for august. why haven't we had plants? that's why we notice them. weekly jobless claims and the ecb latest raidte decision. plus, arby's is the blatest fast food chain to discuss the lawsuit over the claims it has the meats. it is thursday, september 14th, 2023. "squawk box" starts right now. good morning. welcome to "squawk box" here on cnbc. we are live from the nasdaq market site in times square. i'm becky quick with joe kernen and andrew ross sorkin.

here we go, folks. it's thursday. lots happening this week. if you check out the futures, they are higher. dow futures up 90 points. s&p futures up 12. nasdaq up by 50 points. this does come after gains for all three at the major averages yesterday. treasury yields have picked up a little bit. we have looked at the 10-year treasury above 4.3%. now at 4.26%. 2-year treasury has been just at 5%. it is at 4.98% right now. let's update you on the looming auto workers strike. shawn fain said the union and automakers are far apart ahead of the likely strikes. the strikes would begin at an limited number of locations. an all-out strike is still a possibility. fain providing clarity with talks with each of the big three. ford offered a 20% raise

followed by gm at 18% and stellantis at 17.5%. the union has been pushing for a 40% wage increase. in the meantime, a bitter battle of words with jim farley saying fain's accusation saying they are not negotiating and not showing up at the bargaining table. he was supposed to be there on tuesday and far therley was not there. we will have more with phil lebeau on the story coming up. >> they are using u.p.s. as a template as what they want to get through. it doesn't sound like they will get to the levels. >> farley -- i didn't get optimistic with our interview with farley or with shawn fain.

competition is just a race to the bottom. i don't know what that means. it is the way of the world. it is what drives profitability and capitalism and everything else is competition. i don't know. maybe you need to subsidize the big three and that is the only way to do it. if it is too expensive to make cars over other automakers -- that will happen again. >> the idea if you see the wages as they point out, fain said 5% to 8% of costs that go into the labor, the problem is you have labor down the line if you look through the supply chain. all of the labor payments are based on this contract. all of that fades into the cost of the vehicle over time. >> the most impressing thing is

the journal talking about the census that the average worker has lost $4,000 of real income since 2019. >> which is why they are asking for gains like this to make up for it. >> that's the problem. inflation eats it away. we can't blame all of the inflation on joe biden's policies, obviously, but some of the spending has to do with that. you have the well intention programs where you think stimulus or ways of transferring wealth to help income inequality. you do all of those things to help the people on the low end and if you connect all of the dots to where it leads, the inflation causes the people you are trying to help be worse off than where you started. >> you look at the real-life

experiment around the world. look at the $4,000 figure behind in the united states. do tyou go talk to the people i europe? our inflation has been man imperially managed better than any other country around presidethe world. >> that's not new. >> to look at the spending piece of it -- by the way, could have been done better. >> what if it wasn't done at all? >> i also think it is a separate piece. we can look at the biden administration and trump administration. at the time, we can relitigate covid and policies and all sorts of things. the truth was we needed to help

people who, by the way, back then were not losing $4,000 a year by inflation. they were losing $4,000 a month because they didn't have a job to go to that would pay them. >> what about the stimulus in the third andi fourth round? look at this headline. more people trust trump than biden. they looked at every possible way not to say that. i guarantee you. other numbers. anything in the world for "usa today" not to put that in print. what causes that in voters' minds to think that? >> i don't know. >> you and jared bernstein cannot find out why voters have it good under bidenomics.

i'm arguing well intentions. it leads you to help the people that you are hurting. >> we can debate this all day. we can debate the last piece of spending. >> go on. >> how much of that is the i.r.a.? >> it is trillions. it would double the deficit from last year. >> you want to know why people say this? when they look at unemployment rates and they look at -- honestly -- >> they are making $4,000 less in buying power than four years ago. gas prices are 70% higher than when he took office. >> that's true. >> thanks. >> i'm saying i think the oil piece of it is a big piece. >> and groceries. >> and all that. i also think they hear it over

and over again. that's how this happens. >> okay. they don't really know they don't have money after they buy groceries? they are hearing it from who? not the mainstream media. >> no, no. >> where are they hearing it? from me? we need to talk to neilson. i don't feel i'm reaching that many people. a.r.m. holdings will begin trading under the symbol a-r-m. leslie picker is here with more. how are you feeling? are you feeling flush? i'm shocked when everything costs $7. doesn't matter what it is. >> that's why i made my own coffee at home, joe. it is getting crazy out there when you buy $7 coffee. this ipo also quite expensive. pricing at the high end of the

range. largest we have seen in years. some are hoping for a successful debut will pry open the i po window which has remained shut for 18 months. investors are mixed. val anuation coming in hot more than 100 times last year's earnings. that is double most of the piers. -- peers. a.r.m.'s top and bottom line vs shrunk the last six months of the year. a.r.m. is playing into the trendy areas of business right now. chips exposed to a.i. a.r.m. said it is central to a.i. and machine learning by working with alphabet and meta and nvidia to run a.i. however, a future risk is the

exposure to china for a.r.m. a.r.m. says it faces increasing competition with chinese companies which develop their own ip as beijing's push to have a self sufficient semiconductor industry by 2025. it may make it tougher for a.r.m. to compete there. the shares are set to begin trading within the next seven hours. this is not my only coffee today. it is my first. >> thank you, leslie. i might have another one this morning. normally i don't. caffeine. a love/hate relationship. you give me a duff beer from "the simpsons." you open it up and it is a false front. programming note, david faber has the interview with the ceo and founder of a.r.m. and

softbank. masayoshi son. you know him? >> you call him masa. >> just masa. >> his friends do. >> those who know him. >> 90% of the company. >> i wish i owned 90% of something. when we come back, a busy day for economic data and the ecb latest interest rate decision is coming up. we will get you ready next. also, survey data found that less than half of gen gen z americans are thriving in their lives. suzy welsh will join us to talk about it. you are watching "squawk box" on cnbc. >> announcer: this cnbc program

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welcome back. the ecb set to release the latest interest rate decision at 8:15 eastern time. at jackson hole last month, christine lagarde stressed the outlook is still uncertain. we will monitor her news conference and bring you high highlights. we have economic data in the

u.s. and august producer prices and retail sales as well as weekly jobless claims this week. two earnings report after the bell is adobe and home builder lennar. we are watching shares of hp. berkshire revealed in a filing yesterday it sold 5.5 million shares of hpq for $158 million. that reduces the stake below $2.3 billion. no word on why berkshire sold. the share price has fallen 19% since berkshire revealed an unexpected $4.2 billion stake in the company. that stake was revealed and yesterday, they sold a portion of it. that was over three days. monday, tuesday and wednesday they had to file because they owe more than 10%. joining us with her top picks and what she thinks about the market is stephanie link at

hightower. stephanie, before we talk about the three top picks, let's talk about the a.r.m. ipo. it is capturing the attention of the market. it is a huge ipo. if you are looking at pricing, it is relatively expensive. the only other one that was more expensive was nvidia. what do you think about a.r.m.? >> it is an interesting story. 20 times revenue. i think the important more than aspect here is less on the stock and more on activity in capital markets which is starting to pick up. that is very interesting. it coincides with what james gorman, ceo of morgan stanley, said in the last month. capital markets and investment banking is starting to pick up. that is encouraging and healthy. >> makes you feel better about stocks overall? juices are fleeowing again?

>> it does and for the capital market stock. the way to play the a.r.m. deal is by owning morgan stanley or goldman sachs or bank of america. those stocks are left for dead, if you will. they lagged materially this year. it there is real opportunity here. >> let's talk about your favorite stocks. part of the consumer and what you think about things. you own tjx. you think the consumer is in decent shape? >> it has been in good shape. it is empowered by the job market and higher wages. inflation is hurting to some extent. that is why i like the off pricers. all an of the excess inventory in the retail channel will help the industry and people are trading down to some extent. they like the treasure hunt. the long term algo for tj is two times sales growth and expansion and market share increases. they have about 46% of market

share. i think they can get to 50% over the next couple years. remember last quarter, they grew comps at 6% and gross martgins t 254 basis points. i think that will continue to be the theme throughout the rest of the year. >> stephanie, we have talked about oil prices and how they have picked up again. why do you pick halliburton? >> it caught a bid the last couple weeks. i'm looking for the laggards. the halliburton has lagged. it is up 7.5% year to date. the stock trades at 14 times forward estimate. it is the leader in the u.s. onshore market. i think their international exposure is under appreciated. you are starting to see a balancing in the demand in pressure pumping in north america. that should lead to better

pricing. all of the oilfield services companies, becky, implemented technology for pricing power. this company is doing the same thing. they have the electric pumping business technology helping their customers become more efficient and gives them more pricing power. i like it because it is cheap and i think you will see a second half of the margins. >> we talked about inflation. yesterday we got ppi and today is cpi. that played its way through the companies. farmers have had to deal with higher inflation costs. that is a story for a while. they got even squeezed for years. what makes you optimistic about deere in. >> -- deere? >> it trades at seven times ebita. it is running at 25% of 2023

levels of $14 billion. i like technology implementation with precision agriculture technology. margins are expected to grow over 500 basis points this year as a result of their technology. industry leader. good new orders and cheap stock. i think overall farmer profitability is better than expected. >> stephanie, thank you. we ran through a lot very quickly. thanks for getting up early. >> sure. coming up, musk has a beard. did you see that? >> i did see that. >> the big take away from the high profile summit in washington. that's coming up next. and arby's is the latest fast food chain to face a lawsuit accusing it of false advertising. you know the advertising. "squawk box" will be right back.

