pace of negotiations. it is friday, september 29th, 2023. just one more day. "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. heavy rain. it will keep going on. we will see. i'm becky quick with joe kernen and andrew ross sorkin. although it is raining out right now, it looks like the u.s. equities are looking up. dow futures up 135 points. s&p indicated up 20. nasdaq indicated up over 100. a big part of this and

yesterday's gains related to treasury yields tapering off. coming back down after really watching them march higher. above 4.6%. 4.54% is the yield for the ten-year treasury. we have seen calming down at this point of yields. we will see where that continues. late last night in washington, let's talk what happened. republicans passed three of four spending bills in the house and a push to avoid the government shutdown. let's go to emily wilkins in d.c. with more on it. good morning. >> reporter: good morning, andrew. you are right. there was a little bit of victory for house republicans. let's be clear, congress has no plan to fund the government before sunday at midnight. that means we are looking to have a shutdown at this point. the house and senate on looking to have progress today to keep any sort of shutdown as short as

possible. the house passed three of the long-term funding bills. none prevents a shutdown. the hope is to build support for a short-term measure that members will vote on here in a couple hours. now that house stopgap package is it filled with cutting spending and spending money at the border. you have to figure out the stopgap measure to advance the procedural hurdles. mccarthy will not take up the current bill in the house. we have a group of senators working to add a bipartisan border security amendment. chuck schumer made it clear on the floor yesterday that anything the senate produces must have the buy-in of both parties. >> things are coming down to the wire. as i said for months, congress has only one option. one option to avoid a shutdown.

bipartisanship. it was true yesterday and it is true today and it will be true tomorrow. >> reporter: now even with wide support, the senate likely won't be able to move their bill the until after the shutdown has already begun because they have so many procedural hurdles. if mccarthy takes the senate's bipartisan bill, co- face a threat to his speakership. a lot of moving parts here, guys. a lot of unknowns and uncertainty. d. krc. is prepared to go into shutdown. >> that's where we thought we would go. emily, thank you. this brings us to the consumer stat. 4 million. that's how many government workers would go without a p paycheck if the government shuts down. in 2018, the economy cost was

$11 billion with that shutdown. >> eventually, the workers will get paid. >> they will get the money. >> a lot of people don't have excess savings. they will not get paid while told to come in to work for essential workers. >> a mess. a mess. not a way to run a government. >> no way to run a strike? i g the auto workers strike is going for a while longer. uaw is expected to announce additional strike targets at 10:00 a.m. eastern. barring substantial progress and negotiations between now and then. sources say gm and stellantis are growing inn kcreasingly

frustrated from the lack of parpar participation from shawn fain. fain has set the deadline before holding any meetings with the companies or counter proposals from a week ago. we have been hearing that. phil brought us the emails where it said we have them where we want them. we are not talking. that was the gist. we will have a live update from detroit in the next hour. that town might be in a good mood, i guess, from last night. green bay. detroit has never been any good. they're good. they are good. they got that quarterback. i lost money. >> sorry. >> i'm okay. it wasn't a lot. more or less. 10. no croissant today.

>> you could step up. >> buy him a croissant. >> i'll get you a banana. >> thank you. two or three days ago, these were not any good. i have been saving them. swear to god. now they are perfect. let's go. let's talk about why you are looking at higher futures this morning. that is because nike shares are sharply higher. the company came out with earnings of 94 cents a share which beat the expectation of 75 cents. revenue fell and margins slipped, but it was still above estimates. one metric was china sales which grew 5% year over year. that is slightly missed expectations, by the ceo feels good about the market in china and nike's position. he highlighted the return of sports as a driver of sales. nike did maintain the full-year guidance of the revenue growth.

that stock is up by better than 8% this morning. in the meantime, the wall street journal reporting apple staff met with chinese officials to discuss concerns of app store restrictions. china is cracking down on apps to circumvent the great firewall including instagram and facebook and youtube and whatsapp. iphone users can log on with a vpm. china will block those apps unless they register with the chinese government. the journal reporting that apple expressed concerns of china's rules being implemented and affect users. i'm not sure that will change the outcome. a senior executive has been barred from leaving mainland china from kroll.

a hong kong based managing director specializing in co corporate restructuring informed his employer he could not leave in july. neither he or his firm is the target of the investigation. chinese authorities place exit bans on people being investigated or assisting with government probes. worth noting that kroll is in the private investigation business itself. that is what the business is. it is a security firm. here is the private investigator in china. >> big investigator. >> what do you think is going to happen? >> yeah. similar story earlier this week or last week about someone being detained in china. no plans for us. now to gamestop. hours after being named ceo, ryan cohen sent a memo to

employees to emphasize he will take dramatic steps to ensure the struggling video game retailer survives and the email obtained by cnbc, extreme frugality is required. every expense at the company must be scrutinized. the company has no use for delegators and money wasters. cohen will not receive a salary in the new role as chairman and ceo. he he said i'm not getting paid. he made the case -- is it blockbuster or is it best buy? sg g geeky employees help you with the video games. >> digital business. download it like an app. >> one blockbuster left or it

was? it may be in alaska. >> really? >> a great documentary. it was on netflix. the last blockbuster. great film. is it that? >> i don't know. for a while, that was the reason it went short and everyone squeezed the shorts and it became a movie. now we're back to reality. the brick and mortar with the game suppliers. does that really have a future? does it have a viable future? >> i was in one maybe a month ago. >> you were? >> back to school shopping. we stopped by. they have a lot of other stuff. toys and different things. they are trying to mix it up to get people to come in. >> it is still there, by the way. >> in alaska? >> it is in bend, oregon. >> oregon. >> according to the folks at wikipedia.

>> interesting. >> that's almost memorabilia. they should keep it open for that. coming up, bill ackman making the case for his bet against long-term treasuries at yesterday's delivering alpha conference. >> a fully operational video rental store and memorabilia. >> like an 8 track. later, house minority leader hakeem jeffries will join us about the potential government shutdown. i have idea what he may say. you are watching "squawk box" on cnbc. >> announcer: this cnbc program is sponsored by baird. visit bairddifference.com. woah. ( ♪♪ ) ( ♪♪ )

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i think there's in the relative short-term why rates can move a lot. we have a government shutdown. going into a probable government shutdown. the worst technical environment in our lifetime for supply of bonds versus buyer bonds. china selling. russia selling. saudi arabia selling. you know, we have an economy that is still strong and inflation at 3.5% to 4% and

pers persistent. our view is you are not paid enough to enter into a contract with the u.s. government at a fixed price. >> that was bill ackman yesterday at the delivering alpha conference yesterday. jo joining us to talk about rates is the head of the u.s. rate strategy. i didn't see you nodding, but i read your notes. i felt implicit nodding. there are supply issues and not necessarily receptive buyers on the other side of a lot of debt issuance coming up. >> absolutely. i think the supply/demand dynamics are askewed as they have been. foreigners have been stepping back. china is not buying as nearly as much. china is not buying. they have been selling

treasuries. the elephant in the room for me is the fed. they have been unwinding their balance sheet. it is qt. $100 billion per month. then you have banks and financial institutions also reducing their portfolios after the regional banking crisis. they have a lot of unrealized losses in the portfolio. there's a lot of reliance on real money accounts in the u.s. as well as money market funds and hedge funds. that's really where all the money's going as opposed to international buyers or the fed. >> we talked about it and pointed it out. you don't think about it. it is a vicious cycle because the higher rates are going, the more things cost which makes inflation stay high which makes rates stay high.

might go higher from here because of those things. it feeds back on itself. >> the higher interest rates go, the more the chances of something else would break. now you are seeing overseas bund spreads. you know, our equity strategist is thinking 5% of the threshold when equities start coming under pressure. you know, the borrowing costs in general are going up. the mortgage market is under a lot of stress. >> the soft landing idea doesn't really work in your scenario? >> you know, orchestrating a soft landing will wbe hard. the fed has not succeeded that in the past. >> ever. i can't think of it. maybe if you go back to teddy roos roosevelt? 1912? >> i would say in recent memory it has'90s.

they cut in the '90s. the crisis where they cut rates by 75 basis points. we continue to expand until the equity market and tech bubble in 2000. >> could the fed, if the fed is the biggest problem because they're trying to unwind qt, could they stop the problem by stopping the unwinding? >> it is interesting you bring that up because we saw it this morning that bank of japan came in and started buying ten-year treasuries because they didn't want yields to rise meaningfully on the back of that. to me, it feels like a huge supply demand imbalance and treasury yields rising meaningfully and you have to see the fed step in and buy assets.

>> it has been the bond market pushing rates higher to this point. if this is a situation where you just can't sell the debt and government has plans to issue lots more, that seems like the only way out of it if the fed steps in and says okay sdp. >> we saw that in 2020 with the spike in yields. the fed is your backstop buyer if you see a very large rise in yeel yields in the bond market. that is the scenario to play out. it is hard to see that right now because the economy is so strong and the fed is committed to keeping rates for higher for longer as well as unwinding its balance sheet. >> the fed says forget it and we are not cutting rates for the projections. we will not cut rates, but keep them there. maybe they ease by keeping qt.

what does that mean? it is not the worst-case scenario at 7% and beyond? we will not see lower rates than we see at this point. >> i agree with the point we don't really see lower rates in a meaningful way like in previous crises. the decline might be less dramatic this time around if the fed were to cut rates. our case case is the u.s. will into recession next year. if they orchestrated a soft landing, they have to cut policy or adjust policy a little bit to ensure they can remain stimulative. >> as we are unable to self debt, our borrowing costs are soaring on what we paid on what we issued. i was right. this is horrible. this is scary. >> it is. i'm still an optimism.

i'm hopeful. >> about what? >> we will find a way to reduce deficits over the coming years. there are caps on spending. the tax cuts initiated during the trump administration are set to expire in 2025. there are avenues in which we can try to rein in the debt issue. it is not imminent at the current time. >> thank you. what time is dom on? dom chu? we'll continue with the bad news. ryder cup? did you see? four matches so far. europe's pitching a shutout. >> ole, ole, ole. >> we will hear that. some of our best guys. that is on top of it with the rain. it's friday and i have no

croissant, andrew. >> don't look at me. >> that's what you said. that's the point. >> i'm trying to help you, man. >> you are doing it for me. okay. when we come back this morning, speaking of, fast food. fast food employees in california and delivery workers in new york city are about to get a raise. we have details after this. later, a new report says the talks between washington and beijing could pave the way for a atto iisit by xi jinping. th srys coming up later this hour.

