the anti-defamation league for defamation. he blames them for the slump in ad sales on x. and disney has a message for spectrum cable customers in the dispute over fees. it says switch to hulu streaming ser service. it is tuesday, september 5th and "squawk box" begins right now. good morning. welcome back to "squawk box" here on cnbc. we are live at nasdaq market site in times square. >> thank you. >> welcome back to everybody. we can say good-bye to summer. summer is now past labor day. officially over.

i'm andrew ross sorkin. you can't wear white pants. i'm andrew ross sorkin with joe kernen and mike santoli is here hanging out for becky who is still off today. let's show you u.s. equities at this hour. we have a little bit going on. not too much just yet. the dow off 27 points. nasdaq opening down 58 points. s&p is off 9 points. treasury yields with the 10-year treasury is sitting at 4.224. the 2-year treasury at 4.910. have you noticed we flipped that board around, joe? >> the oil prices? >> no. the treasury board. that board, we used to run the 30-year treasury. the 30-year at the top and 2-year at the bottom because the way the world used to work.

now the world is flipped upside down and here we are. >> that is a good metaphor. mirror what is happening. you remember, andrew, years ago where were you on the show or before when greenspan said it. it's back. combine the 2-year. >> the 30-year used to be the one to watch. >> exactly. we should have done 100 about a year and a half ago. would that have worked? >> it would have worked, but the treasury cannot issue that much at the low maturities. the market cannot accept that. is it really moving the needle? they listened to the dealers and they have been skewing to the

shortened. >> i would be interested because it would show how optimistic your chances. if you buy a 100-year bond -- i may get out early. p if not -- >> you'll be there? and the country is going to be here. optimistic on both ends. >> and humankind might be there. with north korea and russia cozy. you want stuff to worry about? >> genuinely. >> you may not need that ev. >> goldman sachs is saying worry less about the u.s. economic recession. now a 15% chance that the u.s. will slide into recession down from the previous chance of 20%. the chief economist jan hatzius

says the hurdle for the november hike is significant. real disposable income is looking to accelerate on job growth and rising real wages. growing drag from monetary policy will push the economy toward recession. this comes after a jobs report on friday which was light on the hea headline number. an uptick in the unemployment rate. higher labor force at healthy levels. we can actually poke fun at the excessive precision. >> contra indicator? >> we did poke fun at it. these guys all do models. instead of taking the 5% less, does that mean anything? it is what is causing him to make that call. we make fun of analysts when they say i'm lowering or raising

my price target from 180 to 1831 183.50. they plug some number. here is my model. they plug it in. they tell us. >> we should emphasize goldman has been correct to this point. they are not expecting recession. the soft landing which seemed like a long shot six months ago is likely now. unemployment lows are not high enough to where you are worried about it. it is not enough time for rece recession. i think jan would point out in a random year in history, the chance of recession is 25%. he is more or less saying it is less likely than typical. you could get a shock. >> what bothers me about jan is he is not a morning person which irritates me. >> he comes on at 10:00 a.m. all

the time. >> that's my point, santoli. he is not on this show. we would like him to be on the show. i'm trying to poach guests live. >> jan. >> the world is moving. the money never sleeps. where are you? where are you? let's get going here. is that a good pitch? can i get him on? >> we'll talk more at 8:30 a.m. with christopher waller. >> he's a morning guy. >> he will join us in a cnbc exclusive. let's talk about moelon mus. he is threatening to sue the anti-definition league. he is accusing it and me of being anti-semitic. if this continues, we will file an anti-defamation suit against

the anti-defamation league. musk noted that x's advertising revenue is down 60% in the united states. alleging the pressure from the adl is part of the decision. adl said it is a matter of policy and does not comment on legal threats. it referred nbc news to the statement in response to the ban the adl campaign taking place on x. it is such an insidious effort which doesn't daunt us. it drives us to be unflinching in our commitment to fight hate. we had mr. greenblatt on the program many times. i thought they were having more of a meaningful engagement prior to this. >> no doubt if you recall

jonathan hernandez has been on. there were times in the past at how somewhat positive he was about what elon had said he was willing to do on twitter. it made jonathan feel better about his concerns for what the problems were. he said i talked to elon and felt better. now i guess that is off. it does set up. we have jonathan on. sometimes we set up an opposing viewpoint. that is a hell of a debate right there. if jonathan will come. >> you are booking guests live on air this morning. >> you know what i'm thinking? don't you follow elon? does he follow you? can you not dm him? >> i do not think he and jonathan -- i don't think. >> how do you know if you don't ask. >> that's true. >> you can do it on the qt.

>> now it is on television, sure. >> he might come on. he may need an mri. it is hard to know before he does. >> all right. coming up, we talk market strategy for the short week. stephanie link joins us after the break. and jared bernstein will speak with us ahead of the president's trip to the g20. you are watching "squawk box" on cnbc. >> announcer: this cnbc program is sponsored by ibm. ibm. let's create. he right ai for . introducing watsonx: a platform designed to multiply output by tailoring ai to your needs. when you watsonx your business, you can train, tune and deploy ai, all with your trusted data. let's create the right ai for your business ...with watsonx.

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the august slump is over, but september is the worst month for stocks. gives us her strategy is stephanie link. steph, good morning. >> good morning, mike. >> you know, i know you don't manage money by the calendar. we have to be aware of the tendencies of september which is the worst month historically. you see the market up 10% plus into september, september is not as scary based on past patterns. be that as it may, how do you think the market is set up here? we were up 2.5% in the s&p last week and down 2% for the full month of august. >> i would not be surprised if september is volatility.

it usually is. the economy is stronger than expected. earnings are troughing and the market broadening out is healthy. i would use the volatility, mike, to pick up stocks and sectors that are not technology to diversify my portfolio. >> actually, interesting that during the course of the third quarter, the first two months of the quarter, we have seen consensus estimates go up for a while. that is a positive sign. during the pullback in august, as you know, steph, the cyclical parts of the market did not buckle. they out performed defensive. i know you were tilting in that direction already. energy and industrials. do they still seem like the place you want to concentrate? >> i think so. that's where i'm overweight. i have been overweight all year long. i have been adding to energy. a couple of weeks ago, i added

to chevron which is down 12% and still down 12% on the year. it trades 12 times earnings and gives you a 4% yield. there are opportunities although energy had a nice run, there are opportunities there. anything tied on the industrial side and aviation is on fire and obviously onshoring is a theme as well. boeing and ge on the aviation side and free cash flow generation. ingersoll as well. you can put money to work, mike, those are the areas i would be buying. >> overnight, we got weak economic numbers from europe. purchasing managers index r revised lower. seems a bit of a struggle in terms of getting inflation going higher. people are worried about the chinese companies as well. does that come together to give

you pause about earnings power in the companies which are exposed? >> certainly europe with the growth there being sluggish. i think china will continue to stimulate there. i think on the consumer side within china is where i have exposure. you have the pent-up demand for being closed for three years and the reopening theme which hasn't played out much yet. we are hearing from companies, consumer companies, with exposure to the consumer in china which is starting to do well. that's the area where i want to be exposed. you want to look at estee lauder down this year. you want to see companies with exposure. you have to be patient. it is taking longer to see the recovery. >> for sure. we were talking about the jobs number on friday which seemed

like a goldilocks reading on the economy. on the other hand, you hear people say on the way to the economic downturn, it looks like a soft landing. you start to decelerate. you don't know the pace. what are you watching on that score? >> for sure, you are seeing an an easing a bit in the job market last we'ek with the j non-farm payroll and the jolts. i look at the leading indicator with the moving average of 237,000. recessionary times and that number is 350 to 375. we are well off in terms of recession. i think at the same time, unfortunately, inflation is persistent. fed will keep doing their thing. higher rates for longer. we have been able to see some sustainable recovery in the economy.

look at the atlanta fed gdp now at 5.6% growth. we have a lot of underlining momentum in the economy. watching jobs is the most important thing. watching inflation. we have been able to handle it so far, mike. >> those weekly claims, as you mentioned, is pretty good real-time sign of that. steph, thanks. coming up, we will talk about the return to office policy for several major companies. it is kicking off today. folks are headed back to the office. this is a tuesday. you think three-day week at least. we will talk about office mandates and debate about them after the break. at 8:30, don't miss the veorusive interview with fed gorn chris waller and where the fed is headed next. "squawk box" is coming right back.

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welcome back to "squawk box." summer is officially over and millions of employees are facing back to work at meta and blackrock and zoom today. joining us is jason greir of greir consulting. the work from home experiment, i think, is officially over. are we from agreement? >> it seems like things are changing. we talked about this a week ago. i'm tell you my position on this hasn't changed. i had a bunch of employers saying they love the fact that employees are coming back to the office. employees are saying we hate

coming back to the office. we have to analyze the world of work. who is to say any of it will with work in the long term? we don't know. >> what do you think will work in the long term? i think based on the conservation we had, you think you have to be in the office and there is no other way around it? >> i don't think there is one size fits all. for certain industries, there is an industry that works well with hybrid or remote work. there are other industries and goldman sachs and if they say you have to be in the office for five days a week, you are in the office five days a week or take your talents elsewhere. if you are pushing employes coto come back to the office, you have to come back to other needs. >> who got to you? is this -- this is a change for

you. who got to you? did you get twitter hate? what happened? >> you are asking better questions. >> i thought you were strident for the need for people back in the office for a myriad of reasons. i moved the other way. if you are doing something sitting at a screen, it is nice to be mentored. if you don't need to get child care or an hour to get to work or something, i can see how it makes sense in certain businesses. >> sure. here is what i think it comes down to is this, if your employer mandates you are in office five days a week, that is the employer mandate. you come in the office. if you feel that doesn't fit for you or your lifestyle, in terms of what has been created in past two or three years, you take

