higher as well. the s&p up a little over a point. let's look at the ten-year note. right now, the ten-year up at 4.288% and the two-year basically where we started. >> 5%. >> we'll call it right there. make sure you join us tomorrow. you want to show oil? >> $89.30. >> make sure you join us tomorrow. "squawk on the street" begins right now. ♪ good wednesday morning, welcome to "squawk on the street," i'm carl quintanilla with david faber at post nine of the new york stock exchange. cramer's at one market in san francisco, fresh from his exclusive with marc benioff at dreamforce last night. futures are trying to bounce, couldn't get that 0.2% on core. ten-year yield briefly pops to 4.35%, close to the august highs. our road map is going to begin with cpi, giving the fed more to consider ahead of next week's

rate decision. apple also in focus as wall street reacts to its launch event, including a new iphone line-up. meantime, china insists it has not issued a ban on the company's flagship product. we're going to get into all things a.i. with tech ceos meeting with lawmakers on capitol hill to what salesforce's marc benioff told jim about that technology. let's begin with cpi. obviously, core, bit of a disappointment to the bulls, jim. gasoline is more than half of the headline, up $10. car insurance, up 2.5, but lodging away from home down 3. >> i was listening to steve liesman break it down, and i agree with what steve was saying, it's just empirical. there's nothing that says that gas and oil and have necessarily trickled into the rest of the combination. we do know -- i've been talking with major insurers who are using, believe it or not, artificial intelligence to actually get prices to where they are lower, and i wonder whether that won't filter in as part of a larger conversation

about trying to get the best price for the consumer when it comes to these gigantic car insurance and auto finance companies. i suspect those numbers are going to go down because of artificial intelligence. that's not -- that may not be two years out. that might be next year. i'm more sanguine on that. what i'm less sanguine about is we've got to see numbers from companies go up about a.i., and we haven't seen that other than nvidia, and david, when we talk about a.i., you know the stocks have all been up as if the numbers are going to be great. the pressure on adobe tomorrow is so gigantic. someone's got to be able to raise numbers on a.i. besides nvidia. can't just be nvidia. >> but isn't it -- maybe it's a bit too early to do that? isn't it -- we talk about the products that are really going to come from generative a.i. and the revenues and/or the productivity, it just may be a while, jim. >> not for banks. because they have -- well, we called goldman.

they had deadwood. you spoke with david solomon. he was more diplomatic through that. some firms will start trimming immediately. but they'll do it through attrition. they won't fire. they just won't hire people. in terms of making numbers move up, what i think is most daunting is what happened with oracle. and i wanted to buy -- oracle's got oracle world next week. i think they're going to lay out a pretty good a.i. strategy, but they didn't raise, and unless you raise, like nvidia, then it's disappointment, and david, that means there's a lot of disappointment ahead. it worries me, particularly in light of what we know about arm holdings and how that stock is going to come in way too hot now. >> you think it's going to come in way too hot? >> i was hoping for $50 billion. i'm hearing $60 billion. i can't get that. >> i don't know if they're going to get to that. really? >> these anchor tenants. the anchor tenants are strategic. they don't care about valuation, right? they're bidding the thing up.

david, it can't go north of $50 billion and make sense. >> well, listen, they wouldn't be unhappy with that at softbank, for certain, if you got above 60. i mean, he bought back stock at $64 billion, which is roughly twice what they paid for the company quite some time back. >> true, but -- >> coming back to this thesis on a.i., i mean, nvidia's benefitting, of course, because they're selling all the chips that are helping all these companies create the products for the future, but isn't it a little early, again, to expect those very products to be actually producing revenue or increasing productivity? it's going to take a while. so, arm is a beneficiary of the chip sales that are obviously behind all the new iterations of generative a.i. or all the new products that are conceivably coming, let's call it a year or two years from now. >> okay, so, here's the difficulty with that. marc benioff, who obviously is a great proselytizer for this, is

telling me it's going to show up this year, that it's that powerful and with the big banks, you will see already their gross margins increasing. carl, it is so prosaic what's really going to do well. it is an auto insurance company. it is a property casualty insurer. it is a money-centered bank. they are the guys who are going to put this to work immediately and save money, and those are the winners so far. i'm sitting down with laura albert from williams sonoma. i saw her last night at a dinner. she can tell you, chapter and verse, how much it's helping already. but i think it's companies that are very tech savvy or companies that have giant overhead, huge costs up front where people just do the same thing over and over and over again. carl, those people, when they leave, or if they're terminated, will not be replaced, and that means gross margins going up for as early as q1 of 2024. >> i guess nearer term, jim, we're left with what's happened with prices on the shelf today. doug mcmillon did talk about

this yesterday at the conference, said, we're going to see deflation but we're not going to get all the way back to deflation and erase some of the price hikes that have happened over the last two years. >> in the u.s., things are better than i would have expected them to be when we started the year. i think the employment situation, wage increases, some pockets of disinflation are helping that. i think we're in a pretty good spot and customers are going to feel some relief as it relates to pricing. the more disinflation happens and categories like grocery and consumables, the more discretionary income they have to buy merchandise, but the spin level hangs into where it is, i would expect the behavior to be about what it is now. and i think holiday is going to be pretty good. i don't go into next year feeling too pessimistic. >> his comments, jim, about holiday are interesting because this deloitte survey or study says we're hlooking at holiday' growth as the lowest in about five years. >> i'm not so sure about that.

i think that a lot of the employment numbers are still very, very strong and that should not lead to that kind of deceleration. it is hit or miss. i think one of the things that's happened coming out of pandemic, walmart is now a loved company to shop at, and i know that when i walk the stores, i think -- sometimes david and i joke about this, but when you walk the stores, they don't look like walmart. they look like target. it's like they figured out what target looks like. at the same time, the numbers from costco are extraordinary. carl, i think that you've learned -- we learned amazon, costco, walmart offer the best bargains, and those are winner take all, and it does almost feel like loser take none. >> we'll see. i mean, he did have this report out of goldman yesterday, jim, looking at q4 potholes. the resumption of student loan payments, government shutdown more likely than not. we're going to talk about the uaw strike.

their number for q4 is 1.3 as opposed to 3.1 in q3. >> that's a deceleration, but remember, if you're the fed, you're looking -- you're listening to what we just said over the last four minutes. it's good, but cpi, not perfect, but walmart, 200 million people go there each week. that's a pretty positive sign. i mean, david, anecdotally, there are enough signs of prices coming down that if we could just get housing to break, in other words, housing is up 40%. that's the big outlier. if we can get housing to break, which we will know with lennar tomorrow. giant home builder that tells you exactly a forecast that you have to listen to. we need housing coming down. we need a.i. to come into play to lower prices. it's not even goldilocks. you can just say it's f

phantasmagorical, but it could happen. >> wouldn't you need housing to decline overall so you have a more robust market overall for homes? >> people like my wife who sell real estate, there's a moment in time where what happens is the rates go so high, and the home builders don't seem to realize, and they keep pumping and pumping, and then there's that moment where the buyers step away, and then the home builders break price and that's what powell is hoping for, he may get it, david, because we are -- we haven't seen numbers for applications since 1996 this bad. i don't think the home builders understood that it could be this bad this fast. lennar will tell us whether they're beginning to overbuild. the home-building stocks are saying the home builders are overbuilding. that's how you get the price break is a buyer strike. that's what i'm counting on to get housing not back to -- it was up 40% from 2019, you're not getting that back to where it was, but if it could just turn to being, say, down, well back a quarter of that, then the fed is golden. that's what we want. we want the pressure off the fed. >> there's also this interesting survey out of red fin this morning, guys. one in ten sellers are listing

because they have been called back to the office. >> whoa. oh, man. i had lyft on last night. he said their business, up 18%, why? because the commuter is back. now, david, you've been commuting for years, so it really hasn't directly impacted you, but do you see more people on the subway? >> a few. yesterday was very crowded. yes, i have noted the middle of the week, in particular, tuesday, wednesday, thursday, tends to be busier. and has become even busier post-labor day. i think that is notable. that said, guiys, friday is just -- that's over. nobody. we're it. we're it. us and maybe those few guys at goldman-sachs. >> i'm taking a friday morning. >> and those people. >> what's it like? >> what's what like? >> when you take off friday, what's that like? what do you do? >> i don't know.

