hand things off to "squawk on the street." futures are about where they've been all through the morning. treasury, the yields there, have moved a little bit higher on this. you can see 3.68% is the latest for the ten-year. that does it for us today. we will be right back here. >> 25? >> i would say 25. is that what you think? >> i do. >> i think 25 too. we'll see. >> now i don't think the market will sell off on that. >> we shall see. "squawk on the street" begins right now. ♪ good wednesday morning, welcome to "squawk on the street," i'm carl quintanilla with david faber at post nine of the new york stock exchange. cramer is at one market in san francisco after his interview with marc benioff last night at dreamforce. meantime, the big day is finally here. fed decision 2:00 p.m. eastern time and an even more important press conference. odds of a 50 basis point cut still outweigh a 25. our road map begins with 25 or 50 as traders debate how big the cut will be. the s&p also eyeing a fresh

record at the open. plus as for that a.i. trade, well, jensen huang says nvidia is just getting started while blackrock and microsoft team up for a massive new a.i. infrastructure fund. and an election pause for the fate of nippon's bid for u.s. steel, why a national security panel has or is delaying its decision. let's begin with the decision day for the fed today and these rate cut expectations. jim, fed fund futures haven't budged much since last night. >> i don't know how they get that, because i'm just seeing too many companies that are doing incredibly well, record after record after record. there are a couple companies, obviously, that have been hurt by commodities going down, and the oil companies certainly have been a big beneficiary of too much drilling, even though it's president biden -- you know, david, there really isn't a lot of deflation in the system. there's a lot of stabilization, but i find too many companies that are doing well to really call for a slowdown.

>> i know, well, that's an interesting way to sort of talk about going into today's decision. there are those who say things are not slowing down, and you're talking about a 50 basis point cut? again, i come back to a couple of people who have said, i don't think we should have any cut at all. they are a minority, to say the least, but from the business perspective, and certainly where you have been spending the last three days, jim, i know it's nothing about anything slowing down. >> david, if you could claim that you're an engineer of any kind and probably even a trained one, you're going to get a job out here. there's a severe shortage of people, again, when you're talking about all the different foundries that are being built, talking about intel, severe shortage of people. we just don't have enough people to do tech. carl, it is a little existential. when you go from 2.0 to 1.7 children being born, and when you talk about a sense of, we just don't have enough people, you see why the story out here

is about the agent, the bot, whatever you want to call it, because that's all about the fed should listen up. that's all about, we can't find workers. it's very important. >> although isn't it also about the productivity that would allow you to do business with fewer workers, jim? >> yes, well, i think what they're trying to do when, for instance, salesforce, we can talk about it, is make it so the people who are at a call center can go to another part of the company and make more money for their company than they would at a call center. i'll tell you, david, one thing that is really interesting that's developing, there's like a soto voce war between microsoft and salesforce where microsoft has copilot and salesforce is making fun of copilot. they're calling it the clippy, which, of course, was a come-and-go technology. david, it could be all-out war soon between these two. >> was clippy that little, like, thing -- that little -- yeah,

that cartoon character? >> benioff took a shot at clippy yesterday. >> yeah. that's what jim was just saying. >> marc is getting very aggressive on this. he feels that billions are being lost. he calls it out. he calls a.i. out, saying, listen, billions are being lost because it's not used right and a lot of it is because of copilot, which he thinks is a hallucinating nut job at times. that's a little extreme, but he doesn't feel that copilot provides any sort of value after -- people liked it at the beginning and then they've left it. tremendous presentation about saas using agent force. it's just so exciting to watch the war and how things are going and then to see jensen huang, ceo of nvidia, on stage with marc, where he's talking about a level of business that if you're thinking about the next quarter, you're obviously just ill advised. i would say something else but i don't want to be too extreme. >> but jim, you know, when it comes to a.i., and that's as we

watch you talk to marc from yesterday, aside from this competition between the likes of microsoft and benioff for certain enterprise customers for certain applications, when are we going -- what is the talk in terms of when this is going to really bleed into the broader consciousness, so to speak? when are we going to start to see -- i mean, here on this phone, for example, as we're waiting, what will be, what, a thousand different apps or some sort of a.i. agents that we can pay a monthly subscription fee for? when is that coming? >> everything you said is true. and i think that in the case of benioff, it's about to happen because he does have -- rumored to be a $2 per query that the agent handles, but you know, david, i think that when you're out here, the answer would be, not yet. okay? that would be just not yet. i wish they had more. >> meantime, jim, he did talk to you about companies being hypnotized, so to speak. take a listen.

>> companies have been hypnotized to think they have to buy a chip and a datacenter and a database and a security structure and an a.i. model and a this and a that, and they don't need to buy any of that, jim. they just need to use the salesforce platform, and we will deliver the results. >> reflections on that? >> yeah. there it is. what he's saying is that everybody has been taught to have their own infrastructure, which costs a fortune, and then layer on copilot, and really just be bamboozled versus taking a salesforce product and just making it so you have one price. you don't have to build a datacenter. your data isn't sent out. you don't have to do the cloud. marc takes care of that. it's a one-stop shop, david, and it would obviously save people a lot of money, which is why i felt this was the first thing where you really realized that what marc is saying is that when you call any company, if you get the agent, the agent is going to be kinder, gentler, more re

respectful and smarter than any of the people who otherwise pick up, if they pick up at all. david, i agree with that. only the machines can treat humans like humans. >> i know, and you have said that, but what you've also been saying is all right, call at tthe center, call center, call center, and you indicated it's too early and i wonder when we're going to come back to this question of return on invested capital for these four companies, essentially, and when we're going to start to see those results. >> that's why marc is offering a 'til december product. if we had it for the investing club, i'm absolutely sure we would get a major lift, because it's how you have customer service in the 2024 era. people are not -- it's a lot about how people are harried. they can't spend time. you can't identify an roi because it's the easiest group to fire. and carl, really, what it says is that we got to go back to the days when humans helped people

who call, and that that -- no. it's not. it's like, press 1 for idiocy, press 2 for we're going to insult you, and this is a different world that marc's introducing, a world where there's a force multiplier that allows people to answer the phone to actually go sell something, maybe handle the toughest questions or maybe we just don't need to hire as many people. >> then, jim, there was the longer term message out of jensen huang yesterday talking about the advances we're going to see primarily in medical science over the next ten years, and in his words, something you don't want to miss. listen to that. >> marc, i'm just getting started. these are -- these are my finest hours. we're just getting started. this is the best. nobody -- nobody should miss the next decade, would you agree with that? the next decade of technology advance, everybody -- yeah. you're not going to want to miss this movie. yeah.