your talents else wwhere. it comes down to the employer mandate. if the employer says are you in the office, you are in the office. if not, you do elsewhere. >> the question i have is do you think there is a turn? we see the banks saying five days a week, minimum. that means six days a week for a lot of folks. do you think that will actually switch? >> i think so. >> the ceo of one of the big banks says, i could see this working out three or four days a week. >> i'm not sure. i think that for some of the banks, if they say you have to be in the office five or six days a week, that is the core issue for them. at the same time, we're living in a day and age where we see the union side and non-union side where we see employees are looking at strikes and employees are actively stating what they

want from employers. that cuts from white collar and blue collar workerworkers. we want a better work/life condition. it comes down to if the employer makes the mandate and the employee balks and takes talents elsewhere, maybe they need to take a step back. we still need employes to work to drive productivity and drive products and goods and services. >> different question. maybe a real estate question. five years out from now, you look at most of the big white collar service-oriented institutions, do you think they have a bigger real estate footprint or smaller real estate footprint? >> based on the number of card swipes across the country, they will have a smaller footprint. that is another thing to talk about. the mandate to get employers

getting employees back to work is the huge real estate buildings and they need to fill it in addition to the overall commerce from the community in terms of your coffee shops and restaurants which are dependent on the kpcommuters. the real estate footprint will be smaller because employers cannot afford it. >> we're seeing that story playing out everywhere. jason, nice to see you. >> thank you. >> who knows what i'll say next time? coming up, the senate back in session today. we will talk about the legislative agenda right after the brk.ea as if -- "squawk box" will be right back. >> announcer: executive edge is sponsored by at&t business. next level moments need the next level network. copy that. make a hard left down the alley. network's got you covered.

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good morning. welcome back to "squawk box" live at the nasdaq market site in times square. take a look the futures. looking to open in the red. nasdaq off 41 points.

the senate is back in session later today. joining us on the agenda for september is emily wilkins. she joins us from washington. i guess there is an agenda. will you come back in the future and talk about things that actually happened, emily? i don't know. i'm not optimistic. are you? >> reporter: i think when you take a look at everything they have to do, there are some things that congress absolutely has to get done. it is hard deadlines for programs with a lot of impact. there is a chance to get some of this done. if you look at the agenda, they have until september 30th to renew or extend half a dozen major programs and bills that will otherwise expire. this includes government funding. both chuck schumer and kevin mccarthy said they want to extend funding to later in the

year to giveissues. a group of hard line republicans are vowing to oppose unless it gives you lower spending. bill hoagland with the bipartisan center said mccarthy will need to partner with the democrats to get the government funded. >> that sets up for a difficult set of negotiations. i don't want to get into the politics too far, but i have to think this becomes a question of whether or not speaker mccarthy is willing to trade off a continued resolution for a potential motion to vacate his seat. >> reporter: government funding is not the only thing running out at the end of september. the half a dozen other programs run out on the 30th. that means congress has a lot of

homework. guys. >> emily, we'll talk more about this. let's bring in former senator heidi heitkamp of north dakota. she is now the director of -- she's smiling. she is hoping i do a fargo accent. director at the institute of politics and contributor and judd gregg. let's get you on a two shot. who wishes they were back trying to make this sausage? raise your hand if you wish you were back in that business. >> did you want to go back? >> neither one of you. heidi, you are like an academic now. you get to hang out. you get to wear the sweaters with the patches on the arms. should we expect anything?

as emily said, there are things that need to be done. >> you know, i watch really closely the farm bill, as you can imagine, and that needs to be extended. there are other programs. the issue is are we going to see a shutdown? if mccarthy cannot get his troops in line and figure out a way to continue that resolution that the freedom caucus would agree to is not a continuing resolution that the democrats will agree to. it is really jammed up in the house at this point. he has worked magic before. we will see how that goes. >> yeah, right. heidi, i know. it's "the post." i'm talking about "the new york post." all they are pointing out is president biden continues to brag and i'll mention this to

jared bernstein. he is the only president cutting the deficit. it was $2 trillion last year. it was post pandemic. what he had spent in the crazy days where we needed all that support to come down from there is really not something the american people believe that you can brag about that you brought it down. would you be inclined to propose more spending if you were the president right now with where we are? >> well, i think he is in a tough spot. the public now is starting to realize we cannot afford the interest payments. this was back when money was base bically free. neither party has bragging rights on this. there needs to be fiscal disc discipline. >> judd, i think voters are

starting to worry. they are not oblivious to what is happening. the handling of the economy and they can't get above water. 1 of 3 americans give them a passing grade. >> they shouldn't get a passing grade. this is a disaster. we are functioning like a ship of fools not recognizing what is coming at us. $1 trillion deficit and get-to-gdp ratio which exceeds greece and unsustainable. no effort to rein this in. the an proppropriations are fig over the small increases. the issue is driving all this is spending and the size of government exploded under both trump and biden. more so under biden. neither one has a concern about the debt. trump lived with debt.

he loved deabt. biden loves the monetary theory. you can print money and you don't have to pay the piper. your political watch is coming later. the problem is someone will wake up and say these guys can't pay back their debt without devaluing their dollar. you get a the dollar crisis. when you get a dollar crisis, the american people feel it in the pocketbook and standard of living drops. this is a solvable problem. this can be done again if the president wanted to stay a step forward and set up a working group with congress to an address the issue of how you slow the growth of entitlements without undermining the basic purpose of entitlements which is to protect the poor and single t women. it can be done.

it is inexcusable it is not addressed by anybody. both parties have walked away from that. >> that may address the cost side, judd. we have had people on saying the only way out of this is growth. >> growth is very important. you have to have economic growth, but it is hard to have economic growth when government is absorbing 24% of the economy. that takes capital that should be invested in the purposes of expanding the economy and moves it over to the non-functional structural constructive side of government spending which is inefficient in getting economic growth. >> that's a political divide right there, heidi. judd says the way you do it is to leave money in the private sector. i don't know, the president or you as a member of that party,

think you need to spend money to make money on things like infrastructure or investment in clean energy. which is it? >> infrastructure is something that if you don't take care of is another way to pass on debt and deficit to the next generation if we don't fix the roads or take care of infrastructure. the reality is until it becomes a voting issue for the majority of americans, we are not going to see political action on the debt. let's admit it. americans like it when they get free stuff from the government. somebody has to be the adult in the room and say we cannot afford this any longer. we have to build a political will for people to basically say we are not going to pay this amount of money in taxes to pay back the debt. the interest rate is a huge issue that no one is talking about right now. >> can i ask a different question, heidi and judd?

i don't disagree with you. we have to be conservative how we spend our money. where we spend the money with evs and electric this and infrastructure that. we haven't really talked about defense spending. i just wonder given the sheer number -- you know, healthcare is another piece of this. healthcare piece and defense piece with the article i was reading this weekend and how much money we are spending on the navy and how much cheaper we could do it if we wanted because of autonomous and smaller ships rather than the big ships that are almost political jobs programs, heidi and judd. what do we need to do? >> judd, it is a dangerous world. >> that is 13% of the federal budget. maybe 14%. entitlement spending is 60%. defense is discretionary. it doesn't automatically rise and hasn't risen.

it is an increase incrementally over the years of. heidi is right. we will exceed defense spending. entitlement increases every year. it is taking larger parts of the federal government's pocketbook. until you address the 60% of the government that is driving the spending machine and train, you will not get this under control. defense is a number you can look at and certainly there are all sorts of issues for the long term. >> we have to end it, heidi. sorry. i would like to go on. andrew is right. we can kill each other 1,000 times. do we need to kill each other 2,000 times? >> i don't know. i don't know how to do it. i care about defense. >> right. >> it is another discussion.

>> heidi and judd, thanks. we will continue it. we will take it on the road some day. thanks. coming up, the ceo of qantas airline stepping down early. we will talk about the scandal next. we will talk to dr. scott gottlieb about the weight loss industry and those drugs coming up next.

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the ceo of qantas airways is moving up retirement by two months over the firestorm of illegal ticket sales. alan joyce who served for 15 years is bringing forward his retirement. initially scheduled for november so the company can accelerate the renewal. the watch dog industry sued selling it sold tickets amid flights in 2022 after being canceled violating the country's consumer law. qantas issued two apologies. joyce's replacement, if you are wondering is vanessa hudson. and president biden weighing in on potential strikes at the three u.s. automakers. the president is not worried about the strike. he doesn't think it will happen.

uaw members are prepared to strike if the agreement with ford and gm and stellantis does not come to agreement by next thursday. and the chinese made vehicles rising by more than 9% for tesla. the ev maker delivered 84,000 vehicles from the shanghai plant. the jump coming after tesla cut prices and the revamped model 3. more on "squawk box" with the latest on the hollywood strikes and the cable carrier fees. we will talk to matt belamy coming up. a beautiful shot here of the white house here on tuesday morning.

welcome back to "squawk box." we will get to the latest on the hollywood strikes and the fight with founding partner. good morning to you. let's start with the state of play for the strike and i want to get to some of comments made last week. labor day was the day for many months you and i and so many others talked about the day that this would all get resolved and i am looking at my clarkock, an we're not there yet. >> yeah, i think it will start to be resolved next month. yeah, the two sides of the writers guild side and the studio side did go back and

forth on a proposal a couple weeks ago, and the studios thought they made traction, and they gave in on a couple issues, and the writers guild were not prepared to do that. two guilds, two unions are on strike at the same time, and they know on the writer's side they have extraordinary leverage they have not had for many, many years, so they are going for it. >> how cohesive is the producer alliance? the reason i ask, is there was a comment that disney is a differe different organization than a netflix or apple. >> well, barry is right, but they come together for negotiating the labor guild deals and it would be pretty difficult for them to break off.

