♪ good morning and welcome to "squawk box" right here on cnbc. we are live from the naz tack market site from times square. i'm becky quick along with joe kernen and andrew ross sorkin. it is decision day for the fed. the market's going to be paying very close attention to chairman powell's news conference later this afternoon. we'll have more ahead with steve liesman coming up in a few minutes. first we want to turn to the markets. we'll be hearing from the treasury. that's going go be interesting how they break it down, all of the borrowing they have for the end of the year. >> right now dowdown by 122, s&p

down by 16%, naz dan down by 59. let's check out energy prices while we're at it. you're going to see right now. wti, it looks like it's about by about 1.4%. but you're still looking at it down, 82.15. right now there could be a jury ruling on realtors. they decided to artificially drive up commissions home sellers pay to buyers' brokers. defendants include keller williams, berkshire hathaway homes and services, american and others. they all say they're going to appeal that which calls for $1.8 billion in class action damages. it's drawn lots of attention for challenging some very widely

used real estate industry prac technologies. shares of real estate stocks all losing ground in a big way yesterday after that court decision. the whole idea that you're going to pay, you know, the commission on the buyer's side, commission on the seller's side, 3% each time. >> it's the business that -- i've sold something and bought something recently. it is kind of monday-boggling when you see the numbers because it's the only interest left. everyone else is 1%. everyone's gotten to the basis points. >> there's no negotiating. you can't say to the broker, will you do it for 1% and the other will do it for 3%. there's none of that. >> if you don't have your own broker, you still have to pay 6%. >> and the reason for that is because of these agreements that they all have these interlocking agreements, and this is in one stop. >> and it locks up the mls too.

>> think about what's going to happen around the world. you can only hope. >> they are classic when they come in here. housing prices are always going up when they come in here. reminds me of the movie, "wall street." you've got to move on this quickly. a month later, oh, my god, there's no one. it's always the way they -- >> the question is what is the right rate? what's the fair rate? >> these are big numbers, and it eat not on the down payment or anything. it's on what you're paying for the property. >> but there are going to be instances where it's done in ten seconds where nobody has to do any work and there are going to be instances where somebody has helped you for five years to try to get the property. the person who's worked for you for five years for free, maybe

they should get 3%. that's the big issue. >> it should be a market-based situation, right? this is the only place where market sources don't come to bear. >> yeah. if you're going to go after amazon, you know, for no transparency, i mean, this is -- 6%. nothing in the world is 6%. >> on what is most family's biggest holding unvefrinvestmen they have. >> that's why i was also saying there are agents who work for you. there are great rae agents who work oftentimes for years for free thinking they're going to get the business. so there's an argument to be made and their case they should get paid. >> there's an argument if they sell your house quickly, you could say, i'll pay you x percent if you can sell this, expercent if you can get a

higher price. >> and if you're a real estate agent is cincinnati or in management or palm beach. do the math. they're selling multimillion-dollar places in palm beam. what is that? >> cost of living is different too. >> i understand that. but if you get a couple of deals in a yearing you're done. do you know how many houses you have to sell in indiana to come anywhere close to that? nothing wrong with indiana. you can get a mansion for about 600 grand. >> that's the point. >> what's the point. >> meaning if you can get a max for $600,000, the rae agent who doesn't sell the $10 million homes in palm beach should link in a mansion in indiana.

>> i don't think it should be standardized. my point is it should be open. if you're a great real estate agent -- >> we don't very anyone else watching. closing argument set to continue today after the defense rested their case following two days of ro cross-examination. bankman-fried, it says, stumbled through statements and more. this is tied to the collapse of crypto exchange collapse and sister hedge fund >> i went down yesterday to watch his final testimony on cross and then the recross. >> you could get in the room? >> no. they have multiple rooms so you're watching on this video. you're in the courtroom but you're not in the courtroom with him. first of all, it's a scene down

mr., but beyond that, the idea that -- i mean at least the room i was in, there was nobody he'd won over in the room. >> did you see the jury? did you see the cameras on them? >> you could not see the jury. you could see him very, very well. in some instances depending on where you were sitting, you could not see him. >> you're sitting in a room with a lot of journalists? >> a lot of journalists who were very, very skeptical who were nickering a jd laughing. it will be interesting to see what the jury says. >> i don't like courtrooms. i just don't. i don't like when i'm there because it's usually for a ticket. >> bad memories. >> you go in at 9:00 and you watch the wheels of justice turn. >> by the way, you want to talk about the wheels of justice turning in the most past, possibly efficient way, that they would argue too efficient

way? some think it happens too quickly? this case has been less -- it's less than a year this whole thing happened. it's going to be likely over the end of today and it will go to a jury. think how quickly. >> that is bad. i remember saying why sit taking so long? sam bankman-fried didn't do himself any fabers because he was so public, spoke so much, it made people say, okay, that's your case, figure it out. i feel like a lot of people knew more details about this than most situations that you have at that point. >> seems like there's a lot of stuff that goes on. it's been my experience, you know, when i'm trying to get this thick out of the way and it takes too long with traffic. >> you didn't feel likely did

himself any favors. >> there were some good answers. it fends what your disposition is of him to begin with. if you come to skepticism, he doesn't do himself any favors. if you're in the middle, there are a couple moments where you say, okay. i would be very surprised if a jury -- first of all, there's multiple counts, so, you know, it's -- the idea that all -- that there's a juror that's going to say no to everything, i think that's hard. >> how much do meth oh thee he oh ma make? don't they get a third? >> i think you're right. >> but there's -- the thing about dpz. >> it's negotiated. >> it's negotiated. ahead of the fed's interest rate policy statement this afternoon the treasury's quart i

le funding announcement, this morning is expected to draw more attention. we've got interest rates and deficits rising. investors are going to be closely watching the size of the various planned treasury action and the allegation between the shorter term and longer term borrowing. it will auction $776 billion worth of debt during the final quarter of 2023. we've got stan druckenmiller who's going to be joining us. he's got interesting points that would have made a lot of sense. we'll talk to him about that coming up in the 7:00 a.m. hour. right now with want to get to our senior economic reporter steve lassman. he's got the survey and grades for the fed chair as well. good morning. >> good morning, becky. improving just a bit when we asked the question about a year

ago. still continuing to give jay powell a low-grade. 42% give him a nay, 52% c or d to a c plus from the straight c he got last time. looking at where he's good and where he's a little less than good. satisfactory grades on leadership, transparency, communication, and market knowledge. there's that economic tease and the economic forecast where he really seems to fat short. that's been true of not only powell. he said i would give him an f,

an a thereafter. he's presided over much higher inflation though he did steer them through the policy and the pandemic. more like a c plus or c for jay powell. the outcome of powell's tenure not really known. i think he best gets an inco incomplete. joe, i realize we've been gragd fed chair membership for 13 years now. >> no one else has been doing it. it's been let the parties roll. it's going to be harder. >> take a look at this chart here. on the very left there, those are the rate cuts under the

great financial bernanke. and then that's where they start to bring back quarter points. 2020, that spikes down. that's the pandemic. like joe said, to the right, the big mountain there, the outbeaten cliff if you want to call it, that's an attempt to get inflation under control. up in of them had the inflation problem. you can say do you blame powell for that or not, that's really the question. >> you can see on your ekg you need to go to the mrmg room immediately. i know, i've had one recently. >> it's supposed to look a certain way. >> it's not one of those. >> what grade do you give him, joe? >> you know what? richard fisher was on yesterday. he said identical. i don't know if you'd say an if. but he had a lot of criticism for him for staying too long with the transitory. but since then he gave him at least an a or a-plus.

i don't think i'd change those grades. maybe adjust them a little bit >> i would give them all a's. >> i don't think it's fair to give him a lower grade than bernanke. >> if it's an inflation story or some combination of inflation or unemployment, that's the reason why, i think. for whatever reason, because of their policy or because they got lucky, they presided over lower inflation than powell did. >> to take the punch bowl away -- i bet everyone would have given volcker an f. we've got to go. coming up, we'll high hite the

fed fed, the treasury didn't, and the nation's ballooning debt. billionaire investor -- legendary hedge fund titan stan druckenmiller. i don't like defining people by their bank accounts. stanley joins us at 7:00 a.m. eastern. >> announcer: this cnbc program is sponsored by baird. visit bairdifference.com.

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joining us now, kari firestone. still down since august when people got all the -- the perma bears got a little bullish at the top, which is the way it happens. do you have a good feel for what the rest of the year looks like and then we'll talk about 2024? >> hi, joe. well, of course, that's the tough question. what about the rest of the year? what we know is that the market's gone a little oversold. got too expensive at the end of july, considering all the risks that were obvious. and pricing was way up and people were just so enthusiastic about the market just in time for earnings to start coming in

and people thinking, oh, my gosh, you're going to see softness and recession. they sold off 11% from the top. now we're up 2% from the bottom. what does that mean? i don't think you can read the tea leaves very well. you've got good factors on the one hand. interest rates look like they're going to be stable for a while. we know that we're not in a recession. 4.9% gdp growth. that's phenomenal. even if it's 2% in the current quarter, that's not a recession. we're out of that hot water right this minute, but we've got another thing to worry about. we might have a government shutdown. we've got this balancing act. let's stay out of the recession. if we get too expensive on a multiple basis or investors start to worry about just valuations, i think they might

sell off again. we'd feel comfortable if we hold steady. that would be great. earnings weren't bad either. >> if you look at things happen empty or half full, i don't know if i was on a debate team i would take the half empty scenario right now. that would be wrong. >> most people take half empty. >> even more right now. i mean we're -- i mean, valuations are at a point where you would think things are pretty good. instead we're either going to get more rate hikes if the economy stays strong or we're going to go into a slowdown, which could be much harder than the soft landing we're predicting. right now people are assuming 2024 earnings are going to go up. that might not happen if we have a slowdown. you mentioned geopolitically

this is the toughest period people have seen since probably the late '750s considering the black swan, something we actually talk about. so what was your -- your positives were that we're not in a recession right now and inflation is coming down a little bit. but valuations are high? >> i think inflation has come down a lot. that's quite a lot. interest rates have been the factor that's been most important and of concern. but if we're at this level, at 5%, remember the ten-year has. finished it at this, if you look at the fact that the housing market isn't really moving, housing markets are high, it's not really moving. the housing market is being moved by interest rates. if you look at orders for

