2023. it's still raining. "squawk box" begins right now. good morning. welcome to "squawk box" here on cnbc. we're live from the nasdaq market site in times square. i'm becky quick along with joe kernen. andrew is off today. yes, it is still raining. four days later. >> okay. rain is a good thing. >> we're here. that's better. let's look at what is happening with the u.s. equities. right now, the dow is down by 3 points. s&p futures down one. the nasdaq off 12. last week was rough for the markets. if you look at the signs of the pressure from the outsides, people are writing stories, joe, about the industrials down t8% since august 1st.

the russell 2000 down 11% with the small caps since the watermark on july 31st. it has people wondering with the small caps and industrials down, is that a worse sign to come? >> germany is in recession. china is slow there. maybe we shouldn't be surprised. the fascinating thing is people are writing articles that we could be in the first quarter of the slowdown. not negative, but a slowdown. it would be one of the things where it happened gradually and all at once. the indicators are not saying that. >> correct. >> we are hearing more and more people and it is depressing with the former fed guys, the smart ones we had on. >> daniel. >> that narrows it down. saying the biggest problem the fed has is they don't have a crystal ball. we know that.

we need to remember that. if you are looking at three months or six months ago and making policy decisions, they will not be at that rate. i don't know what is better. maybe some rules based regardless of what your gut is feeling. >> sometimes that doesn't always work based on what has happened in the past. the good news is the fed is stopping to look around to figure this out. if you want to look at treasury yields, we did see an uptick in yields last week after the fed decision where it will stop and look around. you will anticipate rates will be higher for longer. the 10-year treasury this morning is 4.495%. the 2-year treasury is at 5.13%. you have talked about yields which have picked up significantly. crude oil prices last week dip below 9$9$90.

if you went to bed early last night, raise your hand. >> not it. >> huh? >> not it. >> you didn't go to bed early? >> early-ish. >> the steelers won. i don't think you can say the steelers are horrible. you know what i mean? >> in my memory? no. >> they won. also, you may have missed hollywood writers and studios have reached a deal to end the strike. matt belloni from puck joins us now. matt, we have a lot to talk about. this supposedly was the year of the bears did a little bit better. the reason i'm bringing that up is because travis kelce has a new squeeze, apparently. i don't know if you saw that. >> taylor. >> i did. >> you did. i get nervous when someone is watching me do things.

he did not get nervous. >> there she is. >> he is a university of cincinnati grad, travis kelce. taylor was there. i'm not getting anything from this movie opening. i don't know why. i did have something to do with it. will it do $100 million? >> well, now, for sure! a cynical person might question whether taylor swift's appearance at the game is related to the fact she has a movie coming out in three weeks and might want to get some of the football fans to see it. >> not a bad time to have a movie given that there has been some damage from this strike. some things have been put off. if it ends now, you can salvage something for next summer and 2023-2024 tv season. this will work if it happens. >> i thought you were talking about the kelce movie out.

>> is there? 100 commercials. travis is in every commercial that comes on. sorry. >> this is the taylor swift movie we're talking about. she is interesting because she could promote her movie potentially if she wanted. that's a big thing in the sag-aftra strike. they are not allowed to promote. last night, the writers and studios came to tentative agreement to end the 146-day strike we have been talking about all summer. >> what do you know? neither side are allowed to divulge details. we can assume the studios conceded to some of these things? >> absolutely. there was compromise on both sides. from what i'm told, the writers are getting a success metric in

streaming which was a big point of contention. they wanted to see data and how well their shows are doing. they wanted some of the residuals to be given as a bons if their shows did well. i'm told they did get that metric. they got concessions on a.i. the studios gave them broad protections against a.i. work for training. the studios did get the ability to experiment a little bit and re-frame the positions in the next round in three years. they got wage increases and the normal things you would expect. >> what did they give? >> what did they have to givstr? >> they wanted a minimum number of writers on each show. they did not get what they wanted. they did get something. it is based on the number of episodes per show. they didn't get that.

they wanted broader transparency where they get access to all sorts of data that they will probably not going to get. there are other issues with wages. they wanted the ability to strike if other guilds are on strike and they are not getting that. it is definitely more than what they were offered on may 1st which is when we went on strike. >> why have i read in a couple of places that this opens the door for a settlement for the actors? why? >> the thinking is the actors will use a number of the terms from the writers deal as a template and build upon that. the writers have issues which are specific. the actors have issues specific to actors. the thinking is that now the writers are done which was the big hurdle, then the actors will

follow a couple weeks after. >> i made the point that maybe things can be salvaged. it takes two months before you start production of a tv show. i believe that. they are well written. even the crappy ones are well written. what is delayed? how much damage do we see on the studios at this point? >> it takes a couple weeks to ratify the deal. if the tentative deal becomes the real deal, then they have to ratify it and vote and the actors have their separate deal. best-case scenario if the actors do the deal we think, we think around thanksgiving we could get back up to production. everything will go all at once. >> all right. what does this mean for the uaw,

matt, and the government shutdown? >> that i can't tell you. the general sentiment in the country is leaning toward labor. >> you are giving me a serious answer. i think the government shutdown is like the 12 republicans going on strike because of the $33 trillion. it is like that. we are in -- you definitely have seen a sea change. we will see if it is an inflection point or not. there are right-to-work states, matt. you can drive people and companies to right-to-work states. you have to think carefully about what wyou do. did you see the eras tour live? >> i did. i went in los angeles when taylor swift was in l.a. i'll probably see the movie. i'm not rushing out. i told my wife i'll get tickets

p a and go. >> she has some talent. >> you have come around to that view? >> you are just now realizing this? >> wow! she has written like 100 songs. >> more than that. >> unbelievable. all right. very good. thank you, matt. my wife is happy about travis kelce. she is finally getting away from the other types. you know, the jake gyllenhaal and harry styles. she is getting away from the singers and entertainers. they're flakey, aren't they? >> and athletes are better? >> maybe. maybe. i don't know. we'll see. i don't know what the half life of this one is going to be. i would not venture a guess. in my family, they think he is cute and nice. all right. i think you're cute and nice, matt. >> i appreciate that.

>> you are supposed to say same. >> of course. >> he didn't even think of that. see you later. >> maybe we should go to the taylor swift movie together? >> i'm not opposed to that. i have plenty of stuff. are you a large or extra large? i have so much taylor stuff we can wear. >> i'm an xl. >> you like hoodies? >> sure. >> i got hoodies. i have all that stuff. i got connections. >> you got a bracelet for me? a friendship bracelet? >> i had one. i wore one. i don't want to talk about that. i wore one to the last concert. one of her songs. one of her fricking songs. "red." i like that song. see you later. tmi. before we head to break, we want to update on the auto strike. ford says despite progress in areas, it still has what it is calling significant gaps to close on key issues before it

can reach agreement with the uaw. the remarks coming after the uaw actually expanded strikes at additional gm and stellantis facilities on friday. saying they were making progress with ford. that's why they were holding off on extending strikes there. in the meantime, ford securing a win with canadian auto workers. the union voting to ratify the agreement which avoided that strike north of the border. ford is off 12 cents. when we come back, amazon making a major deal with a.i. and don't miss chicago fed president dpaustan goolsbee. he will join us live at 8:30 a.m. eastern time. a lot to talk about with the chicago fed president. you are watching "squawk box" and this is cnbc.

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welcome back. new overnight, amazon will invest up to $4 billion in a.i. company anthropic and take minority ownership position. anthropic will use the custom chips to build and deploy the a.i. software. a a anthropic offers an a.i. assistant that competes with chatgpt. it was founded two years ago by

former research investors. it attracted google and salesforce and valued after a funding round in may. amazon shares up by $1 on the news. meta platforms is planning to release a.i. chatbots to attract young users. it says the new a.i. bots could be revealed this week at the connect conference. that is on wednesday right before the delivering alpha conference on thursday. i might point that out. >> if you haven't signed up, you could do so at cnbcevents. >> they are tested by employees and they are meant to be used to

drive engagement. some may have productivity skills to help with coding. i'm not really that good at it. i'm average. how about you? >> relative to? >> someone that knows absolutely nothing about coding. i used to like it for high performance pascale. >> i can do html. that is like monkey code. i can code a web site. >> i know those letters. >> not fancy. the futures are flat this morning after a losing week on wall street. joining us to talk about that and what to expect is cameron dawson. she is the chief investment officer at newage wealth. cameron, what have we seen with the down market at this point? >> last week, we broke the 4,300

level which was the august low. that was an important level to hold. now that we broke that, it puts the 200-moving day average in sight for the s&p. that is only 9% from peak to trough. the peak from late july to the 200-day average. that is average for a correction. it is bigger for the nasdaq. the nasdaq was more overbought and expensive. it is about 18% down to its 200-day moving average which is bruising, but given the fact it was up do youble up s&p, we are still having the decline. >> you see the nasdaq is 21%. nasdaq is up sharply. what does this tell you about where we stand as we get into october? >> i think the thing that's really different about this correction is it hasn't been growth related. this is not about growth fears. you see that with credit spreads

which remain contained. you see that with the leadership in the market. you haven't soon a big braeakdon in the consumer staples. that tells you that you are in the shallow category. if you see growth pick up, that could mean the period of higher eps and higher gdp estimates would rollover. that is where you would have a deeper correction. you have to watch that closely. >> small caps and industrials have been under pressure. that concerns people. >> small caps have sat out the rally since the october low. that is very different for major market lows. if you look back in 2009 and 2020, small caps led with fed support and improving economy. small caps have done nothing this year and have been a weak point. that speaks to a lack of risk appetite in the market. when investors are clamoring for

risk, they pile into ipo. >> the good news is it is earnings season. maybe it is good news or not if you are looking for a catalyst or something to trade on. >> because you have better economic growth, it sets you up for upside surprise to earnings. that's what we got in the first quarter and what we got in the second quarter. it will really depend on investors sentiment and how the upside surprises can continue. 2024 estimates are up 12% growth for next year. that is a fairly high bar. mostly if you think that if you avoided recession in 2023, does that increase the probability of increased recession in 2024? that is the push-pull. >> cameron, thank you for coming in. >> thank you. coming up, tinder rolling out the vip subscription tier.

interesting. i wonder if i can do vip. >> no, you can't. ask penelope. >> the ultra premium service will cost $500 a month. details are next. later, countdown to veme stdn.gornnthuow we will talk to representative brendan boyle. you are watching "squawk box." er trading to help sharpen your skills, you can stay on top of the market from wherever you are. e*trade from morgan stanley. 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.