you're not going to want to miss this movie. i think the next ten years, the breakthroughs that we're going to have in digital biology, the breakthroughs in just helping diagnosing disease, the breakthroughs in science, we're going to have so many in scientific assistance. >> jim, what'd you think? >> look, i think this is, for jensen, this -- obviously, this is plain old datacenter where he has inside all of his stuff, but what he is talking about is the -- right now, you have this disparate collection of records that would take maybe ten years to sort through to find common genes of what causes cancer. and now, it can be done in three or four days. this is the accelerating computing side, not just the generative a.i. side, and it is very exciting. jensen comes in, and you have to understand that you may think that a.i. is something that is a bubble, and then this man comes in, he's of a different plane entirely, and he's basically telling you, look, we do not have the ability, as humans, to get things done, but the

machines do, and obviously, he feels that the machines, david, are good guys. >> yeah, he does. >> run by good people. >> i always find myself thinking of that apocalyptic movie that will be made sometime in the future where, of course, they run that basic clip, and then the next thing is the, you know, the robots rounding everybody up and killing them. i mean, i can't help -- i don't know. you know? >> your view is -- well, not many people talk about your view, david. but that's okay. >> maybe they should. maybe they should. it always comes back to, yeah, everything's going to be done to make us live longer, but we don't seem to be talking about the other side. the not-insignificant risks that shared -- >> matthew mcconaughey would tell you, who does a lot of work with marc, i think he would debunk you, orhe might find you even -- he might think you're a

hallucinating agent. >> that is my go-to on all things is matthew mcconaughey. >> that's why i bring him up. definitive. >> when i have a question, just the testimony yesterday for capri tapestry, i call matt mcconaughey, because why wouldn't i? trying to understand u.s. steel, i call matt mcconaughey, and of course when it comes to a.i. and all my questions about the future, matt mcconaughey. >> doesn't it matter that he's a thousand percent cooler than you are? >> i don't know if it does. but i would agree with the basic premise, yes. >> i don't want to be fatuous, carl. matthew mcconaughey is probably one of the closest if maybe the closest advisor to marc about how to tell the story. i saw that last night. it's incredible. he's finishing the sentences of marc, augmenting things, making things more competitive, making things more human, and he's a very compelling figure, and i

know "the wall street journal" doesn't really earn his keep. i think it's the opposite. i think he's underpaid. >> i want you to get into those little corners with people and get them to share their most significant worries and concerns and doubts, jim. that's what i want. all right? i want to stop hearing about all the advances that are going to be made in terms of the coding disease, which will be wonderful, yes, absolutely, but i want to understand the other side of this. >> here's the other side. people who are in tech just keep coming back to what could happen to health care, but they're not doing anything about the health care, but they think it's the best usage for the next couple years. i have lisa su on tonight. lisa su told a big room two nights ago that we will look back ten years from now and just kind of be shocked at how prehistoric we were, about how inefficient we were, and about how uncreative, because we didn't have a.i. carl, lisa su is in a dogfight with jensen huang. right now, she's behind, because

jens jensen's pulling away, but i think she offers a unique view that there are other things that a.i. can do right than what we talk about now. >> well, if not mcconaughey, we have larry fink, of course, blackrock and microsoft launching this $30 billion fund to finance a.i. infrastructure buildout. we did talk to larry fink, i think, jim, back in april about the promise of this whole space. take a listen to that. >> a.i. cannot truly happen unless there's a huge investment in infrastructure. the amount of energy that is required for a.i. or -- is enormous, and the amount of power generation. we will run out of electricity if we are going to fully adapt to a full a.i. world, and so the need to build on -- and this is all going tostimulate our economy, by the way, the build-out of more a.i. and, which, at the backside, is that building out more electricity power. >> you listen closely to those

words at the time. >> yeah, and i've got to make something really clear. the hyperscalers, the big companies, the tech titans, all have to build more because we just keep hearing, when i'm out here, i ask everybody, was larry ellison right when he talked about how he has 162 datacenters and he would like to have a thousand, maybe 2,000? everyone says, yes, that's the number, and i say, well, maybe he overbuilds. remember, everybody else overbuilds, and the percentage of how much of electricity, by the way, this -- the secretary of -- the epa administrator told me it's going to go from 48% of the entire grid because the demand is so humongous for datacenters, and david, i know you may have a pejorative view about who could hijack a datacenter, but that is one of the prevailing themes, which is that the datacenter lives. it's incredibly important. and if you don't do the datacenter, then you may be

bing. no one wants to be bing. >> nobody wants to be binged or clippy, apparently, as well. >> clippy was the insult -- i thought the insult was so -- >> we talk about it every day for a reason, the incredible need, the insatiable demand for computing power that reflects in the need for more and more datacenters, which of course consume enormous amounts of power. again, i come back to ellison as well. i just thought one of the revelations from that call last week was we have a team of former utility executives who do nothing but think about how we're going to figure out how to power all of these datacenters that we're building as we move from what is 162 to over 1,000 of them. there's no doubt. and an enormous amount of capital is going to be needed, and the blackrocks of the world and so many other alternative asset managers as well, apollo and on from there and blackstone, they're all there. they're all there. they all will continue to be with enormous amounts of capital that will be needed to fund this. >> i interviewed dave, the ceo

of train technologies. there's a chart, up 53%. it's all about -- one of his major things is to make it so these places are cooled but don't generate a lot of greenhouse gases and when i see the chart, i say to myself, wow, you can't stop that train. it is just incredible. it's deeply in the heart of a.i. trades at 35 times earnings, and all-time high pretty much consistently for days and days and days. all a.i. i mean, you know, that's the chart of datacenters. more important. that's the chart of datacenters. >> yeah. along with lennar and pulte and amex and visa yesterday. we're going to talk about the markets ahead of the fed message this afternoon. when we come back, jamie dimon's message to college students when it comes to tiktok and facebook. we'll get to general mills, the autos, meta, microsoft on the hill today, goan alit irne merger closing when we come right back. stay with us.

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even with the prospect of a fed cut, got some decent data this week so far. retail sales was a beat, atlanta fed goes to 3%. q3 tracking. ten-year, 3.67%, is obviously off the lows of yesterday. we'll get cramer's "mad dash" and countdown to the opening bell after a short break. makes trading easier.ding p with its customizable options chain, easy-to-use tools and paper trading to help sharpen your skills, you can stay on top of the market from wherever you are. e*trade from morgan stanley power e*trade's easy to-use tools make complex trading less complicated. custom scans can help you find new trading opportunities, while an earnings tool helps you plan your trades and stay on top of the market. e*trade from morgan stanley welcome to the now way to network... they switched to juniper's ai-native network. and now, everything is so reliable... that no one is ever left in the dark. that's the now way to network at work, with real ai—for an experience— that's so lit! ♪♪

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all right, all right, all right. time for a "mad dash." there he is. >> david -- >> general mills reports earnings, and i'd love to actually get you to get to it and make it the subject of the "mad dash." >> i think that when you're jay powell, you're looking for a reason to cut. you know what? when general mills says uncertain macro environment will hurt the company, and there's input costs that are higher, their profit margin's shrinking, you need to say, well, wait a second, general mills, they do have a bit of an inflation problem, but general mills is talking about how things are tougher for the cereal maker and for high-end pet food. david, maybe this makes the case for a quarter point when you're trying to factor everything, every last report, you have to

even think about the micro here, but that's been a good stock, and it won't be a good stock today. >> anything else that it sort of gets -- has an impact on? >> well, i think that the food group was down 130 basis points input costs is going to cause a lot of people to wonder whether others, whom we thought had declining input costs, are getting surprised. one of the reasons why general mills is down so much, it was a surprise. no one really felt that these input costs would come back to haunt them. we thought that inflation was under control. >> yep. gross margin, as you just said, down 130 basis points, 34.8% of net sales, and they say, jim, driven primarily by input cost inflation, unfavorable mark to market effects and unfavorable net price realization and mix. that's got to be a concern and that's why we're seeing the stock down, i assume. >> it's cereal. what is that, like the box?

because the actual stuff in it isn't much. blue buff, there is a competitive market for dog food, as you know, david, because i know you feed your dogs -- who makes your dog food? le bernadette? saga? how many michelin stars? >> scoop is a vegetarian. he eats the same thing every day. he's allergic to a lot of other things. we take good care of him. all right. what would mcconaughey do? that's what i ask myself now. you know, what's he got to say about general mills and margins? just not sure. >> heretic. >> opening bell is just a few minutes away. don't forget you can catch us any time, anywhere by listening to and following the "squawk on dct,ndhooun'" ening bell poas a w wldt want to do that?

