"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 and andrew ross sorkin. and this morning you are looking at a mixed picture for the futures market dow futures are down 12 points s&p futures up 9 the nasdaq up 51 the treasury market this morning also looking like yields are higher ten-year at 3.85 the two-year at 3.71 the crude oil market is where people are paying attention today, joe >> crude prices rose 5% yesterday. it took a leg higher after this comment by president biden to

reporters yesterday morning. >> would you support israel striking iran's oil facilities, sir? >> we're discussing it i think that would be a little -- >> the president appeared to signal opposition to a strike on iran's oil facilities before stopping himself when asked later if he urged israel not to attack the fac facilities, he said he would not negotiate in public. the front page piece that the united states and israel talking less about what israel is likely to do and what israel has done whatever it needed to do for its own sake without the u.s on oil, i think we probably would be more -- >> more inclined >> i don't think we should -- if they need to do the nuclear thing now, it will always be

looming -- it's always going to be looming if you take care of it now. >> the u.s. and the administration has said one thing to the public. >> and they go ahead and do it. >> implicitly or otherwise on the battlefield. >> nick sullivan. >> a lot of people look at what this administration says and this is not one of the situations to don't listen to what they say. they are saying one thing very publicly and, by the way, countries like uk and france and allies with very sort of specific views on these things they would be aligned with those things yet, in truth, when things have happened, they have happened >> that's a wink and a nod. >> that's why oil prices are up. >> they can claim both i still think it might be more -- the united states probably knows that israel is not going to listen either way maybe they are resigned to what they will do i think they would prefer they

didn't all along, i think there's been more -- the piece yesterday in the journal and a lot of times the biden administration is in the business of deterrence of israel, not iran >> you know, president biden though was one of the staunchest defenders of 9/11. >> at the same time, threatening not to withhold certain weapons. i'm sure if you are a true hawk in israel -- >> i think israel as a whole would say they gotten what they needed from the united states. >> right that shouldn't even be a question is our biggest ally >> crude oil prices up 9% for the week that tells you markets don't necessarily believe. >> i think the oil -- i think the oil is a given refineries are given i think it is still 50/50 on nuclear. if i were biden, i wouldn't tell them not to do the nuclear >> one thing i wouldn't do is

probably tell the public >> right if you were israel and you had a country nearby that said it is our stated intention to wipe israel off the face of the earth and a week away -- i would get rid of the nuclear -- i would get rid of the nuclear capability. in the meantime, u.s. port workers are returning to the jobs this morning. this is a very, very big deal after reaching the tentative labor deal we have frank holland joining us from bayonne, new jersey good morning, frank. >> reporter: good morning, andrew the first strike at the east and gulf ports is over for now you mentioned this and these cranes are expected to be in motion and operating later today moving containers after the ila and port operators usmx reached a deal on tentative wages. they will negotiate on other

matters in the contract until january 15th the other matters are the use of automation in ports. the union has been vocal about the opposition of automation which has been featured on signs during protests here from maine to texas remember, cnbc spoke with ila president and said the union was looking for a 61.5% raise over the next six years we got confirmation that number was agreed on by ila and usmx. the use of automation will continue to be a big sticking point as the ila and usmx try to hammer out a permanent agreement. just for context, 5% of ports are automated or semi automated. tentative agreement on wages has been reached 61.5%. union members will go back to work and they will continue to negotiate on the other matters in the contract. i cannot overstate this enough all

automation is a key point. we got information on how the strike was ended the white house playing a key part in getting both sides to the bargaining table sources familiar with the matter tell cnbc at 5:30 a.m. yesterday morning, white house chief of staff and acting labor secretary julie su and pete buttigieg and lael brainard met with usmx over zoom to emphasize the need to reopen ports especially after the devastation of hurricane helene we are told the officials pressured usmx to make an offer before the end of thursday and promised to get the ila union back to the table. the group of white house officials met five times over the day to finalize the strategy to lead to the tentative deal that we're told was reached in the late afternoon yesterday or evening yesterday. we will hear from julie su live

on "squawk on the street" at 9:00 a.m. eastern time is there an economic impact on the strike and will the expected supply chain issues have impact on inflation back to the economic impact. the estimates vary with the negative bimpact to the u.s. economy. it is estimated to be $4 billion a day. for every day the port is closed, there is a week congestion of backlog. this strike would lead to higher prices for the holiday season and has the potential to spark inflation. the rates on the west coast have moved higher and they have been told the rates will be higher through q4 andrew, back to you. >> thank you, frank, from bayonne, new jersey. spirit airlines in talks of a potential bankruptcy filing. the filing would not be

imminent, but shares are trading at $1.34 this comes after the $3.8 billion merger with spirit and jetblue was blocked. in today's move, the stock is down now 90% year to date. always raises the question whether anti-trust regulators are supposed to think about the context of the company and if they were to go bankrupt, is that worse or not? again, the bond holders. >> the shareholders and employees. >> and the ongoing entity from the competition, maybe that's okay no comment >> i don't know. sometimes a couple of drowning -- usually the remaining entity doesn't do that well they could point and say, see, we should merge. get ready for the september employment predictions from economist michelle gerard.

later, we will have reaction to the jobs number from former cleveland fed president loretta mester did you watch the mets >> i watched the end of the game. >> you were up at 11:00? >> i didn't. >> i got up. >> it was unbelievable >> i know. i'm not going to say anything. >> i started watching in the seventh. i could not go to bed. it was amazing amazing mets it came out of nowhere four runs in one inning. >> i got up and i looked at it and i thought they were going to lose then there were two men on and i looked at it for 30 seconds when i got up in the middle of the night at 1300: and no one on base oh, my god it's over. i went back to bed the reason there were no longer two men on base. >> i turned it off >> announcer: this cnbc program

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it's jobs friday, if you don't know polled forecasters expect an increase of around 150,000 non-farm payroll numbers in september. joining us now is michelle gerard head of coverage at natwest and

ceo of natwest markets with the estimates fresh in our mind, michelle, you are at 100, which is below, an uptick of te employment rate. you think it will be weaker than what's indicated by the consensus? >> slightly weaker although, fortunately, the trend is, not up last month, but we get upward surprises, they are followed by downward revisions i think that's something we're all kind of mindful of even if we get a stronger number than what we're looking for, we will see it accompanied to downward months that's not a trend that's encouraging. our number without any revisions to the prior month would put the three-month moving average at 110,000. that is a sharp downtick from running 200,000 per month of

payroll gains over the first half of the year whether it is 100 or 150,000, the message is going to be there's slowing clearly in the pace of hiring >> the fed can argue that, yeah, we did 50, but it was really like 25 from the meeting where we didn't do it and another 25 and michelle girard says it is 110. they probably feel pretty good about the steps they have taken. they can certainly justify them. >> i think you're right. i think the fact it has taken an aggressive step given how high interest rates are versus neutral. there's a lot of ground to make up we heard goolsbee talking about the fact that interest rates need to come down a lot. i think he's just recognizing the fed is still in a pretty restrictive posture given the fact we have seen tangible slowing on the economy and inflation is moving within range

of the fed's target. they have that 2% target i think we all believe somewhere between 2% and 2.5% is where the fed feels comfortable. we expect to move in that and be that by the end of the year. we expect unemployment rate ticking higher we have it stepping back by the end of the year. we think that will be at 4.5%. g again, given all that where the inflation rate is, we feel the fed would feel more comfortable with rates closer to the neutral posture. >> i guess so. you think the fed was holding its -- it's not a thing that could do that. the members of the fed, collectively, were holding their breath with the port strike or is there continued angst about the oil? >> there are a lot of issues the

fed is looking at and the port strike is obviously something the fed -- with the economy and inflation not positive trends. let's face it, that's probably something's transitory >> that word's banned. >> i know. i tell you, joe, one of the things we're starting to pick up is the uncertainty around the election and we saw that in the beige book and we saw that in commentary yesterday comments in response to the ism non-manufacturing survey we are hearing companies saying they are holding off on decisions including hiring with the outcome of the november election there's a number of headwinds i think the economy is facing around uncertainty that, you know, the fed is mindful of in terms of, you know, again, wanting to position the fed to be able to support an economy that is cooling for a bunch of reasons. >> is 110 okay for a soft landing? that plays right into what

they're trying to accomplish, i guess. >> it is, but 110 is probably -- unfortunately, you are probably 110 heading sub-100 if the trend extends. we talked about many times the margin for error in terms of the numbers, if you are seeing job gains sub-100, you are seeing an outright decline in payrolls just to get a sense of the fact that trend is not one -- if we settled around 100 and held there, but i think everything we're looking at -- one of the things is looking at the breadth of the job gains really narrow in the month of august a lot of exclamation points, if you will, suggesting the labor market is certainly softening. >> we're at 385. that's been ticking up on the ten-year it was 4 where it was with the fed rate cuts on the horizon is that okay

>> it's interesting because you do see the treasury yields moving down as you expected when the fed cuts interest rates. one of the factors we have to keep in mind is the deficit remains very large we are still seeing a great deal of fiscal stimulus and a lot of treasury supply. the idea that ten-year yields or market rates can get as low as we have seen historically when the fed cuts interest rates is challenging. that is why people are expecting the curve to be steepening when you see short-interest rates cut. the long end might be more sticky. >> that's what we're seeing. >> yup >> all in all, sounds okay for october. scary month. thanks, michelle >> thanks, joe >> we'll be thinking about what you said at 8:30 >> thanks. have a great weekend >> you, too. when we come back, toyota is the latest company to dial back on its dei initiatives following

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its diversity, equity and inclusion programs and halt sponsorships of lgbt events after the activist it came after the discussions after the commitments to dei toyota will narrow the community activities to focus on s.t.e.m. education. robby starbuck drew public attacks which drew a few hundred questions from employees and dealers and 30 customer calls to the call center. he described the impact as negligent. deere and tractor supply and lowe's and ford all announced changes to the dei program since. >> it is surprising. every time this guy goes after them, the companies fold quick. shares of rivian moving lower. the ev maker delivered fewer

