arm and instacart down big from their debut. has the window already slammed shut? details on the writers agreement and where the autoworkers stand today. first, taking a look at stocks on this holiday-crimped trading day. we have major averages with the exception of the transport are lower. the ten-year treasury note 4.21%. that is the focus, right? it's this wall of worry for the markets as we finish out the fourth quarter. the impact of higher interest rates, student loans restarting, threat of government shutdown, higher oil, and the uaw strike. >> the potholes of q4, as goldman called them, some are longer lasting, some shorter in nature, such as a shutdown or

strike. we'll talk about what the markets have to concentrate on as we get into the next quarter. from a technical perspective, our next guest says the 20% of the s&p now above the 50-day moving averages brings the market one step closer to an entry point. joining us, fair leaf managing partner katie stockton. great to have you. walk us through what an entry point might mean, in your view. >> a lot of corrective phases unfold in this a, b, c format but three ways. we think we're in the third wave, the final wave of that corrective phase. but that would require, of course, some kind of oversold entry point. we're not convinced we have that quite yet. the short-t term momentum is ve strong. we do have some minor signs of downside exhaustion including that market breadth you cited. they're not widespread to give us enough confidence. we do think there's a good

possibility that entry happens either this week or next week. what would really help is that is a pullback in yields. the market doesn't like yields breaking out. and the ten-year yields have cleared very strong resistance at the 2022 high. if that breakout confirms this week, that's a pretty big deal. i don't think that will be favorable for equities. if it fails to confirm, that would be a positive. >> i was going to say, there was some last week who were pointing out maybe we get exhaustion on tlt and we walk in this morning and back to 2.2. >> it holds in the balance whether this breakout confirms or not. breakouts are often faults, right? if this proves to be a false breakout or for treasuries or treasury bond benchmarks like tlt would be a shakeout, some might see a fallout and a quick rebound to leave that breakdown

unconfirmed. that, i think, is still a pretty high possibility. volatility is obviously elevated in here. we can even see that in the vix, or the volatility index. i want to give it a chance to see if this breakout in yields confirms. and then we can focus on year-end targets and objectives. the next resistance, and we've been public about this, is about 5.25. so it's not to say that happens any time soon or even next year, but it's simply the next level of resistance on the chart of yields. >> certainly a level to watch. i am curious, though, because we've seen stocks lower as yields have gone higher. is there a point at which, especially if you start to see economic growth slowing and the market more concerned about how all of that is unfolding that you start to see pressure on long-dated treasury yields and that you could see the correlation between stocks inverse and what i mean is you see yields coming off and stocks coming off?

>> listen, anything is possible. we can't really rely on the historical correlations except over the long term. over the short term, unfortunately, they do break up at times. that leaves some of us saying, okay, what next? we really just focus from the short and intermediate perspectives. we have certainly seen yields at trade along the same lines as equities measured by the s&p 500. and inverse, just even in the last few months. i don't think we can rely on those correlations. the message is, yes, anything could happen. for the s&p 500, where we would feel a lot better about it is when we see the indicator shift to the outside, which hasn't happened yet or see a breakout above resistance, which is around 4600. there is some support very close by for the s&p 500. it's around 4325. it's being tested as we speak. and secondarily it's just shy of

4200. ideally we would like to see the 4200 area hold by the s&p 500 as corrective wave runs its course. >> 4310 is where we're trading for the s&p. got to ask about energy because you're seeing calls across the street for 100 bucks a barrel crude. brent is closing in on that. wti is a little lower. could we get there? what do the technicals say? >> it's certainly possible but we've been calling for a test of resistance which is around $94 a barrel, based on our cloud model for wti. it was a place we could see a pullback ensue. now there's some countertrend signals that are short to intermediate term that would suggest that the energy complex will continue to consolidate after last week. so, they've had really nice gains, including crude oil. and now we're seeing a reaction to the overbought conditions so we think that will persist. it could certainly end up being a pause to refresh the up move.

