Transcripts For CNBC Squawk 20240703

Is waiting to see, even when you look at the market it looks like the 10year is sitting above 4. 3 the 2year well above 5 then youve got crude oil prices that are creeping closer and closer to 100 actually this morning theyre off by 1 , back to 22. It was around 93 yesterday. A lot of concerns over at Goldman Sachs. Theyre suggesting they they 12 months from now the price will be 100 for a barrel of wti. Weve been talking about this it would filter through, but the you know, it depends on how you believe. Theres two sides to everything, it seems like. I could debate either side it does hurt demand. Were going to be about 4 a gallon and that may cause people to rein in spending on other things its deflationary and inflationary i could see both ways. It works its way into every single thing from items that have to be delivered to manufacturing. The one thick we did see from bank of america, remember we had them in and we talked about what they saw over the last month much more went to energy and it came away from goods. Zero sum gains when you argue with the government or zero sum about it with certain people there are zero sum things about what you have per month if x amount there are people who shop i go to the Grocery Store every day. I dont know why. Because you like it. I dont like pushing that cart because theres a lot of congestion and trachlk i use a thing. A basket. I watch them. Im like, theyre going to be at the checkout line for an hour. They have 200 to to a weeks worth of shopping. As far as the yield curb, remember we got unsettled three months ago we had those hot numbers it seems like basically we went up a quarter point so you have to say its been kind of orderly, havent it . We were probably at 3 4 on the 2year now were on 5 its been orderly, yes, and if you think the fed is going to pause this time, which is the overwhelming consensus, but when you start looking at the mortgage prices at near 8 mortgage prices at 7. 5, 8 they dont tell you thats why the market has not given back some of the early meetings. Youve got bank of england, bank of japan. In england, they saw inflation that was below expectations, but still north of 6 . When you talk about stopping and theyre north of 6 , its all different. If you subsidize unionization, long term a lot of costs are going to go up for businesses in the United States, if you subsidize it. With taxpayer money, you mean yeah. Subsidize it you cant blame it on unions you see whether its green or chipped or whatever it is. Why cant i have some if im a worker spread it around its going to make it less con pettive than it was before it does raise costs. It would always be good to have markets set price, which it rarely does. The Federal Reserve has been setting praises for too long. The squauks planner. Whos in charge . I dont know. Don i think its dave evans its thing that deserve to be on there. The fed with its latest rate at 2 00 p. M. Eastern. Most lick likely hes not going to raise as far as earnings, were going to hear from General Mills before the opening bell. After the open bell, fedex and kb to avoid a strike, which would have been on boit suit of the border the Canadian Union then plans to use that ford deal as a framework for negotiations with gm and stellantis. In the u. S. The Biden Administration is no longer sending key officials to detroit this week to help broker a deal between the author mane. He said hoe would is sem them. The uaw mutually agreed it would be better to speak virtually via zoom uaw president shawn fain said he does not see a major role for the white house. The other morning we had an official only. She kind of snapped when i said the white house is sending so peek this is where the rub came in because sean feign has been talking about it President Biden has called himself repeatedly the most laborfriendly president in the United States and he still fws p. They dont want him involved and trump a republican might g and start walking the picket line as a populist, that would not be out of the question to see something those. Michigan was an important sbing state and trump performed well. She kept using the word fair. We want everything to be fair. Egalitarian . I dont know you need a fair opportunity. Everybody keeps i know. If the ceo keeps making too much its like taxing the rich one ceo making 20 million isnt ee equivalent to billions of dollars. But the objects matter. When you see people on the nrlb, then you know. Its all appointed. Right which is why voting matters. Lets get to this wicks big Ipos Instacart finished high, still above the ipo price. Leslie picker joins us with more how did it go . Its kind of an odd and co common thing its still higher than the 30 per share ipo price. You can see now down above 5 , hovering 2 above the ipo price. So what happened there wasnt as much investor conviction at the 2 share opening price and willing buyers came in at a lower price its kind of like what we saw with arm since then arm has tumbled at least 4 in the three subsequent days from its ipo even though arm and instacart are two separate businesses. It certainly didnt help perhaps the biggest indicator of whether it can truly open or not is clav owe. Its set to debut today. Its part of a s. A. S. S. Model. Well see if it has stronger support than either arm or instacart, guys. This is really important. We had alexis oh on yesterday. We asked if it was indicativend h sarkd well see. Thats funny as everybody is watching it. F free issue anances are really important. Yeah. Then it quickly turned south and i think its a fact the prices have been bullish, boosting the range all of these ipos have had characte char characteristics. I think its too soon to tell. They had people who invested for 11 years who were looking to get out of some of those flip some of their shares as well thank you very much. By the way, folks, instacart founder Apoorva Mehta will be with us at 7 30 a. M. He started out doing the deliveries himself even though he didnt drive, he would take an uber coming up, were going to get the fed decision later, a crozer look at the futures am the begin if a deal isnt reached, you could see this sprefrp youre watching squawk box on cnbc announcer this cnbc program is sponsored by baird. Visit bairdifference. Com ance the fan experience, but to advance how the game is played. Nows the time to see what americas largest 5g network can do for your business. Old school wisdom, with a passion for whats possible. Thats what you get from the Morgan Stanley client experience. You get listening more than talking, and a personalized plan built on insights and innovative technology. You get grit, vision, and the creativity to guide you through a changing world. Loving this pay bump on our allowance. Wonder where mom and tdad got the extra money . Maybe they won the lottery . Maybe they inherited a fortune . Maybe buried treasure . Maybe it fell off a truck . Or maybe they switched to Xfinity Mobile the fastest mobile service. Save hundreds a year over tmobile, at t and verizon. Now i can buy that electric scooter. Im starting a private equity fund that specializes in midcap. You do you. Switch to Xfinity Mobile today. A 2 00 p. M. Fed meeting. Joining us now, director of global macro at fidelity investments. Reading all your comments, i was nodding and agreeing with everything, but, you know what it got me absolutely nowhere in agreeing with you in terms of what i would do, and a lot of your questions are almost theyre not rhetorical theyre almost like questions of life like we need to to know what the feds going to do, we need to know what theether the curre policy is restrictive or not we dont know where inflation is headed we dont know. A lot of times after the fed gets to a certain point, they need to wait to see what the lag effects are. We dont know. Is it restrictive . You dont have the answer to that. We dont have i mean it looks restrictive, right we look at the tips curve. Its about 2 1 4, 2 1 2, as far as the eye can see if its 1 , you add inflation to it the fed looks to be restrictive. Then you look under the hood you look at the liquidity indicators, the reverse repo and tga and thats been going sideways for a year and you look at financial conditions. Thats been going sideways for a year liquidityishes havent gotten that much more restringctive ina while. The tips market hat gone 2. 25 where we have another labor strike and the pendulum is beginning to swing around. It may not be as restrictive as we all think. With that in mind, you try to figure out if you like stocks or bonds. I point this out all the time. With bonds, you know, if you look at 4 , all right, its okay, but if Interest Rates are headed up, youre going to lose principle. Youve got to figure out your duration if you stay short and Interest Rates come down, you cant reinvest so either option stinks to get a grabby 4 in the first place it would be better to buy a 2. 5 yielding stock in a company that has great prospects, wouldnt it for the 60 40, i still like it warts and all i think the bond market looks squhat compelling here. For safe money, for a base in your portfolio. Yes, exactly because, you know, lets take the barclays aggregate index. It has a duration of six and a yield of five. If yields go down 100 basis points, if that long elusive recession ever comes, you make 11 . Six plus five. If it goes back up, you lose 6 but only lose 1. But the risk rewart,ve phen the yields go up or more is pretty compelling i would take those odds in the stockmarket any day of the week. Especially when you think were in the twilight of a secular market you might prefer stocks to bonds on a risk reward basis. We got a 7 annualized return in 2021. Thats likely coming down. If inflation does become more structural at 3 or 4 instead of two, thats going to knock valuations down, so i do think theres a valuation headwind that doesnt mean the market goes down. It means earnings have to do all the heavy lifting. Its mostly a matter of setting lower expectations because we did get very handsome double didnt returns for quite a few years since the financial crisis. All right i dont know you gave me a lot, but none of it is that great. Investment is making real time decisions with imperfect information. Testing our assumptions is something we all need to do, and the inflation effect is what we need to do. Risk management it would be nice to hold onto what you get and not blow it on returns. I understand youre right good advice, thank you thats wifi dealts got like a gazillion dollars. And then some. And then some. When we come back, much more on the fed decision. In the 8 00 hour well be talking request the wall street journal chief correspondent nick timiraos. And also the up yat on the brain implant clinical trial. When can i get that that first time you take a step back and see everything youve accomplished. I made that. With your very own online store. I sold