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welcome back to "squawk b box." now to the a.i. summit in washington. here's what elon musk told cnbc after the mooeeeting. >> it was a very civilized discussions among the smartest people in the world. i thoughtsenator schumer did a great service to humanity here. i think something good will come of this. i think this meeting will go down in history for the future of civilization.

>> chuck schumer did organize the meeting and asked everyone in the room if government needed to play a role in governing a.i. everyone raised their hand in the room. senator ted cruz shared a skeptical view of the congress ability to remegulate emerging technology. >> of course, congress doesn't know what it is doing with regard to a.i. this is a body where, you know, it seems the median age is 106. it this is not a tech savvy body. one of my coal lleagues a few ys ago referred to the internet as a system of tubes. the idea of the members are barrelling down the road to have the federal government regulate a.i., i think that makes no sense at all. >> we will bring you more details from the a.i. summit in the next hour. >> if not them, who?

>> when elon said some of the smartest people in the world, i assume he was talking about the tech executives. >> he was. >> obviously. it's them and the politicians, right? are we in the top -- no. arby's is facing a class action lawsuit claiming the roast beef sandwich advertising is not real. >> it is not as big as you said it was. >> it is about the quality of the meat. >> any advertisement where the product looks like in real life. >> it is not roast beef. the court filing is that sandwiches contain half the meat. >> quantity. >> advertised in the marketing

mat materials. the brand intentionally portrays the sandwiches as larger than they are. it's just the latest in a series of lawsuits against fast food companies, including burger king, taco bell -- hold on there. alleging the menu items served are not the same as those in the advertisement. remember the horrible taco bell you said david novak -- they said it was mystery meat. they pretended it had hardly any meat content in it which brings us back to the great first vacation. >> vacation the movie? >> hamburger helper. there's no ground beef, eddie. they really don't need the meat. they didn't have the money. sad. remember that? >> i don't. >> you know who watches the

show? the legend randy quaid. >> i remember the movie. i don't remember the scene. >> i don't think he minds. that was an iconic. al bundy is mad he is still al bundy. >> he is happy with the role of "modern family." coming up, suzy welch will join us on gen z generation is optimistic, not pessimistic. as we go to break, here is a list of yesterday's winners and losers from the the s&p. (sirens) >> announcer: executive edge is sponsored by at&t business. next level moments need the next level network. ase confirm requesting back-up.] -changing route. -go.

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look at the screen. it's green. 90 points up on the dow. nasdaq up 60 points higher. s&p opening 15 points higher. also with optimistic news. suzy welch is here. the latest survey reveal that 76% of generation z feels optimistic about the future. 40% only feel prepared for the future. we will talk about that in a second. while they feel hopeful, it has hit a hree-decade low. here is school of business professor suzy welwelch. they feel better about the situation. >> you know, when i first read about the results, i thought the death of gen z is exaggerated.

our generation is they are over. they are entitled and lazy and don't want to work. they are filled with hope and optimism. the number is high. 76% is optimistic about the future. 85% believes they will achieve the goals they set out for themselves. the general population, us, not gen z say forget it. they will never achieve an anything. >> who is right? >> we will find out. they want to know how to achieve. they want to learn more. i think they want a different future. that may be the source of the frustration. when the poll asked what is your dream and your american dream, they said something that is startling. we want to make enough money to live comfortably. that sounds like an okay goal.

when the word comfortably is not about financial security, but it is anxiety. they will do anything to avoid anxiety. they want anxiety-free lives. that is we saw quiet quitting and lazy girl jobs. >> and this is taking a generation or two back, the answer would not be comfortable, but do better than my parents. >> that is right. they have a tamped down diminished american dream. who is to say it is wrong? the implications for business is they are moving away from work and business being the source of their hoappiness and self identity. >> they grew up with the great recession and followed by covid and pandemic and crazy lockdowns. >> yes. the view of the future can be -- >> if you look at those things

and watched your parents in the great depression, you will not watch or sacrifice for nothing. >> for the man. >> am i wrong to have more hope for gen z than the other named generations? >> no. i have a lot of hope for them. they have one beautiful thing. >> different from the hoverboard generation? >> they are, at least in my classroom, i talk to a lot of people from gen z. they want to have meaningful lives. >> not just apps? >> no, they have more real-life communication than the previous generation. >> we have talked about the unknown m union movement across the

country. how does that play into this? >> i think gen z would be more likely to be unionized than previous generations because they don't trust institutions. their trust in institutions is an an all-time low. they will not trust their boss. >> the union is not an institution? >> they don't know that. >> the management at the unions. >> management is the institution or boss. they don't see if i unionize, it will take me out of management. they don't have long-term views of how long they stay at the company. >> i'm curious with the kids in your class. how entrepreneurial are they relative to a decade ago? >> i have a shiny, bright mba. >> they should be -- >> they are extremely

entrepreneurial. they love the entrepreneurial life, but they don't want to work for somebody else. somebody else can control your lifestyle or can introduce anxiety in your life. part of the lure and having been an entrepreneurial, nothing is more anxiety ridden. >> how is the curriculum over what you teach or colleagues teach or changing as a function? >> i keep up the classes on entrepreneurialship. i started talking about the discovery of what you should do in your life. we put it out there and we didn't know how people would respond. there was a generation of people standing still so they could figure out what they do as the next step forward. it was go, go, go for us.

we got to the stage in our life where we said what is this beautiful house like the talking heads song. they used to have the mid life crisis. >> morgan stanley and black stone would not be on the list 20 years ago. they would have thousands of applicants for training jobs. >> there is the group of high achieving kids coming from the top schools which will be feeding always be the conveyor belt. there is a number with alternative versions of the future which include serial career. work, take time off. i never thought of it that way. >> final question. as an employer, what do you do about this shifting wind? >> i think with all of the gen z

and employers, i heard frustration of how do we manage these kids. they come to learn like all other generatigenerations, they be seen and heard. they want to be, according to the research, they want to be taught how to function in the world. they feel school has not met them there. if you say let me he tell you how to live, they are open to it. >> i would say it was the same when i was in school. you come out of college and if you had a job, that was more training than school. >> you didn't feel i want to learn how to get a job. gen z students are saying i want school to teach me how to get a job. almost like apprenticeship. >> useful. >> suzy, thank you. >> thank you. >> that's optimistic. optimistic, but not. maybe we're measuring it the wrong way.

>> we want to turn it, tune in and drop out. everybody in the '70s. >> gen z doesn't want to do that. >> we talked about that before we started. we all feel that way this college and we turn into what we've become and i hope for the millennials and eventually gen z. >> we were more willing to take on anxiety and the trade offs they don't want. >> life is about challenges. there will be anxiety. billie jean king. pressure for privilege. when we come back, we will ty you live to detroit for the latest on the looming auto worker strikes. later, the take away from the forum on capitol hill. we will talk to one of the moderators, senator todd young. "squawk box" will be right back.

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now let's get to the latest on the looming auto worker strikes ahead of the strike deadline. phil lebeau is joining us from detroit. phil, we are getting down to the wire. >> reporter: we are, becky. we are 18 hours away from the

possible strike from the uaw. yesterday, the uaw came out as they have been over last couple weeks saying here is where we stand and where the big three stand with the most important issue which is a pay raise. how much will the prices or the wages go up for the uaw members in the next four years. the gap exists. they say 40%. i talked to people who say they are closer to 35%. according to the uaw, the big three are 17.5% to 20%. here is uaw president shawn fain on facebook live talking about the situation. >> all together, we are seeing movement from the companies, but they are still not willing to agree on the kinds of raise that make up for inflation on top of decades of falling wages. their proposals don't reflect the massive profits we generated for the companies.

>> reporter: all right. if we do not see a deal by 11:59 p.m. tonight, here is what the uaw says happens. no deal and strike begins. they will target at select plants initially. they expect to probably strike at all three if there are no deals. if the talks drag on, the strikes will grow primarily in the upper midwest where you see most of the facilities. ford is fruitses fro frustratede of talks. within an hour of the talk on facebook live, they said if there is a strike, it is not because ford did not make a great offer. we have. take a look at the shares. the contract expires at 11:59. jim farley was at the auto show. he said he and bill ford went to

the negotiating session on tuesday and made the best offer and were priced that shawn fain wasn't there. he said they made four great offers and have not received a legitimate counteroffer. it looks like we are headed to a strike at 11:59 p.m. tonight. >> phil, this is crazy. you can't see where the common ground might be. shawn fain talked this up so much, how can he accept an offer? where is the uaw membership? what is the rank-and-file feel about this? >> reporter: remember, shawn fain was selected by fewer than 1,000 votes. he doesn't have a mandate. it is not as you come across every uaw member saying fain is putting our efforts in 1100%. we want the best deal possible

and some understand the leadership has to fight for the best deal possible. becky, i'm telling you when you tell somebody we could get you a 20% raise, there are a lot of members who will look at that and say it's not bad. in the past, we were only getting 3% or 4%. >> or go on strike and get nothing or hope for more. >> look, becky, you will end up between 20% and 25%. everybody i talked with within the auto industry and the companies, they all said we will probably see these guys between 20% and 25%. closer to 23% or 24%. >> i know you are doing your best to get these guys on. i love to have farley on. i saw the interview the other night. he is amazing to talk to. he reminds me of a guy you can talk to which understand the hourly. he understand -- i'm not saying he is a blue collar guy. i wish we could get him on.

