thank you. enjoy the weekend. the futures right now are -- you'd call them mixed. not a lot happening. we had a pretty good day earlier this week, which was surprising, giving back a little of that this morning. rutgers, virginia tech. >> tomorrow. >> tomorrow. >> yeah, 3:30. >> colorado-colorado state. we're going to see coach neon, coach prime. >> coach deion sanders. >> make sure you join us next week. "squawk on the street" is next. good friday morning, welcome to "squawk on the street," i'm carl quintanilla with david faber, sara eisen. cramer has the morning off. futures steady as the uaw initiates this unprecedented strike at select factories. yields a bit higher as china data comes in hot for once. oil, 91$91.15. our road map begins with the

strike, though. thousands of uaw workers hit the picket lines. the first walkout to hit the big three all at once. plus arm shares are, well, still looking good ahead of the open, looking to extend those gains from yesterday. it was the biggest ipo of the year and quite a significant day. and rally paused. stock index futures, little changed after the best day for equities of the month. let's begin with the uaw striking against detroit's big three simultaneously for the first time in that union's history. phil lebeau is in wayne, michigan, after talking to gm's mary barra, and joins us with more. >> we are outside of the michigan assembly plant. it is the ford plant where they build the ranger pickup truck as well as the bronco suv. a very popular model. here's what this strike is doing in terms of its impact not just at ford but also gm and stellantis. total number of workers, approximately 12,700. just under 13,000 uaw members who are now on strike at the

ford plant here in wayne. the stellantis plant, that's the jeep plant in toledo, oregon, and the gm plant just outside of st. louis in wentzville, missouri. altogether, those plants represent about 15% of the detroit three's u.s. production. let me say that again. 15% of the detroit three's u.s. production. here are some of the strikers talking about the offers that have been made of a 20% pay hike and why that's not enough at this point. >> it's a start, but it's not, you know, where it should be. we just got to keep fighting for what's right. >> we're ready to roll. we're going to hit it hard and we're just going to go from there and say, we got to be out two, three, weeks, four weeks, whatever it takes to get what we need to get. >> take a look at this. this is general motors and the wentzville facility that builds their mid-size pickups, talking about the gmc canyon as well as the colorado pickup trucks, and

their full-size vans. it runs three shifts five days a week. earlier today, when we talked with mary barra, we asked her just how much of an impact is this strike going to have on general motors and how frustrated is she right now? >> i'm frustrated and disappointed. we put a historic offer on the table that not only has very significant gross wage increases, total through the contract, over 20%, that compounded is 21%, but we also have job security. we maintain world-class health care. there's so many aspects of this -- of the offer we have on the table that i think really is going to resonate with our employees. so, we didn't need to be here. >> reporter: as you take a look at how shares of ford, gm, and stellantis are indicating before the open today, keep in mind that there are no negotiations scheduled for today. there will be a uaw rally in downtown detroit later this afternoon. guys, i think that we are looking at a strike here that is not going to be resolved any time soon.

that doesn't mean they couldn't come to an agreement soon, but i don't sense that we're going to see this resolved by monday or tuesday. it's a possibility. i just don't see it happening. >> why, phil? >> i think they're too far apart. and i think the uaw has leverage right now. being blunt with you, i think that's the way that shawn fain looks at this. he believes that he can get much better than 20%, much better than the elimination or the reduction in the number of tiers, and tiers is where you hire a worker at this rate, eventually they make it to the top rate, but it take a number of years to get there. they want that gone, completely. i'm not sure if they're going to get it completely gone, but they are pushing in that direction. so, from their perspective, they believe that they have leverage right now. >> do they? how disruptive is it going to be to these automakers? >> initially, you're not going to see a run on these models where you can't find it in a showroom.

but you stay on strike, if these guys stay on strike, it won't take long before ford dealers are saying, i got customers who want to buy a bronco and i don't have enough broncos. i don't know the exact inventory level for the bronco, but you go out four, five weeks, that's when that starts to happen. and that's really where you see the impact. look, every day there's a strike, there's a financial impact for each of these automakers. the farther it goes, if you go two weeks, three weeks, four weeks, that's really where you start to see the big dollar impact for the automakers. >> phil, you know, on that impact, what -- at the very top of the ask here, in terms of compensation and benefits as a percent of overall cost structure, i know the uaw says something like 5%. what are the real numbers? do we know? >> in terms of what they get right now and in terms of what they're looking for, david? >> right, were they to get to the high end of what they're asking for, i'm trying to understand what the margin

picture will look like from the perspective of wall street here for these automakers if they give into the highest end of demand here from the unions. >> we asked jim farley that yesterday. he said, we couldn't do that. we could not afford to give them the full amount that they are asking for. if we did, this company would be bankrupt in a matter of years. percentage-wise, david, i think you're looking -- if you gave them 40% raises, you would likely bump up into the 7%, 8% percentage of revenues compared to where they are right now, which is about 3.5%, 4%. so, it would have a substantial impact. and again, jim farley was clear yesterday when he said, we just can't do it. there is a limit to how far we can go. >> phil, we do expect to hear from the president today. there's been some reporting that the white house is trying to see what kind of aid they could give at least to the smallest suppliers that might be affected. i mean, but a lot of takes about how limited or to what degree the white house's hands are tied

here. >> they are tied to a certain extent. look, we're serious. we still see production going for 85% of the models built by the detroit three here in the united states. so, those suppliers, while they are impacted, there's going to be less for suppliers coming into this plant here in wayne, michigan, but they're not completely shut down. so, there is an impact. i'm not discounting that. but the white house is going to have to look at this and say, how much of an impact will there be for suppliers, and you know, when do we really start to see that hit those suppliers? >> phil, busy morning. phil in wayne, michigan, as we keep our eyes on the strike. we'll talk soon, phil. thank you so much. meanwhile, street's trying to get their arms around the numbers here. deutsche takes a crack at it, says the weekly production on these particular plants averaging about 3,000 units a week at ford, 4,500 at gm, ebit losses per week in the 40 to $60 million range, which

deutsche thinks is manageable for now, but it reflects the union's strategy not to paralyze everybody but just inject enough uncertainty to create unawareness of what they may do next. >> bank of america says that it's a hit to gdp. annual run rate of 1.6 to 2.1%, obviously, we'll know more given how long it lasts, but the hit comes from industrial production and manufacturing, not as much from consumer spending because the union apparently will be paying workers during the strike. they also don't think it's going to be as big of an impact on inflation, though it does create upside risks for inflation, both on used and new cars. however, according to bank of america, and their analysts there, the manufacturers have been ramping production. they do have adequate supply, and there are increased signs that consumers have weakened their spending on autos. so, perhaps not coming at the best time for peak leverage for the uaw in that sense. >> right. but to phil's point, we could be having a different conversation if this strike is still going on

three or four weeks from now. >> sure. shortages. >> yeah. it will be a different dynamic, perhaps, at that point. >> the other question is what -- you mentioned the margins and what a wage hike would mean. u.p.s., a lot of people have been looking at that. the stock has been very weak in the last few weeks. the cfo did an interview overnight. their margins are getting squeezed on the back of these higher oil prices now and the higher wages. remember, everybody's looking at that as the teamsters got a pretty significant bump-up there and what that's going to do for profitability. if you look at the year-to-date chart, it's underperformed market. >> and after ppi yesterday, highest number since april, big pieces being written about today is whether or not we need to revisit the corporate margin story because the general sense has been q2 results were about margins. now, it's got to be about demand, and how much more do they need if, in fact, margins are going to be compressed. >> depends on the wages but

certainly the oil prices have moved up, and that -- that's painful. we saw some of the retail stocks underperforming this week. that's what happens when you see higher oil prices, traditionally. it puts a damper on consumer spending. we know consumers have been prioritizing the basics, the staples, and they haven't been buying as much on the discretionary items, even though, guys, the retail sales numbers were not bad. nine out of 13 categories grew there in terms of sales. it comes off a strong july and august moderated but the core retail sales, seeing a bump up was actually a surprise, and that's going to filter into gdp. >> yeah. as for the broader markets, on track for a positive week, s&p, nasdaq up four of five. you had the vicks at a 44-month closing low yesterday with that 12 handle. b of a today says it's pretty much impossible to be bullish on valuation right now if you look at the s&p as a whole. but equal weight, more in line with historical average.