there's a notice period. they could -- they have a written contract. the people left behind could sue the company that breaks away. it's not as easy as netflix saying we will just do this on our own, and they entered into the group for a reason and they are contractually bound, and it would be difficult. i am not saying it couldn't happen, but it would be difficult. >> coming after the pandemic, the whole movie industry is changing. i talked to you last night. >> that was swift. >> let's talk about this taylor swift with amc. you wrote a piece we are showing right now, and i was in telluride when i saw the piece, and i think we have a screenshot. you talk about how that deal came together, and you said swift's father was put in touch

with amc by a mutual friend, and i am the mutual friend, which i told you last night, and i saw your piece out in teleride, and i can't sit here and say i was not the person that was talking to scott that adam might be somebody that you should probably talk to, and i have been friends with both of these gentlemen for over a decade, and it seemed like a simple thing for me to do. i am have adam call you, and what happened, matt, and you know, scott wants everybody to be able to see the eras tour, and that's taylor's father, and the demand was he was looking for a way to do that, and he was not satisfied with the answer from most of the studios, and it's possible for amc to distribute movies now after the 2020 ruling, and i said give

adam a call and see what happens, and now we know what happened. >> the real question is, are you going to get a cut of this? >> no. >> investment bankers get fees for doing things like that. >> tell me about it. there's no way -- i am just -- we're friends. i am friends with both gentlemen, and i said to scott, i will put you in touch with the people at universal, and let's do that, but i don't think the swift team was hearing what they needed to hear from the studios, and now the rest is history. what does this mean about the future? >> the thing amc could offer the swift family was urgency. they wanted to get the movie into theater soon because the eras tour left the u.s., and

there are all kinds of infrastructure you have to deal with, and it was directing negotiating with the ceo, and he wanted it to come out on her birthday, october 13th, this year, great, we will do this. universal happened to have a big movie planned for that day, the exorcist, or the sequel, and they couldn't have done it that day, but amc could. >> and paramount was talking about 2025, and the swift family wanted to have it out co wednesday dent with the eras tour, and 2025, and that shows you how cumbersome it is to work with the conventional hollywood

model looks like? >> yeah, they think in terms of two and three years out. but i don't know what the specifics because offered to the swift family by the studios, but you have to put it out when the studio in this case -- which is the swift family, they own it, and you would think they would be able to work something out sooner than when they wanted to get it out, but the studios had their slate set. some of these movies from the studios are getting pushed to 2024 and beyond because of the strikes, so there's a little bit of a lighter release schedule this fall than normal, and amc took advantage of that. this is a movie that domestically could gross a couple hundred million in the theaters. >> taylor is very smart and surrounded by a smart team, and her parents are both really

start, and i should point out, i mean, i do talk quite a bit -- this was nothing unusual, and i was shocked after the initial conversation, and i was shocked when it was really happening, but it's a big story. thank you. i am not sure i really like being part -- we never want that, do we, sorkin, being part -- >> well, it's happening to sorkin as well. >> yeah, it does. mr. deal book all over the place. >> matt, thank you, and nice to see you. coming up, holdings just filing the paperworkth, e oerpl holdings' ipo filing. "squawk box" is coming right back. to address operations issues? we can help with that. can we provide health care virtually anywhere? we can help with that, too. is it possible to survey foot traffic

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good morning. goldman sachs with a more op mystic outlook on the changes -- or the chances of the u.s. entering a recession. 5% less. and then disney at odds over a new distribution deal.

we're going to talk about the move and what it means for tourists and travelers, as the second hour of "squawk box" begins right now. good morning. welcome back to "squawk box" here on cnbc. we're live at the nasdaq market site. becky is off. i am andrew ross sorkin along with joe kernen. and there's red after the labor day, as summer ends. it's not officially, but it kind of is -- >> yeah, white jeans for the season is over. >> yeah, it's over. the s&p is off about 8 points. treasury yields, and in the 6:00 hour we mentioned -- oh, they

flipped it the opposite way. we had it, and the two-year was at the top, and now 30-year is not the most important anymore, and the two-year at 4.94. >> with a.i., we can have you photo shopped in white jeans -- you never had a pair of white jeans, do you? >> i own pair of white jeans, and they get amor advertised -- once a year. you? >> no. >> you? >> no. >> what i am interesting in, the pants at the bottom, i don't know how you get them on, i want some of those? how do you get those on. >> tapered pants. >> do you step down into them? >> you go like that. >> do you have those? >> okay.

okay. we have breaking news on the ipo front. leslie has been dig into the news around this and she has more. >> andrew, filing an amended ipo. this implies an offering size as high as $4.9 billion. they are seeking valuation up to $55 billion. a whole host of its customers, apple, nvidia, samsung and others will participate in the offering by buying a combined $735 million worth of shares at the ipo price.

last month soft bank purchased the 25% of the arm from the investors' vision fund, so this ipo valuation on a fully diluted basis implies a discount, and there could be an increase in the range if there's enough. the semiconductor industry started the year very strong thanks to all the hype around a.i. and the chips that power it, but chipmakers have gone sideways over the last few months or so, and arm makes chips for smart phones to sensors and super computers, and it's working with alphabet and mercedes and nvidia to deploy technology to feed into the a.i. hype as well.

arm will continue to market its deal with an expect the debut by next week, guys. >> leslie, thank you. we will see what happens. it's will be an interesting one to follow. >> it is. that 14% discount, leslie, to the last valuation, the private market valuation, i wonder if that will be a standard discount of an ipo at this point as well? >> yeah, that's a good question. the deal they did last month was an essentially an internal deal, they were buying it back from their own vision fund, and so you don't have the full -- one would assume it's 28, yes, 28 bankers working on this deal fielded enough of a sense of the market to come up with the $55

billion fully diluted range. we will see if the market agrees, and if there's enough demand they can increase it. >> yeah, leslie. thanks a lot. goldman sachs sees a 15% chance the u.s. will slide into a recession and that's down from the previous chance it gave of 20%, and the resilient labor market may suggest they do not need to have anymore hikes, and he also said the firm disagrees with the notion that growing drag from monetary policy will push the economy towards recession. in the holiday shortened

week, senior economics reporter, steve liesman, joins us now, with more. what is going on, steve? >> good morning. yeah, the general few is the fed welcomed all the data last week that had modest gains in inflation and jobs. markets say you can stop guessing of that as of this morning at 8:40, as we will have a discussion with kris waller. one thing to listen for, how much weakness there was in the jobs report. was it was a one-off wonder or the start of guessing, and that's one of the questions i have.

and trucking minus 36,000, and workers on strike with the hollywood strike, down 18,000. and teachers down 15,000, probably a seasonal adjustment here. in the household report, check it out. last august we brought in $724,000, and that led to a 0.02% unemployment rate, and now increase the unemployment to 3.8%, and now there could be something going on to the adjustment into the workforce, and last year the unemployment rate came back down after the august increase, and then the question is will the fed wait until september and make a decision in october, and we will see if that's, indeed, the federal reserve's plan. >> steve, thank you. friday was a data point. what is next?

>> we have another cpi report, and i guess that is next week. this week is quiet. the point is they have a bunch of inflation reports, and they are going to get a couple inflation reports and another employment report, so not having to make a decision right away. there's lot of questions as to the august report if people think it was as weak as expected, and some people that are employed, do they find work in september? that would be another sign of the strong jobs market. >> yeah, the next meeting starts on halloween, so we have a little ways out before we have to make that call. >> scary. for more on the markets, let's bring in ellen hazeman.

>> thanks for having me, mike. >> where do you see things from here? it looks like the soft landing is the consensus, and the markets might reflect that already, and we were up last week for the s&p, and down modestly in august, and how does that present to you as an investor go into the fall? >> no question the market front loaded a lot of the improvements we are seeing in the economy right now, so if you look at the first half of the year you saw massive multiple expansion across the s&p 500, but particularly by the big tech stocks but across the broader index as well, and it was like the rocket, and the rocket went up, and that's the first stage. we believe there's a second stage. if you look at earning estimates and second quarter earning

results and the labor market you were just talking about, and if you look at other measures, it does look at those earnings and the economy are reaccelerating into the back half of the year compared to what people thought before, and that may very well support the market, and the market usually does not decline when the data point is positive. >> yeah, it's interesting to frame it that way. you have to remember, we did have a modest earnings downturn, but you did see year over year in declines, and then you had the earnings recession, and then the market leads the recovery, and that's the bullish case. you see a lot of folks focusing on the lag affects of what the fed already done, and the fact we have seen deacceleration in the labor market, and consumer

spending? >> earnings estimates are going up now. if you look at q2, earning estimates were supposed to be down 9%, and they ended up 5.5. the analyst starts off too optimistically, and it's not enough to make a trend yet but it's encouraging. what could get in the way of this is sustained hiking programs, so if the fed hiked in september and again in november, in the absence of materially higher inflation that could get in the way of it, but i agree, the market correctly predicted the earnings recession would be fairly shallow, so in order for that to continue is for earnings to continue to grow. if you look at the jobs numbers, yes, it's been decelerating for a while but the last three reports have been up, up, up. as we look at the overall market it looks as though we are avoiding a recession for the

moment and the earnings recession looks like it's fairly shallow. if you look at where the earnings estimates increased most after the second quarter reports, it was in the procyclical sectors, in tech, and consumeconsume skdiscretion. >> do we not need longer-term bond yields and rates to come down for that to work? >> housing has been more affordable, and we have seen the 30-year mortgage rate, but there's a structural shortage of housing, and with the stronger jobs numbers, and importantly, as you noted earlier, more people entering the labor force, and more people have money to

buy houses, and we think at this valuation, you don't need a lot to go right with that, you just need things not to go wrong. if we saw higher bases points, that could be a dent in it. but aside from that, it could be 150, $160 stock, and they could earn $60 a share in a couple years if rates don't go too much higher than where they are now. >> thank you. >> thank you for having me. coming up, the risks and rewau rewards of a.i. we will talk to one author. but before we do that, let's check the market. "squawk box" coming right back. i was told my small business wouldn't qualify for an erc tax refund.

