been reading through the complaint too, 101 pages from the s.e.c. they seem to be making the case that if you're going to say that you're a broker, and a dealer and clearinghouse and perform all the same operations, how can you not register as such that seems fairly straightforward? >> becky, that -- you're

preaching to the choir when i was chief of the office of internet enforcement, for 11 years, if anybody called themselves an exchange or broker dealer or marketmaker, these are very important regulatory nomenclature that come together, that means when you're regulated and i love when coinbase and some others say we're regulated, they're not. there is no audits, inspections, examinations from the s.e.c., no licensure, no cybersecurity requirements, no net capital requirements, no insurance, none of these consumer protections, and if you look at the binance complaint and they filed this tro last night, you will see when -- you don't have these kinds of protections, the kinds of co-mingling that can be done, the kinds of thievery, none of those things are alleged with respect to coinbase. there is no fraud alleged against coinbase in my mind, it is almost worse because coinbase looks like, hey, we're a legitimate broker dealer and exchange and marketmaker, but we just don't register with the s.e.c. because the products we sell are like

buying a shampoo bottle on amazon, not like buying securities. >> john, it is a longer conversation and quite a debate. thank you for joining us and helping us through it. and we'll talk to you soon. >> thanks. great to see you all this morning. >> i don't want brian to cancel. brian is going to have -- face a lot of questions. >> we'll hear what he has to say about all this. >> they have to take this on one way or the other you can fight the s.e.c. on this, and you may lose, and looking through part of it -- >> got to fight it. >> their complaint says part of it is about paying prejudgment interest and as a result, they deprived their investors of knowing these things are you looking to be regulated or not >> investors knew what they were going into. >> did they know it with ftx they're not one and the same coinbase is not ftx. it is not binance.

not from what we have seen >> i think investors thought one thing and the whole game changed. >> when we come back, what does ai mean for the fed and what lessons can the central bank take from one of the last times new technology started to disrupt the economy? we have got that story on the way as "squawk box" rolls right on time now for today's aflac trivia question. what was purchased in the first commercial bitcoin transaction the answer when cnbc's "squawk box" continues now there's a hole in your defense; look at the size of that- gaaaaaaaaaaaap!!! is that a goat?! you talkin' about me? gaaaaaaaaaaaap!!! i think this goat is saying “gap.” must be talking about the expenses health insurance doesn't cover. so who's talking about the money aflac pays to help close that gap? gaaaaaaaaaaaap!!! aflac! aflac! gaaaaaaaaaaaap!!! it's about to go down, baby! aflac! aflac! stop that goat! get help with expenses health insurance doesn't cover at aflac.com

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now the answer to today's aflac trivia question. what was purchased in the first commercial bitcoin transaction the answer, pizza. a man in florida paid 10,000 bitcoins for two pizzas on may 22, 2010, which is now known as bitcoin pizza day. yeah you can do the math. 10,000 bitcoins for a pizza. do the math, at 65 or 27 and th guy wishes he didn't do that jamie dimon sitting down with

democrats to talk about a range of pressing economic issues. the meeting took place on capitol hill joining us now, representative derrick kilmer of washington, vice chairman of the new democrat coalition, he was one of the lawmakers who met with dimon. we have seen, congressman, jamie dimon and other bank ceos in front of congress and the senate quite a bit over the years i can imagine this was more conciliatory yesterday was it confrontational at all? >> it was really a discussion around three things. one, he expressed gratitude to the new democrat coalition for being one of the big movers in terms of getting the debt ceiling issue addressed. 95% of our members supported the bipartisan package that was negotiated by the president, and this is one of those things where in the failure to act could have catastrophic repercussions for our economy. secondly, he talked about the fundamental strengths of our

economy. fact that we have seen substantial job growth, substantial consumer spending and spoke about our relative strength vis-a-vis china and, three, he talked about some of the competitive actions he felt we ought to take as a nation, addressing things like immigration, addressing some of our workforce shortages, addressing things like permitting and regulatory reform, recognizing that we are in a global competition and that's something that the new democratic coalition is really focused on >> congressman, i don't know whether he indicated whether he preferred the bipartisan deal to a clean raise in terms of some of the, you know, some of the spending constraints, covid relief, recapturing, some of those funds, did you have to hold your nose and vote for this or did you think that some of those things were actually positive, whether it is some of the permitting stuff because some of your -- you're the centrist democrats

bernie sanders, others, aoc, that did not vote for the final -- i guess because they wanted a clean debt raise. you were okay with it? or actually positive about it? >> well, here's what i'll say. i've been in congress now for several years. it is rare that i cast a vote that i consider to be a perfect vote oftentimes you're in the position of holding your nose and voting yes or holding your nose and voting no the reality is failure to act would have had catastrophic consequences to the american economy. up to, you know, literally millions of jobs lost, a drag on gdp. i think frankly there are elements of the law that was just passed that are progress, addressing some of the issues around permitting, trying to actually look at some of our long-term fiscal challenges as a nation frankly and this was part of the conversation with jamie dimon yesterday, i think it is appropriate that we look at

reforms to this conversation around the debt ceiling because what you see time after time after time is hostage taking with a scenario where we cannot shoot the hostage without having real impacts to the american economy and to the american people so part of the discussion that we had and mr. dimon didn't speak to whether he supported a clean debt ceiling, what he said was he thought we ought to nuke it altogether. >> i think he mentioned something about just for housing was the example about how much paperwork there was, just how cumber some it is to try to do anything he also said he felt that some of the issues with the regional banks, maybe some -- a crisis has passed, but to take a light touch on regulation. and that also is not what we're hearing from maybe the centrist democrats feel that way, but many in the party would like a much heavier handed approach to both of these things how about you? >> i think the approach of the

