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tv   Squawk Box  CNBC  September 20, 2024 6:00am-9:00am EDT

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and including footwear makers like skechers and automaker mercedes-benz. it's friday, september 20th, 2024 and "squawk box" begins right now. good morning, everybody. welcome to "squawk box" here on cnbc. we are live from the nasdaq market site in times square. i'm becky quick along with joe kernen. andrew is on assignment this morning. let's take a look at the u.s. equity futures at this hour. you see a little bit of a pull back. the dow went positive. it is up close to two points. s&p futures off 13. the nasdaq indicated down by close to 75. that does come after gains for the major averages. the dow was up by 1.25%. the nasdaq was up 2.5%.
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i don't know if we can look at the week's gains. it has been a week for the markets. you have seen the gains for the markets. if you check out treasury yields. you guys are really fast. there's the week. dow up 1.5%. so is the s&p. the nasdaq up close to 1.9% for the week. then if you have been watching treasury yields, we did see the ten-year yesterday above 3.7%. it still is there at 3.72%. the two-year is down close to 3.6%. then new overnight, the bank of japan holding interest rates steady. that move was widely expected. the central bank said the economy has recovered moderately, but some weakness has been seen. it expect the country's core inflation rate to rise through march of 2026. economists are forecasting a rate hike by the end of the year. nike ceo john donahoe is stepping down.
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he took over banck in january o 2020. in a statement, he said it was clear it was time to make a leadership change. he will stay on as adviser until the end of january and company veteran elliott hill coming out of retirement to become ceo. hill started as an intern and worked up the chain. he was responsible for leading all commercial and marketing operations for nike and the jordan brand. he retired in 2020. hill will lead nike's efforts to get back to the fundamentals that long defined the business. during the pandemic, nike shifted from the wholesale model to consumers to allow startups like hoka and on running to take over shelf space. donahoe said nike moved too far
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away from the wholesale partners. i don't know if he really highlighted what's going on here in that piece. we did some ascribing of problems. after a series of misstep over his tenure that caused the sneaker giant to lose grounds to competitors. this is an ouster. >> our jessica golden has done good reporting on this. she spoke with the retired svp of sales at nike. chef she said i heard there were many shouts of joy threw throughout campus when he announced this. he gave ump a lot of compensation. they are paying him off one-time restricted share award with the target grant of $3 million to
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make up for what he lost when he left. >> nike, i always, you know, not to take it here. i always grouped it in with the go woke, you go broke. you have people kneeling and people wearing socks that have cops as little pigs. you give the guy millions of dollars for endorsements. you know, a lot of misstep. that's probably -- >> i think the bigger issue -- >> people say it is a bigger issue. disney is at $80 a share for some reason. nike and even coke has had some issues. quincy, you heard he finally said i'm not going to do it. honestly, i'm just one person, but i haven't bought a nike product in four years because of that. i go to dick's sporting goods and i deliberately not buy nike
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because of that. >> mary dillon from foot locker will tell you they are not their top brand anymore. consumers may not buy and others will not see it. >> inventory issues and future orders and they lost the shelf space during the pandemic by going direct as we said. there is also cultural issues among certain people with a lot of crazy stuff going on in their head. i have not aboubought it. >> you refer back to michael or jordan. >> republicans buy sneakers, too. if you go there, you will lose half the country. >> there are a lot of issues. >> myriad issues. it is tough to run. they are the largest apparel maker in the world. you know how many ways you can
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screw up when you decide what to stock and make and consumer tastes. no idea what they're going to buy. >> stock is up sharply on the news. this was widely hailed within that community at nike at the headquarters. stock this morning up by 5.75%. if you check out fedex shares this morning, they are down sharply. the company reported earnings of $3.60 a share. that was far below estimates of $4.67. revenue was slightly lower than expected and the shipping giant cut its revenue guidance for the year. fedex expanded during the pandemic and has been trying to scale back and cut billions of dollars in cost after demand normalized. fedex said that failed to offset the drag from the lucrative services in the u.s. one fewer operating day in the quarter is a big part of this as people moved away from the
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priority high price priority looking for cheaper ways to ship things. that stock is down 13% this morning. home builder lennar reported $4.46 per share. it was higher than the street. revenue bwas above estimates an guidance. new orders in line with estimates. one possible reason for the downward move is the guidance in margins. 2.5%. significant. the company said gross margins on home sales came in at 22.5%. expectations were 23%. the company also said it expects its current quarter margin to remain flat compared to the prior quarter which was below estimates. the stock has had a strong run. up 65% over the last 112 months
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shares of mercedes-benz tumbling in germany citing a deteriorating macroeconomics environment driven by weaker chinese consumption and the down turn in the country's real estate sector. mercedes-benz now expects earnings dprgrowth of 7.5% to 8 per year. other european auto stocks were down including stellantis and volvo and mercedes-benz. skechers shares tumbled almost 10% yesterday. the cfo spoke at the wells fargo consumer conference and said he expects performance in the back half of the year to be more disapped disappointing than he thought with the worsening conditions in china. it is still reforming itself since covid. recalibrating. the asia region accounted for
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25% of the sales in 2023. the stock gave up all of the 2023 gains, all of them, with yesterday's decline. dodgers shohei ohtani is the only member in the 50/50 club. he accomplished the feat in spectacular fashion going 6 for 6 at the plate and hitting three home runs and knocking in ten runs. his $700 million ten-year contract paying dividends. he is a shoe-in for the mvp and the dodgers clinched a playoff spot with the 20-4 win. 20-4. ten runs batted in over the feckless marlins. not a good year. >> i looked at it and apparently the fan took off with that 50th
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home run ball he hit. they were hoping to get it back. >> he's in the stands. didn't run out there? >> no, no. somebody in the stands. they were hoping to get it back. last i read, they have not recovered it. >> he's something. mets will be in. it looks like. i guess because i live here. >> and you're wearing an orange tie. >> that's good. yeah. i'll say that's what it was for. jets. >> amazing. i didn't see the whole thing. >> i saw video in morning. >> i watched the first half. >> it showed a defensive player -- any other quarterback would have thrown an interception. perfect where it was. just another touchdown for aaron rodgers. is it possible? is it possible? you know -- >> they're 2-1 for the season. >> they were called the amazing mets. >> amazing jets? >> you want me to endorse them?
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>> no. nobody wants your endorsement. you're the kiss of death. >> for the presidential candidates, too. we'll dig into the -- go kamala. the post-fed market moves after the dow closed at record highs yesterday. later, we're learning about another woke broke situation. starbucks ceo brian niccol's message to employees earlier this month about the three day in office policy. open up the bathrooms and don't put christmas trees on any of your cups. "squawk box" will be right back. >> announcer: this cnbc program is sponsored by baird. visit bairddifference.com. hter: alright. dad: side to side. when you work with someone who knows a lot and cares even more... you can do this. ...you're unstoppable. (♪♪) wow... are you kidding me? you can do this.
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welcome back to "squawk box." let's dig into the post-fed moves with kumar. we will talk a lot about the fed and the week. we also have darryl kronk from wells fargo. also the president of the wells fargo investment institute. darryl, i'll start with you for market reaction. the fed cut by a half point. can we count on 500-point a day gains in the dow between now and the end of the year? is that what we get now since this happened? >> it would be nice, joe.
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it is not that simple. i do believe you get a relief rally off this. >> relief from what s? >> relief from this. the concern of the hard landing. the fact we went big. chair powell needed confidence in the data. once you get confidence, you go big. that's why they went 50 basis points this week. that's as big as they were going to go. they weren't going to go 75. they should have went in july and they didn't. >> looking at it like hat, it's 25, 25. nothing crazy. >> right. >> i could definitely do a high school debate from both sides, sri. put me on either side. we worked hard to get rates back to where they were normal and in case there's a slowdown coming, which you wouldn't say this is a slowdown with the stock market
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at all-time highs and unemployment is still very low. this is not an emergency situation for 50 basis points. we worked hard to get the dry powder. why are we doing this here? >> powell called it a recalibration, joe. >> nine times. >> this is big easy. in terms of what he was doing, he was trying to make sure the stock market did not get disappointed with what he did. >> really? >> absolutely. >> how do you know that? >> how do i know that? he was talking about the stock market with his rookie year as chairman and going back to 2017 and saying he would increase several times in 2019. by then, by christmas, the marketed cratered. january 4th of 2019, he said he would be very patient and actually cut rates several times. this is before covid. >> so, you've got evidence in your view, that you've seen him
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respond to what the stock market is doing and base his monetary policy on keeping the stock market -- >> absolutely. the way to justify that, joe, is to say if the stock market falls, it will reflect a weakening of the economy which means unemployment would go up and, therefore, in a sense, i wouldn't say that as chairman, but that's why i have to protect the stock market. >> the wealth effect helps him accomplish his goal of a strong economy. >> it puts you off the goal of inflation and control. that is where i think he is going to miss and the inflation is going to increase. >> the only thing i'll say to add to that point is we had dan trujillo and he thought it was leaked from the fed. that they would do the 50 basis points instead of 25. it was leaked from them because
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they didn't want the market to react badly, too, which plays into what you were saying. >> the market would have reacted badly to a 25-basis point cut. here is the problem. now it is uncertain what is going to happen in the future. do you have 50 basis points continuing or not? yes, you have to. the next time it is 25 and the market is going to back off. once you start feeding the marke market, there is no end to it and he has to provide 50 basis points in the future. i don't know how he's going to escape that. >> that sounds like -- you say there's going to be no end to it. it sounds like there's going to be a bad end to this. you probably disagree with sri. >> a little bit for this reason. if you take the dual mandate of jobs market and inflation and we talk about the annualized numbers with the inflation number a year ago and jobs
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market. the rolling three-month average of the non-farm payroll, jobs report, 116,000 jobs. that is half at the start of the year and half from a year before that. >> the jobs coming back from the pandemic. people going back to work, basically. >> anywhere sub 100,000 jobs, which is close to stall speed, is significant. flip over to inflation, right? the pce deflator, which is what the fed cares about, the rolling is 1.37%. below 2%. so, the recent data on both of those tells you the fed should go and needed to go. you have the bond market screaming at it. the two-year at 3.55 basically, right? fed funds at 5.35. it was the biggest difference between fed funds and two-year that we've seen almost ever.