>> what do you do? >> you wouldn't know. are you going to take the red-eye back tomorrow and come to work the next morning? >> did they cancel it? did they cancel my red-eye? i don't know. i wore my suit that's kind of a -- it's kind of a pajama suit. >> it is? >> it's a brioni 180 pajama suit. it guarantees good sleeping. >> it doesn't wrinkle. >> it has feet. feet pajama suit from brioni. >> jim tends not to take travel days on the way back. >> no, he doesn't. >> i don't care for them. >> unlike some people i know. >> i took one on friday for the first time. >> that was brutal. >> we didn't get in until 3:00 in the morning. i can't do what you do. >> david was on assignment. 3:00 in the morning, that's good, man. if i can get that, that's good. i go right to the office. >> speaking of activity out west, let's get to apple, unveiling its latest products, including the iphone 15, the series 9 apple watch at yesterday's event.

all of them coming with this usb-c charging port. some price trimming, discussion about whether these price hikes at the high end are trying to mask the obvious continued revenue declines. >> well, look. there's a reason why we never buy ahead of an apple launch. the nitpickers are first. they're the ones that immediately come on and tell you, look, it's nothing incremental. it's not a big price increase. of course, we need to see what verizon and at&t are going to pay. but what i thought was interesting was the sum total of things they're giving you for the watch, for the cord, for the phone in terms of the camera where you can get rid of blur, these are things that don't show up in the numbers instantly, and yet, they become why you buy. and i think that the first people out of the block are the people who say, nothing new. and then when you start using it, you say, wow, i now have a tw device that tells me hotter,

hotter, hotter, bingo for where my phone is. i'm not going to use my watch as a clock anymore. i'm just going to use it to find my phone. this is the solution. >> that's why i'm going to upgrade to the new watch? >> it's a find my phone that also tells time. that's what it is. it's changed. >> there's a lot of other things, jim. nobody spent more time talking about the health benefits of having that watch than you. >> well, a lot of times, i'm yelling on "mad money," and it tells me i got to be careful because it's a dangerous sound environment. i don't know. >> you've got the vision pro still on practice, jim, for next year. >> that's so great. see this? talk to my little friend. this is what's going -- everybody's going to be doing senor wences from ed sullivan. we'll all be doing it. right now, i'm the only one doing it. next year at this time, all of us will be doing it and say, oh, he's doing that thing.

cramer was first, like with nvidia. remember when he named his dog nvidia? he's doing this now. david, there's a use case for a.i. did you know that? it's going to wipe out humanity. >> by the way, that hasn't gone away as a concern. >> carl, you and i will still be here. he'll be on assignment. >> it's an absolute possibility. when you get to -- >> musk shared it? >> general intelligence, oh yeah. >> i'm driving in a driverless car today. it's soon, a cruise, and you know what? cruise one, musk none. >> interesting. >> i'm looking forward to that video, jim in the backseat. >> speaking of which, we're on watch for arrivals at this a.i. closed door forum on the hill today where zuckerberg, musk, gates and other tech giants are going to attend senator schumer's gathering. that's kicking off at the top of the hour. we'll take you live to d.c. take a look at the premarket here. can stocks look past cpi this morning? futures have been waffling back and forth. we'll get to two more airlines warning today, the uaw, some news on citi when we come back.

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technology advancement of our lifetime or any lifetime. of any lifetime. >> we're going to talk with jim about that in a moment, but first, our emily wilkins is down in d.c. with the latest. morning, emily. >> good morning, carl. well, a.i. is really getting the red carpet treatment on capitol hill today. you know, capitol hill, home to a lot of meetings, a lot of issues. this is really unique. in less than an hour, at 10:00, right behind me here in the kennedy caucus room, all 100 senators have been invited to meet with elon musk, mark zuckerberg, bill gates, a lot of leaders on tech and a.i. as well as leaders from civil rights groups, from unions to really start or rather continue a conversation about a.i. and what congress's role needs to be. now, this isn't the first hearing. it probably is the most blockbuster hearing with the biggest names, but majority leader chuck schumer has said that this is really about educating members. i know a lot of people don't think of senators as the most tech savvy. senator schumer's known for having his little flip phone,

but he really wants to make sure that senators are comfortable with their knowledge of a.i. the actual legislation process is already under way in a number of different committees. yesterday, senator richard blumenthal, senator josh hawley, held a bipartisan hearing on their a.i. framework that would require certain high-risk a.i. models to be licensed and to be overseen by an independent agency. josh hawley told me yesterday that there need to be some bright lines for these a.i. companies. >> we can't just allow industry to do what they want to do because they'll maximize their profits. b, i think we need brightline standards that protect kids, that protect workers to make sure this technology actually enhances their wages, doesn't destroy it, protects creativity and people's privacy rights, so i think we've got a long way to go, but we're learning a lot. >> there's still debates on the details of what a.i. legislation needs to look like, whether it needs to be one agency, multiple agency, whether open source a.i. should be encouraged or

discouraged. expect a lot of that to be discussed today in the room behind me. the first three-hour session starts in a few minutes. carl? >> emily, thanks. let's talk about this for a moment with jim. jim, is this really constructive? or is this theater? >> no, i don't think it's theater, because these chieftains of tech have not gotten together, and they don't really know. i know that i regard jensen huang as the most important person there, and he is the ceo of nvidia, and he is so pro-guardrail, and he talked about that before he talks about anything else, but there are others who don't talk about that first, others who are talking about profit. sam altman, a bit of a wild card, at all times. this group is filled with wild cards. david, you know these guys are not all in one. >> altman is pro-guardrails as well. >> what i'm saying is that these guys -- when i hear the idea that they're only out for profit, david, do you hear anyone who's just saying that?

>> no. i agree with you, jim. >> they're worried. >> this is important. this is important. you can imagine what if, knowing what we know now, we'd had a forum like this involving social media? where would we be? what would have happened? what regulations would have been put in place? i think it's a good thing. obviously, the chinese and the russians are not invited to this forum, so my point being, we can do everything we want in terms of putting up guardrails. nothing says that our enemies or potential enemies aren't doing the same. >> axis of evil. look. today, venezuela, moduro met yesterday with xi. ronald reagan would say there's an axis of evil going on here. if we're going to sit here and think we're going to play with one arm tied behind our back and those guys are militarizing instantly? i don't know. i think our guys are trying to be constructive. our enemies, so to speak, they don't want to do what's

constructive. they want to do what's destructive for us. >> that's going to be interesting, especially given that schumer is going, i guess, lead a delegation to china, bipartisan delegation, in the coming weeks, we think, which might be interesting. he's been a pretty big china hawk. we'll get cramer's "mad dash" and count down to the opening bell. we'll talk about what china said about apple earlier today, take a look at the futures here as we continue to circulate around the flatline post-cpi. back in a minute. at morgan stanley, old school hard work meets bold new thinking. ♪♪ at 87 years old, we still see the world with the wonder of new eyes, helping you discover untapped possibilities and relentlessly working with you to make them real. old school grit. new world ideas. morgan stanley. every day, businesses everywhere are asking: new world ideas. is it possible? with comcast business... it is.