new democratic coalition has taken is that we have to thread the needle appropriately so that you're taking steps to protect consumers, to protect small businesses, but also making sure that there remains access to capital, that you're not stifling opportunity, that you're not stifling innovation, that you're not stifling lending and one of the things that we spoke about specifically was the supply side challenges that we face with regard to our housing market we need a lot more homes part of that conversation looked at some of the regulatory discussion as you mentioned, we also discussed things like new market tax credits which can provide some incentive for construction of multifamily and affordable housing we talked about trying to address some of the regulatory barriers that exist at the local level. i'm the sponsor and the new democrat coalition endorsed a bill called the yes in my backyard act to try to -- it is a bipartisan bill, that would say let's address some of the local issues like discriminatory land use policies and other barriers that are stifling -- >> you're -- i'm getting chills.

you said supply side, a couple -- who are these new democrats? these are really new democrats did you say supply side solutions a couple times >> we need a lot more homes. our constituency needs a lot more homes. >> just kidding. congressman kilmer, appreciate your time. thank you. good luck. godspeed. >> good to be with you. >> okay. still to come, former richmond fed jeffrey lacquer helps us understand the fed's options at next week's meeting. plus the pga tour and liv golf agreed to team up we're going to bring you the latest on that and the talks about what it means for the orspts world stay tuned you're watching "squawk box" and this is cnbc thrilling thing in . there's an abundance of reasons to get started. how far we take an idea is a question of willpower.

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welcome back to "squawk box. though ai has been around in some form for a while, we might be able to call the current age the dawn of commercial ai. steve liesman joins us now with a story on what the technological leap could mean for the federal reserve. and the economy. hey, steve interesting. >> good morning, joe, yeah you probably remember, but probably not all of our viewers

remember netscape launched the ipo in 1995, a few months after the fed completed cranking up interest rates by 300 basis points they hit a level north of 5%, just a bit above where we are right now. all that raises the question about what impact higher rates could have on new investment in ai is this a tech bubble redux that the fed should lean against? justin wofford says if i was jay powell, i would have a whole unit in place now thinking about this stuff he's just one of the guys that has been thinking about what it all means for the economy. back in 1995, high rates didn't have much effect and netscape ipo launches this massive investment that lasts for a half a decade, and culminates in pretty good technological and economic progress, but also one of the great investment busts of all time at the fed had to address. hedge fund investor glen hutchins sees real potential for companies and investors, but he points out this is the third

tech hype cycle after big data and crypto when it comes to the impact of interest rates, he says, for the moment hype trumps rates other economists and investors see potentially profound but also confusing and divergent economic effects from ai more demand for capital could mean higher rates short term, depends on how capital intensive these investments end up being productivity could potentially increase over time, which would mean lower rates, than lower inflation, but there is also higher stock prices that would be an immediate effect and that creates a wealth effect again that the fed might want to lean again. the fed should be paying attention says jason furman to the stock market and actual intangible investments this is part of a broader loosening of financial conditions, he contends. finally, guys, i wanted to

chat -- bing's chatgpt and i asked what effect would ai have on interest rates and what effect would interest rates have on ai. it said rates could go up as a result, they can go down, or there could be a mixed effect. i asked which answer ai liked the best it said the mixed answer so, that's like a true economist. >> wow, they can apply for a job at the federal reserve one thing that you said there that i think we forget, steve, i go all the way back to computer-aided design, computer-aided engineering, computer-aided manufacturing i saw someone say the other day that google maps, all ai, so we had ai around, i don't know where we decided we made this quantum leap, not the tv show, but a quantum leap, what andrew plays around with when he says, you know, why should i make ten times what i'm making now or whatever you say and then it gives you all the great reasons and it sings your praises, and you can use that during contract

negotiations so i think it was a chatgpt that -- >> do you see the -- out on cnbc this morning, he thinks actually that chatgpt and all these generative ai things completely are overhyped and effectively says some professions are accepting of errors, but you have to be really accurate in finance, really accurate as a lawyer, and the idea is this stuff is very good for sort of a first draft, might be helpful first draft of coding, but i don't know if it is mission critical whether it is really ready for primetime. >> still better than what we got now at the fed, i think, steve >> you mean, you have ai run the fed is what you're thinking? >> what andrew said, there is a lot of -- i think it still might be -- no, i'm kidding. >> yeah. it could be. i mean -- it is interesting, joe, when i asked -- but, right, when i asked chatgpt what would

be the effect of interest rates on ai, bing has footnotes, and i got about half a dozen different footnoted articles that i then read and continued but here is the question, somebody had to write those articles as the input i believe a human being had to actually write those articles i don't think we're in a -- i don't think we're in a self-reverential point where ai is quoting ai. not at this point. >> it is not thinking independently. >> not yet but that's the problem it is either going to be an amazing thing or a terrible thing because you're right, when it starts actually referencing itself, then, you know, are all bets on or off >> right now it is garbage in and garbage out. >> but, who is supposed to ask the question, what is the effect of ai on interest rates? does ai itself generate that question or do we actually need a human being reporter to ask that question i don't know >> we had taylor on last week.