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the opening bell is brought to you by nuveen, a leader in income, alternatives,and responsible investing. this morning, the house energy and commerce committee said to mark up more than a dozen bills, including the kids online safety act. that comes one day after meta's

instagram announced it would make youth accounts private. yesterday, at georgetown, jamie dimon offered his take on alternatives to social media. >> advice to students, learn, learn, learn, learn, learn. if you're a democrat, read a republican opinion. the good ones. there are a lot of very smart ones. if you're a republican, read the democrat ones. read history books. you can't make it up. you can't make it up. nelson mandela, abe lincoln, sam walton. you only learn by reading and talking to other people. there's no other way yet. maybe one day they'll be able to inject knowledge directly into your brain or something like that. be smart about it. people waste a tremendous amount of time. turn off tiktok, facebook, total stupid ways to [ bleep ], waste of time. >> we bleeped that out for you, jim. there does seem to be this growing sense that what you see on social media is increasingly removed from reality and that a lot of americans are beginning to think that way.

>> it is amazing how you'll mention something that you read on a site. i mentioned something i read on reddit to a couple of people and they didn't even listen to me when they heard reddit. they said, why do you read reddit? a lot of people really hate tiktok here. they think that influencing younger people's views, not sure how it's influencing. they're hoping that shein and temu get a comeuppance by amazon. that's another thing. you don't find anyone who's championing china out here. no one. >> let's get the opening bell here. at the big board, it's the susan g. komen marking national breast cancer awareness month, beginning october 1. at the nasdaq, it's ss&c technologies, a provider of financial services and health care software. jim, speaking of financial services, we mentioned dimon, didn't get to this wire piece yesterday on jpmorgan talking to apple about the credit card. >> yeah, look, what the hell?

why wasn't that a much bigger story in first of all, we can't find necessarily what apple wants to do. but second, i mean, this has been a giant, just, hole in goldman's complete roster of products, and you just haven't been able to see it, but oh, amen, did they ever want to get rid of this thing. and jamie, of course, can just integrate it, and by the way, they spent a lot of time with jensen huang. jpmorgan really advised a lot by nvidia. maybe this is one of those things where you can get the card and not have to have as many people and it will be really important. >> nothing, david? >> i mean, i got plenty, but i got a lot of paper in my hands right now, and i'm just trying to look through some things. >> okay, you want to come back? i'll come back to you. >> i'm looking at your list too. although, number two on your list is starbucks. i mean, really? starbucks, number two?

>> we did get the b of a note today. >> china-light strategy and the idea, which would get rid of the black hole that is china. a lot of people feel that there's a lot of a.i. help that starbucks is going to get if brian niccol wants to use it, because wow, these machines can make a latte like it's going out of style, david. >> the most amazing number in that report was that china ebitda, jim, per store, since '21, down 40%. >> brian is going to look at numbers. he's not beholden to anyone, not to laxman, the previous ceo, not to howard. i think he's going to say, you know what? anything that is just going to hurt our stock is gone. he did an unbelievable job at chipotle making the food better and also getting the stock up. he's capable of doing that. i think it's a very, very exciting situation. >> real quick on u.s. steel, guys, we mentioned at the very top of the show, it's a political football, as our

viewers at this point probably know. where the union goes, many of the politicians are going on both sides of the aisle, by the way. that said, as i'd sort of indicated recently, i think the governor of pennsylvania sort of potentially, again, this is speculation, put pressure on the white house to say, hey, let's hold this off a little bit, because you've got u.s. steel talking about moving a lot of jobs out if the deal with nippon doesn't go through. of course, the union is dead set against that deal, aligned as it is with leveland-cliffs. but what has happened is what we expected, i said would happen the other day. they pulled on the cfius, so they'll pull and refile. it's going to push it until after the election. so, stock is up yet again. it's had a very nice move here, as you can see, on at least these continuing hopes that somehow given more time, they're going to figure out a way to get the unions on side and get to the finish line. jim, i know you had decided opinions on them, in part as a result of your conversations

with the ceo of cleveland-cliffs. we may not be talking about it for a bit, although it may have some incremental news as we go along. certainly would love to hear from dave mccall at the union at some point to understand fully what their position is and why they're willing to risk what would seem to be jobs in pittsburgh and the future of the mon valley plant by still saying, no, no, no to nippon's transaction. >> well, david, i felt that when i have been following this, it is kind of remarkable how the people who surround -- when you have a steel mill, nucor once told me this, there are about five jobs for every one job that's created at the actual steel mill. they pick towns that, frankly, are one-horse towns because it's a cheaper place to go. but i think that if nippon steel

puts money in a lock box, so to speak, and says they're going to do this, there is a chance. because more jobs, more votes, and i think that's very important right now for the administration. >> speaking of unions, jim, sounds like uaw is going to start having some votes to strike at various stellantis locals, and then on the merger front, we do have alaska saying it's closed hawaiian. >> that's amazing because i think that those are two that you have competed against. i know they say they're not that much route overlap but it's good to see both of those stocks were getting crushed. i was thinking, well, what happens to these two guys? and i was just -- this was one that i think few people thought would be as quickly closed as it was. oh, good, you've got -- that guy is a hoot. alaska air is very well run. everyone knows it's a very well-run outfit. i don't recommend airline stocks because they just don't make enough money, but this is a good combination. >> speaking of antitrust or combinations, guys, i did want to point, it's a small deal, not

one that's hit our radar, but it is indicative in some ways of the regulatory scrutiny or what the level of regulatory scrutiny is like right now and while this one didn't go to court, it's not happening, and it's not happening because of the objections of the ftc. i'm referring to what was will scott and mcgrath's -- well, their deal and the fact that they're now terminating it. here's the key paragraph. "despite extensive and exha exhaustive engagement with the u.s. federal trait commission over several months in recent weeks it became evident the path to regulatory clearance would be excessively onerous and would detract from the execution of other value creating initiatives inherent in willscot's business. they offer modular office complexes, mobile office,classrooms, temporary restrooms, affordable storage containers, so you get a sense as to their business. there was a belief that it would create koconcentration in that

overall sector, jim. and it is having an impact on mcgrath. willscot, by the way, i believe it was a spac deal way back and one of the more successful ones at that. >> well, look, i think that there are a lot of people who realize that at the end of an administration, these agencies tend to go wild. they go rogue. they just kind of try to block everything. i think we're seeing it at justice, at ftc. ftc completely, i would say, despised out here. people just think they don't even know anything about technology. it truly -- there's truly contempt for that part of our government. >> speaking of antitrust actions, of course, we continue to focus on the courtroom, whether it be kroger-albertson's, but yesterday, we had the end of testimony in the government's case to try and stop tapestry from buying capri. remember, much of this, in fact, so much of the case comes down