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plus one line of free mobile for an entire year. it's the mobile made free event-happening now. get started for just $49.99 a month. plus, ask how to get one free line of unlimited mobile. comcast business, powering possibilities. welcome back to "squawk box." a new book is out. our next guest is one of the early revolutionaries, if you will. he was the co founder of deep mind which was acquired by google. "the coming wave," his new book out today. you were one of the originals, the ogs, if you will, in the a.i. revolution. it's called "the coming wave," and you are getting the book out now because you think the wave

is not about to crest, but it's coming and coming fast. how quickly is this moving? >> intelligence is the most valuable tool we have as humans, right? what we are seeing is we are able to disstill that intelligence, the ability to plan, predict, organize information, and create new things in anni an algorithm. each of these are ten times charger than the previous one. >> how much is this a hype cycle? the reason i ask is a lot of us have played with chatgpt, and a lot of people use it on a weekly basis, but not for things that are mission critical yet? >> right. >> when does it become critical? >> well, if you compare it, you

will see how different the capabilities are. the models are getting more controllable and you want them to be factually accurate and produce the same behavior over and over again, and that's the remarkable trend we have seen as they get bigger, they don't get more dangerous but easier to control. >> how much are we supposed to worry? even you, i think, are not clear on how it all works? sometimes we talk about the huh hra hallucinations? >> hallucinations are an issue, and that's the moment they don't produce the same output over and over again, but they are doing a much better job, and so in my book i try to layout what the trajectory might look like over the next five to ten years. >> five years from now, we are

sitting at the table, and how is our life -- everybody here, changed? >> everybody will have a personal intelligence that knows you that is super smart and understands your history and it can preserve things in its working memory, so it can reason over your day and help you prioritize your time and invent and be more creative, and it will be a research assistance and a coach and companion, and it will feel like having intelligence as a commodity, cheap, widely available, making everybody smarter and more productive. >> when you say that, so before this interview, and i knew this interview was coming up, and i got a pdf that was sent to me of the book, and we had a producer go through the book as well and we looked at different things, and i read an old article in a magazine, and the question is, that took me sometime to do that and i was googling around and

doing stuff, and we have met before and have known each other, but in the future, would i just say he's going to be on the show tomorrow, just break it down for me, write out five questions? would the five questions be good? >> at the company inflexion, we have the ultimate synthesizer of information, and that's what a smart aide will do for you, capture the key points you need to know given the context, just like what you described. in five years, everybody will have their own chief of staff. it will intimately know your personal information and be completely aligned with your interest and manage and process -- >> we both have those already. you do too, don't you? a mrs. >> joe just went to telluride -- >> in white jeans. not really.

>> but, for joe or anybody to go on a trip or conference or an event, typically you might get invited, and there are lots of people in the audience that have had this experience, you have to email back to the event organizers saying i will come, and organize the hotel and you have to get the flight and the car to the airport, and you might need another car from the airport to the hotel and might need to cancel meetings happening during the event you already planned, and i could go through 15 or 20 permutations, and many in our audience have an assistant that handles -- >> you couldn't do that right now, but we are definitely on a trajectory where all of the capabilities you described -- >> where you say "go" and it

magically happens? >> yes, and these a.i.' will talk to other a.i.s -- >> let's talk about mission critical stuff, and in terms of mission critical, one of the things that is fascinating, and elon musk was on x about a week ago showing off some new features of the full driving service. >> right. >> he says it's based on a.i. it's no longer an if then program, it's now being done, and do you say to yourself, boy, this is totally going to work? do you say i am completely worried about this? what happens if it's hallucinates? >> well for it will work, but it's time scale, to your point. there are some people concerned about self driving cars for quite sometime, and putting that

into the real world is ten times harder than putting in software, and that's a much lower barrier into entry. this is going to make everybody more productive. a kilo of grain today uses 2% of the labor it needed 100 years ago, and we are on the same trajectory for white collar work, and you can argue if it's 10, 20 or 30 years, we are on the trajectory. and the jobs question is a real one, and that's a question of how we -- >> are you more worried about that or more worried about the safety and security -- >> short-term i am worried about misinformation, because these are known problems and these tools will exacerbate the known problems, and it will be radically cheaper for anybody to produce misinformation, and

that's a known challenge. >> blue-collar and agriculture workers disrupted, and you said it was going to happen to the white-collar workers? >> in the long-term, we have to a adapt and make -- >> busywork, and digging holes and filling them back up? it's like big fat people playing games and getting paid to eat? >> the reality is if it makes us more efficient and productive, it will give us time to be much more creative and attack the sal chungs we need to attack. this will be the most productive century -- >> well, when it has a billion times as much knowledge as our knowledge, we don't have to do

anything. >> the sing layer tea is too far out. >> i can't -- >> we have to run, but what is the coolest thing you are using a.i. right now? >> the first few pages of my book were written by an a.i., so see if you find it convincing. >> thank you. we're coming right back after this.

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. we will start with shares of oracle up roughly 1.5%, and the cloud computing company is being bumped up from equal weight before. they cited among other things a higher profit margin as oracle's service as well as the oracle cloud infrastructure unit as well, so those shares up 1.5%. and then shares of american express up just about maybe half a percent or so and it could get more help from the upgraded credit card payments, and they cited things like their premium customer base and the strong asset quality and then you have

shares of lowe's which are thinly traded so far, but could get help analysts or at bernstein. they like better trajectory for market expansion, and better mack troe trends in home improvement. we will end in domino's pizza. they have upgraded to an out perform to market perform and raised the target price, and they decided more menu innovation, and favorable risk reward, joe, at current levels. domino's pizza up 1.25%. >> preaching to the choir, dom. >> you and i both. and then discussing a new rule taking affect for airbnbs.

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the weight log drug is advancing the roll out in europe, despite the supply concerns, and joining us now -- now we are pretending covid is a thing. we are starting with a weight drug? i understand it's popular, but the first lady has covid and she's married to president biden. we are in a different -- i still think we ought to talk about that first, scott. we are in a different place now but i heard of a lot of people i know that have it, but i have not heard of any serious cases yet. is that because people have immunity? >> yeah, absolutely. we have a tall wall of immunity, and most people have been infected with it and multiple times, and most people are

evacuated, and this strain that is circulating right now is not more pathogenic, in fact, less pathogenic than delta was. there's people still getting sick and you are seeing hospitalizations going up. not anywhere where we were at this point last year, but close to 20,000 people hospitalized right now with covid, and we are doing a better with the impact and there's infection and people need to be protecting t themselves, but we are in a much different situation than a year ago, and certainly two years ago. we are learning to live alongside the virus and pro proouprotect ourselves. >> thank you, scott.

that sums it up. now, weight loss, anybody going to diet? you need a lot of arrows in the quiver to fight obesity? i want to work out by getting electroeds stimulating my muscle so i can read and not have to do anything, and this seems like to have a short cut? >> we have a weight issue problem in the united states, and it's causing a lot of excess death and disease in the united states. people with the diet and weight loss and exercise won't work, and people can't maintain a discipline to stay on the programs, and if those individuals have excessive weight, these drugs can be beneficial, and there are people who are overweight and have a history of pmi, and we also saw

a study last week showing profound reductions in heart failures in patients who are obese and had heart disease and heart failure, so these drugs could have an influence on their health. the uk approved this under the requirement that people have to be part of a 12-week program of diet and exercise, it's a weight management program, so it will be hard to access in the uk, and they limit it to people with a bmi of 30% and above. there's a price between $275 to $350 if you look on the websites of some of the uk pharmacies, but people can pay out of pocket for it but the uk government is restricting access, and novo can't supply it to that market,

so for the time being it will be married up. >> so above 30 for a bmi. above 30. >> yeah, i said recommended, actually, of 35 -- >> that's pretty fat. that's a person living in a large body, 35, unless they are very short. >> right. i think a bmi of 30 itself is somebody who is 5'10" and 235 pounds, and that's somebody heavy as well. >> heavy. you're nice. is the technology moving to where there will be a different one introduced? do we know how to do this now? we know the mechanism? there will be major companies that get into the very lucrative business? >> yeah, look, a lot of companies have products in development, including pfizer, and i am on that board, and some oral drugs are currently on the

market. i think phaupb skwroer yo from eli lilly, i think you will see a lot of people start on that drug as well, and novo cut back on the first doses in the u.s., and there are other kinds of formulations come into the market. there are triple gs also implicated in the same pathway, and they look to have more efficacy with fewer side effects. >> when do you think we will see the oral drugs in a meaningful way? when does that hit the market? any sense of timing wise? >> well, my guess is these are 2025 events, so late 2024 events, and i am not sure of the

time wise, and there's currently raw bell sus on the market, and you can't achieve the same dosage levels to get weight loss, and the drugs for diabetes, they use four times that dose for the weight loss indications, so you are taking a much higher dose to achieve the weight loss. >> a lot of people are not talking about it as a weight loss drug but an addiction avoidance drug, and folks that may not be overweight or obese are going to start taking the drugs, and somebody said to me the other day, we are going to be microdosing some version of the drug? >> yeah, there are two questions. is the public health benefit we have seen from the drugs like the reduction of the morbidity, is it just weight loss or is it

having secondary effects, and there was an analysis saying most if not all of the issue we are seeing is because of the weight loss, and that's having a distributed public health and medical benefit to the consumers, and that will help to answer that question. the other question is are these having a central affect as well as a local affect? we know they have early fullness, and are they having dopamine pathways where they are reducing cravings and -- >> i have a friend who takes this stuff, and he was saying -- no, no, and he was saying -- >> i have a friend. >> i am not saying it, not yet, and by the way, i almost want to, because we said food is taken off the table. for those of us who have no discipline where the basket of bread comes to the table, he says you never want the whole

basket again. there's no sense of guilt and you are not thinking about food all the time or how much to eat or not to eat, and i thought that was fascinating. another person was at the table saying, as i said, we could all be -- no matter what size you are, microdozing this stuff, taking a version of it to deal with the discipline addiction that many of us, including myself, by the way, have to food. >> they are being looked at for that, and those kinds of indications. we are going to have questions -- answers to those questions pretty soon. >> i looked up your bmi, and i was estimating, and scott i will not do yours, 6'2", 175. you are at 22 -- >> yeah. bmi calculator -- >> that's incredibly healthy. >> yeah, i feel good. >> scott, about myself, i cannot take that drug, that thing about being -- i am not allowed to