>> no, no, no. joe, let me give you one more economic -- >> we have screaming in our ears, steve. whenever you say bing, i think a needle nose ned and that's all i can think about is groundhog day. >> all right i'll let it go but there is some really interesting questions here that i came up with, an economist about what ai means for the economy? we need part two part two for the liesman >> let's continue the conversation on the fed which is set to decide on interest rate policy, one week from today. joining us for that is jeffrey lacker, the former president of the richmond fed and, sir, thank you for being here today let's talk about what you would be doing if you were at the fed right now. would you pause or would you skip at this meeting, and what would you do at the next meeting? >> if it was up to me i would have signaled another increase at this meeting. i think they have a ways to go i think they're well positioned

if the inflation rate was 3.5% and the unemployment rate was 4.5%, but that's not where we are. the inflation rate is closer to 5% and has shown no discernible or meaningful signs of easing over the last six months you know, unemployment rate is going up for sure, but it is still well below 4 i think they're going to have to go above 6 when all is said and done unless they get lucky and i think they should be signaling that to markets. and proceeding at pace >> there is another inflation number that s could comes next day before the decision. will that impact the decision that is made >> that is a really good question they sent the official signal to markets that a pause is on order. they could conceivably reverse course, but it is kind of beyond

the time frame that they would have to be able to leak an official pivot ahead of the decision on wednesday. so, i tend to think they're going to ignore it and blow through it and pause >> what is the official signal and how do we read that and know what is a real signal what is just speculation or what their thought is at the time if they're going to be data-based, shouldn't it be based on the very most recent information that they have >> well, phil jefferson was sent out last week to give essentially the official signal. otherwise, what you do is look at the house organ, it used to be "the washington post," the john barry, but now it is "the wall street journal. the designated lead reporter who has kind of got the inside scoop and whose words are the oracle's views. so that's how you read the official signal. >> couldn't he still write a story in the next week >> it is true, yeah, maybe he

could drop something like midafternoon tuesday or something. so, i wouldn't put it past him >> in terms of how the market is kind of being led along by that, i thought we didn't really care if there was a little bit of concern if the markets, if the markets went a little haywire. because things have been so smooth, markets keep climbing. i thought we were past the point of worrying about a little volatility in the stock market to make these decisions. >> you would think so, the market strengthened over the last couple of weeks to a good place to absorb a bit of a sting, a bit of a surprise of an increase rather than a pause so i think they should be brave and do it if that's what the data indicates i suspect the cpi will be another upside surprise. and it used to be the case that there wasn't much signaling, there wasn't much, you know, forward gain element to these decisions and people just waited

to see on wednesday what the decision was so i think it would be healthy to go back to that >> yeah. it feels like everything these days, we don't want to be too harsh with anyone, so we spoon feed them and get along, but i think the old ways are sometimes better too jeffrey, thank you jeffrey lacker. >> thanks. coming up, much more on the markets, plus an exclusive interview with treasury secretary janet yellen we're going to be speaking with coinbase c'seo brian armstrong a lot going on here on "squawk box" as the program rolls on

coming up, the stunning news from the world of sports liv golf and the pga tour are merging. but is it good for the game? and will it pass muster with u.s. regulators? all that and more as "squawk box" rolls on. thing you can do. single most and it's covered by medicare. before using the dexcom g7, i was really frustrated. my a1c was stuck. (female announcer) dexcom g7 sends your glucose numbers to your phone or receiver without painful fingersticks so you can make better decisions in the moment. so easy to use, and my a1c has never been lower. (female announcer) now, more people than ever are covered by medicare.

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plus ask how to get up to a $750 prepaid card with qualifying internet. welcome back to "squawk box. a deal shah shocked the sports world, the pga

one of the things that we're learning in markets and the like are how to deal with global product with regional regulation we also talked about human

rights abuses in saudi i don't know how much that plays in all of this if you look at the sponsor list por for the pga today, a journalistic organization has been troubled by the murder of kashogi. comcast business, our parent company, is involved in a marketing partnership with the pga. i just wonder how you think long-term advertising sponsors will react to this >> i think the jury is out on that i think saudi arabia brings a different element to the equation that quite frankly we haven't seen before. sports has gone to unique places we've hosted the olympics in russia, the olympics have been in china usually the sports have been able to make its way true this this is somebody having an

equity seat at the table i mean the chairman of this new organization thinks time will tell also, do they deliver on the purpose. do they really build a game of golf do they create things that haven't been created again and search needs and fans and people in a way that hasn't been before i think time will have to see how that all shakes out. >> george and jay, i want it thank you for helping us through what is a complicated and fascinating story. appreciate it. >> thanks for having us. >> thank you >> coming up, don't miss treasury secretary janet yellen in her first interview since the debt ceiling deal. and as we head to break, here's a quick check on the fultures, which are all green now. "squawk box" will be right back.

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good morning two big interviews this hour we are moments away from an exclusive interview with treasury secretary janet yellen. plus coin base ceo brian arm

armstrong will join us and the final hour of "squawk box" begins right now. good morning welcome back to "squawk box" here on cnbc, live from the nasdaq market site in times square i'm joe kernen along with becky quick and andrew ross sorkin futures have been sort of moving a little bit higher as the premarket session has moved on we're now up five points on the dow, sm sp&p, though, is up. we're near a high end of a range, have we broken through the high end of the range, maybe not yet but we're holding our own and the nasdaq has been outperforming everything else.

