sales. it is friday, november 3rd, 2023. we're like a little over a year away from that election. "squawk box" begins right now. good morning. welcome to "squawk box" here on cnbc. we are live at the nasdaq market site in times square. i'm andrew ross sorkin along with joe kernen. we have apple earnings and the jobs report and so much more. we will see what we are focusing on with the markets and everything else. we will show you the board and then get into sbf. nasdaq off 45 points. s&p is off 4.5 points. this follows the surge in the

markets on thursday. dow adding more than 500 points. s&p back over the 4,300 mark. nasdaq adding more than 200 points. dow on pace for the best weekly performance since october of 2022. we will take a quick look at treasury yields. ten-year note at 4.664. we're at 4.999 on the two-year note. now to the sbf of it all. the trial, i don't know if it is the trial of the century. sam bankman-fried found guilty on all seven criminal counts in the ftx fraud trial. he is facing more than 100 years in prison. the verdict coming in before 8:00 p.m. eastern time. kate rooney was in the room. >> a lot going on. andrew, the u.s. attorney called this one of the biggest financial frauds in american history. verdict coming exactly a year after the company filed for

bankruptcy. sam bankman-fried was convicted on seven counts of fraud and conspiracy and on lenders and investors and customers. emotional scene with sam bankman-fried's father with his head in his hands and his mother crying. sam bankman-fried staring straight ahead. the jury started deliberating at 3:00 p.m. and broke for dinner at 6:00 p.m. the verdict came in at 7:45. a news conference with damian williams delivering the brief remaximum. h remarks. here is what he said. >> the cryptocurrency might be new. the players like sam bankman-fried might be new, but this kind of fraud and corruption is at old as time and we have no patience. >> merrick garland said he thought sam bankman-fried thought he was above the law.

he says to anyone who tries to hide their crimes behind a shiny new thingneeds to think again. the prosecution showed evidence that sam bankman-fried knowingly stole customer money. the defense team saying sam bankman-fried maintains innocence and will fight the charges against him. no official word on an appeal. that's what we do expect. >> wow. you asked how quickly. i think both of us said quick. we thought quick. >> did they call in for pizza? they barely ate. >> they took an hour. >> three hours including dinner and desert. >> some people speculated they had a decision before dinner. >> that is typically how it goes. >> they did get free ubers home. they asked the judge for post-its and highlighters. we thought they were obviously

doing work back there, but asking for follow-ups. we thought it was going into monday. >> the most interesting piece of this, quickly, because we have a guest to help with this. there will be a sentencing piece. before that, there was a moment where the judge says to the prosecution, are you still planning to bring a second part of this case around the campaign finance issue which is something they would decide in february. can you imagine them deciding to prosecute him on those counts? do you say he is already in prison for the rest of his life and we're good with that? >> this was a month-long trial. they had mountains of evidence where they talked about the campaign finance violations and they brought it up in the context of him lying to investors. in february, that is where they

will make the decision. they have him for decades. i think they would probably say let's move on. >> i think it would be fun to see all of the people that benefitted. he gave to both parties. that's not exactly -- i think one party -- you heard that no one gave more money to elect joe biden than this guy? >> i heard that argument. i think he was giving to all of these guys. as you know, my view of campaign finance is one massive bribery scheme. terrible. >> yeah. lightning fast. >> a lot of bribery schemes we know and we care about some and not about others. joining us with more is john stack. former s.e.c. internet chief.

he is the president of stark consulting. john, all you needed was his ex-girlfriend's testimony. probably not a surprise it didn't take long. >> not a surprise at all. prosecution did a brilliant job. the evidence came from two sources. these incredible number of turncoats of executives. i have never seen anything like it with that many willing to work with the prosecutors for a year to help with everything they need. then the documents and data from ftx itself. the fbi and doj had access to whatever they wanted. the people and data and someone to explain to them and forensics. this was a quantity of evidence that was amazing. finally, you had a defendant who just would not shut up. everything he said and prosecution was brilliant at

impeaching him because he was so, so often saying things that were completely untrue. he's an absolute sociopath and egomaniacal lunatic. he did whatever he could do to facilitate his scheme. joe, this is the tip of the iceberg. people should not think that it is safe to go back in the water. it's not safe. it's a mammoth house of cards. if you look at crypto, crypto web3 blockchain. it is all nonsense. sam bankman-fried used all of that to promise it was a financial panacea and some way to make libertarians to feel at ease. >> you are not just talking about some of the exchanges or the companies around crypto.

crypto covers a wide range. you think bitcoin is one big scam? it doesn't help? >> it doesn't help. not a single study that says that. the studies say the opposite. the brookings institute wrote a fabulous article where she explained crypto hurts people of color and michelle singletary for "the washington post" of 30 years, wrote an epic piece explaining how it is not good for the un-banked. again, it is part of any ponzi scheme. web3 is marketing blather. crypto represents nothing. no cash flow. no earnings. no balance sheet. nothing to it. if you look at blockchain, the glorified limited writers spreadsheet, you wonder what people are talking about.

you can find a letter on concern.tech of people saying how absurd it is. this is bad ftx, but blockchain is still great. that's not true. i listen to every earnings call. apple, google, oracle, what are they talking about with blockchain? nothing. crypto is not innovation, joe. iphone. that's innovation. internet. the cloud. a.i. inno innovations. >> we had you on to talk about ftx. wow, did we get side tracked. we can get -- i'll bring on ten really smart people that would have the other view. >> that's not how you approach the problem. >> paul or stan or any of the guys come on and explain how crypto works. we're not going to settle that

here. in hindsight, we will see if the entire thing is a big ponzi scheme. we're not there yet. let's stick to why you're on today for the s.e.c. issues. when you take funds and i have seen this again and again. you have one entity and all these customers. you use their funds to make big bets. it works good for a while if you are right in a bull market with crypto. then you can buy the bahamas house and the jets and everything else. you always end up losing money and suddenly you try to give your clients money back and it is not there. is that what happened here? >> what happened is pure thievery. you say it is an accounting glitch. that doesn't work. yeah, it comes down to lying, cheating and stealing. the u.s. attorney is absolutely right in that sense.

if you are talking about just how sam bankman-fried orchestrated the fraud, it is as you say. he used this group thing by buying people. kevin o'leary. he paid him $15 million to go out and say he was great and ftx was great. this was a scam where the biggest idea, joe, and this is why i'm emphatic about it, is it turns victims into victimizers. you are able to build up the codry of cult-like people to put life savings in this and help say you're great and get your mom to help you buy congress with a bunch of unlawful, alleged, but read the ftx lawsuit against his mother and father. his mother helped him do it. figure out how to buy congress. >> john, i want to understand and talk legally. talk as a lawyer for a second.

do you believe the prosecutpros will, not should they, will they bring an additional case around the campaign finance issues in addition to what obviously has happened? do you say as a prosecutor, do you say justice has been served. the guy will die in prison. that's what it is, we're not going to spend more taxpayer money on this. we have proven our point. do you say there is a bigger point that needs to be proven and we need this in the public record about the campaign issues? >> i worked in the enforcement division for 20 years and chief for 11 years. we have to make the decisions all the time. i think they will bring that case for several reasons. exactly like you said where these are important principles of campaign finance. they may not be able to bring it given the case in the bahamas.

assuming they pass the legal hurdles, they will bring in new defendants and facts. the prosecutors send messages. big cases send messages. andrew, there is no phenomenon like this in history. if you watch youtube, there are a dozen commentators who went to court every day and watched it all and went on youtube to hundreds of thousands of people to tell them what is going on. there was more interest in this trial -- the last time i could think of this is o.j. the issue is getting the message out. you want to spend money on prosecution to get the message out. campaign finance reform is a ce cess pool. for me, if i'm the prosecutor, i'll bring it. >> john, we could see blackrock, if there is an etf, and fidelity

and bitcoin market cap is $700 billion right now. there will be massive carnage and egg on the face? >> absolutely. i see it everywhere i go. >> thank you, john. >> it's not great. it's sad. >> we'll watch. you stated your opinion. we will see what happens. thank you, john. >> you got it. thank you. we will get you ready for the jobs report happening in two and a half hours to go? then the potential impact on the markets and all that straight ahead. what to do with apparent lg t apple? some cautious comments keeping a lid on the stock. we breakdown the report in the next half hour. you are watching "squawk box" and this is cnbc.

>> announcer: this cnbc program is sponsored by baird. visit bairddifference.com. 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. now brewing peet's coffee. 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.

this is spring semester at over 13,000 us school districts, which have become top targets for ransomware attacks. but there's never been a reported ransomware attack on a chromebook. which is why thousands of schools like the fairfield-suisun unified school district switched to google tools for education. so they can focus on teaching and 22,000 students can focus on learning, knowing that their data is secure. ( ♪♪ )

welcome back to "squawk box." we are getting ready for the jobs report at 8:30 a.m. eastern time. we want to bring in the next guest to talk about the impact on the markets. the chief investment officer at

bmo. what are you expecting and the big read is not just what to expect, but how the fed will read it? >> good morning. thanks for having me and happy friday. we are expecting an in-line jobs report as you expect last month beating the 200,000 level and then markets might wobble a bit. we believe the fed will take this one single point number. there is a lot of data before they meet again as long as we don't shut the government down in two weeks. there is a lot to absorb. there are a lot of other indicators that the economy is softening around the edges. the markets will take this in stride. you had a strong week and it would not be surprising to see traders take profits and not sit too long over the weekend. >> it sounds like you expect a selloff no matter what the number is here?

>> not necessarily. you had a strong week and it not be surprising to see a flatish week. >> we had a number of folks come on in the last week or two to say rates are eventually going to come down. if you want, you should lock them in right now and get into the bond market in a way that folks have not been talking about in some time. do you agree? >> a couple of weeks ago, we moved duration out to neutral. we have been short term like the rest of the market. we have seen recetiscence. we have encouraged and rearranged portfolios to move neutral back out toward that curve in duration.

you can miss out on that opportunity especially if things come down. we don't think the neutral rate goes back to zero where we liked it in the last 10 or 12 years. we believe you have a couple baked in with inflation on top. the level is a reasonable rate for the intermediate and longer term. >> what do you think in terms of tech? we were talking about apple in terms of thinking about tech as a bellwether and depending where you think interest rates are going and the risk-on or risk-off concept? >> it is important to remember that tech will play heavily into the infrastructure spending we're doing. the companies, while they may have disappointed in terms of growth rates and margins and margins are still very high in the industry overall. the cash flow generation is high. the need to spend on capital

expenditures less than others. the need to lend or borrow -- or the need to borrow is substantially less. there is a lot of opportunity for the long haul, especially on the pullback on some of the names. >> carol, we will see that number now coming up in a little over two hours from now. >> thanks for having me. >> thank you. >> quick math. two hours and eight minutes. >> we have this story. fascinating. sorry. sorry. i just got here. i'm late. >> snooze? >> i shut it off. never have done that. hour and a half late. >> that has never happened. >> i have never done that in 20 years. >> i don't need alarm clock. coming up, jeff bezos is taking off not on the blue origin rocket, but flight to

miami beach. atto icongp xtth srys mi une. de is now part of schwab. bringing you an elevated experience, tailor-made for trader minds. go deeper with thinkorswim: 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. when you think of investment risk, do you consider climate risk? changing weather patterns are impacting the way we live and the value of businesses large and small. this can mean disruption to supply chains, changing demand for products and shifting regulation. what does this mean for your business, your clients, and your investments? ice offers data and markets that can provide critical insight. manage your climate risk with ice.

people are excited about what ai will do for them. we're excited about what ai will do for business. introducing watsonx a platform designed to multiply output by training ai with your data. when you watsonx your business, you can build ai to help coders code faster, customer service respond quicker, and employees handle repetitive tasks in less time. let's create ai that transforms business with watsonx. ibm. let's create.