capital equipment companies and caterpillar yesterday, it's not just construction affecting them. it's certainly interest rates. so we are seeing an effect of higher rates and the fed is very aware of that. that's why they're not raising again. if we stay at this level, inflation is below 5%. you have a real rate. and then what you're really saying if you don't invest in the market is that 5% is a much better return than what the market can do for you. it's consuming with the damage that's been done, and most of the market -- remember, the s&p 500 on an unweighted basis is, yes, flatter down. so most stocks haven't moved. if they're going up 8%, that's return that i think justifies investments in the market. >> we evendidn't talk about our

fiscal situation either. i guess we'll dewith that some day, but we're at 125% of debt to gdp right now. we haven't been that high since world war ii. there's no guarantee that the dollar stays in reserve currency. that's what they're thinking -- i don't know. i'm in a sour mood. maybe because i was preparing for druckenmiller later. >> you're usually more positive, joe. >> i'm not feeling it today. i'm not feeling it. i'm prepared -- >> i am sorry. >> i've got my mind on stan druckenmiller. >> i think you're right. he's very persuasive. he's incredibly intelligent. he's been so smart along the

way. >> and he's been managing risks for 30-plus years. he says, right now i look around and don't see any fat pitches -- -- you'd like to take a swing at. >> right. >> sharon epperson will bring us details next. a programming note for you. target ceo brian cornell will be joining us tomorrow morning in an exclusive discussion. this is his first interview since march of earlier this year. the stocks come under huge, huge pressure since that time. the company's taken a beating. you can also register for cnbc's virtual evolve global summit for more information on the changes impacting its business. there's still time. scan the qr code or go to c in

bcinvests/evolve. >> announcer: squawk picks is sponsored by wisdomtree, the modern alpha pioneer. experience the art of high pressure brewed coffee and espresso with the l'or barista system. enjoy richer, bolder flavors complete with velvet smooth crema.

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the federal reserve is expected to keep interest rates steady when it makes its announcement this afternoon, but rates inflation indexes, i bonds will reset slightly higher today. our cnbc expert sharon epperson joins us with more. what's going on? >> we set them every month. starting today, the rate for series f bonds is set at 5.27% next month through may of 2024. it's still a far cry from 9.62%. that's the record-high rate that made i-bonds so positive they

crashed the website trying to lock in on that rate. i-bonds have a composite that makes up two parts. it's now at a 16-year high, i-bonds that are purchased between now and april 4th will earn that rate, which may make sense for some long-term favors. you can't cash them in for 12 months and if you cash in the bond in less than five years, you'll lose the last three months of interest. also you can only buy up to 10,000 i bonds every year if you do it online and up to $5,000 a year if you use your federal knicks tax return to buy paper i bonds. even though inflation is coming down, join me, jim cramer, and top financial experts for ccnbc.

you can scan the qr code on your screen or go to cnbcevents.com/your-money. >> the first thing is to go on the treasury sooitd and see what you may want to do that. you could easily be getting over 5% right now. some may want to put it in a six-month or 1-year treasury. it depends how liquid you need the money, and how much work you want to try to do to make sure your money is safe no matter where you're putting it. coming up, with the use of

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cbs just reporting results. we want to get right over to bertha coombs. she's got those numbers. bertha, what are you seeing? >> cvs health beating on both of the top and bottom line beating the share, 8 cents better than cons consensus. $89.76 billion in revenue also the beat. among the highlights we saw sales in health care benefits. they were up 16.9% year over year. commercial membership growth grew. but medical benefit costs were a full percentage point higher than what the street was looking for at 85.7% of premium. cvs said it was fueled be i higher outpatient care and

medicare advantage. we've been seeing that. they noted things like dental and behavior health care. the health care services unit, this is the part that including the caremark pharmacy benefits. that was $46.9 billion in sales, driven by specialty pharmacy and the higher priced drug prices. inflation up tailwinds there. meantime in the pharmacy and consumer segment, that's the retail business, they saw over $28 billion in sales. that was up 6%. about in line despite lower covid vaccine and test sales. overall same store sales were up 8.8%, it was all from and why the pharmacy counter. there was no demand for covid tests and comps were down 2.2%. andrew? >> thanks so much for that

report. meantime we're going to talk about the first major global summit on ai. it's being held right now in the united kin doing. and how this can reset capital. joining us now is the counsel for inclusive capital and founder and ceo. good morning to you. tell us about this op-ed and how ai can make it more inclusive. >> thank you for having me. greetings from london. first of all, it's a great achievement from the grittish government to convene. it's the biggest technologies in the world. this is a great achievement. this is a first. i'm sure it will not be the

last. i'm sure the united kingdom will work on it. i say that the purpose is way too small. because ai is going to change everything for good and for ill, i say why aren't we asking how can ai address the structural deficiencies in our economic p system. how can ai create a society where it's not us and them but it's where we all equally believe that the system works for us. that's all that anyone wants. and government regulates here, technology innovates there. but i'm calling for a joint declaration of the private sector and the public sector to

the common good. it would be the first time in history. this has never happened. when you think about the power of bought, what's going to happen is government is going to produce a communicate and the technology will have all manifesto. where is the public on this? >> lynn, lynn, here's -- the thing i'm trying to understand, though, how this would work is one of the great worries about ai technology is there's obviously more going on. it might leave more people behind. so the question is how can the technology itself or the companies that are operateling these business lgs make make it

more. what'slet matly mentioned is its will mamg people more productive, but it also means less jobs. >> that's why i'm saying we have to them about productivity, technology, these very important issues. what makes us difference? king charlgs made a speech two weeks ago. in it he asked spots to each other and to our kmuptds. then le be deal. how do wu may our society more significant. but take care of people who are not part of it do. we create more jobs for carers.

do we change our reductions. there are so many changes. that's why i'm saying it's a root and branch reform of the economy and there's no better place to start than with ai since ai is going to be -- >> if i was going to put ai as something to highlight with 50% or 60% of college kids thinking that maybe socialism is a more effective economic model than capitalism, i would point it -- i would point that lens that you want to focus on the short comings of capitalism on the de facto short comings of socialism and the shift that we're seeing. we don't think, i don't think, more of, we don't this, we don't

d that. why don't you teach kilometer students the is sautism and the drift you even guying might cause people to feel enough us versus them. the best way to prosperity is free market capitalism. why don't you get to the 60% that think it's a viable alternative and crush that notion? >> joe, you and i are on the same exact page. >> we are. you are. >> we are on the same page. >> capitalism is fine, lady lynn. no one's trying to get in there. no one's trying to get to places where they're socialist. that's why thigh want to come here. >> that's exactly right. this isn't the edges. i'm talking about root and branch reform. that's 60% of young people.

you cannot take that for granded. that is sma. >> we need new professors. >> that's not worked out for a lot of people. >> lady len, the ore thepg us was going to ask about, you've been talking for many years about the yf of exclusive capitalism. one of the things you and i have talked about on tv and off air is the backlash of companies doing anything more franksly than profits. we've seen what's happened several years around different companies that have spoken out on different issues or tried to readjust their business models. and what's happied. the question is how do you even begin to do this?

>> well, i think begin is the point. that's why i'm saying we have to have a declaration where businesses have to make a joint statement to the public about why capitalism understood to be for all the people is the best system in the world. that's not free market alone. that's free market as dix tated as adam smith said morality and ethics. that's all i'm asking for. i'm not a proponent or socialism. i'm trying to make it truly the greatest system in the world. >> we appreciate you being with us and starting this dialogue and debate, and we look forward to talking wh ityou again very, very soon. >> thank you. >> thank you.

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elon musk says that tesla is planning to make 200,000 units of the cyber truck a year once production starts to ramp up with the potential for 250 thousand a year by the year 2025. speaking on "the joe rogan experience" podcast, musk admitting that manufacturing that vehicle had been much hajjer than the original design. shares of tell la are down to just 11%. when we come back, shares of sarepta therapeutic tumbled after muscular dystrophy treatment lessened. we'll ask dr. scott got line about that and more when "squawk box" returns. >> announcer: executive edge is sponsored by at&t business. next-level moments need the

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welcome back, everybody. sarepta therapeutics revealed new data for its duchenne muscular dystrophy gene therapy it showed improved mortgage function at 52 weeks. that stock plummeted yesterday as we learned the trial results fell short of expectations, raising doubts of approval for expansion of that gene therapy by the fda. joining us right now is dr. scott gottlieb, former fda commissioner and cnbc contributor who is also on the boards of alumina and pfizer. help us understand this a little bit. that stock was down 44, 45, 46% as we were watching it yesterday. the gene therapy has already been approved, but did not meet the end points. what did you think when you heard that news? >> the product received

accelerated approval in june for 4 and 5-year-olds based on data showing it could improve the production of the missing protein in duchenne muscular disd dyst dystrophy. this was done to confirm the clinical benefits, done to demonstrate the drug at the gene therapy actually improves function in those children. they missed the primary end point on a scale of 17-point scale of things like to step on and off a box or rise from a chair. it reached significance on secondary end points like the ability to walk ten meters or the ability to rise off the floor. so the data was mixed. there was some oddities about the trial. the placebo arm showed significant improvement as well as the active arm, the active arm showed more improvement than the placebo arm, but you saw improvement in the children who weren't based with the gene therapy, which normally you wouldn't expect to see. i think part of the challenge here is that the test that is used to measure function and you

are measuring function 4 and 5 and 6-year-olds, a lot of these are very young children who are hard to enroll in managing clinical trials. but the test used to measure their function which measures function across 17 different parameters is very insensitive. it doesn't really pick up small improvements. and if you're seeing small improvements in boys over the course of a year, this trial was run out to a year, you might not be able to pick that up from a test like this. you might need to look over a longer period of time. so just in summation i think there is speculation that the fda may withdraw the accelerated approval, i doubt the agency would do that. the second question is whether or not the indication would have been expanded beyond just 4 and 5-year-olds because the original approval was just for children ages 4 and 5. i think that's an open question now and that might be what investors are reacting to. >> part of the issue with duchenne muscular dystrophy is boys with this disease die. this is a death sentence. you're not going to live past 33

