clinton: first, i had a big argument with alan greenspan. alan greenspan was to my left.said, we are not going to -- how do we set interest rates on federal securities if we have no debt? i said, that is a high-class problem. let's deal with that when we get to it. [laughter] let me say that i also supported president obama's stimulus program and i supported the bill president trump passed and the bill president obama passed. when you have zero to negative interest rates, you cannot run a balanced budget. and you cannot start cutting spending without making the economy worse. but when you do have interest rates, you have to deal with your debt issue or otherwise you spend more and more money paying interest on the debt and you do not have anything left for education and health and science research. first, it is nuts to make a big issue of this debt limit thing.e we have in america that congress has to approve twice paying for something they have already voted to spend on. a lot of these people opposing raising the debt ceiling voted for most of the debt that is embedded t

when you look at this are you looking at wealth effect like alan greenspan used to look at are you lookingmates, as scott says perhaps away too high how do you see things? >> i think its down the road i think in one sense kevin is right as you we've been rolling with this very high spending that you talked about infrastructure coming to end consumer is in fact -- o leveraging more that is going to come to an end, i do think, inflation will remain an issue, because wages are there the fed not responding they are very cautious want a soft landing going to eof the r.r. on side of the other part i think interest rates have to go up, regardless because you're -- the government dumping tremendous amounts new debt every week and month into the market. pushes prices down trrts up slowing indentured servant more as said we had a good quarter wasn't that strong i think a slowdown ahead i think fed he in a position of trying, to manage the landing err on side until confronts them with much higher -- interest rates but, also, in the lending i mean but importantly the fact that there are going to have

the greenspan commission in 1981 did extend the solvency of social security for more than 30 years. the process saved tremendously on the accounts of our national defense and improved military efficiency and preparedness. and although the total recommendations were not adopted i did serve as a foundation for the budget control act of 2011. the strength of a commission. the strength of a commission is to bridge partisan divide. it provides a mechanism for both sides to work together to solve problems. to be effective i believe everything is got to be on the table. and by everything i mean everything. entitlements, domestic discretionary, revenue. the longer we wait, the more draconian these solutions are te going to have to be. the longer we wait the longer the draconian solutions will have to be that's a mathematical certainty. i also believe commission to be effective has to be truly bipartisan. members from both chambers, both parties, outside experts and i believe the white house. i thought those on these strengths was to have the white house involvement after all you've got to h

playbook back in '94 when greenspan gave back some of the rate hikes in '95 because it was essentially mission accomplished. they didn't say that at the time. but that is the window into a glass half full ending. of course, the glass half empty is we do get that recession, get another washout and microcap stocks, which is the bottom half of the russell 2000, are making new cycle lows as we speak. so, that's not a good sign and it shows how bifurcated the market is here. >> i was going to ask, if you're a believer in the market, where do you think leadership is going to come from at this point? >> we know who the leaders are, tech and energy, which are kind of a strange pair, if you will. at the bottom are the defensive bond proxies, utilities and real estate. if you kind of express the s&p, if it was just tech and energy, we would be at over 5,000 right now. if we just expressed it as utilities and real estate, we would be at a 2500. it just shows you how dispersed the leadership has been. of the winners, i think energy is still looking pretty good. on the tech side, we talk about the

and the greenspan commission, it was called at the time, and tip o'neill and reagan and some others just got together and out a deal. and that's what we're going to to do. hopefully, we don't have to wait people's. benefits are going to be cut by 20% if nothing happens. you know, that's that's to me, a problem at this point that we end up not facing reality in this country. it's so easy to demagogue social security and say you're going to take benefits from the old people. and yet that's exactly what president trump, president biden are doing by not to do anything about social, because there's going to be benefit cuts in ten years. you begin your book and this is quote from barack obama that there is no problem cannot solve when we together. so on the issue of social security, what has to happen and how do you create that political capital to solve the problem beyond 2032? i mean, as bill was saying, thank you, bill, for leading that for the staff because it was a it was a pretty it took two years for it to come through. we had 19 members leading politicians. the two public trustees of s

that was a troubling era or period for the federal reserve going back to when greenspan talked about00 and other comments that have been made. i think they are trying to put the fiscal authority on notice that this is a problem, an issue that they're going to have to deal with, and there's a thing that's called fiscal dominance when you talk about monetary policy. and that's when what's happening on the fiscal side dominates the monetary policy authority. we are not there, but who knows what happens, tyler, when the amount of -- we spend on interest becomes a bigger portion of the budget. will there be pressure from the political side to the fed to lower interest rates? that would be fiscal dominance. >> interesting. steve liesman, thank very much. brian jacobson, thank you as well. >> steve will be speaking with atlanta fed president raphael bostic tomorrow morning 7:30 a.m. on "squawk box" and look forward to that and see what market response is. >> the take on the traders from rick santelli in chicago. rick? >> you know, fiscal dominance, i like that steve brought that up. that is