(♪♪) it's inspiring to work at a place where our patients succeed. and where we as therapists do, too. with great benefits from principal, our clinic shows they truly care about us. (♪♪)

welcome back to "squawk box." jeff bezos switching coasts. the founder of amazon wants to move to miami to be closer to his parents and rocket launches. robert frank made an interesting point that there may be other reasons to leave the seattle region. washington state passed a steep tax on cap ital gains in 2021. when bezos sells stock to fund blue origin, it could mean a

hefty tax bill. he purchased property in miami. robert said for every $1 billion he sells, there is additional $70 million tax. he sells a lot of stock because he's constantly trying to finance blue origin. there is no tax efficient way to do it so you are moving money from one place to the other without selling. he is a genuine taxpayer. >> that is the first thing i thought. when you heard this, washington state, i don't think has taxes, but they have on the bill to start taxes. >> florida is tax friendly, as we know. miami beach is pretty cool. out and about. >> also it gets him closer to cape canaveral with the blue origin launches now. livenation reporting star power profits. ticketmaster's parent company with the strongest quarter ever things to help from taylor swift and beyonce and some other

high-profile tours. higher ticket prices and demand for live shows boosting revenue 32% to more than $8 billion. livenation sold 140 million tickets so far this year compared to 121 million sold for all of last year. stock right now is up about 3% this morning. when we come back, we are just two hours away from the jobs report. we're going to get into the fed interest rate path and why our next guest says that chairman powell should have stopped hiking in january. he also sees big concerns about the banks out there. we'll talk to him about that. as we head to break, we have a look at yesterday's s&p 500 winners and losers. >> announcer: executive edge is

sponsored by at&t business. next level moments need the next level network. sinesses move to the cloud. - so, the question is... - cyber attack! as cyber criminals expand their toolkit, we must expand as well. we need to rethink... next level moments, need the next level network. [speaker continues in the background] the network with 24/7 built-in security. chip? at&t business.

good morning. welcome back to "squawk box" live from the nasdaq market site in times square. not much happening this morning, but yesterday was a session. dow was up and nasdaq is giving back 51. the s&p is off a little. 564 points in the dow yesterday. there was 200 and change the day before. this is one of the best weeks in a while. s&p back above 4,300. a lot of it had to do with the really charsharp drop in the ten-year yield which we watched play out yesterday morning. >> it was weird. guess the fed commentary? >> it was dovish. even the way it was characterized in the headlines was that powell hinted that it could be or could have been the last one. reserves his right depending on the data. data dependent of another

increase at some point. a lot of conjecture now that the market has done a lot of tightening for the fed. especially mortgage rates. there will come a time when the loans need to rollover and that will be a shocker for people. a lot of people went out on more than a year or two. one of these days you will see that. >> our next guest is here to talk about that. the fed deciding to keep rates on hold, but leaving the door open for more hikes if needed. the next guest said the central bank overshot and should have stopped raising rates in january. kevin harvey at duke's business school. we spoke with you in the past. you are convinced that inflation is below 2%. what tells you that? >> i know it seems odd to say inflation is below 2%, but you need to look at how the cpi is

constructed. the largest component is housing. it is more than one-third of the cpi. it operating with a lag. what is reported in the cpi today is housing and inflation from last year. the housing inflation is over 7% in the cpi today. that's why the cpi is over 3%. we know in real-time housing inflation is not over 7%. it is maybe 1% or 2% or zero. policy needs to be determined based upon real-time data, data that is forward looking, not data from the past. if you look at real-time data for shelter, that means inflation is running about 1.8%. so this idea that, oh, well, we still have a long way to go, that's not the case. that is a false narrative. >> campbell, you sound worked up

about this. i think it is because you are worried there are big problems to come with the recession and with problems in the financial system. what do you see? >> so, recession at this point is a self-inflicted wound. if you look at what's happening, the tightening is severe. it is not just a short rate going up so quickly. it's the long rate, too. so often with yield curve inversions, what happens is you un-invert when the short rate goes down. un-inversions happen before recession. the last four recessions. in this particular episode, the long rate has gone up. the long rate is very damaging. it increases the cost of capital so it makes it difficult for businesses to invest. it craters the housing market with mortgages all of a sudden at 8%. this causes implications and our

financial system so the banks are taking a hit right now. you think it was bad in march with svb and other banks taking a hit because they invested in longer-term instruments, that is when the long rates were 3.5%. now they're over 1% higher. we have not realized all an of these losses yet. all of this points to weakness in 2024. >> for those of you who don't know, we had professor harvey on before. he was the one who pointed out the inverted yield curve is a signal of coming recession. people said it is un-inverted now. does that mean we escaped it? you say it is worse than ever? >> again, if you look at the last four recessions, the yield curve un-inverts before the recession starts. again, this particular flattening we have seen is like

a bad scenario because long rates have gone up. when those long rates go up, it really puts the brakes on the economy. i know it is confusing because gdp print was 4.9% which is very good. this is purely consumers working through excess savings from the pandemic. those savings have run out. we can see it in leading indicators like delinquencies on credit cards and auto loans. those are going up which means the savings have been depleted. we cannot count upon the consumer bailing out the economy in 2024 like they did in 2023. >> we had steve iseman on yesterday. he ha has been good on banks an the calls. he said the banks will earn money, but there may seem to be

a financial crisis down the road. why are you concerned there are more silicon valley banks out there right now? >> just look at the data. i challenge your viewers to go and ask what is the interest rate you are getting on your savings deposit. you will find if you are at a too big to fail bank, you are getting two basis points or five basis points when interest rates are over 500 basis points. that, to me, is a red flag. if they can only afford to pay two to five basis points on a savings deposit, what does that mean? >> it is not they can't afford it. it is what they pay. there were too many of the too big to fail banks and money left those places because there was a concern of safety. >> money is leaving those places right now because you can easily get over 5% in a money market

fund. it's a drain on that capital from the banks and that will work its way through and squeeze credit in 2024. it is just yet another dimension in terms of the slowing of the economy. nevertheless, the spread between five basis points and 500 basis points is historically unprecedented. to me, it is a sign of weakness in the banking system. the next time the fed releases data for the third quarter, we will see how bad it is and see the losses on the hold to pat maturity bonds. the point i'm making is silicon valley bank was not a one-off. there are many banks. we estimated perhaps 10% of all banks look similar to svb. this is not a one-off and those long rates going up is

punishing. when those commercial real estate loans come in or renegotiation, watch out. banks would like to renegotiate, but given the level of rates, this will ripple through the economy in a negative way. >> it is a concerning outlook. professor harvey, thank you for joining us. >> thank you. when we come back, the incoming ceo of kraft heinz gives us an update on the health of the consumer and a taylor swift innovation. and update on the story of the morning. sam bankman-fried found guilty of all fraud charges in the collapse of ftx. sentencing is scheduled for march of 2024. we will talk to former s.e.c. chairman jay clayton about the case and what it means for future regulation. "squawk box" will be right back. on either side, while you both sleep at your ideal level of firmness, comfort and support. your

sleep number setting. and now, our all new next gen smart beds have temperature benefits, so you sleep better night after night. and now the new queen sleep number® c2 smart bed is only $899. sleep next level. shop for a limited time at sleep number. ♪ opportunity is using data to create a competitive advantage. ♪ it's raising capital to help companies change the world. ♪ opportunity is making the dream of home ownership a reality. ♪ ...and driving the world forward to a greener energy future. [applause] sometimes the only thing standing between you and opportunity is someone who can make the connection. at ice, we connect people to opportunity. power e*trade's easy-to-use tools, like dynamic charting and risk-reward analysis help make trading feel effortless. and its customizable scans with social sentiment help you find and unlock opportunities in the market.

e*trade from morgan stanley. 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

welcome back to "squawk box." kraft heinz topping estimates this week with higher prices on packaged meals. i spoke to the incoming ceo at the cnbc evolve global summit of what he is seeing from the consumer. >> still a number of consumers who are managing value from the cash flow of the family. those consumers are making two choices. one, they are looking for more

of the lower price point overall and they are making choices on the grocery stores they go to. we make sure we have more availability of the dollar type of products so we can make sure they are accessible to our brands and building a price point to value their cash and increasing the dollar channels. >> kraft heinz is innovating. the company sped up development based on the meme of taylor swift eating a snack at an nfl game. chicken, ketchup and seemingly ranch. >> first of all, i love taylor sw swift. dad was the investing in our people and marking. >> a limited edition of ketchup and ranch. they got bottles out on the

store 19 days after the appearance at the kansas city chiefs game. the big exclusive for walmart stores. they have brands in stores all over the place. to be able to get special items to certain stores is how they keep customers in play. >> good combo. >> not together. >> there is something that is ketchup and mustard. russian dressing? >> it is what they put on burger king special sauce. i thought that was mayo and ketchup. >> ranch. >> russian. this is ketchup plus ranch? >> tangy. >> good combo. >> for condiment lovers, innovation with the coke machines with 3,000 combinations. this is 200 different condiments

you can come up with and combine all of those. >> how bad is this stuff for you? >> i don't know. >> you only live once. >> have you ever seen how much sugar is in ketchup? shocking. shocking. >> i don't know. taylor swift. ticketmaster. kraft heinz. hotels increase with taylor swift. >> the concert tour in south america now and it will go to europe next year and comes back to the united states. >> anything she touches. i was in target and they have a special 1989 taylor swift day. >> diminishing returns at some point. >> right? it's insane. >> ride it while you can. coming up on the other side of the break, we will talk apple beating expectations, but the outlook for the holiday quarter is cautious. we look at what is next for the

iphone maker and later, pete buttigieg is in town and he will join us on set to talk about the dewaetngucture project gti unr y in the big apple. that and the jobs number is coming up on "squawk" when we come back. >> announcer: cnbc evolve powered by comcast business. powering possibilities. absolutely. can we provide health care virtually anywhere? we can help with that. is it possible to use predictive monitoring to address operations issues? we can help with that, too. with the advanced connectivity and intelligence of global secure networking from comcast business. it's not just possible. it's happening.

♪ tourists tourists that turn into scientists. tourists taking photos that are analyzed by ai. so researchers can help life underwater flourish. ♪

welcome back to "squawk box." look at shares at paramount global. moving higher this morning. the parent company of cbs, bet, show time showing subscription growth. streaming service added 2.7

million new users. stock has been on the move. apple reporting better than expected earnings, but also revealing that sales dropped for the fourth consecutive quarter and now there is worries about the holiday season. joining us is bank of america's security services. a there are a lot of concerns reflected in the stock price, 198 or so. closed last night at 177 and indicated 171, 172 this morning, down maybe five points. margins, they were able to maintain profitability. no one is probably that shocked that sales -- i think sales were basically flat. when you call it revenue flat, down 1%, right? >> yeah, joe. revenues are flat in the september quarter. i think that was fairly in line with expectations. i would say that -- >> basically. >> the macs were softer, but

services were a blowout, impressively higher. you have puts and takes. profitability stood out. if i summarize the key takeaways, profitability and gr gross margins were amazing. it is the low end of the product portfolio where you're starting to see the softness. so the worry is is that going to creep up into other areas of the portfolio. capital return, it is extremely strong, they continue to buy back at an elevated pace. you have an apple that is outperforming on the profitability side, underperforming on the revenue side. >> major angst about china as well. huawei resurgent in the quarter. that will probably continue. i guess the other thing is, is apple going to be able to -- it boosted margins by premium phones, but everyone's got one now. don't they? >> yeah. i think the margin story is unique at apple.