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>> that makes it sound like the very recent data that the fed did need to cut. if that's the case, what we took away from chair powell's commentary is make not an accurate representation. if you think the economy is fine and jobless picture is fine, that's the thing that's hard to add up. either things are bad and we needed 50-basis point cut or things are great and we didn't. which is the answer? >> they had the confidence. this is an insurance cut. if you look at the dots plot, they would say 50 or 100. they would say 25 at every meeting until early '25 and then skip a meeting and go 25 from there. the fed did need to cut. i think 50 was exactly the right call because of the economic data. i don't necessarily subscribe to the idea that the fed is pandering to the stock market. i think it takes it into account as a variable. i don't think it's the sole
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reason. >> becky, i think your comment was spot on. if you look at the conference on wednesday and heard him say the economy is strong and employment is being maintained and you stop short of the first two minutes of listening to him, you come out with the impression he is not changing rates at all. he would let them be. then you have the 50-basis point cut. that is a disjointed response here. that is why i said to joe it is more a stock market related move rather than related to what is going on. jobs wise you are more than 100,000. inflation is about target. the initial jobless claims are very low. subdued. why are you cutting interest rates? >> gary cohn was here yesterday and he suggested the weird calendar they have right now. they didn't cut in july. in august, they had the meeting in jackson hole.
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september, okay, this is their chance to do it. there a there's not a meeting in october and then the election. maybe they should have started a little earlier. this is a 25-basis point cut over a couple months. >> it could be. you need to be sticking to the long-term object tives which is the twin mandate. he goes beyond the twin mandate which is what bothers me about the way the fed acts. >> sri, you give market players 15 years of zero, basically after the financial crisis and pandemic. it's just husmuscle memory. we're not used to having money cost something which is the way it should work. whatever money costs should be decided with supply and demand. it shouldn't be an outside agency thinks where it should be because you get bubbles and money goes where it shouldn't go because it doesn't cost anything.
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don't you think -- that plays into just the stock market players, i'm not going to mention any names, but stock market players love low interest rates because they make money for their clients. >> you make a very good point. it began after september of 2008. we were all spoiled into zero h interest rates. you didn't make money from the b bank, but you made money from the stock market. income inequality worse oned. >> the people they are supposed to help are the ones they screw. >> we didn't want to change it and that's what we're going through. >> cronk. cheap money. >> you can't live on cheap money. the fuel that drives. >> you make me chase, but not today. you said that. you still -- >> i know. >> you admit it.
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>> the biggest disconnect to sri's point with the market and the fed remains this very point. if the fed is going to cut seven plus more times in the fed funds future this morning beyond the 50 basis points. >> you think it gets to neutral? >> neutral is probably somewhere around 3% in fairness, right? if you need ten interest rate cuts and the s&p earnings are going to grow mid double digits next year, i can't find a period of time in history where both of those have happened, right? because why cut ten times if you are getting double digit earnings growth? that doesn't make sense. one of those two lovers has to give here t.. it will go forward as it has in the past 12-to-24 months. >> joe, it amazes me the market puts so much on the dot plot because the fed has never stuck to the dot plot.
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the dot plot didn't tell you it would have a 50-basis point cut now? the changes happened based on the latest data which means you don't have a change. th that's why we're in trouble. >> when he came out and said do you see this. in very bad periods, you see this. >> that is 100% right. >> he was almost pointing out the inn congruity. >> that is not why we are cutting by 50 basis points. it is an argument which doesn't hold because he also speaks about the strong economy. >> all right. i guess we got to go. thank god for the fed. we could talk for three hours and have no yviewers left. >> interest matters. it is interesting to us and it really matters.
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i did see someone post something on x yesterday. he was on the plane. the guy in a couple aisles over said the fed cut 50 basis points. all of the other people on the plane looked at him and had no idea. i had to give the guy what's up? i knew. the only other guy on the plane knew. who did what? >> we'll be back with a great recipe for chicken marsala. >> no, we won't. >> thank you. >> thank you. when we come back, we will talk about new starbucks ceo brian niccol after back lalash m the work policy from california. we'll get to all of that next. (♪♪) in life, i'm reminded that it's not about the destination. it is truly about the journey.
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new starbucks ceo brian niccol is taking a softer approach to office work than amazon. niccol spoke about the power of having everybody to the, but said he would not tell them what days to show up. he said we're all adults here. he listed the amenities including a gym, day care and store as well as subsidized transit. starbucks said there is no change to the three-day per week in-office policy. that is a contrast from amazon's andy jassy who recently told employees to report to the office five days a week. niccol's arrangement allows him to live in california and travel to seattle on the company
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corporate jet. starbucks said he will stay in the office and visit the stores around the world. we were just talking about off camera to cronk about this. it's not the office that people hate. it's the commute. i think it is absolutely true. if you are spending one hour or two hours a day commuting each day and saw your life during the pandemic, that is a fault of real estate costs and a family to live affordably to live away from the cities where the jobs are. >> there are only certain jobs you can do from home. >> yeah. and that brings back the inequality issues. >> things you can't do on a computer at home. then, all of the culture benefits of being with colleagues. >> it is better to be
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face-to-face with people. >> i think he might be, brian might be in newport beach. >> you wouldn't leave, either? >> i have a lot of empathy for why he's motivated to try to have the system that he has. coming up, fallout from this week's fed decision. we'll talk about the impact on customers commercial real estate next. as we head to break, here is a look at yesterday's s&p 500 winners and losers. boom! >> announcer: executive edge is sponsored by at&t business. next level moments need the next level network. but all you did was plug it in, you didn't do anything neither did you exactly exactly exactly exactly impressed? honestly, a little
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good morning. welcome back to "squawk box" live from the nasdaq market site in times square. nasdaq is giving back and the s&p is also lower. the commercial real estate sector has been under pressure for a while, but the fed relief could help with that stress.
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leslie picker is here with more. there has been a tsunami we have been waiting for. >> it may explain why we saw 50 basis points over 25. the timing of the 50-basis point cut is important because of something called the maturity wall on the bank loans. according to the st. louis fed, there's about $1.7 trillion of cre debt coming due between 2024 and 2026. i'm told much of that ramping up at the end of this year and next year. unlike residential real estate, commercial has shorter terms. a borrower refinances the balance rather than paying off the lump sum. as you can mcan imagine, refina rates are higher than five years ago weighing on the borrower. conversations with troubled
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lenders are happening now. i'm told a 50-basis point cut opposed to 25 moves the needle for them to come to agreement. banks wcan afford to take a few hits now. this doesn't mean the worst in cre is behind us. delinquencies are rising and expected to do so in office where vacancy rates are at highs. now there is light at the end of the tunnel assuming the broader economy holds up. that is why regional banks traded up yesterday. >> if the fed is doing that and part of the reasoning, it is not a gift to the commercial real estate guys holding this stuff, but worried what would happen to the regional banks. >> they flagged this for the commercial real estate. they have been talking about it for more than a year now. it's very much on their radar. the st. louis fed report from over the summer highlighted the key issues with the maturity
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wall and the financial system. it's this interesting undercurrent of why we're seeing this. >> it makes more sense. look at the dichotomy of what jay powell said. the economy is good and the job market is good and we're cutting 50 basis points. that truly makes much more sense than the other things we heard. leslie, thank you. >> thank you. when we come back, it is one of the largest ever 3d printed projects. an entire walmart fulfillment center. we'll talk to the representative behind that project next. you can get the latest on squawk pod on your favorite podcast app and listen anytime. we'll be right back. because now their network is self-configuring, self-detecting, and self-healing. so, their it team can feel confident that updates are made without errors in minutes, not months. that's the now way to network at work, with real ai—for an experience— that's so lit! yes.
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we were made to put them in a package. 3d printing technology company has printed the walmart
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project in tennessee covering 8,000 square feet. it will be used for online and pickup delivery. the company is working on a second project for the future. joining us is zachary manheimer. the 3d founder and chairman. zachary, thank you for being here. i will say a lot of people's image of 3d is printing little stuff for your kids and you can hold it and it looks cool. what you are doing is more important and substantive. why not describe to people how you cancan build a fulfillment center? >> this is more substantial than what my kids are printing. they are printing all the time. that is the interesting side. the work force development piece and so many coming in with this knowledge. this partnership started among several different groups.
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fmgi and an amazing contractor and, of course, walmart, to print the largest commercial structure there is in america. this was not an easy task. lots of things that were learned along the way. what we have now is a major commercial structure and another major achievement is to go up 20 feet. that hasn't happened before with something this size. we learned a ton on this project and we're excited to do the next one. >> what did you learn? what are the difficulties of trying to build a structure that big and tall? >> pumping the material that high with the speed that we need to go to really make this save time and move as quickly as we needed to, that is one of the biggest ones. temperature control is huge. it was 110 degrees on the surface during the day there. so, our team became knnocturnal.
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our teams worked from 9:00 p.m. to 6:00 a.m. every day to do this print. >> was this project, obviously, you are looking for ways and things to do this better, cheaper, more efficiently. was this project cheaper? >> when we operate at our most efficient, the answer was yes. the first couple weeks, we had a lot of trouble spots with temperature and pumpability. once we got it dialed in, we believe, yes. we will have more time to get there. i can tell you, one day, when we were able to do 325 square feet in a few hours with a team of three people, that's a major achievement for this and we're trying to beat the cost of cmu block. we're still getting there. it's building in the industry. i would not say it is dramatically less expensive now. the next one in the next couple months will be able to tell how we can make it like that
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>> how does this work inwith th partnership with walmart? do you eat up some of the costs? do you share it? >> it is shared across the board. most of it comes to us. the difficulty in the beginning was trying to figure out how to print this and what time of day. once we got this going, things were moving very quickly. 200 millimeters a second. that's the fastest we've ever printed. this was a wonderful learning achievement for us and for the industry. that's really what we're seeing take shape here. you know, we've only been 3d concrete printing in america for six-to-seven years. this are only a handful of companies doing this work. we, of course, all know each other. it is like silicon valley in 1972, but spread out more
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gloglobe globally. it was such an honor to work with walmart and fmgi and rick robotics. >> zachary mannheimer, thank you. >> thank you. coming up, huawei lookg into overshadow the iphone 16 release with the model release on the same day. eunice yoon has the story live from beijing. that's next. >> announcer: this cnbc program is sponsored by baird. visit bairddifference.com.
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apple's iphone 16 goes on sale in stores today. in china, if faces competition
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from the latest huawei model unit. eunice yoon joins us live from beijing. i can't decide which one to get, eunice. >> reporter: well, joe, i am at the huawei store. i don't know if you can see behind me, there is an apple store right across the street. it is one of the many that have seen people heading over since 5:30 this morning to get their hands on the iphone 16. now, over here, huawei fans are coming in to get the mate xt, a trifold phone. it holds three ways. what is also interesting is the screens allow for a lot of different windows to be open at the same time and it is very lightweight. just a little bit heavier than the iphone 16 pro max. now, scalpers outside of the apple store told us that the pro max was the winner of the lineup of iphone 16 phones.