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tinder has rolled out an ultra premium tier charging $499

a month for exclusive search and matching. this whole thing -- we're going to do this without comment. >> we were commenting during break. >> i don't know what it means. it means that people on it -- i have an idea. this is legal. you put your bank account on who you are? >> if this means you are somebody who is up for going out every night and hooking up. >> and show a good bank account, you will find someone? how is this different? >> that's what -- i don't understand it. >> without comment. you swipe. >> i've never been on tinder. >> the plan called tinder select launched friday. it was offered to less than 1% of users who are among the app's most active. >> we're out every night. >> looking. jonesing for a date.

the company said users -- a date. tinder might be mad at us. k new features with search matching and what is not provided in the existing payment plans. it is not clear what you are getting for $500 a month. the parent company match group has experience with high-price dating subscriptions. >> high price what? >> dating subscriptions. it bought the league in 2022 which targets career-oriented singles with a vip plan that costs $1,000 a week. that was supposed to be a 20-second read. >> just saying.

>> i almost -- i know. i almost started with i'm going to read this without commentary and you ruined it. i know. you're right. these are all things that people are thinking, but usually not saying. >> right. when we come back, reports say there was little progress in washington over the weekend with less than a week to go before the saturday shutdown deadline. we will dig into that orsty next. "squawk box" will be right back. >> announcer: executive edge is sponsored by at&t business. next level moments need the next level network. move to the cloud. - so, the question is... - cyber attack! as cyber criminals expand their toolkit, we must expand as well. we need to rethink... next level moments, need the next level network. [speaker continues in the background] the network with 24/7 built-in security.

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good morning. welcome back to "squawk box." we are live from the nasdaq market site in times square. we had green arrows across the board for a second. right now, everything is flat. dow futures up 5. s&p futures up fractionally. nasdaq futures down. a programming note. don't miss our interview with austan goolsbee at 8:30 a.m. eastern time. we will hear about what he

thinks about the economy and if the fed will hold rates higher for longer. >> voting member. >> yeah. >> he has been thoughtful of the continuation into higher rates. i don't want to speak for him. he can give us the latest on how he feels at 8:30. >> exactly what he is willing to share. >> exactly. congress is back on the hill tomorrow to continue working on agreement to avoid a government shutdown following the disastrous week with no deal. joining us now is heidi heitkamp. she is the director of the university of chicago institute of politics and cnbc contributor. she fits in chicago very well. can you tell the difference, heidi? phil lebeau. can you tell the difference with chicago and fargo accents?

>> barely. barely tell the difference. >> mick mulvaney served as white house chief of staff under president trump. i'll read both of you a comment from the speaker and i don't know whether we can count on this or not or if this is different this time around where they don't shut it down. he says when it gets to crunch time, people have been holding off all this time blaming everybody else will finally, hopefully move. do you talk to any of these people any more, mick? are the real dead enders -- matt gaetz will never move? >> i think kevin is right. that is how it played out in the last couple shutdowns. i do think it is different time not because the people are different. keep in mind, it is an

interesting term. dead end. they have not seen how this plays out because they haven't been there long. that combined with the narrow margin. kevin had a marin of 15 to 20 votes, we would not have this margin. he all of these things make this different. i think they go into a little bit of a shutdown. if nothing else, to teach the new folks the lessons of how awful it is for conservatives when this happens. >> right. mick, i was going to talk about it. heidi, i don't think you should try to talk them out of doing this, which is what you do. you talk about how terrible it is and it should never happen. it usually comes back -- i know what i'll talk about, mick, in a second. heidi, it comes back and hurts the republicans. sometimes they have trouble in the next election because of things like this. you should tell them to go for it. >> honestly, that's a legitimate finger pointing because when you

look at the senate through the leadership of patty murray and susan collins, they move the 12 bills that they're required to m move. this is clearly a house problem and kevin mccarthy problem. the problem is we need systemic ref reform on the dead limit or moving forward without when you this point. we have a system in washington with the elite minority who only give attention to the moments to throw a cog into the wheel of the government. it is bad for the economy and bad for both sides. it is bad for people's reaction to congress at large. not just conservatives. it is time for reform. we cannot let these minority players have this much power. >> i feel like jon fortt.

mick, on the other hand, you have said it might happen and might not be the worse thing to happen. i do get twitter after this and $33 trillion. you are fine we are never going to spend anything else other than debt service? we can't do the great programs because the debt service is so high. you think that is normal? you don't think we should take drastic measures? i get people who yell at me when i don't take the shutdown people seriously? >> that is coming from me in a text. no, i don't like spending either. here is my point to my conservative friends. there is a conservative c compromise to reduce spending 8% and add border security. that is a good proper osal that

could pass the house and should pass the house. you only have a five-vote majority in one body of congress. the house. you don't have the senate. you don't have the white house. you will not fix the world. heidi, with all respect, she is talking about making changes to make it harder to reduce spending. the only time we have spending discussions are on the debt selling and government funding. i can't go with heidi on that one. my point to the conservatives is you don't have enough power to make big changes. take small changes and claim victory and move on. >> heidi? >> honestly, this is no way to run a railroad by crisis. it is so irritating. it is irritating that i think you have deficit hawks on the democratic side and an dgus kin. there are people who want to stop the run away spending. mick knows and i know that you

can't do that with these 12 bills. you have to have systemic reform as it relates to entitlement programs. the republicans still want to spend more than, you know, what would be normal and zero budgeting on defense. i want to make this point. the debate over ukraine is absolutely crippling to the people of ukraine who desperately need this help and desperately need positive signs from washington. this is troubling times. i think the casualty of this whole thing will be a larger than life minority say we're not going to fund ukraine at a time when it is critical that we send the right message to the people of ukraine. >> mick. >> not a crisis, joe. a dollar for dollar basis, 15% of the government shuts down. medicare goes out, social security goes out.

there will be impacts. we saw impacts in 2018 and 2019. markets were up during that shutdown. barack obama's best gdp was during the government shutdown. this is not a crisis. the debt ceiling, i ande agree heidi. does the media make a big deal? yes. does it hurt government? this is not a crisis. this is not a shutdown. this is a temporary lapse in appropriations. that is the legal term. we have them all the time. five in the four years with jimmy carter. people will get paid at the end of this. this is not a crisis. it is not the best way to reduce spending. >> if i can point out we have a crisis of confidence in the government and this does nothing to tell the american people there are responsible people in washington who know how to run a railroad or government. we have to fix that problem.

>> heidi, the administration, man, every day is out with another building from the bottom up or middle out and all that stuff about bidenomics. the latest poll from abc, heidi, trump is ahead by 9 points and 30% think joe biden is doing a good job on the economy. they spent too much. they did. no doubt. it is not resonating with the american people right now, heidi. the inflation and everything else. it is a disaster. >> yeah. they can point at polls that show them up. we cannot run government by polls. we have to be responsible. >> all right. that is going la-la-la-la-la. that's fine if that's what you want to do. there are a lot of polls that give it no better than 1 of 3

people think the biden administration is doing good. every poll. you can't deny -- you are in denial. six or seven stages, heidi. the first one? do you remember? the first one is -- i don't know. there are six or seven. thank you, heidi. thank you for putting up with that. mick, you don't govern by polls. polls don't vote. people in the polls. thank you, both. see you later. still to come this morning, more on the potential shutdown. we with will talk to congress m brendan boyle in the next hour. a programming note for you, cnbc's delivering alpha conference is thursday this week right here in new york city. do go ahead and register at

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a senior banker had been barred from leaving china in the move of the long-running investigation into the country. that is according to the ft report that says charles wang is

no more chair of the executive bank of china. he is restricted from exiting china. the travel restriction is linked to his time before he joined nomura in 2018 when he worked with a dealmaker who has left. and huawei pulling back the curtain on the latest offering to consumers. the company faces increased pressure from overseas competitors and regulators. eunice yoon is joining us live from a huawei store in beijing. what can you tell us right now? what is happening, eunice? >> reporter: there is excitement on huawei fans and scalpers. they have been lining up to get their hands on the new products. a lot of people are more excited about what the company had to say rather than put off by what the company didn't say.

the product launch was notable with the tablet. this is thinner than the newest ipad and latest of the mate 60 phone series. that was another notable product with ultimate innovation. as with the mate 60 lineup, previously what wasn't described about the latest phone were any details about what's inside the phone. no information on the chip. no words on whether or not this is a 5g phone. that, for investors, is a disappointment. the company says it is confident that china is behind it. the company said the coverage of the launch has been very broad. they say that more than 100 chinese outlets live streamed the event and state media. state media has downplayed the recent release of the iphone 15.

in addition, there was a bit of interesting timing, i would say, for the event. it happens to be the same day of the two-year anniversary when huawei's founder's daughter returned from canada to china after accused by the u.s. of violating u.s. sanctions. if you remember, that was eventually worked out on the u.s. side. >> eunice, you are pointing out that chinese media is playing this up and state media was playing down the apple launch. is thatting something that speaks volumes? is that unusual with what with we have seen in the past? >> reporter: it is unusual. a lot of huawei events were live streamed by the state media or the company mentioned that with marketing.

also, what is interesting is in the past, iphone 15 and other releases have been reported on or played up sometimes, but never played down. this time, we didn't see mention of iphone 15 release on friday which did see a lot of buzz. the first person who got into the apple store said or told us he had been there since 1:00 in the morning. >> eunice, thank you. eunice yoon. i put that into the bag of things we're collecting on with the apple relationship with china. whe when we come back, the report that says fossil fuel usage is 50% by 2050. really? you can watch us any time. check us out on the cnbc app.