>> reporter: we will hear from his comments coming up in the 8:00 hour. i can't express this enough. knowing jim the way i do, you can sense the frustration. they have all been through the negotiations the last couple decades. this is different. there is a level of frustration at ford that is palpipable. they are irritated. >> his grandfather worked for henry ford and helped build the model-t. he is ford through and through. i don't think of him as ironclad management. i think of him as a ford guy. should i call him? can we beg him? >> reporter: we're working on it, joe. we're working on it. >> all right. >> reporter: we're working on it. >> thanks, phil. coming up, rising fuel prices taking a toll on fuel prices. and later, republican tim

scott will join us live from washington. reminder, you are watch us live any time on the cnbc app. my dad was a hard worker. he used to do side jobs installing windows, charging something like a hundred bucks a window when other guys were charging four to five-hundred bucks. he just didn't wanna do that. he was proud of the price he was charging. ♪♪ my dad instilled in me, always put the people before the money. be proud of offering a good product at a fair price. i think he'd be extremely proud of me, yeah. ♪♪

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american and spirit airlines both slashing profit forecasts joining other carriers and warning that in this case, its rising costs will impact quarterly results. the news sent airline stocks tumbling yesterday. joining us now is steven trent, airline analyst at citi group the jonesing from not traveling is still around. is it the cost side that has people worried?

>> yes. first, thank you for having me on. i think the demand side does look very good, but i would argue there's been some evolution in the demand trends over the last year and a half. you would now have robust activity on the transatlantic charter. transpacific is starting to spool up nicely, and then you have elements of the domestic market that look a little tougher, are facing somewhat more challenging comps, so we think the supply and demand balance looks reasonable but it's not uniform, and then you do have cost items affecting some carriers, so a lack of uniformity in terms of what we can see on the earnings side. >> capacity has done what in the last year, and you make the point in some of your comments but also people can -- what, the gdp number has gone up for people to afford to pay more for a seat.

what was your point there, even though it's harder to get a seat, that would mean it's going to cost more for tickets, too, right? >> it is harder to get a seat. you have capacity versus 2019 is actually now in the domestic market up 4 1/2 some-odd percent. the u.s. economy has grown more than that. what does that mean in terms of getting back to normal levels. we have seen capacity on a per capita basis roughly where it was in 2019. we now also see u.s. economic activity per available seat now are actually higher. so this was a little less than $24 per available seat mile in 2019, it's now almost $29 available per seat per day. there's more economic activity per unit of capacity. supply and demand wise looks okay, and tickets, that's kind of a different story.

in absolute terms, they're up, but domestic fares as a proportion of weekly per capita income is actually down versus pre-pandemic. so all else equal, tickets have become somewhat more affordable. >> your favorites are united and delta because? because of the transatlantic flights? >> yeah, delta and united are my favorite in the u.s. >> what's going to happen with jet blue and spirit? >> in that case, the process hadn't started to play out. the court process is only going to start on october 16th. you have some consumer groups that are suing to get this thing blocked. i think on a long-term basis, you know, jet blue's pledge to relinquish airport assets,

boston, newark, and laguardia, that's 15% of their capacity. is that going to be enough for the courts to agree to this? i think possibly yes. but i also think the street's been far too optimistic on the timing. i think it's going to take a long time, and i also believe that if you're jet blue there's the risk you're going to be overpaying for this asset. >> you can get in here, where are you based? where's your office? >> we're in lower manhattan. >> so you can get here. >> which airport do you like to fly out of it? >> okay. well, newark from a proximity perspective. >> i was going to say, you have to. >> that's easy. for sure. >> kennedy airport -- >> too far. i need to fly there. stephen trent, thank you, citi group. coming up, we've got an

exclusivinrvw the teiewi ubs's ceo, we're going to talk to him in a moment, and ipo day for arm holdings, we'll dig into the evaluation straight ahead. "squawk box" returns after this. to transform your business. but it still doesn't make you a rock star. so unless you work with an actual rock star. hi, i'm ozwald. hello ozwald. pam, you are a rock- i wasn't going to say it. ♪♪

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getting ready for more inflation data and a rate decision from the european central bank. futures are higher ahead of the numbers. it's a big day for arm holdings after pricing its long awaited public offering at $51 a share. we've got a break down of what to expect and whether you should be buying the shares. plus, snake eyes for mgm after hackers breached the company's systems forcing shutdowns across the united states. we have the details coming up as the second hour of "squawk box" begins rightnow. . good morning, and welcome back to "squawk box" here on cnbc, i'm andrew ross sorkin along with becky quick and joe kernen. u.s. equity futures, if they

opened up now, we would open up higher. nasdaq up about 74 points, the s&p 500 up about 18 points. treasuries, we flip the board around, looking at the ten-year notes sitting about about 4.256 there, and you're looking at the two-year, now below 5. >> below 5. >> now below 5. >> just slightly above and slightly below has been what we've talked about recently. making headlines at this hour, get through these quickly, ecb set to release the latest interest rate decision at 8:15 a.m. eastern. expected to keep rates heavy. at jackson hole, christine lagarde stressed the outlook is uncertain. we will monitor the news conference at 8:15 and bring highlights. howard schultz has re-retired, retired again. he stepped down from the company's board yesterday fully exiting the company's leadership after he had returned in march of 2022 to help it navigate a leadership transition, and some

labor challenges. oh, boy. fi first time viewer, schultz departure was planned. delta air lines is changing how fliers can earn elite flier status. january 1st, customers will earn delta medallion status solely based on their spending instead of a combination of dollars spent with the carrier, and combined with flights. the new model is similar to the one american airlines adopted earlier this year, and the new rules will cut unlimited access to the clubs, that's not nice, for certain american express card holders, delta customers will earn one medallion qualifying dollar for every dollar they spend on delta flights as well as car rentals, hotels and vacation packages that are booked through the airline. i like going in those clubs,

don't you? you don't go in? >> when i travel to davos is about the only time i go in. >> can't get a seat at the gate if there's too many people around. >> if i'm traveling with everybody, it's a zoo. >> don't you get there early? >> i try and get there early. it's a mess if you're traveling with family, get through, get snacks, make sure everybody has something they want to get on. not usually enough time. >> i'll let you guess why i like those clubs so much, it's the only time i get to eat cold serial. fro -- cereal. frosted flakes. honey nut cheerios. >> you are a simple man. >> we have honey nut cheerios at

home. >> froot loops? >>. arm pricing at $61 a share, valuing the company at $54 billion when you include the restricted share openings. leslie picker joins us with more on this. it's getting closer. >> it's a big day, becky. it's a home coming of sorts for arm, actually. back into the public markets after spending the last seven years as a private company within soft bank's portfolio. soft bank doing all the selling into the offering as such, which is about $4.9 billion. it's the largest debut we have seen in years, but the float is pretty small here, just about 9% of the company and a portion of that is already claimed by strategic investors, including amd, apple, google, intel and nvidia. this is set up to be a seminole moment for the ipo marketings. t it's a test of investor appetite of large multibillion

dollar deals which we haven't seen much of in the last 18 months or so. arm isn't the high growth, total addressable market seeking deal that characterized the 2021 boom, chips exposed to ai. but some investors are worried that this frenzy may be at or near its peak and on a relative basis, the valuation isn't exactly cheap. the top and bottom lines declined during the first six months of the year, and has a large exposure tochina which has been increasingly turning inward for the semiconductor supply chain. there's a lot riding to go well, and it brings you all the highlights throughout the day. it's a big day indeed, guys. >> i know there are so many questions about this. one of the things we have talked to a few people about already is the sense this puts into the overall market. the idea that there is some, you know, the markets may be open again. this is going to be a sense of those juices, competitive juices

getting back up there and people looking at the markets and saying, okay, maybe it's time to come back out, it's been a long time coming. >> yeah, well, in terms of ipos, there's a scarcity argument as well. when you look at a deal like this one, it's ten times over subscribed, there's ten times demand for the offering as float available. part of that has to do with scarcity, we haven't seen much in the way of ipos. that's changing post labor day, but the market is on fragile footing. if this deal doesn't go well, that could have a ripple effect depending on how it goes for instacart that's out there, a marketing tech also on the road, there's a lot riding on this in terms of the overall health of the market. if investors who buy at the ipo are under water, they might have

less of an inclination, and all the other differences you compare, it might not bode well for their deals was well. >> a lot riding on this. leslie, thank you, we will see you a little later. by the way, folks, don't miss an exclusive interview with arm's ceo, and softbank ceo, that's coming later this morning on "squawk on the street." joe. coming up, we're going to speak to ubs ceo search owe err mo -- sergio ermotti. here's a look at the winners and losers in the s&p 500. "squawk box" will be right back. (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.