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they have been trying to buy the phones off of consumers, saying they would buy them at a markup of $70 for black and white models, and $42 for desert titanium. online orders for the pro max are backlogged by two to three weeks. this doesn't mean, though, that apple doesn't have problems here. the apple intelligence a.i. service still not approved by chinese regulators here. and then, of course, there is the competition from the chinese competitors including huawei. and, joe, you said you couldn't decide which phone to get, well, it looks as though huawei is going to be ramping up its fight with apple overseas. sources familiar with the matter say huawei is planning on launching this $2800 trifold phone in overseas markets in the first quarter of next year. >> yeah, i was -- that was
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definitely sarcasm, eunice. i'm going to get rid of this -- >> maybe you can get your hands on one. >> i'm going to get rid of this motorola flip phone that i've been using -- becky might get rid of her blackberry some day. in all seriousness, when i send a text and it comes -- and it is, like, green, it is like, who are you? you don't have an iphone? i don't even understand the -- what is the an dried samsung? people have those? >> yeah. the cameras are pretty good. the screen ready pretty good. once you're in the apple ecosystem, it is hard to -- >> it is enough for me to be doing this, eunice, and i can't imagine trying to learn how to use a huawei or a galaxy? is that -- >> my dad had one for a while. >> re >> reporter: it is a different ecosystem, based off the harmony os. so huawei has been investing in its own technology, because of its -- >> the what? >> reporter: harmony os, it is a
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different os. you have to get all adjusted to that. >> no. >> reporter: yes. but they also -- >> huawei. >> reporter: but they also have a lot of challenges themselves, because the preorder numbers were 6.8 million. but there were fans who were complaining that they weren't able to get their hands on the phone unless they got a confirmation text. so, there have been some analysts who said the issues could be supply chain related. but the company itself has said that they wouldn't comment on the numbers that have been produced or the numbers that were delivered today. so, still a lot of challenges for huawei too. >> i'm a blue text person snob. i think less of a person when this comes back and it is green. it is, like, what kind of phone do you have? don't you -- >> no. >> you don't think less of -- >> no. >> maybe they -- >> if tim watches -- he must love this. >> can't you like both?
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blue and green? >> no, i wonder what's wrong -- iphone snob. you don't have an iphone, i don't understand what you're thinking. thanks, eunice. >> i have an iphone. >> i know you do. >> i do too. and it is not an old one -- >> i don't make fun of people who don't. >> i'm not making fun of them. >> they're stupid, you don't understand -- >> i think less of them. i'm kidding. i'm kidding. i'm kidding. when you get a green thing back, don't you say, who are you? >> i honestly don't get that many green things back. >> that's what i mean. when you do, it is, like, get into the -- it is 2024. wt's go. >>hen we come back, we're going to talk about the new ceo at nike, and the challenges ahead for the company. "squawk" will be right back.
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nike's ceo john donahoe is stepping down and company veteran elliott hill is coming out of retirement to take over as ceo next month. joining us right now with more on what this means for the future of nike is adrian yeh, barclays u.s. retail senior analyst. this is a big move, the stock is reflecting that. it is up 6.5% this morning. what needs to be done and what can he do in quick order? >> i think the big piece of it is that just fundamentally he's a product and marketplace person. and so, from the prior management, who had been more of a consulting background and more of a technology background, retail really does need that person who understands product and brand and consumer. so, in short order, i think it is just the direction of where he's going to take the company over the next six to nine months. what is already in the pipeline
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is coming at us. so innovation, seeing that in early 2025. >> yeah, the stuff that is already in the pipeline, okay, that's not going to be things that he can get his hands on and feel around it. we have gotten reports of excitement at the company headquarters. people looking forward to the changes because they know him and know him well. my guess would be there would be outside partnerships that would be pretty important too. foot lock er and other places too. how quickly can they rebuild some of the partnerships and connections? >> so, from the wholesale channel management, you can start to do that almost immediately. and we all had heard from the company over the past quarter that they were moving away from this dtc strategy, back to the wholesale channel. direct to consumer. and so that shipped back to the wholesalers, the dick's sporting goods, foot lockers. that had been abandoned for a period of time in favor of their own direct to consumer business. they already had started to move back to that. because he had, you know,
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30-year veteran of the business and one of his charges was marketplace. marketplace is this wholesale retail partnerships, that can immediately start to feel some impact. >> my guess is that to be a retailer today or to be a product today that is really successful, you have to have both, relationships with direct to consumer, your own way of reaching them, and also these great partnerships with retailers. is that a job you think you will be able to do well? if he's coming from the old school way of thinking of things, and the pressure from shareholders and the board and everyone else is that we went too far toward direct to consumer, is there a fine line that he'll be able to walk without kind of shoving that important part of the business aside? >> so, interestingly the strategy that was employed was before he actually retired in 2020. and so this movement or the kind of march toward direct to consumer, led by digital, so this whole world of e-commerce
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and moving toward that digital environment, what i'll say about the channel mix is there has been so much talk about whether they want to be dtc focused or whether they want to be brand -- wholesale focused. and at the endst of the day, its an output of where the consumer wants to shop and how the channels work together. i don't necessarily think that he's going to direct from the input side of things where they want to be at some point in time. i think he's of the both of the channels work together, dtc launches and innovates products, proves the worth of those and moves into the wholesale channel and they're very symbiotic. >> so, adrian, what do you do with the stock today? it is up 6.5%. >> what i would say is these type of management changes, we're equal weight. we're equal weight. this is a positive development. just absolutely a positive development. if there are people who tend to kind of think very, very forward
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looking about the brand health is still there, this is not a broken brand, this is a brand that lost its way. and can be resurrected. but it will take time. so he steps into the seat on october 14th, they have an analyst day, he'll be at the helm on november 19th, that's a critical moment for investors. and then from there, it is probably about 6 to 9 to 12 months before he starts to change the business from the trajectory that it is on. we just previewed their quarter, we think the quarter is going to be fine. we think they have derisked the fy25 guidance. but remember, china's 15% of the business and china has gotten materially worse over the next -- last three months for everybody. so that's one of the risk factors. >> it is a horrific looking chart, adrian. it is dead money for five years, right? six years almost. same level, same level where it was -- go back and tell me, you know, i don't know why i don't remember what did they say on
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july, whatever that was, 19th. stocks like nike aren't supposed to go from 97 to 70 in a single day. what the hell is that? >> so, you're 100% correct, over five years we basically have gone up to 177 in the peak of '21. we're 15 bucks off the pandemic low of march of 2020. what they said in july on the last quarter, they lowered the fy25 guidance and basically guided to negative annual sales. this is a global growth company. you cannot be putting up negative sales. they also had guided -- i remember the consensus was somewhere hanging out around 380. they talked about franchise management, pulling out product out of the dtc channel. their core franchises, air jordan, air force one. this is, you know, and then they talked about moving back to wholesale, margin dilutive. it is a negative on a negative
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on a negative. and frankly, you know, the leadership was the same, right? there was no underwriting of this strategy under that past leadership. >> interesting. so if this new guy had been there, none of that would have happened, adrian? >> you know, it is interesting, like, in order to get to that point in time, decisions have to be made over john donahoe's 4 1/2 year tenure. we had a couple of things that you couldn't control, right? vietnam, shutdown, the marketplace, manufacturing, the excess inventory, but what i would say the difference is that it is, you know, retail is about the details, right? so these big sweeping moves to dtc because the margins are better, big sweeping moves to get out of the franchises because you think you're selling too much of them, i guess at the end of the day we really think that somebody in there might have handled these issues, a little bit better if they were very focused on inventory, very focused on supply chain.
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>> adrian, thank you. >> thank you. it's more than just a little after 7:00, my fault. i guess, kind of. >> it is. >> you're watching -- five after. >> interesting information. >> $200 billion cop worth $90 billion now, or $97 billion. "squawk box" on cnbc. i'm joe kernen with becky quick. among today's top stories, executives at the port of new york, new jersey, tell cnbc they have begun preparations for a potential complete work stoppage by the longshoreman's union. a strike would shut down five of the ten busiest ports in north america. macy's plans to hire more than 31,000 full and part-time employees. sounds like a lot. that's for the holidays. it is fewer than last year. but the department store is gearing up for a busy season, as
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usual. see how many pumpkins are at the supermarket now? it is, like, a month and a half, right? >> they have been out for a while. if you go to the drugstore, all the stuff is halloween, spooky season. >> i love scary movies. i love that holiday. not really a pagan. makes me feel like a pagan. youtube is showing ads that whether you pause videos. it joins directv, sling and hulu by using targeted ads on pause screens. the new ads also pop up when you pause videos on the youtube mobile app, they're going to get you no matter where you are. just be prepared. all right, checking the futures this morning, looks like right now dow futures still barely in positive territory, up by five points. s&p down by 15. the nasdaq a little weaker, down by 87. let's get over to dom chu with a look at this morning's premarket movers. >> happy friday, becky. happy friday, joe. we'll get things started off with a check on some of the earnings movers out there
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besides that whole story with nike. lennar down after hitting a record high yesterday in the rally. lennar reported year over year gains in both home deliveries and new orders. it added that the fed's move to cut interest rates this week will lead to more demand for housing. nonetheless, a pullback from yesterday's record high, down 2.5%. then shares of fedex, driving a lot of the market story today, currently down just around 13%. you can see here the package delivery giant reported lower than expected earnings and revenues. and cut the top end of its full year profit forecast and then lowered its full year revenue guidance. that's led to a number of analyst revisions to ratings and targets. among them, morgan stanley which cut the stock to underweight from equal weight and reduced the target price to 200 bucks, was $215, saying expectations need to be recalibrated to use fed speak today. u.p.s. is also down 2.5% in
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sympathy with that. we'll end with consumer staples and pepsico shares down 1.25% due to a downgrade by morgan stanley as well. they cut the soda and snack giant to equal weight from overweight due in part to potential risks to organic sales growth and market share losses as well. for more on own top stories of the day, head over to cnbc.com/pro. >> down 40 points on edex? >> yeah. it was, if you put it back up there. i'll show you the one-year chart as well. it has been pretty good. fedex and u.p.s., but if you look at the one-year chart of both of those, you know, u.p.s. obviously has been a big underperformer versus fedex, but that mean reversion coming back is maybe one of the reasons why you're seeing fedex shares down -- >> you know dow theory, dom. just transport-wise, maybe the 50 basis points is starting to make some sense. >> what has u.p.s. been telling you about dow theory over the
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course of the last year. fedex has done pretty well by comparison. it is this right here that has a lot of people off guard. >> those are shocking package numbers. i don't know what it means. i don't know what any of it -- >> some people aren't going to pay premium prices. >> the premium price thing, everyone wants to ship -- even the corporate customers are shipping more toward economy type packaging and delivery versus the premium stuff. >> thank you, dom. we're going to talk federal reserve and impact on the markets. and then a new shark is circling. daniel lubetzky joining the shark tank panel. before he does, he'll join us on "squawk box." coming right back.