that. And you can manage it all in one place. I built this. And it was easy with godaddy. I am doing this. With a partner that puts you first. Start for free at godaddy. Com sell powering Sustainable Growth in a changing world. Powering Financial Solutions that transform industries. Powering innovation with access to capital. Powering critical decisions with precise data and insights. Powering seamless execution in evolving markets. We deliver our entire global bank to power new possibilities for you. Barclays corporate and investment bank. Powering possible. sirens [due at target in 5 ] copy that. Make a hard left down the alley. Networks got you covered. [please confirm requesting backup. ] changing route. Go. Roadblock ahead. Back up, back up. Reverse reverse next level moments, were 30 seconds out. Need the next level network. [north corridor, hurry ] coming through or 3, lets go. The network more businesses choose. Transplant received. At t business. Elon musks brain implant startup neura link is looking for patients for a clinical trial. Theyre looking for patients with quadriplegia, spinal cord injury, or als its allowing people to manipulate external devices with their minds. They were granted early approval back in may and the company has received approval from the hospital where it will perform the first surgeries, but it did not name the hospital. I mean rockets and evs. Brain surgery. Neura links to use thoughts to control movement. I didnt realize they were looking for patients with als or spinal cord injuries if youre asking for volunteers for a brain implant, you have to have a need. But its so amazing. In walters book, when we run out of planet, he wants to have a new place for humanity to be able to move in addition to cars. Cars, yeah. And the ability to shoot rockets up and reland them, which makes it more affordable. Remember what we used to on the simpsons, hawaii, i have an ev, it goes zero to 60 in 1. 9 seconds or something its pretty cool. Phillip morris is considerig actions in its push around health care. The tobacco giant is looking at options for pharmaceutical units. Its part of a plan to diversify from cigarette sales which, i dont know im like j. R. Ewing at this point. I see someone smoking, im like what is the story . Who still smokes in the United States fewer and fewer people. Like a handful . But they got addicted to it. Stop. Im just telling you stop. Coming up, the latest on the autoworkers strike well tell you which factories the union can target if a deal isnt made ja a look ahead at winners and losers s announcer winners and losers is sponsored by state street global advisers. The biggest ideas inspire new ones. 30 years ago, state street created an etf that inspired the world to invest differently. It still does. What can you do with spy . Every day, businesses everywhere are asking what is it possible . Spy . With comcast business. It is. Is it possible to use predictive monitoring to address operations issues . We can help with that. Can we provide health care virtually anywhere . We can help with that, too. Is it possible to survey foot traffic across all of our locations . Yeah absolutely. With the advanced connectivity and intelligence of global secure networking from comcast business. Its not just possible. Its happening. Good morning and welcome back to squawk box live from the naz sdaq and Market Square it could all change at 2 00 and the outlook in terms of f how the fed views the near term and medium term. Nasdaq is up a little and the s p is up by 6 points now. Phil lebeau joinsous which factories could target for strikes if a deal isnt reached by fridays deadline phil, good morning. If its not reached i dont mean to correct you on air. If there is not an agreement i shouldnt say an agreement serious problem by noon on friday well talk about this in a little bit it may announce further strikes. The most damage would be those in terms of finally assembly are the biggest in the United States and those that make fullsized pickup trucks or the high end suvs in the case of General Motors were talking the Ford Kentucky plant and gms arlington plant and then stellantis has its truck plant in sterling heights, michigan these are the biggest plants in the earlies of volume. Not the biggest in terms of employment, but theyre pretty darn close to the top. The uaw is not showing any indication that there is enough progress that we could see this ending any time soon in fact, shawn fain says they want to see serious progress by noon on friday in order to not call for further strikes if they dont see that, they may call for a strike at one automakers, two awe though maker. That remains to be seen. As you take a look at general mo motors it remains to be seen. If theres another strike, its figuring out how mump they can keep production going at the koois plant. About 2,000 workers are expected to be laid off this week because they cant get stamping in st. Louis where the union is on strike one piece of news last night, ford reached an agreement with the uaws counterpart in canada. They have reached a tentative agreement. Ford dodges a strike in canada now theyll look at gm and stellantis who have facilities up there as well. Did the deal in canada look like anything the uaw we havent gotten the full detail yet i think they were not being quite as aggressive as the uaw they talk to each other. They understand the dynamics here also you have to understand canada has a much smaller foot print. Still important, but a mump smaller footprint. Much smaller footprint meaning its not going to cost as mump . Its going to be costly, oh, absolutely, 100 i think the uaw is pushing for a far richer deal than what you see. Thank you well see you in a little bit. In the meantime our next guest estimates the strike could go on for 45 days which could lead to more strife. Colin. This is different than what we had seen in the past theyre striking all three at the same tame. 45 days if it lasted that long, would what but catastrophic . Youre absolutely right its never been seen before. Right at this point, its kind of an underwhelming start. I think phil is right. The next wave is coming friday youre not cutting out the volumes. But fullsize pickups could be twothirds of north americas profits. Theyre hitting them where it really, really hurts it could escalate in the next several weeksful you didnt start with the most profitable vehicles, but it could be the next profitable. What does it mean if they strike for 45 days 2 2. 5 billion to 3. 5 billion similarly for stellantis its big dollars what does it mean youre talking the wage demands are 2. 5 to 3 billion. The offers they already have . The demands they have the offers they have today are ore a billion dollars that they put out the 21 wage increase. Theres a long way to go theyre talking about the fixed costs too. Thats the real painpoint for the automakers fords guidance is 10 or 11 billion. Material numbers for these companies, this is why theyre fighting. 7 or 8 are you taking into account 32 hours . Youre not taking those into account. You hear shawn fain say its a small percentage what do you call that . Disas disassembly . Margins in the industry are pretty thin. A percent here or there is very material so if youre going from 6 to 8 , youve cut out a ton. You say the co oes are talking 6 million give them a little less, four or five wouldnt that be better . How about this some of these are subsidies, and if i were an autoworker to get the money, the tax credits, you need to pay prevailing waged its involved in you being able to take the money from the i. Rch r. A. Why wouldnt you do that with everybody . Wages would go across the board. Youre talk 2. 5 probably 1 billion, 2 billion. Is the ev transmission going to be competitive . Are all these things going to be difficult, and if ho was adwreed on, whos going to end up paying that 40 do you disagree its going to be taxpayers . At the end of the day you bring up a couple of good points im not sure where to go first would be the jobs. Right theyll have their hands out during existential issues. Remember a guy named lee ee coka we have seen this authentic before it. I think theyre negotiating at peak profitabilitilet they have pricing coming down. Then you bring out evs evs are very unprofitable. The economics are very challenging. So as they ramp these vehicles, its going to dilute their marys were funding them and were funding their own demise of the Profit Center which is layle them i think youre right. When i was starting 15 years ago, industry was looking at how many cars to sell. I think were moving to a period where theyre going to have to look at how many evs theyre going to have to sell. The dynamics are not good. When you say youre underweight, these stocks. They took some serious haircuts but shareholders got wiped to ziel or underweight is your flashing sell sign . They ended up in bankruptcy they have 40 billion in liquidity. Theyre unfortunately heading in that direction, right . A lot of the pressure in terms of regulatory, you need to sell evs, pricing coming down, and now we have labor inflation. I would be very concerned if some of the concessions coming back retiring health care pension for workers can be very costly reinstatement of things like job banks. Reduce their ability to downsize as you need to theres always ups and downs in the economy. You want to be able to do that these things are big issues if they were to top them. Theyre nonissues, thats. Thats kind of the magnitudes of the demands you asked for here. Coming up. We look at documents inadvertently posted on a Court Website next and later well speak with Savita Subramanian and why shes raising her s p target. A reminder, follow squawk box on your squawk pod. Well be right back. jen so we partner with verizon to take our operations to the next level. marquis with a custom private 5g network. ella with verizon business, we get more control of production, efficiencies, and greater agility. marquis so our customers get what they want, when they want it. jen its not just a network. Its enterprise intelligence. vo learn more. Its your vision, its your verizon. Good night hey corporate types. Would you stop calling each other rock stars . Youre a rock star. You are a rock star. No more calling coworkers rock stars. Look, its great that you use workday to transform your business. But it still doesnt make you a rock star. So unless you work with an actual rock star. Hi, im ozwald. Hello ozwald. Pam, you are a rock i wasnt going to say it. Power e trades awardwinning trading app makes trading easier. With its customizable options chain, easytouse tools and paper trading to help sharpen your skills, you can stay on top of the market from wherever you are. E trade from Morgan Stanley. Power e trades easytouse tools make complex trading less complicated. Custom scans help you find new trading opportunities, while an earnings tool helps you plan