to market definition. affordable or accessible luxury, whether that really represents a market, who's a part of that market, what the market shares are. yesterday, the companies presented their spent witness, fiona scott morton, and what i have heard from those who are watching this very closely is that she did a very good job rebutting the government's position, specifically in the ftc, relying on brand classifications from an outside vendor, npd, and sort of raising the idea that these were porous classifications based on a limited data set. that said, she did not offer a market definition of her own. she didn't do that, simply saying that the market definition remains opaque. will that be enough to sway the judge to say, you don't have a case, ftc, here? they've relied on internal documents that identified this market. they never really were able, as i understand it, to identify

that one company cut price because of the other. i've heard the ftc lawyers were not particularly aggressive on cross-examination, and overall, not -- did not put on a particularly strong case, but jim, so much of this comes back to the judge, and again, back to market definition to remind people it is a $57 a share all-cash deal. there has been some question given capri's numbers have been particularly weak of late as to whether once they get through this, if they do get through this successfully, whether tapestry might still try to claim a mac and lower the price, why? well, in the last conference call, their ceo said, on capri's stand-alone results, the level of underperformance they have announced is disappointing and surprising. that word, surprising, caught a few people. that said, if you were going to do that, you probably would have wanted to do it prior to any court case, but jim, that

figures into the mix as well. >> a lot of people are saying that maybe the ftc is giving tapestry a chance here to get out of a deal they don't really need. the market is so fractured. there's so many companies in it. it was another one of these -- i said that i agreed on air when they did it. i was just tired of the heat from those guys. it's like, all right, that's fine, enough, let's take a look at it. i didn't think the ftc rank and file was at all interested in this case. you mentioned the cross-examination. i'm not saying they threw it. i'm saying this was the case too far where the professionals kind of said, you know what? can we just stop going after everything? i mean, handbags? is that what we're supposed to be doing? handbags? i mean, carl, handbags? s there you go. >> there's plenty of upside in capri's stock, despite it would have not been good numbers from the company itself. >> i think the ftc should go to

tj maxx where david and i go. you get all the handbags you want, and there are some prices there that you would not believe. i always send my wife to home goods and to tjx because that's where the prices are. >> speaking of tjx and burlington and ross, all three of those reiterate buy at b of a. we have a couple upgrades of victoria's secret and vfcorp after retail sales yesterday implied a 3% annual rate of real retail sales growth, in other words, inflation adjusted. >> i'm glad you brought up vfc. i think bracken darrell is an engineering turn right here, right now. the clock -- i know that the chart is already up a lot. that was when he sold a particular street clothes line, people were surprised he did but he got a lot of money and fixed the balance sheet. this is why they have to be running. vans had been the most important product they had, and vans has turned. it has inflected.

if vans has inflected and that means throughout the country in shoe stores, then they've got something. david, this company could be a coiled spring now that it's run better, and by the way, when you see vans turn, well, let's talk about what people are talking about. i always like to say, who's next to go? who's -- you know, who's not cutting it? david, i'm getting nike over and over and over again, because they think that a technologist, someone who is a consultant, is running the company, and they're getting taken to by on, by new balance, by adidas, and by vans. it doesn't stop. this is the drum beat, david. >> i hear you, and by the way, you are the main drummer, just so we're clear. >> i'm a purveyor of what i hear. >> you literally tweeted a picture of you wearing them this week. >> well, i know, but that was the air force one special bob

kraft anniversary, and those can be worn with formal wear. i had to get out of my comfort zone, carl. you know i garden in brioni. it was such a pleasure to wear sneakers. they're cool things. they lace up and stuff. it's cool. >> i mean, i know. i know you don't tell people to short stocks but you wouldn't have done a bad job if you actually did that, if you had the guts to do that. nike and intel. i mean, you have been right on some of these names that you have been -- you're negative but you would never say anything along the lines of short the stock. >> by the way, if nike were to make a change, the stock would probably go to $95. i don't want to play that sort of short seller. >> meanwhile, brakcken darrell - i mean, they sold supreme. >> they needed the money. he gets the 1.5, fixes tbalance sheet. he can spend the money on the brands he knows he can turn and that's a true turn by a really

great executive. he turned around logitech. he's going to turn around vf. it's a buy. >> the other thing jim's been hot on is the meta ray-ban. i don't know if you saw, jim, meta renewed their partnership into the next decade. >> well, look, one of the things that people have to recognize is those are the glasses that look cool. you have no idea that -- no one has any idea that it's a.i., and the a.i. in it just keeps getting better and better. i think that this was something that, when i tried to -- i tried to get mark zuckerberg to come on and talk about it. he demurred, but i have to tell you, when i have tried them, i think they're incredibly exciting. >> one thing we didn't get to, jim, is housing. we had starts this morning, some multi-family beginning to slow down. we knew that was coming. and then, a refi, jim, up 14 in the last week, highest refis since '22, april of '22. >> there's a lot going on in terms of the lowering of

mortgage rates. it's a thing that people are really buzzing about, and i think that if you get transactions starting at transactions because there's price discovery on the downside, on rents, but i think ultimately you're going to be in houses, you got to see williams sonoma. i saw laura alberts for dinner. laura alberts got -- laura albert is one great executive. you want to do williams sonoma if you believe there's going to be a lot of change at the mid to high-end in housing. i think it's just as good as being able to buy lennar where you have to roll the dice a little because they're about to report. >> don't you think, jim, mortgage rates, two-year low, gas prices, three-year low, fast food value meals, deflation in las vegas room rates, thank you, b of a, yesterday. doesn't that all add up to at least a modest fed cut? >> i think companies couldn't do price increases. i remember, though, i happened to pull up with a walmart strategist yesterday and one thing is for certain.

they destroyed the pricing of a lot of companies by bringing everything down very meaningful what's going on at walmart and costco versus dollar tree, dollar general, where i think people are starting to realize, this is higher than we expected and we get it better at walmart. throughout, it's like general mills. yes, there is this macroeconomic overhang, but i -- it doesn't deserve 50. it deserves 25, and then they can do more. we spend a lot of time, 25, 50, as if they get it right this time, terrific. if they get it wrong, we're dead. i think that's not true, but i think 25 would be more measured because as there are industries that are weak, there are also industries that are very strong. >> jim, i want to come back to one of our headlines from this morning and just sort of dig a little deeper on it, the infrastructure fund we mentioned from the likes of blackrock, and remember, they're just going to be closing that deal as well to acquire the global infrastructure partners, that enormous deal, bio, running that

firm for many years. where's the money go, ultimately? and who are the beneficiaries? i mean, beyond nvidia, you know, if you want to play this at home and you see more and more money just continuing to be dedicated and devoted to the a.i.'s infrastructure buildout, where do you look in terms of stocks that may still be beneficiaries? >> the first one is -- >> beyond the obvious. >> the first one is ge vernova, because these plants are largely natural gas . if you look at that stock, it's one of the great horses of the year. $237, the stock was a hundred points lower not that long ago. they are perceived as the company that can build you a natural gas plant because we can't do solar. we just don't have enough. that is almost a pure play on the datacenter. vertiv, one of the first spacs, successful. also don't forget company that my travel trust owns, eton.

they're very big in the datacenter. and then trane technology, tt, because they're trying to cool off the datacenter f.. if you look at their stocks, we are not early in choosing those stocks. >> that's a couple references for trane this hour alone. as we go to break, watch bonds today. we got starts out of the way. fed decision, of course, we'll get a treasury buyback announcement at 11:00. and we'll be paying attention to that presser at 2:30. for now, ten-year, about 3.68%. stay with us. i can't believe you corporate types are still calling each other rock stars. you're a rock star. we're all rock stars. oooo look look at my data driven insights, i'm a rock star. great job putting finance and hr on one platform with workday. thank you!