i think is on the outside on this. the fda approved additional things. people are looking at this for gene therapy overall. and wondering what this means. not just the effectiveness, but also on safety levels. what would you say the state of gene therapy is right now, just from where we were 20 years ago, when things got shut down because there were deaths that came with some of the gene therapies. what happens now? >> look, extremely promising. we have seen gene therapies that have made it to the market that are extremely successful. just yesterday, vortex had a gene therapy for sickle cell disease, others behind it that could be substantial improvements in the treatment of that disease. there are other companies with gene therapies in development for duchenne muscular dystrophy including pfizer, the company i'm on the board of. and second and third generation products are in earlier stages of development right now look like they could be improvements over what is on the market now for this disease and many others. look, there is some evidence here with this product that it

is providing benefit to these boys. i think the efficacy shown on those secondary end points like the ability to walk ten meters or rise from the floor look convincing. i think that what we're doing in these trials is not measuring good end points, not using sensitive tools to pick up small improvements over short periods of time. in an age where we have things like wearable devices that can measure physical function on a daily basis and perhaps develop a much more precise measure of how people are functioning, i think we ought to be looking at different kinds of clinical trial constructs. in terms of gene therapy overall, we made substantial progress in a short period of time. this will transform the practice of medicine. >> a y link marker or something? is it a y chromosome? >> specific to boys. so common in boys, is that a y link genetic mutation? >> chromosome? >> yes, it is inherited just in

boys. and, you know, the disease, the pathology of the disease is you're missing a protein that stabilizes the function of the muscle, so that you get repeated injuries to muscle through just normal activity and that causes the degradation and function in boys. >> let me ask you about pfizer quickly. $35 stock. it has been in a slow sickening decline for the past 12 months. i'm not asking you to comment on stock movement, but the notion that we're going to have a covid slash, what would you call it, annuity every year in paxlovid or whatever it is, we got to rethink that. the stock market doesn't tell us everything. but it certainly casts doubt that we're going to need a booster from pfizer and then if you get the disease, a therapeutic. that doesn't look like it is happening at this point, scott. >> look, i think the ceo is out talking about this, just yesterday, with jim cramer.

the company put out earnings, it did reset expectations around what the go forward would be on the covid sales. i'm still of the opinion that this is a flu-like illness and i think you could have an expectation it is going to be a flu-like market. we'll see once we get to a steady state with this virus how it shakes out. i think that there is a risk that we're going to have a bimodal covid season this year. we had a strain earlier in the year, the vaccine wasn't available in time for that strain. we may see a second wave of infection like we see in past years and 234 many cases we see a bimodal flu season as well. we'll see what the steady state looks like. i think this is going to be a flu-like illness that we'll want to protect ourselves from in a similar fashion. how that translates into expectations -- >> could be people with co-mo co-morbidity, may not hit the entire population. >> older individuals, right, we vaccinate young children for flu, we probably won't be vaccinating young children for covid. >> dr. gottlieb, thank you. he also said yesterday they're moving away from the covid phase

and to the cancer phase. and that's their -- >> the bond with upside phase for investors, 5.4% yield. coming up, hedge fund titan stanley druckenmiller will join us for an exclusive interview next. "squawk box" coming right back. deliver solutions that meet complex needs. do right by customers, clients, and policyholders, always. repeat daily for over one hundred and seventy years. massmutual. partnering with financial professionals, benefits brokers, and institutions. ♪

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futures falling ahead of today's fed rate decision. a look at what is moving in the premarket is straight ahead. plus, a closer look at the chip sector after amd reported better than expected results, but gives a soft fourth quarter outlook. 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. look at u.s. equity futures at this hour. a lot of red to show you this morning. 104 points on the dow, down. nasdaq opens up 50 points. s&p 500 expected to open off about 15 points. we're about to talk about treasuries with a very big guest in just a moment. the ten-year sitting at 4.91%. and the two-year at 4.071%.

>> in studio. hedge fund titan stan druckenmiller had harsh words for treasury secretary janet yellen, not issuing more long dated treasuries when interest rates were low could be the biggest blunder in the history of the treasury. even said all the way back to alexander hamilton. who founded the new york post? i can't get my head around that. here to talk more about all this, stanley druckenmiller, chairman and ceo of duquesne family office. we just said you're like in bonds and welcome, thank you for joining us in studio. i like the way you think about bonds. if we were inverted, and we were at 100 basis points and the normal thing is the opposite way, 100 basis points, that's what you're going at, isn't it? >> i'm kind of disappointed, maybe it is my fault, that that statement has sort of taken over the more important arrative. >> we're going to get to that.

but we introed you with that. >> it was just a small piece of a litany of stuff that is going on for 13 years. but, i would rather -- i would rather get it in the sequence. >> okay. we'll do it in sequence. we eleintroed that you like bon. >> i know the media loves one sentence stuff. and maybe it was the most radioactive thing i said that day, but it is definitely was just one piece of a big puzzle. >> most radioactive thing you said in recent history is a ten-year flat stock market, which you said at delivering alpha and we'll get to that too. it is starting to happen. we're watching it. let's talk about janet yellen and that's what we'll do. everyone and their brother termed out, except for the treasury. >> i promise -- i promise i'll talk about it in a few minutes if that's okay. >> okay. >> look, i'd like to go back to actually 2011. >> okay.

your college tour. >> two things were going on at that time, a, i was going on a college tour, 15 universities because i was terrified about the federal debt situation, particularly from 2025 to 2035. what i was looking at is entitlements had grown from 30% to over 60% of the budget, but more importantly baby boomers like me were going to be turning 65 in the near future and we were going to have a gray boom starting in 2020, so the payments to that cohort were going to go up, while workers shrunk. and that gave sort of a dire forecast, looking forward to the federal budget. something else was going on at the same time. chairman bernanke at the federal reserve embarked upon qe2. if you know my past, i very much

supportive -- in favor of qe1. it was a brilliant policy in an emergency state. qe2 was when they put qe in the tool cut, tool kit of monetary policy. i think it has been a disaster. and it led to fiscal recklessness, but if you remember, when bernanke introduced it, he assured us when the fed balance sheet was $800 billion that this was a temporary measure, we weren't going to monetize the debt, there is no way this would be increased in the balance sheet over the long-term. here we are, 13 years later, the balance sheet just shrunk from $9 trillion to $8 trillion. all right. so, that, to me, that monetary policy, which was then followed up by janet yellen as fed chair led to all kinds of fiscal recklessness because it checked the markets, it disallowed the

markets check on fiscal behavior because when rates are zero, you think you can spend forever and there was this mmt rates, the whole thing. the mnuchin/trump administration did something never been done before in history, they run a full employment trillion dollar deficit 5% of gdp. i love the way trump uses the term rino. trump is the true rino. who would run a trillion dollar deficit in full employment? the next thing that happened is covid. when covid happens, trump, the trump administration and the fed go into high gear because we have another emergency like '08, '09, very different, but it is definitely an emergency. and to be frank with you, none of us knew, particularly me,

whether we were going to black hole, what was going to happen. so, the monetary and the fiscal response at that moment, like qe1, to me, was totally appropriate. then the problem started, it became apparent very soon that we weren't going into a black hole. worldwide supply chains were challenged, the economy, we had a vaccine confirmation by october of that year, the economy, to me, was very clearly booming and this was going to be more like we had a heart attack than we had cancer, so much so if you remember i came on your show, right after i wrote an editorial in the journal in april of '21 to say, look, this monetary policy has got to change. this is crazy having zero rates and buying bonds with what is going on. the next thing that happened, trump loses the election, and

biden comes in, and now we have bidenomics. okay. so you take the trump/mnuchin running full employment deficits, and biden comes in and we're still doing qe and rates are still zero and the economy is booming, so he doubles down and the spending goes absolutely nuts. >> $2 trillion deficit or more. >> more. >> yes. but, again, with unemployment now, you know, under 4%. under the biden/yellen administration we moved on now from trump/mnuchin to biden/yellen, they grow the federal deficit, the federal debt $4.7 trillion, all right, while nominal gdp over that period, three years, grows 25%. it is, like, crazy. the economy is booming.

we never had deficits of any kind of meaningful magnitude before trump, and the spending is going on. so you increase the deficit, the debt $4.7 trillion, by the way the fed is monetizing in a way, and it is happening with gdp growing -- i'm sorry, nominal gdp growing at 25%. all right. now we're going to get to what you're salivating over, joe. >> i'm going to let you do -- you go in the sequence you want. i just -- they introed it like that. go ahead. >> so, at this point in 2021, in the second half, all right, interest rates on the ten-year are, like, 1.1%. on the 30-year, despite having been corrected in a tweet, and i was right to be corrected, it was not 70 basis points under

the -- under the biden administration, it was, let's use 1, 1.1%, that's a more reasonable estimate. by the way, the tweet that corrected me on the 30-year is incorrect, it was trading at 166 as a low that period and it was under 1.8% plenty of the time. the tweet that said that treasury has never managed the maturity of the debt is also historically incorrect, as most of you probably know. the treasury department suspended 30-year options in 2001 because term premium was high, yield curve was steep, and they thought it was a useless use of money. so, they were reinstated five years later. one more thing on this issue, in terms of the maturity of the

debt, treasury will have you believe and the tweet used this, that the maturity of the debt is 72 months. that conveniently leaves out $8 trillion that is funded overnight, in the repo market. that's the fed balance sheet. >> how much overnight. >> $8 trillion that's the fed balance sheet. we at duquesne use the consolidated government debt because we're looking at what the taxpayer is on the hook for. in fact, when the fed was making profits, they remitted the money to treasury. so why you would leave out in terms of government debt $8 trillion, under that, the maturity of the debt, which was 63 months pre-covid is now 57 months. so the statement by the treasury department and others that the maturity of the debt has

increased since pre-covid is absolutely incorrect. all right. you guys -- >> that's like we -- >> the question i have, putting aside the yellen -- >> i want to get to his answer, though. >> my one question is do you believe that there would be a market for selling much longer term duration bonds? either many more 30s or going up to 50s or 100s. the reason i ask, that was the implication i think of what you were saying, i made a bunch of calls yesterday and i know i started reading all these studies and other things that folks inside the treasury department including under mnuchin looked at doing that 50-year. i found an interview that mnuchin did with me at a deal book thing years ago, he wanted to do it, but realized or thought that he couldn't do it because he didn't think there was enough of a market and that it would actually -- it would sort of pervert the rest of the market otherwise.