first of all, the services mix continues to grind higher and they'll monetize more and more of that. that's 70% growth margin. given the market cap and the revenue levels of $400 billion, you're still able to drive gross margins higher. it is a very unique business model for them. the second element of margins is within products. when everything else is soft and iphone is stronger on the relative basis, you end up with better hardware gross margins as well. we're at a point where the question is as commodity prices, which are extremely favorable for the last -- 50% year on year, can you keep this up when you go into next year when you have memory companies talking about 50% year on year price being higher. you have some real headwinds, increased competition from huawei and china, that's real. we're talk about units between 70 to 100 million units from huawei. what does that mean for apple in china? they have taken 20 million units of share over the last four

years, they'll give back some of that. i think management acknowledges that. you have offsets like india. it won't be the upside driver that people thought it might be. it is offsetting some of the weakness and the competitive issues in china. >> apple is performing like the greatest company in the world, but not like the uber greatest company in the world that it was for the last couple of years. just -- it is a minute slowdown in the second derivative. still got the top four phones in china, right? but overall sales sell in china, right? >> yeah, they did, right. you're flat to slightly down a percent or so in net terms overall. china was worse than that, three points down year on year. i think the deceleration is going to get exacerbated. the last year china had a ton of issues. like in the fourth quarter of last year, china really had the production shutdown that happened during the quarter. they also had an extra week in

the quarter, hit by fx, a lot of moving pieces to unpack from last year's fourth quarter. but we think that the china headwinds are going to continue, both from a revenue level, but also from a production standpoint where the supply chain shifts that are happening out of there. >> the outlook, how much worse was that than what you -- what kind of growth are you expecting next quarter in revenue? >> we were modeling about $124 billion, about $117 billion. so it was substantially lower. i think where everyone was surprised was the magnitude of deceleration within ipads, macs and wearables. that's what i meant by the lower end of the portfolio where it is not as sticky, not an accessory. you don't have to walk out of your house with a wearable necessarily or airpods, people swear by them, but i think that you do have to go out of your house with an iphone. it is less discretionary relative to all the other stuff that i think is using softness, which is inherently more

discretionary. so, the question is will that really start to creep up from a softness perspective and broader demand? >> it is a great fear of mine. i need to know where my phone is at all times. and i pass a toilet i get nervous, a swimming pool i get nervous. if i forget it and i can't find it and i have it on mute -- >> you mean both your phones, right? >> yeah. everyone's got two phones now. >> no. one. one phone. one problem. >> well, it depends. >> what's going on? >> well, you know, you got limitations when you use one phone. >> five kids calling me and my wife calling me on facetime, i can't do that on my corporate device, yeah. >> i don't understand why -- i'm not like dieing to have a titanium phone. i have a case anyway. and a better camera, but they

squeezed a lot of continuing growth out of stuff that really isn't that -- >> i think you have to look at it in relation or multiyear period. you're not replacing your phone every year. most people are not. but i think that -- or three or four-year period, like everyone upgrades and it is a huge upgrade, when you upgrade once every three or four years. you're looking at, like, stuff changes and camera functionality. and it is much faster, the apps take more, like resources. so, yeah, it is -- iou s wlday still very innovative. >> you don't park over a grate. i don't park over a grate. i get nervous. we got to go. thank you. "squawk box" will be right back. all g on countless invisible networks, making it a prime target for cyberattacks. but the same ai-powered security that protects all of google also defends the systems running america's infrastructure. for these services. for the 336 million of us living here. ♪

when you think of investment risk, do you consider climate risk? changing weather patterns are impacting the way we live and the value of businesses large and small. this can mean disruption to supply chains, changing demand for products and shifting regulation. what does this mean for your business, your clients, and your investments? ice offers data and markets that can provide critical insight. manage your climate risk with ice. fresh, warm hot dogs! when i'm not selling hot dogs, i invest in a fund that advances innovations like robotics. fresh, warm hot dogs, straight out of my torso! one for you, one for you. oh, you're a messy one. cool, right? so cool. anyone can become an agent of innovation with invesco qqq, a fund that gives you access to nasdaq-100 innovations. hot dogs! fresh, warm hot dogs! before investing carefully read and consider fund investment objectives, risks, charges, expenses

and more in prospectus at invesco.com.

this place is huge with the kids. fund invwhat are youctives, risksso afraid of?penses them? ♪ ♪ we're going to have so much fun together. good morning, everybody. stocks set to cap off their best week of the year as investors await today's october jobs report. ftx founder sam bankman-fried found guilty on all charges in one of the biggest financial frauds in history. he's now facing 115 years in prison. former s.e.c. chair jay clayton joins us with his reaction. and after a strong summer travel season, booking holdings sees travel slowing. we will hear from the ceo.

the second hour of "squawk box" begins right now. good morning. 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 on this friday morning with becky quick and joe kernen. take a look at u.s. equity futures at this hour. a lot of this by the way may change in the next hour and a half when we get the jobs number and we try to assess what it all means, but right now things would open lower of course after a very big day yesterday. the dow looks like it would open off -- my eyesight is going there, we have got -- two points. down on the nasdaq, 6 points. they put the screen quite far from me. treasuries as well, you can look at the ten-year and two-year. looking at interestingly at the two-year under 5. but as we said, an hour and a half away and the numbers may

move for us. >> 90 minutes away from the october jobs report. and senior economics reporter steve liesman joins us now. good morning. the ten-year yesterday -- >> these kind of moves are not supposed to happen with the benchmark security in the most liquid market in the world. >> for no reason. >> maybe not for no reason. >> must have been some reason. >> how mad would you be if you signed the mortgage the day before. >> yeah. >> never comes down. once they get them up there. >> they do. >> they'll move around. >> i'm thinking of the prime rate. >> what we're looking for in the jobs report is to confirm the outlook, which is in both the private sector and among fed officials that the economy is slowing and we don't need more rate hikes to ward off inflation. here are the numbers we're looking for, guys. 170. we'll talk about that in a second. strike numbers are in there, i don't know how much they were incorporated. that's down from the big miss to the upside of 336 the prior

quarter. 3.8 unemployment rate unchanged. average hourly wages, 0.3, up a tick from the 0.2 with the year over year ticking down to 4% year over year. let's talk about missed forecasting payrolls. the consensus has been off by a higher than normal 93,000 over the past year. up from a regular 76,000. this is plus or minus absolute numbers in the three years before the pandemic. that includes big surprises like last month the 336 was 171,000 above the wall street forecast. the consensus also is going to be challenged by the auto and actor strike. i'm seeing forecasts that may shape 35 to 50,000 off the jobs report in october. getting back in november. second, powell made clear in the press conference the level of job growth, it is not the most important thing. he wants it to cool, but more important is what you might call the level of pressure in the job market. that is whether the workforce is there to meet the demand for workers. here's the participation rate,

the percent of the labor force that wants to work or has worked. it is down about half a point from where it has been. it could be some scope for jobs to remain strong. and the workforce to grow to meet that demand. wages are another measure of pressure in the job market. they trended down. this is one of two jobs reports we get before the december meeting, so the fed will have plenty of data and time to figure out the next move. i'm going to have a chance to talk with sara eisen this morning with tom barkin, the richmond fed president after the jobs report. >> what do you think he's going to tell you? >> i will say one thing, tom has been really interesting, he's not an economist. comes at it from a business standpoint. and he has sort of pioneered this idea of the psychology of inflation. >> okay. >> and his -- some of the papers he's written, speeches he's given has been not that, you know, equilibrium rates, there used to be a culture in business before the pandemic, you don't

raise prices. after that pandemic, there was a kind of dam that broke. and it was okay to raise prices. and he's really interested in the psychology, where are we now in that process. of course, all the stuff, the supply, the demand and the shortages play a role in your ability to do that. but the question is, when you go to your guy and say, i need to raise prices 5%, does he tell you to take a walk or does he say, thanks, it is only -- >> remember, carlos gutierrez was telling us through the pandemic if businesses were smart, he had managed kellogg's down in mexico, massive inflationary periods, he said if they're smart, they better be raising prices now because if you fall behind on that inflationary wheel, you get crushed. and so i remembered him coming on during the pandemic and saying they better raise their prices. it is the only thing you can do. >> we talk clinically about it. we talk economerically about it.

>> he was talking about how the sneakers are now $160, $200 and how much elasticity is there in sneakers? >> he's worried. >> it is a basic sort of -- >> he said he thinks it will probably come back to 140. he thinks the upper bound will -- >> where is the bound? for the past two years, if you were sitting at brooks, you're, like, okay. >> we'ird thing where consumers had so much money. >> less money feeds back up the loop and becomes a different thing where also international, the international trade, the ability to say i'm not going to get it from you, i'm going to get it from somebody else at another country or another place, another factory. >> ian shepherdson is here, chief u.s. economist at macro economics. your expectation for what we hear at 8:30 but translate that for maybe what you think it does to the jay powell school of thinking and the rest of the market. >> yeah. so, every time we had a big

upside surprise , the next has been a downside. i assume the pat etern continue. i'm looking for below the consensus. >> and does the market love that? >> i think it does. provided the unemployment rate doesn't drop back down again. if unemployment hangs around the 3.8 mark and the payroll is 125, 1 150, that would play well. >> that's the equity side of the universe. >> bonds probably like it as well. we have a nice rally. bond market really wants to see some sustained evidence that pressure is diminishing. and i think that is where we are now in reality, whatever the numbers say, any given month. i think that pressure is beginning to fade. you can see in the wages data, in the business surveys, and it started to come through. >> with all this fading, and you play this out into 24, are you

then in a recessionary camp? >> close. this is very weird economy. you got the fed raising rates against a private sector whose finances generally look in pretty great shape. you got the fed pushing and you got the private sector pushing back, which it never had before. it is very uncertain as to how the dice are actually going to fall. i think growth is going to slow a lot. whether that tips into an outright recession, i think is kind of 50/50. but i'm pretty convinced it is not going to be a bad one. if it happens, it is not a bad one because the private sector is not in a sort of condition where you need a big correction. you need a big change in behavior. it is light-years away from where we were in '08, even better shape than 1990 or the recession of '01 and they were all very mild. >> do you think the market baked in a recession and we're almost past it, almost past it because it already hasn't happened but happened ahead of -- >> if they had baked in a recession, we would be in a recession. right? is that -- i kind of think that

businesses, they were on their guard and this is, again, a sector question. if you are sure a session is coming, you pull back your production and hiring. they didn't do it. i think they did less than they otherwise would have. if you look at the -- not just the predictions of the recession, but the hubris and certainty of the recession that was about to come but did not arrive, i was interested in your interview with mr. harvey there the other day, professor harvey in the last hour, who is so certain that the savings that went up for consumers, give me a buck for every time they told me the savings have gone up for consumers, they haven't. i'll leave it there. it may happen. it may happen next month. but it has not happened. is it coming, for sure? >> nothing is coming for sure. one thing i learned over the last three years is that nothing is certain. things you thought were

impossible will happen over and over again and things you thought would be certain don't happen. that's the lesson of the last three years. this is why jay powell talks about forecasters need to be humble. >> here is a related question -- >> the future is uncertain -- >> at the tippy top of the show, joe made an important point, we were talking about the -- a year from now there will be a presidential election. >> everyone is thrilled about it. >> thrilled about it. where do you think the economy is come september or october of next year? >> i think that whatever happens in the next six months or so, it is probably on the way out of that by the time the election comes around. but i don't think we're going to be seeing an economy at election time that is either a meltdown or in some sort of boom. it is going to be meh. so, that's my story for the whole of 2024. starts off really meh and less meh by the end of the year.

not a great year and probably have a higher unemployment rate, but we'll have much lower inflation. much lower inflation. >> okay, so if that's the case, i'm going to paint a different picture. this is the clip they're going to roll back a year from now when it is terribly wrong. you said inflation is coming down. if inflation is coming down, it is likely the fed is cutting rates. if the fed is cutting rates, all of a sudden the fear from professor harvey of the meltdown in the banking system from the banks and what is on their books kind of goes away and eases back. banks might begin to lend. we could be that scenario starting from the foundation of lower inflation could spin a much more optimistic story. no? >> probably for 25 rather than 24. i think -- these things take a long time to work. that's the other thing we have forgotten. we're all very impatient. we want things to happen quick. >> you're in the -- you're in the gundlach camp of thinking that we're going to really cut rates 200 basis points?