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>> announcer: the opening bell is brought to you by nuveen, a leader in income, alternatives, and responsible investing. we've been very consistent in our message that september 14th is a deadline, not a reference point, and we expect all three companies to have that agreement. if they don't, then there will be action. so, you know, we can get there, but the companies need to get serious and buckle down, and we're 48 hours away, so we have a lot of work to do in 48 hours. >> so shawn fain runs the uaw. you want to talk about ford. i thought it would be good to have his words prior to hearing from you. >> absolutely, because u.p.s. goes from sell to buy. it's a new analyst talking about how this stock, instead of a price target of $11 goes to $15, in part because of the ford pro. they are doubling the numbers that are going to be made.

it's a very profitable machine, and remember, it's a hybrid. but i think it's interesting about what fain says is that he was the -- the rhetoric was a little bit cooler. he didn't talk about fat cats. he did mention billionaires, but against that, you've got this dual threat from ford, which is, you know what? don't strike us. we're the most pro-labor unit, the most uaw employees, most unionized company in america. however, veiled threats, saying, listen, we've got a lot of money. we can take you on. so, david, i want to watch ford as a barometer of maybe there are people who really do think it's going to be stellantis they go after. fain is opaque on this. they don't have the money to go after everybody. they only have five weeks of strike fund versus five months for ford. i think ford may get a pass here, and maybe that's the analysis. >> phil did ask him. he said, we're all treating you all equally. you don't believe it? >> i think that would be a great

bargaining stance. let's see which guy comes in with the most realistic -- maybe they don't strike him. i don't know. i'm just saying that this guy's as wild as they get, david. he's playing it as if he's got a really good hand. is he bluffing? we don't know. >> all right, jim. let's get the opening bell. at the big board, it's software company s.a.p. celebrating its 25th listing anniversary. at the nasdaq, it's pharma company moderna, marking its annual research and development day, jim. ben cel on "squawk" earlier today in advance of that. ron baron saying they have a stake in that as well. >> stephan came on because he was very defensive that the stock was not reacting to all the things they had in the pipeline. they are trying to personalize cancer vaccines. he said all the things that i

had hoped when the stock was at 12. he did it, and nobody seemed to care that day. suddenly they care? maybe it's the ron baron impact, but this company is so much more than a covid vaccine. maybe it's going to get some credit. i've been staying that the stock is very undervalued. i have been wrong, in that the stock's done nothing, but it seems today the tide is turning. >> to your point, the stock is still down 37% for the year, jim. >> look at pfizer. look at pfizer. it's the curse of covid, david. the companies that did well. >> they deid well, and we were talking about pfizer finally breaking out of that 20-year slump, and now you can go back and do the 20-year on pfizer. you know, at&t, verizon, pfizer, this is just not a way to create value. look at that thing. >> wow. david, you lumped them in with at&t? >> i don't know. >> serial dividend increasers and a dividend cutter? >> okay. good point. and total return to shareholders, which doesn't show

up in our charts, is an important point. pfizer's current dividend is 4.7%. >> right. >> but jim, i'm still saying, come on. look at that. >> you're right. you're right. they just -- versus lilly? david, look at lilly. there's hardly -- i was talking to a major -- what? i'm sorry. >> isn't it, guys, just a sign of the downside of pull forwards? pull forwards in demand for vaccines, pull forwards in demand for broadband service as we stayed home and got shots? >> yeah, in terms of the -- yes, the covid uptick and then not. but that is reflective of coming up with a spcompletely new thery that is going to conceivably, jim, change health care. >> you mean science? are you talking about science? >> i'm talking about science. and i'm not saying pfizer hasn't done its part. i don't mean to slag them. but lilly, and what we talked about there and the accretion of

market value over the last five years as a result of any number of things, but clearly the last year, moderna, is -- i mean, who knows? it's just beginning. it's just beginning. >> but david, you're right. when you look at lilly, and i have been speaking to all the packaged food companies, and i mean, all. and david, they're not worried about wegovy, the drugs that make it so you don't want their snack food. i think it's great that they are not worried, but i think there's a group of people who like the taste of snack food right now, probably about five million of them by this point next year, and they won't know the difference between eating cardboard and eating a potato chip. >> it really does dampen your appetite overall is my understanding. i have not actually used these drugs, but i have spoken to people who have. they aren't without certain side effects that make them somewhat distasteful, jim. we should -- >> i think america likes to -- america has not really paid much

attention to what's bad for you if they want it. that's why i thought that smucker did well buying the hostess, but david, you know, general mills was in there too. and it made me think, wow, maybe the food business, they need growth, maybe they're going to start doing m&a. i don't know how you feel about that. >> maybe. i don't know. i think what you're trying to understand is the implications of these weight-loss drugs overall, and you're not alone. i've talked about this as well. i know hedge funds who are wondering about mcdonald's or coca-cola, on and on from there. you've talked about alcohol as well, where they may have an impact in terms of people's desire for alcohol and what the impact would be there. and then, not to mention what the impact is going to be on the health care system. ultimately, we hope bringing costs down because, of course, obesity leads to so many other diseases. >> it's a blood pressure drug. think of it like that. people are just making it -- i know it's a vanity drug, but it's a blood pressure -- intractable blood pressure is treated by this, and it's an

alcohol to drink test is what they're doing. if people -- two drinks is really bad for you a day, and there's been nothing that's not alcoholism. that's just two drinks, and they've discovered that's probably one of the worst things for you. carl, that's the focus now. blood pressure and alcohol. those are the two that people are thinking it's really good for. >> jim, to your point about ford, second biggest gainer this morning behind moderna. we mentioned ubs does upgrade to buy. they go to $15. b of a with a note here, they do expect the union to follow through, jim. >> right. >> with wages ending up somewhere in the 25 to $30 range over four years. unlikely it would last a full quarter, given, as you said, a finite strike fund. >> yeah. look. they just don't have the -- they don't have the cards. i'm not seeing what he's got in his hand, but i look at the strike fund, and it's depleted after five weeks if you pay employees $600 a week.

and that makes it so that people are going to be afraid not to get a deal. i think mary barra, by the way, has been the leader in offering a pretty good package, a bonus, a signing bonus. look, we look at what the signing bonuses are in sports, and we know the signing bonus here seems like small at $5,000, but you know, carl, $5,000 and a wage increase, that's going to be attractive to some of the members. it was a very split photo to get fain. there are a lot of members who felt like it's just important to stay on the good side of the auto companies. fain represents a different skein. he doesn't have his own group. i don't think he has his own troops as united as we have been portraying in the media. >> so, are you feeling better about a strike not derailing the economy? >> yes. i am. i also think, by the way, i'm not just influenced by the fact that i'm going to meet with kyle, who runs cruz. we're going to be cruising through the streets of san

francisco, driverless, but i think there's a lot of members of the uaw who recognize, we got to keep our jobs. there's two tracks of these companies. there's ev, which they want to be nonunion, include batteries, and then there's regular, and regular's going away. so, i think fain talks a good game if it was 1950, but he's not talking a good game if it's 2023. >> you're doing a cruise, not doing waymo, right, jim? >> cruise. alphabet is in the justice department. i don't want to be involved. there's sam alternman. >> yep. changed so much, generative a.i. walking into this important meeting that we have been discussing. we'll keep monitoring arrivals. guys -- >> i'm so glad you think it's important. >> it is important. >> i'm so glad. they're really very -- there's a little sincerity there. jensen's there. there's sincerity in these talks. >> they're all in the same room. zuckerberg and musk are going to be together.

i don't know if they'll sit next to each other. >> schumer has some gravitas in this. >> he does. got some pull. >> yes, he does. >> all right. we looked at a 20-year of pfizer. i could be doing a lot of 20-years. i think that's interesting. i don't know if you put up a 20-year of citi, what that would look like, talking about the bank. probably not good. that's what i'm guessing. >> no. >> i mention it because about 25 minutes ago or so, guys, or maybe even more, 30 minutes ago, we got news from the company that it is what it is calling streamlining its organizational structure. simplifying its operating model, having leaders of citi's five interconnected businesses that will now report directly to ceo jane fraser, and be members of the executive management team. here's a quote from citi's ceo, jane fraser, "i'm determined that our bank will deliver to our full potential, and we're making bold decisions to meet our commitments to our stakeholders, to all of our stakeholders." she goes on to say, "these

changes eliminate unnecessary complexity across the bank, increase accountability for delivering excellent client service, and strengthen our ability to benefit from the natural linkages that exist amongst our businesses, all with an eye towards delivering on our medium-term targets and our transformation." jim, thoughts? >> well, look, i think that they're trying to -- look, i think this is more of a consolidation of her power. i'm surprised it hasn't happened earlier. you know that offline, all anybody talks about is the tangible book value being so much higher than the stock price, and it's the only one that's like that. when you spoke with david solomon, they're deeply focused on tangible book value, and how great it is. citi can't focus on how great it is, because it's so much greater than the stock price, that we have to wonder whether somehow the fantasytangible book value overstated. how is that possible? >> you've talked about this for a long time. >> it's worrisome.