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welcome back to "squawk box" this morning. new york is going to continue enforcing a new law that regulates airbnb rentals in new york, and it could amount to an effective ban on short-term rentals. >> starting today short-term rental hosts in new york, that's airbnb, they will have to register with the city and comply with the new law that states you cannot rent out your entire apartment for less than 30 days, and hosts face fines of $5,000 per violation. there are about 40,000 airbnbs in new york, and rampant abuse led to a lot of neighbor and

building complaints, and city council members say airbnb raised rates in new york after they have taken the inventory off the rental market. the thousands of new yorkers and small businesses who rely on home sharing and tourism dollars to make ends meet in a very expensive city. hosts say registration is almost impossible, and many avoid it months for approval, and city councils in dallas, and other places have enforced these rules, and this will be the test for new york starting today. >> just before enforcement in hard, and there are work around -- it seems to me that's what seems to happen is somebody finds the way through. >> all of that. and also the rules are all different. in dallas they sectioned off

neighborhoods of banning airbnbs, and in philadelphia you only could have a few and not under the same hosts, and i don't think new york will be able to go into an apartment and say are you there while your guest is there, or are you not there? they will not be able to do that. >> there's almost an industry around airbnb to bought properties to rent them? >> yeah, it's huge. airbnbs in has not matten was about five million, and that's just a share of what people were making. it's not just pwbuying apartmen but -- >> they were renting them and then re-renting them. >> yeah, at a higher rate. >> yeah, they were renting dozens of apartments and

rerenting them for mere, and it will help hotels and rents that reached a record high in july, but it will all be about the enforcement. coming up, a contract dispute between charter and in. we'll spieak to rich greenfield about that situation next. and later, christopher waller joins us for an exclusive interview at 8:30 a.m. eastern. the futures tthors is mning, ve modest losses. s&p down after being up 2.5% last week. the two most important things in golf are your swing and your style. dick's sporting goods has everything you need to upgrade both. find top-rated drivers and irons from callaway, taylormade, titleist and ping.

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sign up for xfinity rewards now. new this morning, warner brothers discovery warning that the writer's and actor's strike will have a material impact on the company's bottom line. it says adjusted ebitda or cash flow for the full year will be negatively impacted by approximately 300 to $500 million, predominantly due to the impact of those strikes. meanwhile, charter communications and disney are locked in a contract dispute, causing millions to lose access to u.s. open, college football, and possibly monday night football, just days before the nfl season starts. joining us now, rich greenfield, light shed partners to get into the details here. rich, tell me how this situation is any different, if it is, from all the many carriage disputes we've had over the years between the cable distributors and the

networks. we have had these standoffs, these temporary blackouts. but i'm noticing the media stocks and cable stocks were down on this news. it seems like there's concern that the whole business arrangement is at risk. >> i think if you simplify this down to one simple fact, charter's video business is now marginally profitable. so they care less about the video business than they ever have before. it's just not profitable anymore to offer all of these high-priced networks, especially sport networks like espn, and not be able to pass enough of that cost along to subscribers, at the same time that charter feels more confident that if they lose access to disney channel, espn, abc, that consumers now have easy choices. meaning, they're not going to cancel charter broadband. they'll keep their charter broadband, and go get youtube tv, they'll go get hulu live. they'll go get sling. remember, in the past, you would actually be told by your cable

company, remember, time warner cable years ago, come to our office and pick up an antenna, so you can get an over the air version. no one's doing that. that was not a real solution. now you have real solutions, click of a button, within 30 seconds, you've restored those networks. you've gotten rid of your charter video service. charter, since they don't make money on it in any meaningful way, they don't care about it more, they just care about broadband. the business of cable has changed. it's not about video, it's about broad band. that's why this battle is different. and you have a ceo in chris wome wimfry, they own your parent company, nbc universal. >> charter is agnostic as to whether you take the video package or not. at what point can disney be agnostic? they do have the different distribution options, you can get espn through different means. but it seems to me all about,

what price point do they have to offer espn to, to the real-core fans to make it viable, relative to the cable model. >> mike, that's an incredible question. and it's the only one that matters. here's the simple math of the way to think about it. charter has 15 million subscribers, just about. a little under. my guess is, roughly half, probably a little bit more than half don't care about espn. probably 45% care about espn, abc, and will switch providers. but that means, if over half of subscribers are okay losing espn, because they're not die-hard sports fans, they're not even like really passionate, they'll figure out a way to get a game, go to a bar, go to a friend's house, if disney loses 8 million subscribers, that's $1 billion of revenue just on espn alone. they probably get over $11 a month from espn. disney can't withstand that. so, yes, they recapture a lot who go to other services, sure.

but for the people that don't care about sports, the beauty of the bundle was that everybody paid whether you wanted the content or not. this is basically putting to the test how many people actually watch and care enough to pay for espn and switch for it. my guess is, unfortunately, for espn and other sports networks, it's less than you think. charlie errgan did this with the rsns and it proved to be financially brilliant for dish. >> a real quick one. real quick. do you see, though, this idea of these extras being included with everything? take espn out of it. meaning, whatever extra services you think come on these services have to come on the cable carriage fee, too. if you know what i mean? >> look, 100%, andrew, what we wrote in our piece that you just published that you should have in your inbox, my guess is if this battle is just over lower penetration requirements, meaning, you know, they have to take 80%, subs have take espn today, that means it will get resolved.

if it is what you just said, meaning it's a hard line and they're not going to cave unless everyone who takes charter or video service gets disney plus and hulu, that's a big ask for disney. it makes sense. all the great content has moved from the bundle to disney plus. it's what started with peacock. if you signed up for comcast, broadband or video, you got peacock, because they put more and more of the good new programming on to peacock. that model's now changed, but that is certainly what charter is saying, hey, we want these networks, because they're effectively where all the good content is now, and you're making our consumers essentially pay twice. if that's the issue, this battle is not ending anytime soon. >> yeah. >> and i'm sorry to say, it could actually be permanent. >> yeah, the battle to rebundle, in effect. rich, thanks a lot. we've got to run. >> okay, coming up, white house cea chair jared bernstein will join us in just a moment. ♪

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oooooohhh... automatic sashimi! earn cash back that automatically adjusts to how you spend with the citi custom cash® card. good morning, stock futures slightly lower. we're going to talk about the potential market catalysts to watch. >> and arm holdings filing new ipo paperwork with an updated price range for its public debut. we'll bring you the details,

straight ahead. and goldman sachs now saying a september rate hike is off the table. we'll ask christopher waller about that. the fed governor will join us in an exclusive interview. the final hour of "squawk box" begins right now. good morning and welcome to "squawk box" here on cnbc. live from the nasdaq market site in times square. i'm joe kernan along with andrew ross sorkin. the futures just turned positive and the dow up fractionally. the nasdaq still indicated down a little bit and the s&p off about five in the first trading day. europe traded yesterday, it was mixed, but first real trading day after we saw what happened

on friday and how that affected treasury yields. you can see the 30-year is back on top, andrew, i don't know. 4.33. ten-year, 4.22. we were flipping it around for a while. for a while, we had it inverted. the two-year was on top and ending with the 30-year. so we can do either. >> we can flip it around however you'd like. two-year at the top, 30 at the top. we should probably just make the board 2-year, 10-year today. or maybe leave the 5-year in there. >> i guess it's okay as is. we can do it all. >> meantime, let's show you about some news this morning. arm holdings starts this morning with a new s.e.c. filing that revealed a price range of $47 to 51 per share. it includes restricted stock

options and arm, seeking a valuation in total up to $55 billion. arm revealing that a whole host of its customers, apple skand nvidia, amd, alphabet, and intel will combine nah offering at that ipo price and the stock expected to be in trading on the nasdaq midweek next week. meantime, i want to get back to the trading day ahead. . i'll just turn you to tell you that way. >> while we were looking at the s&p 500, it was a strong week, 2.5% gain last week for the s&p 500, minimized the august decline. we had about a 5% peak-to-trough decline in august. bottomed out in the 4300s for the month, around 4330ish, thereabouts. and that keeps in place these

gains. a lot of talk about september with its weak the end sis. it is the worst month for stock returns. it has actually been a little more positive than that. so not so bad. joe mentioned europe trading yesterday. we had some weak economic numbers coming out of europe. the pmis were very soft. here's the u.s. market, relative to the euro stocks 600. you can see that they were really in sync for the first part of this year. as a matter of fact, over two years, they've more or less been in lockstep. here's what happened. that was in march, right around the time of the u.s. regional banking crisis and all of that money rushed into the big tech stocks, where the u.s. kind of has a global know mmonopoly on f.a.a.n.g.-type stocks. but cyclical stocks have held up better than defensive stocks in the u.s. because we have had that really surprisingly resilient economy and the economic surprises have

been coming mostly to the upside. take a look at the u.s. dollar index. that also reflects some of that pattern. kind of pushing the upper end of this range that we've had. so you can see that big surge last year. this was all really about a flight flight-to-safety and a tough market as well on the fed. we've come off that as we know the fed was close to writ needed to go. now, you need to see the dollar regain again, because maybe the european central bank might be done. it's a little bit of a dicier, you know, kind of equation in terms of how much rates are going to go up here, versus the rest of the world. and you see, again, just on a relative economic performance basis, the dollar is also doing pretty well. we'll see if the u.s. companies and earnings -- on an earnings basis can handle that, joe. >> all right, mike. thanks. let's talk goldman sachs. goldman sachs downgrading, in this case, it's a good downgrade. downgrading the odds of a u.s. recession from 20% to 15%.