>> currently no. i think that market would be very challenged in a current environment. don't forget pre-covid we were spending 20%, federal government was 20% of gdp in spending. it is now 25% of gdp. as outlined "the wall street journal" editorial this morning, my father told me if you're in the hole, stop digging, stan. all right. i was actually happy to see when the announcement, the support for ukraine and israel, $106 billion, and i was waiting to hear what the offset was going to be. was it going to be entitlements? where were the cuts going to be? the next thing i knew, two days later, there was not only no offset, there was $56 trillion in emergency spending. i have kids, i have grandkids. child care is not emergency spending. it is a priority that maybe should be on the table or not.

but we are spending like drunken sailors, okay, so -- >> so do you agree with the house republican plan, which puts forth spending for israel, but cuts it in the i.r.a. through funding to the irs? is that an appropriate offset in your mind? >> becky, i want to go after entitlements. it is where the money is. and -- >> you're not going to solve -- >> at some point it is going to happen. i'm going to give you some numbers to tell you why it is going to happen no matter what. anyway, getting back to the question, and then i really want to leave it because that's something that is in the past, we can't fix it, we missed a once in a century opportunity, and let's just not discuss it. >> everybody you know extended mortgages -- >> no, so here's the thing. yesterday steve liesman said i wanted treasuries to trade like a hedge fund. i do not want treasuries to be

trading and messing around maturity of debt. all i'm saying is in 2021, janet yellen, okay, and mnuchin before her, we spent $5 trillion. the idiots were lined up out there, wild to buy treasury debt, at 1.80, 2%, whatever you want to call it, let's not play gotcha on this or 1.1%, with nominal gdp growing at 10%. 10%. okay. so, look, it is not like it took stan drunkenmiller to figure out you're at, like, a 700-year low in interest rates, okay. nominal gdp is growing 10%. the risk/reward of issuing debt at 1.1% in the ten-year is off the charts. how off the charts was that risk/reward?

80% of american households, 80% refinanced their mortgage. they lengthened the maturity, the anathemv average to eight y. as a consequence, it is going to take five years for that maturity to go up to get back to 4.5%. so it is just huge in terms of what they saved. so i told my office just for fun, let's run a hypothetical. let's give mnuchin a pass because like bernanke he canceled all notes issues in late 2020. all right. obviously by hindsight if you're a hedge fund, but i got to be honest, none of us knew what was going to happen in 2020. so let's give him a pass for not issuing any notes and just issuing bills. and for the same reason, let's give janet yellen a pass for the

first half of 2021. let's start the meter in july of '21 and then let's do the following. let's instead of going ahead of with what we did, let's do the opposite of what mnuchin did and instead of issuing notes, let's issue -- i'm sorry, he suspended the issue of notes and only issued bills. let's suspend the issue of bills and only do notes for a year. all right? we took every auction where the ten-year was, and this is squishy and i'll get why it is squishy. how much would the government have saved per year if they had done that relative to if they had to pay 5%, had to pay the rates we paid then this and 5% now until now the end of ten years? andrew, want to guess? >> i don't want to --

>> $120 billion a year. it is squishy because if we had sold ten years, okay, maybe they go to -- >> higher, right. >> you get the point. it was a missed opportunity. that's all i was saying. i don't want to talk about it anymore. >> okay. >> i want to move forward. >> let's talk about something really positive and that is where we're going to be in terms of debt to equity by -- >> so, here's the problem, so i was looking at entitlements back in 2011. now we have a monster bigger than entitlements. it is called interest expense. and that interest expense is just incredible, it happens. if you go and you assume interest rates are going to be 5% going forward, which one could argue is low, one could argue it is high, but that's where they are, so let's just say where we are. right now, revenues to

discretionary expenditures, that's all -- that's everything but entitlements are 41%. okay. >> yep. >> in 2033 at -- interest rate expense is -- in 2033, that number goes to 82% of all discretionary expenditures. in 2043, it goes to 144% of all discretionary expenditures. anything but entitlements is off the table. everything. defense, child care, whatever you want to talk about. even economics statistics, the whole thing. so, the constant assertions by both parties and i kind of blame trump and hillary for taking it off the table that we're not going to cut entitlements, is

just -- it is a lie. it is not going to happen. because interest expense alone -- >> is going to do it for you. >> -- is going to wipe out everything but entitlements, so entitlements are going to get cut. that's -- >> for people at home, you can -- for people who are not as experienced in some of these things, it is like looking at credit card debt, which is now jumped -- the interest expense on that about 20%. try to continue to be able to live your life with 20% interest if you're not stopping the credit card spending. >> yeah. so far, becky, because households termed out their mortgage, you pointed out, it is the biggest asset of households this morning, it really mitigated the effects, but the stuff you're talking about with the higher rates is going to start to bite. but it is interesting. because it is not going to bite nearly as hard on the private sector as the public sector

because corporations refinance. so here's another unfun fact. by 2030, interest expense for the public is going to go up to 6% of disposable income. okay. that's not too bad, becky. it is only up from, like, four now. the government, which is a little less than 10 is going to go up to 30%. because they didn't refinance and their debt is so much bigger. that's -- it is very interesting. 30%, when i started duquesne, rates were 12% and that number was 15%. so, we're going to be at 30% with rates materially lower than 12% obviously. >> by when? >> 2030. >> 2030. it just -- the chart is

frightening, it just goes like this. all this stuff is ahead of us because we didn't extend maturity of our debt. all this debt is going to roll over infour or five years and you'll replace the 1% stuff with, like, 5%. >> one of the points that you made to me is that american exceptionalism has a lot to do with being a reserve currency, obviously. and i don't know whether you think that's going to continue, whether you think that's at risk. i don't know how long it would take for the -- but also, we have led in every technological, you know, innovation. this country has. if this country is only -- if all our capital is being used to serve as debt, we're not going to lead at anything in the future. >> well, i talked about this in a speech at usc last may, which has been memorialized in international economy, a piece i wrote called "the coming fiscal horror show."

the first thing i led with, unfortunately, it was a little too prescient, was if you're spending all the money on this stuff, it squeezes out the ability to do things defense spending to take on your adversaries, it squeezes out money for people who want to do climate change. it squeezes out money for people who want to do disadvantage. and then exactly, joe, i pointed out that we led the world in pc revolution. we led the world in the internet. we led the world in companies that distributed the internet through these great products like uber, other things, we led the world in the cloud. we're leading the world in a.i. if you look at japan, i think we all have forgotten unless you read chip recently, they were a technological innovator like you would not believe through 1990.

nvidia, nobody ever heard of, i don't think it had been started yet, but america did not lead the world in semiconductors in 1990. once japan went down this -- went down this route that they have gone, which basically the government spending takes over everything, they just have been kind of a zombie place. and that's my great fear is that if you contributed more and more money to the public sector, and especially to interest rates, you crowd out the great innovative machine in this country. look, i don't think it will -- i don't think it is going to stop. it is just -- it just worries me that we -- that we -- that we lose that over time if we become zombie nation in terms of what we're funding and what we're not funding. >> are you still in terms of secular view of the stock market, are we only in year two of what could be flattish returns? do you not want to talk about that? >> i'm happy to talk about it

because i think it is important. but this -- what we're talking about is one of the reasons i was so concerned. that and the fact that multiples were high. look, we're at 20 times duquesne's estimates for next year. in a pre-qe world, 15 was about normal. when i got in the business, it was 8. those were the days. it was, like, going into a candy box. i don't -- it seems that bonds are adjusting to a post-qe world. but for some reason, equities haven't. so, that's part of the problem. i think given everything i just talked about, and given the geopolitical situation, everything else, i don't think it is unreasonable to think that we're not going to continue to sell at 20 times earnings over a long period of time. and then, again, this crowding

out of the government sector into the stock market and innovation, look, i think they're going to be great companies and great stocks, like a lot to do, stock picker's market. a lot of people made money in the stock market in the '70s. it is just not going to be like surfing with a hurricane behind your back. you're going to have to really do work and figure out, you know, which equities are great, and which are not. not frankly unlike what is happening in the last year. stock market hasn't gone much of anywhere, but it is funny, the one thing i'm not very good at, but i got young partners who are very good at it on a relative basis to my other skill sets is picking stocks, and we have done fine in our shorts this year, we have done good on our longs. problem is i didn't believe it, so i didn't have the big allocation, look i should have, because i never imagined. in some ways being right on the

bond market, which i was, and being right on earnings, which i was, made me completely wrong on the stock market. and i was completely wrong because if you had told me, and it happened, that rates were going to be where they are now, january 1st, and earnings would be flat, you told me the s&p was up, what, 12% or 13%? that's just -- that's not part of my process. so, yeah, i -- joe, i -- i still have a long-term forecast. by the way, i have been wrong on a lot of things and a ten-year forecast, they are what they are. but that's our working assumption. it is also a working assumption that with all the innovation going on and all the disruption, it is going to be a stock picker's market and you'll be able to make money in stocks. >> is there any way around monetizing these debt levels? is there any way inflation is not here to stay? >> yeah.

yeah. we could have a -- >> long-term? >> look, i don't have to worry about the long-term in my day job. but i will say this, we could have an event, i don't know whether hopefully it is not a war of major powers that bring us together, and you get sacrificial behavior like we got after the depression in the world war ii, we could have a financial crisis due to everything i've been talking about. and finally my generation, i think paul jones made the point, we have given nothing, we have given nothing, and now we want to screw our grandchildren. finally, we get the memo. so, no, i'm not -- i'm not that pessimistic. i'll say the other thing i'm optimistic about -- jerome powell normalizing interest rates, we now have a hurdle rate for investment in this country.

so, i think the allocation of capital, ironically, if we don't go the zombie route and don't continue the -- ironically i think it could be a force for good. because instead of funding a bunch of nonsense and bubble stuff, the capital gets more properly allocated, so, look, i'm open minded to a really bad outcome, and i'm open minded to a decent outcome. i'm just -- i'm here today not to talk about janet yellen and i'm here today, guns and butter this morning, i could have written it. by the way, i didn't. we have got to stop, guys. we're drunk. we're digging this deep hole. what are we doing here? >> so what is more important, that we come up with aid for israel, ukraine, and the rest, or that -- if it is not offset, do you think we shouldn't spend it? if it is not offset properly?