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welcome back to sk"squawk box," a warning that the banking industry faces major downside risk from inflation and high interest rates which could erode profits, six months after the banking crisis. for a look at state of banks and the global economy, ubs group's ceo sergio ermotti, just completed its $3 billion acquisition of rival credit suisse in june, quite controversial at the time. i want to talk about that, the progress you have made, but i want to start with trying to understand where you think we really are. you have a unique perspective on the global economy and given the different regions that you ver,re do you think realre? >> well, tutloor nt the expect the glol econto gfro% downside as wepeak the likely the u.s.ill manage to g a sr bas, avoid eu is definitely uer a preure. inflatn isll h and theris nowthd cha is also sow sng dafter a prising start. >> dthatn yore th not a roaring eorse bepesstic, it's about being realc abnot only micrta, geopical fronis nery tructive sohink that one hato b istic in lookingt th e last round of en pricoing up niteelpinflation figh frothe data you see an, of the big ones havethe s.a whdo you land in tt ca, i w say that i'm still hopefuat wn go in for a lan, but it's too mh conss aro, around somethi, wee to this is not gog toa so >>havebe pred. our job is to manage a scenio, >> wyou k abt the tail sks let' to europe wheru'reo thinking it's g toa toroad, what are domitherefore to if 're dominos thato fall europe, the sture lrea a challenginsituation, and an el t ben the u.s. and ththat's the first poiy d thcond one is the atio stuornly high. goto dll what they're en if they don'te, tregoing to a lile bit longer. >> what do you think the impact all of this is going to be on the banking industry writ large? >> well, look, at large, i think the banking industry is very

strong in terms of its capita, particularly the large banks around the globe have demonstrated the so lid of the banks. the large banks were there to be a stability factor. in general, of course, if you have a tough time on the economy, banks are going to be under pressure, both in terms of the credit exposures but also in terms of profitability. >> how should folks think about european banks? we can take ubs out of this, when you look at your competitor set in europe right now, are there certain banks that you think we should be keeping an eye on? >> no, i think that in general, as i say, in europe a strong regulatory framework has been developed in the financial crisis, and rolled out. so i do think that there are enough capital available to absorb shocks, but that's clearly something that we have to be prepared for. >> the last time we spoke to you, you had been just sort of brought back into service to try to fix this situation with

credit suisse and now to integrate these banks. where are you in that process? you have told the government you won't be needing their backstop anymore. >> yeah, that's very important. so we define our organizational structure and returning the guarantee was something that we felt was necessary. the guarantee was not there to be a life insurance policy. it was there to compensate for the fact that during the week, the bank had to take a decision without any data to support the risks we were taking and once we made that assessment past closing in june, we come to the conclusion that the guarantee was no longer necessary, and that was a very important step. >> how much was that a political issue. it became what we would call a political football in the united states, which is to say there were a lot of questions about that guarantee, the idea the government was back stopping all of this by saying, look, we

don't need that money. that gives you a little bit of freedom at the same time, on the flip side, you now have bondholders who owned bonds in credit suisse, say we got wiped out. we shouldn't have been wiped out. >> let me tell you, i mean, giving back the guarantee after a stress test, our risk was a necessary issue and had nothing to do with politics. now, on the other topic, tit's not up to me to make a comment on the decision to wipe out bond dollars, being back, looking at the balance sheet that we close in june, that credit suisse was not a viable business any longer. i don't think it was a growing concern situation over the weekends. you know, the business model was no longer fit for purpose. the cost base was, you know, out of proportion with the revenue, around 4 or 5 billion of underlying losses, and i think it's something that had to be done over the weekend to reopen. >> that may be, but square the idea that wasn't a viable

business. several months later, you were able to see we don't need a government backstop. >> the backstop was only for part of the balance sheet and the assets. it was not for the entire bank. so it's different topic than saying, you know, what is the underlying business model and that's where we are now focusing on fixing, so restoring, you know, basically restoring a decent profitability from a loss of 4 billion that has been there for a couple of years and projected going forward. so i would separate the two topics, one thing is to say the guarantee on certain assets and the viability of the business. i mean, credit suisse has fantastic employees, clients, and capabilities, but actually they were not able to forgeage y longer. >> one of the other issues we talked about was culture. these are two very competitive rivalries in switzerland for a

very long time with two very very different cultures. >> well, look, i think that the different culture, different approach to clients and businesses, but at the end of the day, still, some things in common, 160, 170 years of doing banking, serving clients, particularly wealth management clients and i do believe it's like a national team right now. we are maybe a rivalry on the championships, but now we are together as a national team. >> let's talk about the brand itself, that's been a big issue as well. effectively shuttering the credit suisse brand in most of the world, except in switzerland, why? >> for the time being, we are keeping the brand, we have two legal entities, two bidsusiness and as we go through with integration, by the end of 2024, beginning of 2025 we're going through fully integration. >> the credit suisse brand as we

know it will disappear from the planet, eventually. >> a little bit of an extreme statement, we will continue to use it in certain areas, but broadly speaking, you know s the ubs brand that we lead. >> in terms of bringing wealth management clients back to credit suisse, back to now ubs, how is that going, where do you see that going? >> i would say this is probably the most successful part of the integration so far. not only do we study the outflows, inflows back in june, and now in the third quarter ubs is best second quarter inflows since ten years. i think that's very important. cs lost 200 billion of clients' assets. some did come to ubs. our goal is to recapture. >> what does this bank look like in five years, in terms of the

businesses it's in? >> i think what we're taking on is complementary to our business in terms of capabilities, in the investment banking, in asset management, and wealth management, in southwest asia, the u.s., the americas and brazil is a fantastic franchise, latin america. we manage today 5.5 trillion of assets, by the way, 1.7 in the u.s. we employ as many people as we employ in switzerland in the u.s., 20,000 plus people. i see us as being a dominant force in wealth management and in global banking. >> we have been watching a whole number of banks that have been challenged, most recently just yesterday, citigroup announcing a big layoff plan. i'm curious how you see a lot of the other banks as they're competing with you right now? >> of course we always look at

the competitive space. every firm is going through its own moments. i watch with sympathy, and you know, i think there is no shot to see competitors going through tough times. we need to stay united as an industry at this stage. there's a lot of debates around banking, but i think that's, you know, the growth opportunity for everybody. we have a clear business model. our focus is on wealth management, and our swing and a miss business, and, you know. >> do you think you are now running, though, and might be described as a too big to fail bank, given it is now the -- it is clear it is a national champion, how that changes. this goes to the sort of political question, which is long term. since this is now the national champion, with the clear backing of the government, how that changes the dynamic or not around the bank.

>> we were already national champions and too big to fail. the addition of credit suisse makes us third larger, not twice or three times larger, and by the way, you know, i would say that that weekend demonstrated that banks are not too big to fail. actually, cs was too big to fail bank that was forced, in fact, to fail, and the fact that another swing and a miss bank was a part of the solution without having to call anywhere else in the globe for help was a demonstration that we can be part of the solution. and by the way, you asked where i see us in five years time, i see us as being one of those places where if there is some things, a safe haven place. >> searrgio, it's very nice to e you here. deteriorate to see you in new york. becky. >> thank you. john ford breaks down whether or not investors should be buying

arms holdings on the first day of trading. i take it he'll have a couple of different opinions for us. we have former executive chairman and ceo, maggie wilderotter, challenges with return to the office and what she thinks about what's happening with the uaw right now. maggie's got experience dealing with the cwa, another union. stick around, "squawk box" will be right back. time now for today's aflac triv qstn,iaueio what publicly traded company was originally named "sound of music"? the answer when cnbc "squawk box" continues. gaaaaap! did you just say gap?! he's talking about expenses health insurance doesn't cover. good thing coach prime knows about...say it one time! aflac! because aflac gets you money to help close that gap! now how do we get this goat outta here? (whistles) aflac! meet one of my new homies! gaaaaap! get help with expenses health insurance doesn't cover at aflac.com. elephant would've been scarier.

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now the answer to today's aflac trivia question, what publicly traded company was originally named "sound of music"? the answer, best buy. >> okay. that makes sense. chip design power house arm is returning to the public markets today in an ipo that will value the company at more than $54 billion should investors buy arm at around these levels once the shares start trading or avoid them. jon fortt is here to weigh in.

you have to have more than one opinion. >> i came armed. >> armed? >> joe, this arm investors will want to grab ahold of. the last 15 plus years of tech innovation have been shaped by arm's low power architecture. pc class computing slip into our pockets and purses in the form of smartphones and tablets, the streaming revolution in smart boxes and tvs and devices like apple's max which ditched intel chips for on base designs. what's next, the data center market for one, hyper scalers, amazon, microsoft and google look at arms chips as a driver for efficiency of the cloud. electric vehicles packed with smart systems that will need to watch the road and use artificial intelligence to assist the driver and also run sophisticated connected entertainment systems in the dash and backseat. probably the strongest argument

for arm being worth way more than $54 billion, the future is ai, and to reach its fullest potential, it will need realtime data from camera, motion and heat sensor, tiny computers. these data collectors will most likely need arm technology and dry revenue for the next decade. might as well buy into that now, joe. >> if the architecture was such a winner for the last fifteen years, jon, if it was such a winner, market cap of 54 billion, only 54 billion, that's not chump change. >> apple certainly did a lot better over the last 15 years. on the other hand, joe, investors will want to keep arm stock at arm's length. turned apple into a juggernaut has arm's market value stuck at half of at&t's because arm gets chump change for the chip blueprints, whether the end product is a baby monitor or a

smartphone. it's good that arm chip designs are in everything. if it's that ubiquitous, how is it going to grow? nvidia is taking share with its ai chips, and amd and intel will be counter punching with technology that doesn't benefit arm. cars, ai, arm is going to try to charge more for its designs. that's not a recipe for sustained growth. for that arm is going to have to develop cutting edge designs in areas like ai and image processing, the value add that apple and qualcomm have built on the architecture already. until then, arm is likely to trade as a proxy for global consumer demand not the provider of unique technology, and then there's the dilution risk. soft bank is offering 10% of the shares in the ipo. soft bank needs money, and if the stock goes up, they will probably sell more shares adding downward pressure. >> people love technology. i was hoping it could be the