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johnson & johnson reportedly increasing its baby powder settlement offer. this is according to bloomberg which says the firm is upping its bid to settle thousands of lawsuits to more than $8.2 billion. that's about $1.7 billion above what we heard earlier. the plaintiffs argue that the baby powder gave them cancer. take a look at the futures this morning. we -- we're seeing a mixed picture. the s&p might be down, nasdaq downa little. the dow is also down. so we're down across the board. joining us now, mimi duff, gen trust managing director. good to see you. what were your -- we haven't had you on since wednesday.
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what did you think? what was behind that? have you ever recalibrated anything? i don't -- >> yeah. that's the key message. it is a recalibration. i think the most interesting bits of the fed meeting were that they are taking on a level based approach. they think 5.5% is the wrong target rate for this economy. lowered it pretty aggressively to 4.75% to 5%. they're not going to wait for material weakness. they're basically trying to calibrate the funds rate to the current economic conditions. so that was one bit. and then the next thing for me, the most interesting, i think, was the amount of disagreement on where the long-term funds rate is. they edged that up to 2.9%. if you look at the variability in the dots on that dot plot, there is a lot of variability. see that last column there? and that's affecting the whole
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cap along the way. >> mimi, i just think in the past, i guess maybe it was greenspan or just the experience with volcker. the risk didn't seem to be balanced. the economy, i think the fed people thought he had less to do with being the engine for the u.s. economy in terms of jobs. and the fed was more there to guard the sanctity of the dollar. and to keep, you know, the most insidious force known to man is probably inflation. but i guess after the japan experience and other things, no inflation can be bad too. and it almost looks like this fed, it is almost equally concerned with each mandate, which i think is recalibrating. i just don't understand, you know, you build up this dry powder to use for the next slowdown, with where unemployment is right now, it
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doesn't seem like the jobs picture is as important as keeping inflation at bay. after what we just went through. they seem to think -- seems to be on the back burner now, inflation. and they're full on with pedal to the metal for job growth, which is already at historic levels. employment. >> yeah. i'm not disagreeing with you there. on the inflation, the fed has a dual mandate, most central banks have the single mandate, the inflation target. again, i go back to that long-term dot, the long-term neutral, nobody thinks it is 2%. that's interesting to me. on the degree of recovery that they have seen so far on the inflation picture, if you look at the monthly prints, they really do look good. so, i think that given the deterioration, the recent deterioration in the jobs side, they are pivoting. i don't disagree. they're taking their dual mandate seriously here. >> and you -- as an economist,
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you think that -- i would go two-thirds dollar stability and a third labor. i don't think the fed should be concerned, you know, the u.s. economy can take care of itself in terms of job creation and innovation and everything else, just give me a stable dollar and stable prices, and everything else takes care of itself. do you agree with the 50/50? right now it looks like 75 labor, 25 inflation. >> well, i think -- listen, i mean, they have a dual mandate, they're not gdp -- >> the stock market. that's what i'm getting at. they like stock markets that go up too. >> you know, they'll never say that. we know that. but the stock market yesterday, there was a lot of exuberance, so a little delayed reaction there. >> we're at all time highs and cutting interest rates, like the world's ending. >> again, they're coming to this level, right? >> retail hungry. >> yeah, recalibrating. >> i'm going to try and come to
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grips, come to grips with that. thanks, mimi. >> thank you for having me. >> okay. up next, mark cuban jumping out of the tank and replacing him is kind snacks founder daniel lubetzky. he will join us next to talk about inflation, startups and more. he is the latest shark to take into the tank on this. >> cuban is leaving for good? >> i don't know. that was news to me reading that. >> he is? what's he going to do? treasury secretary? probably. probably hopes. all right. >> and later, harvard's jason furman joins us to talk about the economy and the race for the white house. "squawk box" will be right back. >> announcer: time now for today's aflac ivtria question. who holds the ncaa record for the most career passing touchdowns? the answer when "squawk box" returns. thing i had aflac. (aflac duck) hmmm the cash i got from aflac helped pay for medical expenses, groceries, rent.
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all right, there is a new shark circling, kind snacks founder daniel lubetzky will be joining the shark tank panel. s joining us right lubetzky, the kind snacks founder. thank you for being here. first of all, why jump into this tank? what is it about shark tank, what do you want to do there? >> "shark tank" is a magical, very, very unique show, 16th season, it brings together all generations. my kids, and i use it as an opportunity to teach them a little bit about business. we discuss valuations, we discuss with interpreters. it is brilliant to find the right magic to entertain and
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teaching entrepreneurship and the american spirit and incredible opportunities that our country affords us all. >> yeah, i watch it with my kids too. it is an incredible teacher of things that probably they're not learning in the school system all that often. you're so well known for kind, because you took a company from zero to $5 billion and did it with just an investment of $5 million. how did you do it? what did you learn along the way that you can bring to "shark tank"? >> i think what is interesting on my experience i can bring to "shark tank" is the success and the failures before it. i have ten years, becky, where i was, like, making two steps forward, two steps backward, my first company, and all the mistakes i drew then, i drew lessons to then get it right for kind. and describe what happened then. and so i think i can bring to entrepreneurs every step of the way from when i was a one person operation, windowless basement
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of my building, to the trash compacter, like, all these noises and smells, all the way to building our team members and billions of dollars in revenue, and it is in my experience, the mistakes as long as you self-reflective are as important as the successes. they teach you how to calibrate. >> yeah. a lot of the pitches that come are from people who are at just that point, maybe three people, maybe five people, these are very small operations that a lot of times have great ideas. what do you look for in those pitches that makes you decide, okay, this is somebody i want to put my money on versus, no, i think i'm going to pass on this one? >> i call it the three its. first, i start investing, i look for grit. i want them to be fighting. that's what i used to have in the peace works shares, i didn't have the wit. i would go through the walls,
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but there was a window or door next to it, you need to have the creativity to level the playing field by really outwitting your competitors, large giants. you need the grit, the wit and then there has to be a fit, like, the marketplace has to want the product. somebody needs to really appreciate the unique selling proposition and that's what i'm looking for. >> what kinds of trends are you seeing now that you think are hot, that are investing trends you want to be on top of? >> we, through "shark tank," we invest early stage. we invest 20 million to $100 million investments and we're doing a lot of the restaurant space have been here before to talk about cava, very early investors there. i think we just at the very beginning of that journey. that is an extraordinary ceo, so we do a lot of -- people are
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still coming, health and wellness, the same way with kind, giving people something healthy, tasty, wholesome, convenient. there is still an untapped potential to deliver solutions in the restaurant and cpg space there. and then in a.i., technology, the disruption, it is greater than anything in my lifetime. i think a lot of us also in society are shaken up. the builders movement, we're fed up with the people creating troubles of -- rather than coming off solutions. the forces contributing to toxic -- we're trying hard to elevate problem solvers. talked about schools, those in our corporations, to bring out builders mindset, curiosity, compassion, and courage, to actually learn and teach how to navigate differents and create value, build bridges, build jobs, build opportunities. >> daniel, very quickly, the fed cutting rates by 50 basis
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points. what does that mean for the entrepreneurs that you're looking at on "shark tank," and what does it mean for businesses that are very small businesses that at this point that are hoping to become bigger? >> my advice to small business is do not get distracted by that. for the big boys like you guys, it matters. for the guys starting off, one person or 500 people, you can breakthrough all of that. kind group triple digits from the day it was born, first ten years, fast-forward profit -- cash flow positively and profitably and that included going through the financial crisis and every year we go through -- i didn't even understand what was going on, just holding on to the rocket ship, very good product, good culture, good team you're empowering and giving them ownership. nothing can stop them, not even inflation. not to say that's not super bad for the economy. but for the entrepreneurs, for the people at those junctures, focus on your product and your
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value proposition. >> daniel, we are excited to see you as a permanent shark in the tank and we hope to have you back on "squawk" again soon. >> thank you, becky. thank you so much. >> thank you. still to come, harvard professor jason furman on the economy and the election. check out the premarket leaders and laggards on the nasdaq this morning. "squawk box" coming right back. every second counts. but without investment, those breakthroughs are often paused. citi's seamlessly connected banking, markets and services businesses, deliver global financial solutions. so our client can keep investing in innovations for patients around the world. without pause. for the love of moving our clients forward. for the love of progress. (vo) a successful business owner sells his company and takes on a passion project with his son -ts forward. restoring his father's jazz club, and in the process, revitalizes a community landmark.
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name from the past. constellation energy announcing plans to restart the nuclear power plant at three mile island. >> what? >> get it going. fire that baby up. microsoft is signing a 20-year deal to purchase the power output from that venture. the plant is expected to be ready for service in 2028. see the shares right now, not moving on that.
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>> constellation shares are, yeah. >> three mile island was the site of the biggest nuclear accident in the history of the u.s. nuclear power generation. a partial meltdown of the reactor led to radioactive gases and iodine being released into the air, back in march of way back 1979. >> if you were behind the nuclear movement and want to get nuclear restarted in this country, what pr person signed off on saying, yeah, let's start with three mile island? >> without changing the name. has to be a better name. two mile island. think people would -- >> i think they might still know. i understand the need for nuclear in the country, but, wow. >> coming up, jason furman, fukushima staying closed, i think, right? >> for now. >> jason furman with reaction to yesterday's speech on the economy from president biden. i bet he liked it.
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checking the futures right now, we can see that the dow is down about 20 points. nasdaq down 85. s&p off a little. we'll be right back. >> university of maryland global campus is a school for real life, one that values the successes you've already achieved. earn up to 90 undergraduate credits for relevant experience and get the support you need from your first day to graduation day and beyond. what will your next success be?
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lowering interest rates isn't a declaration of victory. it is a deck ra laration of pro. we entered a new phase of our economy and our recovery. >> that was president biden speaking at the economic club in washington, d.c. yesterday. joining us right now to talk about policy ahead of the november election is jason furman, he is harvard kennedy school professor and former cea chair. jason, let's just talk about what the fed's move actually does signal, what it indicates, because it has been pretty confusing to be watching this saying, okay, when chairman powell came out and said the economy is in great shape, the jobs market is still strong, but we're going to cut 50 basis points, why do you think that is? does the fed seeing some happening, whether that be in commercial real estate loans, something in the job market that concerns it? why cut 50 basis points if everything is great? >> look, i would have cut by 25 basis points. i don't think it is a big deal. i think it was a close call.