#

. risk management company dmv is out with its energy transition outlook. the report says the fossil fuels make up about 80% of energy supply in north america, but that will drop to less than 50% by the year 2050. joining us right now is rem mee erickson. thank you for being here today. let's talk about this. you've been researching the energy transition for seven years. what gets you to the point where we think we're going to be below 50% in the united states and canada come the year 2050. that's just about 28 years away, 27. >> first i would like to say this report and research we are doing for north america is part of a celebration of being 125 years in the u.s. as a company.

and we had our first employee here in new york. >> what about the report? >> the energy transition is going to be fast burk, but it's going to be fast enough to meet net zero goals by 2050. they are changing the energy system from 80% fossil fuel to 60% non-fossil fuel. >> what makes you say that? just based on policies, government policies that are pushing industries to invest in alternative energy? >> two things. policies will be very important. also technology advancements is part of it. a key for this change in energy system is elect electrification. that's the main driver for this change. >> the power of the grid with cheaper renewables. i don't know what you do with jet fuel. it sounds like you're saying

it's going to happen gradually then all at once. we see it all the time when we have jeff currie from goldman sachs on. 20 years later and $10 trillion -- whatever that we spent, we're at 86%. you've cut a tenth of percent off. you're going to cut 36%? it hasn't happened yet at all. >> the transition is actually happening. additional capacity brought in is replacing fossil fuels right now. we are seeing that momentum for the tipping point. >> the biggest thing, i think, though is the grid itself. >> got to power that. >> finding a way to bring renewable energy sources to places that don't have access to that. that's permitting. that's massive amounts of money. every person i've ever talked to said that is the biggest issue. >> the report is $12 trillion opportunity over the next 27

years, and going into grids and renewables. that's the main thing: right now, actually, the grid is constraining the uptake of renewables. >> you saw the saudi -- or the minister of opec talked about the prospect for the next five years, so you're going the wrong way, at least in his view you're headed the wrong way for five years. >> yes, for the world it's going the wrong way. for north america it's actually going the right way, and this is what -- >> we'll use a lot more oil globally over the next five years. >> it will peak within this decade, we believe in our global report. oil in the u.s. has peaked already, not for export but domestic consumption. for the world it will peak towards the end of this decade. >> so it's not going to be natural gas. >> it's electrical vehicles. this is road transport, electrification. >> how, using nuclear? >> no, electrification of road

transport? >> how do you power the grid that gives electricity. >> solar, wind, and hydropower for certain parts of the world. >> solar and wind, that's what your money is on. >> there will also be nuclear in it, but nuclear will be stable in our forecast, not changing up or down. >> if the sun doesn't shine or the wind doesn't blow. >> you will use nuclear and you will have gas. >> so there is gas. that doesn't count as a fossil fuel? >> it does, yes, i'm not saying it's going to net zero. it's like 1.3 gigatons of co2 emitted. it's not fast enough for net zero or fast enough to reach 1.5 degrees. >> i don't know, you need charging stations at the waffle houses. that was my idea. no one wants to buy an ev if they go a certain distance. >> you need charging infrastructure and you need cars that can go 500 miles on a

charging. >> thank you for coming in today. >> thank you for having me. coming up, hollywood writers reaching a deal with studios to end the strike. we're going to tell you what happens next. at 80 n':3dot miss our live interview with chicago fed interview with chicago fed president, to keep your garage organized, "squawk box" is up next. workstations and flooring that let you create a showroom garage to call your own. designed for diy installation. all you need is one weekend to take your garage from unusable to unbelievable. visit us at newageproducts.com. [ weather report announcer ] all flights have been grounded. ♪ i had to escape, the city was sticky and cruel ♪ to unbelievable. ♪ maybe i should have called you first but i was ♪ ♪ trying to get to you ♪ ♪ i was dreaming while i drove the long straight road ahead ♪

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good morning, everybody. shi sh a tentative deal has been reached between hollywood studios and the writers. the uaw and big three automakers far apart on a deal with strikes against gm and stellantis expanding. we've got the details straight ahead. plus, what a government shutdown will mean for your investments. that deadline now just six days away. we'll hear from pimco's libby cantrell on what it means for wall street. and ranking member boyle, the second hour of "squawk box" begins right now. good morning, and welcome back to "squawk box" here on cnbc live from the nasdaq market

site in times square. i'm joe kernen along with becky qu quick. >> they are in the red. we did lose some ground last week and treasuries lost ground as well. the yields gained well, as you know, it moves inversely. today you can see the ten-year 4.5 basically, 4.49 in the two-year, 5.91. that's been sort of the catalyst for the malaise that we find ourselves in really since i think it was the first week of august. it all started -- >> august 1st i think was the high water mark. >> yeah. and it's been sort of sideways, would be generous for what the markets have done since then. >> that's right. we do have some breaking news, though, on the hollywood strikes. writers and studios have struck a tentative labor agreement. both those sides are still

drafting the final contract while the writer's guild of america did not disclose what provisions made it into the preliminary contract. the union did tell members this deal is exceptional in their words with meaningful gains and protections for writers in every sector of the membership. the wga did note that the strike is not over and no members of the guild are to return to work until that agreement is officially ratified. you can see the stocks of some of the major entertainment companies up this morning pretty much across the board. paramount global is the biggest gainer up 3%. the race is on by lawmakers to try and reach a deal to avoid a government shutdown. that deadline is sunday october 1st. that's this sunday. emily wilkins is standing by. she's been looking into all of this. emily. >> there's six days until a government shutdown and congress has no plan right now to keep the lights on after september o'30th. speaker kevin mccarthy has said he wants to try yet again this

week to get a vote on a temporary funding bill that would prevent a shutdown, but he just does not have enough support in his own party to do that. rather, a handful of republicans are holding out hinsisting on first passing long-term spending bills. even going that route, there's not enough time to move all remaining 11 funding bills this week. and frustrations are really growing within the larger republican party at this small fracture of members who have been holing out progress. congressman garrett graves said over the weekend that republicans are ultimately only hurting themselves if the government shuts down. >> the arsonist that lit their house on fire, they're whining about their house burning. they're going to want credit for putting the fire out and then they're going to set up a go fund me to get paid for what happened. this is really disingenuous. >> the senate has stepped in, they've started work on their

own bipartisan short-term spending bill. now, if the senate passes its bill first, mccarthy could work with democrats to pass that bill and to end a shutdown, but congressman matt gaetz as well as several other lawmakers has said that if mccarthy works with democrat, they will move to oust him as speaker. becky, lawmakers will be back in town tomorrow for what many are expecting to be a rough week that could potentially end with a shutdown. >> emily, thank you very much. emily wilkins. joining us now libby cantrell, head of u.s. public policy at pimco. i read a quote earlier from the speaker that says when it comes right down to it, the guys have been holding out probably will come around. is that whistling past the graveyard or wishful thinking? >> i think that seems like wishful thinking. speaker mccarthy has a sophie's choice in front of him. either he can pass a bill that can pass a senate and be signed into law and avoid a shutdown.

he probably will lose his speakership. that means by definition he's working with democrats. or he can pass a bill that won't pass the senate, won't be signed into law, shut down the government, maybe retain his speakership. i think our view is he probably has to pick the latter. so as a result we're most likely looking at a government shutdown. i think for the markets and for the economy the real question is for how long. because if this is just -- >> if the odds -- if the deal is you go ahead and you pass something that you know is not going to get there, you go into a government shutdown, what does he get -- >> goodwill with the house freedom caucus. >> what ultimately looks different? at some point you've got to resolve the differences. >> in the debt ceiling negotiation they'd negotiated the spending years for fiscal year '24 and '25. i think everyone thought this would be perfunctory, that bill

passed by 70% of the house republican caucus. there was some buyers remorse on the house caucus members, and as a result they're sort of forcing this. so i think it really is just more of goodwill. more of a symbolic gesture. >> eventually you're going to have to say we're going to compromise somewhere. maybe you get the administration to say, yes, we'll give you more. maybe you get senate democrats, but what would you be getting? >> i think one lever is around border security because that is an issue where president biden is arguably vulnerable going into next year, and so you would probably get some provisions there. probably not what the house republicans have intimate that had they want. but outside of that, it probably will just end up where the debt ceiling agreement -- >> who would you have to argue with? >> what do you mean who would you have to argue with? >> you said it is arguably vulnerable. who would take the other side? >> this is an area he is for sure vulnerable going into the election.

>> we've had people on that have pointed fingers and named names at who's to blame in terms of the far right guys, and they've mentioned matt gaetz and others and that it's all about self-aggrandizement or cliques, they actually say cliques. >> running for statewide office, yeah. >> they can fall back on the purists the debt is just too high. what duto you want me to do, an that does appeal to some people. >> for sure. we've been talking to clients a lot about this, the politics of austerity have returned to washington. >> is that wrong? no, yeah, yeah, yeah, obviously we're huge debt holders. we are worried about debt sustainability in the long-term. the irony is this is nibbling around the edges focusing on discretionary spending. if you want to change the needle, you need to look at medicare and social security and doing -- making some really we think some common sense tweaks to those programs that would

then allow sort of the debt picture to look better. neither party wants to do that. >> the third rail. >> this is not the hill to die on. >> this does to your point, it does raise money. it does get cliques, and again, for part of the electorate, this is really appealing. i mean, regardless of the fact that it does nibble around the edges, doesn't really change the fiscal picture, it still does something, and i think for some voters -- >> theoretically you could hurt the party itself so that you lose seats next time. so you can still be -- then you're a loud minority and you can still complain and say i would do this if i was in -- if we had -- i would do this, i would do that, boy, but you're not governing. >> yeah, well. >> they don't connect the dots. >> scott gottlieb points out, he's comiing up at 7:30. he points out the difference between this and the shutdown

that happened in the trump administration when scott was there. the blowback was on the president himself. so there were efforts by the agencies to try and mitigate the impact. this is different. this is a shutdown where the administration actually benefits because it's probably going to get blamed more on the republicans, so this could be a little more disruptive. >> the polling shows that republicans disproportionately would shoulder the burden, but still democrats don't look great either. this in terms of disillusionment in washington, the ability to govern. the second thing i think is important to division between this potential shutdown and a 2019 shutdown is that was a partial shutdown. this would be all of discretionary spending. basically the entire government outside of social security and medicare. the bottom line for that is the data. there's an economic impact, but then there are also potential economic impact, but the fed would not have access to payroll data, cpi data.