>> 200 basis points. i'm more in the you know what i don't think the fed is going to remain on a real basis tougher than it needs to be. it will have to automatically reduce rates because if ian is right and inflation comes down, the fed doesn't want to put that much pressure on the economy. it will ease back gently to provide either a stable or slightly lower real rate. >> yeah. i think they'll cut by 150 next year. >> that's a lot. >> it is a lot. and they're not going to flip and not going to say anything like that until the last possible second because they want to retain optionality after the whole transitory fiasco. they can't be wrong again in the same cycle because it looks like you didn't learn from the first mistake. hold on to this line until they can't hold any -- >> make new mistakes. >> maybe they flip. >> maybe they do. >> ian, thank you. steve, thank you. we'll see you in a little bit. >> how many people in the -- we got these two people, right, running. the only people in the u.s.

right now, 340 -- >> could have been. >> that's a lot of people. a lot of people to choose from. >> an opportunity to have different candidates. i'll run the numbers for you. >> 341.9. >> over 35, they have to live in the country, so -- >> got to want to be -- >> got to be out of your mind to be president. >> still 200 million others that we could have picked. >> don't you talk. are you voting? >> no. >> okay. >> stay out of it. >> sometimes it is better. >> i know. i'm kidding. i'm kidding. we want your input. i'm kidding. >> when we come back, booking holdings says it is seeing a slowdown in tracvel demand in israel because of the hamas war. we'll ask if it spread beyond that. the stock was down yesterday among concerns of just that. the ceo will join us next to talk holiday bookings, the

consumer and me.or and later, transportation secretary pete buttigieg is in town and will join us on set. that's coming up in the 8:00 a.m. eastern hour. "squawk box" will be right back.

c'mon, we're right there. c'mon baby. it's the only we need. go, go, go, go! ah! touchdown baby! -touchdown! are your neighbors watching the same game? yeah, my 5g home internet delays the game a bit. but you get used to it. try these. they're noise cancelling earmuffs. i stole them from an airport. it's always something with you, man. great! solid! -greek salad? exactly! don't delay the game with verizon or t-mobile 5g home internet. catch it on the xfinity 10g network.

pent up consumer demand for travel has boosted industry players this year. but uncertainty in the middle east could cast a shadow over international travel. joining us now to talk more about it is glen fogel, booking holdings ceo, a cnbc ceo council member and, glen, welcome. i know you had very strong earnings that were better than the street had been expecting, but it is the forecast that you gave that caused some concern. the reason the stock is down by 3.6%. people were worried about the idea that there was a slowdown in travel to israel and worried that that could spread beyond just the israel travel picture. what do thinks look like right now? >> thank you for having me, becky. last night we produced some really great numbers. we showed that we have new records in our room rates for the summer. we talked about our gross bookings, $40 billion worth for the quarter, that is also a new record. people are concerned about what the situation is in the middle

east. and we talked about last night that israel including inbound israel only about 1% of our business, and if you look at the middle east, broader sense, and include throwing egypt, throwing turkey and you talk with inbound there too, that's 7%. in the long run, people are going to want to always travel. there can be all different things happening all over the world, but we know that people return to travel as soon as that area gets better. we saw this with the ukrainian russian war, we saw a big dip immediately when that -- when russia invaded ukraine, particularly not only in ukraine and obviously russia, but you had issue with the eastern european area, backing off. but then coming back. for october, we looked the week october 7th, sure, there was a dip. but then we saw it start coming back, we talk about the end of october, things getting back to normal. so we talk october, 8% increase in year over year room nights. if you take out israel, 9%. and we expect for the quarter,

fourth quarter, 9% growth. so i'm very pleased with where we sit. >> so you think it was an overreaction by the street and thinking that this was going to be a bigger hit to bookings than you actually have seen? >> i can't really interpret what people who are the investor community, they're thinking how much israel, middle east is impacting -- i'm saying look at the numbers, look how we did, look what we're projecting forward and think about the long run. and then i would say then consider us versus others and that's how you make evaluation. >> international has been such a bright spot. that's been the profitable travel for the airlines, it has been where so much of the profitability comes. what do you see on international travel right now, writ large? does this go beyond the middle east in terms of concerns that people might have about booking? >> i don't think so. we see international growing very nicely. we're happy to be back to where we were 2019 in terms of international travel. that's even with some parts of the world still not back to 2019 pre-covid levels.

asia, nicely coming back, but we always are talking about how where the u.s. is and where europe is and people talked about china, for example, where the outbound traveler from china is still the numbers are still well below where they were in 2019. that's a tailwind for people in the travel business. >> most of your revenue comes from non-u.s. travel, 89%. >> well, depends, i would say we're very global, which is great, because there could be one area where there is a problem in the world but other areas, still a lot of travel. we like to be that diversified. >> what are you seeing in terms of the u.s. consumer, how they're feeling at this point. we're trying really hard to figure out if the consumer is running out of gas when it comes to their spending ability. >> yeah, you know, and i listened to your guests talking about that, we continue to see strong travel. we see this globally. i understand some people say, well, higher interest rates, maybe people won't buy the new

car, maybe they're not going to upgrade their kitchen, things like that. but the great thing about travel is people are always going to want to do that. and as people get wealthier and that's a long-term trend, the world continues, gdp continues to increase, per capita gdp continues to increase. people want to travel more. so there can be short-term volatility in some parts of the world and sometimes people may pullback on discretionary spend, but i think travel is one of the last things people pull back on because they missed down on three years of travel due to the pandemic. >> glenn, we like to talk to people about a.i. and how they're implementing it in their companies. you are using a.i. in terms of trying to book better trips or help people anticipate or help anticipate what people would want to do on those trips, right? >> yeah, absolutely. look, we have a couple of products already out in the market with people. we have a thing at priceline.com called penny, it enables people before they buy, they can ask all sorts of questions. one of the most popular ones is

can i bring my dog or not? it is great to answer them right there or not. we also have our booking.com company, an a.i. trip planner that enables people to use chat a.i. to be able to figure out how they want to go, where they want to go. they use our information and they use large language models. together we can create some great things. in the short-term, increasing productivity, efficiency, our developers, software developers using co-pilots to code faster, our customer service people being able to do their job much faster using all sorts of chat a.i. all sorts of things that look really promising. but i will say it is still early so i don't think we'll see some of the great things next quarter. but i do think in the long run these could be great things for our company. >> i'm telling you, if i can ask right now if i can bring my pet with me, that's a very useful immediate reaction, something i would be into. >> it is great because people ask that and they ask, like, we say, yes, and then the question that i have seen come back is, but i have a really big dog and

our a.i. can go back and answer that, so it is a conversation just like you do with a human being. >> all right. that is news you can use. glenn, thank you for joining us today. glenn fogel. >> thank you. coming up, sam bankman-fried found guilty on all seven fraud charges, now facing up to 150 years in prison. former s.e.c. chair jay clayton will join us next to discuss. the futures right now are indicated down a little. but flat. except for the nasdaq, which is probably -- apple down three or four points. "squawk box" will be right back. >> announcer: time now for aflac's trivia question. what year was the standard time act passed creating daylight saving time? the answer when cnbc "squawk box" continues. gaaaap! did this goat just say 'gap'? he's talking about expenses health insurance doesn't cover. but with aflac, you can get money to help close that gap.

aflac, huh? -aflac! -ahhhh! okay! oh! duck - 1, goat - 0. get help with expenses health insurance doesn't cover at aflac.com -you want to race? -for real? i think i'm ready for this.

doesn't cover at aflac.com heck ya! with e*trade you're ready for anything. marriage. kids. college. kids moving back in after college. ♪ finally we can eat. ♪ you know you make me wanna...♪ and then we looked around and said, wait a minute, this isn't even our stroller! (laughing) you live with your parents, but you own a house in the metaverse? mhm. cool...i don't get it. here's to getting financially ready for anything! and here's to being single and ready to mingle. who's ready to cha-cha?! ♪ yeah, yeah ♪

>> announcer: now the answer to today's aflac trivia question. what year was the standard time act passed creating daylight saving time? the answer, 1918. it was signed into law on march 19th by president woodrow wilson.

welcome back to "squawk box." sam bankman-fried found guilty on all seven charges of fraud and conspiracy. it happened last night after a swift and very quick verdict. former s.e.c. chair jay clayton joins us to discuss what it means and where this is all headed. curious your reaction as we all heard the news that the jury would be coming back with a verdict as quickly as it did. >> well, andrew, we talked about this in the past, this was a very crisply and carefully presented case. i think that, you know, most of the betting line that was watching the case saw that. the issues for the jury to grapple with at the end of the day with all the testimony including the cooperative testimony were pretty clear. so, look, you never know, but it was not a great surprise that

when the judge said stay until 8:00 if you like, that three hours was enough time to get through all seven counts. >> jay, here's the question, we were talking about this in the last hour. at this point, there is still the potential to bring a second case against sam bankman-fried as it relates to campaign finance reform and how he had been moving some of that money around. that decision doesn't have to come from the prosecutors until february, the judge said yesterday. the question i would ask you as a former public servant and somebody who lives in this world, if you are a prosecutor, do you say to yourself, you know what, enough's enough, we have done the work, he's going to prison for the rest of his life, and it is not worth the tax dollars to keep going. or do you say that there is a point that needs to be made from a deterrence perspective or something else in terms of wanting to expose and put on record what has -- what took place? do you decide to prosecute that case or not?

>> as a citizen, i'm in the latter camp. i think that damian lillian appropriately characterized this as one of the hugest financial frauds in history. as i see it, this is one of the largest campaign finance problems in history and it is high profile and as a citizen, i would like to see this case pursued. how it gets pursued, whether there is some kind of plea agreement, but the facts of what happened here ought to be on the table because, you know, sam was not the only one participating in this campaign finance scheme. >> who else was, jay? >> i don't know. that's the -- >> it appears that all of the people who already pled guilty in this other case that were cooperating witnesses were party to what was taking place because they were doing it through their names and talking -- the mother

may have been involved, the father may have been involved, it is unclear. >> and, look, i'm not a scout for scout say kind of person, but this is -- this goes to election integrity and all of the things that, gosh, they're in the news in so many ways these days. i think it is something that the american people should see what happened here, see what is legal and illegal and, look, take the opportunity that people are paying attention to demonstrate what is permissible and not permissible. >> if you're him, i assume at this point you would plead guilty to it just because you wouldn't want to spend the money to fight it if you're going to be in prison for rest of your life anyway, right? >> well, you're right. that's why i use the word resolution rather than trial. the dynamics around whether this is a case that results in a plea agreement and the like or one where you have to put the facts on trial, i probably lean for all the reasons you said toward

some type of settling resolution here. i would -- i would like to see it pursued. >> if you don't pursue it, i think it probably raises the question too of the political backlash on that. if you're pursuing election fraud against donald trump and things and sam bankman-fried was largely giving to democrats, it looks like you're turning a blind eye if you don't pursue it, i would assume. >> look, i think you're exactly right. the question of whether to pursue something or not also has to come down to ramifications of not pursuing something, where many of the facts are already in the public domain. many questions would be asked if this case were just dropped. >> okay, jay, sentencing. so, as you know, this could go i think 110, 120 years. not 30 yet, i think. so, what do you think is a fair

sentence? >> look, that's like what's -- where are rates going? i wish i knew. >> but, you know, i'm making you the judge and the jury. in this case, the judge because there is not a jury who is going to sentence him. >> for one of the largest financial fraud crimes in history, yeah, i think you benchmark two other things, andrew, and what we have seen, you know, in the range of, you know, 15 to 30 years, something like that. >> you don't think he should die in prison? >> you know, lifetime is a long time. everybody has their different views on this. i'm, you know, that's something that when the state takes your entire life away, i feel that way in a lot of things, it is a personal point of view, that's a big -- that's a big step. i would have to be quite convinced that that was the only potential remedy here to put somebody away for life. >> jay clayton, always good to