just shows you how much the big companies are skewing that. collides with what griffin told you yesterday about where we are. >> he was a little more nervous about the rally continuing. here's what ken griffin said yesterday. >> i'm a bit anxious that this rally can continue. one of the big drivers of the rally has been the, just, frenzy over generative a.i., which has powered many of the big tech stocks. i like to believe that this rally has legs. i'm a bit anxious we're sort of in the seventh or eight inning of this rally. >> part of it has been the soft landing story. are you a buyer of that? the fact that we just haven't gone into recession despite 525 basis points of tightening. >> it takes about a year to two years for an interest rate hike to work its way through the economy. it's not instantaneous. we're now at the point when we're going to see the impact of these hikes really start to play out.

we're seeing the job market starting to weaken. there's been a number of news stories in recent weeks about how companies are willing to pull back with their paying for starting roles. we're seeing signs that consumers have had enough in terms of price increases. that they're starting to walk away from products they're trying to push through price increases. so, there's signs here that we're heading very quickly into hopefully the soft landing, potentially a more difficult scenario moving into mid to late last year in terms of an actual recession. >> always interesting to hear from griffin, who runs the giant hedge fund, citadel, of course, top earning hedge fund in history. and multistrategy, david, that's up almost 11% year to date coming off a record year last year. i thought that it wasn't all-out bearish, but it certainly was more cautious on the soft landing view, on the fact that stocks can continue, because the headwinds are piling up and

because he said we're -- we failed the rate hikes with the lag and now we're just starting to see it, which is a valid argument. it's something economists have been trying to figure out. >> it's always worth listening to him and his view. and obviously, i don't know how much you got into citadel every day in terms of just a percentage of the volume overall, given the size of that hedge fund, not to mention their market making. they are an enormous influence. >> enormous. we talked about it. we taped a whole other chunk of content, including citadel, his expansion in miami, some of the strategies he's interested in, commodities had a good year last year. he's interested in that as well. you'll be able to hear it monday night. we're running it in primetime on cnbc. cnbc leaders, 8:00 p.m. eastern time. >> monday night. you're making us wait a long time for that. >> it's good content. he talked about desantis. >> it was good content yesterday too. >> good. thank you. >> you're welcome. >> i thought what was notable is he said he doesn't expect the fed to get to its 2% inflation

target unless we have severe recession in the united states, which doesn't mean the fed's going to have to keep hiking rates. he thinks one more rate hike. but because of all the fiscal stimulus that's out there, and he sounded quite an alarm bell about what's happened with fiscal spending and the impact that that could be having on the bond market this year as a headwind to both fed policy, inflation, and the markets. >> yeah. real yields on the ten-year approaching 2%. that's close to a 14-year high. interesting to hear him tell you small chance, maybe, of one more hike, which puts him in the camp of citi and bank of america as opposed to goldman and morgan stanley, who say, no hikes. in fact, morgan stanley's looking for a cut in march. >> cut in march. so, here's what will be the most interesting and potentially market-moving thing. there might be one in november and december, but the real news is going to be we get a new dot plot, the sep, the forecast from

the fed as far as what they're going to do next year and that will be the signal of how hawkish they are, how much they think they're looking to cut into next year. the market is looking for cuts in the first half of the year. so, that's where they'll be able to sort of signal if they want to walk the market away from those cuts on the higher for longer side of things. if they move -- if they tighten a little bit their outlook for next year to 75 basis points of cuts, which is what economists are expecting for the next year, that's still less than the market's expecting. >> yeah. all depends on the data, of course. we've gotten some this morning in import-export production. let's get to rick santelli. >> yes. good morning, carl. we're awaiting our august read on industrial production and it is hitting the wires as i speak. we're expecting a number of 0.1%, much better, up 0.4%. that is one solid number. as a matter of fact, how far

back do we have to go? that is the second best number, actually, the third best number of the year. third best number of the year, so we want to pay close attention, especially after it's coming off of a very solid up 1%. utilization, also a much improved. 79.3 expected. 79.7 is the number we have. that's the best number of the year. you have to go back to november to find a better number. and just for the sake of context, i do want to point out september of last year at 80.83 on utilization was the best going all the way back to 2008. so, you could see th wveate' started to drift lower. should be no surprise. "squawk on the street" will return after a short break. to address operations issues? we can help with that. can we provide health care virtually anywhere? we can help with that, too. is it possible to survey foot traffic across all of our locations? yeah! absolutely. with the advanced connectivity

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shares of arm appear to be ready to extend some of those very strong gains yesterday that it saw in its first day of trading. of course, the company returning to the public markets. it's a chip designer, and it did finish that session yesterday. look at that. added about a quarter of the market cap. $51 was where it was priced but now exceeding $65 billion in market cap, and that's actually above where masa and softbank recently bought back 25% of the company from the vision fund at $64 billion. of course, still a lot of questions in terms of that valuation. given it's at the very high end now, a lot of things are going to have to go right for the

company, but you have to give a shoutout to the underwriters here. they did a very good job. and it's not an unimportant one, given how important it is to get the capital markets open when it's -- when you're speaking of ipos. got another one coming next week with instacart we can talk about a bit, but when you talk about arm, of course, one of the key questions will still be, okay, you're saying you have revenue and profit growth. is that going to come from volume or is it from price? i asked that question of rene haas. how much of the future growth and revenues in profits for the company, and you discussed the growth trajectory, is going to be simply price increases? i do believe there's a view, and perhaps you can address this as well, that you're not capturing the appropriate value for your product. is that a key component of the growth that you see? >> to some level. but more broadly, we see huge opportunity to deliver a lot more value of the stack. one of the things that we see around these complex chips being built today is that they just

take a long time to design, much longer than they did, and the cycle times to build them get longer and longer, so that puts a lot of pressure on our customers who are trying to design these complex socs, which gives us an opportunity to provide more. so, we're doing something around what we call subsystems, which are full blocks or full packaged entities around our ip. by delivering those subsystems, we save customers significant time of development. we accelerate time to market. and as a result, we can get more value for that delivery. so, what we think is going to happen for us over time is by delivering these blocks -- and we see this, by the way, david, applies to just about all our markets. automotive, networking, cloud datacenter, pc, game console, and of course mobile. they're all great fits for it. so, i think going forward, pricing is a component of it, but i think more importantly, by delivering more value, we can get better pricing in bgeneral and drive growth. >> the market seems to be a

believer. look at what's going on right now. remember, it was a relatively small slug given the overall size of the company. still, 4.5 or $5 billion offering. >> good sign for the capital markets. good sign for risk appetite. i read the bernstein note this morning. they initiated that hold, and it wasn't as enthusiastic. the price is full. the analysts there think we're entering a post-smartphone era where the next growth is going to come from high performance computing and the internet of things and they just don't see arm in that strong of a position. they also think that the arm a.i. story has been a little exaggerated and say it's wrong to compare it to nvidia. >> yep, and that is one of the criticisms. and again, we are getting up to some fairly significant valuation at this level, carl. >> meantime, guys, lot more news to get to as we take a look at futures. we'll get to these reports on disney, instacart, of cose, ur dash, adobe's going toopen

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take look at the premarket here. you'll see some weakness in the nasdaq futures in particular. we're going to get into what done said last night about the quarter and the guide. overall, futures have lost a little bit of eastm as we get into a triple witch expiration day.

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both consumer as well as resilience, i think, continues. and for a long time now, we have been talking about, will this customer confidence continue, and i think we've all been pleasantly surprised by how much it's sustained.