>> the market has not listened. >> it's very worrisome, david, makes no sense to me. >> we're talking about an $80 billion market value here. it's bite-size, citi. take a look at sam altman. >> bite-sized? >> stopping to take some questions. can we listen in? >> there always is changes. i firmly believe there will be far more great new jobs. >> 300 million jobs are at stake. could be disrupted. >> all jobs are at stake -- i'm sorry, but -- do more, do better. i'm very optimistic about it, but that doesn't mean there won't be a great deal of rockiness along the way, and i think it's important to be up front about that. >> sam altman, of course, who helped create, really, the revolution brought on by chatgpt originally, generative a.i. at openai, which he runs. started with elon musk. those two don't really get along that well. be interesting to see what happens in that room, jim. it's hard to hear everything he

was saying. but that room alone with jensen in there, musk, zuckerberg, altman, wow. >> well, i remember when jensen was telling me, the ceo of nvidia, that he had met with -- constantly trying to figure out when would someone recognize the value of this product? david, there was no one. well, i went out there and i named my dog after it, but there was no one, other than altman, who saw the value of it. what a change. now they have to defend the incredible revolution that didn't exist three years ago. >> right. >> the revolution was not even -- >> they had to go to microsoft to get money because these large language models are expensive. the computing power is enormous. we've made that point many times, which does lead to only a very small group of companies that really can provide the underlying technology. now, that doesn't mean that there aren't all sort of products that can then be created, that will be used. you're looking at many of the

companies that can -- obviously, they can all afford to do it, but not many others. tesla amongst them as well. >> you got it. the upfront cost of this, people are angry at nvidia. there's an interview -- there's an interview that slootman, from snowflake, was involved with jensen, it's available online. it was in snowflake's summit. slootman openly chafes at how much nvidia is charging, and you know, david, that musk is angry about how much nvidia is charging. but no one else has anything that comes near it. nvidia spent a fortune developing it. i think it's fair that everyone has to pay the fray. >> yeah. you got the product. you might as well get paid for it as best you can. the question with nvidia, though, jim, is how long will that be the case? is amd going to have some sort of competitive product as we take a look at bill gates now entering as well? >> we have to hear it from lisa su. lisa su has a very good product, but this grace hopper product, which, you know, david, has an

arm holding cpu, not an 86. you know that is the reason why arm holdings is going to be overvalued from the moment it comes public. they're partners with nvidia. >> who's going to -- who's leading this discussion amongst these guys, carl, do you know? they need a good moderator in there. >> yeah. is it schumer? >> i don't -- it's schumer with his flip phone. >> yeah, yeah. i'm not sure. >> how do you think we work this thing here? >> what's interesting is you have this going on at the same time as the doj suit went under way and according to reports, yesterday's arguments really did settle on allegations of the company repeatedly used exclusivity to limit competition, lot of discussion about the nature of, jim, what a default search setting means and how much friction there is for a consumer to choose otherwise if they wanted to. >> it's so funny, because it's like the amazon fight at the ftc. they're picking on the things that we love. one of the things, when many people are saying that what we're seeing right now in a.i.

is bigger than search, and therefore, even more valuable than search. everyone i spoke to is so happy with something that was developed by google, which is the best search engine in the world. happy with amazon. oh, look, speak of this. speak of the nondevil. >> perfect timing. >> coming off that "wired" interview yesterday where he was asked, so, did nadella make you dance? and pichai says, in cricket, there's a saying, you let the bat do the talking. >> i keep learning about cricket. maybe we should get the cricket rights. what did disney do? >> does peacock have the cricket rights? disney lost them from india. >> i watched it. it's unfathomable. it's like the mets, they try to hit the ball. >> speaking of -- >> listen, being a new york sports fan is just -- i can't. >> did you see monday night football ratings? highest on espn ever. >> we're back. linear's back. jensen! >> there's your man.

>> no leather jacket. oh my god. where's the leather jacket? >> fully suited. fully suited up. >> he doesn't have the jacket. >> wow. the net worth alone in that room too. >> yeah. >> gates, zuckerberg, and musk. >> do you think if fain were there from the uaw, he'd be happy with that group? >> wow. >> no. no, i don't. >> speaking of, by the way, while we're on autos there, really quick, jim, this jonas note this morning about his own upgrade of tesla the other day, just pointing out a lot of pushback from investors. he goes on to make the point that if he were valuing it as a car business, equity would be overvalued but we think there's a lot more going on there, and he says add exposure on ev weakness. >> yeah. he's just a good guy. i know -- i felt terrible when i hit him because he's one of the few analysts that really reads and develops a kind of a counterthesis. carl, he's nice. >> there he is.

elon. our timing is great today. we're like, we don't even know. we're talking tesla, and there he goes. >> they're going to throw the isaacson book at him. everyone's reading it. >> i just got it last night. i'm going to read it. >> i got the stephen king book, which is better. "holly." it's good. >> ron baron on "squawk" with what's become sort of a familiar conversation, but repeats today. he believes the company will be four to five times bigger in the next seven years. probably not just on autos. >> no. clearly, it would involve more than that. there's elon talking to sundar, perhaps? and jensen. >> how's that, david? what are they saying? oh, jensen. oh, bad blood there? or peace? >> what are they talking about, jim? >> being rich? no. >> no. >> they don't talk about that. they're humble. well, i don't know. jensen's humble. >> yeah. humble? >> not the word for musk, no. >> well, just in general. hopefully they will be talking

about the threats of a.i. i mean, maybe they'll have an actual fruitful discussion with government officials about it, and really -- and help educate, because they certainly need to be educated, our members of congress, about what these threats are, how they see them and how they can best mitigate them. >> i try to get them to talk about profitability immediately, and they make me feel like i'm michael douglas in "wall street." they don't want to hear it. they want to talk about how we're trying to protect people. it's not for show. they don't -- i'll go back and say, that's fine, esg -- no. jim, focus on this. this is what we're focused on. we'll make plenty of money. we got to figure out how to make this so it doesn't hurt people. it's not for sure. i know everybody is saying, give me a break. >> that was ibm, right? yeah. >> david, you need to get in there and moderate. these people are afraid of you after the last few interviews. they're afraid of you. >> they're not afraid of me. elon's not afraid of anything. any time he's ready, i'm ready

to do another interview, that's for sure. >> you and zuckerberg. >> zuckerberg, he's your buddy. when are you going to interview him again? >> actually, i'm going to put the call in today. that's funny you mentioned it. >> i think we're waiting for him. >> i actually am. >> interesting to see zuck and musk next to each other or sort of -- i mean, i don't know. >> you asked the question yesterday. >> i did. i did. ari emanuel, who's close to musk, and it looked like ufc might have sponsored a fight, said, not going to happen. maybe there's peace between musk and zuckerberg as we wait for -- >> david, he said it was -- that he's on the physically unable to perform list. he's on the p.u.p. list, musk. right? >> yes, he's got shoulder surgery. yeah, take a listen to ari, what he had to say about the prospects for that cage fight. >> i don't think that's happening. >> you don't? >> no. >> did you? >> i did at the beginning, yes. >> what happened? >> i'm not really sure.

>> for a while, it looked like it might be ufc sanctioned. >> for sure. >> i think elon had a couple surgeries on his shoulder. remember, he's had a couple surgeries on his neck. it's probably best it doesn't happen. >> wow. our timing has been just amazing. there's zuckerberg right there. and you heard ari say it's not going to happen. by the way, everybody's in a nice suit. they got all dressed up. >> and they're going all day. it starts at 10:00 and will go until 5:00. so, long session as we pay attention to -- some of them have offered sort of ad hoc solutions. remember when musk called for a six-month pause? >> even though he had -- he never believed that would happen, and of course it didn't. there is a lot of -- there is a lot of tension in there. it's not just musk and zuckerberg. remember, musk is also one of the founders of openai, was the money behind a lot of it, and is certainly not happy, he feels,

at least, says that what happened there in terms of the move to for profit. so, sam altman, musk, zuckerberg, it's just interesting in terms of the dynamic and the development of, of course, this, as benioff told you, what did he say? in our lifetime? or maybe you, what did he say in our lifetime or maybe ever, our most important technology? >> he wasn't the only one. i keep trying to get people at a dinner last night, everybody not there was here, and i can't get anyone off their game that this is a 2024 major change that we'll all look back at this moment right now and cannot believe what our lives were like versus what it was like in september 2024. there wasn't a soul who said it was overhyped. just incredible. impenetrable, david, no matter what i did. people just didn't get on board. pretty powerful narrative. >> there's eric schmidt.