economists yan hatsia says a september rate hike is now off the table. let's bring in jared bernstein, chairman of the president's council of economic advisers. jared, thanks for joining pups good to see you this morning. what is the message that you're bringing us today, as you do, from all -- all of the president and all of his men? what point do you want to make? >> men and women. >> men and women. let's start with jan, a great economist. i know you have jan on frequently. he's a prize-winning forecaster. the reason he gave for the markdown from 20 to 15%, which by the way, 15% is the unconditional probability of a recession in any given time, were three factors, encouraging news on inflation, favorable real income, which of course, is related to encouraging news on inflation, and what they call over at goldman the closing of the job worker gap. meaning, cooling in the labor

market, realigning supply and demand. so i think the overall macro message from our space is that bi bidenomics in action is helping to build the economy from the bottom up and the middle out. and the tight labor market better realigned, as jan suggested. the tight labor market is now supporting real-wage gains. that is wages beating prices that feeds into disposable income, consumer spending, and you have this virtual cycle that i think led to goldman's downgrade. >> we had a couple of former senators on. judd greg and heidi heitkamp. and i mentioned some of the things that are out in the morning papers, jared. i don't want you to just shoot the messenger. i guess the journal and the "new york post" are both rupert murdoch-owned entities. that's probably the excuse that i always hear. here's the cover of "the washington post." libor and it talks about how the

president constantly talks about cutting the deficit, when, in fact, that's going to be $2 trillion, double last year. and the cuts that he did make are based on cutting from the pandemic level. so it's kind of disingenuous. all of that taken together, it leaves a very sour taste in most people's mouths. and we talk about it all the time, if you ask them individually about certain things, they're more optimistic, but only one third consistently of americans think that -- buy into your contention that bidenomics is working. maybe you need to come on every day, because it's not working. >> i certainly don't have the luxury of doing that, but let me talk a little bit about bidenomics and people's sentiments about it. the polls you're reflecting are sometimes 30,000 to 40,000 feet up. i'm not discounting them, i know they're real. but i want to talk about poll

results that ask about the specific components of bidenomics, 82% support capping insulin costs for seniors at $85 a month. 81% support giving the government the power to negotiate for prescription drugs. which is now in the system cuts the deficit by $100 billion. 79% support creating tax incentives. 800,000 manufacturing jobs since this president has got here, and some really great investment indicators with investment coming off the sidelines. 77% support capping out-of-pocket costs on prescription drugs. that's also coming into play. now, look, my point is that you can barely get americans -- 80% of americans to agree on anything. and here they are, line after line, agreeing about the importance of the components of bidenomics. so i think it's an -- an inaccurate narrative to declare that somehow bidensomics isn't

working or it's not favorably received by people when you drill down intowhat it actually is. >> jared, i'm curious about how you're thinking about employment. look at the employment numbers, just statistically, and boy do they look good. and i don't want to take anything away from that. but one of the things we're seeing is a reshift, in fact, from different types of industries and the like. but you're also hearing, at least anecdotally, from a lot of small business owners and others and especially big tech and elsewhere, just how much unemployment really is there. and whether you worry that that anecdotal evidence that we have now carries forward in a way that aren't in the numbers today, but will be in the numbers several months from now. >> well, i'm kind of paid to worry, so i kind of worry about everything that's around the corner. and it's hard to see around the corner. however, the plural of anecdote are data and the data are strong. the job market, we've had on unemployment rate below 4% for 19 months in a row. that's a 50-year record. and as i just mentioned, i think

we should consider the dynamics in answering your question. so it's not just a stand-alone labor market, of course. it's key to this fly wheel mechanism that i described. strong labor market delivering strong nominal real -- i'm sorry, nominal wage gains. at the same time, inflation has been coming down with some speed. that's one of the reasons for yan downgrading his recession probability, okay? so inflation is down two thirds from its peak. that is leading to real wage gains. wages beating prices, that supports disposal income and that supports consumer spending, which is 70% of the economy. so i like the momentumwe have, but, yes, of course, we're going to look carefully at any of these anecdotes, but end of the day, you know, we're going to focus on the data. >> jud greg was on the bipartisan debt commission, jared, and he still worries about our trajectory. i'm just wondering what -- how

do you think we should -- andrew brought up defense spending, jud was more talking about entitlements, things that need to be done. but however you slice it, with interest rates where they are, much higher than where they were, the debt service on what we've already accumulated is going to make it tough to have anything left over to spend on anything else. can you introduce new programs, or do you think we need to digest what we've already done and try to find out, try to find a way to pay down some of it? >> let me mostly agree with you there, joe, which is that we require some fiscal consolidation. i think that's very clear, and you're right to cite a spate of articles that came out over the weekend, recognizing this. so let's talk about what president biden is bringing to the table. $4.5 trillion in deficit reduction, either proposed or enacted. let's talk about ten acted part. $1 trillion off of the deficit as the covid relief measures roll off, but it's not just

that. it's also the fact that getting to such a stronger labor market so quickly, a strong economy more quickly than cbo saw coming by a couple of years has helped generate more receipts. so that's $1 trillion already on the books, less deficit reduction. $1 trillion less deficit -- $1 trillion of deficit reduction from the fiscal responsibility act that closed the debt ceiling argument, and then, $2.5 trillion in both spending cuts and fair tax increases, only above $400,000. nobody under $400k get hit in our budget. so we think we have both an activated and a proposed program to address this problem. we need to work with congress. we can't do it by ourselves. and look, if one party is saying, we will never raise taxes, even on millionaires and billionaires who pay an 8% effective tax rate, something this president just foundationally disagrees with, we're stuck. so i think we need congressional republicans to match some of the spending cuts that we've all

agreed on, with some high-end tax increases to inject more fairness into the code. >> all right -- >> sorry, there are a lot of bugs out here this morning. >> really? always good to have you on. push back, we get pushbacks from both sides, we just want to talk about it and try to find something that we can agree on. but appreciate it, jared, thanks. >> good talking you, joe. coming up, new backlash against the rules for the s.e.c. and hedge funds. we'll talk about that right after this. and later, d'tisouon ms r exclusive interview with fed governor christopher waller coming up at 8:40 eastern time. "squawk" returns after this.

(fisher investments) it's easy to think that all money managers are pretty much the same, but at fisher investments we're clearly different. (other money manager) different how? you sell high commission investment products, right? (fisher investments) nope. fisher avoids them. (other money manager) well, you must earn commissions on trades. (fisher investments) never at fisher. (other money manager) ok, then you probably sneak in some hidden and layered fees. (fisher investments) no. we structure our fees so we do better when our clients do better. that might be why most of our clients come from other money managers. at fisher investments, we're clearly different.

welcome back to "squawk box." filing a lawsuit against the s.e.c. over some new rules surrounding private equity and hedge funds. joining multiple other trade associations, suing that agency, claiming the overhaul would harm investors and funds managers. joining us right now is brian kor corbitt, the president and ceo of the managed funds association. brian, let's talk about the pushback that you on behalf of the industry are pursuing. what is your problem specifically with this new -- this new requirement that the

s.e.c. is seeking to impose? >> thank you for the opportunity to join you this morning. there are really three reasons why we're suing the s.e.c. first, we think the s.e.c. in this final role has exceeded its statutory authority. for the first time, the s.e.c. is trying to inject itself in the middle of negotiations between sophisticated investors. they're trying to impose a mutual fund-like framework on private funds. second, this final rule is completely unworkable. it will result in increased costs, it will undermine competition in the industry, and it will also result in less access to funds for those pension, endowments, and foundations. and lastly, the s.e.c. hasn't done their homework. they haven't pointed to a market failure to justify the rule nor have they provided an adequate cost/benefit analysis to support the final rule. >> so let's just break down what is in this rule, because i think it's important for the audience to understand what's happening here. but i would argue, most specifically, it's a disclosure requirement. is that your reading of this? >> no, it's --

>> go ahead. >> it is disclosure is part of it, but the rule in itself effectively restricts and prohibits a lot of traditional activities and terms and conditions that large, limited partners and private funds have negotiated over the years. so it's much more than disclosure. >> but let's just walk through it. there's the disclosure on a quarterly basis of performance in a way that right now is not required, per se. there's an element that prevents special deals from taking place, between certain investors os ov certain others. you might describe this as a favor nation status, that nobody is getting squeezed without knowing what has happened. why would things like this be a problem for the industry? >> so, today, there is lots of disclosure, and for the s.e.c. to suggest there isn't disclosures, just not true.

when you're a large institinsti institutional investor and investing a couple hundred million dollars in a private fund, you negotiate for specific terms and conditions that meet your needs. they're very bespoke relationships. the s.e.c. is trying to impose a one-size-fits-all regime on private funds, as if they were mutual funds. we're not talking about a retail product here. we're talking about a heavily negotiated bespoke investment in a private fund. >> but isn't there an argument to be made that private equity -- and i would agree, if we were having this conversation 20 years ago about private equity, i would say, this is not about a mutual fund. today the private equity business is a massive, massive component of the american economy. and the amount of money that has flooded into these funds -- by the way, for very good reason, given what we think is good performance would argue that maybe these -- maybe these businesses should be marginally more regulated than they are currently. >> so, the industry is heavily regulated today. dodd/frank imposed a registration regime on private

funds. they disclosed information to their investors. they disclosed to the s.e.c. what we're objecting to is the overlay of regulation that is going to really undermine competition in the market, andrew. when you look at new fund launches, who needs to negotiate bespoke terms with investors to come into early rounds, they need that flexibility to offer preferred terms, to get those capital injections. on top of that now, you're imposing a lot of cost on these new and emerging managers. so you're going to have reduced competition in the market. it's almost as if the s.e.c. is trying to shrink the industry, instead of trying to promote policy that fosters growth -- >> so, brian, would you be -- >> you would you be open to -- right now, there's not a minimum threshold, but let's say funds over a certain size should have to make these types of disclosures? >> well, there is a threshold today. if you're over $150 million in aum, you have to register with the s.e.c. and comply with the

current rules in place. what we're objecting to is the added regulation that goes beyond -- >> and i'm saying, you want to make it $500 million, you want to make it $1 billion in terms of the -- to prevent the problem that you're talking about, which is, you're right, there are going to be start-ups out there that will want to make special side deals with the gp, taking an interest in the fund, and all sorts of other things to get rolling. i get that. and maybe they want to start at something that's bigger than $150 million. maybe they want to start at $400 million, $500 million. but at some point, is there a number at which you say to yourself, you know what, actually, okay, if it's over $1 billion, maybe these favored nation clauses and other things should be re-thought or at least disclosed in a different way. >> well, the size isn't the factor here, because even large institutional investors who are putting in $300, $400 million, $500 million, even $1 billion

into a leveraged fund, they have the negotability to negotiate. investors have a lot of -- >> but they'll say that they only find out after the fact that so-and-so over here is getting some special deal that they don't know about, right? by the way, that's where this came from. >> right, but that's how market dynamics evolve. there are over 4,000 private funds in the market today. there's plenty of optionality for an investor who's not getting the terms they want from one private fund. they can go and negotiate terms with another gp and invest there. what we're objecting to is the s.e.c. trying to impose a one-size-fits-all regime on all funds, as if it was a mutual fund product being sold to mom and pop. and that's just not the case. >> brian, we appreciate you joining us. we look forward to following the progress of your suit and the state of these new guidelines.