treasury yields have been under control, maybe not indicating that the highs are in on the 10-year or fed funds but they don't really listen to all of the hawkish comments from both our guests and from fed guys just don't >> let's talk to someone to find out whether she's dovish or hawkish. i want to bring in treasury secretary janet yellen joins us since the debt ceiling deal was passed secretary, thank you for joining us >> thank you so much, andrew >> so we're all trying to -- the good news is that's behind us but there's a lot in front of us we still seem to have a very strong economy, possibly a little too strong. where do you think we really are? >> well, you know, i've been saying now for almost a year that i see a path to bringing down inflation while maintaining a strong labor market. and i think the data we've seen recently and over the last year

suggests we're on a path with those characteristics. so clearly the labor market remains quite strong with unemployment close to 50-year lows and very healthy job creation but on the other hand we are seeing some signs of easing pressures in the labor market, which may be important in terms of bringing inflation down the quick rate has risen slightly job openings have declined somewhat, suggesting a bit less pressure in terms of firms add adding to their workforce but overall the labor market remains very strong and inflation has now come down about 4% from its peak and i think we'll continue

to see progress over the next two years. >> what do you think unemployment has to be in this country to actually -- and to have inflation actually level off? we keep talking about what the fed can or can't do but politically part of that is a question about employment in this country >> well, to me a strong labor market is one where individuals who want to work can quickly find work. we've always thought an unemployment rate with 4 as the first digit is a very strong labor market clearly americans feel good about their job prospects. they're finding work quickly you know, hiring pressure -- it's not just a matter of the unemployment rate that determines pressures in the labor market, it's also job vacancies and how strong the appetite is of firms to hire

the economy has slowed somewhat and we're seeing less pressure by firms trying to rebuild their workforces, but we still have a very healthy labor market, wage gains are significant but nevertheless we're seeing a bit of easing of pressures >> madam secretary, i don't know if you can take us behind the scenes now, but the debt ceiling deal is complete how close did we really get? and i know prior to the deal you'd be asked the question whose bills are you going to pay first and what kind of preparations are you making and you didn't really want to answer the question now that that's off the table, can you tell us a little bit about how that all would have worked >> well, what i can tell you is what i said and what president biden said from the outset is that to protect our economy and our financial markets from catastrophe, what's necessary is

to find a consensual bipartisan approach to raising the debt ceiling. and that was my focus, thact wa immediately president biden's focus and what was achieved that was a win for the american people had the debt ceiling not been raised, regardless of what approach was taken, the consequences would have been very adverse, very significant and very negative. i believe a recession would have been very likely and we could have had a global financial crisis, higher interest rates for a very long time so fortunately, although our balance dipped to very low levels, we continue to be able to pay all of america's bills and there was -- it's important to realize there was a

commitment from all parties in this negotiation not to default on the debt, to find a bipartisan solution and i think it's a win for the american people that that occurred. and it's also important to recognize that social security and medicare were protected, medicaid was protected had that not occurred, 21 million americans could have lost health care veterans benefits were protected. and as important, now that our economy is operating in the vicinity of full employment, we are very focused on investing in america, strengthening long-term prospects for our economy to make it more competitive, to create good jobs and the trifecta of legislation that was passed, the chips and science act, the infrastructure act, those both bipartisan, the inflation reduction act, the

important things there have been preserved. >> madam secretary, i guess not everyone agrees, obviously, it depends where you're sitting but some people think a lot of that spending contributed to the 40-year highs that we saw in inflation with a lot of other factors as well. that contributes to a 525 basis point increase in rates. that makes everything so difficult and so much of what we bring in need to be spent on servicing our debt so it seems like it's a really difficult sort of conundrum that we want to spend money on things to help people but the more we spend, the less we have left over after we service our debt do you think we need to cut spending somewhere where we can so we can spend it in better places >> well, look, this bipartisan agreement just cut the deficit

by a trillion dollars. and the deficit fiscal stimulus has declined certainly since the pandemic ended so that is supporting the fed's efforts to bring inflation down. i don't think there's a trade-off between investing in america and doing spending that will improve the trajectory for our economy and job prospects. there's not a conflict between that and running responsible fiscal policy. president biden offered a budget that has significant further investments in our economy while lowering deficits over ten years by $3 trillion but revenue needs to be part of that discussion. it's not all a matter of spending i think we in the interest of tax fairness and having the

resources to invest in our economy, we also need to be considering proposals that would enhance revenue while also controlling spending >> secretary yellen, we just spoke with the former richmond fed president jeffrey lacquer, and he said he thinks we're going to have to take rates to 6% in order to really get inflation back to 2% does that fit with your line of thinking does that seem fair? >> listen, i'm going to leave the fed to make its own decisions about what's necessary. consumer spending has continued to grow in a pretty robust way but we're also seeing areas of the economy that are slowing down and this is a judgment that my former colleagues very fed are very capable of making i -- as i said, i think what's

important is to try to bring inflation down it's a top priority. we support the fed's efforts to do that and we're making the contributions we can, prescription drugs, health care costs and other things and a strong labor market. >> madam secretary, i want to ask you about the banking business but as it relates to commercial real estate, there's a lot of worry,as you know so very well about the state of commercial real estate, especially around office and what it means to the regional banks, maybe not now but come the end of this year, early next year and the implications of that some people believe there could be more bank failures. how concerned are you about that >> well, i do think that there will be issues with respect to commercial real estate certainly the demand for office space since we've seen such a big change in attitudes and

behavior toward remote work that has changed and especially in an environment of higher interest rates, i think banks are broadly preparing for some restructuring in difficulties going ahead. but i think certainly stress tests of the largest banks show that they have adequate capital to deal with it and i know the supervisors will be looking closely at a wide range of banks to make sure that they're adequately prepared to deal with it but my overall read is that the level of capital and liquidity in the banking system is strong and that while there will be some pain associated with this, that banks should be able to handle the strain. >> would you be supportive of more consolidation in the