you have to go back to greenspan when he said risks are balanced there was no longer any need for hikes. i don't know that fed is harkening back to that language from 20 years ago, but when risks are balanced there's no predisposition in order to hike anymore. that's off the table. just a little bit of argument professor siegel. he is right, the fed's forecasts are terrible, however it does set the benchmark for where the market tries to figure out what is the trade here. if the fed is hawkish and i have a more dovish outlook and a reason for that then i make a trade based on the fed's outlook. it is almost certainly wrong, but it's the benchmark i have to trade against. >> yeah. professor? >> yeah. i mean, most certain. i think what you've said, steve, early on, is that neutral rate, you know, which the fed thinks is a half a percent inflation corrected, i mean, we're seeing real rates, 10-year, 2.5, we haven't seen and the economy is still chugging. what is the neutral rate is going up, we saw that in the dot plot and i think that idea is what's being embedded in the long bonds. it's

i think he's open to it very much the way greenspan back in 1996 made probably the most important call of his career when he decided to let productivity run and did not raise rates despite being hammered by a lot of his colleagues to do so. this may be the moment he lets it run to see by thinking i'm in a good place, 500 basis points tighter than i was, i've got the bond market working with me, i'm still nervous about this -- >> of course. of course. >> remember the two things powell said. he said twice now at jackson hole that bringing inflation down will require gdp running softer than protection. that has not happened, so he's got to let that run. he also said it would require pain in the labor market. that has not happened. before you think of powell sleeping well, he still has to deal with two things, which is the idea that labor market can remain this strong and inflation come down. so far, so good, but i don't think he's going to be -- >> no, unless he is misjudging the metrics by which he is making his future decisions looking at, you know, more lagging things. i don't know. it

started to happen is social security's solvency started to pull forward that ultimately forced the greenspanobably what we're going to see after the 2024 election, but we're a long way away from there, and you're starting to see the pressure building underneath the hood, and i don't think there's a realization here in washing tann that you'll need financial conditions to tighten more. >> and if there's a recession the revenue side gets worse and even though bond yields should fall. >> yes. >> it's going -- it's unpleasant to ponder, but we'll see where we go interest here. dan, thanks for your time today. appreciate it. >> kelly, thank you. appreciate it. >> dan clifton with strategis. >>> that does it for us. wells fargo cut its price target on nextera but nep, next partners, is down. coming up on "power lunch," microsoft's ceo is testing in the google antitrust comments. we'll get his comments. tyler is getting ready. i'll see you on the other side of the break. with comcast business... it is. is it possible to help keep our online platform safe from cyberthreats? absolutely. can we provid

about here is really the fed holding, and i guess i said this 20 years ago when i was covering gr greenspan, but neutral is a gear for the fed. staying high is doing something, as harker recently said. so, i think that's how they react. be patient right now, and then, if they get the strength of the economy with the fall of inflation, i think they're going to hold, but if the strength continues and it shows up in inflation, maybe you have to think about the fed hiking again. >> the inflation is so interesting, but it's something consumers have been dealing with for so long. maybe it's getting better in some areas, but really just taking it in stride. it seems like jobs are the key for consumers, and as long as they have a job, they're feeling confident enough to spend what they need to spend. do you think that that's true, as well? i mean, does job trump ininflation? >> i think that's true, and i would add to that two other aspects. one is that they underestimated the amount of pandemic savings. we know that, because the government revised that higher. and i think they overestimated how qui

> there's data that exists before you -- >> understood, but in '94, literally, when fed chair gr greenspan talked about irrational exuberance -- >> look what happened to the market >> yeah, but that was one of the most abnormally, like, you know -- yes, the s&p rallied 30% a year for the next five years until it crashed and then we had a three-year bear market and we had one of the deep egest recessions in a y long time. i don't think fed chair powell wants that so, that's one of the reasons higher for longer could really crimp growth and could also make investing in equities not a great time right now we are basically, what, 4800 was the all-time high, we're 4160 or something like that right now. s&p, you know, right now as far as valuations, a period that doesn't make it that interesting with interest rates right here >> let me just say one last thing, the market is not a monolith there are things that have not, you know, you talk about the magnificent seven all the time, who have been doing all of the heavy lifting, there's a lot of things that are really not expensive. and so, i think

. >> maybe a greenspan commission redux. we all get excited about commissions. libby, thanks for joining us. >> thanks so much. >> libby cantrell with pimco. >>> coming up, tech clash. microsoft's show testifying against google. those details in tech neck next. >>> plus, thinking outside the box. e-commerce is essential to our economy but all that packages isn't environmentally friendly. we'll have a look and the kellogg cereal business recently renamed. we'll have more on that and on the downside discover is financial after agreeing with the fdic to approve consumer compliance. those shares are up 6%. to earn me more cash back in my top eligible category... suddenly life's feeling a little more automatic. like doors opening wherever i go... [sound of airplane overhead] even the ground is moving for me! y'all seeing this? wild! and i don't even have to activate anything. oooooohhh... automatic sashimi! earn cash back that automatically adjusts to how you spend with the citi custom cash® card. [mind blown explosion noise] >>> welcome back to "power lunch." micros