thanks. >> thank you very much. coming up, a new warning from warner brothers discovery, revealing how much it expects the strikes in hollywood to hurt its bottom line. that is next. and you can get the best of "squawk box" in our daily podcast follow squawk pod on your favorite podcast app and listen anytime. we'll be right back. predictiveg to address operations issues? we can help with that. can we provide health care virtually anywhere? we can help with that, too. is it possible to survey foot traffic across all of our locations? yeah! absolutely. with the advanced connectivity and intelligence of global secure networking from comcast business. it's not just possible. it's happening. (sirens) [due at target in 5!] copy that. make a hard left down the alley. network's got you covered. [please confirm requesting back-up.] -changing route. -go. roadblock ahead. ...back up, back up... reverse!

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welcome back to "squawk." new this morning, warner brothers discovery warning that the writers and actors strike will have a material impact on the bottom line. the full year ebitda will be negatively impacted. predominantly due to the impact of those strikes. the company saying it assumes the financial impact will persist through the end of the year. executives say that they continue to prioritize and work diligently in other industry leadership to try to resolve the labor dispute. so we were saying, with cash on hand, from a free cash flow perspective, this has not been a bad thing. the problem is, i don't think investors should necessarily be putting a multiple on that free cash flow, given -- >> if it's mostly from not paying anybody, because nothing is in production. with warner brothers, the performance -- >> but we've also talking about the great test that is taking place, which is how long do people hang on to these services if they don't believe there's enough new content. right now, i don't think we've hit that point yet. >> the stock was -- it's a commentary on the world we're in

right now. the stock was 40, 50 bucks at one point. >> it was down 12% friday alone. >> but then i looked at not on a low. still involved with its ownership, some of those assets, but neither one. it's not a zero-sum game. >> negative-sum game. >> it's a negative-sum game. that's what the market is saying, anyway. >> the entertainment business right now is -- i don't know how long this lasts. i will tell you, you know, i saw 11 movies and at the beginning of every single one, anyone that was speaking, whether it was a director or anyone involved, none of the factors were there this year, but they all were holding up a fist saying, we are in total solidarity with the writers and s.a.g. and i think i'm in one of those unions, but i'm not a scab -- i guess i am a scab. am i? >> i don't know, are you acting right now? >> yes! >> he's acting always the time.

>> he's always acting. >> get the man a s.a.g. card! >> i think i have one. coming up -- you know i was on that glenn close show, you know that. co-star. i had like a line and a half. squawk fix, mark mahaney will join us next with some investment ideas about online travel stocks. "squawk box" will be right back. across the globe, industries are transforming and businesses need to navigate the changing landscape to stay ahead. when you partner with barclays, every change leads to a bold possibility. you have the vision. we have the insights, financial solutions and global perspectives to help you make it real.

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time now for some squawk picks. e evercore's annual online travel survey says that travel demand will be stronger going into 2024, mostly driven by optimism economic expectations. bullish results for booking holdings and mixed results for expedia and airbnb. joining us with more is mark mahaney, head of internet research, we should note that airbnb, trading higher on word that hit late friday that it will join the s&p 500 this month. mark, good morning. >> good morning, mike. >> so the survey result, it's interesting, because we keep thinking maybe that the heavy demand for travel is going to wane. that it was just a little bit of a catch-up, but what does the survey tell us about what to expect for next year?

>> you're right, it was a bit of a surprise. so we've run this survey for eight years. we always ask, what are your travel intention spends for the following year. you would have thought that we would have peaked out, you know, this year, maybe last year, but we haven't yet. we found a higher mepercentage, 50% plan to spend more on travel next year. it is also underlying that, at the margins slightly greater optimism about the economy. that's what drives that. and you already mentioned it. if you think about the your online travel companies, you have your booking, airbnb, skpex n and expedia, but the one that was singularly positive was booking. hats off to them, they're doing a couple of things right. >> for sure, that was the takeaway. has the market already figured that out. booking has been a massive outperformer, relative to expedia for a quite a while right now. i know that expedia didn't have exactly negative results, just not as good. >> yeah, that's right. so these -- of the three names,

if you line them up, the most expensive name or the highest multiple name is airbnb, at roughly 19 to 20 times ebitda. then you have where it's been trading for a good chunk of its time as a public company. and then if you look at booking, it's more at like 14 times. the growth rates are relatively similar. that's one of the reasons why most of the time we have had a preference for booking in this group. expedia is kind of the problem child of online travel. it has been for the last two to three years. it just seems like there are fewer growth initiatives there. and one major structural maybe disadvantage that expedia has. is that it's very focused on the u.s. market. you get much more international diversification could have booking and out of airbnb. and that matters in terms of the pnl, because the more fragmented the supplier base, which is what you have in international markets, the better the take rates, the better the margins are for essentially the retailer, which is in this case, in booking and airbnb. so airbnb, hats off to them.

they've always executed well. very consistently management team, ceo has been with the company for 20 plus years. very impressive what they've put together. >> in terms of airbnb, though, certainly, it's underperformed the pure hotel stocks, and what does the survey say about demand for alternative lodging? it seems like there's been a little bit of softening along that line. >> you know, there has been, mike, you're right to point it out. so it's sort of -- we all know, gapped up in that first year of the covid crisis in 2020. and it's kind of slipped since then. and it's slipped again this last year, which surprised me. the percentage of people who say they'll stay or have stayed in alternative accommodation is still higher than it was pre-covid, but just modestly, it's like we gapped up and it's traded back down. airbnb is a company that's really kind of created the tam, or expanded the tam, total adjustable market. they've made it so much easier for any of us to find these interesting, unique places to stay. and it made it a lot more easier for all of us to become hosts, if we will, although there's still more work to be done

there, i think for airbnb, but i am surprised that this is a head wind, that you see fewer people wanting to stay in alternative accommodations versus a traditional hotel. for airbnb to really be bullish on that, on the stock, you have to kind of believe that that trend will start reversing now, and will start rising again. >> we were talking earlier about, you know, today happens to be the first day of restrictions in new york city against certain types of airbnb stays. a little bit of a tightening of conditions there. does that reflect a broader backlash? do you think that's going to be a concern for the company? >> yeah, it's a concern. it has been for quite some time. it's been our call that the majority of those regulatory issues have kind of been solved now. this has been kind of city by city municipality by municipality, debates, negotiations with airbnb and its hosts and in the local municipalities and, you know, trying to find that right balance of allowing people to better monetize their largest asset, which is usually their home or an apartment, and, you

know, and try to maintain, i don't know, the right balance in neighborhoods, you know, it's a struggle. but, it seems to me like the majority of these debates have kind of already occurred and the advantage that airbnb has is there's no one city that's a material percentage of its bookings. it's that diversified. even new york city would be a very low percentage of its total bookings. >> gray market, subleases and new york city is not new. it long predates airbnb. probably won't change the game. mark, appreciate it. >> thank you, mike. we have a lot more coming up after this. fed governor christopher waller, you're not going to want to miss this, will join us in an exclusive interview, talk about his view of the economy and the interest ratpa aade thhe. "squawk box" returns after this.