banking business i ask in part because on the other side of the administration, i think the department of justice and ftc have been trying to prevent in the banking space but unique and particular to the banking business >> well, i see strength in the banking system that has a diverse set of financial institutions capable of satisfying different needs across oureconomy and we do have a diverse banking system with strong community banks, regional banks, larger banks that are involved in global business and i wouldn't want to see that threatened but certainly in this environment, some banks are experiencing pressure on earnings and there is a motivation to see some

consolidation and it wouldn't surprise me to see some of that going forward. >> madam secretary,virtually every interview that we've done over the many years with you, we've always mentioned crypto. we're going to have brian armstrong from coin base on the program in just a little bit there's the lawsuit that the sec brought against them and the separate lawsuit on finance in the past week. i'm curiouswhere you stand on crypto i think there was an evolution in your thinking in certain ways maybe it's changed, i don't know what's your sense for the american public who is thinking about whether to invest in the world of crypto today? >> we recently wrote -- treasury contributed a set of reports in response to the president's executive order to examine the risks inherent in crypto, and we identified a number of risks some of country risk to

consumers and investors, our laws are already strong, the the cftc and other regulators have the ability and tools to protect consumers and investors and i'm supportive, very supportive of seeing those agencies use the tools they have. i can't comment on the individual matters the sec is looking at but i think certainly it's appropriate that they do that and then i see some holes in the system where additional regulation i think would be appropriate and we would like to work with congress to see additional legislation passed. >> madam secretary, very quickly, because i know we're going to run out of time, i have two very, very quick questions, one has to do with the global tax. i wanted to get your thoughts on the fact that the republican party is now really pushing back on that in a meaningful way.

where do you think that really stands and whether that can even happen at this point >> i think the pushback frankly is misguided i think this is an extremely important agreement. countries are beginning to adopt it the eu is moving to put it in place and other countries are as well and i think this will stop the race to the bottom that's occurred over decades in which countries have competed to make -- to try to get business to their shores around it's good for american business. >> it's all 25 on the house ways and means. they all said there will be retaliatory action against any country that, you know, they're saying no way, madam secretary is there a way around that >> well, i don't believe that that legislation is going to become law, and i think that

over time as other countries adopt this minimum tax and put in place penalties designed to encourage countries that are not part of it to adopt it, that the united states and members of congress will see that it is sensible and appropriate for us to put it in place as well so i'm encouraged to think that over the next few years we will adopt it, too. >> and i know you got to go but live golf pga, you're the chair of sifus i'm so curious of what you think of that transaction. >> i really don't have anything for you on the golf situation and i'm sorry to say i can't comment on cases that sifius is

looking at >> will they look at it? >> sifius is very focused on national security. >> would this be a national security asset or maybe a strategic asset for the u.s. >> well, it's not immediately obvious to me that this is an issue of national security but i'm going to leave that to my colleagues who participate in sifius to decide >> what's your handicap, madam secretary? do you go right or left on the -- >> i need a really big handicap. >> to play >> i do. i do indeed. >> you pay your caddie in bitcoin? do you have any bitcoin left >> u.s. dollars, the strongest currency in the world. >> exactly excellent. >> secretary janet yellen, thank you very much. >> and she likes the dollar strong >> thanks. >> when we come back, the sec's

crypto crackdown, coin base founder and ceo brian armstrong will join us in a first on cnbc interview to respond to the charges. take a look at that stock right now up about 3% after dropping pretty substantially yesterday, the stock is off by about 14% for the week stay tuned more "squawk box" after a quick break. father's day is almost here, and dick's sporting goods has gifts for every dad. like golf clubs from taylormade, callaway, titleist, and ping. and coolers and drinkware from yeti. get him the latest styles from nike, vrst, and the north face. plus, the hottest footwear from nike, on, hoka, and new balance. get it fast with one-hour pick up. and with our best price guarantee, if you find a lower price, we'll match it. this father's day, find the perfect gift for every dad at dick's and dicks.com.

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welcome back to "squawk box," every. let's get over to mike santoli what are you watching this morning? >> holding steady at these eight or nine-month highs, very close to what we've seen in august it has not been the big growth stocks over the last week or so. you have seen the average stocks perform, better banks and some of the lagards there we only traded about 4,300 for a couple of days back in august. starting to get overbaut a littl -- overbought a little bit. in terms of the cyclical indicators withins market, look at consumer discretionary and industrials outperforming the s&p still over a one-year basis.

it's not all just been tech, even though that has dominated most of the market story recently and when it comes to consumer discretion, you have to throw in the disclaimer that tesla and amazon are the drivers because they're such big parts of that segment. that's not really the case over a one-year basis they've underperformed it's the home builders, casinos. compared to bonds, i think it's really relevant. the nasdaq is not just a function of where interest rates are going. yes, they seem very connected as they did all last year but this is the long term treasury etf. what you see here is treasuries have not rallied appreciably yields have been pretty steady on the longer end and yet still we have this liftoff in the nasdaq a.i. enthusiasm is in there and last year there was a very crowded sector i'm not saying interest rates

don't matter for big tech stocks but it's not the whole story, becky. >> i'd love to see a longer chart of that, mike. >> it didn't look that well. >> the a.i. is what broke it back here. go back further. let's take a look. can they do that >> yeah, look at that. >> oh, look at that. nothing. >> it's one way to think about it is we had the biggest tech bubble in memory still in history in the late 90s when you had interest rates 6% on the 10-year. it's not so much about just being able -- but stable rates, high liquidity and the idea that you're going to pay out growth is always part of that story >> lookat that super long char behind you >> the bond is never going to keep up with that. >> especially not with tech stocks thank you. we'll see you later. >> coming up, we're going to speak with the ce of coin base in his first interview since