your trades and stay on top of the market. E trade from Morgan Stanley. Were learning more about microsoft mobile growth. They said gaming growth would come from advertising over the next several years they predicted it would double compared to an 18 billion forecast for 2022. That information was included in a presentation that was posted to a Court Website until microsoft told the court those documents retain nonpublic information. A separate file listed features of a kirchlt xbox series and updated controller all slated for 2024 in a post on x, microsofts gaming ceo said its unfort senate the companys work was shared in that way because much has changed and theres much to be excited about and in the future he said, we will share the real plans when we are ready. I would say that too p. I dont like calling it x i like twitter cant h do the overall thing if you loon a post on x. I still call it google rather than alphabet. You cant say he whose name shall not be spoken. A post on x were talking about twitter. Crude holding above 90 a barrel were going to talk more about the impactof higher prices on the consumer next. A reminder you can watch or listen to us live any time on the cnbc app. The bad thing is you should say x, the Company Formerly known as twitter im not saying that every time pano ai chooses tmobile for business for 5g solutions. Because tmobile helps pano ai innovate, so they can stop the spread of wildfires. Nows the time to see what americas largest 5g network can do for your business. Since the citi custom cash® card automatically adjusts to earn me more cash back in my top eligible category. Suddenly, lifes feeling a little more automatic. Oooooohhh. Automatic sashimi earn cash back that automatically adjusts to how you spend with the citi custom cash® card. Well, prices sticking above 90 a barrel after hitting tenmonth highs. Crude surged more than 27 over the last three months, adding more fuel to the inflation worries. Joining us now to talk about the impact of oil prices on consumers, patrick duhan, gas buddy head of Petroleum Analysis these prices arent anyones buddy. You need a new name, patrick do you have all the states average prices at your fingertips is it 3. 90 now across the country . Well, it is pretty close, joe. Were at about 3. 35 a gallon. In california, refinery issues, were at 6 a gallon in l. A. The california statewide average, as you bear with me, california is now at 5. 69 a gallon Washington State at 5. 01 were seeing high numbers as we deal with refinery issues. We made the transition now in 49 of the nations 50 states for cheaper winter gasoline. That will help give consumers some sort of break in the next couple of weeks as we kind of work through those refinery issues in the west coast, previously there were also refinery issues in the rockies and the corn belt. We should see a breakthrough in gas prices, but for diesel, bad news, price of diesel at 4. 57 a gallon last year, spiked over 5 a gallon in the fall as we started to see Heating Oil Tanks be filled up. The same possibility exists this year for diesel which could feed into a higher inflation numbers. Patrick, i keep hearing about the refining issues in the west, especially in california are these shortterm problems or are these longterm problems is this just reality for now they are shortterm issues, we had this kind of same scenario almost exactly a year ago in the fall as well. That refinery maintenance when coupled with unexpected outages can basically crimp any available supply and breathing room in a market very quickly. These issues are temporary in the west coast california, though, unlike the rest of the nation doesnt make the transition back to summer gasoline until the end of ob october. So the Higher Oil Prices are heating into what we expected for consumers getting a break. Theyre not getting much of one. With oil prices down to 90 a barrel after hitting 93, well have to see if this is a shortterm blip or a trend why is california always so much more expensive than the National Average joe could touch on this too, high taxes, Carbon Management program, its own blend of gasoline california is basically a league of its own Carbon Management programs. Nice cap and trade, yes indeed. Not enough of those around. What i love, patrick, are the Carbon Offsets like bill gates. When he flies that 747, once you offset it, it is like it never happened it is like hes fine, right . How does it that doesnt seem right to me, i dont know. Is that how it works there is a l lot of Sustainability Solutions out there. The 747 is still going to be burning jet fuel and somebody else is going to be offsetting that with something else, whether it is planting trees or clean energy great patrick, we had someone on the other day say that this is not demand related, 90 oil. That it is supply related. Do you agree with that completely or is that it must be a it always is a little bit of both. Is it always a supply constraint world were in right now with the saudis i think to your point, i would mostly agree with that you look at demand from china, certainly depressed and now you have russia and saudi arabia, this war on the low price of oil that has been brewing over the summer months, and arguably now they have tipped the balance into a deficit where demand is outpacing supply and thats what the market is getting a little bit nervous about, especially if you sprinkle some turmoil or geopolitical issues in here and there, the market could go up much quicker if one of these issues developed or if Mother Nature doesnt help us or if we get a hurricane. There is a lot of caveats in the way of lower gas prices that we could see, especially since hurricanes are still churning out in the atlantic. We have made the transition to winter gas and we havent seen much of a decrease yet in gas yet, joe, but there should be some relief toward the end of the year, but that relief is far short of where were hoping and the bigger reason for that is the price of oil led by saudi arabia and russias production cuts and when i think of california, i dont think of mass transit much. I know they have some now. They didnt have any people, one person drives every car out there and theyre all stacked up in six lanes and it is 5. 50 a gallon. You think about l. A. , you dont think about mass transit where are the trains nobody wants to get on a bus. Ive seen them. They have some i was never on one but ive seen them down there near the airport when you have a tenlane highway, thats a little bit more conducive to getting where you need to go, but you have to pay 6 a gallon. By the way, this morning, l. A. Is now hitting that 6 a gallon mark on air, we tipped the 6 a gallon mark for the l. A. Metro area. Thats like 100 bucks on a suv to fill it up. Patrick duhan, thank you whether n we come back, an exclusive interview with instacarts founder after the public debut and jim stewart from the New York Times joins us to talk about disneys plans to ramp up investments in its parks and cruise businesses, and the potential sale of abc. Squawk box will be right back. The first time you connected your godaddy website and your store was also the first time you realized. Well, we can do anything. Cheesecake cookies . The chookie manage all your sales from one place with a partner that always puts you first. we did it start today at godaddy. Com sirens [due at target in 5 ] copy that. Make a hard left down the alley. Networks got you covered. [please confirm requesting backup. ] changing route. Go. Roadblock ahead. Back up, back up. Reverse reverse next level moments, were 30 seconds out. Need the next level network. [north corridor, hurry ] coming through or 3, lets go. The network more businesses choose. Transplant received. At t business. Good morning the countdown is on for the fed decision at 2 00 p. M. Eastern time today well have a preview of what you can expect and where you should be putting your money to work. Plus, the looming Government Shutdown and the gops budget blueprint. Senator rick scott will join us live and will instacart deliver for investors . We will hear from the companys founder and largest independent shareholder as the second hour of squawk box begins right now. Good morning and welcome back to squawk box on cnbc live from the Nasdaq Market site in times square, im joe kernen along with becky quick andrew is off. Carrie firestone is here youve come down from did you come down from youre not headquartered here, are you . Im in boston. You are you came down to be on the set with us . I was here yesterday. I was here for halftime report. Did you fly, did you drive . No, i flew. You did fly not myself personally, but your arms would be so tired not that strong u. S. Equity futures yeah, boy, are my arms tired u. S. Equity futures are up a little bit before the fed news comes out at 2 00 and the treasury is not a whole lot not a whole lop happening in treasury or crude. Crude at 90 we are in the countdown. The countdown to the fed Rate Decision is on senior economics reporter Steve Liesman is going to join us with a senior moment now from washington with what investors can expect hey, steve i dont know about the whole senior thing might be a better name for that. Yeah. Not quite senior yet, joe. Got a few years. As when i look at you, joe, you have a few years left too. Were both getting those aarp junk mail, arent we we certainly are. So heres whats going to go on now, if i can remember what it is i came here for, oh, yeah, the focus will be on how fed chair jay powell is thinking about the recent economic challenges the autoworkers strike, Higher Oil Prices and potential Government Shutdown and then, of course, we focus on what the fed signals through its forecast for rates and the economy this year and next the biggest expected change that the fed underestimated growth this year with gdp averaging around 2 , thats the left side of the screen there, and it could go higher. But the average beneficial is 1 so we higher gdp than forecast, somewhat faster progress on inflation, assuming that progress continues, about right on unemployment, and close on the funds rate we got one extra rate hike still hanging around evercore isi writes the fed will leave rates unchanged in november, strike a stern resolute tone, and a high bar for future cuts, but will not exercise the option to hike unless progress on inflation or the labor market stalls out amid stronger growth. Wall streets collective power will focus on gaming out how restrictive the fed expects to be on a real basis the current real rate, the funds forecast minus the inflation forecast, averages about 2. 4 per year. Thats this year thats the middle the third set of bars there. 2. 1 still high next year, compares to a long run neutral rate of 0. 