>> who's that? >> eric schmidt. has all sorts of national security clearances, by the way. very much involved on that side of things, much more so than any of the other ceos -- obviously not a ceo any longer. >> a lot of people in the room won't be, randi winegartner on this back to school, teachers are already grappling with chatgpt. that's already in front of parents and kids. >> i think the person we have to listen to that may not come up as much is zuckerberg at meta has been more involved with anyone with jensen at nvidia. they're on the firing line because younger people, facebook, instagram, a.i., something to worry about or watch.

>> pretty flattish open here. obviously looking a bit past the warm elements today. dow up 40. s&p up about 5. as we go to break, watch bonds as well. we got to 435 on the ten year, the highest since august 22nd if you can remember what that period was like. two years circumstanlating arou. we got the big echo print out of the day but watch out tomorrow with ppi and retail sales. back in a minute. (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! reverse! next level moments, we're 30 seconds out. need the next level network. [north corridor, hurry!]

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we may have had the vma's last night but this is our business world version of the red carpet as they gather at the senate to talk about a.i. at the closed forum. we'll be on watch for headlines all day long. not any solutions or proposals expected but schumer said he wants the senate body to get educated on this early. >> yeah. it's not even that early at this

point as all sorts of use cases for generative a.i., in particular, are being created. and you have them all there. musk, zuckerberg, jensen wang, and on and on. hopefully it'll actually help because all of these gentlemen and people do believe we need to formulate policies around this. obviously potentially productive new technology but also dangerous. >> in the meantime, let's get to jim in stop trading. >> there's a split between ininvestment bankss and regionals. watch key, the stock had a nice move yesterday, no follow through. people want to own j.p. morgan, citi we talked about the reorg. they want to own wells fargo, bank of america. that's the negative side. you need to see a bigger move in the financials for this rally to continue to do well.

a little worried. i think that this arm deal is going to come in in too hot. we need to see numbers added immediately. i have williams sonoma on. we have sofi. and then i have a discord, this is one of our cnbc disrupters. which one do you think is the disrupter there. how about the one that looks like a disrupter jason citron. >> see you tonight, jim. >> thank. >> been an amazing week so far. >> i got my pajama suit. see you tomorrow. >> take a quick break. dow is up 52. a bit of a defensive stance with utilits the ietop performing sector, along with some consumer names. back in two. >> thank you. you're a rock s. you are a rock star. no more calling co-workers rock stars. look, it's great that you use workday to transform your business. but it still doesn't make you a rock star. so unless you work with an actual rock star.

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good wednesday morning. welcome to another hour of "squawk on the street" i'm sara eisen with carl quintanilla and david faber. we're live from post nine at the stock exchange. data coming in in in line with expectations, a .6% jump from

last month thanks in part to energy cost. the core number coming in if hotter than expected, originally bonds sold off on the move. the s&p up .2%. utilities, consumer discretionary, health care and staples leading. materials and energy lagging. titans of tech on capitol hill this hour to discuss the future of a.i. and how to regulate the fast growing technology, elon musk, mark zuckerberg among the ceos in attendance, eamon javers is live on the hill with us. tell us more. >> we believe all of the big name tech ceos are in the building now. obviously the event is just about to get started. this is organized by senator chuck schumer, he has two democrats and two republicans who are going to be talking in a round table format with all these tech ceos today about a.i. innovation. the idea is to gather ideas and look at the landscape ahead of

potential a.i. legislation out of the united states senate. not clear where that's going to go, but this is a high level meeting we saw elon musk here, mark zuckerberg here. i had a very brief chance to have an exchange of sam alt man of chatgpt fame i asked what his message is, he said he's here to answer the senators' questions. so we saw a number of others, sin dar pa chew of google is here. i had had a chance to catch up with the former google ceo eric schmidt, i asked him what his message to the senators was, he said he's going to tell them ultimately that a.i. is a very, very powerful tool and they need to get ready. so a real sense of mission i think you can say on capitol hill as all of the tech ceos who are intense rivals among themselves gathering on the hill as they try to brief the senators and figure out how to get their arm around the

technology. when the senators are not the most tech save have you in the world. >> it's a brainstorming session? any pledges? at least we got a pledge last time they all signed. >> reporter: that's right. we'll see if there's any document or work product that comes out of it. there is legislation sort of theoretically on the table here. the idea is congress might move on regulation a.i. legislation at some point to come. this is an idea-gathering stage right now. there's been criticism of the meeting because this is not being done in the normal capitol hill format. it's not on television. it's not on cspan it's not open to all the senators. the senators can attend but they won't all be able to participate in. some criticized it as the biggest lobbying meeting in the history of technology because the ceos are here giving input

into what legislation should look like and ultimately they're going to advocate for their own interests, right. you can only imagine that's what they're going to do. >> curious about the format of a meeting like this. i don't know if you know. but there's so much to share. you mention eric schmidt, for example, not a current ceo but the special committee studies project is something that he runs that will make recommendations to strengthen america's long-term global competitiveness in terms of artificial intelligence, he was obviously, as well, chairman of the department of innovation board. there's so much to share, how is it going to be done? >> we know it's a u-shaped table and they're going to sit around the u-shaped table and discuss. four senators, two democrats, two republicans will run the things, so you can imagine with the ego and bankroll will run this.

we will get pictures, which i expect them to come out shortly but we won't see the entirety of the conversation. speaking of conversations, david, i think we have a little snippet here of my brief conversation with eric schmidt as he was walking in a short time ago. take a listen. >> a.i. needs to be both promoted as well as regulated. >> what do you think the reaction is going to be in the room? the senators are not as technically savvy as the rest of you in the room. >> this is what schumer is trying to do. >> what do you think it's going to tell the senators? >> t it's powerful and we have to get ready. >> reporter: you heard him say this is powerful and the senators need to get ready. that's the theme of the day what the senators are trying to do. a vast gulf between the technologists and the senate. between understanding of the technology, the desire of what it can do, the national security implications of it, all of that

being discussed here today. >> at least they're talking about it and trying to understand it, congress that is. keep us posted if if you hear anything from those walls behind you. >> you bet. >> turning to the broader markets and the reaction to inflation. the markets taking it well, the dow is up 34 points, s&p higher, groups solidly in the green and not just the defensive ones. guys, as it relates to the numbers, a lot of ways to spin it. you can say it's inline, worse than expected, you can say the trends are better than expected. you can say the initial reaction to sell bonds and get worried about stocks that comes from the upside surprise to the core cpi. 0.28% increase from last month, august to july. the expectation was .2%.

you round it up it's .3%. you don't want a surprise on cpi. we know oil prices are firmer and that explains that but it's the core number and if you go deeper into what the fed pays attention to. there's the super core, core services, ex-shelter and that was firmer than expected as well as 0.5% bigger jump than july. why? what did we see in august? airline prices ticked back up after a decline they had seen. auto insurance prices spiked a little bit. that was certainly a factor. shelter continues to be a problem in terms of higher prices for the numbers. but the theory is that is lagging and should come down in the next few months. the bottom line wondering what it means for the market and the fed, no change in the expectation for next week's meeting. if it's not an upside enough surprise they would have to do anything about it. they can still pause, nothing to

put a fed rate hike on the table next week. but there's in you have to keep the debate around the need for one more hike in 2023 alive. so right now we look toward november, toward december. and david, it's a 50/50 chance on both of those meetings. >> clearly not sending the all clear signal. >> not the all clear because there's a camp inside the fed that is worried that inflation could flare back up or remain sticky. there are lessons from the '70s inflation paused and came back up. there's not evidence to show that's a problem right now. and if you're one of those economists who say disinflation is here, you can point to the trends which all show down. we have a live picture now inside the room with congress and the a.i. discussion. >> that is a unique assembly of -- >> there's eric schmidt. mark zuckerberg. >> mark zuckerberg. there's satya.