and then we would need chair powell to have a greenspan moments and be like growth has picked up. you so much. that encapsulates it perfectly. we are in the shock of a bond market. we have an 8% mortgage rate and we are numbed by what is going on in the eastern mediterranean and claudia nails it in that we need to have a greenspan moment from china will -- from chairman powell today. lisa: i am not sure how much control the fed chair has over the narrative. they do not know what is happening in the underlying economy as none of us do. the bottom line is that the bond market is responding to economic data to potential at -- deficits than fed speakers who have not made a major impact. tom: what is important as i talked earlier the linkage of the economic discussion with the financial discussion with -- which affects americans more. in the last 48 hours finance reigned supreme. do we really care what jobless claims are what the 10-year yield does to the auto loan? lisa: they are connected if jobless claims are going down and you are seeing a robust labor market people can afford to p

you said it was controversial when greenspan did it. was he right? off financial stability. >> i don't want to be in any of their cars. >> you are though, becky. >> it was excessive loosening of regulation. >> we got to go. this is grate conversation. >> mohamed, appreciate it. talk to you again soon. >>> when we come back, tesla earnings disappoint after deliveries slow. we kind of knew about that. there is questions about what happened to margins too. and what they're anticipating the future. we're going to break down the evmaker's latest quarter. "squawk box" will be right back. >> this cnbc program is sponsored by baird. visit bairddifference.com. the power goes out and we still have wifi to do our homework. and that's a good thing? great in my book! who are you? no power? no problem. introducing storm-ready wifi. now you can stay reliably connected through power outages with unlimited cellular data and up to 4 hours of battery back-up to keep you online. only from xfinity. home of the xfinity 10g network. >>> blackstone group reporting results,

if you look at '94 and '95 you might remember, greenspan raised rates from 3% in february of '49 to 6%94. same thing '04 to '06. stocks bottomed at the end of '05. now would be the time if you believe that fed is finished or about to be, right now is the time to buy based upon the past history of how these stocks have behaved. >> what about citigroup? i wonder if there's a catalyst here with the reorg? it under performed in the past quarter, under performed for a long time, the past few years. i spoke with jane fraser, the ceo, on friday, about what she's trying to do. listen to this. >> we're focused on simplifying the bank. it's much more about eliminating the complexity, flattening the organization, taking out layers, getting easier for people to work together and deliver to clients. we will give a number in the fourth quarter earnings once we've begun the work all the way through the organization cascading it down, so we expect to be in a place that all of that change will have finished by the end of the first quarter. >> news on the timeframe and that a she's going to lay out numb

if i go back to 2005 -- you go back to the greenspan conundrum which is i'm racing rate in the long end going on ? what he did is raise rates a lot higher. this fed doesn't want to do that. they want the long end to go up in using the words to get it up. their tightening financial conditions. >> bill gross said yesterday on bloomberg he thought this was the retail investor jumping on board and selling also. he called them bond vigilantes. they're getting involved. that implies this is a short- lived increase in interest rates. do you agree quick >> no, we see every kind of investor and the one consistent inflow we are seeing is from our wealth management platform. is yields have backed up, we are seeing an escalation in new accounts that are opening. today, i've got three calls lined up with wealth management platforms to get into this market. it's the institutional investor, it's the plan sponsor, the pension fund that stepping back. there were to see if they get a chance to buy the long end of the market closer to 5 % to five .25 %. >> will they get that opportunity quick >> i hope no

really writing about the advent of greenspan. this is just after the mckey play.ere near that? michael: that is the open question. do people think the fed will have to do something? the fed is trying to say there is no fed put we are not going to get involved. the only way they can prove themselves is to not. tom: we will stagger until the end of the half-hour with three gas lined -- guests lined up. ralph will join us in 15 minutes. also, ira jersey of bloomberg intelligence. you are a bond guy. he says, what is going on in america? what do you say to the economist about the price action in you are space? >> a couple of things. first, the fed put, there is a fed clip. it is just way far out. you have to see some serious market and economic pain for the fed to seriously react. in the rates market, the link to the economy is still strong. even a bigger reason than is been espoused is the better-than-expected economic data that we receive. by our estimates, and we put out a number this morning, about 70% of this move can be explained by better-than-expected economic

. >> you have to remind, as i left alan greenspan, the head of the federal reserve, actually gave a speechying he thought we would pay off the debt by. 2009. well, that that's the track we were on. so, you know, it takes leadership and it takes an approach like in 1856, it tookvo two months and 103 ballots to getsomeon. mccarthy had 180 votes when. they first went through around scalise, who's a great guy wasn. at 113. well, it's a big mountain. the key number here for all of you is to 17 the current a couple of vacancies to 17 peol the majority. i keep telling people you goe,'t to 17 or you got nothing. and so all these guys ought to look carefully and talk this through. in the interim, i think given what's happening around the world that having the speaker pro tem mchenry empowered, which they could doto bipartisan agreement, had minimum power to bringpowerend the house in, passed significant legislation, particularly about israeicant lp moving forward, which frankly gives him a leg on potentially becoming speaker. but i think you got you can't just sit around for week after week in the