>> that's adobe talking about the quarter last night on "overtime." nice beat. the best beceat in a couple yea. revenue in line. the guide is above for q4. b of a reiterates a buy, but as jim has said, kind of like nvidia and oracle going into the print, jim said there would be pressure on the name. >> he also said it was an important quarter, and certainly that may prove to have been the case. we'll see how the stock performs from here, sara, but at this point, of course, it doesn't appear that it is being positively received. >> it is by the analyst. all the analysts are taking up their price targets, and they're so excited about the future. i wonder if there's a little, maybe, a.i. fatigue in terms of -- because a lot of notes say, you know, just getting started. lot to look forward to. this is an a.i. story. >> we've said many times, a lot of the products are going to be based certainly on generative a.i., and adobe is fairly early here. are still to come. i mean, really, not until 2024

if not after. and your point's a good one. will there be fatigue as we sort of -- the market focuses on the real beneficiaries right now, nvidia, perhaps microsoft with the introduction of pilot very soon. in terms of at least general availability. after that, is there a vacuum? >> let's get the opening bell here. at the big board, operator of grocery stores in south america celebrating its listing. and at the nasdaq, it's neumora therapeutics, focused on the treatment of brain diseases, celebrating its ipo. as we see some breadth fill in here, just circulating south of 4,500. watch energy today. oil is off the highs, but we got to $91.15 this morning. that's the highest of the year, highest since november of last year, in fact. interesting metric out of jpmorgan last night, guys, that the opec plus alliance is

holding back about four million barrels a day. that's the largest -- holding back in terms of production, excess capacity, x-recession in 20 years. >> that's part of the story. and the other story is that the u.s. economic data has come in better than expected. that's been a theme of the week. and then, today, we got, for a change, some upside surprises on china industrial production and retail sales, which is always important for the energy and the commodity market. i find it interesting, carl, that the market has been resilient and is higher for the week. it's opening weaker, but all the major averages are up for the week almost a percent. i think the nasdaq is up almost a full percent for the week given yields have stayed elevat elevated and the data's come in hot. cpi, ppi. nothing extreme. i don't want to overplay it. industrial production. jobless claims are still very low. so, is good news good news now? we're good with the resilience of the economy? even if it means the fed is going to have to stay higher for

longer? that feels, to me, like something -- last week was about higher yields in the market. this week, higher yields and the market's hanging in there. >> on fuel prices, you know, we did obviously see adjustments from many of the major airlines in terms of their profit outlook as a result of higher costs for fuel. although demand doesn't seem to be appreciably affected and many have kept if not actually increased in some ways their revenue outlook. american and delta, everybody coming in with expectations. for the first time, i heard somebody question amazon. you know, it is an enormous provider of logistics. they spend a lot of money on fuel too, as does fedex or u.p.s. unclear whether that really does creep in if we maintain these higher levels that we have recently seen. >> could be a double whammy, too. an 11% surge in one month in gas prices could hurt consumer spending. >> yes, that too. >> no doubt about it. and that's, i think, a question we have to look at, and as we enter the most critical period

of the year for these retailers, which is the holidays. right? thought it was notable, david, that after the successful arm debut, instacart comes out with an update to its s-1 where it is raising the price, and now the valuation's about $9.9 billion, took up the range by two bucks. >> did. >> strong showing from arm, i guess, made them feel more confident? >> you know, i think the expectation for this one is given the incredibly small offering size as a percent of the overall company, and really, even dollar-wise, that it's going to be priced pretty well. there are a lot of questions, though, sara, about the true growth. >> yeah. >> for, you know, in terms of their marketplace overall. it's not great. topline great there. that said, when it comes to the actual offering, remember they're going to -- i think it's about 600 million shares. many of them are secondary. there is a primary offering as well, but you've also got a

number of investors stepping up for as much as they're calling cornerstone investors for about $400 million of the $600 million. that's a $200 million offering essentially. you can imagine, given that's 2%, let's call it, or they're selling 6%, so it's nothing. and that could set up for simply a supply-demand equation that is very favorable for the performance early until you actually get to when everybody's locked up, which, in its own way, becomes the ipo, because that's when you really get price discovery. >> so, there's that. there's the scarcity. and there's the fact that they have brought the valuation so far down that they're making it look reasonable, according to the analysts. this was a company that was valued at almost $40 billion. and you're right about the growth. it's an interesting time to go public, given their growth has slowed down. the folks -- the analysts that

like it and the industry watchers that like the stock say online grocery is still in a growth period as a vertical. the question is, 70% of online grocery is dominated by the large grocers. walmart goes at it its own way. kroger has a partnership with instacart, but how long will that last? if kroger wants to do it themselves. instacart and the s-1 says they need us, 5% of their revenues. they're not going to just let us go. some of these big retailers. but that continues to be the discussion. that and some competition from the likes of amazon or doordash or uber. can they just get into the online grocery game? they have gotten in, but instacart has a first mover advantage. >> they do. but again, to your point, topline growth here is not significant. that does not mean that it is not going to be a successful offering, and again, you were watching arm shares, which are -- there's uber -- day two, still hanging in there. we'll see how it performs. but $66 with a $51 price

yesterday. that has gone very well. that's certainly a positive sign not just for softbank, which owns 90%, but also for the overall ipo market that we talk about so often. >> yep. already got another initiation on arm today out of needham. i think new street was the first out of the gate with a $58 target. as for dash, downgraded today over at moffett. they say, what happens when 43 million americans see an average of $225 a month come out of their pockets in october? if we've learned one lesson in econ class, there is no free lunch. they go to market platform. target of $93, and then you see dash moving to the nasdaq in a move that we don't see that often. >> i thought that was a good note because they really went through the numbers on that, and one of the things i learned is they quantified the exposure, moffett nathanson, that is. doordash and uber eats have a greater proportion of monthly

yiesers in the 25 to 44-year-old cohort than any other company they cover. 65% kpcompared to the e-commerc average. that's the age cohort, unfortunately, that's going to have to pay these student loans. i think it's part of the bear thesis on the economy and the consumer spending story. this is an economy built on spending. if we do see a hiccup like that, and again, there's the strike, there's the student loan payments, there's a potential government shutdown, there's a few shocks that we need to get through, potential shocks for the consumer, and for the economy as we look into the fall here. that's one of them. october 1st, they have to start paying those loans back, even though there's evidence, carl, it's already happening. treasury is seeing an increase already from department of ed. >> consumers are arguably ready for this, arguably already making adjustments. bunch of reactions to the reports on disney today. wells in our view, a deal at eight times can work. actually, some of them, rosenblatt in particular, points

out it adds a pretty nice argument to the break-up value of the disney equity and a lot of media names at the top of the list today. >> there's some of the text from wells fargo, as you point out. barton crockett, we have on frequently, also coming out, specific in some ways also to the benefit potentially of an abc acquisition were it to happen for nexstar. and many analysts trying to figure out what exactly is the ebitda from abc and the stations? remember, this all began a couple of months ago when i sat down with bob iger in sun valley, and he said, listen, abc is no longer a core. he more or less said that. that does not mean, though, that this is the priority. my understanding has been since that interview, really, espn continues to be the priority in terms of when we talk about a deal, finding a potential partner there. and my sense has been that that continues to be the case. it doesn't mean that there aren't going to be incoming

inquiries from nexstar, from byron allen, another name that's been reported, of course, his company owning the weather channel amongst other assets. always some questions there about how you finance these kinds of things. and whether it's for byron allen or from nexstar, also the basis for disney is so low, it would probably need to be structured as a reverse morris trust in order to not trigger huge taxes, huge gains, taxes on gains. i think we just got to wait and see. it's not clear to me yet that there's going to be anything near term here in terms of abc, but of course, again, these inquiries are coming. i don't believe they've hired a banker to actually handle it for them. he has brought in kevin mayer, for example, and tom staggs, former senior executive at disney, to help sort through some of these important initiatives in terms of especially on the deal front and just to remind you, take a listen to iger's comments from a