magnificent eight. you don't think so, a proxy for consumer hand. >> my right hand doesn't think so, but my left hand. >> you're open to that. >> and i said chump change, and it was in your script. great minds. >> i wrote that last night. >> what were you doing last night at around -- >> i was at your house. under the couch. >> that's creepy. >> very creepy. >> i got one more question for you. apparently. what will it take for arm to forge a new path? >> customization, and kind of a vertical integration, i think, they talk about it in the prospectus system on a chip. they have to put the packages of things together to get more value out of what they're offering, more margin out of what they're offering. they've also got to be able to customize, which is something similar to what intel is trying to do with the foundry strategy, and if you want to know more about that. >> that's my next question. isn't there a news letter? >> there is a news letter, joe,

the on the other hand news letter. let's put the qr code up there. if you don't like whipping out your phone and scanning qr codes, go to madmoney.cnbc.com/otoh. are unions a force for good in the economy? 57% said yes. 43% said no, pretty close and a lot of votes. >> you could not do a, like a captain hook version of this where there's only one hand? then you would be like everybody else. then it would be commentary. could you just do it once for me, something you really feel strongly about, where there isn't another hand. >> just for you, joe, i'll give it to and rew. >> this one should have been on the other arm. >> that's right. on the other arm. you came armed with two

opinions. >> thanks, jon. >> still to come this morning, former frontier chairman and ceo maggie wilderotter, will join us. on'll talk to her with things the scene. and the futures, dow up by triple digits up over 100 points. s&p futures up 17. "squawk box" will be right pack.

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welcome back, everybody, u.s. lawmakers calling on big tech companies to understand ai as they look to create regulations and policies for the technology. emily wilkins joining us with more on this. emily, good morning. >> good morning, becky. senators held a one-of-a-kind meeting yesterday rolling out the red carpet for tech giants, including elon musk, mark zuckerberg, bill gates, sam altman, representatives from ai, as well as unions and civil rights groups. the closed-door meeting was meant to educate lawmakers on ai and begin discussing some of the complicated choices congress is going to have to make when regulating ai. senators in the room said there were debates on whether ai models should be open sourced.

many argued for ensuring that the software is publicly accessible to help rapidly develop it. others warn that easy access to powerful ai models could prover dangerous. ceo of hugging face said he felt consensus was building around a sliding scale where some models could be accessed by the public, while others would be more limited. >> you can use staged releases with progressively opening up more and more, not only the models but the data sets and the computes so that you can really unleash the millions of jobs that can be created with ai, that you can give everyone a fairor chuck schumer also asked all participants to raise their hand if they felt that government had -- everyone raised their hand but it's still an open question of who will actually do the regulation.

will it be multiple agencies a single one, a new agency, a current one. that's also a big sticking point and an early sticking point we're seeing emerge as congress tries to flesh out exactly how they want to regulate ai. >> emily, thank you very much. joining us right now is the former ceo of frontier communications, also the chair of docusign. maggie wilderotter, this is an unusual situation. you've got a bunch of big tech ceos in the room, and from all accounts when asked if they think there needs to be regulation on something, they all raised their hand. that's different than what we normally here from technology companies that are not at all interested in washington getting involved in regulating. that speaks to the seriousness of what's happening here. what's your take? >> i think it's commendable that people in industry can say i can partner with government to do the right thing, and, you know, ai is a new and evolving technology. it has capabilities that a lot of us don't fully understand

yet, and especially the public that gets to use it. so i think having dialogue with government so they're more educated on what it can do, and also what risks might be, is very healthy, and i would encourage more of that because we're going to continue to learn more about how ai can be a force for good or possibly a force for bad. >> you think something actually gets done on this front, though, because when it comes to washington, and trying to get some sort of a consensus, trying to figure out who would be the regulator of choice on these issues, look at every issue from bitcoin to privacy, to data concerns, to sexual trafficking, you can't get congress to get their act together on the most basic things. why should we think it will happen here? you know, i don't think that ai is a republican or democrat or libertarian. >> i don't think sexual trafficking is either. >> i agree with you on that too. >> i do think at least starting the dialogue and the education associated with that is important. i do think that the consumer and

businesses that utilize this technology will also ask the people that are providing it to give assurances, whether it's safe and secure to use. so i do think that there's checks and balances that are not just government. i think it's big companies that use it. i think it's small and medium-sized consumers, and i think it's consumers. >> this isn't just a race between u.s. companies. this is an international battle. china seems to be pushing the boundaries with a lot of things, and that has to be something we're keeping our eye on too. >> i think that is an area where government will play a more important role is when it's across borders and not necessarily just in the united states. and i also think that we have to look at it from how ai continues to develop, and the use cases associated with what it can do or can't do. >> does anyone know? that's what i'm trying to figure out. it seems like there was a quantum leap, i don't know, with

chatgpt. we had the guy who sold waze to google. you think about it, waze kind of is an ai company. >> it totally is. >> what changed in the last, is it a year yet? >> not even. >> so it's moving so quickly now, what will it be in two years, three years, fooive year and what's the downside? we really do need to think of the up side and downside. >> i think it's going to be an evolution, not just revolution. chatgpt democratized ai and made it available for everybody to use, and there was kind of a wow factor associated with using a technology that people had not used before to do things that people typically would do on their own. >> who knows? who do we ask of what it's going to be like five years from now, elon musk, erik schmidt? mark zuckerberg? >> i was there. >> you, andrew ross sorkin? >> you can ask all of the above. >> andrew has the best.

>> are you in the camp that we're better off, and maybe it's many, it's five or six folks who have real robust ai systems, or would you want a much more sort of broad group of competitors? what's the better solution given the power that we think that this has. >> well, i think we don't have the answer to that yet. i think the answer will happen over time. i think it will start being more available and accessible through multiple channels. and it might coalesce around certain providers of capabilities where it's really working and it's considered safe and secure for people to use. and they'll have that relationship with customers where there's a demand on the part of the customer. the customer always wants choice. i think one of the roles government has to play is making sure there is no choice. >> i'm not arguing there's no choice. i think there's question about is this open source, is it not,

do you want these big companies which arguably could be held accountable for or more accountable than everybody having access to not just the technology but the underlying code and program ability to actually then create their own. >> yes. well, i think with any technology, you know, when we have new technologies come out, we all think about oh, what are the up sides here, and the downsides, with ai we're still learning that, and ai has this capability that we have not seen before, and one of the challenges is we've looked at ourselves as human beings to be able to manage and control technology. and when you think about something like artificial intelligence, the size of our brains are only one size, and we can't expand that and the capability and capacity of computers are so much greater. >> but we often hear about hallucinations of these services today, and i think there's an expectation there might always be some semblance of ah

a hallucination, and when you talk to some of the folks at the meeting yesterday, andrew, why are you giving us a hard time about hallucinations, you hallucinate, all human brains have things we don't know about and understand. i may be willing to allow that to taptke place in a human, there's no way to control that. historically, working with computers, it has been an if then program, if you input this, you get this, that's not necessarily the case in this instance. is that a problem? is that a good thing? should we take that as acceptable? >> i think it's acceptable now because it's the only thing that we have, but i do think that we will continue to learn how to manage the outcomes of ai processing and capabilities and we'll put different rules of the road in place. there have been evolutions of many many technologies that way over time, and i think what will happen is you'll have some

self-regulation that will wind up as part of the product sets because the users of those products will demand it, and there's definitely more dialogue going on. >> mag, i hate to change the subject, we're almost out of time. i want to get your take on the uaw situation. we have a deadline tonight. as ceo of frontier communications, you dealt with the communication workers of america, constantly. >> and the ibw and teamsters. >> you had lots of unions you were working with. >> yes. >> we heard the terms laid out, shawn fain laid it out last night. sound like they are very far apart still. do you see any common ground, what would you do in this situation and you were one of the ceos facing this situation? >> i always looked at my union employees as employees of the company. i didn't segregate or separate them out. i spent a lot of time with our union workers because they were the front line, and the front line in any company is your bottom line, and i wanted to hear what was important to them and make sure that we had the

right, you know, rules of the road in place for them to be successful as well, and i never took a strike in the 12 years i ran the company. >> but a 40% pay raise they're asking for, not just that, a 32-hour workweek, return to the defined benefits pension plan, those are pretty big asks, and they will lay out why they think that's fair. normally, though, you see more of a negotiation between the two sides. there is common ground and you can figure out how to get there. this doesn't seem to be the case. >> there needs to be trust. we have to have trust in our employees, but the employees also have to have trust in the people they're dealing with in the company. i think in each of those companies, what they have to do is put together maybe four or five people that get in the room that represent both sides and try to have some voices that will go back and talk to their own constituencies about what makes sense and what doesn't, and where you can give and where you want to stand your ground, and i think that's an poanimrtt process that still has to be gone through. >> maggie, thanks a lot for

coming in today. >> great to see you all. >> maggie wilderotter. "squawk box" will be right back. rich, velvety coffee. café quality espresso. one high-pressure system that can do both. brew to your heart's desire with the l'or barista system. a masterpiece in taste.