see you. appreciate it, thank you. >> thank you, andrew. >> great. we're coming right back in just a moment. e360 smart bed lets you both sleep up to 13 degrees cooler or warmer on either side, and at your ideal level of comfort. >> announcer: this cnbc program is sponsored by baird. visit bairddifference.com. smart bed is only $899. sleep next level. shop now only at sleep number

welcome back to "squawk." to dom chu with a look at this morning's premarket movers. >> andrew, the big one has to be right now the earnings edition of this has to kick off with apple. that stock down just about 2.5%, taking a dip despite beating on both profits and revenues. now, overall revenues, sales numbers, fell for the fourth quarter in a row. and finance chief luka maestri warning revenue will come in same as last year. dow component, big weighting for the s&p 500. nasdaq down 2.5%. square surging by 16.5%. the company reporting an earnings beat and seeing strong revenue growth in cash app business and its square business as well. block is also raising its full year guidance for key measures of operating income, pretax

profitability, and others. so block shares up 16.5%. and on the flip side, fortnet, sinking, down 23% in trading so far. third quarter earnings here missing the mark, also revenues, billings and guidance as well. analysts are dwrowngrading thato neutral from overweight and lowering the respective price targets, citing head winds and messier outlook. so you can see down 9%. prior to this quarterly report, it was up 18% for the year and now you can see there down 9%. a lot of ups and downs, but apple the big headliner of the morning. becky, back to you. >> dom, thank you very much. for more on the markets, we want to bring in sarah malik, chief investment officer at nuveen. watching all this, the crazy moves in the treasury market and what that has done to equities, what do you tell investors? >> the question of the week was will they or won't they and that

was with the fed in terms of will they pause on interest rates and they did. that caused deals to fall and markets to rally and it also allowed investors to focus on micro. earnings season looks strong. beats 7.5% and exiting a three-quarters earning recession with expected 4% growth this quarter. all that together i think leads to a santa claus rally for the rest of the year because markets tend to be strong in the fourth quarter. so i think investors are relying on mixed economic data, we'll see payrolls in an hour, which is calming down the markets and key has been that declining yields and that's the tailwind for the markets. >> you would tell investors to chase this, if you haven't already started buying, you missed the bottom and you better run after this. >> we had about may lows about a week ago and 41 and change on the s&p 500. and with earnings coming in pretty strong, and yields continue to moderate, there is upside for the market. fast-forward to 2024, second half of the year, you probably

do hit that recession, but we'll find out in less than an hour whether september payrolls was a one time fluke. probably 300,000 plus is a fluke. i think payroll beats this quarter, some pull forward in holiday hiring. payrolls can come over 200,000, that's a beat. the economy is still resilient and that is positive for the market. >> is that -- is that positive for the market or negative? because if it is too strong, you'll worry that the fed will come back next time around. jay powell left the door open for additional rate hikes. >> i think the question still remains do we get one more insurance rate hike and we could, maybe in december, maybe sometime in early 2024. our view is that we will not be getting rate cuts in the first half of 2024. maybe in the second half of 2024 that's when you'll see that. and, yes, exactly, depending on the day, good news, bad ews, but lately with ism data coming in weaker than expected, it started to settle investors into thinking that the economy is strong enough to keep earnings growth resilient, but so strong

that it causes the fed to diskin on rate hikes over and over again going forward. we see up to one more rate hike and then the cycle is done. >> i wonder what the market's reaction would be if the numbers were strong and then as a result the fed hiked rates. if we pin everything on the crazy moves, and the treasury complex and the massive gains and equities, on the fed pausing, which is what basically everybody thought they were going to do yesterday, what is the reversal if that turns out to not be the case next time around? >> well, two things to watch will be employment markets, if they really -- if what happened in september is a new trend and they accelerate from here. that will be inflationary. we need to watch wage inflation. of course, inflation data, cpi and ppi were mixed because the consumer is still spending. flip side is we are seeing cracks in the consumer. auto and credit card delinquencies are up significantly for the consumer. that slowdown is happening. as long as that continues on a moderate trend, we're past the peak. it will be somewhat downward and

to the right, not at the speed that will get us straight into a recession, but enough i think so that the fed can keep their foot on the pause button and maybe just hike rates one more time. >> yesterday we spoke with robert kaplan, the former dallas fed president and he said he thinks it looms very large on powell and company's minds, jay powell in particular, of what happened to volcker when they stopped raising rates and inflation came back with a very rapid and vicious pace. if that's the case, it could be a more hawkish fed than you're thinking and other investors too. >> i think it is very important the fed does want to maintain their credibility and that's why we're looking for an elongated pause rather than just moving from rate hikes to rate cuts. i think that's where the market made a mistake this year, they were at the beginning of this year, looking at rate cuts at the end of 2023 and the first half of 2024, that keeps getting pushed out. inflation doesn't meet their 2%

target until late 2024, even into 2025. and that's why you're going to get this elongated pause. that doesn't have to be negative for the markets. as long as earnings are still growing, and i mentioned we're coming out of a three-quarter earnings recession, just this quarter, then i think the markets remain resilient and price off of earnings and they're okay with the fed holding. the fed does not want to make that mistake and jump the gun and say we have beaten inflation, we're moving into rate cuts and we end up in a problem and we need to unwind that. >> sarah, thank you. have a great weekend. >> thank you. you too. ysoo ming up, george p. bush sa tany republicans are cheering on the biden administration's antitrust excesses. he's going to join us to discuss that. "squawk box" will be right back. you can't buy great conversations or moments that matter, but you can invest in them. at t. rowe price our strategic investing approach

can help you build the future you imagine. t. rowe price, invest with confidence.

elon musk telling uk prime minister rishi sunak he expects a.i. to wipe out all jobs eventually calling it the most disruptive force in history. musk adding that a.i. cannot be

controlled, but leaders may be able to guide it in the right direction. >> here we are for the first time really in human history with something that is going to be far more intelligent than us. so, it is not clear to me we can actually control such a thing, but i think we can aspire to guide it in a direction that is beneficial to humanity. but i do think it is one of the existential risks that we face and potentially the most pressing one. >> that -- you really take it out to the logical conclusion that is where you arrive, and that's why some of these sci-fi writers are so prescient with the rules for computers, et cetera, never harm a human, always the most important one. but i don't know how you -- >> and the definition of harm can be much broader, harm

physically or harm them by, you know, some of the reputational damage you do or lying about what you're doing. >> if it's -- the singularity when machine knowledge is a billion times what all human knowledge combined and they have a billion times the knowledg that, and think about what -- we can't even -- that's why we can't even imagine what it means, yeah. >> we have watched it play out in science fiction. and in novels. >> there is novels where it is all between thinking machines. there aren't any humans anywhere. >> and it's here. when we come back, republicans reaching across the aisle for more government regulation in y.e econom george p. bush, the former texas land commissioner, the son of former florida governor jeb bush joins us to talk about this. we'll be right back.

c'mon, we're right there. c'mon baby. it's the only we need. go, go, go, go! ah! touchdown baby! -touchdown! are your neighbors watching the same game? yeah, my 5g home internet delays the game a bit. but you get used to it. try these. they're noise cancelling earmuffs. i stole them from an airport. it's always something with you, man. great! solid! -greek salad? exactly! don't delay the game with verizon or t-mobile 5g home internet. catch it on the xfinity 10g network. - after military service, you bring a lot back to civilian life. leadership skills. technical ability. and a drive to serve in new ways. syracuse university's d'aniello institute for veterans and military families has empowered more than 200,000 veterans

to serve their communities and their careers. from professional certifications, to job training, to help navigating programs and services, we give veterans access to support from anywhere in the world. a lot of times we would call someone commission, but i don't think we do that, though. usually senator or governor, even if they aren't anymore, but with you i think we need to look to the future. some day, what will we be calling you, former something? what's your political future?

let me ask you that first. >> thank you again for having me. it's been a while, but i love my state, love my country sh served in the military, served two terms of the commission. if the door opens the way to serve my great state or great country, i'd love to jump in there. but for right now, loving my private practice, being with my family, and writing in the "wall street journal." >> did you go to any games? how many did you go to? >> unfortunately, i didn't make any. >> you could have gotten some good seats, couldn't you? >> i'll come back next year. i'm a coach of both of my little league baseball leagues for both my sons. my responsibility comes to my family first. we pulled one out the week that i was out, so in the end i think i won. >> i'll call you george p., i guess. man, you're preaching to the choir here. it's not just google and amazon

where you see some -- you know, that's the one bipartisan area we have. they both -- and in washington, both parties seemed to -- certainly, you have noticed that it's not just google. they haven't found a single company that's not too big or not too powerful in terms of bringing a suit against it at this point. it's crazy. but you think republicans are complicit. >> i do. you know, so you had mentioned, you know, the google antitrust case, but the doj has also filed suit against amazon recently. they're investigating apple, as well, and it really is reminiscent of what you have seen in europe. so, we are moving in a pathway towards european style, regulation towards innovation, and that's a dangerous path to take and one that president reagan himself wouldn't take. he was famously quoted as saying that government can be summed up in a few words -- if it moves, tax it, if it keeps moving, leg

l regulate it, and if it stops moving, subsidize it. in my op-ed, i talk about the unfortunate republican party listening to the sweet songs of populism. whether it's antitrust, trade, an inability to tighten our belt when it comes to federal spending, we've suddenly joined the progressives when it comes to a larger viewpoint as to government's role in our lives. that's why i pointed out that op-ed, my friend, former attorney general barr, responded in kind, but -- and we agree on a whole host of other issues, but on this one we disagree. >> it's very clear, in europe, it's about competitors. it's about jobs being lost by competitors if a company is too good at what it does. over here, we rightly used to think of it as what benefits customers. so, if you get a company that's

really good at what it does so that it crushes competition, that doesn't mean that laws are being violated in terms of monopolistic practices. but that's our viewpoint, by definition, if you have a large market share -- and you don't even look at whether the customers are being damaged or not. you just figure, look, competitors are unable to enter this market so we need to break these guys up. it's insane. >> exactly right. under the sherman act, it's not necessarily illegal to have a dominant position in a market. what is illegal is to abuse your power. what is illegal is to engage in anti-competitive behavior. that's why these cases are rarely brought. this is the first landmark case brought in multiple decades. but the harmful path and the punitive direction that not only the biden administration but the trump administration has taken against tech is having an

impact. why is it that ywe're asking executives ss ss to constantly a repetition of interviews? we stood behind capitalism. allowing these different ideas to play out. so, your prior segment touched on ai. it will change search in a huge way. you could argue the google antitrust case filed in 2020, ai has been around for a while but hasn't been perfected in a monetizable way. recent reporting, whether through microsoft or google, showed it's transforming the way that we search. i i'll also add, joe, there's recent testimony provided, a great metaphor by an executive at google that compared google to grandpa-style encyclopedia

google. the way our kids are getting information through vertical search channels on social media are changing the way we're getting our information. consumers want it to be accurate. they want it now and readily available. these suits impede that ability for consumers to get what they want. finally, i'll just say that i don't believe that the department of justice brought one consumer on the witness stand to actually testify and say there is harming with brought against them. that's what these cases are supposed to be about, not government getting in between two companies that are competing and warring over who should have domicile. >> you made a point. there's not a problem, any problem on certain circles in washington, any problem, the only way to address it is through government intervention. that's not how we got to our pre-eminent position in the world. and we are definitely headed that way. i hadn't thought about it the

way you wrote about it, that both sides are -- one side could stand up for business, but we really can't anymore. >> well, you know, and it's a very dangerous position when you allow people, whether it's, you know, the far left or the far right, to rise to power -- positions of power and bring these suits. >> as we're seeing in other situations with the far left and the far right. it's almost like they meet, space/time, they meet on the other side. it's hideous combination. >> a.g.s should be focusing on fentanyl and sam bankman-fried. >> we have to run. we have a little bit of a delay. i apologize for cutting you off. former land xhipgser -- we need t's w title for you. leget back in public service, mr. bush. good to have you on. thanks. to get to this milest. the new york stock exchange is a symbol of what america is all about the potential of an american dream.

it is day one. a lot of work has happened to lead to this historic moment. the only way you can move a society forward is a true expression of freedom. (♪♪)

when you're wearing the world's coziest slippers, your comfort zone can be just about, anywhere. step into your comfort zone with olukai. charges, good morning. sam bankman-fried guilty on all charges. don't look now, but we are closing in on the october jobs report. the markets on wait-and-see mode after a powerful rally on thursday. we get those numbers in just a

half an hour from now. and transportation secretary pete buttigieg joining us on set to talk infrastructure from tunnels and roads to the nation's ports, air travel, evs, and so much more. the final hour of "squawk box" begins right now. good morning, and welcome back to "squawk box" here on cnbc. live from the nasdaq market site in times square, i'm joe kernen with becky quick and andrew ross sorkin. 8:30 is the october jobs report. ahead of that report, the futures are basically flat after a big up day yesterday. we move fast in this news business. we were on sbf watch.