couple months back. >> we're talking, i guess, abc, the network, the stations, but then the cable networks as well. >> yes, correct. >> fx, natgeo. is it possible you would look to sell them? >> we're going to be expansive, and i think you can interpret what that word means. we're just getting at that work, but we have to be open-minded and objective about the future of those businesses, yes. >> meaning that they're not core to disney? >> that they may not be core to disney, yeah. there's clearly creativity and content that they create that is core to disney, but the distribution model, the business model that forms the underpinning of that great business is definitely broken and we have to call it like it is. >> lot of things he said during that interview that called it like it was. people still focused on it to a certain extent, but again, espn, my sense, based on reporting, was really the priority coming out of the gate in terms of not selling it but finding a --

finding, perhaps, a strategic partner. but if they get something coming in on abc that really makes sense from a financing perspective, that it can get done from a regulatory perspective, from a tax perspective, and from a price perspective, they very well may take it. >> but they're sort of in early stages of those talks? >> i think this is early. i think this is just stuff that's getting floated and it's not clear to me that it's going anywhere right now. right now. as in, you know, the next few weeks. >> another stock i'm watching is estee lauder. this is a stock that has been really beaten up on concerns about the china recovery, the korea recovery, the southeast asian travel demand recovery, and more recently the u.s. market share recovery. stocks up today because it did get some love from red burn

ther atlantic taking it from sell to neutral, saying they see an inflection point in some of those changes. when the data comes in better in china, carl, estee lauder usually benefits from that. it's had a rough year, though, down almost 40%. >> yes. cramer has addressed this several times, the difficulty that estee lauder and the split between elf and estee, year on year, if you chart those two. >> that's a value play with elf. >> asia strategy as well. lenna are is a story. down. asp's down nine. got a lot of people's attention. gross margin miss. sg&a was a little hot. only $4 now separate lennar from the 200-day, which it has not been below since november of last year. kind of reminds you again of what griffin told you, sara, that these real rates will bite at some point. >> right. and the housing picture's been so interesting to watch and the strength of the tighter supply.

it really hasn't been a story of high demand. the mortgage rates are biting, and the higher rates impact the economy. credit card rates. what are credit card rates right now? like the highest since they've been since the 1970s? in the 20s? s at some point, when we talk about lags on the economy, that's what we're talking about. auto purchases. the purchasing decisions from consumers. home purchases. card payments and delinquencies. it's why we've been watching the credit card data so carefully. it tells us that delinquencies are starting to creep up, but we're not at alarming levels. we're back to 2019 levels, which is sort of normal economy. what we've heard from the bankers is that consumers still in pretty decent shape. even jamie dimon, who says you can't bank on that, has said that the deposits are still higher than they were pre-covid. and the consumer still has that

cushion in place. the question is, what happens when it runs out? if the employment picture weakens further? that's the kind of stuff ken was talking about. >> the employment picture is still pretty strong. people have jobs. >> not just that, but linda yaccarino yesterday saying they're starting to hire back after the layoffs at x. these reports that salesforce is going to hire 3,300 after the layoffs we saw there. i mean, which direction is the job market going in? especially on a week where i know apollo pointed out unemployment in california starting to spike, and the separating from the national average more than it has in the past. >> the best indication of what's happening in the job market is the weekly jobless claims. if you really started to see employers changing their posture on employees and getting more cautious, you'd see a spike up in claims, and we're just not seeing it. it came up 3,000 last week. there's not -- there are not mass layoffs in this country at this point. the question is, though, if policy hits with a lag, then

will things change? >> yeah. >> so far, we're not seeing it. >> hartnett said he thinks the market probably buys the first negative nfp print. in other words, that's seen as good news, but that probably doesn't buy the second one >> because then we start to worry about the broader impact of the -- we're not -- we haven't had a negative payrolls print, and in fact, most of the payrolls prints have been stronger than expected. haven't broken through 4% unemployment. overall, that's a good read. but you know, a lot of people will say that's a lagging indicator too. >> worth taking a look at the automakers, given the top of the show, and interesting to note that tesla's actually down. and ford and gm are both up. not a secret of the possibility that the uaw would strike but perhaps a bit of a surprise that the reaction would thus far be a positive one, and tesla, which is seen widely as a beneficiary, should this strike continue for some period of time, is down.

that said, we should point out tesla shares are still up 122% for the year. >> it's also the best performing stock on the s&p week to date, so the anticipated strike benefit, probably already in the name, up 10%. >> sell on the news,buy -- or buy on the news to a certain extent in this case for ford and gm. >> do we still mention nikola now? they're expanding their dealer network to canada. up 13% premarket. i think it's come off the opening highs. and then, jonas over at morgan stanley today reiterates an overweight on rivian as we continue to monitor sort of the effect of evs, not just on used car prices, guys, but trying to see how -- how the big three manage this, because it's -- a lot of it is about the longer term ev strategy and will be even after these negotiations are done. >> the rivian's not part of the strike, so they've got that going for them. >> they do. not doing anything for the stock price today. as we pointed out yesterday, of course, when we talk about ipos,

that one was quite a blockbuster, very different time for the capital markets during that period of time. that was back when instacart had a $40 billion market value, private value, most likely back when rivian was hitting -- >> good old days. >> the good old days. but hey, look at the move in that thing. not many people saw 65 or $66 for arm when it was getting priced at $51. not that they didn't think it would have a nice strong opening, but that percentage move is a surprise and certainly is going to be embraced by those who want to believe that the ipo window -- i mean, bob pisani is going to be very excited, don't you think, carl? >> yes, he will. he lives for this stuff, literally. as we go to break, watch bonds today. not done with the data as we await michigan at the top of the hour, but we have worked our way through empire import, export industrial production today and rig count later on this afternoon. ten-year still elevated, close to 4.33% with the dow down 90 to start thisriy. fda

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not much is working today. tough tape this morning. watch materials in particular, nucor. he lowest level since july. they warn for the quarter. stetre is at 455 on lower pricing and volumes. caterpillar one of the worst dow names at the moment. don't go anywhere.

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in asia, i do think despite the geopolitical tensions and the economic tensions in china, i think asia is the place to be for the next 10, 20 years. >> do you think you have an edge over the u.s. banks in asia and china specifically? >> not an edge, but i think that we can compete in -- look, we are a global, specialized player. we can't compete across every dimensions of banking. >> that was ubs's ceo with the economic club of new york. there was a luncheon where i interviewed him and one of the interesting news things that came out of that, though long term bullish on asia and china and defended the view there, he doesn't think they will hit their growth target of 5% this

year, thinks they will come below that in the 4% range, as far as growth. clearly you know, is still betting big and betting the firm big. it's worth talking about today because we saw some green chutes in the china data today. i hate that word, but it is appropriate here and it's what investors are saying. august industrial production and retail sales were better. retail sales in particular, 4.5%. in july they were 2.5 a%. that's good. it shows maybe the stimulus is starting to work. we know it's been flowing from china. nothing major in terms of a bazooka maybe the markets were hoping for, but it's been happening. people were looking at the liquidity injections overnight a little larger than expected. they cut reserve ratio rates on thursday. incremental moves to try to system that's maybe starting to have an effect. >> industrial production over there. some discussion this morning about maybe how they're a not exporting deflation in the way that we sort of were enjoying

for a little bit. goldman does keep their q3 target at least unchanged at 4.9 for china. we'll see if some of the numbers can stabilize. >> the problem is ones you start getting better china number upside pressure on commodities and we worry about inflation in the u.s. and europe when the central banks starting to call it quits on the rate hike. >> the deflation in china. >> $90s on oil. >> we are >> interesting on a more geopolitical level. xi has gotten rid of the defense minister in the country. he hasn't been heard from in a couple weeks. >> yeah. by the way, haven't talked about this defense minister in china under investigation. >> yeah. >> fascinating. when we come back, the latest on the uaw's strike against detroit's big three and umish in a moment. ow doug, ever since switching to workday you've been a real rock star. rock star? what do you know about rock stars? billy idol? i mean where's the skin-tight leather? my shoes are leather.