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our next guest told lawmakers this week that large companies with significant involvement in china should be required to extent of disclosure to the chinese market and disruptions to china relations could impact those operations. joining us now is jay clayton, a former chair of the sec and cnbc contributor. jay, more and more we just decide that, you know, in this world we need to, you know, we can't create the world we want, we have to deal in the world that we have. andrew, we've discussed whether we need to be in a nuanced

world. there's gray areas everywhere. would you suggest that these companies somehow pare back their engagement with china? >> well, i agree with your additional premise very much, which we do live in a nuanced world and we need to understand the world we live in. we're talking about the cooperation of constellation, cooperation and competition with china, what's it like and we've done a lot of work on the d.o.d. i side. we have not done a lot of work on what the consequences of an abrupt decoupling would be. we better understand -- i'm talking about large, international companies like apple or across the financial system what an abrupt of

decoupling would mean. i think the risk of conflict goes down. >> taiwan, i can't imagine that's in the next five years even in xi's mind. but there are people who say it's going noeks year. >> there are many scenarios. you have to prepare for the worst, it helps us avoid them. can you have a rapid drop in asset prices. we talked about u.s.-china. i think another thing to learn is it's very much multi-lateral. the connections may be the too biggest economies, the most integrated but everybody else operates around them.

>> do you think we need to prepare or at least have a continuing plan? if china was 35% of the world's gdp growth in the past 30 years, who mauks up the other third? >> the responsibility of both companies and government -- >> like a black swan. >> you have people who are absolutely convinced that the incident of conflict is going to rise. >> skirmishes, not a massive hot war. >> or economic skirmishes. we can see economic skirmishes. >> we have those already. >> if you are a company, you

should be preparing for whether an economic company -- >> how would apple prepare? >> i'll bet you we're talking about this of day. how can we diversify and make resilient our claim every day? >> if you're disney, you can't diversify that. >> no, but you're operating today. are you looking out saying what would our operations look like? how would we adjust? i don't think you can be an ostrich in your area. >> but there's an argument for not putting a lot of expenditure into the country. >> on a macro level you'll very interested to see over the next 12, 18, 14 months what about of inbound investment we actually have, other inbound investment into china as a result of the

level of tension today. i think what we've seen post sanctions, russia, ukraine conflict, is people already making those adjustments. who is the biggest beneficiary so far going back to the multi-lateral? mexico. we can't onshore all of the activity that's in china. our labor costs are higher, other costs are higher. >> i know we have to go but do you have any worry we're just going to make it worse? we could argue we haven't changed china's behavior the way we want. but if there is a full retreat, does that change it into -- the count counterfactual is maybe -- >> i'm here for the level it provides both sides from an economic perspective. that's why i agreed to testify before the committee. look, speaker mccarthy, leader jefferies, they did a really good thing here putting together

a bunch of constructive people on one committee to ask good questions. that was a really good bipartisan thing thank you. that's a hell of a hair cut. how much was that seriously? >> with tip. >> 50 bucks. >> that's like a super cuts price. businesses need 5g solutions today. that's why they choose t-mobile for business. mlb partners with t-mobile to not only enhance the fan experience, but to advance how the game is played. aaa relies on t-mobile's network to stay connected nationwide, so they can help get their members back on the road. and we're helping pano ai innovate, to stop the spread of wildfires. now's the time to see what america's largest 5g network can do for your business. the first time you made a sale online with godaddy was also the first time you heard of a town named dinosaur, colorado.

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good morning. inflation take two. after yesterday's cpi print, we

are 30 minutes away from a new read on prices. and we'll give you a live update on negotiations from detroit. and tim scott's economic plan for america. we're going to speak with the south carolina senator about his top priorities for business and how it aims to cut government spending. the final hour of "squawk box" begins right now. 8:00. good morning. welcome to box here on cnbc, live from the nasdaq market site. it's gone pretty quickly today. >> time flies when you're having fun. >> it's our favorite day, thursday. it's close to the weekend but

not too close to monday. >> i understand the argument for that. >> friday early. friday early. friday early. u.s. equity futures. we love it here! i don't know why we crave weekends. >> you want to work really hard during the week and rest on the weekend. >> try doing that when you're getting up at 3:30, you can't stay up on friday night, you can't sleep on sunday night. >> treasury yield. >> we're down 70 but the s&p was up yesterday. the 10-year, 4.26 and just below 5%. i think you should look at oil and then what do you think that was yesterday with the cpi or not the core but certainly that's an ugly number. it doesn't have a 9 handle but it might as well. almost $90 a barrel.

wti. >> and don't forget producer prices today. >> there you go, producer prices. >> barring a last-minute agreement, u.s. auto workers are set to go on strike tonight. phil lebeau, good morning. >> reporter: less than 24 hurst from when we might have a resolution or at least a deadline for whether or not the the uaw goes on strike, whether you're talking ford, gm, s stellantis. we think 40% from the uaw, reality is probably closer to 35%. there's still a big gap between what they're offering and $17 1/2 to 20% being offered by the big 3. what happens at 11:59 if there's no deal. the uaw says strikes begin. they're not extending the

contract. srn plants around the upper midwest are going to be hit. look for the midwest for the most likely spot where we'll see strikes starting for the uaw. the uaw says it will continue to add agents and the strikes will grow. yesterday after the uaw came out with the latest offers, the ceo was at the auto show talking about his frustration over the lack of negotiation between ford and the uaw. >> the first time i even found out that he had seen our offer was ton on facebook live when i watched it myself and my team. we're here. we're ready to negotiate but it's sure hard to negotiate a contract when there's no one to negotiate with. >> he's not alone. i've heard similar comments from others with different automakers

here. general motorsissuing a statement saying we tip to bargain directly and in good faith with the uaw. here's the ford, gm and stellantis. he is watching and will bring us up to date on everything happening. joining us to talk more about potential effects on the broader economy, tyler goodspeed, who is former economic chairman. seth, you say the strike is looking much more likely. we're getting closer to the deadline. there's not some sort of agreement people can see them

getting to. what happens if there is a strike by the big three? >> i think it's not going to have that much of an effect. a ten-day strike was estimated to cost over $5 billion. we have a 25 trillion economy. it's going to be a drop in the bucket. it will have a more dramatic effect on these workers and where they live. they may be a little late on the rent or mortgage. if it's a protracted strike, then there could be consequences for the auto companies' supply chins with you i think it's more likely that we'll see what phil is describing, which is targeted strikes at specific plants. we're not going to see all 150,000 workers go out at the same time. it's going to are to be more strategic than that. i think the economic impact will

be limited. >> seth was just pointing out that survey, the study that sewed maub $5.6 billion. i think that same survey also suggested that michigan could get pushed into a recession by some of these things. you're looking back in history and seeing what it's done in the past. >> i'm reminded there was a relatively short strike when 150 employees and at the time gmc was 2.3% of the economy, or at least their revenue was. as seth said, this is probably going to be a modest gdp impact, especially if the strikes are targeted at a few factories. however, with an integrated supply change, i think we could see some impact on the flow of

new autos, which is going to have an impact on the price of new and owesed autumn. and in recent months used cars and new cars have been a source of disinflation in the u.s. and i think with this strike ongoing for some protracted period of time, that sign could flip and they could become noninflationary again. >> if you look at the back drop with not just car prices and labor contracts with 40% increases but what happens to suppliers down the chain, is that something that means that we will start moving the inflationary battle that felt like we started to get it under control recently? >> no, i don't think so. whenever works are demand a raise, we talk about how inflationary it is but when

there buyouts and payouts, we talked talk about inflation there. if the uaw were able to get a 40% pay increase, and i think it's going to be something short of that, that's not going to drive a significant increase in the price of new cars. if we were to have a protracted strike and there were to be a significant reduction in the number of cars that the big three automakers are able to produce months from now, i think it's possible that that could have an effect on the price of new cars. but, again, if the uaw is engaged in targeted strikes, if it doesn't shut down production entirely and the workers are still getting paid in a lot of these facilities, you think the financial impact will be limited. >> how is the buyback -- >> if you put money in

shareholders' pocket -- >> not a dividend by a buyback. >> you're driving up the price of the stock by doing a buyback. that's the reason that companies do a buyback, so they can increase the value of their stock price. >> if there's more value -- >> that's false. there's a lot of reasons why companies do stock buybacks. you can't manage your balance sheet as a company without some demagogic explanation of why they're doing it? that's absurd. what if the stock represents a value and they didn't have any other investments that look as attractive at that time? >> we can fight about this and get away from the uaw discussion. >> i'm just trying to keep it real in terms of what we talk about. i'd like to focus it on the uaw. >> well, tyler, let's talk a little bit about whether you

think that this is an issue that is going to face the president. if seth's right and they're targeted and they don't become broader, maybe it's not as big of a problem, doesn't have as much of an impact on the overall economy. >> i don't think it has a massive impact on the u.s. economy. but in economics, things are about margins and with a very integr integrated supply chain, there is going to be an impact on new and used cars. i think this is an historically tight labor market and wages haven't caught up to where prices have moved over the past two and a half years. so, yes, there's a dynamic cost to industrial action and it incentivizes employers to substitute away toward union and nonunion labor. if i'm looking at this as a rank-and-file union member, i'm thinking this is an historically

tight labor mark, two, three standard deviations more tight than historical norms and wages have been lagging prices generally. we saw that yesterday with the cpi release, two days ago with the census release. if i'm looking at this as a rank and file union member, it puts pressure on employers. the biden administration is concerned about inflationary impact. earned, you can only go talking the talk of being pro labor for so long before people realize you're not really walking the walk. >> let me just ask you. we had phil lebeau on earlier this morning, he was saying speculation is you wind up with a 20 to 25% increase in overall pay, that that's a pretty good pay if you could get to those

levels. the head of the uaw has been pretty tough talking on some of these things and it doesn't sound like they're backing down from the 36% they're potentially asking for. he said they only elected him by a few votes. if the rank and file said we're okay with it increase and maybe he's not speaking for us. do you think that's possible? >> i think the leadership of the uaw is paying and they're trying very hard to unify everybody in the union around these negotiating demands. i don't think it makes sense to view what president feign is arguing for.

i think there's a lot of frustration among the uaw rank and file about the concessions given over the years, about inadequate pay increases, to get rid of the two tier system the owners have in place. what they'll ultimately agree to before the bargaining table is a contract he thinks can get ratified by a large majority of the people. it's got to get a vote north of 60, 65% to be successful. the teamsters got an 83% favorable ratification vote. i'm not sure he'llable able to there that's very close to the numbers he's putting out on the table but he does have to unify folks. >> thank you.