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the latest millionaire survey robert frank has a look at how the wealthy are responding to higher prices. >> they've noticed >> everybody's noticed they're betting inflation is going to stick around for at least another two years. the cnbc millionaire survey, we poll people with $1 million or in investable assets say they're not going to fault that fed target for at least two years. about a third say it's going to take at least a year they also say interest rates are going to be higher for longer. nearly half say interest rates are headed higher by the end of the year only 18% expecting the fed to cut rates by the end of 2023 inflation end rates starting to take a bite out of their spending more than a third of millionaires surveyed cut back on restaurants due to inflation. 18% have delayed the purchase of a car. one in four has given less to charity due to inflation that was surprising to me. and if inflation persists, a

growing number will cancel vacations. they're also borrowing a lot less nearly a third say they plan to borrow less this year due to higher rates when we asked them about the threats to their wealth, inflation ranked second behind the stock market, which nearly half think is headed lower you can read more about the survey finding, including who millionaires support for the presidential race in 2024 on cnbc/millionaires.survey >> we have seen some downgrades. the wine and spirits was the slowest growing part of the luxury sector in the most recent quarter. people are certainly drinking less and less expensively. >> and caviar does come in grade one and grade two in.

>> you can downgrade from grade one to grade two >> is there a better salmon? >> i have no idea. i don't even like grade one stuff. >> i don't either. too salty. thank you. >> coming up, breaking trade data plus a can't miss first on "squawk box" interview brian armstrong will be sitting in the same chair at this table to talk about the crypto crackdown in just moments. don't go anywhere. doors can take us to new adventures and long-term goals. your dedicated fidelity advisor can help you open those doors. by helping you create a comprehensive wealth plan, with the right balance of risk and reward. doors were meant to be opened. ♪ ♪

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welcome back to "squawk box. expecting minus 79 billion, minus 74.6 billion, very close to expectations. i do want to caution today are benchmark revisions. we're going to see some of the past data revised. but having not seen it yet, the minus 60 billion revision the last month, which was minus 64

now becomes one of the best -- the smallest deficit post covid. maybe we can throw a chart up there. post covid world is much different with regard to deficits and that's something to pay attention to now the minus 74.6 billion is actually the best -- i'm sorry, the biggest deficit we've had since october. but as i said, october at 77 billion may have changed with benchmark revisions but it is important to note that all things being equal, the white part of deficits that makes them more red and bigger negatives is the fact that we just seem to have a better consumption importing than we are on the export side and hence that's where the deficit really becomes the largest. we see that interest rates are hovering about at the same levels, a ten-year note yields hovering right around .370, up

four basis points, still with good resistance around 378 to 382. becky, back to you >> let's check with steve liesman. he joins us right now. what's your reaction >> it's an interesting thing what rick is pointing out. imports doing better than exports. maybe that reflects a relatively stronger u.s. economy and weakness overseas. we want to watch that. now we have to layer in this port strike in los angeles, which is going to corrupt the data again and one of the things that we have to keep in mind is that the post covid trade has been something like a rubber band that stretches and it's back together and goods come in and it really messes around with the quarterly data quite a bit, a better trade deficit usually associated with better gdp numbers, at least temporarily. but higher imports also reflects stronger u.s. economic growth. i want to bring you real quickly

the business roundtable data that just came out what we see is the oval index down three points to 76 and where that is is it's still below the long run average of 84 greater percentage of firms of the 143 executives that responded still planning to hire than to fire, but that index is down but plans for capex up 1.3 and expectations for sales down 0.4. these are some of the biggest company executives so we follow this to see about spending plans and sometimes it does lead the way in terms of lower hiring when you follow those numbers, becky. >> steve, you mentioned the ports and the labor issue there. how big a deal is that for the economy at this point? where do you number things out right now? when would it be a significant issue? >> it's interesting, becky what i don't know is what

lessons the ports and the suppliers and the overall supply chain learn from the pandemic. one of the things we learned during the pandemic is that we were running things maybe a little bit too tight maybe we were too efficient in the sense that there were no slack in the supply chain. if there is additional slack in the supply chain now, then at least for a time it won't matter quite so much. i can tell you if this ends up being an inflationary issue, something we're going to watch very carefully in that it could drive up those transportation costs again, which have been coming down, it could mean some deficit of goods that we don't have that could drive up prices. it's not something an economy trying to battle inflation needs right now. >> steve, thank you. >> coming up, the sec is suing crypto exchange coinasin be new york federal court this week we'll get brian armstrong's

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welcome back to "squawk box. the futures are about where they were, up single digits on the dow and s&p, 16, 18 points now on the nasdaq. >> meantime, morgan stanley leaving the bank of a 17 years for one of wall street's top firms. he's going to join paul weis in starting this fall as a