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nine of the new york stock exchange. take a look at stocks. softer morning than we've seen this week. down a little pore than half a percent on the s&p. health care and utilities, everything else is weaker. technology at the bottom of the pack. the nasdaq is holding on to gains for the week, but those gains are coming down. up only a quarter of a percent-point 30 minutes into the trading session. united autoworkers union striking, ford, gm and stellantis. we're going to take you live to the picket line in just a moment. arm, heading higher after successful debut on the nasdaq yesterday, and instacart on the back of that raising its ipo price range. more on what that means for the broader markets later this hour. watch adobe today. profit revenue and current quarter guidance better than expectations but shares are falling amid luke warm reactions from the street. let's get to consumer sentiment out a couple seconds ago. back to rick santelli. hey, rick.

>> hi, carl. these are preliminary figures for september. in a couple weeks we'll toss these and get the final reads. 69 even is what we were expecting on the headline. 67.7 is the number we end up with. that would be the weakest level should it become the final going back to june of this year when it was under 60 at 59.2. on the current conditions side, 69.8, also a miss. 69.8. you have to go back a ways to see a number that low. keeping in mind, that we had a couple of mid-70s in a row. prior that that 64.9 in may. if we look at what lies ahead, maybe the most important issue, this one is improved based on expectations and the rearview mirror. 66.3. if it was to be a final that would be the best read since july when it was 68 and change. now the money numbers. the one-year inflation, do keep in mind the high watermark back

in march of 22 at 5.4 that took us back to 1981. 3.1. 3.1 is the number. that is, indeed, progress. you have to go back a ways to find a number that low. we're going all the way back to january. january of 2021. january of 2021. that indeed is very good news. on the 5 to 10-year inflation outlook a substantial drop, 2.7. you have to go back, i only right now see 2.7, you have to go back to december of 2020. the inflation number really has moved down. we see that we are now testing the 4.30 level in 10s and i can't stress enough, today's high yields in 10s, 4.33. wednesday so for the week, the intraday high yields, 4.34. the current high yield closed from the 21st of august, 4.34.

that's the level to watch. back to you. >> rick santelli, thank you. fed is going to be happy to at least see the inflation expectations have come down. they mentioned it before you want to see consumer inflation expectations come down to get inflation anchored, which is something very important for the fed. it's a good number overall for the fed. the view that they've done a lot and they're going to wait to see what the data shows. lower confidence read, guys, we've seen higher gas prices, could have a direct correlation there. food prices are elevated even though they've come down. my chart of the week that i made special as i do at this time every day is the core cpi and ppi. this is what the fed is targeting, right. the 2 line, and we got that this week. there's the chart an you can see where they spiked and it was a problem. strips out food and energy which a volatile. they're on a nice downward trajectory. still elevated above the 2%

target the fed wants them to go g.o. -- to get to but there's the chart. that shows what they're doing is working. now we need to just see how long they will feel like they can chill before they have to do more if they're worried about inflation flaring up or staying elevated. >> that is the question. >> yep. >> do we get another hike before year end? >> it's kind of a coin toss for november and december. and i think the bigger question, almost when do they start cutting and by how much next year? that's why i'm going to be watching the projections for where they think rates go next year. will they go down to 4.8, in other words tighten from where they were, the median target price from the federal reserve or the target interest rate from the federal reserve next year because that is a little tighter than where the market is comfortable and would send a hawkish signal. carl, i thought what lagarde

said yesterday, ecb president, they hiked rates and pivoted in terms of their posture, signalling that this could be it. >> yeah. a little pushback on that today. some drama surrounding just how definitive, supposedly, lagarde was yesterday in the wake of that hike. you see italy and portugal now pretty upset, the fury is the term thrown around. >> we have the quote. >> this is sort of -- happening at central banks all around the world as unanimity dissolves. >> the irony she's getting the political blowback at a time when she signaled she will stop raising rates. there's the italian prime minister, ecb doesn't care about the economic difficulties of families and businesses increasing the cost of money. lagarde is living on mars. >> elizabeth warren could have made that quote about the fed. >> and she has been complaining about the fed's interest rate increases. it's not helpful for politicians if we start to see unemployment tick up, if we start to see

confidence come down. that's what central banks need to get inflation under control and for the ecb, they've got a single mandate the italian deputy prime minister should know by now. the market rally yesterday was a reflection on the pivot they made in terms of communication on rates. it raises the question of what's going to happen here. are they done? are they going to keep raising? are they going to stay tight? we talked to ken griffin yesterday, citadel founder and ceo, about his take on what powell is doing right now and where he thinks it's going. here's what he said. >> it takes about a year to two years for an interest rate hike to work its way through the economy. it's not instantaneous. we're now at the point when we're going to see the impact of these hikes really start to play out. we're seeing the job market starting to weaken. tlaen been a number of news stories in recent weeks about how companies are willing to pull back with their pain for starting roles -- pay for

starting roles. we're seeing signs consumers have had enough in terms of price increases, starting to walk away from products or trying to push through price increases. there's signs here that we're heading very quickly into hopefully the soft landing, potentially a more difficult scenario moving into mid to late last year in terms of a recession. >> sounds like that's what you're expecting, a recession? >> look, my personal view is that the united states' economy is enjoying a tremendous amount of unanticipated stimulus from washington still. the federal deficit this year is going to total almost 6% of gdp. it is completely unsustainable. but it has been yet another shot of adrenaline into the economy that our fiscal continues to push the economy forward, but leaving an ever bigger bill for future generations. >> he went on to say, guys,

investors are starting to pay attention. we haven't talked about the deficit in this country for a long time and that we are having the conversation now, and that he does see it as a risk for bonds and part of the story this year. >> you know, it also comes up, though, the spending on the ira, chips act, infrastructure act, as potentially inflationary as well, but how does powell see that? i mean, that spending, those are big numbers but they're over a long period of time? >> powell has played down the impact of fiscal spending. he doesn't want to wade into fiscal policy ever, he knows that's not his place. i asked him at the end of june, and he said you see it in the construction numbers but he is it play down the impact on the overall economy which is debated. someone like griffin thinks it's keeping us from going into a recession. >> yeah. >> caplan said that too, former dallas fed president. >> powell plays it down. >> he does. for the first time ever, the united autoworkers, ken griffin monday, big interview that sara

taped yesterday, back to the story, united autoworkers union striking at ford, general motors, stellantis, two sides have failed to reach a new labor contract by the deadline just before midnight. phil lebeau is in wayne, michigan did speak with mary barra barra earlier and joins us with more on this situation. phil? >> we'll hear from mary in a little bit. let me give you a sense of the impact of this uaw strike on u.s. auto production by the big three. 15% of what the big three build in the united states is shut down. that's no production at the following plants with some very popular, prominent models that are not going to be built for a few days. we're talking about the ford bronco, built in michigan, jeep wrangler in toledo and the chevy colorado mid sized pick-up truck general motors built outside of st. louis. gm, ford, they're both offering the uaw 20% wage hike.