guys, can you keep it down. i'm working. you people are (guitar noises). hand over the air guitar. i've got another one.

check out crude oil down a touch although s&p energy is the best performer at the moment. looking at the pager explosions in the middle east, the egyptian prime minister saying some of those may hinder any prospect of

a cease-fire in the near term. dow down 71, s&p up a point. we're back in a moment.

it's time for jim and stop trading. >> tomorrow night is fed ex. they may be the company that david is talking about, saying look, macro economic problems are making it so we're not doing as much business as we could. that's the quintessential why doesn't the fed cut a quarter point because you don't want a company like fedex to do anything other than maintain momentum so i'd watch what that does, but it's not necessarily a blow out quarter i don't think. >> didn't he talk recession a year and a half ago to explain a bad quarter that never happened. >> yes, he did, but he managed to take out such huge costs that even though the revenues didn't explode, the bottom line was actually amazing. >> yeah curious to get his comments on china, ft has a

piece out that india has overtaken china as the world's biggest stock market benchmark. >> that's going to be msci, henry fernandez, the ceo. but i don't think china is doing well for anybody right now. i mean, nobody. >> jim you had such a banner week so far, how are you wrapping up the last few days? >> we have to make it something special. we have mike sievert from t mobile. we'll find out about new phones and how they're doing. and then lisa su from amd. and carl eschenbach from work day. >> it's not just who come on, jim, we know you're talking to so many people out there and not sleeping because i assume you go to dinners that don't get done

until 9:00 or 10:00 and then get up at midnight. >> i got two solid hours last night. i resent that. i was watching alanis morissette, david. >> who? >> alanis morissette. >> i remember her. >> isn't it ironic, yes. >> you know who i'm seeing tonight? >> mcconaughey? >> pink. pink. you know the singer pink? >> yes, i do. >> not pink pony club, pink. >> we want to see pictures jim. markets relatively quiet although dow is down and so is the s&p. don't go anywhere. at no extra cost. and if you have medicare and medicaid, you may be able to get extra benefits, too, through a humana medicare advantage dual-eligible special needs plan. call now to

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there's nothing else like it in the united states. good wednesday morning welcome to another hour of "squawk on the street." i'm sara eisen. with carl quintanilla and david

faber live as always from post nine of the new york stock exchange. happy fed day. stocks are a little bit higher not doing a lot this morning as far as the overall index. there's the s&p 500, beneath the surface tech is higher. information technology, communication services, staples, real estate and energy. nasdaq a tad higher. what's faring worst is financials down .03%. not a huge amount of movement ahead of the fed decision and news conference and dot plot. look at treasuries in advance of the fed meeting. 3.685 on the 10 year. two year is the focus because that's the rate sensitive one, 3.644. here are three big movers we're watching. vf corp. gets overrated at barclays, the stock is up 4%.

general mills trying to recover from earlier losses, weaker sales, particularly in north america, higher costs weighing on margin. we'll tell you what they said about the consumer in a moment and shares of sirius xm moved up to buy, guggenheim citing the company's robust free cash flow outlook and the subscriber picture. as far as the big topic of the day it's the federal reserve. i want to layout where we stand. it's an unusual fed meeting. in one sense it's the end of an e era, the hiking era. the fed has telegraphed that, but there's still an uncertainty of what the move looks like, is it 25 basis points cut or a double 50 basis points cut. here we stand, the odds they go

50. it's about a 65% probability they do a 50 basis points or double cut. it's not that certain. and if you look at the -- there's wall street split over it. j.p. morgan, wells fargo, in the 50s camp most other banks are in the 25 camp. the question is not just what they do today, it's how they characterize it, first of all in the statement and then maybe more importantly from the news conference, with fed chair powell. but then the dot plot is important too because this is where the fed puts out the forecast for inflation, unemployment, and for where rates go. this is the last dot plot -- we get them every three months this is the last one of the year. it will give a good picture of what they plan to do in the next few meetings and it will vindicate the market that we get 100 before year end, if they go 25 today we'll get a 50 later

today, or 50 today and then two 25. and that's pimportant we'll see what they forecast for the next year. they go out to 2027 which is irrelevant. but helps us determine the direction of travel. right now there are the probabilities, a double today, a doubl double in december and a single in november. what's it based on? it's officials saying the fed is behind the curve they have to go 50, they want to prevent recession and unwelcome further stress in the labor market as fed chair powell said he was dovish at jackson hole. and then there's the thought that things aren't bad, which is what we're talking about the desk. where rates are, how they impact us, consumers, ordinary folks from where the fed started to hike rates to where we are now.

30 year mortgage run up a bit, 4.29 to 6.12. there's the home equity loan, obviously higher. credit card rates still very high, almost 21%. used vehicles, this is how it filters through to the real economy. especially if you're a small business trying to access capital. they don't have access to the big financing, the market where we see all this financing going on. so there's definitely a case for easing to relieve some of the stress in small business and consumers that we're seeing in the economy and that's how it filters through and rates like that. the question is, how do they get started? >> also, let's not forget, three months is not a long period of time you're talking about a 125 basis points cut in a three-month period. >> right. 's a lot. >> it's a lot. but the argument is -- >> forget about getting started. that's going to be here before you know it.

>> and the market is anticipating it already. so that could be priced into the market at this point. if you look at where we are and why people are itching for cuts, first of all look at pce. this is what the fed targets, rights, inflation, this is the problem, the preferred inflation measure is pce and it's come back down to 2.5%. is it at 2%? that's expenditures. that's kind of a different thing. but is it at 2%, which is the target? no. it's 2.5% and come all the way back down. pci as well. people look at the coconsumer price index. it's now back down to the 2 to 3% range. so there's been a ton of progress. the other part of the mandate is unemployment. that's come up. it's not sharply spiking or anything like that but it's from the cycle low. and the fed wants to get ahead

of it. >> lou green points out there's two more job prints before the fed meets again and powell said they do not seek or wish further cooling in the labor market. >> i think he means it, the question is how does he feel they can best achieve that around the table? there's the unemployment rate. not super high, the spike durinduring covid but we've come off the lows. look, there will be people around the table, michelle bowman i'm thinking of, the fed governor gets a vote, probably not in the 50 basis points cut camp. she's been hawkish along the way, warning about inflation i think has come around to easing but i wonder if they go 50 if they get dissents, which would be abnormal for the fed. we also have a new voting member from the -- from goldman sachs who's now the head of cleveland fed. so there are dynamics around the table as well as to how they

feel they can best get in line with the market and also get ahead of unemployment. atlanta fed gdp now continues to rise actually in light of what we got on retail sales. look what happened, the blue line, up to 3%. it's accelerating. do we have to cut 50? do a double at a time where gdp is accelerating? they don't target gdp but that's something to watch. >> doesn't happen often i wouldn't think. >> no. >> accelerating gdp in a 50 basis points rate. >> not recessionary. >> meantime, carlyle's ceo harvey schwartz talked about the state of the economy with leslie picker and how many rate cuts he sees coming. >> right now when we look at our portfolio data and the factors that affect the economy locally here in the u.s. and obviously globally we see a vibrant economy. it's definitely one that's