5 the fed still expected to release the june forecast to be stepping on the brakes may not be hiking today and it may be done, but it is likely to signal its battle with inflation is not over for the rest of this year and well into next year even if the forecast cuts, it does not see itself essentially as easing, joe all right steve, so you youre in d. C youre going to be there, i guess, huh youre just yeah. Huh yes okay, so we had someone on earlier and it i always get new thoughts it is nice to get new thoughts once and a while, steve, things i had not i dont know if were restrictive or not how will we know, how will the fed know if it is restrictive . And if it did, it didnt have to make any decisions. It doesnt. Nobody knows . Are we in restrictive land only looking in the rear view mirror, if you put up that second wall that i had up there, you can kind of see how it sees itself as restrictive. One way to look at it, john would be mad at me because im not using the correct deflator here, im using a simple rule of thumb here, take the funds rate, subtract the pce on left, get the real rate, compare that to what you think the neutral rate is and thats how you judge if youre restrictive on a numerical basis. You look at the economy. Is inflation coming down, is it not coming down, is gdp slowing, is it not slowing . Those are the ways you tell if youre restrictive and if you ask me how you we dont know we dont know what the basic point is going to be because youre looking forward, trying to figure out and guess it is guesswork. Anybody who is being honest will tell you it is guesswork. What youre trying to do is steer a 21 trillion economy to think this is anything but guesswork and, by the way, the sets of data we have to gauge the economy are not very robust, i would say. Were trying to use the High Frequency data, there is lags in the Government Data, revisions to the Government Data you remember in january this year, the fed thought it was well on the way to vanquishing inflation until february went the other way and they revised all the progress in november and december so, look, i will say one thing, i dont know about good or lucky, this is an awfully good time for the fed to be pausing and have signal to pause there is a lot of stuff to go down in this economy and i think if i was doing this, i would want to be waiting too carrie brings up a good point too, looking at mortgages. Yeah, you know, we know it, over 7 people get worried about a 7 mortgage. They have never seen that in their lives. And carrie, the other thing to think about is just how much that diane has been talking about this just how much the Mortgage Rate is over the tenyear treasury. Money is not just expensive. It is more expensive than it ought to be relative to historical norms you got extra percentage point or more in those Mortgage Rates, which tells me there is scope for things to come down if the fed provides at least some guidance that it is not going to go substantially higher. Okay. Steve, thank you were obviously going to see a lot of you today well check in in a little bit first to squawk picks with Carrie Firestone carrie, before we jump into the actual picks, just very quickly, you said something that i heard from a lot of people recently off camera, the market is a little boring right now. It is. There is not the same volatility or movement or action. Were waiting for the next catalyst what do you think it is going to be yeah,were treading water i think were waiting for earnings we dont have far to go. In a few weeks were going to start to hear the financials and the banks are going to give us some idea about their lending. I think there is activity picking up on the banking side we havent seen ipos we just have seen a couple, instacart and arm in the last week there are going to be more coming so thats working for the Banking System and i feel as if there is a bit more enthusiasm about earnings up until last week, expectations for this quarter were down versus last year and now they have moved positive so, we will start to hear more and, remember, a name like salesforce, which is one of those july reports, it is offer the calendar year, they had a good quarter, because they pointed to some strength that theyre seeing in a rebound in bookings for, you know, new subscriptions on cram systems and that was a good sign it gave us an indication that things were picking up. You sold some of your trimmed some of your positions is how you would put it. Youve gotten a little worried. I think what happened is we had this huge move from last october. So names like adobe, salesforce, google, these were all up over 50 . And theyre still big positions for us, but just because of the weight, we felt, it is a prudent thing to do to take off some of the position, hold the rest. But were still there. And youre buying other places too one stock that you bought recently, epam it is not something im familiar with. It is not a name that is very familiar it is mini accenture, a Consulting Company that focuses on digital transformation. Down a lot because of many of their workforce was in ukraine they transferred them to other locations. But the stock was down over 50 . Okay. Other stocks that you like right now, unh, united healthcare. Why . Unh is both defensive because it is a big healthcare provider, thats not early cycle it has a great business that is based on insurance for employees. We know that the employment numbers have been strong the economy is growing were not in a recession and so we think that unh with a decent dividend, it is below market multiple is a good buy right here. You like blackstone too is that because it is being added to the s p 500 or other reasons . We owned blackstone for years. We have been expecting it to be added for the past six years, i would say. So, it has picked up the pace. The private equity business, which has been in a slump is starting to improve. If Interest Rates arent going to continue to spike, i think thats good. The Real Estate Market which theyre invested all around the world, not in office towers, but other forms of real estate we think is looking better. And, again, it is not an expensive stock with a nice yield. And, again, you mentioned all these ipos, the deal market is maybe opening up if thats the case, you got a play for that too . Were not buying any of these ipos yet there is something important that were seeing, which is these companies have to have earnings both arm and instacart, they produce a profit, were not in an era right now where anyone wants to pay a huge multiple of sales with no earnings for several years to come. Thats different from what we saw a couple of years ago and i think it is healthier for the market. But as a result, you say, oh, okay, im sorry, the debt deal market is opening up thats good for both. The debt and equity. Debt on s p global is one of our names and thats been in a real slump because no one was borrowing because Interest Rates were going up. Now you have to go do it, you cant just wait forever. Kari, thank you for coming in. Thank you for having me. An update now on the autoworkers strike late last night, ford reached a deal with its Canadian Labor Union to avoid a strike on both sides of the border. The deal must still be ratified by the unions 5600 members employed by ford in the ontario province the Canadian Union then plans to use that ford deal as a framework for negotiations with gm and stellantis. In the u. S. , the Biden Administration is no longer sending two key officials to detroit this week to help broker a deal between the automakers and the big three auto companies. President biden said last week that he would send Senior Adviser gene spearling and juli sue but they said it would be better to speak virtually. Does this sound familiar uaw president shawn fein told ms on mo msnbc on monday he does not see a role for the white house on resolving the dispute. The potential for a Government Shutdown. Senator rick scott will join us. Instacart delivering for its investors in the nasdaq debut, giving some of the gains back early this morning instacarts founder and largest ht wpendent shareholder, apoorva mea,ill join us to talk about the companys growth prospects. All coming right back. Squawk picks sponsored by wisdom tree, the modern alpha pioneer. ella fashion moves fast. Setting trends is our business. We need to scale with customer demand. In real time. jen so we partner with verizon to take our operations to the next level. marquis with a custom private 5g network. ella with verizon business, we get more control of production, efficiencies, and greater agility. marquis so our customers get what they want, when they want it. jen its not just a network. Its enterprise intelligence. vo learn more. Its your vision, its your verizon. upbeat music constant contacts advanced automation lets you send the right message at the right time, every time. constant contact. Helping the small stand tall. Nice footwork. Man, youre lucky, watching live sports never used to be this easy. Now you can stream all your games like its nothing. Yes [ cheers ] yeah woho running up and down that field looks tough. Its a pitch. Get way more into what youre into when you stream on the xfinity 10g network. Every business thats why comcast business de is launching theal. Mobile made free event. With our business internet, new and existing customers can get one year of unlimited mobile for free. Its our best internet. Powered by the next generation 10g network and with 99. 9 reliability. Plus one line of free mobile for an entire year. Its the mobile made free eventhappening now. Get started for just 49. 