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hub lost the bid to win the mandate for the app based delivery workers. that clears the way for the city to mandate 65,000 delivery workers to raise the minimum wage by 2025. the wage hike would result in fewer opportunities for delivery workers and pricing them out of orders and shift jobs from local restaurants. you see the stocks still up this morning despite that. separately, california governor newsom signed a bill to raise the wage to $20 an hour next year. calling it a world that doesn't exist. the minimum wage will have an exception carved out for restaurants which sell their own

bread. >> what? >> i saw this earlier on twitter. juxtaposed with gas prices. a picture of $7.50. workers can make $20 an hour, but to get to work, it costs $7.50 a gallon. we have more companies on "squawk box." the latest from washington on the push to avoid a government shutdown. that's the effort. i don't know if it will happen. we'll talk about speaker mccarthy's strategy next. a live shot of the capitol. and later this hour, representative hakeem jeffries will join head to break, we hae a look at yesterday's s&p winners and losers. >> announcer: executive edge is

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good morning. welcome back to ""squawk box." we're live from the nasdaq market site in teams square. it has been raining all week. not ought tside, but inside wite markets. >> all lanes flooded. i was talking about here. government funding runs out on sunday and congress still has no deal. for a closer look at the implications of the government shutdown, we want to bring in the cato institute director and michael linden who is executive associate director from the biden administration. michael, let's start with you. you were actually in the room a few months ago when you were at

the omb when they werie doing te negotiations for the debt ceiling. that worked out. we had a deal. what do you think of what you see at this point? >> that's a good question. thank you for having me this morning. as you said, i was in the room a few months ago negotiating the debt limit deal. at the time, we were all agreed that part of the purpose was to make the appropriations process could proceed normally and avoid a government shutdown. we all want to avoid a shutdown. sh shutdowns are bad. we can all agree. the challenge we have real now is one faction in one chamber in one party is trying to hijack that process and the speaker is allowing that. the solution is pretty simple. that's the good news. there's a bipartisan majority in both chambers to keep the government open. theyed i ed need to put that to

simple vote and put that behind us and get to executing the deal. >> speaker mccarthy has expressed frustration himself. the issue is if he brings the vote to the floor, they will oust him. some of the five or ten members are really trying to get pushy with this. how do you deal with that? if they are successful in ousting him, you are dealing with a speaker with less power. >> i think there are people better qualified than me to talk about the internal politics of the house republican caucus. i will say the speaker successfully convinced 150 of his members to vote for the fiscal responsibility act. some of the same members of his that are threatening to shutdown the government were not happy with that deal and still not

happy with that deal. they didn't vote to oust him after that deal. the speaker should put the american people's interests first above the interests of the small minority of his members and keep the government open or else there will be consequences for ordinary people and the economy and for the budget. i think the speaker knows that. i think he is trying to wait until the last minute, but hopefully he'll come to his senses and put a clean cr to vote. >> what are the consequences of the government shutdown at this point? it is not the same as a debt default which is a bigger implication if you are not paying off treasuries and beyond. what are the implications of government shutdown? >> it depends on the length of the government shutdown. the longer it goes on, the more severe the implications will be. a short-lived government shutdown will cause a blip in the economy. we also saw in earlier shutdowns

in 2019, the smaller shutdown, but the economy continued to roar because this was after the tax cuts and we had low unemployment before the pandemic. you know, it won't be a huge factor. i would like to disagree with michael and say i place blame on both sides. i have not seen a clean cr that honors the fiscal claims in the debt deal. everything i have seen is full of emergency spending and other gimmicks and supplemental funding not agreed to in the debt limit deal. i would not place all of the blame on the republican side. they are legitimate grievances here. >> we were just talking with some one about the bond picture here and the issuance that the united states has to continue with the treasuries. it will be more expensive if

buyers are not willing to step up. what do you think about the situation and where interest rates might head? 12k >> i think the bigger issue is not the temporary government shutdown, but the fact that the u.s. government is borrowing increasing amounts of money as interest rates are rising. we are beginning to enter a so-called debt doom loop where government borrowing drives up interest rates and the fact they pay that interest continues to contribute to higher interest rates. what wie are seeing in washingtn is political dysfunction not just to deal with the government, but the bigger issues driving us down the debt crises which is unsustainable spending on health care and social security and medicare, particularly it is responsible for 95% of obligations.

mccarthy has his pulse on the issue by saying what we need is a fiscal commission and congress needs help here. these issues are bigger than our current governing institutions. especially with how polarized they are here. >> michael? >> i think to the extent there are fiscal concerns, a government shutdown will exacerbate the concerns. not emelerate them. there are fiscal risks with the trajectory that the budget is on. they are not as big as my colleague just mentioned. there is a debate of how serious there are. there are risks. if you look back and say why do we have larger deficits today and we expected 20 or 30 years ago, the answer is because of repeated tax cuts in the last 20 years. those that were mainly skewed to the wealthy and corporations.

if the republicans were concerned about that, they would not be pushing for more tax cuts for the wealthy and corporations and not focus attention and cutting education funding or clean drinking water. these are proposals they have in the appropriations bills. if they want to talk about how to fund the government with appropriate tax system that meets the needs of the kinds of obligations that the american people have repeatedly demanded of their government like social security and medicare, those are bedrock principles that the people support. that is not about this conversation. that is not what a government shutdown is about. the simple fact is there's no need for a government shutdown here. it wouldn't help in any respect. >> i got to let you in. this is what with we're up against. the problems are not that

ser serious. it is all of the nasty tax cuts that help rich people and corporations that don't do anything to hire people and generate the taxes in the first place. we don't want them competitive. can you respond? i hear that all the time. i can't believe it is still a trope that is offered seriously. could you respond to that? >> yes, i think some of the tax cuts were good for the economy and economic growth which helps with the fiscal challenges. i wish we could let them expire, that would solve the fiscal crises. that is not a fanct. healthcare and social security is growing faster than the economy. the tax cuts would barely make a difference in changing that trajectory. that is not where the debate needs to be. that is a band-aid approach to the gushing wound we're facing.

this is the stuff that reads to the credit rating agencies downgrading the united states. we don't agree on the problem we face. how can we begin to have a conversation about the solutions it will take which is why we need to take this process out of the politics and do what other successful countries have done which have faced this problem in the past. set up a phyfi fiscal commissio help the governing bodies to help solve the crisis before the severe fiscal crisis that would be more severe with the impact on the economy and american people. >> thank you. romina and michael, thank you. coming up, reports say several recognized investors are considering a stake in the pga tour. i don't know if that would help with the ryder cup so far. it could rival the saudi investment fund. that story's next. later, ben mezrich will

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welcome back to "squawk box." beijing and washington paving the way for president jinping to visit the united states. discussions are now under way for high ranking chinese officials to vicesit the united states and potential visit by xi jinping. joining us with the read on the chinese economy is our guest. you may think there is a potential for thaw than the rhetoric is suggesting? >> i think when you talk about the china policy coming out of the current administration, we are about close to a peak.

you know, the expport controls that went into effect this year were the most aggressive action so far that you will see. the outbound investment executive order was incredibly mild. even the export restrictions, licenses are being on the expor you're seeing licenses being given out. on the other end, you see a post of diplomatic events and meetings taking place. so i do think that we're headed towards something that is going to be much less tense than the last several years have been. at least in the short run. >> why do you say that, though? when you think about the china select committee being as outspoken as so many members of that committee have been and think about the republicans on one side, democrats on the other, it just feels like the language is actually getting more heated, not less. >> i fully agree there is going to be a lot of grandstanding and the rhetoric will get heated.

when we talk about actual action and specifically action that will affect companies or affect investors, one of the things that has become very clear is both the white house as well as congress are really struggling to come up with legislation that is aggressive quite frankly in nature, that actually restricts investment in china, that actually forces companies to diversify out of china when it comes to critical supply chains. a lot of those hard actions are just simply not on the table right now and the probability of those being on the table anytime soon doesn't seem very high. >> but what you're talking about i think is a proposal or the suggestion or idea of what people are calling reverse cfius, right? >> correct. >> so let's say reverse cfius is not in the offing, that may very well be, but you don't think there will be enough political, if not social pressure, on multinational companies, especially american businesses, to really think about, a, diversifying their business, those in china out of china and those thinking about investing

in china saying, you know what, maybe i'm going to hold off, less so in some ways because of the chinese government and more so because of the rhetoric out of washington, at least it feels that way. it seems you're on the other side of this. >> all you have to do is look at what happened in the last few months with the chip companies and their business associations out there and the aggressive manner in which they tried to push the white house and commerce department away from taking aggressive measures, which would restrict them from selling into china. that's point number one. we have seen the similar thing happen on the outbound investment executive order, with actual flows, capital flows into china. there is very serious pushback. so that's not happening necessarily. i think, yes, companies are looking to diversify out of china, but after what has happened to them because of zero covid, also because of the way chinese regulations around all sorts of things like data collection and information sharing is evolving. but there isn't a wholesale push

happening because there is pressure from d.c. or social pressure. i wouldn't agree with that. >> do you think that's a mistake? we had kyle bass on the program yesterday who thinks everybody is wearing blinders. it is like we are wearing a mask over our eyes, and we're not seeing what is actually happening here and that we should be. >> i think that's true in many regards. you know, the companies are also wearing blinders because they repeatedly failed, this year, for example, and a lot of the investment banks failed this year, for example, to figure out what's really going on in china. call after call has been completely wrong. so forget about the policy side, where there clearly have been several misses and a lot of uncertainty, but really just around the economic front there is a lot of flying blind really. >> but i think what i'm getting after is the larger sort of question about national security and from a u.s. perspective whether american businesses should be investing in china. >> businesses are not in a

position to make national security decisions. so, this is where the policymakers come in. i've said this before too that congress and other elected officials need to define where the red lines are, define what the national security threats are in a very specific way and have legislation that addresses that. but you haven't seen that really happen as yet. so i don't think we can sit here and talk about what businesses should be doing, what businesses are not being fully told what the red lines are. >> talking about red lines, what do you think the long-term risk is for u.s. business doing business there vis-a-vis taiwan? >> look, i think conflict over taiwan, a war over taiwan, you know, there is a likelihood that happens and it is, you know, as time goes by i would assume the probability of that only goes up. hardly i think businesses are -- this is where they're aligning themselves and assuming a conflict over taiwan is something that can be completely

avoided, that's probably not true. if that happens, that's going to be a massive hit. one of the biggest conflicts we have seen post world war ii in terms of its importance between two major powers. so that's a long-term risk that needs to be prepared for and taken very, very seriously rather than just hoping that we never get there. >> okay. we're going to leave it there. appreciate your time this morning. thank you. all right, folks, big lineup still to come this morning. house minority leader hakeem jeffries will be joining us at 7:30 eastern with the latest on the push to avert a government shutdown. then, author ben mezrich will join us on his book about the meme stock craze that inspired the new movie "dumb money." at 8:00 a.m., star wood cap capital's barry sternlicht will join us with his take on the markets. quk x"ilbeig back. tom cash® card automatically adjusts to earn you more cash