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welcome back to "squawk box." the futures right now, take a look at where we are. dow off about 50 points. nasdaq looking to open down about 81 points. s&p 500 off about 13 points. we've been talking all morning about the economy, but right now, i want to get over to steve liesman, who's got our very big view of the hour on this very topic. and maybe give us some direction on which way the federal reserve is going to go next. steve? >> yeah, we can only hope, andrew. joining us now, in an exclusive interview is federal reserve governor christopher waller. governor waller, thank you for joining us this morning. it's really a great time to have you, because we had all of that

data last week. we had the jobs data, and the pce inflation data. i wonder if you've been thinking about it and how you react to what's happening? is it going along with your forecast? >> yeah, thanks, steve, for having me on. yeah, that was a hell of a good week of data that we had last week. and the key thing out of it is it's going to allow us to proceed carefully as chair powell said at jackson hole. there's nothing that is saying that we need to do anything imminent anytime soon, so we can sit there, wait for the data, see if things continue. the biggest thing is just inflation. we have two good reports in a row, can wait and see what a third one looks like and see whether the slow inflation is a trend or it was just an outlier or a fluke. >> when you say low inflation, when i looked at some of the things that i know that the chair looks at, i know you do too, which is that pce core ticking up, housing, it actually went up.

what about it made you feel comfortable? >> well, the thing that really drove it were nonmarket services and those things can be volatile. they're not really a clear indication what market prices are. soy t so i typically don't like to throw things out, but in general, this time, it clearly was something that was a bit odd. we'll see if this continues. >> meanwhile, the unemployment rate went up. is that a source of concern for you? it was up by 0.3. is this the beginning of a gathering weakness in the job market, do you think? >> the data last week clearly showed the job market as starting to soften. but the unemployment rate, if i remember correctly last august was 3.7. you're roughly where you were a year ago. so we're not seeing a big movement. and some of the increase was just an increase in labor force participation. more people entered the labor market and are looking for jobs. jobs are getting a little tougher to find. it's not surprising the unemployment rate went up a couple of tenths.

but it's really not much different than it was a year ago. >> is all of this in line with an outlook that you have for a soft landing, or you still see a threat of a recession to the u.s. economy? >> well, the way the data is coming in, it's looking pretty good. but recessions are often caused by shocks that just come out of nowhere and hit the economy. so that can always happen. and that's why they're shocks. we can't really predict them. but the way the data is coming in right now, it's looking pretty good that if we can keep inflation coming down for the next few months, on trend, at like 0.2 a month, we're in pretty good condition. >> so, can you stop raising rates now, or do you still need to hike more? >> well, that depends on the data. we have to wait and see if this inflation trend is continuing -- we've been burned twice before. in 2021, we saw it coming down and then it shot up. in the end of 2022, we saw it coming down. that all got revised away.

so i want to be very careful about saying that we've kind of done the job in inflation until we see a couple of months continuing along this trajectory before i say we're done doing anything. >> but would you say the risks are now evenly balanced between doing too much by the federal reserve or doing little? >> yeah, i would say they are more. i mean, i don't think one more hike would necessarily throw the economy into a recession if we did feel we needed to do one. but at the same time, like i said, the job market is still pretty strong. these numbers are still near historic lows at 3.8% unemployment. so it's not obvious that we're in real danger of doing a lot of damage to the job market, even if we raise rates one more time. >> chris, let's talk about the issue of monetary policy lags. this is something that some folks have said is a big deal and it's -- there's yet to come

a wave of negative impact on the economy, from the big shocks of interest rate hikes that you had. but you've had the opinion that the lags are here now. that in this economy, with a big increase of interest rates, the way the fed did it, that there is not much of a lag to the economy. and that kind of puts you a little bit at odds with fed chair powell, who said recently that there could be significant lags yet to come. >> well, this is a tricky problem, because there's never an exact number on when the lags tend to it. and i think, as i gave a speech back in july that i think the lags are shorter. they're still there, but they're not like -- we don't have to wait two years for the stuff to start impacting on the economy. we're seeing it now as far as i'm concerned. you're starting to see the economy slow down, we're seeing inflation coming down. it's really been just a little over a year that we've done a

lot of large hikes. so i think we're already seeing the impact. the other thing that i -- people seem to have this idea that long and facial lags means there's this cliff effect. what i call the wile e. coyote moment where the kpleconomy is going long and it just collapses. that's not these typical lags -- they build up and eventually go away. there's not this cliff effect. >> when we talk about lags in the terms of monetary policy, one place it's really obvious right now is in mortgage rates. some are near like 8%. what do you say to people governor waller who are trying to buy a home and you guys have been part of the reason why mortgage rates are up near 8%, or at least more than 7. >> well, remember, the housing market was just on fire last year, and prices were going up, you know, 20, 25% a year. that's just not sustainable. so part of raising rates was to cool off the housing market and then lower demand and hopefully

put some downward pressure on prices. housing's always been one of the most introsensitive sectors. wherever we raise or lower rates, the housing markets is one of the first places you see it happen. so, you know, right now, until inflation comes back down, we're going to have to keep rates up, and that's going to make mortgages more expensive, and that will keep demand for housing cooler and hopefully put downward pressure on shelter prices. >> and from the other side, actually, the other side of that coin, is treasury yields on longer-term treasuries have risen quite a bit. does that cause concern of exerting too much deceleration on the economy? or does it feel like treasury yields are in a normal place? >> i think the treasury yields are probably about where they should be. we wanted rates to be up, we want it to be tightened. they're not going off the charts. certainly compared to where we

have the policy rate. the yield curve is still inverted from the last time i checked. so it's not like that longer-term yields are super high and causing problems for the economy. they are pushing up mortgage rates, as we just talked about. but, you know, higher rates is kind of what we need to tighten financial conditions and slow the economy down. >> okay. and then, forgive me for going back and forth on these issues here, but another thing happening is the weakness in china. is that going to help the u.s. in terms of importing disinflation or hurt the u.s. in terms of the economic downturn there and less -- and fewer exports? >> clearly, you know, you've got china is slowing, europe slowing, this will put a drag on global demand for goods and services. and, you know, that will have some impact on the u.s. in terms of exports, and also import prices. but the u.s. is a fairly closed

economy. i've always argued that it's about 80% closed. so these impacts from these countries tend to be smaller than we tend to think they're going to be. so, that's the one big difference between the u.s. and a lot of other countries. we're still fairly close in terms of how we do all of our economic trade. the foreign facg to be smaller impacts on us than they would for some other countries, particularly smaller emerging markets. >> governor waller, another challenge for the federal reserve is what's happening with deficits. do you believe that -- first of all, are the current deficit levels sustainable? second, do they present challenges to the federal reserve which obviously takes what the fiscal side gives them, but it creates issues for you guys in terms of you guys are reducing your balance sheet. the treasury is trying to build up again its treasury builds and the treasury government account. are these issues you have to deal with when it comes to the size of the deficit?

th does it create financial stability issues? >> congress makes their choices of what they want to do with tax and spending policies, and we just take that as a given. so whatever those policies enact, we have to take that into account in terms of how they're moving rates or anything else. it's not really our job to sort of dictate what the deficit side should be, shouldn't be, how it get resolved. trillion dollar deficits going into the future don't look too good for the fiscal health of the u.s. >> governor, can you talk about what risks you're looking at, what areas concern you? one thing mentioned quite a bit are corporate refinancings into higher rates. what are the risks that you're watching? >> we've been keeping a very close eye on the commercial real estate sector. we know there's a lot of refinancings coming up. they're going to be over a

2.5-year period or so. these won't be shocks to anybody. we knowthey have to be refinanced. they're far enough out in the future, 2, 2.5 years from now that the economic situation with inflation, the interest rates may be much better. again, we've -- we're looking at this. we're keeping an eye on it. we're not seeing anything that's going to cause a huge shock to the economy collapsing because it's totally predictable. you can see all this coming. what you're not clear about is what kind of prices the commercial real estate will be trading in say 2, 2.5 years. that's what you're worried about, is the losses on these loans when they go to refinance them and who is going to bear those losses. right now everything i've seen, these things are manageable. >> governor, waller, thank you for joining us today. >> all right. thanks, steve. good talking to you.

>> all right. joe, back to you at nasdaq headquarters. coming up we'll talk market expectations with morgan stanley's andrew slimmon. david faber will introduce david solomon at 4:15 eastern time on thursday live from the -- it's in san francisco. what is it, andrew? >> commune topia. >> i misspoke. that's wrong. it's not a communist copia conference. it's a commune copia. we'll be right back. (sirens) [due at target in 5!]

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our next guest says the s&p 500 positioned for a strong year-inderally and will be closer to the 15,000 mark by then, a more than 10% increase from friday's close. andrew slimmon senior portfolio manager at morgan stanley investment manager. andrew, what happened in august? how would you some up that sort of -- i don't know --

disappointing after what we had seen from october through july? was that just a backing and filling in your view? >> yeah, pretty much. hey, joe. i think the fact that the market only pulled back 3% is a sign that positioning still is too negative, and we didn't get more of a pullback than that because even though seasonally august is a weak month, people jumped on that pullback, and really the market has had a pretty strong rally since the third week in august. it tells me positioning remains too negative and people need pullbacks to get better positioned. >> how would that -- number one, what's the economic backdrop or the fed backdrop for the 10% gain you see before the end of the year, and what does that mean for 2024? >> look, i'm more worried about 2024 than i am 2023. i just think we're seeing classic behaviors -- this is a

textbook case of what happens after a bear market. people get too negative. fund flows are too negative, and that's symptomatic of an early stage of a recovery. it takes time until people realize, oh, my gosh, i shouldn't have been selling, i should have been buying. i still think that's out. weekly fund flow still remains negative. the return differential between money markets and equities is going to become more acutely painful as we get to the end of the year. that's the first reason. earnings are going to invert from negative to positive, and you get a huge amount of public works spending coming in the fourth quarter. all that is positive and i think that's why we'll get closer to 5,000. what worries me, to your question, we are -- right now the monthly year-over-year inflation numbers are coming down, but that's going to get tougher next year. the bar is going to get harder,

and at a time when the fed is still pressing on this 2% goal, i see that as -- that's going to be a tough thing to overcome, butthat's a next year story, 2024, not a 2023. i have a hard time seeing the market substantially sell off, however, with an election year and the amount of stimulus that's coming in the fourth quarter. i don't think this is really discussed enough. >> money market funds will be more attractive next year? there will be no cuts next year? interest rates will stay higher for longer? >> well, you know, joe, you know as well as i do, whatever is the most popular product usually doesn't do well the next year. how is the money market, the most popular product, not going to do well? if the economy fell off a cliff and rates came down, that wouldn't be good for money market, but it would be good for risk assets. it seems to me the way the money

market turns that way is we get a slowdown, but not a recession at least next year and the stock market hangs in there. >> andrew slimmon, morgan stanley, thank you for that. >> we have to sfeek mike santoli for all that. >> it's implicit. >> implied open on the dow up about 30 points right now. make sure you join us tomorrow. "squawk on the street" begins right now. ♪ good tuesday morning. welcome to "squawk on the street." i'm carl quintanilla with jim cramer. david faber is on assignment. watch for volume and activity to pick up, conferences kick off. ten-year 4.21. roadmap begins with a september swoon ahead. historically the worst day for stocks