99 a month. Plus, ask how to get one free line of unlimited mobile. Comcast business, powering possibilities. Senate majority leader Chuck Schumer has a full plate in the coming weeks between the possible Government Shutdown and a trip to china. Our next guest says if we have a Government Shutdown, the president and majority leader only have themselves to blame. He also questions why so many u. S. Officials need to travel to china at the expense of u. S. Taxpayers. Joining us now, republican senator rick scott, a member of the Budget Committee and that goes against what ive been reading and hearing about, senator. I know youve seen the same things why do you say that this shutdown should be put at the door of majority leader and the president when most people say that Speaker Mccarthy has 12 or 13 guys on the far right that he just cant control and, i mean, we have seen it, it might come to a head at some point as they try to pass some of the stopgaps. Well, first, joe, we shouldnt be doing this in september. We should be doing this in the summer we ought to be doing these budgets early. We dont actually have budgets yet. Here is what im working on with the house. Then were going to the Freedom Caucus in the house, actually committed to not having this Government Shutdown. And do what they promised the American Public is getting inflation down, Interest Rates down by balancing the budget, so securing the border. Theyre working on a bill, we would never shut down government again. It would prevent Government Shutdowns. Well have a continuing resolution it is not the perfect solution, but we ought to stop this idea that were going to see Government Shutdowns we should never see Government Shutdowns again. Senator, im sorry, just to clarify on this, that sounds like breaking news if the house Freedom Caucus is saying theyre making sure theyre not going to shut things down is that the case last i read there with ten House Republicans that would not go along with this that would shut down the government and i think the speaker can only lose five is that the difference between the house Freedom Caucus and some of the others that are out there . Explain that because the latest we heard is that it is very likely you see a shutdown sure. Well, first, i dont think well have a Government Shutdown i think what is happening is the Freedom Caucus is saying, we committed to the numbers, to start the process to balance the budget, we need to follow through on those numbers, and also secure the border so, my conversations late last night, members of the Freedom Caucus, theyre committed to getting to a deal that does these things start bringing in the wasteful spending, and secure our border. I believe it is going to happen. Tell me about how we should be youre a china hawk, i know so why would you not be engaging to try to figure out how to deal with this major superpower and trading partner in the future . You dont want as many people going. Is it really a question of expenses, senator . Well, look, i agree with you. And what we ought to do we ought to engage everybody we can and have a real conversation you watched china, you dont have a real conversation with them everything they tell you is a complete lie they never follow through on anything whether it is a trade deal or following the rules of the World Trade Organization or whatever these things they never follow through. So, in that case, there is no trust, you cant do a deal with them so, i dont think we shouldnt be traveling over there and saying, oh, gosh, you know, how do we work with you when all they do is they sell fentanyl across our southern border, kill 70,000 americans, never comply with our trade deals, dont comply with the wto, they steal our technology the latest we have supposedly an antichina bill that allows Companies Like intel to expand in china, so it seems like that was the prochina bill so i think why would you engage in somebody that just lies and cheats and steals . The future, though, is coming, whether we want it to or not. And Companies Like apple, Companies Like disney, take your pick, we have multinationals that are dependent on china. There is no easy way out at this point. Can we if we engage china, can we prevent the worst case scenario, whether it is taiwan, whether it is, you know, continued, i dont know, you know, when we get our trade secrets stolen, there is all kinds of bad behavior. But how would you handle that, senator, other than engagement and dialogue sure. Well, first off, i actually really agree with you. We need to have engagement but, i mean, you when somebody is a bully, you dont appease them it never worked. Ive never seen anybody succeed by appeasing a bully he threatens everybody, he lies, cheats and steals, thats what he does. How do you work with somebody like that . I think we have to understand that china is decoupling from us and if we want to continue to build american jobs, we got to figure out how do we buy american products, how do we build american companies, how do we stop supporting investment in china, how do we support investment in this country senator, how do you think the election is going to play out, just shifting gears completely this has nothing do with china, just has to do with 2024, youre in an important you represent an important state, with an individual that at one point looked like you could challenge for president trump. How do you think it is going to play out is it going to be the two leading candidates at this point in your view if you look at the polls, you clearly would say it is going to be election between biden and trump again. I think the election is going to be about, you know, is the Biden Economic program working for you . And it sure doesnt look like it is you look at what has happened with inflation, look at Mortgage Rates over 7. 5 , look at, you know, Interest Rates on car loans, highest in 23 years, high Interest Rates on credit cards if you look at the job market, if you look at the, you know, the different surveys, it is not growing. They have even on the best survey for biden, they have to revise the numbers every month so it is this is not a great economy. I think thats what the election is going to be about when trump was in office, the economy was a lot better we werent at war and we had a secure border. I think those are the issues that are going to decide the election. So you at this point, dont expect anything between now and when we know the two nominees, you think that it is pretty much settled, just from the numbers we have seen in the past, i know you were around well, you look at trumps pretty defined, biden and trump both defined, trumps way ahead in all the polls so like to say, okay, whats going to change . There is a lot of great republicans running and they all would be better than biden but right now, trumps ahead in the polls and have to say, all right, how are you going to have a better economy than trump, how do you do a better job securing the border, better job at preventing war and those things are happening under trump and not happening under biden. Well, all right, senator. Other people think that there is, you know, a lot of overhang with both candidates and wonder, i dont know, how maybe out of 300 Million People, a lot of people could be president. Youre not headed that way, i guess. Not at this point, anyway. No, im running for reelection in the senate. Im running for reelection in the senate all right appreciate your time thanks, senator. In the next hour, well hit another topic impacting washington and wall street, a. I. Intelligence and well have a senator from the other side of the aisle, senator mark warner will join us when we come back, the founder of instacart on the companys public debut and competition in the food delivery space. This is the guy who built this company, starred over 11 years ago. Well talk to him. Hes a newly made billionaire after yesterdays launch and later, disney doubling its investment in theme parks over the next ten years. We will talk about the companys transformation initiative, the possible sale of abc and Strategic Partnerships for espn. Well get to all of that with jim stewart. Before we head to a break, though, lets take a look at the markets this morning so far you still got some green arrows, dow futures indicated up by 65 points s p 500 up by 9, the nasdaq up by 33. Squawk box will be right back. Time now for todays aflac trivia question. What state is home to the biggest u. S. Casino . The answer when cnbcs squawk box continues ok over our offic. And hes using it to send out medical bills. Good hands hospital bill for prime . gaaaaap did you just say gap . hes talking about Expenses Health insurance doesnt cover. Good thing coach prime knows about. Say it one time aflac because aflac gets you money to help close that gap now how do we get this goat outta here . whistles aflac meet one of my new homies gaaaaap get help with Expenses Health insurance doesnt cover at aflac. Com. Elephant wouldve been scarier. This thing, its making me get an ice bath again. What do you mean . These straps are mindblowing they collect hundreds of data points like hrv and rem sleep, so you know all you need for recovery. And you are . Im an investor. In invesco qqq, a fund that gives me access to. Nasdaq 100 innovations like. Wearable training optimization tech. Uh, how long are you. Im done. Im okay. Now the answer to todays aflac trivia question. What state is home to the biggest u. S. Casino . The answer, oklahoma the winstar world casino in thwackerville has a gaming space of 519,000 square feet General Mills just reporting earnings coming in at 1. 09 a share, a penny ahead the company said higher prices during the quarter helped offset lower volumes. General mills also affirmed its full year guidance as inflation moderated somewhat supply chains stabilized but an increasingly cautious consumer has remained resilient. Still to come, with ere going talk to the founder of instacart after the companys public debut. Disney will double its tenyear investment in theme parks, cruises and resorts in a big strategy shift that sent the stock lower. Well bring you much more on that and the future of the media giant. Stay tuned youre watching squawk box and this is cnbc Morgan Stanley is partnering with the Womens Tennis Association to remove boundaries. because this game is for everyone. People are excited about what ai will do for them. Were excited about what ai will do for business. Introducing watsonx a platform designed to multiply output by training ai with your data. When you watsonx your business, you can build ai to help coders code faster, Customer Service respond quicker, and employees handle repetitive tasks in less time. Lets create ai that transforms business with watsonx. Ibm. Lets create. The citi custom cash® card a different kind of card that automatically adjusts to your spending earn 5 cash back on your top eligible spend category up to 500 spent each billing cycle learn more at citi. Com customcash Marketing Automation company clavio set to list shares on the New York Stock Exchange. The Public Offering is price at 30 a share, above the indicated range. Blackrock and Alliance Bernstein agreed to buy up to 100 million worth of shares each that accounts for a big chunk of the ipo proceeds and the cofounders of klavvio will be joining squawk on the street later this morning. Instacart making its wall street debut, opening at 42, and came back down closing just 12 above its offering price of 30 a share. Joining us right now is instacarts founder and its largest independent shareholder, Apoorva Mehta. And, apoorva, first of all, congratulations. This has been a long time coming, more than 11 years in the making i know that youre a billionaire now on paper, and i want to talk about all of that, but before we get to it, lets go back to the beginning and how you came up with the idea for instacart. Youve been working at logistics, you quit your job and moved to San Francisco and then what good morning, becky excited to be here after i quit my job at amazon, i the reason i quit my job at amazon is because i wanted to become a entrepreneur. And i didnt know what my idea was going to be so i moved to San Francisco and i started about 20 companies and unfortunately, all of them failed one day i was in my apartment in San Francisco when i realized that all i had in my fridge was a bottle of hot sauce. And i love hot sauce but