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good morning. it is the final trading day of the quarter and what a quarter

it's been. i think a lot of people are ready to put it in the books. we'll look at the charts and what they're telling us for the start of the fourth quarter with katie stockton. frustration growing among automakers over the pace of uaw talks as a new deadline looms. we'll get the latest from the picket lines. speaking of deadlines, the countdown to shutdown continues in washington as america braces for the economic impact. house minority leader hakeem jeffries will join us live. the second hour of "squawk box" begins right now. good morning and welcome back to "squawk box" right here on cnbc. we're live at the nasdaq market site in times square. i'm andrew ross sorkin with becky quick and joe kernen. we have still a lot of rain outside. hate to tell you. but that's what's going on. the markets however, a little

bit of sun for you. 20 points higher on the s&p 500, the dow a bit higher, 150 points higher. let's talk about treasuries. bit of a different story. ten-year note, 4.547. we talked about bill ackman's comments at delivering alpha conference yesterday. he has a negative look on all of that. oil now, wti crude, $92.59 is the price tag if you buy it by the barrel. nike shares sharply higher. earnings of 94 cents a share beat estimates handily of 75 cents. revenue is just short of expectations, gross margins slipped a bit. still above estimates and one closely watched metric, china sales, in china. grew by 5% year over year. still, slightly missing estimates and you're right, it is supposed to rain all day, until 9:00 tonight and most of tomorrow. >> there is a flood warning

until 2:00 tomorrow. >> 2:00 tomorrow. >> but you know, rain brings up green chutes. maybe that's what we're seeing in the futures this morning. >> there you go. tensions are rising and accusations are flying between the detroit automakers and united autoworkers. phil lebeau joins us with more. another deadline, phil, but not much progress because the two sides aren't talking, are they? >> well, they're talking, are they talking, talking, like we're going to give you a proposal, come back to us tomorrow, that's not happening. good example is i believe it was general motors gave the uaw a proposal week and a half, two weeks ago, still waiting to hear from the uaw. this is what we're seeing. we'll stalk about stellantis and the counterproposal from the uaw in a bit. a rundown of what's happening today and what to expect, we will hear from uaw president shawn fain at 10:00 a.m. his favorite venue, facebook live, that's where he gives an update on the strikes or the negotiations. if there is no serious progress in the union's words, they plan

to call more strikes, potentially. walkouts, if there are new ones, those would start at noon eastern time. so, one, we're looking at the strike now, what we have seen so far is a pretty -- it is a pattern setting in here. two weeks ago, three final assembly plants, one from gm, ford and stellantis, that's the strikes that were called on a friday. last friday, shawn fain said, you know what, gm and stellantis, parts and distribution centers, all 38 of them, they're going to go out on strike, which happened. you got about 18,300 strikers who are currently on strike. that is spread out across 20, 22 states in the country. the total number of uaw workers on strike right now is about 12.5%. they have room if they want to expand their strikes in terms of calling for more plants, whether it is final assembly, whether it is engine, transmission, they ever a number of options at their disposal if they want to call for more strikes. this brings up the question, okay, what is it going to take

to get a deal done? look at shares of stellantis. yesterday, a uaw source said that they issued a counterproposal to stellantis. but that doesn't necessarily mean that these negotiations are moving terribly quick. there had been a long gap between initial proposal and a counterproposal and we have seen this also at gm and ford. look at those shares, those automakers and i know from talking with people and i know we talked about this on cnbc.com, there is frustration building because they believe that they are making offers and good faith efforts to get this wrapped up as quickly as possible. but what we talked about, becky, is that you know what this comes down to, leverage and pain. and in the eyes of the uaw, they believe that they have the leverage, they believe that public sentiment is on their side, and they're not feeling the pain yet. obviously there is pain for those people walking off the job right now or have been on strike for a week, two weeks. $500 compared to the regular pay

is an example of that. but where is the pain in terms of the automakers? they want to get this wrapped up. but shawn fain believes he can push this further. and that's what we're seeing. >> so weird this week to watch, you know, next year's presidential campaign kick off in michigan this week. you had president biden there on the picket lines, the next day you had former president trump at a nearby factory. and both of them basically saying they're on the side of the uaw. president trump was saying i'm on your side, you got to convince your leadership at the uaw that i'm the right choice and when you get it that politicized, i can't imagine that helps the negotiations. >> no. they don't need the politicians there. it is tough enough to reach an agreement, let alone to have the president and the expected candidate on the republican side donald trump coming to town and saying, hey, we're with you, the

workers, and we're not with the automakers. and so that's the -- that's part of the frustration that the big three executives are feeling right now, that they would like to get this done as quickly as possible without all the playing out in public. that's the big change from the past, becky. we never saw this in the past where one side would say, this is what we're offering and the other side would come back and say, that's not good enough. >> phil, thank you. we will see you again very soon, i have a feeling. the last day of the quarter, hard to predict the future. always hard. but without looking at the past, katie stockton is here to talk about what could happen. we're really fascinated by the bonds and interest rates. we want to get to that in a second to see. you did think we were in an up trend for rates. but, first, let's talk what our viewers care most about, equities are kind of -- is it a

malaise, a downtrend, a correction? seasonally it is a weak time. is it anything worse than what we should have expected? >> no, not at this stage. we have a correction within a cyclical up trend at this point, below 4200 if we saw that support area taken out. it would start to look like something worse because the next support is around 3900. but we do expect the correction to mature and honestly even as early as next week. seasonal influences as you know are really weak in september. we have usually a much better october, november. i think the bigger question beyond potential relief rally is how sustainable that is and will it get us back above that long-term resistance, which is about 4600. >> i don't know which -- i think all months have ides around the teens, 13th, 14, 15, the ides of october, they just are bad. they're not bad, they're good because there are so many bottoms, but they can be very frightening bottoms that occur in october over the years.

>> yeah. a washout, right? >> why? halloween? >> there is a friday the 13th i think this one too. so who knows, but what i will say is the sentiment is already somewhat washed out. we're not at zero percent for the fear and greed index, but we hit 25% which shows bearishness increased, driven in part by treasury yields. we also had very oversold extremes of market breadth so that creates a backdrop in which the market is easier for it to go higher. you have the combination of support nearby, oversold readings into the corrective phase, which played out as the abc correction and with the sentiment backdrop better, it should release it to at least see some relief this coming month. >> we should get used to whatever the s&p is doing, the nasdaq does more. >> high beta. consolidation and relative terms, but i think technology

should outperform as one. former leadership in general should outperform on the back of this corrective phase. i think we'll see a shift back to megacaps. we should see breadth improve off the oversold reading. maybe the small cap benchmark will do better, or some kind of retracement. >> anyone who thought we were near a high at the ten-year at 4%, they're all gone. now we don't know where the high is. >> remember we were talking about 5.25 and everybody thought i was crazy. doesn't feel that far anymore, does it? >> is that the high? >> that is the next resistance for the ten-year yield. >> what is the resistance after that? >> goodness, i'm not even going to put out that number. i don't want to be held to it. >> it's friday. it's in the 6s. so -- right?

and -- >> 6.66, maybe. >> it doesn't mean it is a magnet by any stretch. that's not the nature of resistance. it is the next hurdle on the chart. this 5.25 holds importance, the highs from 2006, '07. when we look at treasury bond benchmark like tlt, you have a breakdown, that breakdown should be confirmed today. and yet there is still support. so if you go back to 2009 on tlt there is support around 87.5. we feel while we have a breakout in the yields, breakdown in tlt and the likes that we will see consolidation for probably a couple of months. and that could also help the equity market recover to some degree. >> you don't know where after that? >> and that's -- that's the data on the long-term. and bonds too. we assume the secular shift we have seen in yields will maintain itself. but within that context you can certainly see prolonged countertrend moves. so we're looking for a countertrend move in here very soon, that's in part based on

our countertrend measures like the -- >> you're looking for a countertrend that means yields will come back down? >> right. sideways to lower perhaps, yeah. and that should help equities. think about the influence on market sentiment from yields. >> we're in a totally new paradigm where it is going to be higher. >> it seems like all of the trends point higher. >> they tested your support how many times? >> for bitcoin? it is still in tact, it has proven to be a very important level for it. it is holding, but also not breaking out. seems a bit indecisive when you see this kind of consolidation. and, you know, risk on,risk on comes back to equities, maybe bitcoin can break out. >> really quickly, taking what you just said and trying to put it to average people who maybe are not investors playing along on all this, if you're somebody about to look for a mortgage, you would tell them, get the 30-year fixed, do not sign up

for an adjustable rate mortgage because you could be in for a world of pain if you do so? >> i think so. if you look at the secular downtrend that preceded what we're now in the midst of, i think it is very feasible to see them higher for longer and even potentially much higher unfortunately. >> you can always refinance, but it is much more painful to get out of an adjustable rate if rates go up. >> i don't think patience would necessarily pay off in that case, yeah. >> you wouldn't necessarily go to put all your money in a ten-year now either. would you wait a while? >> depends on the time horizon. if you get in and out, if i could buy treasuries right now. >> if you're -- no. you don't want to be sitting on $80 of principle value for the next -- a year from now. >> for a year, yeah. >> okay. a lot more coming up on "squawk box" after this. former united chairman and ceo

oscar munoz will join us. we're talking about loyalty programs. later, house minority leader hakeem jeffries will join us for the latest on a possible government shutdown. all that and more as "squawk box" rolls on. this cnbc program is sponsored by baird. visit bairddifference.com.