stellantis offering 17.5%. and i asked mary barra this morning, you've offered that. can you go higher? she didn't want to negotiate in public. you've heard from the administration about this. give me some sense of what they're telling you and your sense of how quickly potentially something could be resolved with the strike? >> i talked to many members of the administration as well as members of congress and we're at the table and problem solving. we want to get this done. this will not be good for the economy overall an again for all the communities that are impacted when a plant is in their city. >> take a look at shares of gm and ford and stellantis, a couple things to keep in mind, first of all -- [ inaudible ] not having any contract negotiations today. second of all, we will be hearing from the president regarding this strike in a few minutes. guys, back to you. >> just on the expectations here, phil, of this targeted

labor action, maybe that's why the stocks are faring a little bit better today and people are less worried about the impact on the economy. what is the strategy there? was this expected? >> well, look, that's the big question. is shawn fain planning to do another targeted strike at some point? what he has said, if there's no progress on talks we may decide to hit another plant. doesn't mean they will hit all automakers. they could want to shut down another ford or gm plant or stellantis plant, depending on how negotiations with that automaker are progressing at that point. i don't think we're seeing a huge impact on the stocks is that overall this has been to a certain extent baked in. if we see the strike stretch out five, six, seven weeks it's a far different equation for investors. but that's my take at this point. guys, i mentioned we'll hear from the president in a little bit. i should mention we'll hear from

the president next hour regarding the uaw strike and what's going on for the big three right now. >> timeline was fluid this morning. we'll keep an eye out for that and check back soon. that's phil lebeau in wayne, michigan. keep that conversation going this morning. joining us former ford ceo and contributor mark fields, great to have you. i wonder to phil's point about on the one hand it is targeted, on the other hand it's all three. do you see this as a jab in boxing terms? >> well, listen, it's unprecedented they're hitting all the detroit three at the same time and the union has been around for 88 years and shawn fain wants to show a break from the past. you know, i think, at the end of the day, fain wants to demonstrate the power of the strike and the ability to use it, and it's meant to spur negotiations. as phil was saying, it's meant to accelerate them, rather than paralyze the company. as they see progress or not, they may decide to go after some

other plans. but not paralyze the entire company. it has the benefit also, they don't have to deplete their strike fund by having all their employees across the plants go out. >> do you think so-called paralysis or forced paralysis is off the table from the union standpoint? and on the other side, do you see any sort of broad measures to export production in retaliation is also off the table from the three side? >> i think that's a longer term issue, depending upon what they end up agreeing to in this negotiation. i think, you know, carl, at the end of the day, i think the unions, they're most focused on the wage increases so i think the detroit three are going to be focused on that and the proposals they put on the table. they may have to move those up. the union is going to be focused on this tier 2 acceleration of workers that get to what they call tier 1 status or full pay status. and the union is going to focus

on temporaries and limiting those in plants. you know, i don't think -- at the end of the day, on the oem side, they're going to be focusing on just keeping both themselves and the uaw at the negotiating table, keep communicating, keep, you know, bringing proposals back and forth. the automakers have to keep in mind what is the victory speech for the union when they get a tentative agreement? ultimately, that has to be ratified. if it goes extended to your point, carl, i mean, listen, there's actions some of the oems could take on shutting down plants, not a lockout, but saying it's a parts shortage, but your point about moving products and plants out of the country, that's going to come down to if the oems are forced for some of these nonwage demands such as pensions and health care improvements, et cetera, then the oems are going to be rationale and look at

their competitiveness and if they can't be competitive in the u.s. they will have to move somewhere where they can be. >> well, mark, i mean, you know the cost structure of ford certainly and probably have a good guess at the others. what can they take here in terms of not just the wage increase but the overall compensation when you include the benefits you were describing? >> it's a little bit of a moving target because traditionally the automakers, the detroit three, were competing against the import brands which are nonunion. right now, all-in wages for the detroit three are about $65 an hour versus $55 at the nonunion plants. any movement upwards is going to increase their competitive gap. then you lay over tesla which the last contract they weren't a player now, they're a major player, their wage rates are about $45. so in terms of what they can take, listen, the automakers can't, you know, plead poverty because they've had very good

the last three years profitabilities and margins because of covid and a number of other things, so they're going to have to increase their costs. the key is to do it in a way that doesn't add more structural costs which would accelerate that gap versus the competition. >> i'm thinking about other sort of bigger picture potentially more longer term implications here for investors that pay attention to these stocks. you know, the companies all have pretty ambitious growth plans when it comes to evs and ramping up ev production. does this set them back and have to move into the next year as they have to play catch-up once these workers come back? >> well, you know, those plans are, you know, already in motion in terms of building up not only the assembly plants but the battery plants. the key thing, nobody is really talking about this in their -- in the negotiations right now, but one of the things that the union wants is the ability to organize these battery joint

venture plants that the automakers have set up with battery companies, as well as some of the new plants that are going up in the south to manufacture the products. that's going to be very important for the union because that means membership growth. at the same time, the automakers are going to say listen, we're already, you know, losing money on evs. we have a plan to get profitable but anything that sets us back with higher costs including labor down in the plants for evs is going to make it more difficult for them to actually make a business out of their electric vehicle transition. >> finally, mark, i wonder how you're thinking about the union and why they're framing so much of the negotiation around executive comp? the union tweeted, for example, in the eight minutes that mary barra was on cnn this morning, she earned more than any automaker worker makes in a full day. so is it a victory speech need to say we narrowed the gap, the pay ratio between the rank and file and management? >> well, you know, i think at

the end of the day, the uaw leader is pulling out populace sound bites that, you know, he feels are going to resonate with his members and the public. listen, at the end of the day, that victory speech has to include, listen, we are -- we are increasing the compensation for our workers, but at the same time, we're a limiting the damage, if you will, to our competitiveness as oems to compete not only in the u.s. but on the world stage, and at the same time, you know, this is all going to be overlaid by, as phil was saying, some input from the biden administration and if they get involved, the key question is, which biden is going to show up? is it the, i'm the most, you know, pro-union president in history biden? or is it going to be, i'm the guy that's fighting for american families in terms of fighting inflation? is that biden going to show up? it's going to be a very interesting to see how this

plays out over the next couple days and weeks. >> maybe we get a sense in the coming hour when we hear from the president, mark. we'll check in with you soon. thank you. mark fields. by the way, the business group u.s. chamber going after biden for this whole government approach promoting unionization at all costs. as we head to break our road map for the hour. it was a big week for data but what does it mean for the fed as we head into next week's big rate decision. apollo joins us to break things down this hour. >> oil topped $90 a barrel the first time it's hit that level this year. the key stocks to watch as a result. and after the brk, teahe read through on arm, holding on to gains this morning and instacart boosting its pricing. what that might signal to the ipo market.

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arm shares just turned lower for the first time since that successful debut yesterday. returning to the public markets, priced at 51 and a very, very strong debut even with that bit of a turnaround. it had been higher in the early trading this morning. of course, you know, the questions about the future growth rate of the company which has focused investors on the opportunity it has in terms of the growth overall in a.i. and generative a.i. for its chip designs being a part of that emerging ecosystem. another factor that may have figured in here is softbank.

they own 90% of arm after yesterday's offering and when i asked the founder and ceo of softbank masa son, whether he had any anticipation to sell some of that remaining stake, here's what he had to say. >> our intent is to hold as much as possible as long as possible. i wanted to keep 100% of arm, only reason we are having ipo and selling is because arm is such an important company for the industry. i wanted to have investors opportunity to participate on the upside opportunity of arm. >> they've already done that. of course you can see the stock holding around $63 a share. following on this successful offering, instacart raising its ipo price target after that success of arm that we're watching right there. leslie picker is here to sort of

talk through some of the news. obviously, the arm ipo went well day one, and instacart now is next in line. >> yeah. so, obviously, instacart, and its advisors were watching to see what happened with arm. the constructs of the instacart deal are different. arm is a 33-year-old company. it was whole kwlee owned by softbank. one of the sponsor-backed type of company going into the public market. instacart has never been public before, despite the fact that it's been rumored to be considering it for years now, initially filed that s-1 confidentially about a year and a half ago or a year ago and now looks like they're finally making that move. ultimately opted to raise the price range by about $2 per share throughout their road show. i heard the road show is going well, it's a small float they're offering if you extract what cornerstone investors have indicated interest in