>> down at the court this morning i think. >> right. we'll talk more about that. but we are thinking about 8:30. here's the treasury yield. the 10-year made a fairly big move yesterday. it's only basis points because we're still pretty low, but to go from 5.00, 4.64 in a couple days, in large part explains that 700-point move to the dow we had the previous two sessions. i spoke too soon, becky. >> sam bankman-fried, we're still talking about this, because he was found guilty on all seven criminal counts in the fraud trial last night. he is now facing more than 100 years in prison. we want to get more on this from kate rooney, who has been covering this trial from the start. that happened really quickly. >> yeah. this was a fast verdict. the u.s. attorney calling it one of the biggest financial frauds in american history. sam bankman-fried's guilty verdict comes almost a year after his crypto company went bankrupt. he was convicted across the

board on seven counts of fraud and conspiracy on lenders, investorsing and customers. it was an emotional scene last night, his father doubled over when he heard that verdict, burying his head in his hands. his mother was crying. bankman-fried staring straight ahead. the whole process only took around four hours, including a dinner break. a news mpbsconference after thi damian williams, said "we have no patience for it." the prosecution described ftx as a pyramid of deseept, presenting evidence showing bankman-fried knowingly siphoned billions of dollars from his crypto to his hedge fund. he continues to maintain his innocence and will continue to fight the charges against him. >> kate, thank you. we have a newsmaker at the table, transportation secretary

pete buttigieg attending the celebration of the third phase of the hud zone yards project. it will connect the gateway hudson tunnel to penn station, replacing the 100-year-old train tunnel under the hudson river. secretary buttigieg joins us now to talk about infrastructure and labor. i want to talk about a hundred things. >> good. >> you running? you're here in new york. the marathon is on sunday. >> you've run marathons before, haven't you? >> half marathons. a lot this summer. i'm going to cool it far while. >> you're headed to hudson yards, and this is a bit of a celebratory moment of sorts for what you guys have been working on in terms of infrastructure. what do you think -- economically, when people look at something like this, what is the actual implication, and what kind of true dollars, economic growth do you think comes off of a project like this? >> yeah. this is about more reliable

train service in a tunnel that hundreds of thousands of people a day count on. it's more than 100 years old. so, we're undertaking one of the biggest public works projects in u.s. modern history to fix it. if something went wrong, if that tunnel became unavailable, and it's needed that work for years and years, the economic implications are such that you would feel it at our house in michigan. meanwhile, of course, there are all the jobs that are created along the way. just last night i saw a bunch of people in the community of businesses that are excited to compete for the work that is going to be done. >> right. >> so, for all of these big public works projects, there's really two economic stories back-to-back. there's of course the ultimate benefit of being able to use it, or in this case, knowing it will be reliable. there's also the benefit along the way of construction, engineering, planning, even just the accounting services, the food trucks, all the things that go into that big project. >> the reason i ask is i think

we're at very unique moment where the conversation in this country has turned about spending, spending in this country. what are we spending our money on? we had druckenmiller on earlier this week. the amount of debt. moving from crisis to crisis. spending money on both war. >> announcer: ukraine and israel. i think there's big question of how we spend and how we spend in a way that makes sense, that's not a shot term solution, meaning construction jobs are great in the moment, may not be great in the future, and how we should actually think about all this. >> and what i would say is we're talking here about the supply side, not so much in the 1980s sense of what was called supply side economics, but that the dollars need to go into building up the productive capacity of the united states. remember, the shape of these infrastructure projects in this bill, very different from the last time you saw anything like this, which would have been different scale but the stimulus work that was being done in '08 and '09.

it was about that demand, get t the money into the economy as soon as you can, with shovel-worthy projects because we're interesting in building up the supply side of our economy. >> your role in transportation. what do you make of the uaw deal that's just been reached now with all three automakers? and what do you think lit do both on the worker side, which obviously will improve their live, but also on the cost side and the inflationary side of vehicles, the average cost of a car is going to go up by about $900? >> look, i come at this from the perspective of a son of south bend, indiana. our city was home to uaw local 5 and 9. i saw how the middle class of my hometown was built through the fact, not just that the jobs existed, but that auto jobs were good-paying jobs. and our city, even for decades before i was born, was recovering from the aftermath of losing studebaker in 1963. what we have on our hands right

now is obviously a new chapter in the automotive industry starting with some of the new technologyings that are coming on. >> right. >> and wanting to make sure they're made in the u.s. is a priority of ours. and we want to make sure they're good jobs. those good-paying jobs means there's pressure on the companies to innovate in the same way we need to put pressure on to innovate with our fuel economy standards. but every time they figure out a way to do it and make a great product. >> you want to innovate and automate. that could be the issue, that it forces each an quick automation, competing with tesla, much more automated, uses far fewer employees. the best laid plans could end up hollowing out the same thing you talked about, that could happen to this industry based on being noncompetitive because of these new deals. >> what happened in south bend -- take south bend as a case study. it wasn't that studebaker became more high tech and was using labor in different ways.

they couldn't keep with the times, didn't innovate enough, and went belly up. >> all the jobs got outsourced. >> steel jobs. >> that can happen again because now the big three is no longer competitive because of these outside -- >> i think they're going to remain competitive. i think they'll be competing in different ways than -- >> now with evs? >> from one year to the next, you'll see some of these ups and downs. we drive a pacifica. i never thought i was going to be a minivan person. >> ev? >> it's a plug-in, a hybrid. >> you want an ev. >> totally. >> he's got a pacifica. >> we plug it in, the first 30 or 40 miles it runs on electric, then it switches to gas on a long road trip. but my point, the u.s. auto industry, the newer companies that grew up around this, like a tesla, or the big three, they're all finding ways to compete on -- yes, they have to obviously make sure they keep driving the costs down, but also

they're competing on quality. we're excited about that. i think a great motivated labor force is a big part of that too. >> i come from a union background too. my grandfather was present of the carpenter's union in indiana. but one of the things they agreed to today that shocked me, the big three will be paying strikers a daily wage for all the days they striked? i mean, that seems like a crazy setup because you don't want it to be easy to strike, you don't want it to be -- it hurts everybody. that's what the funds at the unions were for. strike funds. >> that's just -- >> that's like in a negotiation, you don't agree to pay the other person's attorneys' fees, because you want people to force things out before it gets to that extreme measure. >> sometimes you do agree to pay the other person's attorneys' fees. those are things they worked out at the economic table. i wasn't there at the table to see all the dials they were turning. but i don't think you'll ever have a situation where workers

go on strike lightly. it's just such -- >> seems like it sums it up. >> for them, their families, as well as for their companies. i think the outcome of this is going to be a level of assurance on the quality of life that comes with these jobs. this isn't happening in a vacuum. they were pushing for their income to grow in a way that corresponds with the company's income and the executives. >> you did see our automakers -- gm and chrysler specifically -- fall into bankruptcy. we've seen this movie before. and i think people could fairly say part of that was a function of an overextension of dare i say of benefits to workers. i mean, i think that -- it's almost empirically true, even though it may be painful to say because we're all sympathetic to the workers. how do you ensure that, especially at a time when there is this transition to evs? >> you saw what -- they warned about -- these millions of

losses that they're occurring right now. >> that was about the structure of the compensation, not just about the level of the compensation, right. an actuarial picture of what it meant to compensate people through those defined benefit plans looked different by the 2000s. yes, of course, you have to adjust the model and the structure as well as the level, but the bottom line is there is more than enough in terms of the value being created, measure of it to be shared with the workers who create it. that's the premise, and that's what these negotiations have led to. >> speak to us talking about evs. nikki haley was here about a week ago. she effectively made the argument that the country is pushing the automobile makers to go too far and too fast as it relates to evs on two fronts, one, arguably diminishing and you're seeing this in news reports from the automakers, which is to say they're not hitting those numbers because they say there's not enough

demand. that's a market-based issue. the other piece is that the infrastructure for evs isn't there is what she said, both on the charging station issue and then, she argued cars were -- evs are so much heavier and that we haven't improved our roads enough. i don't know if you want to respond to either of those things. >> obviously, we're improving the roads. that's why i'm in new york. same thing with the grid. if the question is can we run tomorrow's cars on yesterday's grid, the answer is of course not. but the answer is also not to pickle the old technology and assume that we can make it last forever. the answer is to fix up the grid, which is literally what we're doing. i have to sound very skeptical of the prescriptionings for the auto industry that come from some of the same people who a decade were saying just let it go bankrupt. we have to make sure that we are competitive in a future, electric future -- >> -- people like harry wilson, who was on the board putting

things back together last time around to make sure they didn't go bankrupt. it's not just people who were on the sidelines saying -- >> my point is -- my point is the decision to rescue the u.s. auto industry, which i also believe was a decision to rescue communities, was vindicated. that worked out. >> but people are saying a lot of things going on around this time are too much. >> back to the original question, this is really important, the trump administration allowed china to take the lead in evs. and just putting your head in the sand and saying, well, maybe evs won't be a thing, is not an answer. that is how you get another generation of rusted-out factories and dead companies because -- >> tesla did pretty well. >> phenomenally well, but at the end of the day, the policies of the last administration allowed china to get an edge that we are now racing to overtake. and i believe we will. because we have these policies that not only incentivize demand but try to make sure we're supporting the development of the right kind of market.

these interventions are never going to be 1,000% perfect. and we want the market to do most of the work. but when we see a chance to take care of what is manifestly a public good, like public infrastructure, like roads, like the tunnel we're announcing today, or like element tofgs grid, then that's our responsibility. so, the question is do you need to take steps to make sure america is ready for this electric future? the answer is of course. but we can't use that as an excuse to sit still, because when you constitusit still, you lose. >> from the ground to the air. a number of reports about these sort of near collisions taking place with planes. god forbid they ever happen, but they're scary when you read them, about these moments that -- where there are these super close calls, super close calls. and it's almost by the grace of god go i kind of thing. >> it's not the grace of god. it is a multilayered aviation system that, even if one piece

fails, another one catches it. the aviation safety record of the united states is -- >> it's fabulous. yet these reports seem to be worse today than they were five or ten years ago. tell me that's wrong. i don't know. the question is, if that is the case, what you need to be doing about that as it relates to training, as it relates to having more faa employees, et cetera, and technology. >> i'm really glad you mentioned technology. ai is part of the picture of how you manage the future of the air space, because some of these thing rgs computation ally addressed. addressing these close calls are a new priority of our administrator. mike whilt kerr just got confirmed. these happen every year, but the only acceptable number is zero, especially true now that we've driven the number of fatal crashes in airlines to zero, which is incredible. 40,000 people a day -- sorry, 40,000 people a year are killed

on our roadways, and we kind of treat it like it's normal. that's like a 737 every day. we have the most complex air system in the world and we're working to keep it that way, not even a collision, but even something that could have theoretically led to a collision, if planes are 1,000 feet away, we're going to investigate and step up to deal with it. you mentioned technology. i would be remiss if i did not mention that the house republican mark that they're prepared to vote on that funds our department is about a half a billion dollars short on the technology and systems that we need in order to keep our system growing. i think most people, if you even have casually followed the news about aviation, you know we need more air-traffic controllers, more up to day-to-day technology, not less. >> one relate t tech question to bring us back to the ground finally, which is i don't know if you saw, but gm cruise, the autonomous car service, that was operating in a number of cities, including san francisco, effectively has ceased its

operations currently in terms of cars on the road, right. they're still doing some training and the like. it goes to your issue about 40,000 deaths in america in cars. what do you think is a politically palatable number of deaths by autonomous vehicle in america? the reason i ask is that to me the fundamentally going to become the ultimate question. if i told you you could get that number from 40,000 to 5,000, that would be great in the macro, but if i told you all 5,000 were being killed by a computer effectively, could you, as a human, and a citizen, accept that? and i don't know the answer. i'm curious how you think about that. >> this worries me a lot, too, because our psychology is such that sometimes something by the numbers seems safer doesn't feel that way because it involves less control. the scenario you're describing, 80% reduction in roadway deaths,

is a safety triumph. >> fabulous. >> yet i'm not sure that the american public would accept that level. that's one of the reasons why we're being extremely rigorous as a regulator in the way that ntsa is approaching automation, the national highway traffic safety administration. it's not because we don't like it. it's because we know both in terms of safety and in terms of the psychology of safety, it has to be squeaky, squeaky clean. >> you read about every death where a person wasn't in control, and in graphic detail. >> then those manufacturers would be liable. >> right. >> that's a whole other question that the policy world hasn't caught up with. the division of labor we have in this country is that we, the federal government, regulate the car, and the state, the dmv, regulates the driver. our system does not contemplate things like liability if the car is the driver. that's part of what we need to work on in a policy sense. >> how does insurance catch up with that? there are a million things.