if we see crude climb above that 94 level, then $100 to me would probably be a foregone conclusion because that's below the next resistance level. it's possible but for right now we're looking for consolidation in the energy complex. and if the market does come out of its corrective phase more broadly, i don't think it will be the energy complex that leads us out of it. i think it will be technology, again, the mega caps will kick back in and we'll see a shift back to the former leertship of the market. >> i was going to ask about that, katie. i've seen a couple arguments for the double top in the sox and equal weighted in the s&p. >> i haven't looked at the sox to the equal weighted s&p but we look at it versus the market weighted s&p. largely driven by nvidia. we've been a better seller of nvidia for a few weeks. we don't think it will be the

leader it was. that's not that big of a statement given how extreme that leadership was. for us we think this is a corrective phase that has its hold but will culminate in a nice opportunity to add exposure to the semis, which are already oversold from an intermediate term perspective. >> talk about a sector that's kept a lot of people guessing. katie, good to chat. thanks for kicking off the hour. the uaw strike is entering its second week but there might be some progress when it comes to negotiations with ford. our phil lebeau has the latest. hi, phil. >> they are making progress, the uaw and ford. it's clear talking with people close to the talks familiar with what's going on that they still have a number of things they need to clear up. before they're close to reaching an agreement. while they're making progress, i don't think we're expected to hear an announcement any day now. we may have to wait a bit of

time but they are moving closer. that said, these are the three areas that not just with ford but gm and stellantis, these are the three areas you really see the big battle happening between the uaw and the automakers. total wage hike, somewhere in that 20%, 21% range. does it move higher a? cutting or ending wage tiers. this is where you were hired at a certain level and it takes a number of years to make the top pay level. the uaw wants it eliminated completely. the automakers say, we'll eliminate some steps, not all the way. and cost of living adjustments were stripped out after 2008 when the automakers, two went through bankruptcy. since then, this has been a big push with the uaw. bring back those cost of living adjustments. with that said, as you take a look at the automakers, and in terms of their cost, where the strike is right now, it's expanded. there are 20 states with parts

and distribution centers with a couple hundred workers where there's a strike going on. that has an impact for gm and stellantis the longer this goes on because those centers send parts to dealerships. it doesn't mean dealerships are running out of parts immediately, but it will in time filter in and it may be people have to wait for some repairs to be done on certain vehicles, depending on the part that's in question. as you take a look at shares of the automakers, keep in mind they have president biden visiting tomorrow. he will go and meet with some uaw members picketing. we don't know the exact location at this point or exactly what he's going to say, how long he'll be there or how long he will talk. we assume he'll do a press briefing or press statement where he says, look, i'm in favor of the line workers getting more. but the question becomes, guys, as we talked about for some time, how much more? we know they're going to get a hefty raise. is it the 40% the uaw originally were asking for or is it closer to 21%, which is where the automakers are right now.

that remains to be seen. >> biden tomorrow, trump on wednesday. just to go back to the parts piece of the puzzle, phil. we know that the oems have idled some facilities as well and, i guess, temporarily furloughed some workers that are not involved in the strike in the past, you know, week plus. what's going on on the supply chain side. are the auto parts manufacturers feeling the pinch already, too? >> at the tier one level, the largest of those parts suppliers, not yet. keep in mind, 85% of the production that the big three do in the united states, that continues. that has not stopped. you still see plenty of demand for parts from the suppliers, et cetera. the big question is going to be when you get to the tier 2 and tier 3 suppliers, there may be one or two out there that will start to say, okay, how do we adjust to this if this strike goes on for a long period of time? those are the smaller, privately held companies, which may have a

handful of employees and they do a specific part that is part of, say, a transmission. that's where you'll start to see the real pain. >> okay. phil lebeau, thank you. speaking of strikes, the writers guild reached a tentative deal with major studios and streamers, putting an end to the 146-day strike. five straight days of negotiations finished on sunday. a new three-year deal expected to be ratified by the writers in a vote tomorrow. details on what the new agreement includes will be coming later this week. shares of netflix, disney, warner already were hedging a bit higher. apparently according to "variety," the language surrounding a.i. was the toughest to get to and one of the final things they wrapped up. we'll see if that's as easy a conversation if they bring that to the s.a.g. side. >> it will be interesting to see what happens on the s.a.g. side. does that serve as a template? as we get into earnings season, how some of these different companies will talk about this

because the economics are very different for netflix or some other big tech companies that have helped to strike the streaming deals that were struck against versus the more traditional media players, which we know is part of what was so contentious about these deals. >> indeed. coming up, the clock is ticking for congress to reach a budget agreement. we'll look at what it could cost the economy and what it means for the markets. has the ipo window already closed? the most recent wave of public offerings stalling after a pretty good first days. what might that mean for the 'lta auts dk? wel lkbo that in a moment.