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good morning welcome back to "squawk box" live from the nasdaq market site in times square. looking at futures ahead of the employment report. up 17 points on the dow. nothing too significant. the vix is, you know, moving a

little we'll see with the port strike finished and back to focusing on the middle east, but at least today we're focusing on jobs in america. mark zuckerberg became the world's second richest person yesterday surpassing jeff bezos. meta shares are up 25% since the company reported better than expected sales in the second quarter on july 31st zuckerberg's fortune has grown $78 billion so far this year that stock right now is above $585. late last night, elon musk posting on x posting he will be in butler, pennsylvania on saturday musk retweeted trump's post repeating the rally saying i'll be there to support. a spokesperson for the secret service said the agency made

changes and enhancements since the assassination attempt. we will, of course, watch that. spreparately, we are watchig shares of trump media. andrew north resigned last month and the company did not provide an explanation, but plans to transition duties internally the company will release 800,000 share of stock to early investor ark global in accordance with the deal the shares would be worth $12.7 million. the stock now at $16.22. >> so, they're not going back to the same spot in butler? are they >> i don't know if it is the same spot. >> the sloped roof it was tough -- >> probably another location. >> tough to secure last time for

whatever reason. >> i'm curious back on the trump media thing. >> you want to talk about that badly. okay. >> i'm curious. >> curious about what? >> curious about the shareholders who owned the stock when it was much higher? >> they lost a lot of money. what is the curiosity? what do you want to know >> what do you think they were sold >> i would say they were sold and he wasn't going back on twitter. it was always from the spac-ipo on, trading at 1,000 times revenue or something you duly noted it looks like it's trying to get back to 20 what did it get to 13 14 i don't know the lockup is done people can sell it now and the founder and co-founder is out comple comp completely resigned you can opine. >> it's a mess it's a mess. that's just what it is

i think it's worth acknowledging. we said when this thing went public it was a mess and made no sense. here we are. >> is this a good way to cast dispersions on the candidate or -- >> it's his company. it has his name on it. >> yes >> maybe >> okay. >> we talk about people managing businesses and who is good at this and that. you know, people making promises. >> it still will make $1 million from this. >> he may be is that the measure? his money or about -- this is about you tell the public one thing and you want the public to believe in something this is another example of something that hasn't worked. >> for me, if we did two stories and one of them was elon musk is actually going to be -- that's the one that i probably would have focused on. i don't know if i would have focused on djt being at 16 that is more interesting to me

it depends on your perspective i think. >> that may be the nfl is in talks with david ellison's skydance media and redbird partners about the possible sale of the media assets according to the bloomberg report that says the talks could include the sale of nfl media and nfl network cable channel and include an acquisition by paramount global. paramount in the process of merging with skydance saying the contract with the nfl includes a change of control provision. it is unlikely the nfl would seek to replace cbs. when we come back, the china stimulus rally on hold during the golden week holiday, but we are watching honk honk's hang seng's index of how the mainland could trade next week. hong kong stocks did fall yesterday, but rebounded up

2.8% we'll dig into the china moves with leland miller next. you can get the best of squawk pod on your favorite podcast and listen any time. we'll be right back. what took you so long? i'm sorry, there was a long line at the thai place. you get the sauce i like? of course! you're the man! i wish. the future isn't scary. not investing in it is. nasdaq-100 innovators. one etf. before investing, carefully read and consider fund investment objectives, risks, charges, expenses and more in prospectus at invesco.com

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beijing's stimulus package sending stocks soaring in hong kong for the latest on the beige book, leland miller. leland, welcome. why don't you tell us the forecast >> we have to have a short-term outlook in the macro economy the stimulus package has put us

in two directions. on the stock market, of course, things are going well. they will probably go well for a while longer it's a short-term put by the government they are encouraging everyone t get in and redeem investor spirits and a cheery couple months for the stocks. on the macro environment, it is a different period very little of this is coming into effect. they are trying to put a floor on the economy and stabilize it. they are not reaching for a higher ceiling whether it is property or consumption or credit, they're trying to do measures across the board that just improve things just enough so they can shift their focus on things they care about a lot more >> it's interesting. we were speaking with an oil analyst yesterday who made that same point we were asking why, since then we have seen prices come up. we heard from president biden yesterday addressing the middle east why we hadn't seen oil prices

rise just on what china had done and he said the same thing these are stimulus measures really targeting the stock market, not necessarily the broader economy there. >> that's true, but if you also look at what they're talking about doing, they're talking points about consumption they said, okay, we'll issue a couple trillion yuan of bonds. we'll use some of that for consumption, whether it is handouts or pulling growth forward through trade-in offers. on the other hand, we'll feed the economy some things and we're going to backstop property the idea that's going to send commodities to the moon that's going to juice the economy in the traditional ways china sees stimulus reacting inside it's economy. very different type of thing they're talking about now. very few details so far. most of this is gain is about making sure the doom confidence loop where consumers and

investors and households seeking sentiment feeding off itself i think they're trying to stop that it's not really a commodities play at this point. >> leland, how much of that is boosting investors within china and how much of that is boosting foreign investor confidence? i think that's the thing that's been shaken so much. the tensions between beijing and washington and commentary out of beijing and concerns from u.s. businesses that maybe they don't have a safe way of doing business there do any of these measures make you feel this is a safer place for american investors or businesses these days? >> not at all. they don't have anything to do with rule of law or china cracking down on western companies. what this is is an opportunistic play in the stock market the government will backstop you jump in as long as you can if you are in china and trying to actually determine whether you're future looks better now than a month ago and you are a

household, you are trying to figure out how this advantage is in the long term is this a onewone-offhandout ors this long term been efficiently to me? if you are a corporate, we have seen bottom barrel will this spur beyond a month or two or will it simply look at lower rates and say no, thank you. the question is, is this a structural pivot in the minds of people in china to change behavior going forward i think we haven't seen enough from the stimulus package to convince this is going to happen. >> what would change your mind on that front? what would make you think this is more long lasting on the grouped there? >> i think you have to be a lot more demand side stimulus, but not one off. it has to be construction economy so it is not disincentivizing in order to

advantage -- you don't want to reduce the savings rate to take the credit and plow into manufacturers for instance you want to see an economy that works for you if you are a chinese family what is happening as part of the financial system is suppression of households to boost the state. they need to reverse that to see the sentiment shift. >> what's your expectation for growth there for the rest of the year and next year >> look, they've done enough so they will claim to be near the 5% gdp growth target a lot of what's happening right now as it has been suggested on the consumption side is pulling in growth. if you are trading in growth, you will not need them in the medium term negative.stabilize creating all these swap facilities for stocks and they will be plowing all the money into things they don't care about like asset markets, how

long will this last? how much will the boost be once you get to the point in the stock market, what happens then? does everyone sell into this that's every stock market rally in the last 15 years it's a real big question beyond the next several months what's going to happen. growth will go up a little bit, but we may be back to the drawing board if they don't do a lot more. >> leland, do you ever go to china or is this based on what you're reading what sources are you looking at? >> we have an active survey that tracks china for thousands of firms every month. i do go to china it's a different environment there now than it was five or ten years ago. i think the core here is we're trying to get responses from around the country the problem for people jumping into china is they go to beijing and shanghai and one other choice city and they bring back

their impressions. what china beige book is trying to do is do away with that survey all of the country and sectors and regions rather than just an impression of a trip or two or three. >> what is different versus five or ten years ago i haven't been there myself. >> that's why the sentiment. the idea for a while is china was changing and china was growing. there was still opportunity. i think what happened offever t last four or five years is the belief the government is cracking down and it's not focused on supporting growth or not supporting households and consumers. you look at borrowing and you look at investing and hiring and metrics underneath the hood are looking really bad and particularly borrowing for years now. the idea is how can you kick

china sentiment back up a couple of notches and make sure this doom confidence loop doesn't hit. people are depressed about consumption and property how do you make sure they don't feed off each other to create broader contagion. >> leland, thank you. coming up, texas sues tiktok details in the next hour. and coming up, savita subr subramanian will join us "squawk box" will be right back. >> announcer: this cnbc program is sponsored by baird. visit bairddifference.com.

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texas attorney general ken paxton sued tiktok yesterday accusing the company of sharing and selling minors personal information. not people in mines, but young people that's in violation of a new state law that seeks to protect children active on social media. tiktok denied the accusations. a spokesperson said the company offers robust safeguards for teens and parents. the biden administration sweeping student loan forgiveness plan was temporarily blocked again one day after the federal judge in georgia said he would allow the plan to expire the st. louis based u.s. d disd district judge issued the injunction of barring people from student loans until the judge can rule on the case the case was transferred from georgia to missouri because the georgia judge said the plan would most harm student loan servicer based in missouri.

when we come back on this jobs friday, we talk about theee office we will dig into that story next

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welcome back to "squawk box. andy jassy telling employees they would have to return to the office five days a week. some current and former amazon employees blasting the plan as a way to reduce head count without announcing layoffs joining us now is joanne litman, the author of "that's what she said" and brian elliott, work forward ceo. good morning to both of you. i'm surprised, not by the

pushback i'm surprised by this explanation that somehow folks feel that this is a way to fire more people. t that very well may be, but the memo was super explicit about the idea they were planning to take out middle management the whole goal, whether you think this is related or not, is take out middle management, we have too much middle management, and get everybody back five days a week i don't know -- and maybe those things are interconnected or not, but it almost doesn't matter what do you say? >> i agree it almost doesn't matter the reason it doesn't is because what amazon is doing is now being absolutely looked at by every other company to say, can we do this too can we bring back people five days a week? and a lot of executives want to do that. the problem is, andrew, we have heard this every single fall, i've been here every single fall since 2020, with executives saying now it's time, now we can go back. >> a lot of people are back

three, four days a week, adding a fourth or fifth day doesn't seem totally -- >> they're back on a hybrid basis. hybrid is very, very different than five days a week. i really don't think that we're going to go back to that five day a week standard. i think that is wishful thinking. >> you think it is a bad idea? adam grant is out there publicly saying when it comes to deep work, deep work might be an engineer who is coding by themselves, periods of time you have to actually do the work, right, i'm a writer, you have to do the work, or certain instances where not being in an office is actually better to actually be more efficient, but when it comes to meetings and all the interaction kind of stuff, that clearly being in one place together is better. >> 100%. and that's why i believe that this hybrid situation is where we're going to end up. the hybrid, three days a week, maybe four days a week, but, you know, you want your -- that deep work you can do that at home.