>> there's majority leader schumer. there's musk. that's quite a group. no way around that. hopefully they'll educate the members of congress they're speaking to. >> the fact they all showed up i think shows the importance of the issue and the fact that first of all they've all shifted their business to focus on a.i. and as patriots have to, i would hope, be concerned about regulating it so it doesn't get out of control and threaten humanity. >> there's a difference of opinion to some extent -- maya wiley -- to some extent in terms of the dangers it poses. i think you find altman perhaps being more outspoken than some of the other members of that panel in terms of what they see is the potential danger. for example, musk is also going to be fairly outspoken on it. probably say not an

insignificant chance it could wipe out phumanity. what that means is unclear. but it has to be discussed and there are guide rails that could be applied in the technology development that will lessen any chance when we get to general intelligence this thing starts to write code and why do we need you around? >> looks like the reporters were chased out. the other thing you can hope for when you say "guardrails" for instance is there a role for congress when it comes to regulating i.p. around a.i., is that something the ceos can talk about? you go back to the early days of the internet and section 230, those rules were crafted around ecommerce but ended up creating what some would say was a monster on social media and giving them an unconditional sort of cover for their business models. >> no doubt. >> i think about those kinds of things and these discussions and

who was present at the table, who was all about ecommerce. so it's hard to do this for congress. >> if you can go back 20 years and have something around for social media you can imagine they would be more significant guardrails in any number of areas. in this case it's not just about the threat to humanity. it's about so many other use cases and what it means for productivity, jobs going away over time. i'm sure that will be part of the conversation as well. >> schumer has talked about a conversation he and musk had in the springtime about why congress must ask what questions to ask. how to build a consensus for safe innovation. how to detect deep fakes, attacks on infrastructure. i'm sure that's all on the agenda as it goes until 5:00 this afternoon. our next guest recommends energy as his next pick. adam parker is here. great to have you back. >> thanks for having me.

>> do you have thoughts on the meeting? >> i do a lot of work on stocks i'm going to avoid the politics and humanity part. but stocks, you think about which businesses have sustainably high margin such that if you were a company paying one of those you look to substitute that out. so maybe it's some of the s&p global or mci, high margin businesses can i do something to replace paying them, i'm paying a lot for that, i don't like that. that's one area you try to maybe save money and the second is obviously low net income or revenue dollar per employee. i have lots of employees, can i improve them making them more efficient? people are excited about how fast it's going to be to replace them. some people are like how fast can i replace sara eisen. >> not going to happen.

>> that's not going to happen next week but if you look at businesses, like call centers, that might go away. but more like banks where there's lots of employees. it's very hard to create parallel systems, immediately remove them. a lot of times they invest in productivity it doesn't necessarily mean the stocks go up. maybe it means inferior experience for the end user. so people are too excited about cost cutting potential in the next three or four years for that. i wouldn't buy stocks thinking they have unproductive employees getting replaced by a.i. i think that's more premature. i think it's on the revenue side where you see compute with semis and other things. >> some argue corporate cash balances are high. you're seeing companies begin to make choices if you think about things like buy backs and there is liquidity there for cap x if

they feel there is return on these things. does that make sense? >> yes. there are themes to be excited about. i think maybe people use the letters a.i. as if it's -- oh we're going to a.i. that. well, kind of. we do a lot -- you know, we do a lot of language processing of transcripts trying to do generative things to understand real time maybe semiconductor, it's not that easy to do and i know what i'm trying to do. i don't think everything is immediately a.i.-able on the cost side. it's going to take time. i'm staying away on purpose there's a lot of other issues there and i focus on the stocks. >> economists are watching it related to productivity and the labor market, which we know is tight. and i do wonder how long you think it's going to take before it filters into the broader economy? >> so yeah, i'm trying to say

nice things about economists. but i think the stock market leads the economy. if i think about what happened this past year, you read -- read the biggest four firms' outlooks last september, no one mentioned a.i. we talked about it on this program in march. i think they've gone the other way. they weren't talking about it and now it's everything. i think the truth is in between. there are kernels of truth being exaggerated. you start reading economists saying 50% of all employees are going to be replaced. i think that's a little hyperbole at this point. >> what do you do with stocks at the moment. there's been a lot of soft landing narrative -- >> gold ilocks. that's where we're at. you talk about it on if network of good is bad, bad is good, all

that. people don't want it to be too strong for the market. we're in the gol dee -- >> goldilocks zone. what i do all day is talk to institutional investors so i can tell you that's their view of the world short term negative and end the world higher. doesn't happen the way people think ps but that's the view. i look at the market and see three or four things i'm excited about. both long and short, over weight and under weight. the thing i'm probably -- three areas. you mentioned energy, i think you're seeing that's the best performing sector the last three months, nobody is talking about it. supply demand looks bullish than any longer term view so i like that sector a lot. it won't act great if people really worry about a recession, that's obvious on the demand

side. you can't replace the math of low cap x with decent demand. the other two things i'm excited about is negative on retailers. we spent a lot of time on our research side the last few months looking at shrink or stealing the financing arms of those businesses and so many bad things happen to their cost structure. so i don't see how these dollar stores and target and those things are going to act well and how they can have reverting profits. so i think it's a lot of exciting things for people to avoid. you live in the new york area. you know you don't want to walk into one of those stores where there's product behind glass and someone has to open it for you and the inventory is mismanaged. there's no will to change that any time soon. so a lot of things happening behind the surface to get me interested about long and short ideas. i think that's where we're spending our time. >> that's good.

>> i think about the mistakes i made in my career. like the first explanatory variable would be i confuse cyclical for structural at the wrong time. another i would be a little worried about is machinery. they have record high inventory, high earnings estimates, cyclical businesses and everyone thinks automation, on shoring, all of this is going to be the next greatest thing. there are elements of that, exaggerated so do i want to buy stocks with high inventory, high expectations, valuations, not really. i think the upsidedown side scene owe looks better. looks better on the surface. >> your supply thesis is backed up today looking at the undersupply. >> they're cyclical we know they are. they can't grow forever. we're hearing people say i'm negty on the stock market but like industrials as my top sector not a lot of evidence that works. >> adam, thanks.

>> good to see you. as we head to break, here's our road map for the rest of the hour. a.i. regulation in focus as a number of the big ceos meet with lawmakers on capitol hill. we'll bring you the latest as it happens. >> just a day away from arm's big ipo. what investors need to know. >> the strike facing ford and gm what it means for the stock? big show, don't go away. the first time you connected your godaddy website and your store was also the first time you realized... well, we can do anything. cheesecake cookies? the chookie! manage all your sales from one place with a partner that always puts you first. (we did it) start today at godaddy.com what do you see on the horizon? uncertainty? or opportunity. whatever you see,

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welcome back to "squawk on the street." check out shares of apple lower down 1% on the heels of the new iphone 15 release. our next guest was at the big event. joining us is dan eisen. he just raised his price target on apple to 230 as an outperform rating on the stock. what did you learn, dan? >> look, my opinion this is still massively underestimated by the street, in terms of what this upgrade cycle is going to be. if you look from a chip perspective, battery technology and what is ultimately going to be massive promotions we'll see from the carries like verizon, it's going to be what i view as a mini supercycle and i think the street is going to under estimate estimate. >> you think users around the world have not updated in four

years. >> we think ultimately about $100 more from an asp perspective. >> didn't they not raise prices? >> they raised prices on the max pro. look at pro, they kept it the same. the most important thing is the mix. out of asia checks, seeing 75% roughly are going to be pro and promax. what typically is 60%. a huge uplift for apple. when you look at what the street is calling it, maybe a knee jerk reaction here and maybe not expecting that this is a wow type of launch, i disagree. i think when you see how this all plays out, i think it could actually be iphone units up year over year and the important thing is, in terms of china, we've done a lot of work this week, talking in had and out of beijing, a lot of experts that we talk to, it further confirms my thesis that this is bark a lot worse than the bite.