you cant make it a meal and so this was an ongoing problem for me and i figured i couldnt be the only one who suffered from this problem. This was 2012. And we were ordering everything online except for groceries. So i decided i was going to change that. I started coding the first version of instacart app and three weeks later, instacart was born when it was born, it was kind of a rough prospect at that point. I think you were doing the deliveries yourself . Thats right. I was i was the coder, i was the delivery person, i was also the Customer Service person. I remember one time while answering the phone to help troubleshoot a customers issue, i totally had forgotten that i had a pot of chicken wings on my stove in my kitchen. And fastforward 30 minutes later, unfortunately my kitchen had burned down and my entire apartment was flooded. So instacarts early days were very crazy but these were temporary setbacks and we continue to focus on building a great business okay, lets fastforward to what we see today. The pricing came out, raised a couple of times to come out at 30 as we mentioned. The stock actually closed up 12 from that. That values the company at 12 or 13 billion. Thats a big number but far below what it was valued at a couple of years ago had you took your last founding round it was then 39 billion there are a lot of questions asked, people wondering why did you go public then. S they thats when you saw airbnb and doordash go public and both of those took off. All the markets have completely changed from a couple of years ago the macro environment has completely changed and thats also something that we do not control. What we do control is building a strong business with that is very durable and thats what we have done here im happy the company went public yesterday and im excited to see what the markets think of it in the future. Apoorva, im asking because there were some investors like sequoia and others that were a little agitated by what has happened and by the fact that you didnt go public sooner i think Michael Moore from sequoia was one of the ones who was very agitated by all of that why didnt you go public two years ago . Why did you decide to wait this was the middle of covid. Our growth, we had gone from doing about 78 billion in sales to doing, you know, to growing over 400 year on year this meant we had to completely reshape our infrastructure, we had to onboard half a Million People in a matter of a few months to pick and deliver groceries. And this meant that we also we didnt have a cfo at the time, i didnt think it was the right idea and the rest of the board didnt think it was the right idea and very happy that we went public yesterday and excited to see what the company does in the future what does the future look like for the company and by the way, we should point out, youre no longer the ceo, you decided to step down a year ago. There have been some reports that there was pressure to step out. What happened . Why did you leave that position and why are you leaving the chairmanship position at this point . So, i was not pushed out. I decided to leave on my own and i decided to step down because im a entrepreneur and i want to build another Transformational Company and i brought on the right person to be the ceo of this company at this stage. I believe in her leadership. This allows me to really focus on my next venture that im very excited about. It is a healthcare venture . What are you working on . Thats right. Healthcare is, as you know, a very large industry. 4. 6 trillion, incredibly complex but underpenetrated. When you think about it from an online penetration standstandpot it is similar to grocery, but it allows me to still have the beginners mindset but today is about instacart, and more to come on the healthcare venture another time. We mentioned at the top youre officially now a billionaire on paper do you plan to sell some of the stake . What do you do with your shares . Im the largest independent shareholder at instacart im proud of my position there proud of the company and im excited about the vision and what the future holds. I wont get into my financial details at this point, but im excited about the direction of the company. What is the biggest lesson you took away from this for future ventures . This was 11 years in the making. My guess is it probably felt more like 50 to 100 years. What is the biggest lesson you took away . Perseverance. I remember when amazon bought whole foods, this was 2017, 2018, and all the headlines said that instacart was dead. And because it sort of i understand where theyre coming from, given amazon was our biggest competitor and whole foods was our biggest partner, our biggest competitor now owned our biggest partner. It felt like a gut punch i remember calling an all hands and bringing together the whole company and telling them that we were now in that meant the only thing we would focus on is bringing the entire grocery Industry Online and bringing all virtually all the Major Grocery Retailers Online and over the course of the next nine months, the team launched thousands of new markets, launched instacart enterprise, and by the time whole foods finally left the instacart platform, we brought on virtually all the Major Grocery retailers to the point that whole foods was less than 5 of our revenue. And we learned a lot as a team during this time, and we learned how to persevere i believe it is just an incredibly important skill as an entrepreneur. Apoorva, thank you very much for your time today. It has been great talking to you. Congratulations on the ipo Apoorva Mehta. Thank you thank you. Thank you when we come back, James Stewart will join us to talk about disneys latest moves to streamline t bins. Heuses squawk box will be right back. ella fashion moves fast. Setting trends is our business. We need to scale with customer demand. In real time. jen so we partner with verizon to take our operations to the next level. marquis with a custom private 5g network. ella with verizon business, we get more control of production, efficiencies, and greater agility. marquis so our customers get what they want, when they want it. jen its not just a network. Its enterprise intelligence. vo learn more. Its your vision, its your verizon. You know doug, ever since switching to workday youve been a real rock star. Rock star . What do you know about rock stars . Billy idol . I mean wheres the skintight leather . My shoes are leather. Wheres the unnecessary zippers . That thing billy, rock star is just how doug feels when he uses workday. Thanks, rory. Ill show you rock star be a finance and hr rock star. Workday. For a changing world. Billy idol just stole your golf cart climate week continues in new york city with a heavy focus on decarbonizing real estate, which means going electric diana olick joins us right now with more on the goals and on the grid diana, good morning. Good morning, becky yeah, it is all about the Energy Transition this week who better to talk to than the ceo of edison international, owner of Southern California edison i asked him given what we saw in maui and midwest if investing in electric isnt too risky right now. We understand the risks we already are making the investments needed to address them and we have a framework for doing that within the regulated compact. So i would say to investors, i do this all the time, right, that we do have that framework for sound investment we have a plan for what we need to do. And frankly were leading the economy in terms of getting ready for climate. Now, he said edison invested 6 billion this year alone to strengthen the grid and make it more resilient to Climate Change one thing he cant fix, though, is the impact of higher Interest Rates on demand for Renewable Energy all sectors of the economy are being exposed to higher Interest Rates i would focus back on what the federal government has done already to try to help with that the tax credits that are embedded in the i. R. A. , you know, provide good support and, yes, you know, Interest Rates are going to have an impact but we need to think about this over the longterm and so the fact that there is nearly 300 million that is being invested in the clean Energy Transition to the i. R. A. To provide support and he said the biggest obstacles are permitting and to get what he wants done in the areas he wants to do it in. Just with Interest Rates, all investment is much harder. It is not free money, not easy money and that makes any sort of new development difficult. Exactly and even retro fitting older Development Like here in new york city with local law 97, you have to decarbonize all the office and apartment buildings, higher Interest Rates are making that much more difficult than devaluing the buildings. I guess the reason theyre pushing for that, we heard this earlier in the last week when we were talking, one real estate developer, the thing they asked for is help from the federal government right it is helping. New york state has a lot of tax credits but it is a lot to do obviously. It is diana, thank you very much good to see you. All right, coming up, were going to talk disney with jim stewart and b of a security strategist will join us with her new call futures ahead of the opening bell and ahead of the interest Rate Decision, they have ticked up a little, up about 83 point s. sirens [due at target in 5 ] copy that. Make a hard left down the alley. Networks got you covered. [please confirm requesting backup. ] changing route. Go. Roadblock ahead. Back up, back up. Reverse reverse next level moments, were 30 seconds out. Need the next level network. [north corridor, hurry ] coming through or 3, lets go. The network more businesses choose. Transplant received. 