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the cut was three steps progress. inflation has come down a lot. one step moving in the opposite direction in the job market with the unemployment rate up. i don't think the fed has some secret information about economic weakness we don't have. but they're a little nervous about the unemployment rate going up. i'm a little bit nervous about it too, not quite as nervous as 50 basis points. >> i think satisfaction thinking inflation has been tamed is one thing. and we certainly have seen some better numbers and some improvement. but if you look on the horizon at the potential for strikes at the ports, for the strike at boeing, some other things that could go wrong along the way, that could lead you to think that inflation could come back in some way, shape or form. >> absolutely. look, i think inflation is running at about 2.5%. and that's why the fed is still keeping interest rates at a contractionry stance. the loose labor market -- the loose labor market will continue
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to put some downward pressure on that inflation, but, yeah, there is a risk. if you look at wage growth, wage growth right now looks like what you would see in a 3%, 3.5% inflation world. there are risks to the soft landing, both from resurgent inflation and from recession. it is just that the balance of those risks have changed. and inflation one has gone down. the recession one has gone up. rates should come down. >> just would be pretty disconcerting if the fed had to turn around and focus more on the inflationary side of the ledger of the dual mandate at this point, rather than watching labor market if something happens in the next few months. >> that's why they moved so gradually. that's the nice thing. if they made a mistake and did too much, they just need to not cut at the next meeting or not cut at the meeting after. they're not in a position where they're going to need to reverse this. because rates are still co
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contractionry. i don't know if it is the best way for the fed to operate bought they operate with gradualism. they only move when they're overwhelmingly sure they should move. this is not getting to where you want rates to be this minute if you wanted to constantly have them in the right place. it is part of a path that they're going to go gradually on and -- >> i think that's why some people were in the 25 basis point camps, including yourself. it is what you would have done too. why don't we switch and talk about the election. and what is potentially out there from each of the candidates. you had an op-ed earlier this week where you said basically both candidates have crazy economic plans that have economists kind of ripping their hair out trying to figure out what to make of this. you said kamala harris is the safer choice. why don't we start with the economic plans we have seen from each of them so far? what is your favorite part? >> my favorite -- there is
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things she has that i like, expanded child tax credit -- >> i'm sorry, for each of them. >> i was being a little sarcastic. >> sure. i mean, it is not going to tank our economy, but the idea that you might try to block a japanese steel company from investing and helping support the growth of american steel production is just completely nuts. saying tax free tips, tax free this, tax free that, i think is pretty nuts. the idea that price gouging is right now keeping grocery prices higher, and that is something we can do about it, i don't think it is understanding the economy. so there is a lot of things out there that, you know, i'm not loving what i'm hearing. >> what do you like the most about -- why do you say harris is the safer plan? >> look, it is three big ones for me. and it is the question of what you want to do and what you're able to do. first, trade, this administration did a bit more tariffs than i would have liked, there was some theory and
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argument for them. 10% or 20% across the board tariffs, tariffs on allies like australia. tariffs on products like ball point pens that we don't make. that's just a global trade war in the making. it is something donald trump could do all on his own without congress. that's number one. number two, on the budget, i don't think anyone is taking it as seriously as they should. but pretty much every independent rack up of the two says donald trump would add more to the deficit, $5 trillion for him and from harris, depending on what she does, some deficit reduction or trillion and a half of increase. and, bity the way, if he's elected, he will probably have a republican congress and get it done. his threats to the fed are awful. i don't think che could pull thm off but i would rather not take the chance. >> some of the markups include her ability to raise taxes by $5
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trillion this and probably wouldn't happen either. i read -- you had a good piece in the journal. john paulson -- >> you can stop there. >> john paulson, if he were here, he would -- he makes an interesting case for targeted tariffs and biden did leave some on. and you're right, ball point pens, i don't know about that, but the defense industry, in general, we average about 2% on imported industrial tariff of 2% and it is just much higher from everyone else. we are definitely -- >> not everyone else, most of the advanced economies have pretty similar tariffs with us. these are our close allies. we're going to put 20% tariff on -- >> not 20. how would you -- in 2022, we had a record for the trade deficit, 1.2 trillion and we had a one-month record in july of 103 billion. there is a -- there is a
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problem. >> but tariffs won't do anything about it. first of all, we'll do tariffs on them, they'll do tariffs on us and adjust. statistically there is no relationship whatsoever between the level of tariffs and the trade deficit. what tariffs affect is the volume of trade. we'll end up with less imports, which hurts our consumers, and we'll end up with less exports, which hurts our workers in those industries. it just shrinks all of this trade, it isn't going to rebalance it. >> it must be hard for you. because neither -- >> it is almost like there is a neo free trade group that, like libertarian, it is very strange. both sides have some strange hybrid ideas. now trump wants to get rid of the s.a.l.t. tax. it is crazy stuff going on. and i don't know how much -- how many trillions that would be.
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you probably would like it. i don't know what massachusetts -- >> no, i would keep the s.a.l.t. cap that was done. i think the structure of the 2017 reform was actually quite good and thoughtful. it is getting the rates down as they lowered them. >> well, there is nothing you like on either side at this point, to be totally honest. i understand we both have our axes to grind, but there is crazy -- >> there is nothing quite like tariffs on $4 trillion, most of the goods we buy -- >> like you say, it is going to be a republican congress, we don't have to worry about kamala's -- that's something crazy stuff with price controls and unrealized gains. i mean, it is -- if that was going to pass, and you couldn't say, well, it will never pass, you would be hard-pressed to try to defend some of the whacko ideas coming from -- >> i don't like her price proposal. it is like what most states do.
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>> go back in that little pod or whatever you were in. then i can just -- >> i'm in a hotel now. >> are you really? >> i thought you were. >> in canada, they're terrified about the tariffs that donald trump wants to do on them. >> jason, thank you for joining us today. 'lsewel e you again soon. >> coming up, what the wealthiest of the wealthy really pay in taxes. robert frank has that story next. and mining friendly wy oming. u.s. gold corp has a reserve of almost 1.5 million ounces of gold equivalents. permits to mine zero debt with only 10.73 million shares outstanding and a portfolio of world class american strategic metals assets. u.s. gold corp, join the golden age. your shipping manager left to "find themself." leaving you lost. you need to hire. i need indeed. indeed you do. sponsored jobs on indeed are two and a half times faster to first hire.
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with both candidates pitching their tax agendas on the campaign trail, our robert frank, our friend robert frank, took a look at how much ultra wealthy are really paying in taxes. i guess it depends, doesn't it? >> no. there are actual numbers. we're going to give them to you. vice president harris making the tax rate of the wealthy a big pillar of her campaign. >> billionaires and big corporations must pay their fair share in taxes.
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here's the thing. here's the thing. it is just not right that those who can most afford it are often paying a lower tax rate than our teachers and our nurses and our firefighters. >> also not right, those numbers. in fact, according to a new analysis from the nonpartisan joint committee on taxation, the highest earners pay the highest tax rate. the top 1% pay an average federal income tax rate of more than 16%. that compares to a rate of 5%. this is the effect of what people actually pay for the bottom 90% of americans. half of americans, in fact, pay a negative rate of 2%, they get money back from the government. the very highest earners, the highest we can measure, the top .01%, they average $13 million a year, they paid a federal rate of 31%. that's six times the rate paid
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by the bottom 90% of americans. yes, the wealthy have a higher share of income, but in 2021, that's the latest year available, the top 1% paid a record 46% of all federal income taxes. their share of income was 26%, so it is a progressive system. at least 40% of americans paid no federal income tax. for more on what the wealthy pay and how they're preparing for the election, you can head to cnbc.com/inside wealth for my latest. >> what if you don't have any income to put you in the t top .01%? if you're just rich? and you don't -- >> you're living off -- >> tax unrealized capital gains and sign up for -- >> no but do they pay any taxes? >> are you asking whether billionaires -- >> you to stay out of the top .01% in income, but still have a billion dollars, but you don't pay any income. she can find people that --
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>> there are individuals in any individual year, that because of capital losses, because they're bore rogrowing and using the borrowing as income, you can find examples on either side. on the whole, the top .01%, the smallest top group we can measure pays by far the highest rate. when you include all federal income taxes, they pay 34%. >> i think what may throw people off is when you look at the statistics from the irs saying these people pay less than 5%, pay less than 6%, pay -- they're looking at the top 50, they're not paying income, but it is also not apples to apples comparison. what you pay versus rates for those levels. i didn't realize 50% of americans were getting that money back. >> again -- >> that's mitt romney's 40 -- yeah, 47%. >> and but, again, what we're talking about here are the effective what they pay rates, not the published marginal rates. and that's what was surprising.