500,000 units at worse -- >> you're talking about the government ban or what we called or what it was reported as. do you think you're talking to the right people? you have asian supply chain checks. you have government i guess chinese industry contacts but you think you're talking to the right people? >> these are contacts for us that over the last, seven, eight years with all the black swan events that apple is going into, they navigate well. there could be some scrapes, i'm not saying this is rosy and rainbows in terms of having the champagne dinner in beijing. but what i do believe is that the fears here are way over blown and i think when you look at huawei, it's essentially the equivalent of an iphone 12. if you compare it from the technology perspective. i'm not saying there might be, in terms of shot across the bow and sort of warning shots.

but overall, in my opinion, this is, i think, ultimately going to be a lot better than the street is anticipating. we believe 45 million iphones will be sold in china, only 500,000 could be impacted there. >> when do you see revenue impacting year on year, if it's not this year, in the middle of the launch, isn't that weird? >> yes. december to march you have services double digit growth, fx headwind starts to become a tailwind and ultimately you have units that start to uptick, 4, 5% with asp uplift, combine that with where it goes, you're looking at a renaissance of growth for apple. some argue the valuation, and i get it. but i view it as the services business, that goes to double digits, that's 1.4 to 1.5 trillion. >> tim cook is not in the room

with congress right now. is there an a.i. story with apple? >> we believe it's 2025 when they come up with the a.i. app store. i think that's a huge -- >> what's going to be the a.i. app store? >> we believe, this is our view in terms of talking to developers. vision pro, the start of a new form factor, essentially a new app store they're starting to build with developers but that's going to go into what's a.i. apps specifically in the app store for apple. that's another area of modernization from health to fitness to life sciences. apple, when you put it together we believe they spent as much as microsoft has on a.i. they're not on the outside looking in here. they continue to play the long game and it's one where it's hard to argue with what apple has done from a success story. >> that's a headline, they spent as much as microsoft on a.i. that's surprising to people.

dan, thank you. good to talk to you. dan ives. still to come, time is running out for detroit automakers to make a deal with the union. we have the latest on the negotiations next. a quick programming note, an interview you do not want to miss monday morning on the show, treasury secretary janet yellen joins us with her outlook for the rkmaet, labor, inflation and more. don't go anywhere.

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automakers in detroit, less than 48 hours away from the potential start of a uaw strike. phil lebeau joins us this morning fresh off the sitdown with the uaw president. phil? >> when we talked about with the president of the uaw, he made it clear they plan on going on strike if they can't reach an agreement by 11:59 p.m. tomorrow night. here's where things stand. last night they gave an update to the local union basically saying targeted strikes are likely at different automakers as opposed to to going across the board at one automaker or

all three. the issue is wage raise, the automakers offering in in the mid teens, they're going to come together on that eventually. here is the president talking about how serious they are about striking if there's no deal. >> we're consistent in our message that september 14th is a deadline not a reference point. we expect all three companies to have that agreement. if they don't, there will be action. so, you know, so we can get there. but the companies need to get serious and buckle down. we're 48 hours away. so we have a lot of work to do in 48 hours. >> reporter: as you take a look at shares of gm, ford and sfe l stellantis getting a little bit of a bump higher. when ford unveiled the f 150 jim far lee was there and he was asked about the negotiations saying look this is the best offer we've ever made.

it is true. probably the most gm and stellantis have made in terms of offers too. but they're coming off record profits. from the union perspective, that's great, but we think we should get more. and jim farley said there is a limit. i don't know if they're there. we'll see what happens in the next 37 hours. >> phil lebeau, keep us posted. it relates to the inflation data today because the fed has to be watching this. if we get a prolonged strike that could have implications for the supply chain and worry about inflation which they're just starting to beat down. we know that new and used car prices have been an issue before. bank of america put out a note saying they don't believe it's a problem, any risk to inflation is limited. this is interesting, ghes ik

suppldes domestic suppliers have supply so they don't think there's a big impact. they do see it as a hit to gdp as the strike goes on. >> they've talked to all three automaker saying stay at the table. arm less than a day away from the blockbuster ipo. what investigaors need to know we break down what might be the biggest debut in years. back in two. every day, businesses everywhere are asking: is it possible? with comcast business... it is. is it possible to use predictive monitoring to address operations issues?

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welcome back. here's your cnbc news update. the two week manhunt for the convicted killer who climbed out of a pennsylvania prison is over. a couple hours ago authorities recaptured danelo cavalcante

while he was sleeping in tall grass. police say he will be taken to a state facility soon to serve out the rest of his life sentence. officials said today more than 5,000 people were killed by devastating flooding in libya's coastal city of derna, a storm pounded libya on sunday causing two dams to burst. officials say at one point it was submerged by waves reaching 23 feet high. a bridge connecting ohio and kentucky reopened this morning after police received a call from a man threatening to blow it up if he didn't receive $400,000. several agencies checked out the bridge, including homeland security and determined the threat was not credible. carl? >> thanks. it could be the ipo of the year. arm holdings getting set to price shares after the close today in a big moment for the

semis and ipo market at large, we break down the action here. talk to us about what you're hearing about tonight? >> it should be the biggest ipo of the year, in fact, the biggest in several years. it is a scaled down marketing process from what was initially expected. what i'm hearing is that the book is currently over subscribed about ten times so that bodes well for pricing and they should be pricing at the high end of the range or above given the demand. so that indicates valuation of about $54.5 billion or higher. now that is great news for the psychology of the deal and the obvious strategy surrounding the deal but initially there were reports out there this could be could be valued at $70 billion. so it's a discount to what had previously been reported in terms of the targets they were seeking. but none the less, not a bad

strategy to go in with a more muted or modest valuation with the hope you get the demand, the book filled, multiple times over hopefully and then you can guarantee or hope to have a pretty decent debut when this thing starts trading tomorrow. we want to bring in kristina partsinevelos to talk about not just the capital markets element but also the business model itself. >> which is important because this is a company that provides the architect for so much out there. you have the $54 billion valuation leslie talked about chips and a.i. setting up the ipo for success but the hype may not be warranted. think of arm as a coding blueprint for companies like nvidia or apple to use to do their own chips. really what they do is they charge a licensing fee and a royalty on every chip that

contains the technology. which is a great achievement but leaves concern about future growth when penetration levels like 99% in all smart phones is high. also, arm specializes in coding for cpus, not necessarily those sought after a.i. graphic processing units, arm calls the gpus its complementary business in the perspective. other risks include about a quarter of revenues coming from arm china, which operates in a black box as an independent entity. also has high levels of r&d spend and derives revenues from five customers. so there's of course nvidia, ftc in arm and the balance sheet is strong but there are risks ahead of the i po and it's important

to note. >> what do you hear on the risk factors, leslie? the china risk which we've been talking about in recent days. are investors looking past it? >> yeah. it's been a big concern. and i think that's one of the reasons why the valuation had to be discounted is that you have the customer concentration risk. you have the outsized exposure to china in particular and uncertainly over the growth prospects of that market and then, of course, this is a company that's not a major grower right now. it's a controlled company, soft bank will own about 90% of the company after it goes public. all of those risks, especially in light of what we're seeing, where we are in the smart phone market, is this a trough or does it stabilize at the lower levels. all of those are concerns that investors are grappling with. if you can get a deal and feel like you're getting a deal and discount in terms of buying

shares, perhaps there's an upside. there's an analyst note out this morning which showed a price target of 59 per share representing about a 15% upside. so, you know, that's -- that's decent on a one-year basis. i it's nothing to really deliver alpha in one's portfolio if it's down but nothing to shy away from. >> the multiple we're talking about there, even with the significant up tick in its growth rate is not insignificant. >> yeah. it -- >> no. sorry go ahead. >> christina, go ahead. >> after you. >> the valuation is not insignificant. it's the -- the -- the -- you just talked about the ratio. but leslie used the word conservative. we have to go back to 2020 when nvidia tried to buy the company at $40 billion, ftc blocked it. talking about a valuation at 54.5, possibly more. it's crazy to hear the word conservative with that much

amount of growth in three years, especially when soft bank bought the company at 32 billion back in 2016. in terms of just you were talking about price targets everyone is hyped up but only 10% of the float is available to retail investors which means there's a lot of clamoring for a small portion of shares when institutional guys already got in. >> there's going to be plenty of hedge funds and other institutions that buy the stocks. >> exactly. >> it's a small float, 90% controlled by soft bank. unsure if they have any intention to sell beyond that. while we have you, leslie, we shared the news on citi, another beat you cover closely for us in terms of at least simplifying the reporting structure. what do we make of these moves by jane frazier? >> i think this was decently

telegraphed there would be structural changes here. a source tells me on background we could expect to see as we would with any organizational shift of this magnitude we could see job cuts as a result of this. we don't know the sides of the job cuts but that's something to keep in mind as well as the financial implications of layoff and restructuring. i know jane fraser is speaking at the barclay's financial services, she wasn't originally on the skchedule but she said te changes are most consequential in how citi will be organized and run in 20 years. so they're creating five businesses, division heads report directly to her, which helps her have more of aing like in sight as to what those businesses are doing. their goal is to streamline and make sure that everything is transparent and operating officially. so we'll see if they're able to

execute on that front. >> leslie, kristina thank you both. arm less than 24 hours away from beginning trading, we expect. titans of tech on capitol hill this hour. we watched the arrivals in the 9:30 hour. they're meeting with lawmakers behind closed doors talking about the future of a.i. and our next guess said he wishes lawmakers were serious about regulating the technology. roger macnamy joins us now. at this table you have a lot, do you expect anything out of it? >> i expect chuck schumer to shake these guys down for large contributions. >> you're a sin nick. >> -- you're a scynic.