>> we have to spend it, becky. if we don't spend it, if russia wins, okay, we're going to be spending so much more down the road. i hate the desantis argument, he's going on and on about defense and ukraine and most republicans are going on about or at least the maga people about wasting money in ukraine. are you crazy? do you know how much we're going to have to spend if putin wins in ukraine? it is madness. >> in terms of the approaching entitlements, how would -- if stan drunkenmiller were king for the day, how would you do it? >> that's about how long i would be king because it will take a one-term president to do what i'm talking about. this generation has got to take a cut. and everybody is, like, oh, my god, how can you do that? i said, well, right now currency is going to get 100 cents on the dollar. future seniors might get 5 or 10 cents on the dollar. it is not unreasonable for us to

go to 85 or 90 cents on the dollar? >> how would you do that? would you push out -- >> i would -- >> i mean, by the way, you and i agree -- >> i'm okay with it for the spending. no, i would -- i would cut -- i would cut, not just the first thing you should do, the first no brainer is freeze the colas. we had an elegant opportunity here with social security and the payment went up 9.8% in the big inflation year. i would -- i would do stuff that would get you thrown out of office. but i would do it. >> we will -- this happens, like, once every year too, when it has to happen. we'll look back on all these things in a year or two. can we do that? i'm booking you a year or two from now. if we're both still around. can you come back and we'll revisit? >> i can't make any promises on that.

>> all right. >> i hope i'm not here because i only seem to get here when something ignites me. last week it was the 55 billion in emergency spending on top and then secretary yellen saying the preposterous statement that interest rates were not up because of the debt, they were up because the economy is good. i must have gotten awfully lucky because i made a lot of money this year betting on bonds going down because of the debt and had nothing do with the economy. if anything i was wrong on the economy. >> right. still happens. well, if you'll come on whenever you're triggered, maybe i'll book you for next week because i'm sure there will be something. >> you just take care of that lovely dog. forget about me. >> i'm going to. i'm going to have to visit the loan officer to do that, that erioopatn. stan, thank you. >> thank you. pleasure to see you guys again, particularly in person. >> always. >> stan. >> enjoyed it. >> we'll be right back.

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who is the only two-time winner of the heisman trophy? the answer, archie griffin. griffin played for ohio state and went on to the nfl to play for the cincinnati bengals. welcome back to "squawk box." i'm dominic chu. let's kick off our morning m movers check with dupont, shares down roughly 2%, around 1500 shares of trading volume so far. the specialty materials company behind everything from building construction wrap to styrofoam insulation and kevlar body armor reported mixed results. revenues fell shy of expectations as sales at electronics and industrial segment fell by 13%. dupont cut its full year revenue forecast to in part the lower customer demand and the potential need for restructuring actions as a result down 2% for dupont. couple of analyst calls getting some attention, starting with upgrade in autos over at barclays. ford and gm upgraded to overweight from prior equal weight. gm up roughly 1.5%, similar for

ford as well in the premarket. they say that cheap valuations aren't usually a reason to buy its stock, but at current levels it is for both of these names, adding that structural concerns aren't likely to be resolved anytime soon, but even a little bit of positivity around a highly negative sentiment for autos could drive meaningful upside in that stock. let's cap things off with a check on dow component boeing, up north of 1%, around 20,000 shares of volume. the contractor getting put on the conviction buy list over at goldman sachs. they cited the pullback from the recent june highs as you see here. and the investors are more focused on near term disruptions rather than longer term fundamentals and better free cash flow trends. production challenges starting to get resolved, things are looking better for binoeg. those shares up .75%. stick around, we have more "squawk box" coming up after this commercial break on this wednesday morning. you'll want to stick around for that.

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welcome back to "squawk box." amd offering weaker than expected guidance. the company is forecasting more than $2 billion in sales for 2024, saying that supports a.i. chip design to compete with nvidia, but tightening u.s. regulations on a.i. chips sold to china could also be posing challenges. chris cosso is a managing director covering semiconductors and capital equipment at wolf research. he joins us with his analysis of

the amd situation. maybe we should go broader with the whole industry given there is real questions about what china is -- what the rules are going to be around china, chris. >> right. well, and maybe we'll start with amd and use that as an example of what is happening in the overall industry. and amd is a pretty good example of that because the correction in semiconductors started last fall. and some of those segments that corrected last fall, such as pc and data center servers are starting to get better now in the second half. amd talked about that. you also have some segments of the market and in amd's case, the xilinx business, very broad business that covers things like communications and industrial, that is starting to weaken. that's the reason why the numbers are coming down now. so, there is a bit of a mix. but the probably most important thing for the stock today has been that they quantified their opportunity for artificial intelligence next year and they talked about $2 billion number and that's from close to zero

earlier this year. a very fast ramp. and, of course, that's the secular thing that is growing as you go into -- into next year, which is driving the space now. >> so, as you look at the sector right now, if you could own one of these stocks, given where they are, given whatever you think value is, if there is value, given the multiples on these things, which one do you like? >> well, amd has been our top pick. and if you go back to last year, it was nvidia. and obviously that had a really good run. and, you know, we're a big believer in the a.i. trend going into next year. and for -- for amd, just being a smaller company and we don't expect them to have the same position as nvidia, but it is a big impact for them, and the stock hasn't moved as much, i will say that nvidia had to move back here, you know, partially due to what you spoke about in some of the fears about china. and, you know, we think it is an opportunity also for nvidia. we like that stock into the

long-term because right now the china restrictions for nvidia aren't going to be effective in the near term. there is plenty of customers. but longer term, we think a.i. is the biggest growth in semiconductors over a five-year period. and we just don't think it is anywhere near to be done. >> chris, final question, because we had it on the screen, you probably can't see the screen, intel. what is your take? is this a turn around story that would work? >> it is tough to say. and we have been negative on intel for a while. we remain so. and it is in the context of a cyclical recovery in semiconductors next year. the problem intel has is that they're spending a tremendous amount of money in the plan to turn around the company. so, where as in most of the semis going into next year we think we have got better margins, better cash flow and such, and intel just doesn't have that because of the investment. the question, which is yet unanswered, is do they catch up to the rest of the industry,

tsmc in particular in '25 with this aggressive process and can they monetize that? we think that question is still up for grabs. >> chris, thank you. appreciate it. >> thank you. we're going to turn our attention to sam bankman-fried who pleaded not guilty to criminal fraud charges, facing potential life in prison if convicted. closing arguments start today. and kate rooney who has been at forecast is at our table this morning. >> good morning. great to see you. sam bankman-fried's criminal trial is wrapping up almost exactly a year after the crypto company collapsed. the former ceo was the last witness to be called, closing arguments kick off this morning, putting the case on track to go to a jury as soon as tomorrow. when bankman-fried was on the stand yesterday, we heard a less hostile tone than the previous day. he said he learned about the $8 billion hold, his hedge fund, when it was borrowing from the crypto exchange last october. despite members of his c suite testifying it was much earlier.

he said he deeply regretted not taking a closer look before that. prosecutors questioned his, quote, cozy relationship with bahamas prime minister and an offer to pay off $11 billion in bahama's national debt, which he says he doesn't recall. his defense team tried to explain his fuzzy memory on the stand, for example, after he testified that he didn't remember certain media interviews, sbf explained he gave 50 interviews last year and said he just doesn't recall every one of those. they tried to explain $15 million spent on private jets, which according to court documents, was at some point used to deliver amazon packages. he said the was appropriate depending how much he was in washington, d.c. and the line of credit, that was for money, it was only a theoretical maximum. the fund drew on about $2 billion of that. >> so, i was trying to explain to becky and joe earlier, having been down there now, but not being able to look into the eyes

of the jury, but obviously being able to look into the the eyes of lots of journalists who are professional skeptics as a profession, do you have any sense that what the mood is actually among the jurors? >> so, our sketch artist has been really helpful. she is sitting behind sam bankman-fried. again, they have been sort of studious, they have been taking notes, it is hard to get a sens sleeping yesterday, closing his eyes, there is a sense this has been going on for five weeks, not getting a sense for how they -- but the overflow rooms tend to be more rambunctious and you can hear the oohs and ahs and yikes when he says something. there is a lot of skepticism. >> you might have your lawyer get rid of a couple. >> would you want 12 journalists on your -- >> i think that would be a very tough jury. >> that's what i mean.

>> that's the profession. >> i want nice, normal people. >> yeah. >> okay. here you are, a journalist. >> nice, normal people. >> good luck today. we'll see you, i'm sure, tomorrow. when we come back, columbia law professor tim woo is going to join us to talk about hiss latest piece in "the atlantic" about protecting kids online and why nothing ever happens to that effect. it is a really important piece. he served as the president's adviseon thnogr ecoly and competition policy. he knows why this stuff has gotten scuttled, why we won't do anything about it and he'll join us right after this break. we'll be right back. per with th: our award-wining trading platforms. unlock support from the schwab trade desk, our team of passionate traders who live and breathe trading. and sharpen your skills with an immersive online education crafted just for traders. all so you can trade brilliantly.