cooled. monetary policy has worked. the fed has done an amazing job with a complex set of circumstances but we see three cuts by tend of this year and perhaps a pause. economic activity should stay robust, activity levels should continue to pick up and maybe one next year. >> let's get more color with jim bullard, who was with the fed. jim good to see you, happy fed day. >> happy fed day. exciting in the world of central bankers. >> earlier in the year you did say three cuts was your base case. has that been changed in recent weeks? >> no. i think they should go 25 today and signal 25 at subsequent meetings. i think the case for 50 is overblown here. you have a pretty robust economy. you were just citing the atlanta fed gdp now 3% we got an upgrade

from the second quarter of 2%. so pretty fast growth through the middle of the year here. unemployment insurance claims sort of ridiculously low. lots of things looking pretty good about the economy. so i just don't think it's the kind of situation where you have to go 50. so i think what they can do here is go 25 and signal we're going to keep 50 in our pocket and if things deteriorate, we're willing to go faster but we don't have to right now. because the case isn't really there right now. >> i want to read you one of the notes out of wells today writing the fed needs to provide more certain communication. if not they risk needing to add excess accommodation later in the cycle as uncertainty weighs on activity. do you think it needs to be more explicit than usual? >> you know, i think the chair did a good job at jackson hole saying they were ready to get going and i think he meant, at

least my interpretation was, he meant that he'd start a string of rate cuts but they would be orally and methodical about it because the real economy is actually doing fairly well and the inflation isn't down to 2% yet. it has -- yes, it's come way down and it's been very po successful policy but not down to 2%. i would say another thing to people listening you have the two-year already down a long ways. in a big sense market pricing is already done most of the easing. so really it's the signaling that the committee still wants to see inflation go all the way down to 2% and they're going to gradually ease here but only gradually because they want to get that last bit of inflation out of the system. >> everything you say makes sense, i agree with you. the counter argument, though, they're using for 50, if you're

in the 50 camp as the two year yield is 3.6. so the fed is off sides, the fed is too tight so why not make the adjustment now in a bigger way because it's going there anyway given the inflation dynamics? >> yeah. in the first half of the year i gave a talk at the university of miami and made this argument that the -- if you lose -- use taylor calculations the policy rate was too high and they should start sooner and then they'd be able to sort of glide in to the 2% inflation target. they didn't do that. just didn't have the data in the right position, i think, to make the move earlier. but now that you're here, in september, i think going 50 would be very hard to defend. you also have the s&p here. the s&p probably will indicate three rate cuts in a row of 25 basis points. so now, how are you going to say

we went 50 today and so you're going to skip one of the other meetings or something? i don't see how it's going to add up with the sep. sometimes sep does not go with the decision on the day. and then the chairman has to dance around that. but it seems to me like people will probably coalesce around three 25 basis points cuts and keep in their pocket the option to go with bigger cuts later if there really is some deterioration in the economy. you're talking about an unemployment rate at 4.2, which actually ticked down in the last report. it's certainly not a situation that seems to call for panic. >> among the more dovish in the 50 camp is j.p. morgan jim. they're calling for 50 and a dovish presser. they look at cleveland real time fed forecast, at 207.

i wonder what you make of the emphasis on real-time to market especially in shelter metrics. >> on inflation they're saying 207 on inflation? >> yeah. i don't know. they've tended to want to -- the committee likes to use the year over year core pce and the reasons for that, i think the seasonal adjustment probably got out of whack during the pandemic. i'm not sure you can trust the seasonal adjustment as much. and so, a real-time indicator like that might be susceptible to fluctuations based on seasonality that are kind of imponderable. so i think they want to look at the big picture. policy is relatively slow moving compared to markets and so you want to have your indicator -- your core indicator be relatively slow moving as well. and it's still 50 basis points

above target and probably will only come down slowly over the next nine months. so i think that a lot of this is to, you know, how can you calibrate over the next six months or nine months so by the time you get to second quarter of next year, the inflation is right where you want to be and the policy rate has come right down to the neutral rate. >> i guess the big risk is every time you have a big economic report if they go 25 and signal 25 it's the fed is behind the curve, is it fed is not doing enough. and financial conditions are going to tighten and make it worse. >> markets have already put the easing in there and so that's -- if those that are concerned about the path of the economy should comfort themselves with the fact the market pricing reflects the easing. so the fed is really following through on a promise easing path

but keeping open the possibility of moving faster or if inflation turns around or gets stickier to take a pause in this process. so it's a momentous day. you could play this different ways but i think it would be hard to play with 50. if you go 50 you have to say well, what does this mean for the next two meetings? are you going to go to neutral by january ? is that the idea? 200 basis points by january? that seems awfully fast considering you haven't made all that much progress on inflation in 2024, most of the progress was made in 2023. so i don't know. i think it would be tough. it would be better to just keep that in your pocket, i think. >> even as we're talking, goldman taking q3 tracker to 3.0. jim, on a day like this we cherish your insight more than ever. thanks so much. >> all right.

thanks a lot. as we head to break, our road map for the rest of the hour. mortgage demand surging double digits ahead of the rate cut. how much more can they go? >> kroger and albertson's making a final pitch for getting together. it's a judge that will decide to approve kroger's purchase of albertson's or block it. > d the ceo of alaska airlines will join us live on "squawk on the street." (man 2) what's my next step? oh! ugh. (girl) dad. (vo) y (vo) trade in any phone, in any condition at verizon for the new google pixel 9 with gemini. (man 2) give me a recipe with these ingredients. (girl) let's do that one. (vo) only on verizon.

weekly mortgage demand surging 14% as interest rates hit a two-year low. housing, housing related stocks posting nice gains this year. and a new intraday high. is there more room to run? jeffrey chang joins us now. you talk about the names we don't cover, eagle materials, champion homes what's the risk/reward set up for these names given the boost we've seen? >> the risk is mortgage rates have come down about 100 basis points already ahead of the rate cut. we need to see rates ideally below the 6% threshold. that's where we see consumers step into it and drive activity.

we haven't seen that recovery come through yet but we remain bullish. i think the market is under built from a housing standpoint for new construction and think about existing home sales which is prosen with this lock in effect we see that potentially being a big catalyst going into 2025 for these renovation related names. >> you say the lower rates that are coming aren't fully priced into the stocks? >> we've seen them move. i think we see a bigger uptick, that's why we're bullish and remain constructive with a lot of these names. >> what 6% are you basing that on historical numbers as far as what might drive a lot more demand for home buying? >> sure. we've done some work on the consumer side. i think from affordability level, about 80% of the consumers we surveyed back in june that was a technical

threshold they could come back to the market and you could see that in the affordability level improve. if you think about the average consumer, call it 60 to 70% of the consumers currently have mortgage rates below four. seven to four was a big ask, five, four is probably more manageable andthere's a lot of pent up demand, people waiting on the sidelines but certainly under 6% is a threshold. we think that could catalyze activity. the other piece for housing, if you think about the regional billio builders, they've been frozen from that market. the big builders have been buying down mortgages. certainly the stocks have rallied off the bottom but we still think there's room to go. >> phillip is there any sense that the spread between long

term rates and the 30 year fixed is going to compress or are we beholder to what the overall rate structure is going to do? >> that's a great question. that's the million dollar question. i think what we've seen in past sickles when activity does pick up, the spread does narrow a little bit. when activity is weak like we've seen the last 12 months that spread is a little more outside so we're hopeful that spread does come down and bring rates back to the 6% level. i think what's encouraging is, with rates coming down already we saw the data come out today, it was stronger and you saw is an uptick from july to august. >> who has the most upside in your group? >> when we think about how we want to be positioned on the new construction side for single family that will probably come back first so the names we're bullish on top, and in the r&r piece, tied to existing home

sales it's been depressed, multi-decade lows. if we see rates pull back that could accelerate r&r activities in existing home sales. the names that we like and the recovery with r&r would be the fortune brands and azar. >> got it. thanks for joining us. >> thanks for having me. >> phillip ng on a fed day. >> take care. still to come, kroger and albertsons making their final push to regulators. and the ceo of alaska airlines with us following their deal for hawaiian closing. we'll be right back. is it me... or is work not working?