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good morning we've been debating this at the table for the last three hours help us understand from your perspective what your rear action was and to the tex ent that you have a defense i feel

like we've had a long history of being very transparent with them before becoming a public company, you have to disclose every about your business. there were many revisions of our s1 they had all the knowledge then and they allowed us to become a public company we're going through time and genzler has statements to congress saying he doesn't feel he has the authority to regulate this industry and we're seeing conflicting statements and we filed a petition with the sec asking for clarity about a number of points in the law, which they never responded to and then this wells notice and a complaint arrives. this isn't good for america. it's not good for the history obviously and we now need to go get clarity from the courts. >> the chair was on cnbc yesterday. i want to show you a clip and get you to react, if i could take a look at this. >> in the coin base complaint,

we note that they have through the coin base wallet, you can trade 16,000 different tokens. there's a lot of debate to the use cases and whether there's any there there. look, we don't need more digital currency we already have digital currency it's called the u.s. dollar, it's called the euro, it's called the yen they're all digital right now. we already have digital investments and you have digital -- you have entrepreneurs representing digital investments on this program all day long and it's whether it's the big tech companies, the automobile companies, you name it it's on digital right now, the investing world. what it is, the real underlying value of these tokens and that's why you need full, fair and truthful disclosures >> do you think this is about disclosures? or do you think this is about the underlying currencies that

are on your exchange >> it's tough to know exactly what he means by that. our self-custodial wallet is not trading crypto, the ones that he mentioned some huge number that's happening in defy that's not something that we operate the trading of our centralized exchange is trading a much smaller number of assets we reviewed over a thousand assets in crypto rejected about 90% of them because we felt they weren't right for our exchange to his point about what's the there there, people are using crypto for all kind of things, not just trading they're doing payments with it and presidential candidates are using it we don't need the government picking and choosing our technology winners let's let the market do that >> when you spoke about the ipo and ipo process, i think implicit in what you were saying

is they approved us as a business and yet the prospectus itself, as you know, also says very clearly that effectively the sec has not opined on the underlying business itself and in fact that the company can't actually legally say publicly that the sec has do you agree with that >> well, they allowed us to become a company, understanding the s1 i feel like that's our moment to be totally transparent with them, show them everything about our business and how it operates it's not great to have a regulator come back later and say actually we changed our mind >> but, brian, they didn't change their mind. we had john stark, the former sec office and internet enforcement chief. he was on earlier. he said it's very specific that in the ipo, the i.c. does not approve these things and very specifically says they could come back and say there is additional regulation that's required or additional

disclosures or additional filings. i think what they're very specific about is you call yourself an exchange, those are things you need to register for if you're going to be an exchange or broker dealer, just like the nasdaq or nyc would have to. >> if you're trading economies, that doesn't necessarily apply we wanted the ability to trade crypto securities. i think there could be a big, robust market of crypto securities in the u.s., even if we don't list securities today the regulator does have the right to come edit their thinking at times and come back and say here's a new set of rules and we'd be happy to follow those the issue is we're getting conflicting statements from the sec head and statements from the sec are such an outlier. they're saying anything other than bitcoin is a security that's not our interpretation of the law. that's not what the law says and

it's not what the position of every other country around the world, their financial regulators is taking i don't think we had a choice. otherwise this industry is not going to exist in the united states if we took that position. >> warning there could be additional regulation is one thing but, you know, bringing enforcement action on something you knew full well at the time was occurring, that i don't see how all of a sudden you make that leap. that just seems arbitrary and capricious and vindictive almost >> that is a regulation by enforcement approach we met with the sec 30 times in the last year. they never gave us a single piece of feedback about what we could be doing better. we just got silence. when we asked them how would you like us to register, we have this dormant broker license, can we activate that it's not appropriate to come back and do an enforcement action if we don't have clear

guidance >> is it your hope congress does something and act or a judge rule there is case law. if they look at things as security and judge them as such, you could be subject to what the sec is saying. >> there's a couple of that's relevant to crypto yet in fact, that would be a good outcome, kind of regardless of what the court decides, is we start to get clarity another option is, like you said, congress is starting to act. last week, we saw the, you know, mchenry thompson bill draft that came out this is the start of something really useful, which is a clear market structure for crypto, clear delineation between what the ftc and s.e.c. are supposed to do. there's probably little details that need to be worked out, and i know that lots of people in congress are starting to look at that there's a few other bills being drafted as well, but we need to get the clarity at this point from congress or the courts, and they seem to have an interest in doing that >> seems hard to have government

agencies, whether it's the ftc or the s.e.c. that really seem overtly political. it depends on who gets elected every four years, and that's not -- isn't it stated somewhere that these agencies are supposed in act in an apolitical way? >> if you look at the commissioners, they are completely -- >> every -- that's the case with every agency >> this is all happening against the backdrop of a case that's very different but still in the news against binance, and a lot of these things are getting conflated together what was your reaction to that suit >> i don't want to comment on any other companies, but the timing was curious to put those back-to-back, and there may have been an intentional desire to conflate the two or something like that, but the companies could not be more different, and the suits could not be more different, so in coinbase's case, for instance, there hasn't been any allegation of misappropriation of customer funds. i haven't been named personally. the executives haven't been

named personally this really -- the complaint in the coinbase situation is really a technical matter about, do you classify these as commodities or securities we're based here in the u.s. we've never operated a hedge fund or something that trades against our customers. all our financial statements are audited. the customer segregation, funds and everything like that, people can take someone else's word for it, not ours >> in retrospect, do you think you would have been better off not going public i ask because i think there's a lot of public investors that went along for this ride, maybe very well should have known that part of this was a gamble and bet on not just your ability to execute as a business but that the regulations and the laws would cut your way over time >> i don't regret going public there are certainly some things about being a public company which are a little more difficult. the private marks and evaluations, i think, you can sort of defy reality a little bit for longer, but no, i'm glad we became a public company because i want us to go first. it's not easy to go first. you're going to take a few