>> brian, what do you think about this >> there is lots of ways you can make flexibility like that work in a lot of different ways you look at companies like american express, airbnb, nvidia, that have all taken a much more flexible approach and what they do is they say i know the writright answers for every function, they asked leaders to figure it out, what is right for your team. the magic is if your team is talking this through and figuring out what is the right pattern for us, you get a lot better results, better en engagement, better productivity, better satisfaction to your employees, we all kind of get it, right? if you have a regional sales team asking them to be the other three days a week to learn from each other, to model off each other, to do the pipeline review, do some training, can really pay off if you got an engineering team that is distributed across five states, asking them to come into different offices, three, four or five days a week, is going to strike them as being, like, what

are you talking about, boss. i think amazon's move from that sort of team oriented way of working to i'm the boss, i know what's right, and from three to five is going to cause -- >> it sounds to me, if you talk to people in and around amazon, that even though people down a five day a week plan, that there is -- i don't want to say there is no expectation you're going to be there five days a week, but for senior people, they're going to travel, they have to work you talked about sales people, they're going to travel. this whole idea of even people working three days a week oftentimes and one of the great conundrums a lot of firms have found is that people never worked five days a week to begin with it wasn't that they didn't work five days a week, but they were moving around, had to go to meetings, they weren't in the physical office, even if they were in the same city, sometimes they're traveling to other places sometimes they're bringing their child to the doctor and so they're missing the morning. so, the whole idea that everybody is -- needs to be in one place is not that they

don't, it is just that if you lop off monday and you lop off friday and say one or two other days is getting missed anyway because people are actually working but in another place, how do you set up a construct where people can actually get together in any efficient way. >> that's why the demands currently aren't working i spoke to people within companies that are required to be there five days a week who say it makes no sense, i talked to my manager at one of these large organizations who said, look, i'm in one office, the people who report to me are elsewhere, i don't care, and it is a waste of my time to tell them they have to be in five days a week because i don't care where they are, i just want them to perform >> sometimes the managers aren't there. >> the managers don't want to be there either the research shows, this is why i really think we cannot -- we will not go back to this five-day standard, i think it is so outdated, and the major reason is that it is working the hybrid situation is working,

we're now at a point four years in, where there is actual research coming out about this nicholas bloom at stanford, you know him well, he has a paper that came out just in june where they looked at hybrid, i believe it was three days a week, they found performance did not suffer what happened is employees were happier and retention improved there was another study that came from the recent of pittsburgh that found that when companies do demand people come back and be on the premises, it does not affect financial performance. it doesn't improve the stock price or your quarterly earnings so, you know, we're seeing that it works >> there is also a couple of things we have seen in the past few days nick bloom and adam grant both shared out a study yesterday that showed that if you get people the ability to work where they're most effective, from the home or office, when they do their individual work, a 12% boost in productivity. so hard to ignore that one

on top of that, joanne was talking about the mandates, pushing people back even further. besides the fact it doesn't boost financial performance, it degrades employee engagement and there is mounting evidence that it does cause people to leave and the people most likely to leave are people who have been there the longest, that have tenure, people who have been recently promoted because they have marketable skills they're the ones that can find a job even in a tougher economy. and the third one is women there was a study that came out -- >> i'm sorry, go ahead. >> there was a study from upwork in july where they polled about a thousand different executives that had done mandates, two-thirds said disproportionately caused women to quit over men and they couldn't replace those people fast enough and there was a knock on effect on their productivity. >> makes sense, joanne. >> we talked a lot about this, about the women factor, where women lost their jobs at the beginning of covid, we had a

shesession and we thought it would be permanent, a terrible thing, but because of hybrid work we have a record percentage of women in the workplace, led by women of young children >> the only thing i'll say to the first point -- or second point, issue on tenure, whatever point it was maybe in some cases management wants them to leave. you can't get rid of tenured people unless you make them really uncomfortable. >> if you look at the data, there is a firm called flex index that tracks what the policy is for flexibility, whether you're fully in the office, hybrid, remote, 13,000 firms around the globe, they brought their q3 report and it showed the firms most likely to be pushing people back in more are actually the ones that want to shed talent you can correlate who has done a layoff in which industries, so it is financial services -- >> you think there is a temporary shed talent moment for amazon and other companies will look at this and say this is a shed talent moment there are large businesses that have a massive bureaucracy,

they're trying to undo the bureaucracy, who unfortunately have -- potentially overhired, you could argue in certain cases and what do you do about -- it is not just one or two employees, you go online and, and i've experienced in my own life, there are employees who are not paying attention they are not -- they're on the zoom, but they're not on the zoom they're doing 100 other things it is just -- it is a whole different system and i don't think that's just 10% of the employees there are people, maybe even more 10% who are taking advantage of the system and i think one of the things that some of these companies are seeing and getting frustrated with is by these people who are taking advantage of the system sometimes very tenured people are taking advantage of the system, sometimes very young people who are taking advantage of the system. >> so the trick -- >> it is a lot easier to take advantage of the system remotely. >> but the trick here is if you require people to come back, are those the people -- the people that should leave, are they the people that are going to leave

there is some evidence to suggest the people who are going to leave are your high performers because they are marketable, they're the people >> that's why they say for most people you have to come back unless you have an agreement with your manager and they cut deals for the people they actually like. >> the rainmakers are always -- everyone is playing the rainmaker, do whatever they want. >> you got 10% who are cheating the system what does that say to the other 90%, the 20% of the highest performers they're saying i don't trust 10% of you for those of you who are high performers as well, i need you back five. it is a negative signal to trust and trust is what causes people to quit their jobs >> on the premises, you have 10% of people who aren't performing either so those are the people who you need to deal with as opposed to, you know, imposing this on 100%. >> real quick, we got to go, if you're betting, yes or no, 12 months from now, amazon will have a five day a week poll a and other big businesses, five day a week policy or not

>> no. >> brian >> no. >> thank you we'll have you back before a year from now but we'll see. it is just past 7:00 on the east coast 7:03 right now you're watching "squawk box" right here on cnbc i'm andrew ross sorkin with joe kernen and becky quick a lot of big stories to tell you about this morning ports from maine to texas, they're reopening. this is good news after dockworkers and port operators reaching a deal on wages we'll have a live report from the docks of new jersey in a moment. and it is jobs friday. forecasters expecting an increase of 150,000 nonfarm jobs in september that's the number to beat. the employment rate expected to hold steady at 4.2%. we'll have those numbers at 8:30 a.m. eastern time. we'll bring them to you live and have some instant analysis. and then we're watching crude, price of crude up 10% this week alone. escalating violence in the middle east and fears of potential israeli strike on iran's oil production keeping

the markets now on edge. u.s. port workers are returning to their jobs today after reaching a temporary labor deal to end the strike frank holland joins us from bayone, new jersey what does it look like there today? >> reporter: good morning to you, becky sun is coming up you see behind me the cranes aren't moving, but they're expected to get moving later on today, things are expected to get back to normal so from now to january 15th, ports from maine to texas including the port of new york and new jersey, that's right here behind me, going to be back up and running as the first eastern gulfport strike in just about 50 years has come to an end on a tentative agreement, until january 15th the union and port operators, they have agreed on wages with a 61.5% increase over a six-year contract they're going to continue to negotiate other issues including maybe most importantly the use of automation and semiautomation at ports you see me talking to union president harold daggett, that's

when he first told us of the demand of 61.5%. we're hearing from president biden, he issued a statement on this tentative deal, he said in part, i want to thank the union workers, the carriers and port operators for acting patriotically to reopen our ports and ensure the availability of critical supplies for hurricane helene recovery and rebuilding. the president mentioned a number of times that having a strike at the ports and the hurricane at the same time was very bad for the economy, put a strain on the supply chain he goes on to say, it is critical to building a stronger economy. talking about this tentative deal the president also repeatedly said he would not invoke the tap hartley act to get the union and port operators back to the negotiating table and keep the ports open we know from sources that the white house played a key role in getting this agreement done and getting these two parties back to the table so here is where sources are telling cnbc at 5:30, just yesterday, white

house chief of staff jeff zients, julie su, pete buttigieg and the director of the national economic council lael brainard, they met with usmx to emphasize the need to reopen the ports, especially after hurricane helene again, something the president just mentioned in his statement. we're told those officials together, they pressured usmx to make an offer before the end of thursday and they promised to get the union back to the table. this group of white house officials met five times over the day yesterday, according to sources, to finalize the strategy that would eventually lead to this tentative deal that we're told was reached in the late afternoon, early evening on thursday the question is what if any impact this strike will have for every day of the strike, we should expect a week of congestion and backlog of the ports. estimates vary on the daily impact of the strike economically, ranging from half a billion dollars to $4 billion a day. also a question about the impact on holiday prices and inflation.

i emailed with the chief economist of ernst & young, he doesn't expect any inflation due to the strike or any economic impact he said it was too short if it would have been longer, you would have seen some of that in the markets, big downside moves in shipping stocks like maersk the holiday season changes that narrative. we're seeing upside moves in other transportation stocks like fedex, jb hunt, the biggest container shipper in the u.s back over to you. >> is there a feeling that these issues are going to be resolved in january or that this is going to be a difficult conversation, particularly around automation and we're putting things off for a few months at this point >> reporter: i reached out and spoken to the two sides, but they didn't get into the weeds about the negotiations but automation certainly is a very contentious issue so right now globally, just to give you context, 4% to 5% of

container shipping facilities are automated or semiautomated, but that range of automation varies there is conflicting studies when it comes to what automation means for jobs so just, you know, put this in context, the west coast port workers, they commissioned a study a few years ago and found over a course of two years automation costs their union to lose 5% of jobs. at the same time, around the same time period, the pacific maritime association, excuse me, they represent the port operators on the west coast, they commissioned a study and found automation didn't lead to loss of any jobs globally we're seeing some kind of different conflicting ideas you look at the international ports, the union work with the port operators to try to ensure jobs and also create more skilled workers, so a lot of different questions about exactly what automation means for port jobs, for employees, for union jobs and things like that but, again, a very contentious issue when it comes to negotiations >> frank, thank you. frank holland. >> i like that

>> yeah. >> expected to give them pricing power. >> gouging power, you mean >> fine line we were talking about former president trump heading back to pennsylvania tomorrow and elon musk tweeted out i'm going to be there to support and, in fact, according to daily news, many are predicting a large crowd to hear trump speak at the very farm show property where a bullet grazed his right ear. >> i read that >> going back to the same place. meanwhile, just like elon musk tweeted that out, he'll be there to support -- he has 200 million -- he won over 200 million followers, first person to get over 200 million, any guess who is second? >> who >> barack obama. 131. guess who is third cristiano ronaldo, the soccer dude

followed by justin bieber, if you're a belieber, and rihanna closely behind 200 million, president obama, 131 million and then cristiano, and then the biebs, he might get more followers giving some of the things -- coming up, we're counting down to the jobs report at 8:30 a.m. eastern time. futures indicated up a little bit, we're going to talk to bank of america securities market strategist savita subramanian. that's coming up next.