>> tell us what this looks like for an individual consumer, somebody who doesn't maybe work in the government, but government workers are going to be hosed. most of them don't have bank accounts where they can afford to pay for everything. >> a lot of these workers are going to be deemed essential but they are not going to get paid. tsa, they'll have to still be showing up at the airport and not get paid. that was so air traffic controllers and tsa were the forcing point in the 2019. >> that is ridiculous. >> becky, i'm just the messenger here. >> what is more disturbing to the credit, to the ratings agencies, if we shut down or if we go to 35 trillion? i think neither -- >> neither is sustainable. i just think this is the question, though, does a shutdown really achieve the ultimate fiscal goals? >> there's going to be -- start with fitz, this could spread, couldn't it? >> the irony of course is that fitch downgraded u.s. in august

for partly this very reason because of this dysfunction and polarization. they also pointed to debts -- >> and everybody in government said you're wrong for downgrading on this. >> take aging a step back, ther a bipartisan coalition who agrees that the debt is unsustainable, that we're on an unsustainable trajectory, but a solution needs to be bipartisan. >> and by the way, we had them on on friday, josh gottheimer from the problem solvers committee, but they also agree there needs to be something done at the border. so it's kind of like, yes, all of the common sense sort of things that everybody agrees with. >> all of the above, yeah, so i think i bottom line i think to the markets is that this could be another sort of whammy, sort of another headwind to the economy when you're looking at student loan repayments, when you're looking at all these other headwinds that are going to be heading onto the consumer,

this could be another option. >> they might like that anyway. thank you. later congressman brendan boyle going to join us for the latest out of washington and government shutdown. we'll have that to look forward to. when we come back, the uaw expanding strikes against gm and stellantis, but there are reports of some progress being ilebu lltalks. ph leawi have the latest. "squawk box" will be right back. is it possible? with comcast business... it is. is it possible to help keep our online platform safe from cyberthreats? absolutely. can we provide health care virtually anywhere? we can help with that. is it possible to use predictive monitoring to address operations issues? we can help with that, too. with the advanced connectivity and intelligence of global secure networking from comcast business. it's not just possible. it's happening.

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welcome back, everybody. we've got a bit of deal news this morning, amazon saying it will invest up to $4 billion this ai company an tlopic. as part of that deal they will use amazon's custom chips to build and deploy its ai software. amazon agreeing to incorporate anthropic's technologyinto its business. it offers an ai assistant named claude that competes with chatgpt. it was founded two years ago with executives from open ai. it has attracted investors from google and salesforce and was valued at $4 billion after a funding round in may. $4 billion for a minority stake tells you about how hot ai investments are. the tech sector overall is weighing down the stock market

since the fed warned of more rate hikes to come. for more on this and much more, we want to bring in doug clinton, managing partner and cofounder of deep water asset management. thanks for being here today. doug, what do you think of this investment that amazon's making in ai? >> it's a page right out of the open ai microsoft playbook for amazon. i think they saw that they're probably a little bit behind in terms of the adventure that microsoft has been on building open ai's technology into products like azure. we saw in this release with amazon and anthropic, they will bring this to aws customers. they're trying to compete directly with everything that microsoft and open ai have built so far as sort of leaders in this ai infrastructure space. if i think you sort of broaden out and look at the foundational model of companies, there's really five, it's open ai, it's

google. facebook with llama anthropic is one of those companies. amazon's making a big bet that as one of the top five it will be able to maintain that position is and continue to build one of the leading ai products on the market. >> even though anthropic already has other investments from companies like google, is amazon going to be able to control it at this point? it's a minority ownership stake. >> i don't think it's about control so much as think of goog and will their balance sheet of over $100 billion. facebook, meta, same thing, they have so much in terms of resources, these startups taken a lot of funding, over 10 billion for microsoft, now anthropic, they have a war chest where i think they can continue to be competitive. from amazon's perspective, i think it's more about the partnership and less about control, saying look, we don't have a product we could compete directly with open ai with, and instead we'll go and get a great partnership with one of the leaders in the market and make

sure they have the capital they need to continue to be competitive. >> you get into these partnerships and it makes you start wondering about things, how security that is down the road. you said they were a little behind. can they catch up, and if so, how long willit take? and i'm talking about amazon from this perspective. the partnerships and trying to figure out what regulators in the united states think about all of these things right now, especially when you consider what's happening with google and the money that they pay to apple right now for the partnership to make sure that they are the primary search function on the phones. i mean, it just -- it gets convoluted. i would guess they could look at this and say maybe we wouldn't be able to buy it outright, but a partnership might be a questionable deal too. >> it may be i think in terms of time. it's probably a six to nine month thing in terms of -- six to nine months, yeah, for meaningful product and maybe starting to see some actual revenues from customers and

getting a sense for how competitive are they really with what microsoft and open ai have kind of already launched. from an anticompetitive perspective, all these companies, the entire mag 7 landscape is under a very fine microscope, so i think anything that they do of size and scale like this will certainly be scrutinized. i think because it's a partnership, because it's a minority stake investments, it's hard to see what the government would take issue with there, but you never know. >> okay. does ai and the excitement surrounding that overall protect technology stocks from declines, especially with what we've been hearing from the fed about maybe more rate hikes to come? >> i think interest rates, the ten-year at 4.4, it sort of puts a cap on the tech sector in our view over the shorter term. it's hard to see that the rally that we've had here to date, which has been incredible, the mag 7 have carried the indices, it's hard to see how that rally continues with rates where they

are. i think investors really need to look to specific stocks that have catalysts to try to outperform. talking about ai here, google we think is one of those stocks within the mag 7 category that does have a catalyst. they will be launching their new ai model gemini sometime later this year. gemini is said to be as good or better than gpq 4, which is open ai's core model. so i think google has this reputation of also being behind microsoft and open ai, if gemini is as good as people think it could be, that could shift the narrative and people might start looking at google as a real player, maybe even the ultimate winner of the ai awards. >> what about amazon with this partnership that it just announced today? >> i think it's great for aws. i don't think it really puts them in the same category as really google and open ai as the two that are probably fighting for model supremacy, really delivering the best product to consumers and ultimately developers who will build

products to consumers. i think the aws and the anthropic deal with amazon is more about making amazon's products more intelligent, so your shopping experience will probably get much more intelligence from here and building it into their cloud infrastructure services, so not going direct into search and information discovery and things like that. >> doug, thank you for answering a lot of questions i've had this morning. great to see you. thank you. >> good to see you, thanks, becky. coming up, uaw expanding strikes against gm and chrysler, stellantis, the latest on those talks is next. a reminder, "squawk box" is streaming live every weekday morning exclusively on peacock as part of the morning news live collection. join us every day for the latest headlines no matter whether you're at home or on the go,

head to p peacocktv.com/morningnews for more information on how you can start streaming. we'll be right back.

ford says it's making progress in talks with the uaw. there's still significant gaps to close. meanwhile, strikes at gm and is

stellantis and expanded and phil lebeau joins us with more. >> hey, joe, we are starting to see little bit of the outlines coming together for a potential deal with ford. it's too early to say exactly where things are going to settle in terms of a wage increase, et cetera, butky i can tell gr talking with those familiar with discussions between ford and the uaw they had very active talks over the weekend. we're starting to maybe start to hear the drum beet b beats of a come together. they are making progress here. ford issuing a statement last night saying although we are making progress in some areas, we industill have significant g to close on the key economic issues. how much is the long-term cost impact for ford and what's the benefit, obviously, in terms of wages and salary increases for the uaw members. this is a reminder of what we saw on friday, an expansion of the strikes by the uaw against

the big three automakers adding gm and stellantis parts and distribution centers. they're scattered in 20 states around the country. so as you look at that, keep in mind that 12% of the uaw members are on strike right now. so this is not a widespread strike impacting a ton of plants where they're shutting down production. it is having some impact, but clearly not to the degree that it could have. and that's part of what the uaw is saying. look, if we don't make progress, we'll call for more strikes. is that going to happen this week? who knows. that's part of the whole strategy. take a look at shares of gm, ford, and stellantis. ford did get some good news with the rank and file members of the unifor labor union north of the borde border, which is the counterpart to the uaw, they ratified their agreement with ford, now they will move on to gm and stel stellantis. the president will be in michigan tomorrow. it will be in the mortgning. probably won't be for long.