arrows we have to educate the public market investors we have to deal with the s.e.c but that's what being the leader in the space means, and so we're happy to do that >> hey, brian, no argument that you are very different than what we're seeing with binance, the allegations that are made with ftx. those are flatout fraud charges. that is not what is in this complaint. but there could be some pretty serious repercussions as a result it's not just a technical issue. depending on how things are ruled on this, they are asking -- the s.e.c. is asking for disgorgement of your ill-gotten games and to pay prejudgment interest thereon they refer back to when you had billions in revenue. they are not alleging any of the things that have been alleged in the cases against binance and ftx. >> obviously, it's a serious matter, but you have to remember that we list over 200 assets the complaint just snames 13 of them, so it's a pretty small

percentage of the assets we trade. a lot of our revenue now comes from nontrading fees, almost 50% of our revenue, and we also have revenue outside the u.s., which isn't affected by this >> but the $6.8 billion in 2021 that they point to from transaction revenue, is that what they're talking about >> that would be 100% of our trading revenue in that year >> it's your understanding that's not what they're talking about? >> their complaint only references 13 of the 200-plus assets that we trade so, yeah >> let me ask you a different question just about -- given the challenges you're facing, i know we'll put binance in a different category, but the challenges the industry is facing, for those who are invested currently in crypto or thinking about it, what do you tell them today? where do you think this all heads over the short-term, medium term, long-term >> well, the fundamentals have not changed. crypto is the most important technology we have to update the financial system, and i think 80% of americans feel the financial system is in need of an update. it's too slow, too expensive,

it's not equal access for everybody. and so, crypto's being used for more thins too it started as this new asset class that people were trading sometimes speculatively, but now people are using it as a form of money and payments, and new types of financial services and things which have nothing to do with financial services like identity and artwork and voting and governance and web 3, the next application platform for the internet so, it's still very early days there's a lot work that we need to do as a company to make crypto easier to use, more scalable, and yes, get regulatory clarity, but i always tell people the same thing don't invest money that you are unwilling to lose. this is a new field of technology it's one of the most important technology fields in the world, but don't speculate with assets that you're unwilling to lose. >> i want to thank you, brian. appreciate you coming in >> thanks for having me. meantime, we have some other news a source telling cnbc that chris

licht, who runs cnn, will soon be stepping down the report says that someone will step in on an interim basis while warner bros. discovery's david zaslav, picks a new leader new york city is suing south korean automakers hyundai and kia for causing a public nuisance the city says the companies failed to install devices that prevent cars from being stolen after a social media challenge prompted young teens to steal vehicles by hotwiring them using, in this case, a usb cable. the city's complaint said, in its words, "making sure cars are not easy to steal protects both property and the public by keeping dangerous drivers and stolen vehicles off the road." in response, hyundai said it made immobilizers standard on all vehicles starting in november of 2021 and had taken

measures to reduce the threat of thefts kia said it's been working with law enforcement to combat car theft and the role social media has played in encouraging it the two automakers agreed to a $200 million class action settlement last month covering out-of-pocket losses for about 9 million car owners >> this is a crazy story >> hey, you can -- it's walgreens' fault that they're not nailing everything down in there. if you stand near the tracks, you think you're not going to get pushed it's your own fault if you're standing near the tracks >> it's a reflection of society. >> you're going to get pushed. just assume you're going to get pushed in new york >> right i couldn't believe this. >> you can get a vending machine for a crack pipe that's not locked. but you can't get prilosec -- not that i need it that's not what i'm saying nexium well, you know, gerd, things like that. you'll see some day. >> you're kidding me it's the car makers' fault

all right, an update now on the labor issues that have strangled traffic at west coast ports. union pacific railroad is no longer accepting exports or empty containers at its denver terminal that terminal that are destined for the port of los angeles. container traffic has been backing up at west coast ports amid work slowdowns and stoppages related to labor tensions meantime, jpmorgan's ceo, jamie dimon, meeting with a group of moderate house 2k democrats yesterday. he answered a couple questions from reporters and said this about the u.s. economy >> the thing about the economy is that today, it's still doing fine consumer's in great shape. home prices have gone up for ten years. debt's in good position. it's okay. we have issues down the road the excess money is being spent down, quantitative tightening, this war in ukraine, oil, gas, et cetera, and we have to deal

with those hopefully, we'll get through all of that. >> dimon also responded to this question from eamon javers >> reporter: jimmy, are you going to run for president >> i think the spokesman for jamie already said i have no intention of doing that. >> this year or 2024 or ever >> i never say never to anything, but no intention >> okay. pretty good. the new york city area has some of the worst air quality in the week because of smoke that's drifted south from wildfires burning in canada. >> blame canada. >> yeah. the u.s. government -- they're exporting that to us the air quality platform rated the five boroughs yesterday at levels considered unhealthy for all people and significantly above exposure recommendations from the world health organization officials warn residents to limit time outdoors and caution those with respiratory illnesses or heart disease to be especially cautious. air quality advisories are also

in effect this week in minnesota, michigan, and wisconsin. i guess we'll talk about chris licht tomorrow going to be a lot of people dancing on his demise if that's true he did -- that's -- john malone acknowledged needed to be done at that place, and you can't do that, though >> we're out of time make sure you join us tomorrow right now, it's time for "squawk on the street. ♪ good wednesday morning welcome to "squawk on the street," i'm david faber with jim cramer carl has the morning off let's give you a look at futures. we get started with the trading day. it's a hump day, jim it's wednesday >> you bet it is >> yeah, baby. we look like we may have a bit of a higher open we'll start with the markets the s&p 500 posted its highest close since august of 2022 you're going to hear w