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welcome back, everybody. our next guest has exclusive new data on best practices inside the board room. for more on this, we want to bring in oscar munoz, former ceo and chairman for united airlines, cnbc contributor. he's now the co-chair of the national association of corporate directors blue ribbon commission that got a new report out this morning that examines board culture over the last six months with insights and recommendations on improving board room culture. oscar, thank you for being here this morning. what is wrong with board room culture? what is the biggest problem right now? >> you know, it is not that it is the biggest problem, it is a recurring issue. we seem to be faced as board members with the constant set of crises. the term i learned over the last few months is perma crisis. because of those issues in the board room and within corporations, it is important for the board to constantly have sessions and meetings to sort of help and guide the company. in this particular report, you

know, as directors, we always have an oversight sort of level of responsibility that we discuss and talk with management about. a bit of turning, a bit of turning the tables on us as directors to create structure and make it more of an intentional sort of culture development as opposed to something that happens out of some of these crises. we set up structures, we gather people from around the country, real great board directors, we have come up with great findings and great recommendations for directors potentially following their own board rooms. >> what is the biggest recommendation? i will say, look, the view in a lot of places is that board rooms, the biggest problem is they rubber stamp things that come from ceos. how do you get around doing that? how do you make it so the board can actually make decisions and drive the discussion of what's happening at the company? >> i'll tell you, with that particular -- i don't see -- the

people i spent the last six months with, i don't see a lot of worry of rubber stamping. i think the conversations around how and when you take those actions and structurally, you know, the report is broken into three different places. what is the optimal board culture you want to have. how do you on board directors and teach them about that. how do you set up behaviors and norms as to how you act every day and we have a third section, a little edgy, and when that doesn't work out, how do you go through the steps of potentially removing or advising or counseling performance review, if you will, the different directors potentially taking action if you will so the conversation spans that whole wheel of activity very, very similar to what we would ask people to go ahead and do for themselves. >> you must have looked at case studies of things that went terribly wrong in board rooms, things that went really right.

can you give us an example of each that helps you come up with these recommendations? >> there was 24 different directors representing 70 different companies. so everyone had conversations. for instance, proxy battles would be a good example of when that hits you, boards have to quickly gather, get outside information, and then you have a lot of very long board meetings as to what are the next steps you take. and several more members have more experience than others, different emotions, and knowledge base about what they want to do. what it creates in the initial few meetings is a little -- for lack of a better erm, dysfunction, with everyone trying to norm and form with how you deal with the crisis itself. how do you prepare for that ahead of time so you can be more efficient in guiding the companies that we are honored to oversee. >> what do you do if there is a proxy battle? is it better to take them into the tent, try to negotiate with them or better to give them the heisman maneuver, the heisman?

>> that's -- that's a particularly great question. that's what boards have to answer. and there are many issues. i have my personal opinions based on my experiences, but regardless, a board and its entirety needs to make that decision and do it in a unanimous way so that they can guide companies. so what you do is up to you. and if you're well prepared to handle the conversations, with trust, candor, visibility, transparency is important, you have that before, it makes the conversations a little easier with the concept of our study. >> oscar, can i ask you about some news in the airline business that i imagine a board has been spending a lot of time thinking about trying to be transparent about. we heard from ed bastian this week from delta airlines saying he's going to be rethinking this loyalty program of theirs where he had said, look, it is just, you know, what we're going to be doing is making it more expensive effectively to reach various tiers that created an outcry. we have seen it almost a

nationalist, viral movement and it may very well be impacting the relationship with american express and the like, which runs their credit card. how do you think about that and how would you balance these two issues which is, you know there is only so much space in these lounges. there is only so much space up front in these planes and yet you're also trying to reward your best customers? >> it is a delicate balance for sure. all that you said is true. all of those issues are the reasons delta may have made some of these decisions is because of those concerns and restrictions that they have on physical space and all that. at the end of the day, you have to balance your customer, your important and last person that does -- that is so important to your business, and so from that perspective, these kind of decisions and conversations, i know from my perspective, would be something i would bring to the board, if they were thinking about doing this. here the potential

ramifications, here is how we manage them and it is great to -- >> you do what in this decision? i ask because yesterday united hit me up when i was paying for a plane ticket and offered me like 6,000 extra miles if i just paid 180 bucks, like the cheating way to get to some of those levels too. is that a good thing or bad thing? get more revenue, but you muck up the place a little bit to andrew's point. what is the -- >> i think brand reputation and customer satisfaction and appreciation are really critical long-term values that you need to create and maintain. >> i think we all agree with that. the question, i think is in this particular circumstance and i think this is true for united and some of the others, you have this loyal base of people who are now using the airlines, i have had great experience recently on delta as it happens. but there are folks who are

saying, look, you're not going to get upgraded to the front of the plane. that's for sure these days. and if you can't use the miles, does that change the dynamic? and so you want to have this great customer experience, but also you're taking away from the customer experience and i'm sure this was the calculus for delta, which is their best customers were standing in line and couldn't get into the lounge, for example. these are all high class problems, but what do you do about that? >> my assertion would be that you find, again, it is easy to stand on the sidelines and go back and say i wouldn't have done what just happened, i think there is a level of customer interaction and conversations that you need to have to help them understand what the issue of the company faces, and then think of ideas of how to manage that. it isn't just -- you can't go from everyone is welcome to what feels like everyone is not welcome.

and that's what has created -- i didn't feel included in this conversation as a customer, therefore i'm going to have that backlash. the actual thing to do would be specific to each company and how they think. but involving the customer in that conversation to some degree would have been my approach. >> oscar, thank you. oscar munoz. coming up, highlights from yesterday's delivering alpha conference. and then countdown to shutdown. house minority leader hakeem jeffries will join us. "squawk box" will be right back. time now for today's aflac trivia question. in honor of national coffee day, what country produces the most coffee in the world? the answer when cnbc's "squawk box" continues. gaaaap! did this goat just say 'gap'? he's talking about expenses health insurance doesn't cover. but with aflac, you can get money to help close that gap. aflac, huh? -aflac! -ahhhh! okay! oh! duck - 1, goat - 0.

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[speaker continues in the background] the network with 24/7 built-in security. chip? at&t business. now the answer to today's aflac trivia question. in honor of national coffee day, what country produces the most coffee in the world? the answer, brazil. welcome back to "squawk." the 13th annual delivering alpha summit brought together elite thinkers and leaders and leslie picker who is our delivering

alpha maestro has some of the highlights from yesterday. leslie? >> andrew, yeah, rates were in focus at yesterday's delivering alpha conference. pershing square's bill ackman reiterating in a matter of weeks the 30-year could shoot through 5% and the ten-year could approach those levels. >> we have probably the worst technical environment in our lifetimes for supply of bonds versus buyer bonds. we have china selling. we have russia to the extent they own u.s. securities and more selling, we have saudi arabia selling. and , you know, we have an economy that is still strong and inflation, you know, 3.5%, 4% and persistent. but our view is basically you're not being paid enough to enter into a 30-year contract with the u.s. government at a fixed price. 4.7, where it is now, doesn't

make sense in a world where we think structural inflation is north of 3% for the very long-term. >> but don fitzpatrick believes the bond market volatility is presenting an opportunity. >> we think interest rates, government bond rates, globally are going to get -- we have seen them get sloppy in the last week or so. we think they continue to get sloppy and actually will give an opportunity to set long positions that will serve investors well over time. but the net issuance that is coming to market, including central banks speeding up qt, which the bank of england did last week, we think it sets up for some pretty volatile moves there. and it is a good time to, you know, when nobody wants to buy, it is a good time to buy. so we like that opportunity.

>> for comprehensive coverage of the event, you can check out delivering alpha.com. guys? >> okay. still to come, thank you so much, when we come back, congressman hakeem jeffreys is going to join us with the latest out of washington of what seems look a looming government shutdown. plus, the new movie "dumb money money" out in theaters nationwide. we'll talk to the author of the book that the film ipinsred the movie about, ben mezrich will be our guest. stay tuned. you're watching "squawk box" and this is cnbc. you can't buy great conversations or moments that matter, but you can invest in them. at t. rowe price our strategic investing approach can help you build the future you imagine. t. rowe price, invest with confidence.

know how time flies, we are coming down to the wire. congress has until tomorrow to reach a deal to fund the government for the new fiscal year that starts on october 1st. emily wilkins joins us with more. good morning. >> good morning, joe. well, for those hoping to avoid a shutdown, there is good news and bad news. good news is that the senate and the house are each making progress on a measure to fund the government. the bad news is that neither of those plans are actually going to go all the way through. they're both dead on arrival in the other chamber, meaning more hurdling toward a shutdown that

would begin sunday at midnight. let's break it down. last night, the house did move three long-term spending bills. but the more important vote is going to come up today, when the house will try to move that short-term spending bill with budget cuts and border security measures. now, a small but powerful group of republicans have said they will never, ever, ever back a short-term spending bill. and if that group holds firm today, then speaker kevin mccarthy is going to need house democrats to help him fund the government. over on the senate side, democrats are also keen where they're adding border security provisions to the bipartisan stopgap bill. senator john cornyn told us yesterday he and others aring look at limiting migrants who could enter the u.s. while awaiting on legal status but it is not clear if that's the final proposal or if it would get democratic support. democrats will be really critical for mccarthy as it is looking more and more certain that he'll be facing a challenge to his speakership from congressman matt gaetz. mccarthy is likely going to need

some members from the opposite party to help keep him in power. there is still a lot of unknowns at the house of government is going to be funded, but it seems almost a guarantee that we will be shutting down starting october 1st. andrew? >> okay. emily, thank you for that. right now we want to get over to house minority leader, new york congressman hakeem jeffries. good morning to you. we're all trying to understand the state of play here and what it would take to avoid a government shutdown. do you have any hope? >> well, good morning, great to be with you. my hope is that there is a bipartisan spending agreement that continues to work its way through the senate, that earlier this week senate democrats and senate republicans voted by a margin of 77-19 to advance. it would continue to fund the government in a way that provides for the health and the safety of the economic well-being of the american people. it avoids any partisan political