a lot of people are saying this is nothing more than a photo op for him to say i'm in support with the rank and file of organized labor, but he will be there saying he will show his support for the uaw members who are striking right now. guys, back to you. >> do you have a primmer or any advice for the president on how to walk this line? do you know -- it's difficult, isn't it, phil? inflation, wage price, i mean, it just -- he's a pro-union president. >> joe, it's a very tricky area. what you're getting into with him saying hey, i support these people and i'm going to be on the picket lines. there are a lot of people who work for the automakers, not that everybody should feel bad for corporate america. a lot of people work for automakers who say wait a

second, when the pandemic hit who was there to work with the white house for respirators, and the administration said we want to do certain hinthinks, the automakers say they're one of the first that the administration or previous administrations have leaned upon. you're taking a stand here between talks where we would -- >> the rail workers, rail workers are mad too because they feel like he turned their back on them, so now you're going to have to say which strikes do you support, which ones do you not. >> great point. great point. i can't remember a president ever taking sides to this degree saying i'm in support of them against the management. i just can't. i know they've in the past said let's get together. let's work out a deal, but i can't remember a president ever saying i am 100% for organized labor. >> and phil, i made a point before, you know, i don't know if it's controversial, but i always go back to governor kor

sine of new jersey, you know, giving a speech to the public unions saying we're going to get a great deal for you. here's the governor of the state whose taxpayers are going to be on the hook for these exorbitant promises and then the unions he backs always donate to democrat -- it's not a good way to run things, phil, and it ends up with another bailout for the automakers if we end up promising too much. given all the subsidies, where's mine? i'm the guy on the line, i'm the guy or gal actually making these things. you're giving all these subsidies. >> a trillion dollars. >> that's why the public support is there, joe. that's why the public support is there for the workers. >> right. >> i think a lot of people sit there and say you can't give these people 4% raises, not in this day and age, not with inflation. i've heard that time and again when i've been in michigan. i've heard that from people

let's say at a restaurant, a server will come up and be like, come on, you can't give these people 4%. that's ridiculous. and now you have the automakers coming back and saying we're not giving them 4%. we're offering approximately 20% raises right now. there is movement there, but you can understand why there is public support for the autoworkers right now. >> shouldn't have low balled at the beginning. >> right. i can't wait to see how president biden handles this. i don't know. i don't know what advice. >> former president trump has said that he might show up too. >> great. >> we'll see. still to come this morning, former fda commissioner scott gottlieb is going to join us to talk about regulating ai and health care, the rise of weight loss drugs and much more. and later, chicago fed president st glsauanoobeewill be our special guest. stay tuned, you're watching "squawk box" and this is cnbc.

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in our next guest's latest piece provides a road map of how ai could be integrated into health care, given current regulations. let's bring in former fda commissioner dr. scott gottlieb, now a board member with ellume na and pfizer and a cnbc contributor. thanks for joining us. i could like break it down.

remember when we used to have to do paper, scott, in school, but you'd try to do an outline. aren't there like -- i could come up with eight different areas of health care where ai could be used, not just -- i mean, drug discovery, it'd be amazing on what you can do there, but drug-drug interactions when you're getting prescribed by doctors where you could worry about that or billing or i mean a million different things. what's your take that you're talking about in this latest paper? what would it help with solving? >> look, ai is making broad penetration into health care, particularly in drug discovery as you mentioned and in things like clinical decision support software machine learning. so may alert physicians, prompt physicians related to drug, drug interactions like you mentioned. machine learning applications you're seeing broad use in areas like radiology and pathology where these ai tools are trained to do pattern recognition.

more than 500 cleared medical devices by fda. the challenge and what this article is about is trying to integrate large language models into health care in a way they in integrate with patients without physicians. where are you going to try to penetrate first if you're a developer, you want to be able to develop a medical device regulated by fda that interacts directly with patients and makes recommendations to those patients. the place to look first is places where the interaction with the large language model can augment the interactions with the physician and not replace it so you're basically allowing touches to patients, input from partients and guidane back to patients. think of a doctor visit before you see the doctor, you may interact with a large language model and that would help make decisions whether it's going to make adjustments to your medication so that the doctor's visit is going to be a higher productivity encounter.

it has done some advanced work or follow-up for patients where follow-up isn't happening because you don't have enough manpower. that's where i would be looking first to get these large language models regulated as medical devices that could interface directly with patient and gives guidance back to patients. >> that's the case that's made for a lot of different uses of ai that it doesn't display the person, it actually makes the person more productive. and it's not like you don't need specialists with more time on their hands because it's like k, you try to make an appointment to do anything, scott, it's mind boggling. they go, okay, yeah, looks like -- how's february 18th look. seriously. if you try to make an appointment today, it might be february or march. so you're hoping you're alive. >> yeah, look,these tools can definitely give providers a productivity lift across the spectrum. again, i think the challenge is going to be getting them regulated by fda as medical

devices so you don't need to have a physician in the loop of the guidance that's coming back to the consumer to the patient from the large language model. the reason why machine learning devices have been approved by fda is because they're trained on closed data sets like a radiology device or pathology device where you're training them on a known data set. the fda has more confidence there that the devices themselves are going to produce reproducible results. they're going to be accurate because they have confidence in the fidelity of the training s sets. with a large language model, the fda has much less confidence that the language model itself wasn't trained on data that may have mistakes in it, errors. you're going to have to introduce these in certain narrow use cases where the outcome of variability isn't going to be as grave, and where it's augments what's already going onin the health care

marketplace. >> my head starred t start going on in the health care marketplace. >> my head starred ted to hurt. i've seen ai can interpret x-ray or a pathology report better than a human, but a lot of medicine isn't it kind of an art, not a science? aren't there times when you want a doctor's sort of instinct to interpret things, or do you think it'd be better five years from now to rely on the findings of an ai model? >> yeah, to fully rely on the findings of an ai model in some of those settings, i don't think we're quite there yet. what you have are systems that help improve the productivity of radiologists substantially or t pathologists. there is physician review in most cases. not every case, some simple cases are handled by the ai tools. by and large you get physician review, for that element that is an art, where there's a lot of

nuance where a human being can put together multiple variables. in many cases, the radiologist will consult with the physician who ordered the test to try to glean more information about why the test was ordered that helps yield a bert interpretation of the diagnostic scan itself. an ai tool can't do that or can't do that right now. there are instances where certainly a physician is very important. in most cases a physician is still somewhere in the loop of the decision-making. >> how many years until a laparoscopic procedure is performed robotically with ai or is it -- are we almost there already? and that would displace some doctors, i would think. >> yeah, i'm hard pressed to believe that an ai toolinged to -- tool linked to a robotic device is -- >> you're just talking your own book there.

>> nowhere i'm involved sells robotic tools. what i will say is the ai tools are already being incorporated to help guide decision-making in the context of those procedures. so you are seeing software embedded on some of these tools that are helping physicians make decisions about what they do. >> i think he meant as a doctor, not as on the board somewhere. >> yeah, yeah. >> protecting doctors. >> you remember that, what doctors do. >> i don't do surgery. >> i hate blood. anyway, i thought you were going to say that. ooh. >> it gives me the heebie-jeebies, you don't like blood, right? all right. that's bad. or surgery with the shades. that scares me too. doing my lasik surgery. were you out last night, doc? anyway, scott, thank you. good to have you on this morning. >> thanks a lot. when we come back, house budget committee ranking member brendan boyle will join us to talk about the latest out of washington on that looming

government shutdown. and later we will talk energy security with harold hamm, the founder and chairman of continental resources. "squawk box" will be right back.

the s.e.c. has collected thousands of staff messages from more than a dozen major investment companies as part of a probe into wall street's use of private messaging apps. that's according to a reuters report that says the expansion of the probe to reviewing thousands of staff message had not been previously reported. drag it out. you want me to like talk to you? okay. previously the regulator had asked companies to internally review the messages in its investigation of wall street's use of whatsapp, signal and other messaging apps that aren't approved for work discussions. >> i mean, this has been a big deal because if you're doing it on these other messaging services, like the thing is if are you actually want to have an illegal conversation, you should have it on the phone or in person where they can't track you. >> right. >> if you do it on anything, they're eventually going to get

it even if they have sort of ways of encrypting it. >> you have a big interview coming up. let me get right to this. >> yeah, hurry up. >> up next, budget committee ranking member brendan boyle joins us for the latest on the looming government shutdown. and in the next hour, chicago fed president austan goolsbee talks about the fed's recent rate pause and whetherha tt's permanent, whether there's more coming. "squawk box" will be right back.

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man, billionaire stanley druken miller. he's a lot of other things. you think we should do things like that? stanley stanley druken mill e had the best record over the year, like 30% a year for 25 years. >> which is why he's a billionaire. >> all those things taken together and he's a billionaire, hosted a fundraiser for republican presidential candidate tim scott on wednesday in new york, combined with an event in charleston last week, the senator brought in $1 million in campaign funds. that's all according to a bloomberg report. had the senator on yesterday, and he certainly -- i wish in practice everything he said would work. it almost sounds too good to be true, but he's impressive. >> politicians saying things that are too good to be true?

>> he's an impressive guy all the way around. lawmakers are heading back to capitol hill today with a government shutdown appearing more likely. the deadline to avert that shutdown is october 1st, that's this sunday. joining us right now is pennsylvania democrat congressman brendan boyle, the lead democrat on the budget committee. congressman, thank you for being here, first of all. we know that this is a more likely scenario that we see a shutdown. what would be the odds that you give it that we actually do shut down the government at this point? >> yeah, it's great to be back with both of you, and unfortunately, it does appear as if we're headed toward a government shutdown. the cruel irony of this, of course, is that a solid majority, a bipartisan majority in the senate do not want a shutdown and, frankly, i think that if we're allowed to vote on a clean continuing resolution, if kevin mccarthy put that bill on the floor tomorrow, i think there are well over 218 votes that would pass it in the house. so unfortunately, though, the

speaker continues to attempt to broker a deal with the freedom caucus extreme maga types who keep asking him for everything. he gives in and says yes, and then, they say no, that's not good enough and move the goal post on him. at the moment, that's where you know, earlier last week we heard that congress was going to be asked to stay and work through the weekend. that fell apart. that didn't happen. so what happened over the weekend to say, okay, now it's monday and now we think -- have you heard anything? what are the rumblings at this point? what are the possibilities? >> last weekend was inexplicable to me. i was one of the members who cancelled everything we had in the district having been told we were going to be there working at least until sunday and then because of the jewish holiday and certainly wish everyone well who is fasting today for yom

kippur, but then all of a sudden it turns out the republicans couldn't even pass the rule bill on thursday, which was shocking. no majority party had lost a procedural vote like that in 20 years and now republicans have lost it twice in a week. after that happened, kevin mccarthy came up with plan b or plan e at this point. this intra republican fighting and the dysfunction in their caucus is what will in the end bring about the shutdown if it comes about. >> we had mick mulvaney on today and he pointed out this is what you get when you have such a small majority in the congress. there's only five votes that kevin mccarthy can lose and therefore any republican members who decide to step up and say anything have much more weight

than they would otherwise. we are talking about both sides being quite a bit more aggressive and it's hard to find common middle ground. having said that, nancy pelosi was able to manage her caucus and keep things in order. >> with the exact same five-seat majority. genuinely mick is a friend and he's attempting to both sides something that can't be both sides. the democrats had the majority for the last five year and you didn't see this nonsense. number two, we can have bipartisan compromise and this isn't a hypothetical. we proved it in june. i talked about it before on your program. that bill that we passed in june to raise the debt ceiling as well as the set spending levels for the next year, 80% of house democrats joined 67% of house republicans and voted for that.