we're keeping an eye on the apparel names. a new survey from jeffries, 600 consumers with outstanding student loan debt, says spending is likely to be curtailed. they tagged foot locker and urban outfitters, lowering their price targets. you can see both of those names

are under pressure today. it does speak to -- we've seen the consumer index become more disconcerting. how much more does that ratchet up now as we head into the final couple months of the year, the key holiday season? >> they surveyed 600 people with student debt and said, how concerned are you? 90% said they are very or somewhat concerned. they do say those retailers in the best position, in light of all that, walmart, costco, tjx. >> costco earnings tomorrow. we know from walmart at the goldman sachs retail conference just earlier this month that they are actually -- they've been seeing some momentum going into september with a strong back-to-school season. but, to your point, it's not all -- what is it -- not all tides -- i'm totally butchering the metaphor. it's not everybody. >> yes. meanwhile, congress has under a week to reach a budget agreement. if they don't, a government

shutdown could have big implications for the economy. >> hi, carl. i'm doing good. the government, maybe not so much. there are multiple options congress is working on to keep the government funded. at this point it's very unlikely that any of them can be done in the next six days, meaning we'll start a shutdown very likely on october 1st. depending on how long that shutdown lasts, it could have major impacts on the economy. about 2 million federal workers, plus some members of the military, would go without pay for weeks or even months depending on how long the shutdown lasts. when the government shut down in 2018 and 2019, it cost the economy $11 billion, according to the congressional budget office. congressman greedz said not funding the government would be a failure for republicans. >> we shouldn't be in a situation where we're asking our troops to go out and put their lives on the line yet not be paid. we shouldn't be in a situation to where we're fighting to close the southern border but not have

our border patrol paid. i think this is an unreasonable situation. and i think it would be a failure on our part if we actually reach that point. >> now, for a lot of americans, some key services are going to continue. social security checks are still going to come, medicare and medicaid will still be normal during the shutdown. but for a lot of investors and other folks in the economy, they're not going to be seeing some very key data. during the shutdown we won't see jobs numbers, we won't see inflation numbers. those won't be produced. how long a shutdown lasts isn't clear. guys, it's becoming more and more likely with each passing day that there will be one. >> the clock is ticking. emily, thank you. for more on the potential for a government shutdown and the implications for the markets at large, let's bring in head of policy research dan clifton. it's great to have you on. i guess, first place i'll start with you, how likely is it that we do get a shutdown, even if it

is short lived? >> i thought emily's explanation was excellent. we're headed toward a shutdown. i say we're stumbling towards a shutdown. i put it at 75% probability. if there is no shutdown it's largely because speaker mccarthy makes a decision that there are only a handful in his caucus that won't agree to anything and speaker mccarthy makes a deal to do a bipartisan deal before the government shuts down. that's not the base case. it's unlikely he'll do that. i call it a cleansing effect where you can sit in shutdown for 10 to 14 days. you could let conservatives make their point to try to win over voters. but that political pressure will ramp up day after day after day to reopen the government. it's very likely after about two weeks, we'll have the government reopen and in a bipartisan deal. this is a process we're going to go through. it's not convenient. there's going to be hardship on the human element for individuals. from a macro economic perspective, it will be somewhat

limited and probably won't have a big impact on stocks all by itself. >> to your point, a shutdown is not a default, right? economically speaking it's not cataclysmic, at least not in the first days or weeks that it happens. markets don't tend to be nearly as spooked by a scenario like that. so, republicans that are holdouts right now, do they have less to lose by holding out? >> well, yeah, there's just not -- it's easier to shut down the government than have a debt ceiling breach. this one he doesn't have to cut a deal. the conservative vote and the conservatives can hold out. each day that goes by while we're shut down, they're going to lose their leverage. we're -- the way i would explain it is, a shutdown could actually bring more government spending, higher levels of appropriations, more ukraine aid, more disaster aid. so, it actually works against the conservative interest from