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squawk picks is sponsored by wisdom tree. welcome to the future of investing. september employment report will be coming our way at 8:30 a.m. eastern time. joining us now, savita subramanian, head of u.s. equity and quantity strategy at b of a securities we usually have you here to talk overall about equities but is there a jobs number today. is it -- there are some different i guess angles to cover with the jobs report what it does for the fed, what that means to the stock market, what it does for the election, are all these things things you're considering for what you tell your clients to do? >> well, today's report not so much i feel like we're one week doesn't make a trend, one month doesn't make a trend but i think when you kind of look at the background right

now, everything that we're hearing about is relatively inflationary wouldn't you think like, i mean, when i look at what's going on with the fed, the fed is cutting interest rates or has embarked on an interest rate cutting cycle. china is trying to stimulate their economy. the fed is actually cutting as profits are accelerating, which almost never happens. >> all time highs in the market. >> all time high >> the port strike was settled, that was not -- >> the port strike was settled, it was settled for higher wages, 62% over the next ten years or something along those lines. we have this big kind of wage increase in the works, and i feel like this is an environment where maybe inflation isn't spiking back to 9%, but there is an argument we see a little pickup in inflation over the next 12 to 24. >> i mean, 4 would be devastating if that happened on top of the 20. >> you know what's so interesting, think about where we are now and i feel like it is

anchoring. because, you know, back in 2017, if we thought that interest rates were going to be 5% and inflation was going to be 3-ish, we would have thought the market would be a heck of a lot lower than it is today so, i think what we're seeing is just corporates adapting to, you know, a different rate, a different inflation environment. i said this, and some people think i'm crazy, but i think real rates of 1.5 to 2% would be okay for the economy we have seen this before, we have seen it in the '80s and the '90s folks think that rates are unsustainably high right now and they're going to choke off the economy. when you think about where rates are today, and nominal rates and real rates, they're lowish levels relative to -- >> if we did have a 4% print over the next year for inflation, you think that would be okay? >> i think it would be okay for certain parts of the market. >> you say corporations. for people buying eggs or whatever it is they're buying, i

don't think that's going to feel good at all. >> it is not going to feel good for the consumer the lower income consumer and lower to midincome consumers are also chasing prices. but when you look at corporate profits, what is shocking to me is that we went through a period of, you know, 9% cpi and corporate profits barely compressed it was like a couple of basis points >> if they're gouging, they should have -- >> i don't think they were gouging, though. i think it was just an environment where they were figuring out ways to cut costs. >> they raised prices but not enough to cover their costs. >> well, i think that it was an environment where they did a bunch of everything as corporates do to rejigger their business model margins compressed a tiny bit and for certain sectors that were more labor intensive. but i think what was shocking is how little they compressed during that environment. so i guess what i'm saying is i think we're in an environment where corporates are adapting to

this new normal of higher for longer rates and inflation, versus what we were in the 2010s. >> back to the 4%, not saying it would be that. who knows, pick a number higher than 2 does the fed go another 120 basis points, 150 basis points down >> i think the fed has -- i'm not a fed expert and i leave that up to our economists. but they're signaling they're buying themselves latitude to change their mantra. this whole time they have been data dependent, driven by the data at the beginning of the year, we thought they were going to be a lot more cuts than what we're actually seeing, the market has survived again, i think the fed is important, but not necessarily the ultimate arbiter i think what is important, if you step back and look at what's going on right now, in corporate america, we have got reshoring, we have got this manufacturing pickup in certain parts of the

u.s. economy that haven't been busy for a really long time. we have got nominal gdp growth, surprising to the upside i hate to say this word, because i know that equity strategies are always accused of being polly annaish and i've been bearish before, but i feel like this is goldilocks this might be goldilocks we got the u.s. is actually in a pretty good position >> you feel scared saying that >> i do. i feel like i'm going to struck down by lightning. but i think that there is an argument to be made that cyclicals are going to do okay, that consumers are going to continue to spend, maybe not as much as they did when inflation was zero, and, you know, the world goes on. >> getting resolved so quickly, again, we don't know what happens come january, getting that resolved quickly before it causes massive problems, you still have the middle east. >> right, you have -- >> and china, that is doing all kinds of stimulus. >> china is stimulating. the two biggest economies in the

world are in stimulus mode i think that's positive. and potentially inflationary is the market multiple justified? in parts, it is too high but think about it, we have got areas of the economy and manufacturing that have been underinvested in for a decade or more and now they're coming back online and granted there is supply chain issues and strikes and, you know, the typical friction, but i think that what we're seeing right now is sort of a shift from just spending on tech and asset light business models, all the time, to a more normal capex cycle, a more normal economy, a little bit higher rates, a little bit higher inflation, goldilocks, i'll say it again. >> higher inflation won't be goldilocks for most people it has got -- and the fed is set in stone at 2, they can't back

off it they're getting criticized about, you know, shifting to labor when the job is not done with inflation if there is any spike back up there, they're going to be -- i just think they're very paranoid about that. >> i think the fed might pause who knows. they could even hike again. >> we'll know another pause that we'll be waiting for we'll finish with the last pause. that was going up. >> that was, yes, i know it is interesting. i think the fed is -- obviously critically important, but i think what is also important is the fact that corporate america has navigated this environment of massive volatility in rates and inflation and earnings have remained relatively stable >> all right savita, thanks. >> thank you >> okay, folks coming up after this, place your bets, not on football, but on our elections. the ceo of prediction markets startup kalshi will talk about the key decision to let the

platform resume betting contracts from congress to the white house. that's when "squawk box" returns. >> announcer: time now for h day's aflac trivia question. whictwo denver broncos players have the shortest names in nfl history with just five total letters? the answer when "squawk box" returns. ple money for the expenses health insurance doesn't cover. aflac! health insurance does leave a gap. but aflac gives people money to help close that gap. aflac! oh! coach prime got one on the line too baby! uh huh! see that's how you hold up a trophy. trust me. get help with expenses health insurance doesn't cover. find an agent. get a quote at aflac.com. i hope you're hungry. i'm glad i brought my own dinner. uh huh.

>> announcer: now the answer to today's aflac trivia question. which two denver broncos players have the shortest names in nfl history with just five total letters? the answer, ty law and bo nix. welcome back to "squawk box. prediction markets kalshi resuming betting on its platform related to elections this follows a federal appeals court ruling that lifted what was a freeze on congressional control contracts which were prohibited by the cftc. joining us now to discuss it all, kalshi ceo tarek mansour. good morning to you. >> good morning. >> take us behind the scenes of the past couple of weeks for you, and for those who have not followed this story, what has happened >> i can take you over the past couple of weeks, but first, maybe past couple of years, so,

we are kalshi, we let people trade on any event >> right. >> we have been working on years with the cftc to list the election market, it was banned by the cftc and we were bold enough to sue them over it it was a tough decision. we won in the district court early september, september 6th so, that was amazing it was now the first time in 100 years that election markets were legal in the united states again. it was frozen by the appeals court because the cftc appealed and a few days ago, the appeals court lifted the stay. today at 8:15, we're going to see the first legal trade on the u.s. election in 100 years in the united states. >> and why do you think that's important? >> well, in 2016, when we started the company, we got the idea to start the company, i was working at goldman sachs actually, it was interesting, i was working on the desk, the

most popular thing that we -- people were requesting, institutions, hedge funds, et cetera, were election trades they didn't want to hedge against an election candidate, winning or not, hedging against brexit and so on, or take a bet. speculate on it. and it was interesting, we were giving bundles and so on, that's one. a proxy. two, turning crazy fees, ridiculous premiums and this is the thing that irked me the most, elections impact everybody, so, if you have less than $30 net worth you get that product. we're allowing everybody to access the product the same way large institutions can >> one of the big things that people worry about when they hear about gambling or betting on the election is the manipulation effectively of this market and whether a group of people could get together, either collectively because they're doing it with each other or just generally to try to manipulate the impression that the public

could very well have about the outcome of an election what do you think about that >> i'll respond in two parts. >> that is singularly the thing that people worry about given when we talk about democracy, and the idea of manipulating or influencing the outcome. >> absolutely. i think it is one of those things where, like, so i'll start with the headline answer, these concerns are totally moot, they are baseless, and ill founded. and there is three reasons for it these markets have existed, they existed in a number of other democracies, uk, ireland, australia, they existed in the u.s. i think, joe, you messengered the market multiple times on the show the reason is because they're accurate, they work. they work better than polls. the polling accuracy is decreasing over the last ten years. they have existed. and if anything they haven't threatened elections, they have promoted you have a source of truth you can quote. it is pretty interesting and accurate two, every single economists

that look at the issue, supposup submitted a letter in support. and, three, let's get into the -- >> why do they promote election integrity? >> they're a mechanism for truth. >> meaning what? that people look at that as opposed to polls and that's helpful? >> they look at that in conjunction to polls, conjunction to a lot of other things the 2016 elections you had a number of polls saying hillary clinton had a 90% chance of winning, which was a ludicrous statement. these markets were not going to be at 90%. they may have been at 55%, but not 90%. these markets, people have skin in the game, they don't lie. polls, they can say whatever and, two, markets work if you believe in markets, you have to believe these work you get an accurate gauge and so on i want to respond to your specific -- you asked for a specific example a group of people, let's manipulate the oddities market, let's assume they decide to

spend, what, tens of millions of dollars, hundreds of millions of dollars to move the prices, fine, they can do that what will happen is the price moves from 50 to 60, traders on wall street will see the prices moved, bring it back down. >> how much money would it cost to move it you say hundreds of millions of dollars. if somebody bet 100,000, would it move it >> 100,000 would not move it you have to spend millions to move it. but the thing is, like any other market, the value is 50 and you try to move it to 60, traders bring it back. >> one thing we have seen over the past couple of years, and it happened in the context of short interest on game stop, for example, or amc, where you've seen the wisdom of crowds, i don't know if it is the wisdom of anything, a group of people, maybe who aren't calling each other on the telephone and doing it secretly but doing it on reddit or twitter and they're deciding we're going all in this way, and they have moved the market not just for a day or two

or three, but for months on end, sometimes in what you may describe as a rational way, others would say completely irrational what would happen if that were to take place and would that be perverting democracy >> that's a great question there is something kind of interesting about these markets. they're not as manipulative as stocks there is a correct answer here what is the price of gamestop? can anyone tell me i don't know what is the probability of trump winning this election? somewhere between 45 and 55. probably not 90. and so, there is an existence of what we call a fair value, a correct answer to this surprise. these markets are not actually very manipulable there is a thing, assume gamestop didn't happen and others disagree and say, well, it is still 50/50. >> kalshi is not on the rcp average, is it not >> we're launching at 8:15.