unfortunately since then kevin mccarthy has reneged on that deal. we need to get back to it. in the end i believe that is what is ultimately going to fund the government for the nbs ext year. it going to look like the already overwhelmingly bipartisan deal we passed in june. the faster we get back to that the better we all will be. >> let's talk realities of what this would look like. if there is a shut double play, what are-- shutdown. explain to your staenconstituen what this is going to look like. >> the best way to predict future behavior is look at past behavior. if we look at past shutdowns, take the one that happened when donald trump was president in 2018, you had then a $6 billion reduction in terms of the economy. that's according to the congressional budget office. you also had again according to

cbo about 140,000 fewer jobs created as a result of that government shutdown. just yesterday mark zandi, who i think has been certainly in the pro soft landing camp, he tweeted out that we cannot rule out a recession, most of all because of the possibility of a government shutdown. so the reality is and some of my colleagues who are openly calling for a government shutdown right now, they're attempting to putt forward the narrative that it will have no impact on the economy, that no one will suffer. that's just not the case. when you're furloughing that number of workers, even if you end up paying them in retrospect, there is an impact in economic activity. >> you mean stuff that doesn't get bought that's not going to get bought later. >> and those are jobs that aren't created that would have been created. i cited the data from the 2018 shutdown, the 2013 shutdown showed exactly the same.

there have been more than 20 of them that have happened since the 1970s, they have all had a negative impact to a varying degree on our economy. >> congressman, thank you for your time today. >> thank you. >> right now it's time for today's consumer statistic. 3.63%. that's where credit card losses currently stand. goldman sachs they are racking up losses and predicts those losses will continue in 2024 into 2025. >> and we'll watch that statistic. >> coming up, for the latest on the autoworkers strike, we'll talk to harry wilson.

and don't miss our interview with austan goolsbee. "squawk box" is coming right back.

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good morning. writers and studios reach a tentative deal to end the 146-day strike while the uaw expands strikes against the big three with some progress, those, apparently, behind the scenes. deadlines to avoid a government shutdown. can lawmakers reach a compromise before october 1st? how ways and means chairman jay smith will join us. and the fed's interest rate path and the inflation battle. chicago fed president austan goolsbee who made a dig at the president. the final hour of "squawk box" begins right now.

good morning, everybody. welcome back to "squawk box" right here on cnbc. we are live from the nasdaq market site in times squire. i'm becky quick along with joe kernen. andrew's off today and i just won the most annoying contest. >> you did. every day you do. >> we were picking worst songs in the cars for kids. >> people last week said they love you because you are willing to sing. >> you can hate him. we've been back and forth -- okay, we're a little bit weaker. the dow futures are down by about 70 points, s&p down by 12 1/2, the nasdaq down by 46, somebody woke up, saw the rain, they're in a bad mood about it. yields were up in the treasury market. the yield is now officially

above 4.5%. probably explains some of the weakness that you're seeing. the 2-year is sitting where it was at 5.11%. >> there will be an ozempic story on this show. the weight loss drug. >> we'll do the other most annoying song. and then "small world," which has always been -- >> the one to drive you crazy. >> wti down. >> details in the agreement weren't disclosed by either side and will be effectively released after the deal is effectively ratified. the writers guild told america that that this deal is exceptional with meaningful games and protections for every sector. and they will now turn to the

actor strike that's been on for more than 70 days. we are now less than 90 minutes from the opening bell on wall street. we're going to find out what mike santoli is watching in the markets right now. he joins us from the new york stock exchange. maybe at the end, mike, you can tell us the song you vote for most annoying. >> i might just endorse one of yours, becky. you nailed it, the stock market back on its heels, considered to be apprehensive. the move in treasury yields wasn't that huge last week, it was making new highs, breakouts, seemed like there was no end to it so the higher for longer is weighing. it's normal seasonal weakness. there's a little bit of concern that people are writing it off as seasonal weakness, which might previous vept us from gett -- prevent us from getting from an

oversold low. and this is sort of the next level as we break below the 4330s or 4320s, up 8-plus percent from the high. it shows us it's going to give the chart a look at being kind of heavy and unable to get anywhere near the 4800 levels, which is the all-time highs from back early last year. this has been a touchstone. when everybody was complaining up in this period here that the market was too narrow, it was just a mega cap tech stocks, it's only seven names doing all the work, i wasn't that concerned in part because the equal weighted average stock was also in an up trend. you're losing that benefit now and it's broken below what looks like an uptrend line, even if you go all the way back to march of 2020.

clearly we'reseeing a lot of weakness below the surface. it's creating oversold conditions. looks vulnerable are most stocks are down below their high and that's the makings usually of a comeback if you get a trigger. high yield bonds relative to treasuries. this has not been flashing much of an alarm. here you go. pretty much not doing anything. spreads are tightening. you have seen a little decline recently and the overall rates are going up because treasuries are going higher. i think this is one thing to watch both to see if we want to get to a moment of extreme fear and panic or if they can hold up and that's a better macro sign.

>> you're pretty sanguin. would it be fair to say things have gotten more interesting in. >> yeah. i think because of the different range we're in in terms of yields and the wrinkle that seems to be happening, not because the economy is just racing ahead, it's more because people are worried about supply and the rest of it. i don't think the fed's move last weaknessly changed the story that much. the market response sort of gets your attention and you guys have been talking about all the political stuff that can always at least be an excuse for further market volatility. >> very quickly, worst song? >> i don't know. "lion sleeps tonight." >> that's a bad one. >> the other one i was thinking

was -- ♪ ting, tang ♪ >> joining us is the head of u.s. equity strategists. >> on the song my children torture me with "cars for kids." >> that might be the worst, little brats. they're not playing those instruments. i'm never giving my car to them ever because of them. no, maybe i will. we're missing something, aren't we? it's like we don't know what to do. the old narratives faded. i don't know if there is going to be a recession. there's a vacuum of info so we don't know what to do? >> yeah. i was talking to clients last week and we were comparing notes on conference season. i was saying i hadn't heard a

whole lot of buzz. i read through a lot of transcripts, i didn't feel like i learned anything new. and the clients were like we feel the same way about conferences and they were like we just didn't learn all that much. that's disappointing because that's where you usually get colors. >> it's just they don't know. >> they don't know. rewind to last year, we were all talking about inflation and supply change and we're like, hey, this is what we're doing to work and these prices. we are starting to hear a little bit of squishiness with some companies saying costs are coming down, it's going to be hard to pass some of these kcoss along. >> but you're not gloomy. you can find things you're doing and doing things. >> i think one difference between me and some of the bearish strategists is i feel like we're coming out of something, not heading into

something and i think we're still in this normal post-crisis normalization. '02/'03, the market was afraid we were going to tip back into a recession, there were excesses and there was a fragility in confidence. that femt very similar it me. >> we were going to have a recession for sure, then we weren't going to have one for sure. now we're kind of like open to the idea but we don't know, maybe 2024. is that the year we'll see one? >> i watch the gdp forecasts pretty closely and we've sucked out the negative gdp anticipated for the end of this year. it's now kind of slightly positive and you're not seeing that move into 2024. we've seen a little optimism on the 2024 full-year numbers. on the margin the street telling you it thinks the recession has been avoided, not just delayed. from my perspective, i think we

bought it last year, i think we already paid the price for it. does it matter if we have one? of course it does but maybe not as much as people think from an equity pricing perspective. >> 2024 was going to be when we resumed double-digit growth. is that still going to happy or will 2024 also be a -- >> i think 2024 is going to be determined by what we think is going to happen in 2025. and the same way we baked in the supposed 2023 recession at the october 2022 lows, we found the market moving well ahead of earning trends right now. we essentially already baked in a pretty sizable earnings recovery in 2024 next year. >> this only covers u.s.? >> no, i cover a canadian bank but i cover the u.s.

>> it can look down, we don't have enough social programs. >> social graces. they are a lot nicer. >> they are very nice. it's a nice place to work. >> we love our community and hope they watch. good day to you. >> thanks for having me. >> when we commonwealth back, the uaw expanding strikes against gm and stlantis. a former senior member of president obama's task force, harry wilson, will have some advice for the big three. that's next. and can lawmakers come together and try and avoid a shutdown? we'll talk to jay smith in the next half hour of "squawk box." we'll be right back. avalarahhhhh. what if tax rates change? ahhhhhh. filing sales tax returns? ahhhhhh. managing exemption certificates? ahhhhhh. business license guidance? ahhhhhh.