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our next guest's new piece problems why congress keeps failing to protect kids online. and we welcome tim lu. we've had this conversation again and again about how there are some things that just seem so obvious that nobody from either party should ever oppose this, it should be promoted, put forward, protecting kids online. seems pretty simple and straightforward. what is happening? >> an extraordinary level of failure in my view. 70% of americans want stronger protection for kids. congress cannot seem to manage to pass the bills. in ten years not a single vote in the house or senate. the reasons are almost impossible to explain to outsiders. last year people really wanted a

big privacy bill and they held children's bills hostage. but it is just fundamentally dysfunction, they don't seem able to do what the american people want. >> meaning they were holding the children's issue that everybody agrees on by tying it up to a privacy bill that would be for all americans, adults and beyond. not allowing the good things to get through because they have their own agendas that they tie to this. >> that's right. i agree that that would have been a great idea, but not going to happen. nobody would let it go. people were angry, stlrn paybacks. ultimately we did in fact get a children's protection bill into the final omnibus. last stage mitch mcconnell just axed it, no particular reason. presumably to avoid giving democrats the win. this is the political maneuvering that congress is doing that people don't want. >> i don't see how this is a democrat or republican issue. will this is about saving children from online

pornography. you said the saddest meetings with are with who? >> from parents who had died from suicide or very bad bullying. it was heartbreaking. and the parents come in and are like why can't you do something, anything. and i said we'll try. and then we failed again. >> and interesting is how interest groups get involved. you said it got to the point where they had two groups that came in, it would give parents more control over what their children do. and what happened? these two groups got in a fight over transgender issues. >> yeah, that's right. somehow it got linked into the culture of war. parents would have more oversight over their children, maybe there would be different types of content and the sites noob to need to be more careful.

they were limited to suicide,ed a addiction, eating disorder content. but everybody on the far left and further right saying these are civil rights issues and it will block vulnerable youth from getting content they want. and just small chance of that happening. but it turned into a culture war and people were not able to move it. >> this is such a shame because even when you talk to people in the industry, they think the government needs to do more. you quoted one person who spoke to you i guess on background or off the record who works for the industry who said that the u.s. government doesn't actually force us do anything. sure congress calls us into yell at us so often, but there is no followup. she said what you need to do is force us to spend money to protect children online and without pressure we won't. >> very clear if pressured the industry would do more to protect children and i believe lives would be saved. there is a spectacle, theater

where they are yelling at tech d executives, no foss. >> what do you think the cost would be? >> this is not dollars. this is about children's lives. >> i'm trying to understand why the companies have not stepped up on their own. and invariably i go straight to the money and i think somebody sitting around saying do this, it would cost us x dollars. not saying that it should be spent, it should be spent, but i'm trying to understand the economics of it so that we can decide that this is actually a valuable and worthy thing do. maybe the answer is irrespective of the cost. but what is it? >> i don't have a number. obviously it is more than zero. you have to hire a lot more people. not fun exciting work asto try make sure this happens. they do have a lot of people, but they don't have staff to call -- boring people to call who you need when you have a problem. >> and by the way if you do it

and your peers don't, your numbers go down in terms of potential revenue, growth outlook and wall street punishes you too. >> and some of the sites say they can't be tar getted markets. >> cigarette companies do that. anyway, we're out of time, but i really appreciate you coming in and i hope that we can follow up on this and maybe put pressure on congress to take action. when we meco back, the adp report. when you're wearing the world's coziest slippers, your comfort zone can be just about, anywhere.

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good morning. countdown is on to today's fed decision. the u.s. central bank expected to leave rates unchanged but will jay powell leave the door open to more interest rate hikes? and the latest wave of earning all coming in. we have new results. and early look at october jobs picture, adp private payrolls due out in 15 minutes. final hour of "squawk box" begins right now. all right. good morning. welcome back to "squawk box." we're live from the nasdaq market site. i'm joe kernen along with becky quick and andrew ross sorkin.

we cover a lot of different things, do we not? it is not just about money. i have a recipe for chicken enchiladas that we -- >> no, we don't. >> we don't do that. >> but that is huge. it does tie back to money. >> gene therapy. just -- i'm proud to be here. u.s. equity futures at this hour indicated lower after, i don't know, we saw some signs of life the last couple sessions. but we remain almost in correction territory for the s&p. so we'll get some fed speak today. there are times when i think that maybe do we really want to obsess with what is going on in the world? i don't know. i guess the fed is important, but that is -- >> it ties back to what sam was talking about for sure. >> it does. >> and the costs related to all of those things.

>> the world is turning so fast, i may get thrown off. treasury yields 4.90% as you see. and it is another morning for earnings. dom chu, you live in a nice world. you don't need to worry about -- let's talk about your own individual stocks and then it is -- just keep it there and it makes it lot easier. >> no, i leave the big picture stuff to you guys. that way i can just focus on the individual stories and tell some positive ones. some negative ones here and there and let viewers and listeners sort out what all of it means for the bigger picture. but to your point, we do have earnings reports out. i can't hit all of them, but we'll hit them throughout the next hour. we'll start with a few to get

you apte-pattized with that chicken recipe forthcoming. cvs is down after better than expected profits and revenues helped along by stronger performance in that drug store operation. and that helped offset higher costs for medical care at the insurance business. cvs did cut current quarter guidance. and also shares of humana down byoff 3%, right now around 5,000 shares of volume. health insurer both beat profit and revenue estimates. and humana was helped along by better than expected results in its insurance plans that are government backed, the medicare advantage or part c plans. those shares down 3%. and we'll end on yum brands, fast food parent company of taco bell, pizza hut.

mixed results. profits better than expected, revenues lighter and we did see stronger performance across the brands. but specifically kfc and taco bell. maybe they could use your recipe. >> i'm just trying to figure out why we don't have like 100% viewer ship. maybe we need a couple of -- we weren't do recipes, but -- >> if you mix the recipes pinterest style with some of the photos that go along with it, maybe some video, maybe there could be -- >> what is it called, pinterest? their ceo was on yesterday. have you used that? >> pinterest, great. love it. >> etsy? >> yeah, i've bought some stuff on etsy. >> spotify, what is -- >> i subscribe to spotify too.

>> all these things sound interesting. >> i'm a customer of them all. what we're talking about today, we're watching real estate stock after a massive federal jury ruling that may change the industry. national association of realtors and several real estate companies conspired to artificially drive up commissions that home sellers pay. they say they will appeal the verdict which calls for $1.8 billion in class action damages. that number could get even higher. this was a case that challenged why we use real estate practices around commissions and the fact that they are locked 3% for the buyer, 3% for the seller. and there is not a real market for it. that is what the jury decided and we'll see whether an appeals judge affirms it. but could have huge implications

across the country. also watching shares of amd after third quarter results beat analyst profits but gave a weaker than expected fourth quarter sales forecast. but they did seem to like next year's forecast for ai chip businesses. yesterday finitially falling an saying that the forthcoming chips are on track. and multiple reports saying that one time office sharing king wework filing for bankruptcy protection as early as next week. we have been hearing about that and that company if you remember was at least for a hot minute valued at $47 billion. on paper. now capitalization around $100 million. the stock fallen 97% this year. and coming up, breaking jobs data, this is important.

october adp, the employment report is next. do we want a great nber umor awful number? i think either one is bad for the market. we'll be right back. with powerful, easy-to-use tools, power e*trade makes complex trading easier. react to fast-moving markets with dynamic charting and a futures ladder that lets you place, flatten, or reverse orders so you won't miss an opportunity. e*trade from morgan stanley. ♪ upbeat music

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welcome back. want to talk about the broader markets. joining us now onset, stand dr we talked about what it will take. >> great companies and great stocks. a stock picker's market. a lot of people made money in the 70s but it won't be like surfing a hurricane, you will have to do work and figure out, you know, which equities are great and which are not. not frankly unlike what has happened in the last year. >> and so joining us a deputy

cio of multiasset solutions at goldman sachs asset management. i don't know if you had an opportunity to hear what he said, he thinks it will be tough sledding luns you are an individual stock picker. >> and we think that it will be a more difficult environment but that there is plenty of opportunity to build long lasting good portfolios. and right now we're in the middle of our alternative summit and we're just really excited to see people saying that they will keep consistency with their private allocations. and when you 1k3eyou expect the unexpected, a great place to provide returns and in a more difficult environment. >> and so when you look at the private allocations right now, how much of that is being becoming a credit business versus an equity business? >> it really is up to the individual investor. but right now, there is plenty of opportunity within private

equity. oftentimes throughout the cycle in fact it can be and icyclical because you can figure out ways to extract value. >> do you think in private markets now and still significantly outperforming the public markets generally speaking? i mean, that is always the argument. but the truth is after fees and everything else, it becomes a little more complicated. >> it is very complicated. but i think that is why the manager you select is really important. >> so complicated to actually judge and measure whether you would have been better just sitting in the s&p the whole time. >> that is a fair question and i think liquidity is very important when looking at markets. and, you know, privates aren't going to detract from needing to have liquidity. the stock was a fantastic trade looking back. >> and when you say and

highlight the benefits of alternative markets, it sounds like noncorrelated assets sometimes are important. but are they really noncorrelated or just -- >> but if you do really want something noncorrelated, it means you don't want to be correlated with what is going on everywhere else. and i think that is what i'm hearing from you. about a now i'm thinking about multiples given all the problems -- 20 times earnings is not cheap and we have major issues to be thinking about right now. >> i think it is fair to say that it is not cheap when you are looking at the broader market. but when you lift the hood the bulk of stocks are 15 times which is about average. >> the magnificent seven that skews everything? or the storied stocks that have us at 20? >> effectively. cio of equities always says the s&p is not the market.