what they're trying to achieve on a policy adjustment. once every ten years we have this shutdown just so people can put out their complaints and then we'll wind up figuring out a way to reopen the government in the next couple of weeks or so. >> dan, what's magic about a couple of weeks in your view? is that because historically that's how long they've lasted? >> yeah. there's a rhythm to it. people talk about 2019 being 35 days, but it was only a 25% shutdown. it was about the equivalent of eight-day shutdown. the problem is congressional staffers don't get paid. they start putting pressure on their bosses. services go down and you start getting complaints from your constituents. it's kind of a pointless exercise you're going through. i think you come to those sort of realizations. in 2013 we had this huge catalyst behind it, which is we had to raise the debt ceiling and we were going to do everything at once. today you don't have that. you can last on this for weeks. think about where we are politically. you have midterm elections

coming up in virginia. virginia's going to be very impacted by this government shutdown. you also have the president of the united states' polling numbers very, very bad. the republicans are creating an opportunity for biden to restate the offensive of the agenda. you don't want this going on too long. my final point is that the rating agencies have been downgrading on process. i don't agree with that personally, carl. but if you're talking about process and you bring moody's in, then you don't want this to last longer and start having a credit watch put on. >> i was going to say, it looks like they're watching to see if moody's starts playing the game as well. do schumer and mcconnell matter at all in this process? >> absolutely. what i think is going to happen is we'll start to see the house look to see if they can pass a bill tuesday. they're going to try to move the appropriations. if you don't see action from the house, you'll see the senate deliver its own package with ukraine aid, with disaster aid, and they'll deliver it right to the floor of the house of

representatives a day or even sooner before the shutdown and try to jam up the house. that's where mccarthy will have to make a decision and decide, hey, do i cut the deal and keep the government open for 45 days, 60 days? if not, do i go into shutdown and try to get a better deal once we go into shutdown? the senate is going to play a big role here if the house does not act. very unlike the debt ceiling where the republicans in the senate gave mccarthy a lot of wiggle room to do what he needed to do. you just don't have that backstop support on this one. >> a lot of moving parts here over the next couple days, not to mention the fact you have an impeachment inquiry, for which hearings are expected to kick off later this week. dan clifton, thanks for joining us. >> thank you. coming up after the break, the highlights from a rare interview with bhp ceo mike henry. stock is down more than 10% this year. plus, watching shares of hp in the red again. berkshire sells another 4.8 million shares, roughly, $130

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you

. welcome back to "squawk on the street." chinese property stocks getting whacked after evergrande would have a meeting later in the day. that persistent pain in chinese property sectors was discussed exclusively with mike henry, ceo of $150 billion metals and mining group bhp.

it includes iron ore, ingredients to steel making. china's both the biggest consumer producer of steel. i asked him about his outlook on that country. >> in terms of china, we've seen that slowing in the second quarter. there's still some sectors of the chinese economy performing strongly. you look at automotive, green infrastructure performing well. the sector everybody focuses on, which is important to bhp, is the property sector. sales have been strong. new starts are lagging. what we're really keeping an eye on is how quickly some stimulus measures the government has put in place translate into to improve confidence. not yet quite seeing that pull through. if we tart to see that pick up, we would expect growth momentum to increase over the remainder of this calendar year. strong growth into 2024. if that building of confidence lags, and it could take a little longer. >> we also discussed the broader outlook for the global economy, the role of nickel and copper will play in the energy transition and how the uaw strike could impact demand for some of those commodities that

bhp produces. we'll have more from that interview today beginning at 4:00 p.m. eastern on my show "closing bell overtime" so tune in. >> commodities are such an important tell right now, all around the world. >> so key. >> looking forward to that. let's get a news update with. that stevens. >> carl, people who live in the wildfire devastated areas of maui may be able to see the destruction firsthand today. county officials are expected to begin lifting restrictions on the area nearly seven weeks after the wildfire. the residents will be taken on supervised visits to the burn zones. they will be provided with personal protective equipment to stay safe from the potential toxins that may be in the ash. free at-home covid kits are available once again from the federal government. it comes after a late summer wave of covid cases and ahead of the busy holiday season. you can commit an order online starting today to have four tests delivered to your household. shipping begins the week of october 2nd. a piece of american history

just sold at auction. two front row balcony tickets to ford's theater in d.c. bearing the date 1865 went for over $262,000. why so expensive? well, the tickets are from the same show where john wilkes booth assassinated president abraham lincoln. a piece of american history, indeed. >> it's such a piece of american history. i didn't think this was as expensive as it could have been for that very reason. i don't know. not that i'm bidding on any of these. pippa stevens, thank you. coming up, we've seen a string of high-profile ipos including arm and instacart and klaviyo. is it not as open as we thought? plus, as cnbc celebrates hits hispanic heritage month, we're sharing stories of influential spanish business leaders, like this one. >> it's really important to know

that advantages are not always going to be given to you. you need to create your own, find ways to stand out in a room. i often still feel like a minority in the conversation. but it's important that you also rely on mentorship. surrounding yourself with people that really help you reflect on what you're doing is critical. and executive leadership for hispanic americans, it's important to have that opportunity to reflect.