>> the launch is today. >> poly market back to 50/50 the rcp average is 49.9 harris -- >> kalshi will be the first u.s.-based market where u.s. americans will trade and i think we're going get the gauge and we'll have it fill up on that. >> what time >> 8:15 this morning my question to you lastly is who is going to say carry the exchange, if you will. are we going to be on robinhood soon trading this stuff? >> the whole point of kalshi, the institutions and retail, we're broadly accessible regularly as a regulated financial market, dcm, like cme, accessible to anybody and everybody. that's part of the mission that's really part of it the big guy can do it. why can't the little guy >> do you expect all of the trading brokers and platforms to allow this trading to take place? >> we're the only one that is regulated, we expect all the brokers in the next year or two

for sure. >> what kind of pushback or not have you gotten on that? >> from the brokers? >> we just have the new ceo of charles schwab on. that's -- he didn't like when we called it an old line firm, a storied firm that -- >> that was lazard. >> i don't know if certain times of firms would say we want this type of trading to take place or not. >> i would say the bigger issue is, tarek, you made an enemy of a big regulator, the cftc, they tried to shut you down, you won in court, great, but if i have to deal with that regulator, i may not want to touch you, i may think you're toxic. >> we are regulated by the cftc. there is a big distinction. >> but they don't like you we have russ behnam here -- >> i talked to russ two days ago. i think i wouldn't say that the cftc -- that's a surprising statement to us. we disagreed on a matter of law. we sued them over it and we won

we were actually right everything we have done from the start, three years before we launched, we did it legal and regulated. >> you won you won the court battle sometimes you win, but you lose. >> i think this time we're going to win and we're going to list the market, do it safely, do it in a regulated way, working on the cftc yesterday, last night, two days ago, every day a regulator, every trader's report, we're a regulated financial exchange, russ behnam, a regulator, we have great respect for them we won on this matter of the law. like behnam said on the show, they respect the law like we will and we'll work together to make a successful launch and finally offer election markets in a legal way to u.s. americans. >> and to me this feels a little bit like bitcoin gary gensler may not like the fact that bitcoin is -- >> these are now regulated and legal, we'll work to make them

safe, trusted, protect consumers and make sure market integrity is in there. >> thank you for joining us. >> thank you for having me. >> we'll see what happens in a little less than an hour now good luck. "squawk box" coming back in just a moment ooh! penny stocks are blowing up. sweetie, grab your piggy bank, we're going all in. let me ask you. for your wedding, do you want a gazebo and a river? uh, i don't... what's a gazebo? something that your mother always wanted and never got. or...you could give these different investment options a shot. the right money moves aren't as aggressive as you think. i'm keeping the vest.

all right, welcome back to "squawk box. i'm dominic chu with a check on your friday morning movers we're going to start with a check on rivian shares they're down to the tune of just about 8% to 9% after slashing the production forecast over there on a parts shortage for its suvs and pickup and delivery vans also amid slowing demand for ev cars overall the amazon-backed ev maker is falling short of analyst expectations with regard to its third quarter deliveries on balance, down about 9%. we're watching spirit airlines, which are plunging they're losing about a third of their -- 37% of their value. this is on a "wall street journal" report that the budget friendly airline is potentially filing for bankruptcy. the company is struggling in the third quarter with what it called intense competitive battles with airlines and oversupply of airline seats.

that stock again is falling by 91% over the last year as the firm struggled with its failed merger with jetblue airlines and morgan stanley is getting an upgrade from a buy rating up about a percent or so the analysts at hsbc saying the period of underperformance in comparison to peers like goldman sachs could be ending as pressures on net interest income eased and analysts are bumping their target price to $118 from $103 keep an eye on morgan stanley. llofhere on those and other top cas t day, head to cnbc.com, subscribers get full access to the detail and analysis behind the calls. keep it here, we have more "squawk box" coming up after this commercial break. using responsible ai doesn't make you a rock star. it kinda does. you are not rock stars. (clears throat) okay. most of you are not rock stars. oooh. data driven insights, and large language models.

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energy markets are weighing fears that israel could strike iran's oil industry in retaliation for tehran's missile attack earlier this week for the latest on the rising tensions there, we want to bring in megan o'sullivan, director of the bellfor center she's a former deputy national security adviser in the george w. bush administration and currently serves on secretary of state blinken's foreign policy advisory board thank you, megan, for joining us

this morning we're trying to make sense of what's happening right now with the potential strikes, how do you read this? what do you think is most likely >> thanks, becky happy to be with you this morning. i think what we're seeing is still a very large uncertain landscape where israel is weighing the whole span of options. we have seen already that president biden has publicly said that the u.s. would not support strikes against iran's nuclear facilities but the reality is, if you're israel, you're looking at this landscape and you're thinking about when will be a better time to take out and fundamentally change the regional balance. right now, you have american forces and carriers in the region you also have israel's nemesis hezbollah, hamas, other iranian proxies on the back foot and you have the price of oil pretty low in the markets, weak relative to what they could be

and it may be that israel assesses that there won't be a better time in the future, particularly if this confrontation leads iran to up its nuclear capabilities >> meaning, an attack on oil facilities or meaning an attack on their nuclear positions >> i'm talking about why the question keeps arising will israel attack iran's nuclear facilities i think they're weighing that against, one, they're capabilities but we have all been taught a lesson in the last ten days or more that it is a mistake to underestimate iran's nuclear capabilities and perhaps it wouldn't be a military attack of some kind i know, of course, they're weighing other options, which include energy infrastructure, as we have seen highlighted by president biden's off the cuff comments recently. and, of course, military targets are very much on the table >> very quickly, do you consider

attacks on the oil infrastructure are a given >> no, not a given per se. we think about the attacks on oil infrastructure, there are two kinds that the israelis might consider there are many kinds, but two large. they could attack some infrastructure that is largely geared toward domestic consumption. iran is pumping maybe 3.3 million barrels of oil a day and consumie ing half that inside o iran it will almost certainly, if it comes, lead to more attacks on -- or attacks on infrastructure, around the region, potentially, which is part of the reason why there is nervousness in the oil markets right now. though, still less than we would expect if the oil markets were in a stronger, tighter position than they are. >> the oil that they pump, that they use internally, most of that is going to china do we care if china is unhappy, if something happens to that oil supply >> i mean we do care about the

global economy and, of course, the oil market is a global market it is not as if that oil, that potentially 1.8 million barrels a day of oil that is flowing from iran to china, if that oil is cut off, or terminated for any reason, it is not just the chinese who will be affected by the higher price it is, of course, the whole global economy so, what could be potentially useful here is that china could be a constructive player in this, in terms of trying to tamp down escalation and the potential regional war but it just shows you that you have a lot of actors that are going to be affected think about the russians, increasing the price of oil is going to help the russians end their war against the ukrainians this is already really moving into having global implications, even before we have seen a retaliatory strike by the israelis. >> meghan, how likely do you think it is if israel went after their nuclear positions that they would be effective in

setting back their -- iran's nuclear ambitions? >> yeah, i think this is the big question and frankly i think most military analysts believe that the israelis do not have the capability to go after -- to be successfully in terms of eliminating iran's nuclear programs there are a variety of different places in which they could cripple the -- some elements of the nuclear facilities the real question, i think, to focus on is even if the strikes are not against the nuclear facilities, what are the calculations of iran going to be iran clearly has to have the message that its conventional capabilities are just not up to snuff against israel and that israel has the ability to change the regional calculation, based on the configuration of power right now. one way that iran can change that is by expediting or going beyond its current virtual threshold state or status as a

nuclear power. and i think that we need to be seriously concerned about whether these events, however they play out, whatever the configuration and the nature of the israeli military action, whether this is going to push iran into a territory where it realizes its long held ambitions i think is not too strong a word to get a nuclear weapon. >> meghan o'sullivan, thank you for joining us this morning. >> thank you, becky. coming up, we're inching -- going pretty fast toward the bs data. september, which will be at 8:30, we'll have the instant reaction at that time and the analysis "squawk box" coming right back ♪ ♪ ♪ ♪

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koike. box. this week openai clipsing xai in the race to artificial intelligence raising billions passing the $6 billion raised by

elon musk back in may. joining us to discuss what is turning out to be quite the tech a.i. race and author of elon musk, also advisor and partner and professor and importantly cnbc contributor nice to see you. >> and friend of andrew. >> friend of "squawk"'s. walter what do you make of the race what do you think about openai you may think everybody is close to each other and xai by my eyes actually has caught up or gotten very close very, very quickly. >> yes xai caught up very much and i saw musk and sam altman together about a week ago there's, of course, a little bit of, a large built of tension that goes back four, five years when they both started openai and now sam has taken openai making it no longer open and no

longer not for-profit. and telling people invest in us we don't want you to invest in others interesting the script getting flipped a bit next week, october 10th when elon introduces robotaxi and things that operate in the real world when musk bought twitter he got this huge data feed. when he has tesla, he has a billion frames from cars every day. that's the -- the big thing you need is the data set to train on and the big next leap is real-world a.i cars that drive themselves, robots that walk. >> one of the questions becomes how xai will be integrated, or not, into the development efforts of these other products. >> tell you one thing about elon musk he tries to integrate everything he's not going to set up walls and silos even though some, you know, tesla's publicly traded. xai -- >> what i was going to ask

investor class, xai. we know. investors class in tesla another investor class in spacex. >> when he took over twitter he brought engineers from tesla and other companies to help build the a.i. -- he blurs those lines. plus, he even has neurolength, the company implanting chips in the brain. if you're wondering. is he going to bring all of these things together? my guess is, my guess, my answer is, yes. >> the ability for him to advance as quickly as he has literally there was no true a.i. effort in terms of inside xai that didn't exist a year ago. >> right i remember, coming to austin, texas, sitting in the back of, by a swimming pool in a house somebody rented. telling me i'm going to start from scratch an a.i. company because i don't trust sam altman. >> how much, though, does, is this a business that is just a function of processing power if you have enough money to buy

enough chips and you can get nvidia to give them to you, or to sell them to you, that you can be, not just a player in this game but one of the top tier players how much is it that versus the alchemy, the sort of software talent, the engineering talent, to be able to write algorithms and how is it possible in a year, or less, this group has managed to do it while google, which was clearly at the, you know, they were the art of all of this in the beginning i actually think inside google the same talents but struggled to productize it or what's happened, but it looks very different? >> google, google deep mind and do gemini. my opinion greatest mind at the moment looking at a.i. but you're right at the moment gemini is not racing ahead of anthropic or xai or openai. i think that part of it is musk