>> the pot of gold, so to speak, is we could have a radically safer country because the traffic record of human drivers is murderous. >> secretary buttigieg, thanks for joining us. >> thank you. >> good luck at the marathon. good luck later today. thanks again. "squawk box" coming right back. i made that. with your very own online store. i sold that. and you can manage it all in one place. i built this. and it was easy, with a partner that puts you first. godaddy.

joining us is bernstein's senior fundamanalyst. people are saying this could be a case of apple being cautious in their guidance, but even so, it's a pretty big difference between what the street was expecting and what apple is now guiding. >> good morning, becky. yes. apple for the december quarter guide about $6 billion lower than the street was expecting. i think more importantly, if we sort of think about the year and how it typically seasonally evolves from that fourth quarter, it does point, at least through our analysis, to revenues that are about flatish. the street was at about 6% growth for the full year '24, so that is a significant difference. on the positive side, apple's doing a great job with gross margins. and, so while revenue is lower, earnings power, at least, you

know, relative to our expectations is not that different for '24. >> for the year, it's still up by 25%, but it has struggled in the recent months. what do you do with the stock right now? >> you know, we're neutral on the stock. i think the question for investors is what do you pay for apple? when we look at the alternatives in terms of large-cap tech, apple's trading at about 27 times '24 earnings. microsoft is trading about 30 times, amazon about 32 times, and google and facebook are less than 20 times. most investors believe, certainly on the top line, that all of those other things will grow faster than apple, yet two of them are notably less expensive, and two only modestly more expensive. i think that's the challenge for investors. apple is a great company in a great core franchise, but what do you pay, particularly at this

point where apple, you know, declined in revenues last year, and we think probably won't grow much in revenues in '24, what do you pay for that relative to other large-cap tech choices? >> so, you're neutral on this name. what stocks do you like better in the tech arena? >> within our coverage universe, we prefer dell, which we think is very inexpensive, and has tail winds for a recovery in the pc market and potentially a beneficiary from ai. i think as a firm, our top tech picks are microsoft and amazon among those faang names. >> the concerns with china, how big of an overhang is that when it comes to apple, not just from its own perspective, but then with the partner it's chosen there, foxconn, having it founder now saying he may run for president in taiwan? >> right.

well, i think, as far as the results are concerned, many people are pinning the disappointment to china, but china actually grew at about 3% on currency for apple in the quarter, so it wasn't really a unique drag on the quarter. it actually grew slightly faster than the company overall at constant currency. so, china, at least right now, is not sort of a unique issue for apple. that said, you know, china accounts for 80%-plus of apple's supply chain and 90%-plus of its manufacturing. so, there's always been intrinsic risk as an apple shareholder from escalation of trade tensions or political tensions with china. and i think apple's ability to migrate its supply chain is pretty limited. i think it would be very difficult for them to move more

than 20%, 25% of their supply chain in the next three years. they are tied to china from a manufacturing and supply chain perspective going forward. and that's an intrinsic risk to the company. >> for better or for worse. tone national championship, thank you very much. >> thank you, becky. up next, the october jobs r ne rctn omnstanteaiofr oupal.

♪ upbeat music ♪ upbeat music

welcome back to "squawk box" on cnbc. we are moments away from the government's october employment report. leapt's bring in our jobs panel. betsy stevenson is professor of public policy and of economics at the university of michigan. scott lincicome, vice president of general economics at cato, the cato institute. stephmy link, chief investment strategist and portfolio manager at hightower advisers. she's also a cnbc contributor. our own steve liesman and rick

santelli. we could have hollywood squares. >> or brady bunch. >> i'm looking down. uh-oh. we are just seconds away from the jobs report. rick, we want it right on time. take it away. >> yes. we want it right on time. this is the october jobs, jobs, jobs report, and of course we're expecting nonfarm payrolls tock around 108,000. 150,000, 150,000. that versus 336,000. there are revisions coming. the cumulative revision over two months, minus 101,000. so, that 336,000 turns into 297,000. now, let's move along, shall we. the unemployment rate -- and do keep in mind our last look at

the unemployment rate was pretty important because we had 3.8. it moves up again to 3.9. 3.9. 3.9 would be the highest level going all the way back actually to january when we were at 4%. and just for a comparison, we were at 3.17 a year ago if you look at october of '22 versus october of '23. average hourly earnings up 0.2. last month was up 0.2. it gets revised up 0.3. up 0.2 was basically the lowest levels we have going back to february of 2022. if you look at average hourly earnings year over year, they're up 3.9%. excuse me. they're up 4.1%. up 4.1%. this is a new cycle low. if you look, since we hit 5% in november of last year, this is the lowest level. to find a lower one, you have to

go all the way back to june of 2021 where we were at 3.9. and once again, just to take a look back to last october, it was at 4.9%. so, if wages are something that are making many feel a little nervous, especially in light of some of the strikes and settlements and some of the juicy contracts, we do see that it is coming down. it's still much loftier than 3.1 and 3.6 in march of 2023 covid just to put some context to it. average workweek, 34.3. this follows 34.4. 34.3 has kind of been the cycle low that we've had on this move. we've had it several times. finally, the underemployment rate, which is 7.2, it continues to move up. maybe i saved the best for last. labor force participation 62.7. it's going in the long direction. our last look was 62.8. that was the best since february of 2020. interest rates, they always

define whether the report is good or bad, weak or strong. well, interest rates are moving lower. as a matter of fact, as i'm speaking, we've just breached the 4.60 on the 10-year, trading at 4.56. how intense is 4.56? well, we settled at 4.84 last week. 4.84 last week. that is something to pay very close attention to. and when you look at a 2-year note, which is just covering around 4.90, look at the difference in how much it's moved down on the week. we settled at 5% last week, so it's only down 10 basis points. we see that the three opening equities as evidenced by the dow futures is moving higher. we could all debate what the fed is doing, what they're not doing, but if you want to just use conventional wisdom in the marketplace, let equities speak for that. we've had a lot of end of the fed world party. many believe the fed is done, and they are partying. maybe that party will be short

lived as servicing the debt and fiscal dominance seem to be dominating the headlines. joe, back to you. >> all the charts, they all moved, rick. steve, the dollar immediately weaker, gold immediately turned around. the dow jones went basically from down a little or unchanged to up sharply. the 10-year, rick said 4.84. it seems like we were just at 5.00. we were just there. now we're at 4.5. >> yes. on the 23rd. a monday. outside session. >> this is, like i said, the biggest -- the benchmark is the most difficult market in the world, and it's moving like a penny stock in terms of the volatility of it, which, by the way, is another issue we can talk about. what i want to talk about is the job market, joe, and just, first of all, the number is a little weaker than it really is. there's 30,000 strike members in there.

you had a decline in transportation costs -- sorry, transportation hiring. somebody ringing my bell. and then you also have about five or so on the other side. add 30,000, 40,000, which is the general consensus that was expected here. when i look at the number, i see pluses and minuses all over the place. health care is still a huge addition. you had also a big addition from local government education, which is what i expected. it's been a little weird. the seasonals with that because when the teachers were fired and hired during the postpandemic period. that's been a big source of job gains. but i think the story at least for the moment, if you try to -- given the uncertainty of the fact that this number is going to be revised, if it's plus or minus 100, the prior revisions downward, the easier numbers when it comes to wage gains, and if you're looking at not the job

level but at pressure in the job market, that could potentially create concern about inflation, it has eased off a bit. what i see very quickly working to the panel, i want to talk about the fed fund futures, probability of cults in june has come up. >> no one's saying jay powell knew what this number was going to be. i think maybe he had an inkling. but maybe his quasi-dovish tilt was warranted as it looked like that was a pretty good way -- i mean, are we done? do you think we're finished? >> you know, i think i would not call it because we still have a ways to go and all sorts of shocks could come. but if we continue to see what we're seeing right now, then we're finished. and what we're seeing right now is clearly a labor market that is slowing enough that we're not going to see the tightness in

the labor market continue to drive inflation. you know, last month's number i think sort of, you know, sent the wrong signal. we all knew it was too high. we all expected it to get revised down. you know, last month, we had upward rescission to the two prior months. this month we have downward revisions. you know, there is, like, this whole glass half full, glass half empty story you can tell when you look at this data. i think the bottom line is it's a labor market that is slowing nice and softly, exactly like the fed wants it. >> scott, we just had pete buttigieg on with a lot of conversation about planes taking off and landing. the fed, is it bringing it in here for a pretty good three-pointer? >> the bank shot. it does look like things are softening like they want. if you look across the numbers that we got today, again, with the downward revision, it's

looking good. you know, and the manufacturing number is, like you said, it's distorted because of the uaw. you take that out, and it looks like it's basically flat, which is actually pretty good given how the industry is generally struggling right now with output and other things. so, yeah, if you're at the fed, you're really -- or if you're a fed watch erp er worried about another hike, you're happy. >> 4.55. >> stephanie, you're going to go to work eventually. does this mean you'll be telling people to buy things? >> yes. and i have been actually buying over the last couple of weeks. i think we absolutely have seen peak rate, and that means risk on. i think you want to have a two-pronged approach. you want to add to the companies that have had great earnings, and that falls right into the faang camp, and you also want to

own the laggards, because you have tech selling is over, so you'll have that catch-up trade in those kinds of names. but bottom line is, the job market is slowing, average hourly earnings still a little high. but when you add in from yesterday unit labor costs falling and productivity rising, that's also a good recipe on the inflation front. that's why i think we have seen peak rates. >> rick, i'm going around to sort of go around, but, i mean, the move from 5.00 we were thinking 0.600 or 7.00, it's less likely from 4.50, isn't it? a year from now, we could be, you know, back above 5.00 or even 6.0 po. there's no way to know. but this is certainly headed in the right direction. are the worst-case scenarios off the table, rick? >> well, i'm not sure what the right direction is, joe. i'm sorry. i'm preoccupied with $307 trillion of global debt and the