watching tesla, barclay's writes they moo believe third quarter deliveries may miss cons consensus, writing demand remains soft and they expect down, primarily in china and europe. 238 intraday is the lowest going back to the last week of august.

>> it's down 5% on the month. it's down, i guess, 6% on the quarter. we've seen profit taking across big tech, which this tends to fall in that bucket. what i'm curious about, and i didn't see much about this, in this specific note, carl, is whether they'll gain more market share amid this uaw strike in north america. this note is very much to your point, more focused on china and europe and some softness, perhaps, we're seeing there. >> indeed. about two hours into trading. let's go post to post with bob pisani for a look at what's moving. >> you were mentioning tech. these higher interest rates are a huge problem for tech and consumer names. consumer discretionary, even consumer staples. we've been lucky. we finally turned around. i was getting worried there. in the last half hour we went positive. the a.d. line is about flat. there's an awful lot of damage in the last two weeks. consumer discretionary names. obviously when you're dealing with rising rates, rising mortgage rates, the home builders will get hit.

horton was $125 a month ago. it's down $15, $16. then there's other big names in the consumer space. home depot. this has had a terrible month overall. home depot was like $330 a few weeks ago. now it's $305. you're dealing with -- that's a 10% decline or so. that's a pretty rough move here. other stuff that's even worse. some of the other dow components. nike has been a horrible performer. it was $108, $109 just a month ago. look at this, $90 right you in. that's like a 15% drop in a month. these are big, big names. remember the dow is price-weighted, so the higher price names will move it more. let's show you two high price names. i told you about the problems with consumer, the tech names. there's salesforce. this is a pretty high priced stock in the dow. one of the highest priced ones in the dow. it was $220 a couple weeks ago and now it's $205. you see the pressure here. consumer discretionary, consumer

tech names. don't get me started with boeing. boeing has been 15 out of the last 16 days. it's straight down. it was $230 at the end of august. i did something on this at the end of august. it was $230. now it's $197. that's another fairly high priced stocks. the bottom line, carl, we've got to get some price stability in bonds. this era of bonds going down and stocks going down is happening again. that's why the market is under so much pressure. this is a real change in sentiment. recall, carl, for 40 years since the early 1980s, generally rates have been going down as a tailwind on stocks. now it's really causing some issues for equity holders. >> you can say that again, bob. thanks. let's turn to some of the recent ipos. arm, instacart, klaviyo, giving back some of the gains they saw

right after going public. our next guest sees some reasons for optimism, saying the market is back open for great companies looking to pursue public funding. joining us at post 9, ben lara is back. >> good to be here. >> what do you make of these nice openings that fade? >> these are excellent, excellent companies. i think it's been -- it's been a while since we've had some excitement in the tech ipo market. this is a good thing. >> is there a reason for the fade or do you think -- does it point to what some are calling a soft open for the ipo window? >> i think these are -- i mean, when a company goes public, it's the beginning of an entire long new chapter. these are excellent, excellent companies. i really wouldn't worry too much about the first few days of trading. these are the first ipos in a while. let's let it settle. >> has it changed founder sentiment? >> i don't think it's changed founder sentiment, aside from a small group of companies that

probably planned to go out in '21, maybe didn't get out, have been sitting on the sidelines. this is good news. but you have to be an excellent company. there were companies coming out in the 2021 cycle that were good companies that thought of the public markets as a place to raise money they couldn't get in the private markets. that's not the case right now. you're only going to see great companies come out. >> if you're not an excellent company, what do you do? is m&a back on the table? >> i think, you know, broadly if you look at interest rates, we feel like maybe we're at the peakish. they'll be sticky for a while. i think people are sort of getting comfortable thinking it's going to be, you know, a soft landing, blah, blah, blah. right now if things don't get worse, they're going to get a little better. but it's going to take some time because things have been so locked down in the private markets. there's been very little liquidity. there's not going to be less liquidity. you have to have patience. if you are a good company, you've got to do the hard work