was very smart and good at getting nvidia chips getting cpus one of the factors creating his own chip taking a longer time, dojo chip, doing visual data, and once again you saw a blurring of the lines. getting some nvidia chips for i think tesla and then he was moving it to xai. >> his plan not to be open either, by the way. >> no, no. >> right so this whole idea of he can be frustrated or upset but thinks openai is not open but building his own closed system, too. >> total consistency >> is it about who controls it and do you have more faith in -- >> i mean from a very elevated perspective. having watched musk very up close for a couple of years, i'm going to say something you might think is naive but i really believe it, which is he has certain missions he's had his whole life

read isaac, read the robot series thought the robots might turn on us i have to come in and save us from hostile a.i i have to make this -- >> do you think he will? i believe you 100% on his mission. i believe that's who he is. >> and started an a.i. company buying twitter >> do you believe -- do you think a.i. is safer in his hands than's in sam altman's hands no i don't know i wouldn't make that judgment. sorry not to give ayou a snap answer here. >> a complex question? >> here's a real question what he believes versus others. it's that the more a.i.s you have, does that make it safer? 12 companies, 20 companies doing it, competing a.i.s, does that make it safer? or is it better to be concentrated in the hands of a few? like google -- >> like lina khan. >> and musk believes more the

merrier because they're check each other. >> a very important point. >> how many do you think there will all minutely be some argue a lot of smaller language models but the frontier, language, language models, cost a fortune to run. at some point, don't you think that they will either get merged, people say, look take all the processing power put it towards this or -- three in the end or do you think this is a five or six or seven-player race? >> i think three or four and i think you're right certain natural factors. i mean, you need enormous amounts of electricity three mile island plant again. enormous amounts of cpus things like that my brother in new orleans who wants to start -- never able to do that. there's a natural concentration. >> do you think that long-term regulators will have to ultimately allow big companies to buy these things? even though openai has a

sky-high valuation, for example, it's not profitable and less clear over time, actually, that with scale, that you necessarily reach profits, because truth is, there is -- seems to be an incremental cost oftentimes to the more power generated and the more use as it goes. it's not that, you know, you add a bajillian more users if you keep building and growing a modeled? >> and then scale the way other types do i think that i tend to err on the side of more anti-trust, because you want more competition and that basic question i talked about a moment ago. if you have 12 companies doing it it's better than 3 or 4. >> getting killed. i have to ask. do you think elon musk should be paid for, or get some kind of stake in openai given the new valuation? and what -- >> wants it. weird, yes, he should. >> elon. >> yes.

>> and a point of a.i. destruction of mankind, why would any of them be different >> well, yes but maybe it brings us to a higher level of consciousness. >> they're all going to get us depends who gets it first. no one can stop it could be 12 of them, but -- >> i do think you have a good point, which is that the market forces and all the forces don't say, slow down make it safer. if you look at everybody saying, should have had more safety, should slow down. >> easier said than done. >> a lot of competition. >> and -- >> happened exactly with openai, is when a lot of people said let's slow it down you can't. you'll fall behind anthropic or gemini or others. >> yeah. got rid of those voices. they got rid of those voices. >> yes another interesting story. >> yeah. >> walter, great to see you. friend of "squawk box." >> yes. >> thank you it is a little after 8:00 on

a.m. on the east coast you are watching "squawk box." i'm becky quick along with joe kernen and andrew ross sorkin. the port strike is over. ports with tens of thousands of dock workers extending the twact thr -- contract through january 15th details of the story, sources say worker wages will increase by 61.5% over six years. a conflict over port automation is still under negotiation. don't miss the first on cnbc later this morning julie su coming at 9:00 a.m. eastern time. spirit airlines exploring a possible bankruptcy filing following unraveling of its merger with jetblue accordings to a report in "wall street journal. speak wig bondholders and saying spirit is looking into

restructuring through an out of port transaction. and the european union hits chinese-made electric vehicles with tariffs the vote coming earlier today. the eu said chinese-made evs benefit from unfair subsidies and pose a threat to european ev producers. futures. we are getting closer and closer to the employment report gains. no double, or triple digit gains yet but up 60 in the dow nasdaq up 67 get to mike santoli. nyse mike >> joe, yeah steady market heading into the jobs report. been more or less on pause this first week of october after closing at a new weekly high all-time take a look at the s&p 500 look at it over a year-to-date basis, you see definitely managed to get five moss in a row higher suggesting in itself we're not necessarily, the market not picking up clues of imminent

downturn the last two job reports a good amount of downside movement intensified fears of a harder landing when we got the numbers payrolls goldie lo locke -- goldilocks-ish the market is concerned with the consumer hanking in. home depot versus lohwes. accelerating higher. lower rates, obviously high mortgage refinance applications things like that acting as a tailwind quality element to the big bellwethers. talking oil, geopolitical situation there. one reason the broader markets are able to azorb this move a five-year chart of wti crude you see absolute levels are totally unthreatened relative to where we've been recently. helps explain why we've been able to handle it.

guys >> yeah. it's been a bit of a slow boil and interesting to see this week i guess we head into the weekend with a lot of unknowns. >> we do. >> excellent explanation mike, thank you. when we come back, the september jobs report. the big number on the way. 8:30 eastern time. you got 22 minutes to go up next, though, the ceo of disaster recovery firm bellfore holdings joins us on the cleanup from hurricane helene one week after the storm slammed into the southeast united states. cleanup efforts are still taking place. stay tuned you're watching "squawk box" and this is cnbc.

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. it's been a week since hurricane helene slammed into the southwestern united states leaving a path of destruction. over 200 dead with hundreds for still unaccounted for potentially. more than a million without power and the cost could total more than $34 billion.

according to moody and joining us ceo of belfor holdings specializing in property restoration and recovery i think the largest property restoration and recovery >> largest in the world. >> in the world. sheldon, you have been down in florida until this time working. your voice strained as a result of this is tell us what you've seen and what you all are working on. >> well, this storm reminds meep a little bit of katrina in 2005 with the depth of destruction, and then i couple it with hurricane hugo back in 1989 with the whiff and geographic coverage look at the big bend area between tampa and tallahassee and go up through georgia, a little west to alabama, south carolina, north carolina we've all heard about asheville and then into tennessee you're talking about 600-plus miles of coverage the damage, the devastation.

and i think that when you look at the downed power lines, the lack of cell service, the bridges, the infrastructure that's wiped out, people still not able to return home, and, again, please, i say, heed advice of your heroic first responders remember downed power lines and water don't mix. you cannot take it upon yourself to go back to see your house, to see your business. you have to get clearance to go into these zones. >> kind of shocking we are a week out and there are still so many people unaccounted for. can you describe what you're seeing with this rescue efforts? >> the -- unfortunately our hearts go out to the families who have lost loved ones over 200 now excuse me. still 100 people unaccounted for. these first responders are using every minute they have to look, search and rescue. it's still a rescue operation, and the devastation is so

widespread with lack of communication, it's making it very, very difficult some of our high-water terrain vehicles are being utilized to get responders in and our areas and we're working alongside of them even belfor employees. but the damage we've seen is so extensive and devastating. complete villages are wiped out. complete infrastructure needs to be rebuilt. and belfor comes in with utility workers and all people restoring communications an everything, because we have to restore these communities. how do you restore a community infrastructure and then buildings that serve the community. hospitals. we are all over hospitals. k-12 belfor people in these facilities industrial and commercial. people's livelihoods dependent on the factories getting up and

running again and, again, keeping safety first, because we have to make sure everybody's safe, and we've got to prevent from mold and mildew growing so all of the equipment we bring in are mobile command centers with satellite communications, being utilized our logistical operations are enormous, because we have, in asheville, we have over 800 people there now in the big bend area we have over 900 people there now. we have 65 people arriving every day. to add to the force. logistically we got to provide water, food for all of our people so they can continue to work, and get these facilities back up and running as fast as possible. so communities can start to return to normal. >> have you run into problems with fema not having money you see that all over the story that they're broke fema is that, has that been an issue in terms of what you're trying to do? do you know is that factual?

>> so i don't know firsthand what money they have or don't have, but i've always seen over my mast 40 years is in a fema's never funded for an event that they're talking about $34 billion additional dollars. >> until after -- >> they get funded in short order. >> okay. >> the stuff that happening on the ground it's horrific. we've heard people saying there's not help there there's not help coming. can you explain what's happening? >> i think the reports of, there's no help available, is also due to the fact that there's a lack of communication. people don't know what others are doing. what i can tell you firsthand, what i've seen i've seen the heroic efforts of our everyday citizens. neighbor helping neighbor. people reaching out to do one small act of kindness for somebody one hug of hope. that is the energy that's needed in these situations. and i think that that is unfolding slowly i think when communication gets

restored, and power slowly comes back, because they're talking about it could be another couple weeks. you're going to see people's hope rise. >> but, sheldon, you think the rescue workers, the front line, are doing the best they can under very difficult circumstances? >> our heroic first responders are doing everything they can. they are stopping at nothing like i said earlier, they're utilizing some of our equipment. some of our vehicles to get to areas they can't get to on their own. they're working shifts and i've heard people say it doesn't matter i'm off shift they're still going. this search and rescue operation is front and center for every one of them. >> sheldon yellen from belfor holdings thank four being with us and we appreciate you taking the time and everything you all are doing. >> thank you all for what you do. coming up, it's coming, again. i want to tell you the jobs report for september at 8:30 so 13 minutes away. and is an ipo the next ste

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welcome back to "squawk box. a huge week for openai company closing $6.6 billion round. securing a $4 billion revolving credit line. joining us for what this could mean for the next company to go this round, and investors axios business eder, a huge valuation. the question is how this all resolves itself? when an ipo happens. does an ipo happen conversation you've written about it using some of this money to actually buy out earlier employees. where do you think this all goes >> i do think an ipo is inevitable it's not something sam altman

and company want to do tomorrow. they obviously value their trade secret in all sorts of ways don't like talking what they're doing before they do it. ultimately talking, andrew, you know, talking about $157 billion valuation no one's buying this thing. handful of companies that could afford to would never get it through antitrust. ultimately the out for investors is an ipo. makes sense for openai they're going to need lots nor money and public markets are the best place to find that. >> the next question how much more money is this company going to need? talking to walter isaacson earlier. scaling. bigger you get closer to bigger and bigger profit margins. in the context of a.i. the power consumed and number of chips that need to be bought, and the processing that's taking place it does not necessarily seem that the more you add the bigger the profits get?