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most estimates i've seen before this are about -- this is why chairman widen, the chairman of the joint tax committee, actually disputed the finding, he actually said -- >> that's not going to stop the demagoguing and the fair stuff. elizabeth warren, even though she calls it kroger, she is still using comparisons on profit gains based on a prior year's quarter where there is a $1.4 billion goodwill impairment charge, that's how she gets to these big -- they don't care. they dnocao t re. >> our job is to give people the real numbers. >> right. >> the populist -- >> they can make a decision. look, it is a legitimate argument. let's at least use the real numbers for what --
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eu has been tough on big tech, but a new incoming antitrust chief may shift policies toward companies like meta, alphabet, apple and amazon. joining us with more on global tech regulation, a.i. and much more, peter huntsman, ceo and president of huntsman corp. good to see you this morning, peter. >> joe, very good to see you again. >> do you -- are we behind the
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curve in terms of this, in this country, and in the eu is right or do we need to be more like them or do they need to back off? what do you really believe? >> we have multiple billions of dollars of business in europe and i really struggle to find one aspect of european industrial energy or tech policy that we would want to even begin to regulate. particularly the environmental policy. >> do you see any -- we're talking about a shift. is it going to get worse or the pendulum already swung too far in the eu and it is going to start coming back the other way? was anything learned from what could have been a disaster after the russia/ukraine situation with natural gas? has anything been learned? >> i hope we have learned a couple of things. first of all, when you think about big tech, we think about
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a.i., it all begins with hydro carbons. we can talk about all the green energy we want, we talked about all the renewable, there is no such thing as green energy. there is not an energy source in the world that doesn't depend on oil, that doesn't depend on the chemical industry to build out the infrastructure, distribution, transformers, storage, battery technology, solar technology, wind tech. all of this comes from hydro carbons. you have a policy that is hydro carbon, that is antichemicals. first of all, that's just a complete contradiction. and we think about a.i. in this country, the competitiveness of a.i. will be both technically driven and energy driven. and that energy needs to be able to come from a source that is reliable, that is affordable, and readily available. and we think about that today, that's mostly natural gas and it is mostly coal in this country. >> just had pete buttigieg on, transportation secretary, pete
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buttigieg. and i don't hear that -- when i hear a lot of people talktransi hear what you said in their calculus. do they know these things? and do they -- are they misleading the public or do they not know -- have they not connected the dots between what they're saying they're going to do in one area and a.i. and technology and everything else and the other area. >> i can't speak specifically on what he said, what he thinks. i can talk about reality. the reality is what we face every day, what we face as a manufacturer, what we face as -- as consumers every day. and that is what we pay for every day. if you're going to have green energy, you have to be willing not only to pay for it, but to pay for the backup sources, green energy, a lot of wind, wind is only about 25 to 30% efficient. i'm not antiwind. we make the raw materials and go into the wind industry. but i'm not willing to pay for
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two or three sources of electricity and only have one of them operating at any one time. s that that's not going to keep us competitive. >> we got to have you back. they don't want to -- there is a lot of people misleading. we are going to go and we have tim cook on the screen, peter, we got to go with this new apple stuff. we'll have you back, thanks. >> that is tim cook waving to the crowds. apple opening the doors to its flagship fifth avenue store as the iphone 16 goes on sale. steve kovaches joins us now. >> i believe i just saw deirdre brian, the head of apple retail there with him. this is the tradition every year, taking selfies with the fans. i talked to a number of people in line who come here every single year. just to do what you're seeing now. meet tim cook, take a selfie with him, i talked to one guy who has been here every year, he takes work off, for example. but also i talked about the line
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here, compared to the last two years i stood out here for the iphone watches, a little shorter, usually around the corner, they put the spillover line, a little shorter than it is or has been the last couple of years. this is coming, of course, amid questions and mixed data about demand for this iphone 16 line. just this morning, ubs put out a note showing, again, preorder times are a lot lower than in years past. ubs called demand muted for this cycle, but also said let's wait and see, of course we're waiting for apple intelligence to launch. that's going to come next month. the first couple features of that. that is not stopping apple from marketing this, though. behind me, the entire apple store has been redone into that glowing look. you can't see it as well now, but early in the morning, when it is dark, it looked pretty cool. that is a nod to this update that siri is going to get with this new artificial intelligence
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feature, but, again, just because they're marketing it now, just because you're seeing so many commercials with it now, it is not ready on the iphone yet, the big feature here that everyone i'm talking to, they're in it for the camera, not necessarily for a.i. talked to one photographer, talked to a bunch of people, they're excited just to upgrade their phone because they're apple fans and the a.i. thing, to the people i spoke to in the line, it is just kind of a secondary thing, guys. >> i wondered if they were going to show you. i saw you earlier and then tim cook. you look like you're in some, like, band together. you look like -- are you dressed exactly like tim cook right now? is it some kind of cult? like a heavens gate thing or -- >> that was not intentional, joe. i did not talk to tim ahead of time. i think he's wearing navy. i'm wearing black. so -- >> it looks the same. it looks the same. i thought you had, like, a roll of quarters in your pocket and there was a comet coming or something. that's very --
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>> who knows. >> i didn't see him before. >> i saw him earlier. that's amazing. >> i got to ask you, the camera and the battery life, those will be the two reasons that i'm interested in this. i know that new ios will eventually make the things work with all of the promises of a.i., but it has been a while since a lot of people have upgraded and maybe that helps apple out in the cycle too. what do you hear on that? >> yeah, that's the other part of this. the real question is all the estimates we have seen, a couple of weeks ago, nikkei reported that apple ordered 10% more phones than they did in the year ago period. and that could just be because the last major cycle we had was about four years ago when 5g came to the iphone for the first time. that spurred a big upcycle and people are ready to get a new phone. the real question is, how much of it is people just upgrading because their phone is three to
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five years old or they want the art official intelligence features that are coming to the new line of phones. the latter is still a big mystery. we know people are going to upgrade. carriers are offering amazing deals. you can trade in, basically get the phone or the new device for free or get installment plan. so, there are a lot of incentives to upgrade, but the big one, artificial intelligence, many months before we figure out if that's actually going to pay off. >> steve, thank you. steve kovach, who is there at the opening of the iphone -- at the opening of the apple store for the iphone. >> the color is different. i can see that now, steve. you're right. similar. definitely dressed appropriately for the whole deal. among today's other top -- it is a cool store. >> it is a cool store. >> glass and futuristic. >> where fao schwarz used to be. >> could be bad luck. that's sad, isn't it?
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>> it is. >> they never came back, did they? >> i think they have a brand -- there is one at 30 rock, a store there. >> among some of the other top stories today, check out the shares of nike. the ceo john donahoe, this would be horrible if i left "squawk box" and the ratings went up. a lot of people say that would happen. if you're a ceo and leave and the stock surges, it is bad. donahoe stepping down from the sneaker giant after close to five years in charge. he'll be replaced next month by company veteran elliott hill. he'll start as an intern at nike in the 80s, donahoe helped the company build out its e-commerce and data gathering operations and sales boomed during the pandemic. but definitely people would say that critics would say the company lost its way recently, the lack of product innovation at nike and other issues. it was $180, to $170 stock, and it has been -- this is the same level it was five years ago in
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terms of the share price. up quite a bit today. fedex shares falling. look at what's happening here. what? >> you don't have to say everything you think. >> i do. look. it is down 40 points. isn't it? >> oh, my last comment. >> the last comment. >> if you're a ceo and you leave, and the stock surges, that's bad. >> probably don't feel good about yourself. >> i'm not a ceo, but in my case, it would be -- >> never mind, back to fedex. >> all right. if -- how about this, if you are a dow theorist, and the transportation zdoesn't do well and the fed cut 50 basis points and fedex is down $40 because package delivery is weak, but you're telling me it is for premium packages, right? >> that's what the reports i read suggested. it means margins are hurt. i don't know what it means for overall package. i know that u.p.s. announced this morning they're hiring more
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people than they ever have for the holiday season coming up. so i don't know what that means or how you read into it. >> lower margin delivery. >> i think dom pointed out earlier, fedex has been an outperformer to u.p.s. maybe this is a reversion to the mean too. >> another stock mover, lennar, the company beat estimates for its fiscal third quarter, but gross margins in this case could be responsible. 3.6% drop in the stock. and lower per square foot revenue as you can see those shares down a little bit. coming up, i'm not leaving anyway, so we're never going to know. >> okay. >> you know what i say. on a slab, i'm leaving this place. the latest on the escalation of fighting in the middle east. israel and hezbollah trading fire across the israel/lebanon border. earlier this week we saw that attack on the communication devices, like walkie-talkies and pagers. we'll talk about where things
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could go next and whether things are going to be escalating or the prospects for de-escalation. stay tuned. you're watching "squawk box." never an unspoken thought on cnbc. over 90% of cobalt used in batteries comes from china. electra battery materials, awarded $20 million by the u.s. department of defense, is bringing the battery supply chain home, reducing dependance on china and revitalizing our industrial base. electra battery materials. (woman) look i got the new iphone 16 pro at verizon. and rapple intelligence istrial pret-ty awesome. (man) nice. (woman) you can get it when you trade in any phone. (man) whoa, whoa, whoa! ♪
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u.n. peacekeepers in lebanon calling for calm amid heightened tensions and violence between israel and iran-backed hezbollah. that conflict is nearly a year old, which i couldn't believe next month is october. >> i know. >> could not believe that. it seems so -- >> my daughter's birthday. >> so hostages. october 7th is? i didn't know that. yesterday israel's military said
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that it struck hundreds of hezbollah rocket launchers that were getting ready to fire. and this follows the exploding pagers and handheld radio attacks against hezbollah earlier this week. thousands were wounded, at least 37 people killed. israel has not directly commented on those attacks, nor has it taken responsibility, but hezbollah's leader vowed to respond. for more on all this, let's bring in shiraz, senior fellow with the middle east institute. any way at this point that this does not escalate or is there some hope that given some of the restraint, i don't know if you call it restraint, but, you know, if we talk about iran, and what could have been a possible retaliation in recent months that didn't really come to pass, could that happen again or is the dye now been cast in your view? >> good morning, joe.
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yeah. to discuss the parameters of the coming conflict, the trend lines are very clear. there are escalatory trend lines across the board. both are locked in a mexican standoff. israel wants hezbollah to seize r cease rocket fire across the border, to allow israelis to come back to their homes. but hezbollah is unwilling to yield. we have to understand that after october 7th of last year, iran, hezbollah, and the various proxies in the region, the militants that are under iran's umbrella, they declared a strategy of the united front. the unity of fronts across that iranian-backed axis. so, for hezbollah to back away from its demand that a cease-fire in gaza be declared first, that would mean to risk that entire alliance and entire strategy. i don't think that's going to happen and unfortunately we're locked i eded into escalatory c
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right now. >> the worst case scenario has not come to pass yet. and we scratched our heads and asked about that and people said that iran really isn't prepared to bring on the full wrath of israel at this point in terms of its nuclear facilities and everything else. i don't want to say they fear israel, but i guess that's what it is. had they been less aggressive than you thought they would be at this point? the iranians? >> well, yes and no. because the iranian strategy has always been to take the fight to israel through a thousand cuts rather than -- they do not want a direct war with israel. they understand that they will come out on the losing end of that. so they want to undermine israel, using asymmetric warfare, all the various proxies firing at israel from gaza, from
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lebanon, houthis and yemen, that is their strategy. so i'm not surprised that they kept this relatively contained. now, that said, i don't think that we're going to go from what is essentially up to today a border war to the nuclear option, which is hezbollah firing its iranian-made ballistic missiles, flattening parts of tel aviv and israel also flattening parts of babeir. i think both parties can escalate, but keep this below the threshold of an all-out war. that said, iran had made it very clear if israel threatens hezbollah in any significant way, that it reserves the option to also jump in. that's the worst case scenario. that contagion that brings others in the region into this war. >> what do you think israel is up to right now in terms of equipment moving and -- i don't know how you connect the dots to what is next. what do you think is most
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likely? >> yeah, i mean, great question. we see that armored brigades and commando paratroopers are being moved out of gaza, further north to that lebanon border. clearly israel is bringing a lot of military capabilities and firepower to the war. the big question is will there be a ground invasion? there will be an uptick in the tempo, broadening of the scope of israeli attacks, pounding hezbollah positions, arms depots, fighters, targeting commanders. will there be a ground component and will israel try to re-create some kind of a buffer zone? i think there is some daylight between israel's stated war objectives of being able to return its residents to the north. i don't think they'll be able to achieve that solely using the military. if they need a political outcome here, a deal of sorts that the biden administration put on the table. i do think they're very much capable of degrading that ring of fire that iran has created
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around them, starting with hezbollah, iran's ace in the hole. >> and how much leeway or how much time does netanyahu and israel -- how much time does netanyahu have. how much time does israel have for the united states to be, you know, fully behind what it is doing? it has been almost a year and we have seen it, you know, that was the worry from the start, that the pr war would be difficult for israel to win. >> the pr war is difficult, it has been difficult in terms of what is happening in gaza. the utter devastation on gaza and the human toll of that. it would probably be more difficult if there is a significant loss of life in lebanon. the israelis know us well. they understand that this is an election cycle in the u.s. they understand that the biden administration, where they're very frustrated the fact that israeli prime minister bibi
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netanyahu has not found his way to some kind of a cease-fire in gaza. that would then also unlock a solution in lebanon, one that the biden administration has pretty much negotiated, but which hezbollah and iran refuse to sign on to without a cease-fire in gaza. a great deal of frustration by the biden administration. i think bibi netanyahu understands the limits of the kind of pressure, the little will in washington right now to force this to an end. so, you can bring a horse to water, but you can't force it to drink. >> very good. firas, thank you. and we look forward to speaking to you again in the future and hopefully at some point we're -- i don't know, we're in a better place at some point. but i don't know what the prospects are for that. thanks for your time today. when we come back, we will go inside a pair of important labor stories. former commerce secretary carlos gutierrez will join us on the potential fallout of east and gulf coast port workers can't
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get a new union contract by the end of the month and they go on strike. after a week, how much is the boeing machinist strike ngou ng that company and how lo cld the work stoppage last? that's next. "squawk box" will be right back. you'll find them in cities, towns and suburbs all across america. millions of americans who have medicare and medicaid but may be missing benefits they could really use. extra benefits they may be eligible to receive at no extra cost. and if you have medicare and medicaid, you may be able to get extra benefits, too, through a humana
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eli lilly is asking people who took knockoffs of its weight loss drug to give the company access to the medical records. the company is building a case against businesses selling compounded versions of the drugs. compounding pharmacies have been using a legal provision that allows them to make knockoff versions of zepbound and mounjaro when in short supply. a spokesman confirmed to bloomberg it sent letters to patients asking for access to records, part of its ongoing
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efforts to monitor and evaluate the safety of its medicine. >> would people turn that over? i couldn't get access to it, so somebody made me a cheaper version and gave it to me and you go after them, so i'll give you my medical records? i would be concerned about the safety aspects of the compounding. >> you got the knockoff and you inject it into your blood stream. >> i would be concerned about the -- >> people are -- >> the idea that people would do this to begin with makes me think they would not be likely to turn over their medical records. i would never inject it myself. >> no. and don't go to mexico for, like, butt implants either. >> yeah. i've seen the stories on that. boeing machinists walked off the job last friday. we want to know if they're any closer to a new deal than they were a week ago. we turn to phil lebeau. what are you hearing, what are you seeing? >> they're not any closer, becky. settling in for a long strike. that's what most people are looking at when they look at what's happening out in the
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puget sound area between the machinists and boeing. a couple of things to keep in mind as we look at where they are, one week in. furloughs start today. for tens of thousands of boeing white collar workers. they're going to do rolling furloughs. you're off for a week, you come back, then another group furloughed for a week. this is all to save money for the company. the talks were held on tuesday and wednesday. here is the bad news, the machinists came out at the end of wednesday and said, yeah, we didn't really make any progress on the key issues of pay and restore, a pension. reminding you, again what the difference is between what boeing has offered and what the strikers on the line are saying. we don't know if boeing's -- the machinists' leadership is saying 40% for sure, you know that every striker i talked with out there, they said i want 40% over four years. boeing is only offering 25%. by the way, 96% of the machinists voted down the idea of a 25% raise. that is nowhere close to what they need.