>> that's how this game is played. if they were serious about regulating tech, the thing would be filled with people from civil society and the people who have been pointing out, correctly, there's a lot of hype here and not a lot of substance. which is not to say that generative a.i. cannot eventually be a valuable tool but it's not one today. the way the thing is set up, the people making money are members of congress who get campaign contributions. and i think microsoft is particularly well positioned because the way the thing is structured, open a.i. is essentially a sharecropper on the microsoft azure platform. and at the end of the day, most of the profits from whatever gets done by open a.i. are going to be captured by microsoft. they really have all of the purse strings here. and i think, as you look at it, we want to be careful, david, to remember the history of

enterprise software in the early '90s when a mania was created around specifically s.a.p. what was incredible for investors if you shorted the hundred largest s.a.p. customers in the '90s that was one of the greatest short plays all the time because the technology was hopelessly overpromised and customers didn't get a good return. yet s.a.p. became a valuable company -- >> you think the technology is overhyped. are you not concerned about the dangers it presents to humanity, to the workforce, to deep fakes? so many different things. >> oh, no. i -- i take all that as a given. i don't think the existential risk is real. i think that's a rhetorical trick to make us believe this technology is inevitable. i believe the harms going on to

intellectual property, so copyright theft. people's privacy, their ability to do their work successfully, for students to actually learn, those things are baked in in, they're happening already. when you talk to educators about chatgpt, they view it as inevitable so they're trying to adjust around it, notwithstanding the educational flaws built into it. again this is a classic example of something sold incredibly effectively but the thing that's sold is not effective. >> you've been such a critic of social media for so long and correctly so perhaps. imagine if a meeting like this had taken place 20 years ago, you think nothing would have come out of that as well? >> campaign contributions did come out of it. >> we didn't know the dangers of social media as much as we know now 20 years ago. can't you say at least roger there's a recognition here that

the development of this technology over time does pose certain threats we can try to mitigate right now if we educate our lawmakers. >> i only wish that was true. i have spent seven years trying to educate lawmakers about how to think about the culture of technology. the thing here is we had a series of things that began with the second generation of social media, went to ride sharing and the gig economy, then to crypto, self-driving cars, the metaverse and now generative a.i. and each was 0% interest rate, they promised the moon, promised massive market cap by spending billions, losing billions you and creating the illusion of inevit inevitability. it's the same plan back to social media with the same harms. and the thing that's really incredible is we don't learn. what's wild about this one is microsoft i think stands to profit a lot from this particular spin on the game.

and, you know, it's a public company, which is, you know, something investors can look at. >> you said you want more members of civil society in the room. the afl-cio leader is there. who else should be in the room? >> there are five or six -- what i'm saying is ratio is what's wrong. we all know what big tech is promising. the spin game has been so effective. it's one of the most effective marketing campaigns in history. we know what they want. if you were serious about regulating you would have meetings with just civil society and have meetings you said listen what is the thing we need to worry about today? in congress, if a members of congress uses chatgpt, it's the level of national security risk is off the charts because the technology itself, it's not just that it gives you bad results, they know who's asking the question, they know what the answer is, and we have no idea

which agents of foreign intelligence services are working inside these companies. we know they're working inside all the tech companies so you have to believe they're inside all of these as well. and the whole idea you're going to do things that touch on the nation's security on a platform that is this this insecure, is insane. and yet, that's congress' own use. and for members of congress who are fighting for the right to use this technology, despite that risk. >> i mean, you just keep getting more cynical every single day, roger. >> well, david, the problem is i've been around too long. and when it turns out that we're wrong about all of this, we should sit down and have a beer and talk about it. but the issues thati'm looking at here are not that investors don't have an opportunity to make money. it's that the big money will come from being short the large corporations that invest deeply in this technology. because i don't think they're going to get any return for a really long time.

>> interesting, the investment side of it is something we can continue to discuss in the future as well. roger, always appreciate it. >> my pleasure. >> track those campaign donations now. just a day away from an exclusive interview you do not want to miss. citadel founder and ceo ken griffin fresh off the launch of a new philanthropic brand called griffin catalyst, just announced today, after having said that he's given away already $2 billion in philanthropy. that interview about that, the markets, the economy, ai, kicks off here tomorrow at 10:00 a.m. stay with us.

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stocks have improved a little bit here this morning. the s&p is up 0.2%, technology stocks are now positive. it's why the nasdaq is up about a quarter of 1%. and all the major averages now higher for the week. this as the market digests the inflation numbers today, pretty much coming in in line. look at the bond market reaction. that's always where you go first, especially the ten-year in this sort of thing. when the numbers first came out, that core inflation that the fed pays such close attention to came in a little bit hotter than expected thanks to airline fares a little bit, car insurance was

a little bit of a problem. the bottom line, carl, is, going through some of the reaction, the way the market is taking this, no change, to no -- it's an expectation of no action from the fed next week, but does clearly put november and december still on the table, because we do still have an inflation issue in this country, and that's what the fed is targeting. is it coming down and improving a lot? yes. for instance, you didn't ask me about white bread, but we're seeing deflation there. deflation in white and wheat bread. some of these painful points for the consumers have calmed down a little bit, but still way up. >> lodging away from home, at the top of the nine, down three. i see the president just now tweeting about three-month annualized 2.4, which is probably the best thing the bulls have going right now. >> that's what he should do, 3-month, 6-month and 12-month, all those trends look better. >> meanwhile, bitcoin below 25k as consumer headwinds take a pit. some investors fear the sell-off

may be beginning. our kay rooney joins us with some of that story. and some of it involves ftx. >> good morning. so ftx holds billions of dollars in cryptocurrency, which needs to be sold in order to get money back to the consumers in its high-profile bankruptcy case that it's going through. the threat of what could be a major liquidation event has certainly weighed down prices this week. you mentioned it in the intro, below 25,000. we will get some updates this afternoon when ftx is back in a delaware court and set to discuss off-loading this stockpile of crypto it's got. according to an updated bankruptcy document, $3.4 billion in various cryptocurrencies have been marshaled by the new management. the bulk of that, roughly $1 billion or so is something called in solano. half a billion in bitcoin, roughly $200 million or so is in ether. the remaining is in thousands of smaller coins, as well. and if approved, guys, these sells are set to be facilitated

by mike novogratz's galaxy. the government holds about 1% of all the outstanding bitcoin through criminal cases and things like asset seizures. plans to sell about 32,000 bitcoin in three separate tranches. while the government is likely to try to minimize a market impact, doesn't entirely eliminate the possibility that this could add some pressure, downward pressure on prices. they also point to july, when the doj did get a big bitcoin sale, and it did negatively affect prices. guys, back to you. >> kate, thank you. kate rooney. "squawk on the street" continues after this break. don't go anywhere. (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! reverse!

next level moments, we're 30 seconds out. need the next level network. [north corridor, hurry!] -coming through! -or 3, let's go. the network more businesses choose. transplant received. at&t business. every day, businesses everywhere are asking: tris it possible?ed. with comcast business... it is. is it possible to use predictive monitoring to address operations issues? we can help with that. can we provide health care virtually anywhere? we can help with that, too.

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good wednesday morning. welcome to another hour of "squawk on the street". i'm carl quintanilla with sarah eisen. vince reinhart with his reaction to the contrpi print. and news street puts its best foot forward initiating a bu