>> yeah. there's no evidence that where we get there, it's a little like building a giant skyscraper. an enormous amount of work to get done before you can really generate revenues that can overcome that. again, a huge commute power for the research more people who use it including more commute power third piece, wrote about it yesterday, my colleague at axios incredible talent push right now. to get researchers you need. compete with elon musk, compete with anthropic, et cetera. that costs an insane amount of money. much more than any other start-up dealt with. >> how do you look at what's happened at openai a number if not many, many of the early founders that carpeted at the company at the outset no longer there. it does look like greg brockman will come back to the company later this year. so you're going to have him as well as sam there. they brought in a lot of new talent do you think that shifts the

balance in terms how this race plays out? >> maybe a little bit. interesting. from speaking to investors in this round, one of the things i asked, venture capitalists usually talk about investing in people the people who are at openai when this round began compared to where it closed you say, seriousist ist serious shifts the answer i got, part of the company shifting from nonprofit to for-profit model, part of this deal. that they're really moving from a research lab into a product-focused company and thus needs different people the fact research lab, people aren't there anymore doesn't seem to concern investors pap notable new name is sarah friar. ceo of nextdoor previously ran square/block with dorsey think about will it go public? the cfo who would know how to take it public. >> what do you think the timeline is for that >> god knows

i think realistically probably within a couple of years within this deal there was a promise that openai played to investors that it would complete that transition into a for-profit structure within two years. don't do it within two years investors could ask for their man back would openai have the cash to give it to them? an open question openai should try to do this in a couple years no particularly good reason not to every company that's ever said we don't want to go public because we're worried about secrets getting out. gotten over that quickly and hasn't really hurt them. lots of secrets, didn't seem to hurt that company. >> dan, great to see you thank you. a quick programming note don't miss an exclusive interview later with owe a.i.'s coo monday morning on "squawk on the street." >>wh wco bk > ene meacthe september jobs report. stay tuned you're watching "squawk box," and this is cnbc.

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box. here we are a minute and a half away now from the government's employment report. ahead of the numbers, let's bring in our jobs panel.

wendy edelberg, senior fellow at brookings institution. joel griffith, research fellow at the heritage foundation sarah malic, chief investment officer and head of equities and fixed income and our own steve liesman here on-set. and rick santelli as you can see on the lower right we're going to do our best with only six boxes you know, nine is always, i think, more inform ti-- informative and better. >> rick, forecast? >> i'll let rick go. >> what's the most important things, in your view maybe things that can be surprising, rick >> well, i think we're going to be higher than expected. so i think -- a. -- looking for over on jobs and i think the actual unemployment rate, if it moves higher that will be a big deal if it stays the same or moves lower but i think the actual

jobs number will come in better than expected. i think that will be the surprise today, but this number is truly -- we say it almost every month. maybe true every month, but this particular jobs number i'd like to see if steve agrees is really going to have an outsized potential effect on the marketplace and investors psyches, because we've seen the fed now flip their lens to the labor market here's two seconds away. and -- as we come, hitting the wires on the september jobs report -- the over wins. 254,000. significantly better than 150,000 expected and upward revision to last month from 142,000. to 159,000 which means the two-month revision now is a little over 70,000 if we look at the unemployment rate, it is at 4.1 4.1. it moved lower i can hear yields moving higher

as we speak, and 4.1, of course, equals where we were in june you have to go to may to get a lower number at 4% average hourly earnings month over month bet than expected up 0.4% equalling where we have been in may. you have to go back to the beginning of the year, january, when we can up half of 1%. now, if you look at average hourly earnings on a year over year basis, this number also much better than expected. 4% 4% that equals where we were in may. you have to go to march to find a higher number at 4.1%. workweek 34.2 which makes it actually 0.1 less than expected and 0.1 less in the rearview mirror. to find a lower workweek you have to go back a long way you have to go all the way back to 34.3, which is going to bring you -- in february of this year.

finally, the utilization the labor force participation rate 62.7 it's been holding there. not a bad number 62.7's actually the best number of the year that we've seen on multiple occasions you have to go to november of last year to find a higher number at 62.8 and finally, the under employment rate. actual employment rate 4.1 called u3. u6 underemployment rate, moving higher at 7.9 our last look, which was the highest since october of '21. it came down 0.2 to 7.7 which equated to lowest level since june of this year. yields shot up now at now 394, 395 in ten year. and these are big, smart reversals. today now marks the third consecutive session that treasury yields have climbed over the previous high yield or

look at it in terms of low prices, which means building momentum to higher yields and that's important, considering we settled the ten year last week get this at 375 so we've seen some significant moves, and on the short end, we settle a two year last week at 356. so it's up 30 basis points from last week. of course, the fed, last move, 50 basis point ease. the market seems to be going the other way. joe, back to you and the panel >> really does thanks, rick get to our jobs panel and start with steve liesman so much for the fed having numbers in advance, that they know we're going to be -- also, steve, is the whole asymmetric risk now in the labor market versus inflation >> yes where we're at. >> does that make sense? don't you think -- >> i don't think so. let me explain why. first of all, hearing muttering

when i say -- >> i hear it a lot. >> i say, rick, tell me about labor supply labor capacity so good. i wanted to compliment him the deal, jobs gain where we see. looks a lot like a pandemic year report 78,000, leasher and hospitality. 17,000 health care and social assistance, in my book like 150,000 or biggest part of it. construction also up 25. specialty trade contractors the big deal there that may have to do with the government programs for infrastructure i don't know about you guys. when i drive around here all i see is construction auralll oveh new york city area part of it the story for the fed here is, if you have the labor supply to meet the labor demand, that is not inflationary now, you did have a pop in wages. see how long that lasts. the story is one of looking at inflation and to use a word i

think the fed chair used, recalibrating. recalibrating the funds rate to where the inflation rate is. that's why -- rates should still continue to come down, but as rick pointed out, not in 50 basis-point increments. >> can i just ask. looking at this without knowing impact from hurricane helene just had someone on-set with us talking about the destruction being the broadest, widest they've seen someone who's actually doing the reconstruction there the demand, that this is going to require over 600 miles plus of area in the united states how -- >> bigger than -- talking about the panhandle. in florida right? the swath in the middle of the country even bigger and worse. >> before you get out and how wide and how broad it is. >> right. >> when you say it's okay if labor supply meets labor demand, how can that be possible with the construction we're talking about? >> i don't think -- look

i think it's going to cost a lot of money i'll back up there's a decline in economic output as a result that could be an offset to the increase that's generally -- i'll say one quick word about this. and then get to the panel. i spent 22 years at cnbc el telling our bosses video is great. the big, natural disasters don't amount to much when it comes to the macro economy. usually right. usually right because big storms hit cities and cities have the infrastructure to fix them i don't know the economic impact of what just happened with helene in these outlying areas over sump a vast swath that could both depopulate certain areas and require massive amounts of infrastructure. i'm taking a pass on your question, becky, and tell you you're right to question it, but i do not know the total net on helene, because there's a decline in output and there's an increase in the need to spend a lot of money to fix it leave it there.

>> all right get to our panel start with, i see your name up here on the teleprompter go for it. what do you make of this pretty good report >> it is stephen exactly right we need to understand these numbers and the context of what we know about labor supply the three-month average of payroll job gains about 185,000. by my calculation. that is darn close to what i estimate is the break-even rate now given what i think i know about the growth and labor supply from the surge in immigration. our economy is doing a fantastic job of absorbing these immigrants and this labelinger market is doing well for u.s. farm workers and for foreign workers. great news. >> joel? >> can i say one thing opinion we don't know about productivity the wage number may be in line with productivity plus inflation. leave it there. >> okay. what do you think, joel? >> what i was most interested in

were the full-time jobs numbers. it appears that we've seen a bit of a diversion from recent months part-time jobs actually shrank, which added to the number of full-time jobs, and my concern arises from the fact over the past year seen a decline in full-time jobs of around 900,000. this was incuencouraging. concerned long term, talking about the different economic put forth by the two candidates. how those policies are going to really play forward in 2025. >> sarah, i made the point that the fed has focused all of us on possible weakness in the labor market and sort of the notion that not inflation -- has been put to bed, but that the risk lies in a slowing labor market with everything we're seeing, you know, i don't know what happens in the mideast or oil prices and had the port strike, which gratefully looks like

settled. but are we back to at least 50/50 on the dual mandate? isn't inflation at least as important as worrying about weakness in the labor market >> the fed has been clear they shifted to a focus on the labor market and concerns about it cracking obviously this number is not showing that today it also tells us that the august rebound in payrolls wasn't a blip health care and government what is weak recently within the payrolls numbers the numbers now, i assumed rebounded a bit going forward. what does it mean for the fed in november moving back to a 20 point rate cut. likely the market is strong today, been defensive recently under the current. that because people are worried about this geopolitical issues oil prices increasing, election coming up. oil prices going up, average hourly earnings 0.4 higher

inflationary the fed noeeds to move back to a balance. not just about labor market. inflation going forward. determines the cuts going forward and likely 25 for november. >> rick, maybe move back to that or just stop telling us anything about -- you know wnknow, what think. what would be better, rick >> i used to like it back in the old days, joe. people, investors, traders, had to actually figure out what was going on by watching effective fed funds rate, how it traded especially after meeting the numbers. specifically answering your question huge progress 1.9% on inflation. the issue isn't about inflation in the last mile the issue, is there going to be any type of resurgence in inflation that's going to make the target more toward, from where it is?

not from the fed's 12standpoint 3% there's not a type of wage inflation spiral, wage cross-spiral that i saw 35, 40 years ago. but definitely there seems to be under the surface that dynamic i think the fed's going to have an inflation problem not that the going to be huge, but the going to bounce around and have some life i think they need to focus on that in terms of the labor market, listen, i've been wrong. some of the spreads, signals in the market, they called for more recessionary times, but this report is strong, and i don't see any way around that. >> the economy's a disaster. right? joe? >> no. >> just quoting somebody that's all >> oh, you know, but here's my question, though, steve. if we're not restrictive based on, like, if you are looking at inflation that -- well just talking about by rick. why cut again? >> you can be in the wrong place, joe that's the -- the working

theory it doesn't mean -- if you are hiring the number of people who are available to hire, and you are meeting the demand of -- hiring's not the -- >> no more cuts? what i'm asking? >> i don't think so. i think the fed wants to bring it down to something that's neutral. >> inflation might be certain. >> why say hat >> because it just -- you heard all the details rick just talked about. >> if you did 250 and had workers for 250 and had demand 250 and output 250. >> inflationary forces we're seeing >> what inflation forces >> labor -- >> hiring people is not inflationary. >> saying the port strike. >> what strike it's done. >> and oil what if there's -- just seems to be -- workers seem to be in the driver's seat right now. >> okay. if you have productivity to meet

9 -- >> getting in the weeds. >> why that's where exactly you should be increed productivity. >> look at the rooms in california look what they're doing to trucking i'm sorry. but bottom of the food chain issues whether wages, transporting, all the things we use, the price is going up i don't see any way around it. >> doesn't mean you have inflationary spiral, rick. you have increase. >> come on economics. i'm talking common sense. >> oh, you mean actual economics? oh. >> look -- >> it's inflationary -- look, rick, i know you were -- >> no, no, no. are you kidding? i've had arguments with andrew about science. haven't i? i like science all's i'm saying here is you can throw all the economics around you want there's going to be inflationary forces in the grid, inflationary forces in things like diesel and trucking okay these things are bottom of the food chain

i see 61.5% -- >> always a bad things, i don't think i'd be talking science. >> here's the thing, rick. if you have an increase in the price level that does not mean you have inflation it means you had an increase in the price level. when you have the numbers -- >> all right go with that fine with me forget inflation toss it out. okay, america. what we're saying. the prices are going to be going up put any name on it you want. >> rick, if you want to have a semantic argument but a rise in the price level is not inflation. >> you're the one with semantics. prices are going up. >> you're a dip -- it's a natural science. wendy, what -- it's dismal if it is, but you got noble bell laureates that win,in polar opposite theories. >> joe, your hand is in my shot when you do that and i'm insulted by that sorry. >> okay. wendy -- weigh in?