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wells fargo out with a note saying we think ba, meaning boeing, needs to reach a resolution with its union by the end of the month or potentially issue equity. this is the problem for boeing right now. it is -- it doesn't have the free cash flow that it would normally be getting from the planes being built and delivered. and as a result, liquidity at the end of the second quarter at 1 12.6 billion, a few people think they're getting to the threshold where they have to make a decision of about 10 billion. meanwhile, the credit firms are all warning that they may cut boeing's credit rating, the debt, the long-term debt at boeing, if you look at the stock over the last couple of years, $53.2 billion. if they cut their debt down to junk status, the price and the cost of that debt is going to go up. so, the next ten days will be telling. can they get a deal the next ten days? sure, anything is possible. but reading the tea leaves and talking with the people that
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i've been talking with, listening to the workers on the front line last week, they're nowhere close. i think this could be a long strike here. >> if that's the case, boeing needs more cash, they better do an equity raise before any of the credit rating agencies lower their debt rating. >> and that may trigger a cut too. that my trigger a rating cut. that's the challenge. >> there is a lot of challenges to this. have you heard the idea -- look, flat out pay raises, and going back to the pension, set up the company for potentially disastrous results. however, if they do well, the workers should do well as -- alongside the company and that's been the issue. the 25% raise being part of the problem. but they did that hand and hand while saying we're going to cut your annual bonuses. that seems like a kind of stupid thing to do. why don't you say, okay, we're going to give you x amount in pay raise and make sure that if we do well, you do too.
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we will give you annual bonuses that are based on performance of the company, and we will go to the idea of giving you stock instead of reinstating your pension. 401(k) and maybe stock that if the company does well too. >> all of it makes sense. you're 100% right. all of that are the moves that boeing probably should make. and kelly orford wants to get a deal done. it is a question of whether or not boeing says it's going to cost us. do we pay it now and pay more in terms of bonuses, do we say, look, we'll give you a little bit extra in the 401(k)? the pension is probably never going to happen. there is nobody i talked with who believes the machinists will get a pension back. >> there is 90 million who are on 401(k) plans, the rest of americans don't get anything along those lines. it is a question of safety, though. if you're giving stock inc incentives and bonus payments on a flawed system that was prioritizing speed over safety,
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is that part of the problem here? >> that has to be reworked and that is being reworked. but the flat out taking away the annual bonus, that really bothered a lot of the people i talked to who are picketing right now. they said, wait a second, wait a second, immediately you're taking away. there has to be a system that needs to be worked out, where if you are meeting certain quality control standards, then you get a bonus. i'm not sure exactly how you -- >> what i don't understand is -- >> flat out saying it is gone is -- that's a nonstarter with the workers. >> and the leadership of the union, how are they that out of sync with their membership? >> long been out of sync. >> you're either totally out of sync with your membership or it is like the smartest rope-a-dope you've ever seen, you get them to agree to some package you know your membership is not going to pass so you can come back and say -- >> i think they're out of touch. when we were there on thursday, when people were in line getting
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ready to vote, as much as they are angry at the company, at the offer, there was a lot of anger towards the union leadership for not only accepting it, but then recommending that the rank and file approve it. you got to read the room. and the room is clearly that the rank and file are not happy with the leadership. >> phil, thank you. >> you bet. coming up, much more on the markets following yesterday's fed induced rally. and top apple analyst tony saganaki will join us on the debut of the iphone 16. you're watching "squawk box." this is cnbc. he now way to network at work, with real ai—for an experience— that's so lit! ♪♪
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we're now hearing that the potential investors in a.i. giant openai may get some good or bad news today. kate rooney joins us now. what do you mean, kate? >> so openai is going to tell potential investors who is in and then who is out for this ongoing funding round that would value the a.i. startup at roughly $150 billion. that's according to two sources familiar with the matter. they asked not to be named because the details around this funding round are still confidential. i'm told by a source that there is a minimum investment
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threshold that they need to pony up at least $250 million to be part of this round. i'm told by a source the round is raising between 6 billioned and $7 billion at this point. some of these details were reported last night of the a so i am told by a separate source that mgx, emirati state-backed fund, part of the sovereign fund, is also looking to put money into this deal as well. and then there are others that have been reported, there is tiger global, that cnbc confirmed, and reportedly microsoft, apple and nvidia all looked to get into this latest round. this a.i. darling, led by ceo sam altman, it has ballooned in recent years in terms of valuation after launching a
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research-based nonprofit. that's how it started. it has gone on to raise billions at this point. these a.i. companies, they need a lot more cash than your average startup, for example. building these large language models, which is what openai does, takes massive amounts of computing power which also takes a lot of cash. we'll find out more today. i'm told openai will call the potential investors directly. i'm thinking of it as the bachelor as the rose ceremony. we'll find out today who gets a rose. >> really? you're going to go there? >> i don't even watch out bachelor," but -- >> it sounds more like "shark tank." >> you find out who -- >> closer to "shark tank", but i'm share a lot of potential openai investors will be checking their phones today. >> the latest, if you don't know, there is -- i know this, there is a golden bachelorette, just started a couple nights ago. >> you watched it? >> i did not -- it is on at
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8:00. it is on at 8:00. i would be -- it would be tough. i'm not going to be a contestant or -- it would be tough. i have -- i have heard, though, kate, that she is very nice and that some of the men are very nice. remember the last -- the last golden bachelor was a disaster. >> that was not good. i didn't know if you knew what you were walking into there. >> that guy was a disaster. he was a sociopath. >> hopefully this openai round goes better than -- >> stay up too late. >> exactly. that might be -- that might put a crimp in my dates. i'm married. i don't need it. >> kate, thank you. >> you can't be on the bachelor. >> no, no, no. you are not a bachelor. back to the markets, the dow and the s&p coming off a session in which they both hit new highs. that came after wednesday's fed interest rate cut. the first one in four years. and joining us right now to talk about the markets' reaction is
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andrew slimmen from morgan stanley investment management. andrew you thought we would see a strong market, heading into the end of this year. you were look for the s&p to hit 6,000. it looks like that's a more likely bet than it had been, but not necessarily working out because of the reasons you thought it would happen. want to walk through what you see right now, where you think markets are headed? >> sure. sure. so, good morning. so, look, i -- the market got back to the presidential kind of handbook cycle of how it trades once joe biden dropped and we had, you know, a less known candidate. prior to that, the vix all year was very low because both candidates we knew what we got. and once that happened, the vix started to spike, which it normally does, in a presidential election year. and then until the election
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night. and that's when the market gets back to fundamentals and that's when we get a rally. so, i understand the fed cut 50 basis points. that got the focus. i'm surprised by the magnitude or the speed with which the market has so positively reacted. and really within the rally, it has been so led by what i call high beta value growth stocks. that has surprised me, though, you know, i'm obviously constructive on the year overall. >> i know you think the market could go up after the election, just based on the idea okay the volatility is gone, we know what we're getting. what happens if it is a blue wave or a red wave, and one party takes all -- takes the presidency, the house, the congress, almost every guest we talked to said don't worry about the craziest provisions the candidates are talking about economically, because there is no way it is going to happen. what if it does? >> i'm no expert on that area.