right? >> s&p may not be the market, but i want to go back to the market in question because this goes back to the larger issue about the performance. it looks -- privates always look good on a relative basis to the public markets. most of the time. because of the way that he are marked. >> i don't necessarily think it is because of the way they are ma marked. there is customization and you get to determine the underwriting and what you are getting back. >> we'll hear from the fed later today. what are you expecting to hear -- what is the signal -- what is like the sentence that you are focused on sf. >> i don't think that there is a singular sentence, but what i will say is the fed is looking for a rate to be at for a long period of time. we had core cpe that was okay. and there is a tension that is

building between financial stipulate ability and the wage price spiral that i think is incredible and i think that they want to signal to the market that we're happy to be here but oh, by the way, we have the free option of the december hike and we'll keep it. >> and you think they will take it? >> i think if the data comes through hotter than expected, yes. we have important numbers on friday. so if the wage dynamics continue, i mean continue to see better than expected data come through, then yes. >> all right. thanks for coming in this morning. we'll see what mr. powell has to say later today. and so adp report just out, they say the u.s. economy added 113,000 private sector jobs last month, that compared to a consensus estimate of 130,000 jobs. september's total was unrevised still showing 89,000 jobs. if you want to break into where it happened, goods producing sector only 6,000 of those jobs. 107,000 came in the service

providing sector. biggest garn was from education and health services. that was 45,000. you also saw 35,000 in gains when it came to trade, transportation and utilities. and biggest decline came in the professional business service, down by 10,000. if you were looking by regions on this, in new england, the northeast -- not just new england, but in the northeast 21,000. biggest gains were in the south where you saw 64,000. west up by 46,000. maybe surprise decline in the mid wis wiwest with a loss of 1 jobs. small businesses, 19,000. medium which would be anywhere from 50 to 499 employees, that was 78,000 of the gains. large establishments, 18,000. joining us for more, let's bring in chief economist at adp. let's talk about this. surprise maybe that it was a

little below expectations but you are still talking about a pretty strong jobs market overall. >> good morning, yeah, we are. it is solid, steady and positioned to support the uptick in consumer spending that we saw in the third quarter. hope it lasts through the end of the year. what we're seeing though is that there is a decline in wage growth. pay growth. is t this is a solid wage growth. is this a different type of market. firms are not paying up for workers. >> and i would almost beg to differ with that assessment. 5.7% year over year pay increase. that is the slowest pace of growth since october of d2021, but that is above the rate of inflation. and job changers 8.4%.

i know smallest since july of 2021, but those are still pretty decent numbers for people who are home getting these -- potentially a concern for the federal reserve if they are worried about inflation coming down. >> especially when you break it down by industry especially the pay does his friday abuse behind the numbers. we've seen that the strongest pay growth has come from leisure and hospitality. if you look back at the numbers, this is the first month where leisure and hospitality did not dominate hiring. in fact low paying jobs have been the job leaders, the stalwart of the recovery. and now that hospitality is coming close to 2019 lifls, it is levels, it is starting to slow. and so the wage growth that we've seen be the strong heest the lowest paid workers. that has more of the effect on consumer and main street than on

the fed's policy decision where we're still not seeing wages lead to a wage price spiral that could lead to even higher inflation. >> so we're stiffing health care workers like nurses and teachers? >> i don't know what you mean by stiffing, but -- >> most of the job growth coming there and they are not seeing the big wage increases. >> i think what we're seeing is that the economy is always important. it is not as interest rate intense difference. you see the weakness in the goods sector, manufacturing, construction. housing is at a near frozen pond because of the higher interest rates. but when you add the demographics of the u.s. pop lakers they will continue to see higher. you are right that the wage growth is not the same wage growth. but companies hiring in full

force just to replace workers who walked out the door or who were impacted by the paindemic, this is a more normalized volatile labor make rket, but sl steady enough to assume the consumer i share your concern to meet the demand that we know already exists. >> i guess i blame the blunt instrument of what the fed has to use to manage the economy for this. but i find myself when i see a weak adp number, i find myself hoping that that gives us -- i don't want to hope for a weak job market, but i do. we got this crazy strong number. does it -- month after month,

does it regret to the mean, do you think that you will be like right on this time in terms of forecasting what happens on friday? >> no, we don't forecast anymore. we haven't been for a year. even though the month to month will differ because these are two different numbers with two different data sources, the overall trend is very similar. so if you look at the last three months before the jobs report in october, the numbers in the private sector jobs are very close between bls and ner. month to month being different. and the timing is important here. what we're measuring is very important. we are asking our data and this is actual data, not a survey, how many people were on payroll this week. bls essentially asking is how many people did you pay this week. and so there is a bit difference in how these things vary from

week to week. but what we're seeing at adp is solid morederate growth. not the blockbuster headlines. and that is driven by the hospitality sector that is calming down after taking such a big hit during the pandemic. >> thanks for being here. and coming up, ceo of glass o glas glas

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. glaxo 1smithkline reporting that results. angel ica is joining you. >> and they beat top and bottom lines raising full year guidance on better than expected performance of its new rsv vaccine for seniors before sales contributing 700 million pounds in the quarter and expected to reach almost 1 billion this year. their ceo had to say this about the launch -- >> this is a disease that impacts, yyou know, tens of thousands of americans

hospitalized every year. you have 14,000 that are tragically dying every year. and, you know, it is a very competitive market, but we're pleased to say that we're getting two out of three of the prescriptions at the moment. it is early days. >> the question now is whether they can sustain the early momentum. we also asked about shinkling shingles vaccine. and the market in china will be key going forward.ling shingles vaccine. and the market in china will be key going forward.ing shingles vaccine. and the market in china will be key going forward.ng shingles vaccine. and the market in china will be key going forward.g shingles vaccine. and the market in china will be key going forward. shingles vaccine. and the market in china will be key going forward.shingles vaccine. and the market in china will be key going forward. joe. >> all right, thank you. appreciate it. and coming up, some new numbers that are taking on more significance in this era of high interest rates. we'll hear about the near term funding needs. we look like we will open lower. s&p off about 14. nasdaq looking to open down

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welcome back to "squawk box." we have shifted now and we're definitely waiting on jay powell and what happens later. the maybe not ready for the actual action itself but the comments and what the dow and s&p is doing. treasuries 490 now on the ten year. and we're getting breaking data from the treasury department on its funding needs. steve liesman is joining us now. >> $120 billion of treasury securities in the coming quarter. that seems to be around what i read is the spekts tags of the market. so unlike -- it is an increase, but unlike last time, not maybe a huge surprise. trishry treasury funding $102 billion in

that and will increase coupons for at least one more quarter. auction size -- sorry, building size reduced modestly. and they also add that they are making significant progress on the buyback. and let me be clear, we're all sort of equity tourists in the fixed income market, we're watching this because obviously the fixed income market is going through something right now in terms of digesting a whole bunch of new issuance coming down and financing the larger deficits and we're stepping to see how they are digesting it. i'm interested to see what is

happening to the ten year. looks like pretty much unchanged if i'm right. maybe a little more on the 30 year. there was a big surprise, fitch announced a downgrade that before the august refunding, august refunding was larger in terms of what was expected. treasury since then i thinks that been out there basically telling people expect bigger auction sizes, bigger coupons. and maybe this is less of a surprise to the bond market or equity market. >> go figure. looks like we're improving, narrowing losses and down about 150 on the dow. steve, i was asking adp about -- i mean, what happened last month? was it a weak number and then just a blockbuster jobs number? she said it is the trend that matters that any measure different things. can we clean anything from the

adp number today? >> this is one of those things where it may well be that adp has a better truth than the bls has. we know the bls has problems with its response rates. adp data is not imputed in anyway, it is actual data. whether or not it is doing the same things in terms of seasonal adjustment and other things when it comes to what the bls is doing, i don't know. we just have to watch it over time. use it as an input and the trend like she was saying. and i'd like to abandon it because it doesn't do a great job in following the bls. it is just that their data seems to be good enough to say you know what, this looks at least as good a picture as any of what is going on in the job market. you know how electrons can be n two places -- >> yeah, watching "breaking

bad." >> yeah, a couple realities on the short term basisoff time, you would think that they would come together. we can't get rid of it because i think the data set is stoo good. >> one indicates a blockbuster jobs market and the other -- >> coming down gradually. i have to tell you, we're working on another way of measuring the retail sales report. working with the national retail federation. i'm just kind of giving you a sneak peek that actual credit card data to measure retail sales and it is different from what the government reports. so i'll confuse you more is what i'm saying. >> a cooler number? >> so far cooler. working with economists over there. and they will get mad at me, but the idea is that this is actual 8 billion transactions a month that we'll be calculating and we won't be revising. so very excited about this.

>> using ai? we got to go. but -- >> yes, great question. >> let's bring in brian sack from the new york fed where he served as head of the bank's markets group and managed the system open market account. also director of global sxhik economics. all that info from steve, how would yyou characterize it, as expected? >> i'd say a little better from the market perspective. treasury sizes have to go up. last refunding they did it at this one, likely to do it the next one as well. so we knew coupon sizes would go

up. real focus is how much would the sizes go up at the long end and would treasury be responsive in its debt management plans to the fact that seems to have increased in the long end and been under pressure. i think we're seeing responsiveness to that which i think is appropriate from a debt management perspective. so yes, more supply is coming. we knew that already. but treasury will bring that supply in a way that is hopefully best digestible by the markets given the current pressure. >> so the indigestion people are worried about is not -- we showed a couple charts. but definitely show the ten year dropping a little bit. i mean, a basis point. but stock market improving. when do you expect this to be sustained where the worst case

scenario, are we going to be okay? >> i think the process of increasing supplies is certainly on going. we face a fed that continues to run off its balance sheet. so by no means are we out of the woods here. supply treasuries to the market is going to increase meaningfully for quite some time. and, you know, i think the market has shown having problems -- not problems in terms of market functioning, but just the need for higher return on the securities to actually hit into the market and be held. and that will be and ongoing process. what this release seems to indicate, yeah, not pouring fuel on the fire but pushing h--

pushing hard a say the size of the 30 year bond auction. but total supply duration is going up. and i think that it will continue to put pressure on the term premium over time. >> yeah, i just want to emphasize it sounds like what you are saying is when we reported that there was less of an increase in that 7 to 30 year range than the 2 to 5 year -- and more in the 2 to 5, that is where the relief comes from. the amount was roughly what was expected. you were the vice chair of the treasury borrowing advisory committee, tvac, which advises the treasury. i wonder if you want to weigh in on the question we've been debating with druckenmiller who i think did a good job talking about the issue of how much debt and also the how it is done.