> >>we have breaking data coming up. and can't-miss interview with senator tim scott. all that and more as "squawk box" rolls on.

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welcome back to "squawk box." the european central bank raising interest rates by a quarterback point bringing up its benchmark rate 4 1/2 from 4 1/4. saying that based on its current assessment they may have met a level that was sufficiently restrictive. there was polls and surveys of economists showing it was 50/50. the market was like a 60% possibility of a rate hike. it could have gone either way. in that sense it's kind of like a visit from the ghost of the u.s. monetary policy future where we go in -- not next week where everybody is pretty sure the fed is not fogoing to do anything but in november, it's like a 40/60 split of not hiking

and with the uecb doing nothing maybe they hinted at yesterday there was a report that the inflation forecast was higher and also in jackson hole, laid down a hawkish point it end of her speech. maybe we were on notice when the market was 50/50, which is kind of unusual going into any major monetary policy decision here but the ecb raised a quarter point and i did see a little bit of weakness actually in the euro. guys? >> steve, we're going to keep watching this. >> the market's ticking higher. i guess because maybe the dunn.

>> and then you have to ask yourself a question, is that a potential model for the fed in november, saying are we due another, are we done with that? the ecb, i want to remind folks it's a single mandate bank where they're only supposed to follow the inflation forecast. so we'll see if the fed can be quite so bold. >> okay. thanks, steve. we're going to switch gears, talk about many. big tech names in the world that descended on washington. organized by new york senator chuck schumer and other lawmakers. elon musk was there, bill gates, mark zuckerberg. i don't know if you saw, they were on opposite sides. we caught up with musk after that gathering. >> i think this meeting may go

down in history. i think we're going in the right direction generally. senator schumer or lead are schumer did ask us to raise our hands in the room to see if we were in favor of a.i. regulation and i believe several of us did. >> joining us, todd young, a member of senator human's bipartisan a.i. working group, he helped organize the gathering yesterday. good morning to you. >> hey, good morning. thanks for having me on. i think the big question was or is what did you learn? what was the one thing that you think you took away from this that you think you didn't understand before? >> well, i think most fundamentally we found that all the individuals you mentioned and everyone else present from labor to civil rights groups, they all think that there's an appropriate role for government and most of them are of the

opinion that we're going to have to adopt a light touch approach to regulation, to make sure that on one hand we address any concerns or risks that people have about the continued enablement of society through artificial intelligence but also want to make sure the united states of america leads the way so our values ultimately are embedded within this technology, not the values of anyone else who might leap ahead of us, say the chinese communist party. >> senator, you used the phrase "light touch regulation." salt waltman, he hasn't used that phrase exactly and a number of folks that are actually in the industry have frankly called quite openly and publicly for regulation of this. what do you think the distinction is between that and what you're saying? >> i'm not sure there is a really great distinction. i would just emphasize we want

to focus on use case by use case and then assess the need to regulate accordingly. so as it relates to using artificial intelligence technology to try and design a new toxin or a new chemical substantial, that should be highly regulated because we know there is a large risk that someone out there, some bad actors will develop a toxin that could hurt others. if instead someone is using artificial intelligence to design new toys, much lower regulation probably would be expected of that. so i think there's probably alignment but there will ultimately be some disagreement about how many individuals.

>> there were questions about how transparent was, the hope was the meeting would be made public to the media and therefore made public to the citizens of the country. do you think you could have done that? do you think that whatever information you got in a private setting, do you think you could have got that in a public setting? >> first let me say that's a fair concern. i think it's really important to have public hearings and shine a lot of light into these sorts of conversations. but i do think having these conversations initially, it was important to have unguarded conversation and we heard things from a number of individuals that i don't think we would have

perhaps heard in a more public setting. we heard about the labor market disruptions that could happen associated with this technology. we heard about all the amazing up sides. i do want to emphasize that. during this information gathering stage, i think that's appropriate. the most private meetings we had here on capitol hill on an ongoing basis are individual meetings with individual technical executives and what have you. so absent this sort forum, we would have had those meetings. using committees of jurisdiction and ultimately having the public, you know, watch all those proceedings in coming months. >> could you speak specifically to this. one of the reasons that elon

musk has said he's gone into the regenerative a.i. business is that he's concerned that a number of the leading regenerative a.i. companies and operators are doing it, a, for profit and, b, won't do it in a way that is completely open and that is something he believes for humanity is necessary. after listening to this debate yesterday to some degree i imagine, where do you land? >> i think we need more open source model and propriety models. there are clever actors out there who can hack the system and figure out how to make their code more visible to themselves and effectively open source. it's also worth noting if you have an open source system, that does democratize artificial intelligence. you want that to happen,

democratize its use and development but it also makes it easier for any rank and file bad actor to use these amazing tools, which will increase our productivity between 30 and 50% we had heard but people who will use them to a bad end. so it's a balance and i think the real key is making sure the united states and our companies and innovators and vinsors stay ahead of those in the rest of the world so that we have the innovations to counter any bad effects of the next successive way of a.i. >> senator, i want to thank you for joining us this morning. i look forward to you joining us again. we're coming right back. ♪

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. all right. yesterday we got consumer prices. right now it's time for august producer price date. rick santelli joins us for that. rick, take it away. >> yes, we're awaiting the august read for producer prices. the whole ssale version is up 0, the hottest read back to june of '22 when it was up 0.9%. excuse me, i was looking partially at retail sales.

that was retail sales up 0.6 of 1%. x autos and gas up and the control group up 0.1%. if you strip out food and energy, it drops to 0.2, exactly as expected and if you strip out food, energy and trade, it's up 0.3 and that's a little bit on the hot side. last time we're up 0.3% last year was february and january of this year. we can see that those numbers have moved a little bit. and if we look at final demand year over year, these are important, up 1.6. it was supposed to be up closer on expectation 1.3 and in the rear view mirror, that was up 0.8. up 1.6 is actually the hottest

read since able when we were up 2.2. if you strip out food and energy year over year, it is up 2.2%, exactly as expected. that's 0.2 shy in the rear view mirror. and trade is a bit hotter than expected by 0.3 and the last time we had a number in this category was april of this year when it was up 3.3. now, let's move to initial jobless claims. by the way, you notice the two punch we had? we dropped significantly on yields, now we've turned is back around. so it was a bit hotter ppi and influentials of the ecb, tenth consecutive rate increase. jobless claims 220,000. that's 5,000 less than expectations, that's 4,000 more than the rear view mirror but we could still see a revision,

216,000 on our last look was actually the lightest number going back all the way to december of last year. so now let's look at continuing claims, always a week in arrears, so there could be some influence there with the holiday issues. 1.68 million. that's almost spot on with expectations and just a smidge higher than our last look. i continue to point out we've gone from 4.22 in tens up near 4.27. we want to pay particularly close attention to two things. we've talked before that when we extended this rally in yields or selloff on the face value, it took out some of the october high yields in the long maturities. those yields happens and when

said it was technically significant, we see it continues to be true. becky, back to you. >> rick, thank you very much. steve liesman joins us with more on this now. i guess the most important number probably headline for the ppi. a lot hotter than expected if you strip out food and energy, it's not hotter than expected. it's right in line with expectations. is it easy enough to pin that to higher energy prices, higher oil prices or is there something else at play? >> no, that's what's at play. it's actually a play in the retail sales number, too. that hotter-than-expected retail sales number was also driven by a 5.2 percentage point month by month increase in gasoline station sales as well and there was some weakness underneath that. i am amazed that we continued that august consumer spending,

but it at any time. it nans the notion that the third quarter g dp number that' going to be fairly strong. it might be good news for the indicator but, stuill, we're going to have to die gest the surge. if it was just oil prices and/or just food prices, the fed could look through it. we don't know if that bleeds into other areas of the economy

and does it have an effects on service inflation or on expectations. the latest quote on the fed funds futures, which had fallen in the wake of the ecb, still a 41% probability, a november hike. next week, though, they're not expecting to do anything. we're still in play because of this inflation from the oil and energy sector working its way into the economy. cky? steve, thank you very much. >> coming up, south carolina senator and presidential candidate tim scott is going to join us next when "squawk box" returns. power e*trade's easy-to-use tools make complex trading less complicated. custom scans help you find new trading opportunities, while an earnings tool helps you plan your trades and stay on top of the market. e*trade from morgan stanley. ever since she was a little ki, all maría wanted to do was bak. i'm maría alvarez, owner of maría's cakes.