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Disney will nearly double its tenyear investment in theme parks, cruises and resorts to around 60 billion the move underscores the dramatic shift in the companys business model, which used to rely heavily on media and entertainment. Disney stock is down over 24 since january. Joining us now is jim stewart, New York Times columnist i mean, i guess theyre going to sell other things, jim, so the rumors are true, we dont know to whom or when it happens or at what price. As iger sort of shocked everyone on this network when he made those comments at sun valley where, you know, suddenly he put on the block the core of the disney media empire including their once, you know, incredible cash cow espn. So, the question is, you know, we saw not too long ago that paramount pulled back and stopped trying to sell the b. E. T. Networks. There doesnt seem to be a lot of demand for the legacy channels espn is in a category of its own. Not clear they want to get rid of it entirely, they want to bring on partners and grow more of the sports gambling thing there is a lot going on there. But unfortunate bottom line here is that theyre all diminishing assets theyre deteriorating, i think, now faster than many analysts had thought as people move increasingly to streaming and as disney and its competitors still struggle to make money out of streaming. Thats what occurred to me, jim. Theyre not saying were going to sell these legacy media assets and invest in streaming they said were going to sell and invest in, like, physical experiences, cruises, and theme parks and everything and everyte so what how just Media Entertainment in the future, disney has no idea what we want or how to go about it. Im not going to a theme park. I turn on my tv and look for entertainment. It is kind of a shot were looking at theme parks as a part of future growth nobody has focused on theme parks for a long time. They have profited immense i f immensely from the postcovid bounce back. A lot of families Top Priorities were to get their kids to one of the disney theme parks and they have become much better at exploiting demand and adjusting price but they pushed prices up a lot. The anecdotal evidence has been recently that the parks are not full what do they do to make money in theme parks. You have to stoke demand, increase supply or raise prices in all of those so theyre pushing on those levers but its hard to see where theyre going to go. They probably shouldnt have had a frozen attraction in there now. The crews ship business seems to be growing but team parks are not going to be some kind of perpetual doubledigit Growth Strategy what about streaming its not looking good there. Nothings looking good. And if becky quick had ten things for a growth future, cruises would be like dead last, wouldnt it, becky im not everyone. She thinks theres noro virus on every surface i do its the same water its whats already there and theres 4,000 people parks i dont get but cruises parks you need to feed the beast with the new Simpsons Ride you cant use any of the old disney content because us all cancelled im plugging universal. Theyre going to continue to feed the beast with new contest. Is it lost im not going to go that far. With you they are confronting, you know, an incredibly difficult, you know, broad environment. And you mentioned making more mochies, more product. Thats another challenge theyve got. Theres a lot of concern in here that the super hero formula has been getting stale, going on now for decades but that it recently hasnt done that well. So the the streaming division is also now in trouble. Its like theres nothing on their spectrum thats why its 80 down from 200. Do you remember when comcast bought universal from nbc, it was almost like the theme parks were like, yeah, were going to get that, too. It turned out to be a great asset there were a lot of quarters where that was like a Profit Center, but it wasnt the rational for buying it in the first place and its just so weird that disney will place all of their bets there. Disney didnt buy espn either and espn was a great growth diver for many yoors and universal made the brilliant move of getting harry potter into the theme parks and disney left that slip out of its grasp. Think marts is a solid business and its good theyve got the cash flew given the situation in streaming. I think in both areas you canny them that willing with thats what that your wrestling with, the both topping off there but the falloff as the streaming suggests that theyre kind of hitting a ceiling there, too. I just dont know how we go from the golden age of content and it was going to last fref and every talented writer and everyone out there was just it was going to be the good time wore really and now their streaming doesnt work, legacy media doesnt work, everyones on strike because of i. A its a mess, isnt it . Its an industry upheaval weve been talking about this this is one of the great Disruptive Forces in business history. It is a massive shift in this industry and that golden age was great and i think thats were the writers are upset now, that gravy train has left the station. It businessic economics and business you cant lose billions of dollars quarter after quarter. Those numbers were staggering. I was kind of surprised that wall street was slow to react and they were racking up losses at billion as quarter, disney being on the forefront of that netflix is making money and i dont think we vet p have yet see them navigate to this much more techrhythmar the demand is there. Consumers love it. Its not like the auto history but you think are funding the transition to evs which nobody wants except for texas. And sooner or later youre getting rid of something and monetizing it and thats gone but the future doesnt look so great. You can definitely screw it up its like the same thing its like the i still love my cable, jim i p and i want i dough another book here. There is thank you. Get a. I. To do it. When we combae ck, why shes raising her yearend s p target. Squawk box will be right back. Let newage products transform your garage into an area of your home you can be proud of. Modular steel cabinets let you pick and choose the Storage Solutions to keep your garage organized, with overhead racks and shelving, slat wall, workstations and flooring that let you create a showroom garage to call your own. Designed for diy installation. All you need is one weekend to take your garage from unusable to unbelievable. Visit us at newageproducts. Com. Well, its final liply hered day. Wall street will be watching closely for any changes in the feds Economic Outlook and its projections. Ahead of the opening bell, the futures are higher were paying special attention to the 10year, close to its highest level in yield in more than 15 years. And the ipo trifecta expected to debut this week, as the final hour of squawk box begins right now. Good morning, everybody. Welcome to squawk box here on cnbc were live from the Nasdaq Market site intimes square im becky quick along with joe kernen andrew is off today. Here we go, it is a fed day. Were going to be getting this decision at 2 p. M. Eastern points treasury yields at this point lock like theyre basically where weve been for a couple of days the 10year is at 4. 34, twoyear at 5. 07. Klaviyo, it will trade. Ipo is priced at 30 a share, above the targeted range its now valued at 9 opi. 2 miln it specializes in making automated business transactions. Insta cart raised 620 million in that ipo. And neuralink is looking for participants in human brain implant trial. Lets bring in senior commentator mike santoli what do you think of this it had. I think its heathy theyve managed to get out there and are decent pricing i do think it shows a general lack of conviction. For the entire Third Quarter effectively youve been around the current level in the s p plus or minus 3 1 4 now some things people are focused on is you did have this up trend since march, since the svb failure lows weve broken below that a little bit and maybe lost some momentum on that front. Folks would look for something along the 430 level to say this was more than a standard, seasonal pullback. That would be just under where we bottom in august. Other things were watching, all the talk a oil general commodities, the move has been hired in the index, heavily influenced by energy were not toward the 2022 high an aggressive move at the high tend end of the arrange, such as treasury yields, ous prices, up. Theyre really focused on poor Nonhousing Services Inflation to see if thats going to continue to come down and help out their cause. Now, the twoyield, thats where they get priced. This shows you the story in the economy for this year. Remember the hot january Economic Data . Everyone said, oh, no, the fed has to come a long farther about 5 60 in yield and. Weve rebuilt expectations. Well see today how they adjust that outlook and maybe how many cuts they still project by the end of next year, assuming there still are some in there, becky okay. Mike, thank you. Obviously a lot riding on this before 2 p. M. But especially when you get the 2 30 Conference Call how are things had you hear from jay powell from the start of his tenure, theyve been weaker than most ot others from the market the marketimpolice department move was less than half a percent. So thats a small move on a fed day. I it also know that almost after every meeting since the fed started hiking in march of last year, the tenrear later youre like a. I dont think ive ever asked you a question that you dont have the answer to ill make it up so that doesnt happen lets continue the market discuss. Our next guest just raised their yearend s p from had 46 and is veet a are you acquired to have price targets at your job at the i dont know if its written into my contract but its a great question we usually. It going to be raw. It says its oot 4450 you need to raise it at this point. But youre 4300. Was that from november of no, no, no. That was when did you go to 43 were you dragged kicking and screaming to 4,300, too in. No, no, no. We started the year more construct uf on stocks we raised it once during the year to catch up with the. Where havent you been . 236 no. You were above 4,000 . We were above where the market was trading for this. So we were expecting a positive return but we didnt estimate the strength of mega cap tech. So that was our fail this year lets assume 4600 is what you see as fair value, it might be good idea to stay at 4,300 so this is a choice youre making this is a very concerted choice because i feel bullish indicate toors for mid every day a new bearish narrative emerges, i any this are a that should be in mid caps stocks rather than bonds and other asset classes. One is productivity. I think that that has this a. I. Theme is not just about a. I. And seven tech companies. Its about a broader efficiencydrurch earnings power for the s p 500 that we havent seen in a very long time good for companies but good for workers . If is dpd for workers think about it right now weep also have this mini manufacturing renaissance going on weve spent ten years woefully underinvesting in manufacturing, but think about the grid, the infrastructure, all of the towers, all the spend that we need to support this a. I. Boom that everybodys talking about thats stuff on the ground that is bullish for industrials, its bullish for machinery, bullish for oil. Even getting to net zero and decarbonization goals along the way. I think were in an environment where were all underestimating the bullish themes for the economy and stock market and just focused on the fact that you can get 5 on cash those productivity. Who care. You have four more . I have four more and i hope i remember them up a and did you may have a rick perry move youre inform supposed to illuminate what is sentiment . Sentiment is still very negative on entities except for these mega cap tech companies. Everything else is kind of neglected. I think whats interesting is the magnificent seven now take up over 40 in almost every Fund Managers portfolio. How much of a risk is that for the broader