could the treasury have done more on the long end, should it have done more on the long end, and then bring that forward to now. what about right now, what is the right way to finance? should the treasury be going back and forth here in terms of trying to get the best deal for taxpayers and why not? >> and so as you suggested, primary issue here is the size of the funding need which no debt management policy is going to, you know, solve that or undue the fact that the market has to digest quite a bit of treasury debt. and that is -- i think that that is -- that is a meaningful issue to be discussed. does the debt service burden going forward, is it going to be problematic for the economy. but that is really all about legislated fiscal policy. so we talk about debt management which can make modifications to that debt and change the profile

some. but it doesn't change the overall profile of the amount of debt that is out there. stan made a lot of headlines this week about talking about why treasury didn't turn out more aggressively during the low rate period from 2020 on. you know, with a lot of anecdotes about everyone else refi refinanced, why didn't the treasury finance. first thing, this is a $26 trillion market that is at the center of the global financial system. so the idea of refinancing it or substantially changing the structure of that debt is just a nonstarter. the treasury likes to be unpredictable and that served it well. so that constrains them from changing the structure of the debt in a dramatic way and over a short period of time.

if you look at the history of the maturity of the debt, i mean, essentially it is hard to move the weight of the maturity of the debt by more than a few months over a one year period because you are only issuing, you know, a certain amount of debt relative to the total debt stocks. so i think that, yes, we can be looking back and saying what would have worked better but in the end i think the fetd could have only extended it in a mar marginal way. fetd could have only extended it in a mar marginal way. edfetd could have only extended it in a mar marginal way. could have only extended it in a mar marginal way. >> joe, i don't know if you want to follow up on that, but i want to ask him about the fed meeting today. >> no, yeah, a year is tough, but look how long we were at zero.

i mean, the prior administration, there was time and it seems like a no-brainer. tough to turn around, you know, a big ship in a bathtub. but i think they could have -- it is off just that we could have done more than what we did in terms of terming it out and it helped every taxpayer. 8 on% 0 80% of the world can figure it out, you can't follow balk on un able to do anything by the treasury. they could have done it. >> that is a comparison, yes, so so they had time, but rates were zero, front end also cheap fro fronting. what stan was talking about is the past couple years and numbers that the treasury could have issued. but the numbers only valid for 2 or 3 refundings. so tvac has done a lot of work

on the structure of the debt. very good treasury staff, you know, looking at this thinking about this. and i should be thinking, debt management decisions at the end of the day are carried out by the treasury. but i think that the deliberations over that period were quite good and structure of the debt is actually -- >> you know, real problem is that it is not the treasury. it is the people that spent all the money in the first place. >> yeah, can't solve that. >> i like that, you can't blame the debt managers for the bill they are given to pay, right? stan is right, put the onus on policy. but if i could, brian, what is your expectation of the fed, are they done hiking here? we have in our survey that they are on hold until september 2024.

how does that comport with your outlook? >> today clearly they will pause. my guess is that they are on hold for at least several meetings. i think that they are done. we've seen enough tightening of financial conditions to bring growth back to trend or slightly below trend. the labor market will continue to balance. that will be sufficient. but i think the risks here are certainly in the direction of we're not there yet. that maybe some additional tightening is required as you know the data has been remarkably robust. if i could say one thing about fed policy, i mean, they need to prevent any further above trend growth. that is -- i mean, absolutely necessary here for them to meet the mandate on inflation. q3 blew everybody out of the water with the reading we got. i think there were oneoff reasons for that.

and my outlook is that we'll have slightly blow trend growth. but any sign that growth is not settling at trend and we're continuing this above end growth and the labor market remains robust will require them to go further and financial conditions even tighter. so i think the risks going that direction. >> if you want to blame anybody, blame brian who was doing the buying and selling. he is the one at fault i think.. >> you should be. but he was getting directive from the fed. >> pretty close to the mandate on the fed, but second half -- >> brian is the one at fault. >> you can take that up with le liesman. i'm buear barely hanging in trying to understand. >> we're equity yourtourists.

>> we are. but brian, you sound very smart. so we hopefully will have you back on. >> one of the brightest. >> exactly. hope to see again soon. still to come, microsoft's co-pilot is ready for takeoff. the ai assistant rolls out daifrd. b but will businesses put up the numbers.

here in hawaii there is always time. there's time to spend with family, time to enjoy with friends. there's always time to listen or lend a helping hand. here we have all the time in the world, but no time to waste.

big day for microsoft. highly anticipated ai assistant going live. and steve company ckovach has t. >> microsoft starting to sell its most important new product, co-pilot. now offering that to businesses that subscribe to michael microsoft 365. $30 per month on top of $23 or so most eligible customers are already paying. big challenge is proving that it can be a productivity boost to justify the cost. it could give notes to gene generating power point present

presentations and as powder r.ed by chatgpt. pipe r sandler saysthat it is the likening it to microsoft's early start in cloud computing. and researchers at forester last week estimated 6.9 million people will be using copilot by the oechbd next year. that wosrks out to an extra $2.7 million or so in sales to microsoft per month. there are well over 300 million paid microsoft 365 users, and look, it's still early for microsoft's a.i. sales push, but it is further ahead than google and any other potential competitor, andrew. >> so, just to understand the pricing piece. you said it's $30 additional on top of the $23 and that --

>> it depends on what subscription bucket your business is in, but yeah, it's a hefty premium over that base level price. >> but the base level price is giving you 365 already, right? >> outlook, teams, so on and so forth. >> and from a competitive perspective, obviously, google's not out with its service yet but how quickly do you imagine they're going to come to market with a similar product that would be integrated into things like google docs and gmail for professionals and the like? >> they haven't given a release date but they have a very similar product they're going to start offering to their enterprise and business customers. also priced at the exact same. in fact, a couple weeks after microsoft announced its pricing, google came out with the exact same pricing of $30 peruser per month, so look, microsoft has a much larger user base than

google does on the enterprise side of things so it's going to be hard for google to crack in. >> is your sense that this is going to be used to effectively upsell the current customer base or is really an effort to try to capture even larger market share of actual corporations that might not be using microsoft today? maybe they're on google, for example, and saying, you know what, actually, this is what i want. >> i'm sure microsoft would love that, but microsoft 365 has the market share already. like i said, over 300 million customers worldwide. they're not even getting into education yet. that's an area maybe they can creep into google. google has more strength, i guess, in the education part, but right now, microsoft isn't selling copilot to those education customers for all the obvious reasons you can think of. they're being a little more careful with that, and they're also not selling it to individual users yet, so if you're a small business, andrew, maybe one or two or three people, you can't buy this yet. right now, it's only for the biggest business customers, so there's plenty of addressable

market out there for microsoft. they're starting slowly. they're being conservative with their estimates on how this will sell, but everyone is excited to see this thing in the real world. >> right. steve, appreciate it. we'll see it in the real world. i was out in seattle, i don't know, maybe -- i did that interview with satya where you saw how it works. it is pretty cool. it means that when you -- all those emails you send me, you won't have to spend all the time writing all those lovely things how you usually start them by telling me how great i am. it will just do that for you. you don't have to spend all the time think about the poetry. >> is it raining? >> oh, raining in seattle? >> did you see any grunge concerts? >> that's -- you're about 25 years -- >> pearl jam? coming up, we're going to talk markets and get you ready for the first trading day. doesn't rain there anymore? the futures right now are much improved, and in fact, there's some green on the s&p and the

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head of this afternoon's fed decision, i want to bring in chief global economist and head of global macroeconomic research at pgim fixed income, also former deputy national security advisor for international economics in the biden administration. good morning to you. what is your expectation, dare i ask, about what we're going to hear today and what signal are you actually sort of looking for? >> good morning, andrew. i don't think there's much drama in store for 2:00 p.m. they're not going to hike policy rates today. i don't think they're going to hike again in this cycle, but i expect chair powell will keep the option to do so in case the economy stays hot or financial conditions ease. the main signal i'm looking for is where are we going? what's the destination? we know the peak policy rate is probably 5.5%. we know that the fed wants to keep policy at the peak for a long time, but where are we going over the next few years? at jackson hole, chair powell

said we're navigating by the stars under cloudy skies. can you see anything up there yet? >> is your sense, though, that we're going to -- you looked at the adp number today. we'll get the jobs number on friday. you think we're going -- he's going to raise rates in december? >> no, i think we're probably at the peak already. >> this is it? >> yeah, i think this is it. there are a number of stiff, cyclical headwinds for this economy. monetary policy is tight. fiscal policy could get tighter with a budget sequester next year. credit conditions are tight, and financial conditions are tightening, so we were going from a very strong economy to one that i think is going to moderate. i see a lot of rebalancing in the labor market. the external headwinds, what's going on elsewhere in the world, those are all potential negatives for this economy, so i don't expect a recession, but i do expect us to moderate, and i think the fed can pause here and

engineer something akin to a soft landing. >> talk about some other bad news. what do you think the chances are that the government could shut down? >> reasonably high. we're at unprecedented levels of political polarization. you've got to go back to the early 1900s to find anything like this. it's not just polarization between the parties. it's polarization within. so, you know, i think we're going to have a lot of drama heading up to the deadline on november 17. if we avoid a shutdown in november, it will only be a short-term reprieve, and early next year, we'll be right back at it. >> thank you. appreciate your perspective. we'll see what gets said later today, and of course, we'll be bringing you that right here on cnbc throughout it. >> we're in a state of incredible polarization right now and i was going to say, and you're just talking about the republican party right now, right? how long is this -- >> i don't know. >> i'm trying to gauge how it's going for the new speaker. i don't know. it can happen again, right?

it could happen again the minute something happens on either side, it could happen again. >> this whole israel funding thing and then defunding the irs. >> i totally agree with that. >> you agree with that? >> absolutely. >> defunding the irs? >> definitely. >> are you -- >> take that totally useless money and give it where it can do some good. >> here you are saying we've got debt problems. >> yeah, that's going to help. everybody's cheating. "squawk on the street" is up right now. good wednesday morning, welcome to "squawk on the street," i'm carl quintanilla with jim cramer and david faber. futures trimmed some losses, yields back off as the treasury refunding announcement and adp come in a bit light. plenty of corporates lowering guidance, including dupont, estee lauder and others. our road map begins with fed and market watch. the central bank is expected t