purchasing. that's about 60% of the deal. it leaves about roughly $200 million just over $200 million or so for the rest of the market. so that has significant demand which gave them confidence to raise that price range before they do their listing early next week. >> leslie, sara and i were talking about that earlier. $200 million is nothing. >> nothing. >> i don't know if they're going to -- could they increase the size? it's such a small amount. it potentially could skyrocket, couldn't it? i don't want to prejudge, but that's just -- nobody is going to get any sort of allocation on that. >> it's a very small float, and at these new terms they're looking at a $10 billion valuation. that's about 2% of the company that we're talking about that's available for everyday investors or even institutional investors, just participants throughout this road show process to be indicating interest in

purchasing. they could absolutely increase the float, but i believe this was by design here. they tried and this is an important lesson we've learned from arm, there's a couple characteristics unique about the deal coming to market. number one, both came to market in a down round. arm higher than what softbank paid for it in 2016, but lower than the internal transaction done last month. it's important. instacart coming in at a significant to its private fund raising from 2021, about a quarter of those levels. number two, you've got these cornerstone investors that are not just indicating interest in purchasing some of the deal, but a significant portion of the deal. that minimizes the actual float available throughout that marketing process as i described there. so all those things are in an attempt to try to kind of create as risk-free of a process as possible. obviously, it's an ipo. there's more of an art than a science here, so some of these

conservative measures we'll see how they ultimately play out. kind of looking at that, i think it shows what kind of ipo market we're in right now. there are a lot of uncertainties. >> one more which is profits, right? like instacart is not growing very fast right now but it is profitable and klavio, another big digital marketer is going next week. >> you know, leslie, one participant said to me specifically with instacart, it will be when the lockup expires that you get a sense as to what it's worth. back to the idea that it's just such a small, small float. it really is not representative of anything other than supply and demand at this point. >> yeah. and those are really important dynamics for investors to keep in mind. now the big wild card and a i think this had something to do with what we saw yesterday with arm and talked about this yesterday on the show, what is retail doing in this current environment. and that was a big question i

think among some of the advisors for arm. it's not necessarily a retail name, but it does play in or at least it was marketing itself playing into the a.i. chip ecosystem. what would that be in terms of do mand in the aftermarket. we did see significant demand. i don't know how much was retail per se, but that was one of the key questions they had in kind of decision what price they wanted to do. instacart on the other hand is a very well-known name. something that every -- a lot of people use. it's a consumer-facing company. retail will have, likely, at least some kind of dynamic at play. we'll see how retail participates. it's another factor to consider as we watch this one. >> can't wait for next week. leslie picker this morning. speaking of arm, number of chip names down today on the report that taiwan semi is getting nervous about customer demand telling suppliers to pmt.y delivery of some high-end

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welcome back. i'm dominic chu. stocks are pulling back after a rally yesterday. the s&p trading at about its average price over the last 50 days on a rolling basis. there is a particular focus on the energy sector which has been an under performer so far this year. given what's been a more volatile trade in oil prices today swinging between gains and losses. there are currently now fractionally to the upside. they did earlier hit the highest level since early november last year for u.s. benchmark west texas intermediate and of course world benchmark brent crude prices. it did get u.s. wti about $91.15 on today. the result of that pullback is some underperformance in exploration names like devon energy, oil services like slb, valero, exxon, mobile and

chevron are out performers on the day. chevron positive on the session. analysts are predicting brent crude prices could top $100 per barrel before the start of the new year assuming production cuts by opec and partner countries and more positive data in asia in particular. that is the energy trade. bullish economic data sending things to the upside. i'll send things downtown to you folks at the new york stock exchange. >> thank you. when we come back, stocks on pace for a winning week. can the run keep going into next week's fed meeting. call it a minor sell-off today. programming note, we're less than two weeks away from delivering alpha investor summit where wall street's top investors and business leaders will break down where they see risk and reward ahead. scan the qcor de or visit cnbcevents.com/delivering alpha to learn more. we're back after a quick break.

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welcome back. i'm pippa stevens. libyan authorities evacuated the city of derna today as rescuers waged through waist deep water and dug through buildings following flooding this week. 11,000 people have been found dead and another 10,000 are still missing. the city was inundated with water after heavy rains from a mediterranean storm that caused the collapse of two nearby dams. the kremlin said russia and north korea did not sign any formal agreements on military matters during kim jong-un's visit to russia this week. putin and kim spoke for five hours on wednesday, but specific details of the talks are not clear. kim toured a russian fighter jet factory today under western sanctions. and spanish prosecutors requested a retraining order this morning for the former spain soccer chief.

the order would keep him from approaching the women's national team player he allegedly sexually assaulted when he kissed her during the world cup without consent. he insisted in court today that kiss was consensual. back to you. >> thank you. stocks in the red today but on pace to end the week higher following a big week of economic data. what does it mean for the fed ahead of the rate decision next week and are there risk to the rally that investors should consider? joining us at post nine is apollo chief economist administratorsen shock and edward senior management. good morning to both of you. i will be watching the median dots on rates next week. what are you focused on? >> going into this meeting, what's interesting is that they have put so much focus on being data dependent and their data is pointing towards all kinds of directions. look at the atlanta fed gdp estimates and this quarter will be 4.9. the new york fed says 2.25 and

the st. louis fed we're in a recession in q3. so going into the meeting we're watching, of course, what -- >> who has the best record there? >> some of them don't have a long track record and the new york fed took a break and started publishing again. the bottom line to your question, watching the dots it's critical. the data is slowing down as the textbooks would have predicted. we've seen capex spending slow down. we've seen a number of job openings come down, the workweek come down. a number of things are moving in the direction they want. we're just not quite there yet and that's why the bottom line to your question, they will signal we are almost getting there but not at the final destination yet. >> is that a risk to equity investors into next week that they'll signal hawkishness still that there's work to be done? >> yeah. look, i think the fed will be reluctant to declare mission accomplished but the markets have started to embrace this position that perhaps we're on this pace for an extended pause. the september pause is kind of

baked in the cake. we're seeing november closer to 5050, market expectations have come down for any sort of rate hike in november and beyond. in fact, markets are pricing in a pause until mid june of 2024 where they see the first rate cut. we think this is a credible scenario, higher for longer until we see the core inflation number continue to core and moderate towards a 2% figure. to toresten's point, early leading indicators of market softening until opening and quits but a consumer that may be slowing down as well. we know they've worked an awful lot of their excess savings and seeing interest rates remain elevated and we're ending the summer travel season with financial conditions, bank lending standards remaining elevated here. it will be interesting to see, markets are expectinga slowdown in the economy, not recessionary but a below trend for q4 and q1.

we think that is reasonable, probably not going into any deeper for longer recessionary environment but we can re-emerge in .4 2024 with rate cuts, inflation moderating and growth and earnings that could be rebounding. not a bad environment as we look out into next year. >> we have the new auto strike targeted and we don't know how long it's going to last, but the fed has to be watching it. certainly the impact on inflation and the supply chain the longer it lasts. do you expect an economic impact it? >> if it's short lived it's going to be mild and i completely agree, they're watching it carefully, but if it is going to be longer lasting it could have a number of ripple effects across the supply chain, across the broader economy in a number of different dimensions. for now it looks like we don't know how to quantify this event, but it is something that you're saying they're going to be watching carefully. >> what about the student loan impact? also estimates all over the map

as far as whether that is what really starts to dent consumer spending? >> absolutely. because half of everyone who has a student loan is going to resume paying on average about $140 in increased payments, so the conclusion is combing that with what mona was saying, we're seeing excess savings running down and delinquency rates on credit cards and auto loans and seeing default rates going up. the broad picture here is that interest rates are biting harder on consumers and biting harder on corporates and that's what textbook would have predicted and the fed would like to see. they are seeing exactly what they had planned for since they began hiking rates in march of last year. >> what's the trajectory for earnings if we are seeing all of these things slowing, not into recession, but coming off these levels. >> yeah. it is interesting. earnings have kind of already gone through their earnings recession. three quarters q4, q1, and q2 back-to-back of negative earnings growth for the s&p 500.