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kroger and albertsons making their final pitch to push through the merger the federal government urging a judge to prevent the deal saying it would benefit shareholders and not shoppers. the two grocers argued a merger

would preserve consumer choice allowing them to compete with rivals like walmart, costco and amazon. as far as timing, they have a ten day count to the post trial briefs which puts it at september 27th. so then the judge will rule after that. they're also by the way, kroger and albertsons three days into the washington state trial. remember the states are also going after them on this. and the next one is september 30th, which is the colorado trial. so it's a lot of moving parts and kroger is fighting it all the way. i can tell you this is going to come down to how the judge defines the market. kind of like tapestry. >> like tapestry and capri and affordable luxury. market is key in all of these cases as you know and the companies claim this market and you imagine it would be the case when you think about it as a shopper includes costco and walmart not to mention amazon,

most of it is online not whole foods and companies like aldi and others. >> and drugstores and convenience stores. stuart akin, kroger's chief merchandising officer said a banana is a banana is a banana you can buy one anywhere and we compete to drive it home. and the ftc is arguing maybe there's not just a banana, there's organic and different priced bananas. these two are competitors. and the argument that the ftc is making about unions and labor and they compete with each other as two of the largest grocery, and few only grocery union labor shops so they compete for workers. is that really a thing or as kroger has argued they compete with mcdonald's and nonunion.

people don't just say i'm looking for a union job. there's only 2% overlap from the jobs going from krogers to albertson so not necessarily a traditional anti-trust argument. >> there's the divesture package that the companies have offered and the judge will be making the decision on the viability of those taking on the stores and whether it can really represent a true competitor. >> right. which there have been questions about. >> that was also part of the trial as well. >> the cns is a smaller and weaker company but backed by a very rich person so they have good prospects going forward. whether that's good enough, i don't know. the judge hasn't showed her hand as far as i'm told one way or the other. it's a biden appointee and we expect the ruling in a few weeks. dow down 60, s&p up just a int. still to come, the key fed decision is on deck. s&p is aiming for the eighth

straight day of gains. back in three minutes.

welcome back. i'm contessa brewer with your cnbc news upat adate. a ukraine drone attack overnight threw fireballs into the sky. the russian state media said they were building an arsenal at that depot. in lebanon a death toll there the wave of pager explosions have risen to 12, including two children. secretary of state, antony blinken said today those blasts and other recent surprise attacks reportedly carry out by israel threaten to derail cease-fire talks in gaza. the digital passport renewal is

back. the state department announced today the online system is fully operational. there are some qualifications, you have to be based in the u.s. and you can't have a passport that's been expired for more than five years but anything helps, david. anything. >> anything. anything. cons con contessa, thank you. if you're not living on the planet maybe you're not aware or you don't watch cnbc regularly. we're a few hours away from the fed decision, a big debate, will it be 25 or 50 in terms of the cut. steve liesman is down in d.c. ahead of the press conference, which he will partake with chair powell. what do you have and what do you think? >> we'll get that answer in a couple of hours. but then we move on to the question perhaps of more consequence to investors. how low does the fed go and how quickly does it get there. the economy is urging to create

a destination and speed of travel, barring that, we should be prepared for a long and irritating ride marked by the unpalatable echo of where we there yet. the trouble for the fed is which bogey to aim at. the long is 250 from here to neutral. the fed averages 06 from the great financial crisis to the pandemic. 5.5 during the tech boom of the late 90s but that could be an analogy for now with the tech investment. the nominal has been 4.8 since 1960. so pick your number. the neutral rate is likely higher than many anticipate potentially above 3% given that the economy is expected to stay close to full employment, the fed will probably need to keep rates above this level.

that's not how the market is priced. sees an aggressive fed cutting by year end. 298 by the end of 2025 or 240 from here. futures have a habit of forecasting more than the fed has don and often more quickly so we'll watch the dot plot today. we'll end the day knowing the answer to 25 or 50 but begin a new debate whether it goes town 100, 200 or more in the next year, sara. >> always fun to debate all of it. thank you, steve. steve liesman in washington. our next guest is in charge of corporate credit at goldman sachs advising companies on their multi-billion dollar financing. johnny fine, investment grade debt. always great to have you. >> thank you. >> you're 25, right? >> i am 25. >> why? >> a couple of reasons. if you replay everything that happened since the july fed, financial conditions are easier,

stocks are back to the level more or less they were at before. credit spreads are back to levels they were at before. term interest rates are 30 to 35 basis points lower and the terminal rate hasn't changed. it's just there in 12 months as predicted as opposed to 24 months. that's real easing into the economy. i think that's point number one. i think point number two, this is where people might disagree with that train of thought. i think that the fed still has a perspective and a number of guests have talked about this today that 50 is generally reserved for more emergency type of action. now, i think we're 200 basis points in restrictive territory so the fed is well within their rights to say a 50 basis points cut is appropriate but i don't think they've done enough to destigmatize a 50 basis points cut. so i look for a dovish 25, opening the door for 50 basis

points being normal course of action in the future and run the play, will the next be 25 or 50 will be with us for a while. >> he has to do work if he does the 25 to convince the markets that they're still right with the path in order to keep financial conditions from tightening, right? >> agreed and that's something to protect in the press conference and the dot plot as well. i think seeing a selloff in long term yields will be an undesirable outcome. my guess is they'll look to protect the shape of the yield curve as it is right now. >> it sounds like what canada has put together, a couple of 25s, the last few days, not adverse to a 50 down the road if we need it. is that a decent play book? >> i think the market will like that. the market doesn't like 25 when they first see it but they see the dots and hear a more dovish

tone in the press conference they'll be soothed by that. but i think that's a decent play book. >> we saw steve reference sub 3% by 2025, maybe by this time next year. do you believe that's going to happen? >> so fed futures forwards do a terrible job of predicting what actually happens. i think we looked at data back to 2017. if you compare where the market thinks fed funds will be in 12 months time and look at where they were, then there's a prediction miss by, on average, 60 basis points. so my guess is also, we won't be at that level in 12 months time. my personal view is i think we'll be higher. i don't think the terminal rate will be as low as 275 to 3%. i think it'll be higher. i think the reality is is that the things that we're concerned about today, in particular the labor market, i don't see that as being a huge head wind for the u.s. economy it's a head wind but as we get into the easing cycle with some 25 basis

points cuts potentially opening the door for 50 basis points cuts i think we'll be on a better glide path and i don't think the fed will need to go that deep, that far. >> let's get back to corporates. what do you do if you're a treasure cfo, hold off on refinancing? hit the market because rates have weakened a bit and may not come down that much? >> you saw it in september, we had a busy month. year-to-date, the second busiest year ever, bested only by the covid boom that we saw in 2020. and that's what spreads that tight and with yields at low. so if you think about the real winners for all the volatility that took place in august it's actually corporate america because they're able to finance at lower yields than they were prior to the july fed. so moving in advance of that, that's been the play book all year. moving in advance of risks merging at the end of the year in particular with the election,