and become a great company if you want to be public. >> we talk about less liquidity in the private markets. where is that money going? there's such an a.i. bonanza, at least in the public markets. is it the same in the private markets or is the fact when you talk about a.i., you're talking about heavy amounts of spending and a more centralized leg up for the big cap tech names that the money will go somewhere else? >> you're seeing -- a.i. is definitely the entire story in the private markets right now. you know, it is -- you saw the anthropic deal today. there are leading large language models. a bunch of the value has moved to the benefit of the big seven public stocks. but there is venture money going out into every sort of level of the a.i. ecosystem. i think there's probably too much money and a little bit of overexuberance, some very high

prices for some very immature assets. like any hype cycle, you'll probably see death and destruction for money pouring into the market this year. a.i. is here to stay. every company in some way, shape or form will be an a.i. company, not unlike every company became a mobile company. >> when you think about use cases, when do you think the street at least starts to get hard examples of monetizable use cases they can start taking to the bank? is that a first half '24? later? >> i don't think so. i mean, maybe -- maybe a few of the big, you know, the microsofts or googles start to show monetization around some of the products they're rolling out that are sort of these generative a.i.-enabled products. but this is going to be -- this is going to take a really long time. i think that we have to be patient with the applications of a.i. being something that build really big businesses. >> is it just the technology that makes --

>> hardware, obviously. on the hardware side, you do see -- like nvidia -- >> picks and shovels, that gets bought. >> absolutely. >> but platforms and services will take longer? >> it always does. everyone wants it to show up tomorrow. >> is this where you're putting money to work or are you looking at other opportunities? >> if you look at our pipeline, we are early stage. almost everything has a.i. somewhere in the sort of strategy. we're certainly doing deals around a.i., although i think so much attention is being put on a.i. right now that we're seeing interesting value opportunities around places where -- frankly, anything other than a.i. where you're seeing less investor attention. therefore, if we're willing to do the hard work, potentially some interesting stuff. >> meaning? >> areas like health care, areas like energy. really anything that is not directly focused on a.i. is probably a place where there's some interesting opportunity.

>> all right. >> one last one on consumer and whether or not you are starting to see real vulnerabilities in consumer, given all the challenges we talk about all the time. >> i think we've been seeing vulnerabilities in consumer for the last several years. i might actually say that we've seen so much vulnerability in consumer for such a long time, at least digital consumer, that i think there's going to be some opportunity where investors have not paid any attention to this space for a while and we're starting to see some things bubbling up that are interesting. >> i want to bring this back full circle. success is in the eye of the beholder. in terms of the ipos we have seen so far, are founders looking at that as successful or given the fact that investors have faded these gains, maybe not so much? i guess my point is, is there a window to get your ipo out there before markets move lower? is that how people are thinking about it? or there could be more sustainable? >> i think people think this can be more sustainable. to think about these ipos as anything other than smashing

successes, is nuts. the fact they were valued in the private markets at multiples that don't make any sense in the '21 hype cycle, but these are extraordinary companies that have created a bunch of value for early investors, midstage investors, for their teams, founders and the facts a few folks came in in the sort of -- at bad prices in '21 does not mean these are anything other than slam dunks. >> okay. thank you. is the quote, mini economic miracle about to come to an end? ruchirhaa ys srmsa yes. we'll break that down on the other side of this break. 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

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welcome back. call it the little engine that could. after coming into 2023 with a gloomy outlook, the u.s. economy has held up far better than most expected, including the fed. but could that tide be turning? well, that's what our next guest is asking in his new op-ed, america's mini economic miracle

may be fleeting. with us, ruchi richlt sharma. it's great to speak with you today. i think we start the conversation right there. we talk about this mini miracle. what are we talking about? why is it fleeting? >> first, we have to acknowledge the fact that at this time last year, most economists for the first time in history were predicting that america would have a recession. why is it the first time in history? because economists have never predicted recession as a consensus. what we ended up with is economic growth which at this quarter could top 3%. we have never had a period of history where the gap between consensus and in terms of what's tu turned out to be as far as economic performance has been of america has been this large. first, let's acknowledge that. if you had something really nothing short of a mini economic miracle as far as america is concerned. if you look at the reasons why that's happened, a lot of those