>> the fed does not need to set monetary policy in advance of, you know, the ghost of possible inflation on the horizon the fed -- >> and talking about -- >> expectations are right now, and right now inflation is darn near target, and the labor market looks -- looks -- relatively balanced. remarkably balanced. so it's not appropriate for monetary policy to be restrictive right now. inflationary pressures, if they come up going forward, let's say because we have massive deportation, reducing labor supply say because 10% across the board tariff the fed has a lot of dry powder. >> oh, don't get political. >> political it's not political that's -- that's fact! rick, it's fact. >> joel, do you think -- i meamean the fed made a move based and

labor market weakness. where's that >> yeah. where is it? >> number one, i really do think it's important to look at the number of full-time jobs which que we know diminished over the past year inflation itself those invested in the market, yes, doing quite well over the past few years the market's gone up a lot 6 people don't have those investments. the typical family, ghost inflation or not we know real wages are down roughly 2% over the past if the few years. a significant impact on middle-class family making 150k a year that's a pay cut in a year and important, too, to realizes middle-class families have been taking on credit card debt to maintain their financing, and if you look at increase in interest rates on revolving debt combined with increase in balances the typical family spending another $1, 500 a year paying credit card costs it's not pro-growth. >> we need pro-growth policies,

joe. you're spot-on >> deflationary. >> doesn't think -- >> i feel a need to jump in. got to say real wages are up. not down real wages are up since before the pandemic by any measure, and more importantly -- >> no , they're not. >> and given employment gains we've seen on workers across the economy. >> joel -- >> is that true? >> joel, not true. is it? >> in fact, looking at real wage numbers. this does not even take into account rising home costs. ran those numbers the other day. get into a middle-class home, cost for property taxes insurance, mortgage, additional $23,000 per year that's why real families, talk to middle-class families they feel under the gun right now, because they're real wages working with just a few thousand

dollars a year cushion, take $5,000 off that cushion a lot of families are under water >> the argument on the table is whether or not inflation is going to go up all of the things you're saying, joel, are sort of deflationary-type things people are struggling's they don't have the money. in that context you do have a funds rate over -- >> and joel from heritage to counter wendy being from where she's from because everybody that's talking is political and -- >> no, no. >> i agree >> not the actual number real wages -- >> hold on. >> give you real earnings. >> let's do -- >> weekly average weekly you want hold on. >> average weekly. >> okay. >> real earnings. >> compared to what day? february 2020? 37 -- yes. real earnings are up index of real earnings is up from 377. -- sorry 377 -- 384.6. >> from january --

>> february 2020 to today real earnings are actually higher. >> okay. >> real earnings higher. >> average weekly earnings. >> real average weekly earnings. >> haven't seen that joel >> go from the start of 2021 to now, real wages are down by about -- look, i agree this should not -- >> depends when you start. >> pre-pandemic it is -- >> inflation hit >> okay. we always talk when biden came in. >> did say pre-pandemic. she's right. >> i know from pre-pandemic. >> joe also right if you take it from the point where inflation was highest. >> okay. what i want. real numbers to see what's right on this. depends on the time frame. both right. >> yes >> since doing it in a political context. >> right. >> and since the administration came in peoplelost buying power. >> i like what you say, joe, what is the thing that matters to people?

by the way -- the sense that people have that they're wages have not kept up with inflation, and i don't think you can do anything to change that, sensibility of the people, they have wages have or haven't kept up with inflation look at a median like that so for a lot of people, if you are a poor worker you're feeling pretty good today and if you are not you are not feeling as good. >> in terms of being so relaxed about it, gdp above trend, equity new highs, credit all time high, gold all time high, corporate profits k sell rating, no labor market resources. where is your reason for going down 50 bases points >> because my funds rate is above my sense of where neutral is now, the one thing that is the -- >> i don't want to base -- >> i think this is neutral. >> but politically all the things you just said would say we are in a great economy. >> i don't know if gold is at an all time high. >> except for gold everything

that you just read you would say this is a great economy. >> except for people's purchasing power is still down. >> gdp is above potential but it does make me question about mr. where gdp potential is maybe it is somewhat higher. >> sara, what do you have? >> good to see you this is why the fed needs to still cut rates even though inflation has picked up and the jobs markets is strong the fed can't rely on the jobs market for data in terms of a recession. job markets tend to crack when a recession starts, data goes down the elevator faster than up the escalator. they need to be prudent, cut rates because the undertone of the market is that the consumer is slowing a little bit, manufacturing data was weak, we saw that this week with pmi and we still need to worry if you are an investor your main concerns are the geopolitical issues and the impact on oil prices and what is going on in china which is having a very strong rebound. >> rick, you don't even need to assume inflation is going back up to look at all the things we

just said to not see any restrictive policy there is no signs anything is restrictive right now, is there? >> no. no i really don't see a sign. so, i don't know, what do you define neutral as? maybe this could be neutral. that's the other issue, this caveat, word game we play. neutral. they don't know where neutral is. >> true. >> they have no idea where inflation -- >> steve says you think it's neutral. did you. >> i just want to say before we get the hook on this that i've enjoyed this conversation all right. we're done. >> we can sit around and have arguments and disagreements as civil human beings. >> by the way, and get to the real numbers on it. >> and get some real numbers. >> and really look -- >> that's what we do. >> i appreciate that. >> and it's friday and i'm really close to the weekend. >> it's nice that we can do it as a luxury talking about whether people can afford things or not. >> you're right about that, too, joe. >> whoa, no more ground beef. >> you have somebody really smart coming up. >> we're having just hamburger helper no hamburger.

>> here we go. joining us right now is former cleveland fed president loretta mester, an adjunct professor of finance at the wharton school and a cnbc contributor. loretta, you are the person we need to speak to most at this point. please tell us based on your read of the numbers whether the fed should cut rates again. >> it was a greater converconve conversation the fed has a duel mandate, price stability and maximum employment the fed start this had phase of bringing policy rates down towards neutral. yes, you're right, we don't know exactly where kneutral is, but e do have signs that the economy is moderating. the employment report today was a strong report which is good for the fed. the fed has to balance those things the concern over the past couple of months was maybe labor markets were cooling off a bit too much, not just moderating but weakening. i think this report plus the

revisions from the two prior months really show that, too, the economy is doing quite well on the employment front and inflation is coming down and so in that environment the fed has to be forward-looking and you don't want to keep rates at the current level given where inflation has come down from and where it's going in terms of the forecast yeah, there are risks on the upside to inflation and you pointed out some of them, including oil prices given the conflict in the middle east which may be escalating and that's something to keep an eye on, but you have to sort of make your best policy looking at where you think things are going and maybe you will have to course correct in the future if things turn out differently than where you're projecting, but right now it makes sense for the fed to keep looking at the data it gets up until that next meeting and then move rates down as it said it was going to do at the last meeting starting a new phrase to bring them towards neutral. we don't know exactly where

neutral is we don't know when the stopping point will be, but with the moderation going on in the economy that we've seen so far which is expected to continue and where inflation is expected to go down, it makes sense to be bringing rates down, and a moderate pace. i think this report would not necessarily support doing another 50, but it does -- it is consistent with moving rates down another 25 and then, you know, maybe they will pause for a meeting or two. >> that would be my guess, loretta. if you're looking at inflation, not necessarily completely where you want, it but coming down significantly, when you are looking at the jobs market being stronger than you even anticipated last month because we not only have stronger than expected numbers for the most recent, they've revised the numbers upward for the month before, wouldn't it be a prudent thing to do to be to look around and wait a see, especially when you just came off 50 basis points when that was the most anybody have been anticipating >> i mean, you could do that and, again, they're going to have that discussion around the

table. i think it would be actually a signal of sort of stop and go policy which i don't think would be very helpful. look, they started in this phase. there is a lot of evidence that suggests that things are moderating i mean, not every report that's come out has shown that everybody is hiring, right if you look at the ism surveys and the businesses that they talked to in that survey, a lot of them said, hey, we're being, you know, prudent about our labor force now. we can hire people if you look at the quits rate, people aren't fitting their jobs as quickly as they were before because they feel that it's harder to get a job if they were to quit to move into a new job there's moderation going on in the labor market which we want we want sustainable labor markets, we don't want things to be overly tight and we certainly don't want people to be losing their jobs because the fed is too tight. that's kind of where the fed has to look at it's basically balancing risk and, you know, in the past you could say they had the luxury of

having to worry about inflation, that wasn't really a luxury, but you know what i mean, they had to focus on inflation. >> sure. >> now they have to look at both parts and that's what makes this more ifficult. the decisions are going to be difficult going forward, but they've always been keeping both parts of the mandate in view it's kind of like if you have a panorama shot, right, you may focus on one part of the mountain, but you still want to have the valley in the panoramic shot they always have both parts of the mandate in mind. >> loretta, thank you. it's great to have you here. "squawk box" will be right back.

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good friday morning, welcome to "squawk on the street" i'm carl quintanilla with jim cramer and david faber. futures getting a boost today from a blowout september jobs number, 254,000 beats even the highest estimate on the street unemployment down for a second straight month to 4.1, got some positive revisions, our roadmap will begin with the stabilizing labor picture, far more jobs added than expected, what that could mean for the fed rate ca