q3 we're starting to re-emerge and q4 we could start to see a rebound in earnings growth, especially after easier year on year comparison. when i say more broadly, 2023, not very exciting, flatish s&p 500 earnings growth. really what we're looking for is 2024. as noted earlier we could see a rebound there and even a double digit type rebound. we're looking at a more normalized earnings picture with valuations, especially outside of the magnificent 7 that may have room to expand. that gives you a better backdrop we think overall for some expansion in your portfolios broadening of market positioning and also think about the bond portfolio as well as the fed is looking towards a pause and pivot lower in 2024. >> torsen to, do we think china activity is stabilizing and if fz, how important is that? >> we have been on a down trend. in august we saw a surprise upward move in a number of

indicators. it's clear policy makers are on this and trying to do everything they can to limit the slowdown. but you're right, that in the background is a very important development for the global economy. that's important for the europeans but it is also important when you think about the implications for the dollar and commodity prices and maybe also what it means for u.s. rates. >> because we might have inflation problems again if commodities keep rising? >> absolutely. >> they didn't export the deflation. >> well, as some of it is helping import prices a little bit here and there, but you're right, it's not the case. that's what's interesting at the moment, it's not the case that inflation everywhere is coming down at the same pace. it's idiosyncratic stories in the europe racep and u.s. in particular the own story in china. >> we'll leave it there. good discussion head of a fed meeting next week. thank you both very much. have a good weekend. >> s&p is narrowly on pace for its third positive week in four. so othbimef e g gainers here. we talked about how tesla is

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in honor of hispanic heritage month kicking off today, cnbc is taking a look at where the community has made economic progress. brandon gomez is here at post nine. >> some progress, some bright spots. wells fargo is out with a report looking at the economic progress of hispanic americans. let's start with what's improved. hispanic american employment has bounced back significantly post-pandemic. the unemployment rate near aen all-time low at 4.9% in the august jobs report. still, though, a full point higher than the overall rate of 3.8. worth noting tightness in the labor market does benefit traditionally marginalized groups. you're seeing hispanic employment growing at a faster rate overall. median household wealth closing the gap slightly in recent years

by $7,000. still look at the numbers. miles apart, almost $90,000 difference there. you're seeing a pattern. while the data does show progress, the gap persists. you really see it best in the wage data. wells pointing thought as of q2 this year hispanic workers earned around $850 a week. $250 less than the total population. which translates to an 80 cents on the dollar average. and that's the average there. right. latinas earning even less. when you look at nicaraguan and honduran women, wages plummet to 40 and 50 cents on the dollar. when our partners at just capital asked if our current form of capitalism is working for the average american hispanic americans were less likely to say yes. 26% versus 32% of the general public. now listen while, of course, everyone feels the impacts of inflation and the rising rates we discuss at cnbc every day it's clear not everyone is

feeling the pressure equally? >> what are the best practices? companies in recent years have tried to step up their efforts to hire people of color and boost diversity. is it not working? >> we come to this conversation every year and feels like little progress is being made. salary transparency. companies have been able to do wage gap analysis internally disclosed those results have been able to close the gap. and the other thing i would point out is that hispanic americans want long-term generational wealth building blocks, 401(k)s, stock options. unfortunately, companies don't necessarily always offer those up to their employees or hispanic americans are in industries where those aren't an option. they prioritize higher wages, more hours, things like that. >> the other difficult part the migrant crisis and how that is suppressing the debate about immigration at a time where country needs more workers, right? more than ever. >> and we need that labor, right. so it needs to become a priority

if companies -- and this is very interesting too -- hispanic americans want their company ceos to speak up on these issues, like immigration, like labor. and that sort of goes against this anti-woke narrative as well that we've been hearing. when you bring up one of the issues that hispanic americans are prioritizing. >> it was interesting. in the data set, who are they actually measuring? when you talk about immigrants, particularly those who are not even allowed to work but, perhaps, are doing so at very low wages, that would bring it way down. what is the data set they're actually drawing from here? >> immigrants are actually a part of that population in terms of the data set. it's also more about when you look -- when you zoom out and look at who actually makes up the hispanic american community. it tends to skew younger. it tends to skew within industries that are predominantly latinos and hispanics. we're talking about hospitality, we're talking about transportation. i think that because of that overindexes within those industries, you sort of see

those averages rop. and that's the case specifically for those numbers around latinas as well. >> and the leaders numbers are still pretty low, right? >> yes. >> ceos and no female, i don't think, hispanic ceos, right, on the s&p, and 16 men. >> right. >> brandon gomez. quick programming note. tune in monday, we have another "squawk on the street" exclusive. treasury secretary janet yellen with us, 10:00 a.m. eastern with her outlook for the economy, inflation, get her thoughts on this new auto strike. don't miss it. we'll be right back on "squawk on the street." dow is down 111 points. this is cynthia suarez, cfo of go-go foodco., an online food delivery service. business was steady, until... gogo-foodco. go check it out. whaatt?! overnight, users tripled. which meant hiring 20 new employees - and buying 20 new laptops. so she used her american express business card, which gives her more membership rewards points on her business purchases. somebody ordered some laptops?

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let's get a quick check on the automakers. they're kind of mixed. gm is a little higher, in fact, so is jeep maker stellantis. president biden expected to speak later today on the strikes. this is the news of the day, that the uaw, the auto union in this country, goes on a targeted strike because they couldn't make a deal and they were very far apart when it comes to negotiating pay and compensation and benefits, carl, that the

share price reaction, morgan stanley says, this was largely consensus, xexpected. the fact it's targeted so far looks like it leaves room to continue production in some aspects and room for negotiation as well. though, phil lebeau reported, no talks happening today. >> yeah. interesting to see names like carvana and carmax lower today. we'll keep our eye on that. as we close out the hour, sony picture's new movie "dumb money," chronicling the gamestop saga. take a look at this clip featuring some of our own cnbc friends. >> you should probably dial in. >> yeah, one second. >> gamestop, extraordinary volatility today. you might want to make this the stock of the day. now it's gaining 103%. that is volatility. >> i'll tell you, i've never seen anything like it. i'm concerned about it. deeply. >> i'm calling it the ultimate short squeeze. >> 120%. >> but if you go short in some of these elaborate options

trades, you can lose money to infinity. >> they were stupid enough to be short -- >> how much did we make today? >> $5 million. >> babe. >> they managed all of business media, i think. >> although david had a role. he was in it, weren't you? >> i have a speaking role. i do a scene. me and seth rogen. we didn't do it together but, yes. that's not it, by the way. that is not it. that was just a clip. yeah, they have -- yep. >> can't wait. i'm going to see that. >> i spent a lot of time preparing for it, as you might imagine. you know, i'm a method actor. >> you want your back story and what's my motivation and you fought with the director, i imagine. >> i did. i did. they had to do it a number of times. >> the only actor not on strike, david faber. >> i'm the only one around to promote the film. i don't know if you've seen the posters across -- on the old jpmorgan building, but it gives the essentially, because that

is the poster. it's interesting to see a movie like this get broad distribution. not typical, carl, these days. >> yeah. and part of the culture, zeitgeist we've lived through firsthand the last couple of years, wouldn't you sna. >> yeah, the social media mob, started there. we've seen it in so many other areas, whether it is the svb losing deposits in four hours, whether it's target or anheuser-busch, as we say, and what they've been able to do in terms of online opposition to some of their policies. >> by the way, ken griffin is played by an actor in this film. >> nick opperman. >> i asked him about it and his perception. there's some reports that he's unhappy with the portrayal. ec get to the bottom on that spial on monday night. >> that was an opportunity to market the film because he's not portrayed that badly. at least that's my opinion. "squawk on the street" comes back after this.

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