rollover risk that the u.s. government and corporations are going to have. we know that the duration of the treasury portfolio probably is, what, 2.75 interest rates, under 3% right now on servicing the debt, and there's, what, somewhat under $700 billion. as we get into the, you know, late parts of the third quarter in '24 and a little beyond that, as the rollover process with longer-dated treasuries pushes the yields up on the portfolio of the treasury and the servicing of the debt starts to cost more, that's when i think the sugar buzz runs out, that's when i think my agreement with stephanie link, sure, there's a window to buy stocks. and i think most traders don't look that far down the world. i think there's green lights and you're right, interest rates will be pressured lower for a while. but i wouldn't get so used to it. i think this is going to be a two-pronged approach by the markets to try to get ahead of fiscal dominance, get ahead of

some of these issues if that's even possible at this late stage in the game. yes, i think the end of the fed party should have been dramatically expected, and i think there were many that were early, and i think some of the geopolitics made it a little messy in the early part of october. also, do not forget, and this is important, today is friday. geopolitics is a wild ride sometimes. we have a lot of things going on, demonstrations in d.c. expected. so, look for traders to be going countertrend on some of their positions late in the session today. >> rick, i disagree a little bit, and you might agree with my disagreement. the thing that has been freaking out the bond market has been the things that it didn't know were going to happen. i agree completely with what you're say about the total amount of debt, about the longer-term fiscal trajectory of the united states with entitlements. that stuff was known. what i think was important this week, and the reason why we've

had this very positive reaction in the bond market, was the treasury market, the bureaucrats and the pencil pushers who do the refunding stuff, took some of that off the table. they did two things. one, they took pressure off the long-end issuance, put it back into the shorter end of the coupon curve in terms of how they'll issue the debt and pay the tab. the other thing they did is they told us, you know what, we think we have one more quarter of increased issuance. i think that's taken some of the edge off of a problem that was known. i think some of the unknowns out of the overall dire situation. >> the numbers aren't that big. and you know what, if they're wrong again on interest rates, let's just say, for example, rates are going to go to 10%. once again, they may not be issuing enough long-term debt, and once again they're doing the simplistic thing, looking along the curve and issuing where it's cheapest to issue. is that really the best strategy? i'm not sure.

>> i would agree with that, rick. >> the problem is you said that the treasury is doing everything correct. if they're doing everything correct -- >> they're issuing where the market -- >> -- half of 1% in august of 2020. what did they think, they were going to stee negative rates? i'm sorry. >> those cheeseburgers aren't even cold yet and he's right. it was basically the last hike. >> they did one more. >> it just seems like -- i mean, the spirit of the law, maybe, the letter of the law, you get your burger. so sorry, everybody else. everybody got at least something to say. rick was talking cato language there, scott, about all the debt. i would have let you echo that.

stephanie, thanks. you've got to get to work. >> it is good to know there's lot of other things going on. >> all right. they tell me we have to go. >> when we come back, we have more reaction to the jobs report and what could mean to the fed's inflation battle. judy shelton joins us after the break. check out the futures. the dow up 150 points after being flat heading into this. the s&p up by 20 points, the nasdaq up by 56. looks like the goldilocks scar afaasheart enios r t mkeis concerned. let's check it out. says here it gets plenty of light. and this must be the ocean view? of aruba? huh. this listing is misleading. well, when at&t says we give businesses get our best deal, on the iphone 15 pro made with titanium. we mean it. amazing. all my agents want it. says here...“inviting pool”. come on over! too inviting. only at&t gives businesses our best deals on any iphone. get iphone 15 pro on us.

(♪♪) new nature's bounty hair growth. clinically shown to help grow thicker, fuller hair with just one capsule a day of advanced hair complex. conquer hair thinning... ...and fall in love with your hair all over again. only from nature's bounty.

welcome back to "squawk box." let's get more reaction to the jobs report and what it could mean for the fed's next move. judy shelton, senior fellow at the independent institute and the author of "money meltdown," her latest piece for the "wall street journal." it's called "the federal reserve at war" and explains the central bank's response to global turmoil. another uncertain data point to throw into the fed's calculus on what it's going to do, which you point out, kind of by the seat of the pants at time, meeting to meeting, because no one has a crystal ball, and theirs doesn't seem to be much better than ours. what can we learn from history and wars? they're inflationary, aren't they? and the fed, i think, feels -- they don't want to be with a couple of wars going on, they don't want to be the problem, so they're usually pretty accommodate tif, which just

makes it worse for inflation. >> well, that's right. and, you know, the narrative's got an little bit stale about whether the fed is going to raise 25 basis points this year or next year or never. and that's why in that piece for "the journal" i wanted to point out that the changes in the way the federal reserve impacts financial markets and economic performance, the ones that have a dramatic impact are the ones that you don't see coming. it's really when the fed does have to respond to shocks. there's an interesting research study that's posted on the st. louis federal reserve website, and it talks about the fed responding to major wars going back to the civil war, and it even compares the federal government's response and the central bank's response to covid in terms of responding to a war, because it was a war on covid.

and what always happens, as you said, there's a sharp increase in government spending. there's substantial monetary accommodation of that. and that results in inflation. inflation has been associated with every major war in the united states has experienced. but that becomes a secondary concern. the big concern is that, for instance, under covid, in march of 2020, you would think that everyone would pile into treasuries and the rate would come down as a safe-haven asset. no. they started jumping, treasuries, especially saudi arabia and the united arab emirates and china. what they really wanted was cash. that was the ultimate safe haven. so the fed, suddenly, within a week, saw a 64-basis point difference in yields and ended up in the first quarter of 2020 having to buy a trillion in

treasury securities. and that was more than it had to buy in any of the qe-1, qe-2, or qe-3. so, those are the things that really impact monetary policy going forward, because when the fed has to do these gigantic things, the real trade craft, i think, in monetary policy, is how quickly can you go back to normalizing? and that seems to be the difficult part for the fed. >> that just adds another variable to try -- we had enough. i mean, we already didn't have any idea about the future, judy, and now this just makes it more -- what about the numbers that we just saw? do you think the fed, at this point, can declare a quasi-victory in terms of inflation, and they don't need to raise anymore? that's the perception.

and then i don't know if you heard rick, but the interest costs are going to go up once all these things are factored in, and i don't know if we can just go to bed and say we're going to be at 4.5% on the ten-year forever. i mean, a year from now, i wouldn't even venture a guess. >> well, the fed, i say, would much rather not have to keep raising. i thought it was really interesting at the press conference when chair powell said that the members of the fomc found it very gratifying that they have been able to raise interest rates by 500 basis points without it seeming to curtail growth or cause higher unemployment. i think the real word should be, bewildering. they don't know why. they thought it would be painful. so, for me, what the fed should be paying more attention to is the impact of fiscal policy.

the fed is running this contractionary monetary policy while, from a fiscal point of view, it's classic keynsian stimulus. it's massive deficit spending at a time when we have strong economic growth and low unemployment. exactly the opposite of what you would expect, and for me, the danger is this combination of lack of discipline, fiscally, and then this monetary rectitude behavior, the fed saying, we'll do whatever it takes to stamp out inflation. all they're doing is putting up high borrowing costs for the private sector and enlarging the government spending programs, their priorities, because treasury will pay whatever it takes to get the means to -- the deficit. >> judy, as always, much more to try to understand and talk about, but i don't know, we got places to go, people to see,

things to do. thanks for playing the music. we'll see you next time. thank you. >> thanks a lot. okay, coming up after this, portfolio manager dan niles. we're going to find out what tech stocks he likes right now and what he's doing with apple. don't go anywhere. we are coming right back as we close out a big week. ( ♪ ♪ ) ( ♪ ♪ ) ♪ (when the day that) ♪ ♪ (lies ahead of me) ♪ ♪ ( seems impossible to face) ♪ ♪ (a lovely day) ♪ ♪ (lovely day) ♪ ♪ (lovely day) ♪ ♪ (lovely day) ♪

a bank that knows your business grows your business. bmo. with gold bond... you can age on your own terms. retinol overnight means... the smoothing benefits of retinol. are now for your whole body. plus, fast-working crepe corrector diminishes wrinkled skin in just two days. gold bond. champion your skin. the first time you made a sale online with godaddy was also the first time you heard of a town named dinosaur, colorado. we just got an order from dinosaur, colorado. start an easy to build, powerful website for free with a partner that always puts you first. start for free at godaddy.com

welcome back to "squawk box." our next guest shorted apple ahead of its earnings, doubling down after market after warning a sluggish holiday quarter. dan niles, portfolio manager, good morning to you. we've been walking through some of these employment numbers that are impacting the market.

things actually for the most part looking a little bit better right now across the board, but let's talk apple since that's one of the most widely held stocks in this country and in this world right now. >> sure. if you look at apple out of the magnificent seven, it probably had one of the worst releases because if you just look at the top line, top line revenues have been cut every single quarter this year that they reported, and that wouldn't matter except you're asked to pay 28 times pe for 2% revenue growth last year and negative 1% revenue growth this year. if you look at the alternatives you have, you have google and meta growing between 9 to 14% on the top line. you can pay 22 times for them. microsoft's growing about 11% at 32 times, but at least that's got an ei kicker, and the s&p overall is growing about revenues at 6% and trades at a 20 pe, so there's a lot of other stocks you can choose from where estimates are going higher. amazon's actually our favorite

of the magnificent seven because operating profits, they beat it by 40% when they reported, so we own amazon. we own meta. we own nvidia. we like oracle, not in the magnificent seven, but a cheaper way to play a.i., and so i think there's a lot of alternatives beyond apple where you get growth and a reasonable valuation. >> so, looking at nvidia right now, 440 bucks a share, what do you think that can go to at this point? >> well, nvidia, in some ways, is the toughest one to figure out, because in the short-term, i think they're going to have blowout results again. the numbers are going to go up huge. but the issue you're dealing with -- and this is something i'm struggling with -- is that investing is hard enough. you don't want to be fighting the u.s. government at the same time. and unfortunately, that's what you're doing, because they're saying nvidia can't ship to china. that's 25% of nvidia's datacenter revenues, and so not this quarter, not next quarter, but sometime next year, you're

going to run out of not being able to supply all the demand in every other region on the planet, and then you're going to have to figure out what the right growth rate is. and don't forget there's other people like amd and intel very far behind, but who are also trying to get a piece of the a.i. market, and at some point, that spending will slow down. i mean, don't forget, about a year ago, nvidia was preannounced -- massively missing numbers and cutting forecasts because datacenter revenues had slowed down. nvidia's the one i'm still thinking through right now and do i want to fight the u.s. government? that's why it's one of the smaller positions we have. >> meta, is that a value play at this point? >> i mean, it's both. that's the beauty of meta. so, that, along with amazon, our two biggest positions, because you've got 14% revenue growth at meta. you've got at it 22 times. you've got a stealth a.i. play built into it because they're

using a.i. to help recommend videos to people to watch, and they're using a.i. to help increase the monetization of their ads. so, you've got both at a very reasonable valuation, and so that's why it, along with amazon, we like those two quite a bit. >> dan, just, i know we always talk stocks with you, but just macro, i'm curious what you think of both the jobs number that we just heard about and what you think the fed may do about it and how that is going to impact risk on-risk off kind of assets like the ones you're talking about. >> the biggest thing on the macro side is what happened on wednesday when the treasury said, hey, we're going to issue more bills at the short end and not at the long end, and you saw the ten-year, mid-october, sitting at 5% with the payroll number today at 150 versus the 180 people had been expecting, unemployment edging up a little bit, we've posted before. we think we're going to get the year-end rally. the market is entering its best

seasonal time of the year. november, december, january, over the last 50 years, it's up 4% in total. or last hundred years, it's up 4% in total, and the odds are even better when it's downgoing dan, we got to thank you. we hope everybody has a great weekend. >> monday's not going to be like this. not this impactful. >> we'll see. >> not as many. >> we'll see. >> who knows? make sure it's spinning out of control. join us monday. "squawk on the street" is next. and on that note, enjoy your weekend. ♪ good friday morning, welcome to "squawk on the street," i'm carl quintanilla with jim cramer, david faber at post nine of the new york stock exchange. stocks are adding to the best week of the year as october jobs comes in 150,000. that's below almost every estimate with some negative revisions. bond yields are tumbling. our road map begins with the