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joining us is harry wilson, previously a former member of president obama's auto task force. welcome to the show. we're using this as a touch point for everything we've been looking at. you laid out pretty clearly the wrongs on each side and where you think there is common ground. let's talk about where we are a week later. you've got gm and stellantis in a different position and ford. i'm not sure i understand that. what would you be telling the big three? >> so far ford has made more concessions than gm and stellantis and in some areas in the wrong direction. the central question remains how do you get to a deal without repeating the mistakes of the past. to me that clearly is addressing wages and profit sharing, which reflect the success and health of the companies and is there for workers without readding the

structural costs that bankrupted gm years ago. what ford did was move ford on allowing for a right to strike for plant closure, which has never been in play and allowing for two years of income security post-lay off and those impede the long-term success of the big three. the fundamental mistake the big three leadership is making, they've been outshot of step of the way but think never articulated a strategy or set of principles along with what they're bargaining. they only complain about sean feign. so if i were them, i would focus on clear vehicles. i think the leadership screwed up by having the ceo pay

dramatically outpace worker pay. i would do a mea culpa and have parity so you can share in the success of the company, the sacrifice, share success model was 15 years ago but we can't repeat the mistakes of the past and endanger the health of the company long term and we can't agree to the structural cost you're asking for. that's a fair compromise. it's the great deal for the workers but they haven't articulated that in the forms of principles. they have just shot across for our five proposals. they may be in a position where he's not willing to recommend a deal. whether he's supportive or not, they're going to have to ultimately make the case to gm and stellantis employees and they're going to have to wrap

their argument around a long-term solution to them. >> i'm not sure why you're not concerned more about the future of the big three because of the products of f150 and gas guzzling suvs. all those profits are going to try to get the big three in a competitive position for the transition to evs, which is going to be hard anyway. it's daunting. people don't want to buy them. at this point tesla's got a huge lead. there's emission standards that the government and biden administration is forcing down the throats of all the companies. the past big profits are just that, they're in the past. and -- >> well, they're in the present. and i am concerned -- >> the present but where are we going? you can't see the future? you can't see how daunting it

is? you seem to think, well, this time around we can make sure key don't do the thing -- how can we make sure we don't do the things we did last time in terms of promising too much on shrinking profits? >> there's two pieces on that. the negotiation around the uaw contract and the strategy around the big three. i am concerned about where we are and this deal depending how it comes together. the first part is getting the uaw piece right. that's why i'm so focused on not reintroducing the structural cost that will bankrupt the companies. if you can have wages that are fair, everything is less than a point of margin. that i think is a fair balance between where we are and where we need to get to. i don't think a uac deal is struck on that basis. >> but that's not what ford has already said. >> no, what he said to be clear, if you take all the asks of the

uaw, that would imperil the future. he's never made the distinction publicly about what's fair and not fair. outside of the uaw, i think the emission standards from the biden administration are totally unattainable and i think should be amended. i think that, you know, the big three obviously have not proven an ability to develop successful ev products yet. i think they're making lots of great strides but still have a long way to go. i think that is a concern. it doesn't change the fundamental near-term deal of a labor deal. >> the need being one thing and the reality being another. what's actually going to happen? you've got president biden flying to michigan tomorrow to walk on the picket line with the workers. >> i think it's a shame that president biden is doing that, not because of where his political tendencies lie but

because we shouldn't see these things politicized. i look forward to getting back to where business gets politicized by third string politicians who can't do their day jobs. we should focus on this as a business deal and not a political fight and but unfortunately the politicians on both sides will politicize it. >> but before you worked in the obama administration, did you used to use the word "fair" a lot in talking about economic decisions? >> joe, joe -- >> that is such a loaded term and it means nothing. it means nothing! >> 30 years in the business -- >> but it's worth nothing! it's what the market will bear and what the future for everyone involved. you even mentioned ceo pay. $20 million versus something that's going tho cost billions of dollars?

that's de minimis. that's totally optics and you're using it. >> it's not optics. it's not optics. >> you have the stockholm syndrome. >> there's imbalance between willing news and lack of morale. if you have a company that can't attract and maintain talent, you're not going to succeed in the long term. you need to have the workforce you can develop and grow and succeed in the long run. that's what happened leading up to the financial crisis and that's what's happening right now. that's the playbook i used long before anything to do on the auto task force being, have to long-term profits, competitive advantage and the track that

the -- >> we've got to run here, harry. very quickly, that's what you think should happen. do you think it does or do you think this drags out? >> i thits more likely to drag out. it depends on how pragmatic with sean feign be and will the big three articulate a timeline and strategy to bring this to closure. i think this could be resolved in two weeks but it's more likely to play out until october. >> great to see you. >> next, energy security and rising food prices. and at 8:30, austan goolsbee on what's going to happen. rates remaining higher or not in the fed's inflation battle.

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the dow keeps getting worse. let's get to brian sullivan with the hamm institute's american energy summit with a special guest. hey, brian.

>> good morning. fantastic conversation you had on that previous block. we'll dovetail the energy side of it. i'm here with the gentleman who founded this institute. in his own words he was a barefoot country boy, probably not far from where becky quick grew up. thank you for having us here. >> good to have you here. you always do great job, i tell you. >> and why am i back here? why is oil back at 90, brent crude at 93 and there are reports that some russian barrels are trading for over $100 a barrel over the weekend. how did we get back to these prices? >> that's why we're here. it's all about national security interests. you've seen what's happened with russia using natural gas as a

weapon, cutting off supplies to europe. that disrupted a lot of things. we've seen the supply channels change. we'll see more disruption before this thing is over. >> it's economics, to joe kernen's point in the previous block about anything, right, supply and demand. where are we on supply? where are we on demand? >> one thing that this summit is going to success, that's what demand looks like for the future and also what supply. we're not running out of oil and gas here in america. we've got ample supply. that's a lot of what we're doing here today is looking at that assessment. we'll be on fossil fuels, particularly oil and gas the next hundred years. >> you're an oil and gas guy so you would say that. joe -- i don't think you could hear -- joe discussed the transition to electric vehicles. the supply issue is fine. why are you so confident that

the demand will be there when we're talking about and being sort of driven into, pun intended, an electrified future? >> fossil fuel and gas is about 82% of our fuel mix today here in the u.s. same thing we were in 1980. and we'll be there the same percentage in 2050. so we're forced in to electric vehicles. are they the right thing to be forced into? i don't think so. and a lot of american people don't either. >> why do you say forced into? >> well, the -- >> they're not forcing, the enticing. how about that? nudging? no? >> forcing. they're forcing the car companies to build electric vehicles and they're forcing the american workers and the american workers are fighting back. that's what this thing is all about today. >> and energy security.

how do you take the macro world view, oklahoma, yet we have to deal with what opec does. how do you see the global framework and where do you see prices headed, harold? >> we're fairly rel balanced. we have a little bit of oversupply. 1 million of 103 million barrels of demand, i mean, that's a very, very close balance that we're talking about in the world. we're not going to see $170 oil. >> but we don't want to. i made last fight a quip about high prices. people think they want to celebrate high prices but you can kill the golden goose. >> it's very well balanced. we have that wonderful supply basically brought to us by one

thing and i pointed that out as a game changer. the drilling, that one thing did it. this industry has been transformed for the future and it's done a wonderful thing for america. we need to celebrate that balance, celebrate our well being, if you will. >> harold hamm, a real pleasure. we'll let you get to it. >> appreciate. >> becky, we're not too far from where you were born and lived. >> no, not born. fourth to 11th grade. >> ties to every state. >> joe gets mad because i'm -- >> she just said she wasn't born. >> i wasn't born there. brian, thank you for kicking

things off for us this morning. and thank you to harold hamm, too. up next, the fed's interest rate pass and inflation challenge. we've got chicago fed president ab austan goolsbee. he'll be our special guest right after this break. "squawk box" will be right back.

all right, welcome back to "squawk box," everybody. we've been watching the futures this morning. we've been treading water, just about to flatline until the last 25 minutes, s&p futures off by 13, nasdaq off by 34. that came at the same time we saw a rise in yields for the 2-year. it was significantly higher this morning. 5.125% and the 10-year right at about 4 1/2%. >> now for a closer look at what the fed's done recently, pause central bank's future rate path and more. we knew him when he was a normal person. we did, for a long time. let's bring in -- he's huge now, he's big. he's like a -- you're not maga, you're mega.

chicago fed president austan goolsbee, former chair in the obama administration. mr. president, thanks for joining us. >> thanks for having me back, joe. >> how is your health and how are you sleeping? it's a big job you have. i'll tell you why i'm asking. we have a lot of people on who almost describe the risk as completely symmetrical call. they say a stop-and-start fed policy that lets inflation stay alive is the worst thing we can do. then others say the fed stayed at zero for too long, why wouldn't they go too far in terms of hiking and put us into a much harder landing than necessary? which risk keeps you up at night or makes you worry more. >> i'd say the risk of inflation staying higher than where we want it is the bigger risk.

i'd say it's the bigger risk. >> did they talk you into that? the word was maybe you were dragged into doing some of the recent hikes and that you thought maybe we should stay. that wasn't true? >> probably not but, i mean, it depends which meeting. we've all voted together. >> i know. >> at each of the meetings. and look, as you know, the feds got to do a mandate. the employment side has been going very well. so our focus, we've got to get the inflation back down to target. but i think weir doing it and so far we've been on a path, which is quite unusual historically, where we've been getting the inflation rate down without driving up the unemployment rate. now, these external shocks i'm going to call them have derailed the fed trying to nail a soft

landing in the past. so let's keep an eye on it and those are the kinds of things that are keeping me up right now. but we ought to have 100% commitment to we're going to get inflation back to the target. and i think there are markers that we can watch to do that. >> and that's not going to change. 2% target is not going to change. i'm ready to declare victory. >> i don't think it's going to change. >> no? >> i think it's unhealthy that people expect it. you cannot change your target if you haven't reached the target. fine, can you have some debate when you're at target whether that's the right target, but if you undermine the target and say, well, maybe let's give up because we haven't gotten back to it, it defeats the whole purpose. >> is it possible that the lag

kicks in in sort of a quantum way where suddenly things really do slow quickly? >> you're getting all science on me now, joe. >> there are some people that say the fed's done. there are people that say the last rate hike is in, smart people that say we're going to see this there's no way that they've already at least accomplished restrictive and that it's going to restrict itself with china and oil prices at 90 and strikes and all these other things. the fed doesn't need to do anything else. >> we don't know, but it is certainly possible. and there's one world view which says traditional historically, it takes several years for the impact of monetary policy to work its way through.