policy writers and would provide support for the american people in the context of extreme weather events and continue to fund the ukrainian war effort. that bill will advance out of the senate, hopefully in the next day or so. and arrive in the house. at that point, house republicans have a simple choice. put that bipartisan spending agreement on the floor for an up and down vote and i'm convinced that it will pass. anything short of that is a house republican effort intentionally to shut down the government and hurt the american people. >> so you don't believe -- i'm of the impression, maybe wrongly, that kevin mccarthy thinks if that bill were to come to the floor, it wouldn't pass. >> it would certainly pass if it was to receive an up or down vote because the overwhelming majority of democrats if not every single member of the house democratic caucus in terms of the bill and its current form in the senate would certainly

receive democratic support and there are republicans who have indicated they're prepared to support bipartisan legislation. and if that were to be the case, we only need six house republicans to join us. certainly there are six traditional republicans, six reasonable republicans willing to avoid a catastrophic government shutdown. >> congressman, we had kevin mccarthy on the program yesterday. we need to take a listen to this. he joined us. he took issue at the president's response, talking about the autoworkers strike against everything else going on in the economy. and just curious what your thoughts are about what he said. take a listen to this. >> i look at the country today. we got people striking from california to michigan. we got the price of gasoline $100 a barrel, we got inflation like we haven't seen before, and we got a president sitting in san francisco just trying to raise more money. i say get off the fund-raising

trail, care about your nation, let's get together, we have been able to do it together, before when we sat down. we can solve this problem. this is an actual opportunity to put the country on a better path. >> you think we can? >> we certainly should be able to and all house republicans need to do is keep their word. in may, at the insistence of house republicans, who were threatening to default on america's debt for the first time in our history, that would have been catastrophic, they insisted on bringing the spending dynamics into the discussion to protect the full faith and credit of the united states of america. president biden agreed. we all had a negotiation. it resulted in a bipartisan agreement that avoided a default and also set top line spending numbers for the fiscal year that is fast approaching. that bill passed the house by more than 300 votes. the overwhelming majority of

democrats and republicans support it. same thing happened in the senate. it went to president biden's desk, he signed it into law. the reason why we're in this situation right now is because house republicans have broken the agreement that they themselves negotiated in terms of top line spending numbers. everyone else in washington is adhering to that agreement. house democrats, senate republicans, senate democrats, president biden. why are house republicans threatening this government shutdown and breaking the agreement that they negotiated. it is because they would rather cut social security, slash public school funding, and criminalize abortion care, loading up the spending bills with unnecessary extreme maga republican policy riders. >> one of the things they have talked about is the border problem and tieing this bill to the border. you're from new york. and we clearly, if new yorkers

didn't appreciate the problem before, i think we all appreciate it now. do you think that's a viable thing to connect? >> well, the president did submit a funding request to provide for additional border resources in terms of the situation that has taken place in the border and throughout our hemisphere. and so far republicans in the house at least haven't even indicated a willingness to consider that proposal, which apparently in the senate they're working through some dynamics. we'll have to see where they ultimately land. we do need a bipartisan effort to address the issues that we are confronting at the border and to lean into comprehensive immigration reform, to fix our broken immigration system in a way that is consistent with our values as a nation of immigrants and as a nation anchored in the rule of law.

that's important and house democrats stand ready to find a bipartisan path forward. the problem is what you have in the house is that the extreme maga republicans basically on every issue including issues that they previously agreed to and negotiated are adopting a my way or the highway approach, changing the terms of an agreement that is a matter of law at this moment. >> you used that term before. you said there are six normal ones. there are six normal and 250 extreme maga ones. that's not the way it is. it is probably eight or nine that fit that description, extreme maga. >> yeah, joe, there is no point in this interview or any other point in which i have actually commented on the number of republicans -- >> i know. but you -- if the speaker did bring that up, you're right, it would pass, because there is only so many. but you want something bipartisan. there is already discussions

with senator sinema and others about an amendment when it would go back to the senate floor, not just extra funding. funding is not helping the border. there needs to be a policy change. that's all speaker mccarthy said. let's do it in a bipartisan way, and get some actual policy there. we're doing plenty with ukraine, get some actual policy and some additional funding and i'll bet you he would eventually take his chances with keeping his speakership if he felt like there was a real border change in policy as well as funding that the senate put in an amendment. i think you would get it done. but that's bipartisan. bipartisan doesn't mean everything thatthe democrats want becomes law. that's not what bipartisan is. >> yeah, thank you for saying that, because in the senate right now you have a bipartisan spending agreement that passed earlier this week. 77 members of the united states senate, that means the majority of democrats, the majority of republicans. >> you can get him to --

>> that's bipartisan. that's bipartisan. and also i think it is important to point out that in may, when we reached an agreement, part of that agreement was that when we approached the end of the fiscal year, preparing to fund the government, that there should be no policy changes one way or the other as for by the left or as for by the right, which should be part of the spending discussion. that was an agreement that was reached in may. and so now, again, house republicans are changing the terms of that agreement. that doesn't work in politics. it doesn't work in the business world. it doesn't work in the not for profit world, it doesn't work. your word matters. and now a government shutdown is being threatened because the house republicans want to go in a different direction. of course we stand ready to find the common ground with the other

side of the aisle on any issue, wherever and whenever possible. we can't be put in the situation where extreme ransom demands are being made at the 11th hour that are inconsistent with a spending agreement that was already reached in may of this year. >> you don't want to -- let me ask -- >> all i would say is that when you look at the realities of the situation, democrats, there is plenty of schadenfreude with what you refer to as the clown show that speaker mccarthy finds himself in with those 10 to 12 as you say extreme maga republicans. but that's the reality of the situation that he's dealing with right now. you might be majority leader some day with a slim majority and have the same type of issues. with what he's dealing with, what would you advise him to do? knowing the realities of his situation, what is he able to do to arrive at something where he

probably doesn't want to lose the speakership? but the numbers are the numbers. the numbers are the numbers. and, you know, there are -- i guess you call them extenuating factors. it is obvious, you read any of the articles written about this, you know what the situation is. how do we get beyond that where everyone can smile and be bipartisan? >> well, first of all, let me point out that we had the exact same numbers in the previous congress, not even the hypothetical situation or question that you -- we had literally the exact same numbers. and under the leadership of speaker pelosi, we were able to pass measures that makes life better for the american people and measures that help business competitiveness, help our economy, whether infrastructure, whether that was chips and science act, whether that's standing up for clean energy economy. >> how does she do it, though? >> the democrats are the board

collective. you got every single vote for speaker, from democrats. remember? they like staying in power. >> really what's the difference? how do you keep -- >> we don't like -- >> yeah, you do. >> we run to win, but we win to govern and we govern to make life better for everyday americans. that's why we got big things done. the majority of those things were bipartisan in nature in both the house and the senate. and that's the path forward. run toward the center. don't run toward the extreme right. run toward the center and we are ready, willing and able to find the common ground to make a difference for the american people in ways that will lift up the great american middle class dream and allow for a business environment where companies can continue to thrive because when companies thrive, workers thrive, and that's what our agenda has been all about. >> congressman, real quick, i know you have to go, as a new yorker, given the border crisis we're having and the immigration

crisis this state is having, and what seems to be a standoff, frankly, between the mayor and the governor and now the administration, how do you see that playing itself out? do you think the governor should be asking for more? do you think that she should be declaring a state of emergency? >> well, i think that president biden inventing temporary protective status, taking steps forward, we believe numbers in new york currently under the care of the city of new york are anywhere between 15,000 and 30,000. venezuelan migrants who are eligible to work while they are waiting a decision on their asylum application and when i talked to people both members of organized labor and members of the business community, they have said there are labor shortages and that these refugees who now have work authorizations can provide assistance and meet unmet needs. and i think what the mayor and

the governor and all of us need to do is focus on making sure we can implement the step that has currently been taken and provide relief, resources at the border to try to alleviate the situation. we also need to provide resources to adjudicators so that the asylum applications can be processed in a more expeditious fashion. >> leader -- congressman jeffries, thank you for joining us. we hope to talk to you again very, very soon. hopefully not about a government shutdown, but that looks like -- >> thank you. >> thank you. >> when we come back, dumb money, the movie about everyday people who flipped the script on wall street is in theaters this weekend. we're going to be joining -- we'll be joined by ben mezrich, the author of the antisocial network, that's the book that the movie is based on. and atheop t t of the hour, barry stern lick of starwood capital group will be our guest. we're going to talk rates, return to work, much more. "squawk box" will be right back.

that first time you take a step back. i made that. with your very own online store. i sold that. and you can manage it all in one place. i built this. and it was easy, with a partner that puts you first. godaddy.