reasons may really be fleeting. the biggest one, of course, has to do with the massive fiscal stimulus, which no one anticipated the fiscal stimulus would be so huge. of course, the consumer ended up being much more resilient in america compared to europe or japan, where a lot of the excess savings are still there, but in america they have really run down the excess savings. that's given a big lift to the economy. >> so, it raises the question. to be clear, there's typically a divide between forecasts and reality when it comes to the economy. but the fact it's been so wide this time around, does it mean that the economic modeling has to be thought about differently, done differently? >> in some ways, yes, because i think what a lot of us have not taken into account is how the financing structure has shifted in america. what do i mean by that? well, a lot of finances now is either the private markets or as

far as the sdurm is concerned, it's much more locked into long-term financing out there. as someone put t the american consumer now finances long and yet invests short with so much in short-term deposits. but if you just look at the whole structure out deposits. if you look at the structure, it takes longer for the monetary policy to have an effect under the structure. it would take 18 months to see the monetary policy to have this effect, and i think the effect could be longer given how much is done in the private market and how much is long-term financing. having said that i think i would be a bit cautious from here onwards, because the fiscal spending, we have never seen it at this magnitude in america,

and that could be a drag for economic growth going ahead, because interest rates are not likely to come down much when the economic growth weakens, so you would not have a counter affect in the next few quarters. >> would you go so far as to argue that the costs associated with it was a mistake? >> yeah, i think that in terms of what has been spent is a mistake. just consider this, that america ran budget deficits, and that was in line with other developed countries. what are we doing here now? we are running a fiscal deficit of 6% of gdp, and the train rate is about 6% for the next few years that the cbo projects, and that's a staggering number and no developed country can run,

and we have ran fiscal deficits and expecting the world to finance that for a long period of time. it's quite possible the bond market after a long time is beginning to get worried about that, and you are seeing higher rates across the curve. >> yeah, we are seeing the d.c. dysfunction playing out in real time. amazon is making a big bet on a.i. as it tries to keep up with microsoft and that space, and we will talk about it with the s&p session highs here at 4331. 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

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amazon investing up to $4 billion in starting anthropic. >> this deal touches on both aims, and they will get the compute power amazon's business provides, and amazon gets a customer for its customized chips and a minority stake in one of the early of early ai. this is not, however, the exclusive partnership that microsoft and open ai inked this

year. $4 billion, up to $4 billion from aumazon, and we don't know the size of the stake amazon is getting, and we don't know how much anthropic will rely on amazon, and it's unclear whether the deal will give amazon the ai halo affect that wall street bestowed to microsoft. amazon has focused on developers through ai tools like bedrock, and they have said they firmly believe there will not be one model to rule them all, so in that sense, guys, this latest deal might be seen as a shift in that strategy because it brings the bot chat cloud, and so it's a big deal with a lot of

implications, and anthropic, it's one of the buzziest ai startups. >> at $4 billion, this would represent the largest piece of corporate deal making. i wonder at a time when amazon is under regulatory scrutiny right now, and there's reports that a big antitrust move by investigation by the ftc could be imminent, and the fact they did an investment like this is so expansive is it reflective of that environment than, let's say, acquiring the company out right? >> yeah, you could make that argument with microsoft and open ai, and it was an exclusive partnership, and that deal saw $13 billion, and this is $4 billion, and that tells you

deals are still being done. neither company told us how much of a stake amazon was getting, if it's larger than, say, 10%, and maybe one of the anti antitrustees may have seen, what is going on? and it feels like artificial intelligence is a zone where they know they have to get deals done so they are doing it creatively, and it's also, acceptable, for wall street, right? we have been in the cost cutting mode. amazon has seen layoffs and trying to achieve greater efficient see, and artificial intelligence is a hands off zone for wall street. you see all big tech doing this. >> meta, later this week, and it's connective ends where ai is concerned.

thank you. and then the energy transition is said to be slower than many expected, and the chevron ceo had feisty commentary. >> there has been a lot of moving pieces in energy policy, whether it's in the uk last week or here. as we get saet for a busy week ahead, let's get to frank holland in for the judge. what is next for stocks as the yield hits its highest in 16 years. we have downtown josh brown, shannon, and first let's get a look at the market. the dow is off of its low, and the s&p and nasdaq moving into positive territory. both up just about a quarter of a percent. the small caps