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i got to go with what the experts say. they say it is a low chance. i think if that were to happen, you would see a substantial correction in the market because of increased uncertainty. i think the reason the market tends to rally after the election and i think that's very powerful this year, is that, you know, fundamentals are pretty good. and the bottoms up number for next year for earnings is $280. wall street top down is a lot lower. it reminds me of last year where the bottom's up, guided by companies, are saying a stronger economy to start the year than what topdown does and i think that's why the market will focus on that after the election. but i do concede you're right, if we get a sweep, you know, kind of -- we'll be more focused on washington than back to fundamentals. >> ten-year is back above 3.7%,
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3.72. you say that's a sign that inflation could come back. >> yeah, again, i'm surprised by the acceptance of what the fed said, lower inflation, economy soft landing, that surprises me because usually you get this type of cut, there is some anxiety that perhaps both sides of the ledger, low inflation or soft landing doesn't work out perfectly. but that's not what rallies. what rallies is, yes, they're going to be right. now you see the ten-year move up, which suggests a hint of maybe inflation will come back at some point. and i think that's a possibility. so, to me, it is just a question of positioning is now very optimistic and that gets me somewhat concerned that what could happen, the chance of we get an economic data print that
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says hard landing or inflation print that says, maybe it is not so obvious inflation is coming down. that's what worries me. >> in terms of a trade, you said you would add to some of the semiconductors. which ones and why? >> i think, okay, short-term, very short-term, i don't -- i will be watching the beta factor. people are chasing risk. and that's not quite overbought yet. that was very oversold, people were buying defensives going into the fed announcement. so it doesn't surprise me defenses are selling off. and risk is coming back. so i think what is going to happen here, people are going to look around and say, well, what's still down a lot from where they peaked out in june and i think the semis, you know, whether it is land research, applied materials, those stocks are down 25%, 30%. i think nvidia is still down 15%. i think the semis will be a
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short-term play to chase this kind of rally. and i suspect in a week or two you'll get the defensives that are sold off enough that people will start to revisit, maybe we're getting too optimistic. >> andrew, thank you for your time. >> are you married, andrew? >> joe is in the market. >> i am. i think my kids watch "the bachelorette." >> seems nice. doesn't he? successful. >> i will say i'm more drawn in because "the golden bachelor" was a failure. i'm more interested. >> terrible. >> allowed to say that? >> dirtbag? >> okay. the inside of a vacuum cleaner, right? >> yeah, yeah. >> that's all. >> that's what i thought. >> where is he now? we don't know. thank you, andrew. you're next. no, he's not. he's married. when we come back, counting the days until a possible strike. that could come at the end of
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the month. after a break, we'll ask carlos gutierrez about the nationwide economic consequences if workers decide to walk off the job. right now, as we head to a break, a look at where bitcoin and other cryptocurrencies are trading. bitcoinupp ingjuinmpg close to . today, 63,461. you're watching "squawk box" and this is cnbc. “outdoor adventures" you. stylish. powerful. sophisticated. because when you're in a mercedes, you'd expect nothing less. mercedes-benz suvs, featuring the gle plug-in hybrid and the all new glc plug-in hybrid. visit mbusa.com for special offers on select suv models. i can't believe you corporate types are still at it. just stop calling each other rock stars. and using workday to put finance and h.r. on one platform. tim, you are a rock star. using responsible ai doesn't make you a rock star.
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port of new york and new jersey executives tell cnbc that they are making preparations for a potential dock workers strike at the end of this month. five of the ten busiest ports in north america could shut down if workers can't get a new union contract. some businesses are trying to get ahead and bring in more imports now ahead of that deadline. joining us right mao to talk about the impact of all this on companies, consumers and potentially on inflation is carlos gutierrez, former u.s. secretary of commerce, a cnbc
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contributor. and, carlos, i think in some ways we're thinking we are beaten this inflation situation but if you look at the potential for a strike here, this is hugely concerning. not only what it means for inplaying in, what it means for the ability to get goods in, what it means for a lot of things in our country. why don't you lay out the situation, if this happens, if the ports go on strike. it is about half of the incoming ocean going cargo that we bring into this country that would be shut down. >> yeah, that's right. hi, becky. it is about 50% of what the imports have come in come through the east coast. this is on one hand shortages. every day there is a strike, you have a compounding effect and it is not one day of a shortage, it adds up to a week. so, it is big in terms of the impact and it is not only the shortages, but it is the cost. the costs of the freight increases because you have -- you have ships sitting at the dock. they're not being unloaded.
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and that just increases the cost of the goods coming in. so it is bad, i don't think this is something that will make the fed raise rates again. but it is going to have an impact and it will impact families, impact, again, just remind people of the period of shortages and the period of inflation. it will have an impact. no question. you know, i think the thing here is to look at the union and the companies and i've never been a union buster. i haven't dedicated my career to that. but there is a sense here, at le least i feel like the longshoremen are overplaying their hand. 77% increase, by the way what they received in 2017, so they're going for the same amount, but the issue long-term is the notion that no new technology if it takes out one
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job. it is hard to stand against progress, to stand against science, to stand against innovation. that's not a winning proposition. so, the union here can have a tactical victory, but long-term it is a strategic defeat. this is why companies are constantly looking for areas where they can build plants, without unions. so, and also it his hit them whn they're down. inflation is coming down. nobody wants it to go back up. now is the time to hit them. i find that the totally overplaying their hand. i don't see the option. this is where they remain, no new technology, 77%. i don't see what you can do other than take a strike. >> the idea that there are so many companies that are trying to bring in excess inventory now to make sure they don't get
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caught with shortages, could that potentially be covering up economic weakness we wouldn't see otherwise or is it too small of a number? >> well, it does impact a lot of companies, when you have stocking of retailers, you're just going to sell less the following month. the following quarter. so, you know, you're bringing sales forward. and this would show up in the numbers. slightly. it won't be bidding up. but, yeah, inventory increases cover up potential softness in the economy. because increase -- inventory doesn't mean you're getting more demand. so there are ripple effects everywhere. nobody likes loaded warehouses. that's terrible for the future. so, this isn't good for anyone. and, again, it just comes down to at one point do unions, the
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longshoremen realize a compromise here is good for them long-term. and, you know, they're just totally overplaying their hand. >> if they're overplaying their hand, and they go to a strike and it shuts the economy down, maybe they're not overplaying their hand. they have a pretty overplaying their hand long-term. you know, today, we don't have one single port in the top 15, so we're already known as having, you know, not the best ports, inefficient. i think our top port is number 17 in long beach, and even long beach is known as being inefficient. capex projects take five years, and a lot of it is because of labor. so, eventually, this will come back to bite them. this is the type of thing that continues to give labor a bad name. labor has a role to play, and i'm not saying let's get rid of unions, but the idea of hitting
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when a company or an economy is down is going to backfire. so, yeah, they can -- they've got a good hand, they'll have a nice tactical victory if they win here, but a strategic defeat long-term because it just -- it doesn't play well for union -- the union movement at large. >> there were other people who looked at what happened with the west coast, with its new deal that it came out with, and i think the raises were something closer to 32 to 35% there, thought that would be a template for what we'd see with the east coast and gulf coast ports. why do you think that was not the case? >> the increase was half on the west coast, and you can make a case that those are the largest ports, los angeles, long beach. i think the longshoremen see an opportunity here.
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they got a huge increase in the 2018 contracts, and they believe that this is a place to squeeze. and you know, they've been very vocal about it. it's almost as if the rhetoric sounds like it's coming out of the 1960s. the union movement. we have to find a new way to move forward. unions cannot be against technology. they can't be against innovation. they can't be against progress. so, you know, the government won't get involved, and president biden has said he's not going to touch it. of course he's not going to touch it. but how about public-private partnerships, reskilling, retraining? there has to be some kind of, maybe, payment for that reskilling, but this can't continue to go on. china, asia, european ports are moving forward. they're very efficient. and we're kind of standing still. so, i do think that the west
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coast was left, i won't say off the hook, but i think the union sees an opportunity on the east coast, and they sort of proved it the last time around when they got the 77%. now, they're asking for the same 77%, so it's hard to say that, you know, things are better now than before, because they've been hit with inflation. but it's -- i think we'll probably see a strike unless a miracle happens. a strike and maybe a strike is the right thing. >> yeah. >> unfortunately. >> secretary gutierrez, thank you. >> thank you. good to see you. >> you too. coming up, apple's iphone 16 hitting the stores. we're going to get analyst toni sacconaghi thoughts. stay tuned. you're watching "squawk box" on cnbc.
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there you go. iphone 16 going on sale this hour at apple's fifth avenue flagship store right a bit north of here, northeast, but some key a.i. features missing from the device. joining us now, toni sacconaghi,
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bernstein senior research analyst. that is the next thing, i guess, toni. it's not a car, not a tv. we've been waiting for all these different things for years, some transformative thing for apple, and the stock hasn't needed it. the company hasn't needed it. great new iphones have done it. is this a great new iphone? >> good morning, joe. the phone itself is what i would call a standard upgrade, physically. better camera, faster processor, a new camera button, but the real feature, which as you mentioned is on the come, is having apple intelligence, which is its version of a.i. on its phone, and those features will not start coming to the u.s. until next month, and many of them won't roll out to the rest of the world until later this year or even next year. >> in your notes, you seem to be saying that if the lead time seems shorter, which means there's not -- some people have
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tried to say that it's -- people aren't as excited about getting it, you point out it could be -- it's both supply and demand. maybe supply is better, but what you just said just now seems to be arguing that it could be less demand than previous upgrades. >> well, you know, typically, investors, and even apple doesn't really know what the demand trajectory is looking like until, you know, november, so we -- it's still very early days. but there are some questions around the trajectory of that demand, specifically if these features, which are only a software upgrade, not a hardware upgrade, if they only come out in october or in other countries come out early next year, will consumers wait? and i think that's a big question. our perspective is that apple's install base is about 25% larger than it was in 2021 when it had
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its last big upgrade cycle, and so, accordingly, there is pent-up demand. if upgrade rates go back to where they were before and the install base is 25% higher, apple could sell 25% more phones. is that going to happen this year or might some of that get pushed out to next year? i think that's really the big question. >> how about everything else, toni? you got 50 basis point cut. that should help multiples. is the stock -- you can see it's, you know, it's -- it hasn't really ever backed off, no matter what. is it -- would you buy it here? >> i think if you have a one or two-year horizon, i would buy it here, because i do think this apple intelligence cycle will be pronounced. historically, there is a bit of a seasonal trading pattern, joe, where the stock typically does well in the april to september time frame in anticipation of an iphone release, and then it kind
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of treads water for a few months as people digest that anticipation and try and figure out, okay, is this really going to be a strong cycle? so, i'm not sure this is up and to the right over the next few months, but i think if you're looking for something over the next year or two, apple should benefit from apple intelligence. >> okay. all right. we're going to end it there. thanks, toni. good to have you on. and that's it for us. make sure you join us next week. "squawk on the street" is up right now. ♪ good friday morning, welcome to "squawk on the street," i'm carl quintanilla with david faber at post nine of the new york stock exchange. cramer's at one market in san francisco, wrapping up this blockbuster week on the west coast. futures, mixed as we come off the 39th all-time high of the year for the s&p. bunch of corporate news today. nike, fedex, lennar, microsoft. fed speak resumes today, harker at 2:00 p.m. eastern. our road map begins with that shake-up at nike

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