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great in my book! who are you? no power? no problem. introducing storm-ready wifi. now you can stay reliably connected through power outages with unlimited cellular data and up to 4 hours of battery back-up to keep you online. only from xfinity. home of the xfinity 10g network. investor ryan cohen is taking over as gamestop ceo, the board unanimously appointing him after holding the title of executive chairman. he says he will not be collecting a salary. joining us is the author of of "the anti-social network. that's the book that the new movie "dumb money" is based on. ben, it's great to have you here. this next part is set you up for

a sequel. >> i don't think it's a coincidence. it's like being 2021 all over again. it's a moment that it feels like there's a sequel starting. >> book two, it details how a band of average investors were able to take down wall street. >> yeah, regular people in their dorm rooms, single mothers, or just people who were living in the worst part of the pandemic stuck at home fell in love with the stock, they fell in love with gamestop because they felt like there was a value with this company that wall street was missing and it became this movement. it's almost revolutionary. when you watch the movie, there's a lot of anger, a lot of people mad. >> was there any value in the company? >> personally i like the stock

but don't take investment advice from me. >> if he didn't sell at the top, was it smarlt t money? >> i think it's more about people who believe in something because they love it. they felt like it was being taken away. >> we were just talking about whether it's still going to go the way of blaockbuster? >> i believe that ryan taking over could be huge for this. he's not taking a salary, he's doing it because he loves it. i have a 13-year-old son, you walk into the place and you talk to the guys. >> you talk to the geeky guys. >> people love the products. >> what do you think about the idea of him being a hero? we were talking about the screenwriters. >> by the way, i feel like i'm looking a the a movie star.

you are beautiful in the movie. >> they've taken lots of clips of us here on cnbc and put it into the movie. we're all trying to understand long term. i don't want to give away the end of the movie, people know what happens at the end of the movie. there is a question of whether people were following a fever dream of an idea that ultimately was to their own peril, right? >> i interviewed dozens of people for this movie and not a single one cared about the money. all the people who bought this stock and buy amc and whatever, it's not about making money. it's a movement against what they feel is an unfair playing field. >> these guys stuck it to the man. but they may have stuck it to all their followers, too. >> all the bag holders. they left them with all the bag hol holders. what do you mean it's not about

the money? everything's about the money. >> have you talked to the people about the stock? >> they write in all the time and i say how's your money and they don't answer. >> it's not about the money. >> you might as well just go to nfl, to draft kings. >> you're treating the market as if it's rational. >> where the stocks are now is rational. they're back where they're started. >> but people were rallying together to buy a stock. you don't think that's going to happen again? >> i think it's going to happen again but gabe can just pull out the basketball team. >> didn't matter about the money, i'm broke. >> i think wall street is going to figure out a way to i adjust and try to. but if you ignore the fact that

millions and millions and millions of people were pissed off enough to buy gamestop to tick off someone -- >> the rapidity and a group of people and how quickly things can move, that was true of svb, when silicon valley bank went under. the idea that a group of people could move their money, nobody thought this could happen with such speed. >> there are times that a short seller comes along and identifies enron, which was a complete fraud. and that's something we have to be grateful to them for but this is a way to make sure that short sellers aren't able to just push their advantage and -- >> i'm not a fan -- i have to be honest with you and i know i get yelled at by people in finance, but i think there's something repugnant about short selling. >> i would agree with that

aspect of short selling but when it identifies fraud. >> a good answer came out of a bad action. that's like the end justifies the means. you're still doing wrong betting against the company. if you think there's something wrong with a company, publicize it. you doesn't have to make money on someone else's failure. e everyone's looking for another way to look money. >> the money aspect is the only thing that identifies the fraud. >> it's a sad state of affairs if the only way people will do right things is for money. >> short sellers can be definitely heros and on the right side of things, just like the cases that becky talked about. if you uncover something that's underlying fraud, that's not the only one. they keep the market honest. if you come on and you hype a stock because you're long, it's no different than coming on --

>> and building something is different than breaking something down. >> something built on air and fossil wood should be exposed. >> so expose it. >> you don't think short sellers for ftx should expose -- >> we have to say thank you. the film is called "dumb money." coming up on the other side of this break. barry sternlicht will be with us in just a moment. >> oakh, i love it.

good morning. the future is getting a boost on this final trading day of the third quarter. we are going to have a rundown of today's stocks to watch. and more economic data on the way. this time consumer spending. that's coming at 8:30 a.m. eastern time. and the man is here at the table. starwood capital chairman and what he is calling a hurricane. the final hour of "squawk box" begins right now.

good morning. welcome back to "squawk box" right here on cnbc. we are live from the nasdaq market site in sometimes square. i'm becky quick along with joe kernen and andrew ross sorkin. here we go heading into the 8:00. futures are still in positive territory, not by quite as much as we had been earlier. s&p up by 13, the nasdaq up by 73 on the last trading day of the quarter. treasury yields have come back down. that's why we saw green arrows at the end of the session yesterday and why you see the futures this morning. the 10-year at 4.6%. >> the return of student loan

payments next week and a november rate hike could change the path of the economy. our next guest has been saying a recession is likely on the horizon for some time now. and starwood ceo barry sternlicht. i'm trying to remember when you said the rates were too high already. has it been a year already? >> no. i mean, yes, but no. we have to give you your croissants. >> look at you! and you did it from the donut pile. >> i love taco bell, too, for next time. >> is there more to all this than meets the eye. >> my criticism was we had too much on the shelves and too much money. consumers were loaded with the

packages. now the shelves are full and people are out of money. him raising rates as fast as he did was throwing kerosene on the fire. what i missed and i think a lot of people missed was the scale of the bidenomics packages. $3 trillion, the american recovery act, the trillion dollars from the infrastructure bill, and the 250 billion of the chips act, that money is actually getting spent and it's distorting the market. so you're seeing private investment go down and public investment rise. it's not quite -- so there's a tug of war between congress's spending and the fed's efforts to try to weaken the economy. so it's an interesting inflexion point. i feel like he's really going to blow it. and you're seeing that reflect in the bond market. the biggest victim of him raising rates is him, the federal deficit. >> but are we -- the things that we're seeing that seem like the

economy is still hanging in there, those are due to keynesian stimulus? there's nothing instructurally good about the economy right now? >> next year we'll be back to prepandemic levels. there are some good things, the drilling, the oil, data centers, evs, the batteries. there is some onshoring going on but the consumer is not so healthy. >> but the labor market still is. >> it's fascinating. in '08, you lost a million construction jobs. year to date 130,000 construction jobs have been added. >> that's the stimulus package. >> and the ceo of a construction company based in dallas is on

our board and he said he's never been busier. there are 34,000 projects be done in the infrastructure bill. it probably adding 50 basis point to adp, just the infrastructure bill. i thought the typical government takes ten years to put the money out. they're actually putting it out. he has 30% private business and 70% public. it used to be reversed. we stopped building. private real estate are looking at projects. we're finishing what we have, that's the delay in fact, but we're not starting new projects. and you see construction and logistics down 70% in warehouses. >> but the funding isn't going away, right? >> no, powell needs to walk across the street and talk to congress. >> he says that all the time. nobody listens. >> they approve, these wonderful five guys who are going to

strike the budget, they approved a 1.3 trillion dollar budget. there's no big ger customer in the government than the u.s. government, right? no company is spending a trillion seven. >> all jay can do is -- >> you had janet yellen on the other day. she said it's all paid for. really? we have a $2 trillion deficit. >> i want to put up a slide on this. can i do that? >> mm-hmm. >> there's the slide on the deficit out of control. the estimate was 1.4 trillion. now it's 2 trillion. where did the $600 billion delta come from? the first one that comes out is receipts. i've been saying this and people haven't paid attention but

change in receipts because he's crushing capital gains. they're paying more on interest and losing receipts. receipts are going down. and they're going to go down further. people aren't selling and values have gone down and the complex of real estate, whether it's home or buildings, there's no capital gains. >> we need the irs in there just harassing people to get that back up. >> so he's losing receipts. raising rates is hurting capital gains. the second one is interest payments. >> there it is, 146. >> 146 billion. he's keeping it higher than they thought. medicare, medicaid skipped. >> he's talking about the the last -- >> the second slide, please. the interesting one, social security, that's the 8% in inflation, that's linked to

inflation. and they lost income because they sold the bonds. next slide. this is going to get far worse. look at the actual interest expense. that's the dark blue bar, the little bar. and the red bar is actually what the government owns 5 or 6 trillion of our own debt. so grossing in relates. so that's the 5% on the balance of the 33 trillion. the interest expense and the deficit is going to go from 2 to 2 1/2 to 3 trillion and there's no end in site and loses control. >> is he forced to continue quantitative easing? >> yes, yes, we will have to. >> because nobody is going to be here to buy these bonds. >> we realize that the chinese bought our treasuries and the saudis were doing a good job of kicking them in the face and who's going to buy the stuff? at some point there's too much

paper and not enough buyers. >> why not go back to qt and are they going to have to raise rates? >> there's two slides, the last two slides on the deck on inflation. so tpi is below 2%. it's the slide that says inflation -- >> there it is. >> it ticked up last month because of oil. he has what he wants. inflation is less than 2%. there's two caveats here. go to the next slide. this is about rent. and again the orange is rent and the blue is actual rent. that's the lag in the government data. so you can see that the rent component of cpi is headed to the floor. and if that happens, you will get a 2% magic number that nobody thinks you can get. gavin newsom raised minimum

wages to $20 for restaurant workers and he's going to have a bill to raise workers to $25. now he's backing the unions which are forcing wages up which is creating inflation he has to kill. >> and former president trump was there advocating for the same thing. what does jay powell do other than hold rates high? >> the point is the economy -- he should just be patient. the fed should stop. what they're injuring is the balance sheet of the united states. the economy is going to slow. the regional banks do not have money. i looked at a deal yesterday in our shop. we were getting a loan. we went to 132 lenders and we had four lenders actually submit us a proposal and the spreads are crazy. what are we doing? it's a life science project. we're not going to do phases two

and three. we're finishing phase one, we're under construction. we actually have demand. >> even though the government, the public side of things is so strong, the private economy is getting killed. >> that's right. you're not going to have a great christmas, consumers are out of money. bought couches and taking trips and he's working hard but they're taking those away, too. >> brian told us he's got 66 million customer accounts between small businesses and individuals and that they're still doing fairly well. they're spending more of their discretionary spending on things like gasoline but they're still doing pretty well. and everybody who thinks, you know, it's such a broad debate between people who think you need to hold rates higher and those who think they'll come down, but most who think the

rates will come down are going to benefit because they hold the bond portfolio. >> i think in order to keep receipts up, he has to improve asset values, rates haveto come down. you want to make a bet they'll be higher or lower in 12 months? they're going up. they'll go past 2019. and student loans cookicking in they'll have that to deal with to. the saudis, the russians, they need to pay for a war. and powell, another thing about his strategy. jackson hole he said i need interest rates to come down. is he going to change the saudi's mind about cutting oil supplies with a quarter point change? no. >> but he's saying i can only whack the stuff i can whack. i can't whack the other stuff. >> he is whacking such a small

portion of the economy. the health care doesn't care. health care, government jobs and education, half the labor pool he can't impact. he can cause me to fire my restaurant or hotel workers because demand slacks off because he's killing business. travel maybe slows down but there's a narrow thing he can kill. he always kills construction jobs but he can't do that because of the infrastructure bill. two other industries -- dishwashers and services. this is one i really care about. i want these people to have jobs. when they raise wages to $28 in restaurant, restaurant prices are going up. that's actually part of cpi. so he's creating inflation, which democrats say they're getting control, it crazy what's