so things might get worse in the coming months and years based on what we already did. now, that said, if you look, i've been trying to emphasize that pretty soon in here the question is going to stop being, well, how much they going to raise and it's going to transform into how long do we need to hold rates at this kind of restricted level to feel convinced that we're back on this path to 2%? and that's healthy. that's what we want it to be. so we're just going to have to play by ear the open is still coming down the pike versus how much was expected and was already in there. but i think we're getting close to this spot where it's going to be more about the how long we hold rather than how high we go. >> and what's your view on how long? there's a lot of disagreement when it comes to that, too, austan. >> it feels like it's a little

longer than what the mark was expecting when we released the last statement of median it's got rates holding well into next year. that was a little longer than it seemed like the. we had the father, austan, the father of the previous districtor and he said it's been wrong -- >> it's been wrong for like two years or something. they keep saying, let's wait. >> it's happening. you yourself noted how rare it is to not see anything in the employment sector when you've gone up 500 basis points.

so i wonder whether -- so you don't think we're on the cusp or already in a slowdown, a real one? >> it slowed a bit but the unemployment rate is still basically what it was when inflation of almost twice as high as it is now. you at least got to stay. i think it's possible but -- but the thing is the inverted yield curve is just the clearest manifestation of a mentality, which is let's look at the past and see what happened in the past, that's what's going to happen in the future. there are some things going on in the economy right now and the coming out of covid aspects that are unique that have made predictions based on what happened to previous business.

you know, at the university of chicago i think people looked at you and said he's here but he's not really one of us. i mean, i think that's the way it is. >> they never said that, joe! he said they're one of us. >> because you are changing. >> i'm data dog. i'm not anything except that. >> do you think it going -- it's going to be 2 trillion now this year, the deficit. do you think the i.r.a., all the other stuff that we'vin spent that, that there's always this money in the system now, the assistance programs, is that why the economy is holding up and we're going to hit a wall at 33 trillion. >> you know i'm not going to get into fiscal policy and

ideology -- >> you love all that. i know you. you we go way back. >> that's not my world anymore, joe. look, the fed takes the conditions as they are. it's a very midwestern thing. we do the job. doesn't matter what the conditions are. so our job is going to be look at what matters so if the deficit went up, if the physical impulse is bigger this year than last year, it's shrinking in the gdp growth context so our job is to take it as it comes. >> i like the old austan i can't -- it's like three times

more expensive now with the biden -- >> biden, yeah. inflation is not your friend. >> mr. president, remember when you said -- you insisted on it, "call me mr. president," remember? it was in a tweet. >> it was just to you but, yes, i do remember. >> and you're smart. >> thank you for having me back, joe. >> all right. next up, countdown to shutdown. speaker of the house kevin mccarthy facing some big challenges inside his own party to reach a deal. can lawmakers reach a compromise ahead of the october 1st deadline. we'll ask jason smith and especially on peacock as part of

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speaker of the house kevin mccarthy preparing for another tense week on capitol hill as members of his own party push back against any compromise for a continuing resolution. joining us now, missouri republican jason smith, chairman of the ways and means committee. you got two feds, you got two football teams, two baseball teams. where are you, mr. chairman? i just need to know. where abouts?

>> in god's country. it the ozark. >> you're in the ozark? >> in the ozark. >> i love that drive through missouri in the ozarks. it really is god's country. you're absolutely right. do you have a problem with the way that intro read? it's kind of true, right? there are members in your party that are kind of throwing up roadblocks against any type of compromise. >> i would say we definitely have a big battle before us, joe, but the senate said three weeks ago that they would pass their appropriations bill and they haven't even been able to get a vote on the senate floor. you're looking at their so what we have aifies in the house is will we secure our border, will we reduce the government

spending? of course there's obstacles but unfortunately we have not had one democrat in the house of representatives to vote with us. they go along with the few other individuals that are voting no for other reasons. >> right. no, i've heard that, you know, nancy pelosi only had five. but, i mean, do you remember when they -- speaker mccarthy went through 15 votes? hakeem jeffries got every -- it's like i called it the board of collective. they vote luke from "star trek." they just do. it's never going to be that way with republicans. ne stook together. >> the democrats absolutely all particular a don't count kevin mccarthy out. people thought he would never become speaker. he went through 15 rounds to become speaker. they said we would never pass the debt limit increase.

we went to an agreement that led to the largest rescission package in the history in our country and the largest cut in spending in the history of our country along with the most substantial reforms to work requirements for welfare programs in two decades. so speaker m >> i said the same. his demise has been great. i figure he gets this done, but we don't really like to see all the sausage being made every three months. it's not good, and you know that you're not going to get -- you're not expecting any help from the other side of the aisle. they love watching you twist in the wind. they lovethis. this is, like -- >> the bigger issue kevin mccarthy can't ask for help from the other side of the aisle with the holdouts. >> if he would get help from the other side, do you think he can keep his speakership?

>> he'll absolutely be able to keep his speakership. will members ever do a motion to vacate? i would never be surprised. some members love to be in the news, and so this is a way that they do this, but he will be speaker of the house. he will continue to be speaker of the house. so i don't buy that. democracy is a -- it can get messy publicly. so whenever we air our differences publicly, which you do in a democracy, it can get messy, but i wish that the democrats would -- would actually try to work together, and i would love to see the united states senate to deliver some kind of spending bill. they haven't done that yet. they have been trying for three weeks, but they haven't been able to even get a vote on the floor. at least we've passed appropriations bills out of the house, and we have had several

votes on the floor. >> what about the bipartisan, you know, problem-solver's committee that sounded an awful lot like many of the things the republicans are asking for with border protections, some additional things built into that, spending reductions, and a committee that actually tries to figure out how to balance the budget coming out of that? they say that kevin mccarthy won't bring it to the floor, that that would get votes, but he won't bring it because it will anger those who don't want to see any cooperation with any democrats. >> there's definitely common ground on a lot of spending proposals. if we can secure our border, if we can also create a commission that looks at the long-term spending, we're discussing right now in these 12 appropriations bills only about one-fourth of all of government spending. three-quarters of all the government spending are these -- are theseitems such as social security, medicare. it's all within the mandatory spending room, and that's what that commission that the problem-solvers suggested is that you would look into.

>> how much of this is personal animus against kevin mccarthy, and how much of this is people who don't want to see things happen? i think some in your own party have said they want to see things burn. >> well, clearly the two to three individuals that have been in the news never have voted for kevin mccarthy and they haven't gotten over the fact that he's speaker of the house, and so i don't really understand what they are fighting about other than just fighting against kevin mccarthy. >> all right, congressman. is branson in your area or close? >> we're ten miles east of branson. so we're pretty close. >> it is a beautiful -- beautiful drive. arkansas claims the ozarks too, i think, but i think of missouri. >> missouri owns the ozarks although it does touch oklahoma 'lgi.rkansas wel ve that to them.

thanks. "squawk box" coming right back. what do you see on the horizon? uncertainty? or opportunity. whatever you see, at pgim we can help you rise to the challenges of today, when active investing and disciplined risk management are needed most. drawing on deep expertise across the world's public and private markets in pursuit of long-term returns... pgim. our investments shape tomorrow today.

let's talk more about the markets right now with jared woodward. he's head of the strategy at bfa securities. thanks for being here this morning. >> great to be with you. >> let's talk about where we are, where we've come. i was surprised. i guess it kind of snuck up on me that we are down 8% for the highs for the s&p. this has been a little bit of a stealth decline and hasn't felt nearly that band this is the

normal range for a correction. do you think we're going to get a bigger one here or no? >> absolutely plausible that you see more volatility, you know, during this year, and if we end the year maybe higher. you're down on the s&p and also down in treasury bonds which is a repetition of last year if you remember down almost 20% in stocks, almost down 20% in treasury bonds, and so for the third straight year in a row, you're looking at losses on your government bonds, something that's never happened before in u.s. history. >> wow. that's never happened in u.s. history? >> it's a moment where a lot of the big risk thats that we all , we think they're long-term, and they're affecting markets in realtime, and that creates a situation that a lot of investors haven't been prepared for. >> how do you prepare for it? >> what are those big risks? we talk about inflation being a risk, demographics, levels of debt, and as all these things show up in markets, it requires a different asset allocation, and different focuses in your

investments. we look at a lot of investor portfolios and we look at allocations anded models and sn that aren't different. the world is changed, and you've got to allocate differently across these different asset classes. >> what's wrong with your allocations now? what would you restructure? i realize that's a broad question. >> it's a question of owning the assets that are going to benefit from a world of structurally higher inflation and interest rates, more stagflation than you've seen in the past 20 years. instead of owning the winters of the past 20 years, tech stocks, growth stocks, virtual, you want to own the assets that can benefit like value stocks, energy, real assets. these are more robust, and even if it's a question of being more balanced as opposed to the growth and treasury portfolios many people have. >> technology has escaped. a lot of technology has escaped from some of the downturn you would have anticipated because of ai and the new developments that they have seen. can technology kind of work

their way out of this again because of innovation? >> they can see upset over the long-term, and since the lows of covid, energy talks outperform the tech sect eor by 2%. >> what do we see coming? >> banks, no recession for next year. it's almost a moot point, a debating point. whether it's low growth or no growth, it's low. >> what you described with financial assets being down equally, both stocks and bonds, that's what happens in stagf stagflation. i've seen it before. it's horrible. >> exactly. >> it's the opposite of what we have had for 20 years. low interests and great growth and no inflation. that's, like, perfect. >> we say it's the end of 64 years because when we made that call years ago -- >> so instead -- >> how much you have in stocks or bonds is a large part a function of how soon you have the retirement. you can't be expecting treasury bonds to be doing the work they did as a portfolio hedge for the

past 20 years. they're not functioning that way, so instead you can get yields in other places and fixed income. you can also get exposure in your stock portfolio that's not so devoted in stocks. >> what about your portfolio? i'm kidding. it's a lair fink question. make sure you join us tomorrow. "squawk on the street" is next. good monday morning. welcome to "squawk on the street." i'm carl quintanilla with courtney reagan and mike santoli. final week of september, and q3. futures read as we come off the worst week for the s&p nasdaq since march. busy few days ahead with global inflation data, fed speak, and earnings from nike and micron. we have the last trading week of the quarter. s&p drops further from thi