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>> south carolina senator and republican presidential candidate tim scott unveiling a new economic plan. he calls it build, not borrow. it's great to welcome you on to "squawk box," senator. >> thank you. >> you are welcome. the latest from the census bureau, median real income was $78,250 in 2019. 2022 it was down almost $4,000.

we've gotten nowhere. $74,580. what does your plan do to try to reverse that trend? >> we had paychecks going down. my plan cuts taxes, which requires us to cut spending and cut government as well. think about the 2017 tax cut and jobs act that i helped write. that provided the average family about $4,400 back in their paychecks, they got to keep their own money. let's make those tax cuts permanent, not just end in 2025. make them permanent. the inflation reduction act of joe biden increases tax. we need to eliminate the 75,000

irs agents so that we focus more of our attention and time on the things that encourage and create economic activity in our nation. >> we also heard so far debt service. we should know this. we were tacking alking about th. 800 billion will put the deficit at 2 trillion. i don't see how you're going to cut taxes -- that's going to worsen the deficit, isn't it in. >> we should look back in 2017, 2018, we lowered corporate tax from 35 to 21, lowered all the taxes on the domestic side. we saw revenue to the treasury go up in 2019 and again in 201. we saw two consecutive years with revenue growth. it creates and encourages

capital to come off the sidelines. when that happens, you see growth to the revenue in the treasury. we saw that in 2019, 2018. i blow we'll see the same trajectory that will stimulate growth in our economy. we have to reassure jobs. that's why the 2.0 is so important. >> senator, there's no question there was additional revenue. i don't think anybody is going to debate that. the question is whether there was more revenue than there would have been an otherwise. i think there's a question mark of whether that and we can go back to 1930s and see that revenues went up. we just had too much spending. we see that time and time again. the reagan years saw the exact

same thing happens. what we're seeing in the biden years is even though we have had a lower tax environment, when you have $2 trillion of overspending or 40% more spending than revenues i don't think. it's not simply a revenue problem, it's a spending problem. that's why my plan, not on does it cut taxeses, when it comes to nondefense, discretionary spending, that's the way we right the ship. >> let's put specifics on that then. what would you cut and what service rails would you cut in. >> first, you extend the current tabs cut beyond 2025. you reduce and rescind the inflation reduction act and then you look at spending. first thing you deal with on

spending is reinstate all the well the fact of the matter, it's a simple one. if you're able bodied in america, you should work. we should eliminate all of the conversation and the spending around reducing the college education oss that we seep in the student loans. we were talking about term untilly happens on the supreme court on the next iteration of biden's design to make student loans free. my mom taught me if you take out a loan, you should pay it back. if you went back to the prepandemic levels of spending on all don't and $2.4 trillion. we're talking about significant into your window, talking about

significant transforation of m we are not in the middle of a covid crisis. why are we spending like it? >> nor, how do you invision cam pawn playing you see that former presidentes aung you know, he said there's too many republican candidates. you know, when you split up all the republican primary votes, that just, you know, adds to president trump's ability to secure the nomination probably. what is your strategy? how do you think it's going to play out for you to get there? >> well, i can tell you what's working already, both in new hampshire and iowa where we're actually campaigning. our message, optimistic, positive message anchored in conservative values and

principles renovates very well. it one of our surroundings are packed and so what we've learned is that the power of persuasion is a necessary component for the next american president who hapz it we've lost seven out of the eight last national elections we can do better as a conservative party. we do that by attracting more voters to our side and we spend not enough time talking about the american people and the challenges as a kid that grew up in a single-parent family mired in poft, i can tell you america can do for anyone what it did for me. >> you're a big charter school.

is that? >> i believe in choice. i want parents to have a choice so kids can have a chance. >> that is not in massachusetts. >> that's not going to happen i think with their sort of attacks with the hits of the teacher's union. >> you have to have an optimistic, positive messenger and we won back our majority in the senate and at the same time we wreak break the buck stopping four kid for finding the right path for a better education. we spent over $700 billion add speaking it our ocd competitors,

we are falling and training behind. the own way to change that is to introduce competition. we're on a show that talks about money. competition means that the price goes down, the quality goes up. we desperately immediate that in education. far too often minority kids are devastated by poverty, high crime and very little hope. you can restore hope by giving a parent a choice, a child a chance and desperately needed in places like chicago, los angeles. chicago they're spending $30,000 per student. my goodness. and those kids still can't read on grade level. we can change that devastation almost overnight with a republican administration that focusses on the great opportunity party. >> hey, senator, you've been clear about your position on education and teachers unions. we've been talking all morning about the uaw in the fate that

it engaged in now with the big automakers. they and some of the office have been in the 18 to 20% range. where do you stand? who do you support in this? >> i will say i support workers. when you look at my state, south carolina, one of the things i did as a state legislator, i said we should use our right to work laws to attract new businesses. we are now one of the classic examples that the auto industry will be bmw. it came to a right-to-work state, they expanded their local manufacturing and location, it the largest in the world for bmw, mercedes creating their sprinter van, we brought volvo in as well. we attract auto jobs into a state without being burden by the unions, that's the best way for us to create a path.

i say move it down through south carolina and to the south. you'll have better wages, better kwaul? >> what was your rear action? ups had its own highest pay is going to make $170,000 a year. >> unbelievable. here's what we have to think to ourselves. i'm on the finance committee. one of the things that we wrestle with are when unions go belly-up, the government steps in and provides $20 billion plus to reshore and stabilize their benefits packages. i remember sitting in a hearing, and a widow came into our hearing. she was promised $4,000 from her husband's union benefits. unfortunately, when they crashed, she started receiving a thousand dollars a month, which, of course, is the federal guarantee is $12,900 a year. she was devastated by that.

yes, they're winning the battle today, but they lose the war tomorrow because they overpromise and underdeliver, and then the taxpayers step up and subsidize that, because the radical left continues to honor the promises that we didn't make to folks that don't work for the government, doing so by taking taxpayer dollars like my mama, who worked for a little bit over minimum wage, and now she's subsidizing the union plans of a 40% increase. it's just not effective long-term, but it certainly sweetens the pot. it's quite seductive on the front end, but it's devastating on the back end. >> senator, we like having you on today. the road to the nomination goes through "squawk box." i don't know whether anyone has said that to you. we certainly -- >> i knew it was south carolina. now "squawk box" too. abm coming back, by. >> "squawk box" and south carolina. we do have viewers that need to hear your message, and we hope to see you again. >> look forward to that. >> okay. "squawk box" will be right back.

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welcome back to "squawk box." casino giant mgm recovering from a massive cyberattack. it turned the company really upside down. contessa brewer joins us with the latest and the details. >> the cyber intrusion caused some disruption in the hotel and casino systems nationwide. much of that is still shut down. the website, for instance, i just checked, still off. i'm told the regional casinos have recovered. some computerized gaming

systems, but las vegas is still manual, though offering the full compliment of casino, dining and other guest options. the fbi and other federal law enforcement are involved in the investigation, and my sources tell me they've also been involved with an incursion at caesar's entertainment. criminals got into caesar's systems and last week demanded a $30 million ransom. i've learned that caesar's has agreed and will pay -- is paying half of that. i've confirmed that ransom demands have been made to mgm as well. what separates these two sophisticated cyber incursions is likely the systems that got exposed at each company and, of course, the damage caused by the intrusion. what they have in common, my sources say, is that the criminals did not hack their way in. a human actually opened the door for them. in both cases, social engineering was used where criminals target an employee, either at the company or at a third party vendor, and it works. cybersecurity expert, the ceo of point five, says that criminals

increasingly are using vishing, that is, voice phishing by phone. we saw those efforts work successfully this summer when a number of casinos lost millions, when back room staff were fooled into making cash payments to criminals, and the chief technology officer for another major gaming company told me all of this is a sobering wake-up call about how sophisticated the criminals are once they're inside the system, how damaging financially and of course to brand reputation their actions can be. he said it has prompted more system reviews for his company internally there as well. >> okay. we want to thank you. i mean, this is crazy. it's a crazy situation. >> and you don't find out about it until somebody says, we're not going to pay the ransom. >> and then what do you do? we're going to get you primed and ready for the trading day in just a moment. "squawk box" returns after this. t are needed most. drawing on deep expertise

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all right, we're going to take a final check on the markets. remember, less than half an hour ago, we got the producer prices number. that number on the headline level was hotter than expected. it came in at 0.7%, but if you stripped out food and energy, the number was in line with expectations. 0.2%. that's because we've seen so much activity in energy prices. oil, specifically. you're going to see right now that t. that's rebounded since we got those numbers. watching the yields, you'll see

at this point it looks like the ten-year is sitting at 4.25%. the ten-year just below 5% at 4.99%. oil prices, they've been around $90. if you check it right now, wti, $89.92. >> neither number was the worst case scenario yesterday or today, and even with the ecb surprise rate hike, they still said maybe that's it. so, it's like -- >> we'll see. not this month. steve was saying 42% fed funds futures for a november hike. anyway, we'll be back here tomorrow. right now it's time for "squawk on the street." ♪ good thursday morning, welcome to "squawk on the street," i'm carl quintanilla with jim cramer, who's back, david faber, at post nine of the new york stock exchange. what a morning we have on tap. the arm ipo, china cuts reserve requirements, ecb hikes, uaw strike deadline, and the ecodata runs hot from retail sales to ppi. we've got oil above $90 for the