going on. it's actually crazy. it's not -- it shouldn't have been zero. >> i think we all feel a sort of -- it's a challenge to think it through. you want them to get the 20 bucks an hour. >> yes. >> but you're saying it's going to increase inflation. so which one do you want? >> by the way, 2% is an artificial number. if it was 3% and all wage driven, i think we'd have a party. we don't want commodity price pressures, we want the underclass and those who haven't participated in the great economy to do better. i'm happy to pay my housekeeper $20 an hour, $24 an hour. demand will slow if prices get high and the world will get normal. the uaw strike is so funny. when they did the reconstruction

of car companies, they were bankrupt. they'll go bankrupt given. they can't make the profits they need to transition to the ev world. there's a balance. they should get increases but labor hasn't been helped but it's not -- there is the other side. if you think long term, are you helping these companies compete in the global marketplace? short term the workers will be employed but long term the non-union shops will put them out of business. >> that's what president trump said to them when he was there. >> one of the things about trump's economy, because i watched the debate the other night, they talk about the trump economy, it was on steroids, too. it was a trillion dollar deficit economy. 3 t someone said we'll do it again. really? you're the first president to run a 3.4% unemployment right

and have a $3 trillion deficit. it was on a sugar high. it was not a real economy under trump. and the republicans said i'll one up you. the american recovery was the bridge too far. that was the fire that lit this thing. >> so we're not going to stagflation, we're just going to stag. >> no, if he doesn't stop, interest rates continue to go up -- >> then inflation won't stay low. you. >> think it's low now. >> theeconomy really weakens as rates go up and he can't save it. >> the worst thing would be persistently high inflation and very slow growth. but you think inflation is not the bogeyman as much as we're saying? >> i don't think wage inflation is a big bogeyman. i think there's so many benefits of a strong economy of a strong consumer who will spend more money and buy nice things. i think wage inflation, i'm okay with that. i really am.

i don't think industries should put themselves out of business because they're short-term thinkers. i don't think the u.s. auto market, i'm not sure -- >> given that we're going to spend money for years, these a long programs -- >> endlessly. >> yeah. these are long programs. we had someone on earlier who said, okay, we may be able to agree that the deficit at some point in the future might be a problem. >> it's a problem right now. >> it was like mind boggling it because half the country believes that, which is frightening because there will be a day of reckoning. >> if government survives, corporates will be six or seven, the cost of capital to the industry goes way up, fewer factories get built, fewer investment and capital expenditures. it's not just isolated to the u.s. government bond market. >> you would do big time entitlement reform. >> first move, the retirement

age. who cares? they're not even born yet. you can't offend them. they're not even voting. why can't they agree on that. there are easy things to do to increase the labor force that are simple and they're common sense. the debate was not exactly a fun event. >> "the washington post" says there are a group of high-profile, big-ticket republican donors who are going to try to get youngkin. >> i like nikki, i like glen a lot. i think nikki is one of those candidates of the moment, probably the one i would say is the closest to being in the middle, moderate. andrew and i were at a conference this week and talking about china and i spoke to mike gallagher, andrew will recall, they're very big hawks on china and i just got back from china. the chinese need respect. they're tough, we're tough, we spy on them, they spy on us. kissinger said we spoke to them

a hundred times before we recognized the peoples republic of china. you can fight later. talk now. go into a room, have a conversation. that's how grown people do things. you don't embarrass the chinese, you do not do this or they will bite you back. and anyone who's done business there, we have lots of investments there, we have a huge presence there, we talk. you can fight later. we cannot afford to fight. we cannot afford a war in taiwan. we have a $33 trillion deficit. let's go talk. it seems like right now that xi and biden may get together and he hasn't gone. trump never went. gallagher said that he actually ripped up blinken for going. and it's a talk. it's a lot cheaper than sending a missile. and he's never been. he's never been to china. i asked him, have you ever been? no. okay, the head of our subcommittee has actually never

been to china? take a trip. i'll pay for it. go to china, go see the people, go see how westernized they are. they don't like this turn to russia. they don't have much there, they have vodka and oil. we have apple. we have much more things that they want. they're much more to have an affinity with us. the government is going one way, he's losing control of his own economy, he's not having a lot of fun. but we need to give our allies in china a reason to say you need to calm down, the u.s. will find a bridge. we're the two largest global economies. it so much better for the world if we get along than if we fight. we cannot afford a war. >> xi might be coming here. will you pay for him to come here? >> yeah. >> wow, you are feeling generous. >> i can't really afford the whole chinese delegation. >> you can afford that.

>> while you were standing there, they were -- i haven't been able to open the friggin' thing. >> barry, we got to thank you. we're a commercial operation, as you know. just like you. just like you. coming up, stick around. coming up next, the ceo of x. you don't want to miss this. a contentious interview with our nfenjulia boorstin at the coerce. making a lot of news all over social media. back after this.

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lp welcome back to "squawk box." linda yaccarino will lay out her plan for reviving the company that is expected next thursday. she also took center stage at the conference on wednesday night with our own julia boorstin. good morning. >> good morning, andrew. first some headlines, she announced that x is on track to turn profitable early next year. there was so much news coming from elon musk about the future of the platform formerly known as twitter.

i asked linda if they were going to charge a fee for x. she did not know. >> elon musk announced you're moving to an entirely subscription-based service, nothing free. >> did he say we were moving to it or thinking about it? >> he said that's the plan. did he consult you? >> we talk about everything. >> she said she was more of a coo than ceo. here's what she said. >> who wouldn't want elon musk sitting by their side running product? >> i see a show of hands. >> there may be a few show of hands to get the cute chuckles you're getting, but i would say the percentages in this room are

about 99% who would say no to that and 1% of maybe personal opinion, feelings. >> so i also pressed her on musk's threat to sue the anti-defamation legal, asking if her threat was working in on significant to her efforts with organizations and with advertisers? >> do you think it is better to have these conversations and meetings that you're describing or to threaten a lawsuit? are there times when you wish that elon musk would not tweet and instead let you do your job? >> the foundation of x is based on free expression and freedom of speech. everyone deserves to have that opportunity to speak their opinion, no matter who they are,

including elon, including you, julia. >> on stage i asked yaccarino how many monetized active users the company had. she didn't have an answer but she followed up to share the company now has 245 million daily users up from the last time twitter reported earnings at the end of the second quarter of 2022 before musk took it over. twitter, now x, also announced that now 1.5 million people sign up for x daily, up 4% from last year. >> andrew? >> there has been, as i mentioned in the tease before we came to you a lot of reports about what some people have called drama surrounding that interview, stemming from the a late ad, and an interview of the former head of the platform.

what happened? >> his responses, he talked about a lot of these issues in "new york times" pieces. he was empathetic to yack reasre yaccarino'spos position. he did talk about death threats and he said she should be worried not only for herself but her family and friends, too, after the threats he had faced. >> what about the timing of the interviews? there's a lot of commotion on social media about who knew what when has become almost a story unto itself. >> linda was the first person we had booked for the code conference, the first name we announced as one of our

speakers. that was back in june. she was announced in june. roth was a definitely a late add to the schedule. he was announced wednesday morning after both linda and i had been informed that he was going to be on the agenda. but i have to say i reported on a lot of code conferences. there are always changes so, for instance, i had booked an interview with gm's ceo. i was looking forward to that one but she cancelled at the last minute because of the autoworkers strike. and years past, plenty of guests weren't announced until they were on stage. last-minute changes on stage are not unusual. they did raise important issues about trust and safety. and she did say she was hiring many more people in that space but there are still some key questions that were left unanswered and there were questions i didn't get to before

she had to leave. so i had a lot more questions on my agenda, andrew. >> hopefully we'll get answers soon. thank you for bringing us that this morning. >> we are just a few seconds away from the government's personal income and spending report. that does include the core data, 161 point above fair value. rick santelli is standing by in chicago. rick, the numbers, please. >> personal income and spending for the month of august starting to pop lulate here. and the income numbers up 0.4 of 1% and it up exactly 0.4 of 1% and you have to go back to january when it was up 0.7. if you look at spending alone, it is also up 0.4 and 0.4 is actually the lowest number since

may of this year because it's following 0.6 and 0.8 higher. now, if we look at real spending, that's up .01 so we see inflation does take a bite out of that. now let's get into the deflator. the deflators are always important. if you compare it to history up 0.4 at the highest level since january, which means it's the second highest of the year. year-over-year numbers, maybe the most important aspect here and keep in mind the year-over-year deflator peaked in june at 7%, expected up 3.5. exactly as it is, up 3.5%, upward revision last month from 3.3 to 3.4. the 3.5 is the lowest since last month but it actually now becomes the highest since may when it was at 3.8.

not something i want to say. we don't like to see these things moving in the upper direction. if you look at personal consumption deflator core month over month, expected up 0.2 and it arrives at 0.1. and now in my opinion the most important number of all, the personal consumption expenditure core deflator year over year and it finally breaks the 4%, 3.9, as expected following 4.2, it moves to 4.3. why am i so excited? it hadn't been below 4% since 7/21. last year alone half the readings were above 5%. so it indeed is progress but progress is slow. 3.9 is a long way from 2% and to hear so many fed officials seem to be so pleased that the performance of the drop in

inflation that i agree with but these are still sticky numbers. let take care of something else. trade balance moved lower to minus 84.3 billion. we were expecting a number over 19. retail inventories up double expectatio expectations at 1.1. interest rates are highly unchanged. yesterday we put an interim peak in treasuries. back to you. >> core pce is good to be back to 3.9%. that does not include energy. energy prices have gotten a lot higher but energy prices eventually bleed through to a lot of other areas that would show up in the core, right? >> i couldn't agree more. it exciting to see we dropped below 4% but it still on the high side. most persons doesn't agree at

looking at things from a core perspective because at their core, food and energy prices being very high. and even if these numbers moderate, it doesn't mean we're going back to what prices were pre-covid. >> right now steve liesman joins us. what really jumps out at you? >> i want to go back to the question you asked rick. i was talking to one of those m millennial types the other day. and they were saying the numbers aren't good because they don't report energy. that's not right. one number includes energy and food, one is a core number that takes it out. you can look at whatever you want. i think you know this, becky, apparently not everybody does. i want to make sure people understand that. >> my big ger point is even if you are focused on core like the fed is, the energy prices

eventually feed back down the line to all kinds of stuff that isn't cpi, whether that's delivery cost of things, it winds up in manufacturing, so higher energy prices if they last, they do show up in the cpi. >> that's exactly what i was going to say. i just wanted to make clear there's not a great conspiracy going on to not report the higher energy prices. but you're right, becky. that's why what i'm going to say about these numbers here is so far so good but it's a little hard to take it too far. but what you have is this spike in energy prices, which you see in a rising headline number. the fed is going to listen to that to an extent, until it becomes concerned of what's happening to the energy prices. we look at the core because it's perhaps a better way to make policy over a longer term and to not go up and down with energy prices and food prices, which tend to be more volatile.