that's been a huge boost to activity, it's a huge boost to the leveraged financed activity as well. almost two thirds of the leverage loan market has priced this year. and you've seen better activity in the equitable capital markets as well. 30% higher year over year and u.s. ipos 70% higher. >> that's not saying much based off the base it was. >> it's off a low base but it builds market in leverage finance and the ipo market and builds for a stronger outlook. >> good for the banks. i am curious what you're hearing about the election and what companies are anticipating. and how it might change your market. >> so i think that probably the most important part is what's going to be the impact on the labor market and that's largely driven by immigration policy. that's really a function of who's in the white house as opposed to who has control of

congress because that can be executed via executive order. i think both administrations are hawkish on immigration and so we'll see a better balanced labor market in either instance but clearly a tighter labor market in a trump administration compared to a harris administration if he follows through with respect to his pledges of deportation. >> so higher rates? >> i this i that leads to a slower path of cuts because we have actual tightness in the labor market as opposed to concerns overall. and then of course with respect to the rate direction overall, a lot of that would be a function of fiscal policy. i would say both candidates are likely to be expansive but that's going to require control of congress. so either a blue or red sweep is likely to put upward pressure on yields overall. >> great having you today. thank you very much for the color omhefr t desk. after the break it's the

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alaska airlines completing its acquisition of hawaiian airlines. joining us is the ceo and who else, phil lebeau. >> if it's happening i'm there. you got across the finish line here. something nobody was expecting when you first announced this. how quickly will the results start to filter down to the bottom line of you incorporating hawaiian into alaska. >> quickly. you see that come into the bottom line in the next two to three years and we're planning two to three months actually improving the synergies. so this deal is creative to the bottom line, credit to eps and

looking forward to getting on with it. >> more than a few people doubted it would happen. >> i think in this environment, in terms of mergers, especially in the airline space there was a lot of doubt. i think from the beginning we said this deal was proconsumer, pro competitive, fantastic for people who live in hawaii, on the west coast. and so we're really excited to be doing this. >> let me ask you about boeing and what's going on. it's right there in your hometown of seattle. because of this strike, production which was already capped is not taking place on the 737 max. you have a slew of maxes that you plan to incorporate into your fleet over the next several years. are you bringing down your plans, drawing them down and saying we're not going to have what we thought we were going to get? >> for 2024 we're pretty much almost through the year intact with our capacity plan, if the

strike lingers on, phil, and you and i were on the front lines there, i think if it lingers on it'll have an impact for 2025. we're five miles away from where our airplanes get built, in constant contact with boeing. i had a great conversation with kelly -- >> let me ask you about that. we haven't heard from kelly yet. clearly focused on everything going on there. but the outsiders watching boeing are saying does kelly know what needs to be done and how quickly it needs to happen? >> i had a conversation with kelly and i was impressed with his grasp on the current situation at boeing, he is an industry veteran. he knows what needs to be done at boeing and i will say in the last few months i've seen improvement at boeing in terms of production and quality. i think they're focused on the right things they have to get through the strike but i have confidence in kelly he can right the ship and get boeing on the right trajectory. >> are you more comfortable with the quality of what you're seeing from boeing. >> we're receiving our 12th

airplane this week for this year and the quality of the airplanes, the reliability once they get in service has been quite good so i'm really pleased with that. >> keeping the brands separate, i'm curious as to why? >> the alaska brand and thewhy? >> both of the brands have over 90 years of history and culture. traditionally, when you do a merger, you bring it all into one brand. and we thought to extract the most value out of this acquisition, hawaiian has such deep history and roots. we thought this was the best approach to use a dual-brand approach. the state of alaska and the state of hawaii, they're not contiguous states in the country. they are special. these are two special states in our country. and you know, the name alaska and the name hawaii means so much to the residents there. we're doing something that's not been done. i'm not saying it's going to be easy. but i think we're going to do something very, very unique that

will honor both states, and where this will actually result in loyalty for alaska airlines and in the end, prove to be better for us long-term. >> quickly, i want to ask you about the fact that you guys solidified your position, there you see it, as the fifth largest airline in the u.s. given this environment, politically, where we are in this country, do you see another airline merger, let's say in the next five years? >> you know, it's tough to say. i think the case for a merger always has to rest on the merits of the case. and in our case, the merits were strong. there was very little overlap. it was good for consumers. it was great for competition. we will be a little bit bigger airline than we are now. and we're going to compete hard against the big four. they dominate 80% of the domestic skies, and we're going to take it to them, when this thing comes together. and we'll be a bigger, stronger airline and a successful one. >> and i'll see you in seattle, i'm sure, soon. >> ben menacuchi.

>> i'm wondering which is a better vacation, alaska or hawaii? >> hawaii. >> i'm kind of with you on that. >> having done both, hawaii. >> but those alaskan cruises look -- >> speaks from experience. >> i was going to say both. >> of course. >> surprise. >> thank you, ben. thank you, phil. coming up on "money movers," the ceo of electronic arts will join us on set following the company's investor day, out with be some big announcements, including their plan to create a movie based on "the sims" with margot robbie set to star in i ceo will join us next hour to discuss, with the dow down 91. the s&p fluctuating between gains and losses on this fed day. we'll be right back. (woman 1) all right, here we go. uggggh. (man 1) oh no, no, no, no, no, no! (man 2) what's my next step? oh! ugh. (girl) dad.

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former president trump reversing course on one of his own tax laws signed back in 2017. our robert frank joins us this morning with details on a name we're getting to know pretty well, robert. >> yeah, carl. great to see. former president trump pledging to, quote, get salt back ahead of a rally on long island. it is the latest tax break that he's announced on the campaign trail, on top of the $4 trillion in effective tax cuts that he's promised, as part of extending the individual provisions of the

2017 tax cuts. now, so far, he wants to end taxes on tips and taxes on social security and overtime pay. those add up to an additional $2 trillion in lost revenue. if he ended salt, that would be, of course, removing that $10,000 cap on state and local tax deductions. that would add another $1.2 trillion to the cost of extending those cuts. most of the benefits would go to the highest earners in high-tax states. in fact, two-thirds of the benefits of repealing the salt cap would go to the top 1% of earners. trump campaign not commenting on exactly what changes he would make to salt beyond that quick statement. the rally that he was at yesterday in long island, nearly half of all tax filers had their state and local tax deductions capped. so really speaking to the crowd there, carl, as he has done throughout. and it's going to be a question of whether congress would ever take this up, because there's opposition on both sides.

>> yeah, although there is support, too, amongst a lot of democratic congressmen, to a certain extent, in these blue states, to be fair, as well. somewhat surprising, given this was one of the only key revenue raisers in the 2017 bill. >> yeah, and that's why it's been hard, even when the democrats had control and wanted to oppose it or repeal it, they couldn't do it. it's going to be a tough sled. >> he's going to have to raise a lot from the tariffs to offsoffset some of these tax breaks. >> they are adding up, tips, social security, corporate tax rate at 15%, salt. just take salt. that's it. >> selfish! >> so selfish. > l gh we've got a market that we've got to keep a close eye on. and of course, if you haven't heard, there's a fed meeting later today. a lot more for you straight ahead.

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