by the way, there are many o things and there are many ways to make sure there's no conspiracy there. what i saw this morning as soon as that number came out, it a little bit of lower probabilities on the outlook for the federal reserve this year. i want to give you the freshest quotes. i'm looking at a 31%, 32% for another quarter probability for december, another quarter point. and then looking to the cuts, 42% in june. what's happened essentially, becky, is that the probability of a rate cut has moved more to june, july and obviously the total amount of cuts baked in by the fed and therefore by the market have come down for next year. >> steve, thank you. see you later. >> coming up, the former fed

governor will injo us to tualk about today's inflation data. all that and more as "squawk box" rolls on. wow... what did i do to get here? (city ambient noise) right. work. you worked hard and it's time for a bank that'll work hard for you. everbank brings security and a guarantee. that you'll earn a yield in the top 5% of competitive accounts. going, got you where you want to be. we're the partners for your next move. everbank. advantage, you

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welcome back to "squawk box." right now we want to look at how the fed's rate hike path is helping regional banks. i want to bring in a former fed governor who led the central bank regulatory reform in the wake of financial crisis, now a professor as harvard law school. thank you for joining us.

how concerned are you that the way things are headed, if they are headed or continuing to head up that we are about to break something? >> well, andrew, i distinguish there between the economy and the banks. you know, as i've said before on your program, i am concerned that the fed has not been forward looking enough about the possible pass through of the effect of rate hikes that it took last year. and, you know, you never want to put too much emphasis on any one print but this morning's inflation news just lends further credence to those who have been saying, look, a fair bit of progress has been made, you're going to keep rates up and we're a bit worried that when companies need to refinance, when a lot of the effect of raising interest rates comes into new lending, that the fed will have inadvertently pushed us into a slowdown. so that's kind of the economy

has a whole. >> that's the economy side of the story. but let's talk about the bank piece of it because we just had barry sternlicht on. he thinks things are getting broken already. >> well, i think there are certainly risks there. i mean, look, the large portfolios of bonds and which have not been recognized continues to hover over the system and particularly some of the mid-sized regionals who might have deposit flight problems again. i don't want to overstate things because i think there's continuing vulnerability. the real point here is not a near-term vulnerability, i think the real point here is the ongoing business model challenge of these mid-size bank, the banks between 50 and $250 billion. those are the ones we saw failing and in trouble in the spring for idiosyncratic reasons. >> well, that's the question,

though. what would you do about all this? we have this still i think implicit guarantee around deposits. it's not cotifidified in any kif law. when this was tested to the extent it was, it worked. but that was not a series of banks all at the same time. how does that play out? >> well, i think, so what's going on right now, the big banks were just fine in the spring. the four mega banks, people are moving their deposits into those banks. the group with which i think we're most concerned is that 50 to $250 billion group. and there i think, as i said, they're just caught in a squeeze. and it's a little hard to see how that group of banks survives in anything like present form over the next ten years. so to me consolidation among those banks is one clear option

for giving them some additional scale and maybe allowing them more effectively to compete with the super regionals and the mega banks. the problem -- i'm sorry, i just want to say the problem is that the anti-trust division appears to be saying it's going to look unfavorably on bank mergers generally, not just with the biggest banks, with which i certainly agree, but even among the regionals. that would sort of put them in a trap then, andrew. >> that's where i was going to go with this, which is i'm sure you have folks in the treasury department who may be aligned with your way of thinking around trying to create some transactions that gives them enough concentration to actually be able to withstand things and yet you're going to have this other side of the administration that has a very different view of that. who holds the balance of power, do you think, on that front? >> on bank mergers, i think the

anti-trust division has heavy -- app an awful lot of weight. if the anti-trust division challenges a merger in a non-related industry, high tech or something, the companies can choose to fight it immediately. when the anti-trust division has negative views on a bank merge e er, they can't that to bank regulatory angers and i think they'll be reluctant to approve a merger that there are concerns about. so i think effectively the anti-trust division's views will carry more weight in the banking industry. >> dan, real quick, final question, and it may be sacrilegious to even raise the issue. do you think that the united states has too many banks, that -- i mean, there's an argument that has been made among some that you look at the

un u.k. and australia or canada, the approach is much more concentrated. or you could say the idea of consolidating the banks is crazy but others say it would be the answer to a lot of these issues. >> in 1984, there were 14,000 banks in the united states. now there are about 4,000. it was accelerated when intrastate banking laws were l liberalized. we've seen that with community banks. i'm hoping it's making the remaining community banks stronger. when you ask that normative question, is it good or bad, i actually think the answer is a positive question. there's going to be more

consolidation. the question is will the banking agencies and the anti-trust division be keeping an eye on the end game? what does the competitive landscape look like after this consolidation is complete. >> dan, thank for your smart and thoughtful and alalysis of the situation. >> thank you. >> coming up, crude prices surging more than 30% in the last three months. will the market see 00 p$1rice tag on wti in the very near future? that's next.

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welcome back to "squawk box." the futures after all that data that rick brought us a little while ago, not much change. pretty good session this morning, up 190 points or so. it will be the last trading day for the quarter. it's september 29th. and then we have been watching oil, which we just mentioned before we went to break, up about 30% in the last three months. up this morning. and that recent surge in oil prices altered a bit yesterday. that was the highest level we had seen in more than a year. some analysts predicting $100 a barrel oil next. our next guest says his long-term price target is $80 a barrel.

joining us is christopher malek, from jpmorgan. we hear a lot of this is supply constraints causing it and i guess there's a feeling we may be seeing some slowing in the global economy. is that what would cause would cause prices to come down? >> you put it very well in the context of trying to think about kree sess recession and then supply. analysts try to call the un underinvestment thesis. we didn't believe in it, but even know i think that you can frame deficits and supply deficits over the next few years which we have, but i think what is really more important is what is changing the model in the cost of oil. the price needed to see incremental dollars in oil production. that is a thing that we focused on. we've looked at it in so many different ways.

whether capex gdebt, dividends and buybacks. it has gone up and they have to feed all these mouths. so that tells you they need to clear 75. and then youyou look at shale. it is robust but slowing. and so you see shale production costs moving hire. and so before and after thinking about why we're going to you will about bullish tirer to is because we have higher cost of debts and new supply. >> i assume high price means more production, but still not enough to get the frackers excited. and that is weird. that is not what we --

>> unusual, absolutely. it is a canddifferent thinking. we talked about the high cost of debt. you are also looking at high cost of equity. so what does that mean? it is the equity risk to premium of the majors. it has gone up. maybe because volatility in oil, because they have underperformed. an extended period of time that their performance was pretty bad. so what does that mean if you have a high cost of equity, it means you have to return a lot more cash than you used to. if you saw how much cash these companies are returning 30% over market capital, you think that that was -- not closing shop. so that is fine, all it does is get in the way of incremental investment because you get good return and that is before you think about investing in growth. >> all right. we'll have to cut it short because of breaking news. but very interesting data point -- or at least a way of

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just over half an hour to go until the opening bell. right now you can see nike shares, this has been a big boost to the dow and s&p 500. that stock up 10.5% after earning beat expectations and full year guidance. if you look across the board, under armour up and so is on holding, deck's, lululemon. stephanie, let's start with the nike news. the china business is still pretty strong. >> yeah. actually that is definitely a highlight. up 12% on a constant currency

basis. second quarter in a row of double digit growth in china. and you know i have been bullish on the consumer china and kind of the reopening. and so it is certainly playing out. they are taking share in china. that is number one. number two, the nike brands were up 2.5% but s.a.p. rise in every geography as well. that is helping margins. jordan brands grew double digits. and i think the most important numbering is that ebitda margins beat by 180 basis points. why is that important is this because the company has the goal of getting that to the upper teens. it came a in at 12.5% the past quarter. so if they can get to the upper teen, that means that this company has a chance at getting to $6.50 in earnings power making the stock pretty attractive for the next couple of years. >> and you still like the stock because of the long term strategies? >> i think that the worst is

behind them. i think that the higher spend is behind them. i think that they are focused on profitability. much more focused on profitability which is a good thi th thing. and still down 10% year on year. not cheap, but the last ten years traded at 28 times on average. so we've seen a very biderating and i think that you will see a rerating. >> and we've looked at foot lobber and deick's were higher too. is nike benefiting? >> yeah, i think that they are taking market share direct to consumer, china as i mentioned, jordan up double digits across every segment. so they are absolutely the number one player. anytime that you can get the number one company on sale at a discount to its historical multiple, you have to take that chance, right?

because especially given the visibility. and by the way, they have very strong balance sheet and $17 billion buy back. they bought back a billion one this past quarter, so shethey ga good price. >> do you like any of those other companies? >> not really. i think that they are a lot more vol volatile. i'd rather just own nike. i also think that there is really a change in the industry. there are winners and then there are the losers. and w winners from costco, walmart, all are best in class and i'd rather buy any of those on sale at a discount multiple especially if you have a little bit better visibility and keind of profitability improvement. >> stephanie, thank you. have a great weekend. let's take a final check on the markets before we hand it over to our friends on "squawk

on the street." as we've been mentioning, it is pouring rain outside, but sunny in the markets at least for now. dow looks like it would open up about 202 points. s&p 500 up about 30 points after what has been a tough month, tough week. anyway, folks, stay dry if you are dealing with this outside. and have a great weekend. we'll talk to you on monday. "squawk on the street" begins right now. good friday morning. we are putting q3 mercifully to bed with green arrows as the disinflation trend continues around the world. eurozone cpi runs cool