markets, though. If that was the thing you got wrong about those being strong six out of seven of those companies we have buy ratings on these are fundamentally attractive companies, a i cording to our analysts. They are people who can make money and they can return cash in if he dont have as much growth i think what we saw with meta is a bullish sign for s p Duration Risk i was worried a lot of the stocks of back loaded. Meta cut a bunch of costs, fired a bunch of people, did a huge buyback and pulled a lot of cash forward and returned it to investors. I think thats the saving grace of stocks is that companies have options. They can navigate. They responded to the changes. They responded to a change in macro, exactly thats whats really exciting about corporate america, theyre adopting and spending in the face of higher inflation now. You also have strength from unions, though, two. Uaw and so this is the negative headline that everybodys focused on but what this actually says and points to is an underlying shift from just financialin asset inflation that benefited luxury goods and markets to an environment where we seeing a broadening of income, which is actually bullish for the Cyclical Companies in the s p 500 Consumer Discretionary factor. Luxury is your up. Those stocks have done really well now come back to the u. S. And buy some middleincome spend manufacturing drives jobs pip feel like i sound a little bit like a politician but i think there are positive teams right now beyond. I like all of them. Who got the Energy Department excuse me i foregot the Energy Department. I do think were at a point where the markets hated the equal mark is pretty cheap 15 times thats not crazy expensive so i want to give you guys an example of a period that was great for equities and accompanied by very strong productivity gains if you think about the market from 1980 to 2005, we had massive labor efficiency gains we saw Companies Get very labor light, automation of the theme and over that period the mash returned 15 Percentage Points of total return per year. Real rates were 3 1 2 on average. Right now were at 2 and people are stinging ut. And its good that money has a cost it removes all of the fake zahnby companies drifting into the. When we come back, mark warner to join us to talk about a. I. , fresh off one hearing yesterday and one scheduled for today. Well about a. I. s implication for national security. Future are still in the green. Youre washing squawk box and this is cnbc that energy cannot be created or destroyed. but it can be passed on to the next generation. every day, businesses everywhere are asking but it can be passed on to tis it possible . Ion. With comcast business. It is. Is it possible to use predictive monitoring to address operations issues . We can help with that. Can we provide health care virtually anywhere . We can help with that, too. Is it possible to survey foot traffic across all of our locations . Yeah absolutely. With the advanced connectivity and intelligence of global secure networking from comcast business. Its not just possible. Its happening. ella fashion moves fast. Setting trends is our business. We need to scale with customer demand. In real time. jen so we partner with verizon to take our operations to the next level. marquis with a custom private 5g network. ella with verizon business, we get more control of production, efficiencies, and greater agility. marquis so our customers get what they want, when they want it. jen its not just a network. Its enterprise intelligence. vo learn more. Its your vision, its your verizon. Mark warren is urging the Biden Administration to boost the Technology Workforce as a. I. Challenges become more widespread and yesterday the Intelligence Committee held a hearing on a. I. Senator, i think you are right to think we need to have people who are better qualified, who have more experience in a. I. In terms of helping out government and trying to make sure were on top of all of this this is a serious problem in industry where they pay a heck of a lot more money than they do in government. How do you get the best and brightest to help coming up with these complex decisions and a policy that the tech owners cant agree on it was a pleasure to see all the tech leaders of Civil Society all saying there needs to be some level of government guardrails, maybe not fullon regulation so there was agreement there secondly, were all kind of in that i think we may need to kind of monday shottype experts all to come together to get this right. I cant think of an issue where the economics is changed more dramatically in the last ten months it used to be who had the most data on the big compute with win. That meant countries who had very offensive tombs they could use with a. And weve seen even that model change. Uae has built a large model for pennies on the dollar. This is a constantly changing field. Let me quickly mention the area that your audience would be most interested in, the two areas where a. I. Could have the moe. Our honored public elections, the kind of doop folk and manipulation that can take place. The other is disruption in our Public Markets when we think about disrupting our Public Market from deep fakes and other tools, do we need a new law or do we simply need the weight over penalties this may become the jenlts or low are and the example i if you shoot someone with a gun murder is an extra crime if it happens to be terroristcaused murder not a perfect analogy but i do think we need to think about public trusts in markets and elections look, i hear you on the oppenheimer effect i think everybody is thinking more broadly about what a. I. Could unleash, just like Nuclear Weapons unleashed around the globe. Even if you get all the tech guys, havent gotten anything done even if we can get our political and political agree to we cant control whats happening outside our borders. How do we do this making sure were not following behind and we can compete great question. As some of these people erase these models, they are duplicated by other nation states whan has for their do, the japanese have a completely different approach, for example, but on depp drop good morning. There are questions around bias and copyright that are huge. Youre right, stow tar maybe where woo on our public elections. You think most investors probably could and maybe we could start with those go as a starting point the question i would have, senator, in illinois are we allowed to have a cash bail for the terrorist murderer and not for the murderer or do we have no request do we both let go you are the expert. Im not gsh. You cant ask for ksh anymore. Its a huge attack on the market im saying there may be a need to jofr watt in where whats the there there . Is there no question in terms of overwaiting in terms of extra penalty and i dont know but i do know that doing nothing is probably not a very good opg mark, while youre here, lets talk about a couple other issues first up, the potential for a Government Shutdown. Do you think a shotdown happens in we had a report are who pg and you do get a shutdown for a period of time because of what hes hearing m the house yeah. I dont see i havent seen this movie that frn so not only are young people not working, but theyre ultimately going to be paying, as well the folks who want to use our mags parks, shut down on medical research i do not get the notion of some of these House Republicans who want to shut down the government and obviously virginias were going to be hurt one of the most it like this sam at the very moment any redikss on your state in the elections coming up . Glen youngkin wants to turn it red. I think weve rattled the coax on my or. And you are a form are ps manw negotiations with the big three automakes are. We had an analyst come on this morning and said that hes underwait, at least two of this many he was upd he was saying, okay, the ask right now from the uaw, if you added the 32 work week, the reinstatement of retirement forecast and where around nearly 6 billion a year. So youre talking about negotiating if and it 1 1 2 to 2 billion hes worried between that and what the admission standard that theyre going to be back in the same position in 2007 when the government had it step in and that will many but the fact that if they workers did give up benefits we have seen great growth from the Auto Industry the last four, five years, weve fiend. And youve seen your Salary Increase about 6 i think there what it if and it also creates a big are question, which is something eye if right now we have a Tax Accounting and reporting system. You pend 5,000 from a poos of equipment, your piece of equipment and they spent 5,000 training to train two machines to be better than ma ma frnl and in balance we still have our system where as always, capital gets precedent over labor. Thank you for your time thank you coming up, were going ask what could be standing in the way of a soflaint ndg by the u. S. Economy wool be right back welcome to ameriprise. Im sam morrison. My brother max recommended you. So my best friend sophie says youve been a huge help. At ameriprise financial, more than 9 out of 10 of our clients are likely to recommend us. Our neighbors, the garcias, love working with you. Because the advice we give is personalized, hey, john reese, jr. Hows your father doing . To help reach your goals with confidence. My sister has told me so much about you. Thats why its more than advice worth listening to. Its advice worth talking about. Ameriprise financial. when the day that lies ahead of me seems impossible to face a lovely day lovely day lovely day lovely day a bank that knows your business grows your business. Bmo. Welcome back, everybody. We have news on apple and Goldman Sachs this morning kate rooney joins us with that were learning what happened is apple and Goldman Sachs had been planning the launch of a stock trading future for iphones but that project was put on hold last year as stock markets turned south this is according to three sources familiar with those plans who asked not to be named because the discussions were confidential, sources telling me and our colleague that apple began looking into this in 2020. Soaring Retail Investors were flocking to trading apps like robin hood but markets were hit by rising rates and apple was nervous about potential backlash this was happening before goldman backed off from near live all of. Banks consumer efforts. So its unclear where this project stands a the this point but a source did say the apple trading infrastructure is mostly in place should they decide to go forward with those plans. And instead of Going Forward with stock trading, apple and goldman moved to launch and the stock trading project underlined some of apples ambition in Consumer Finance it would have added to the sweet of existing apple Financial Products powered by goldman. Apple first teamed up to after that credit card in 2019 and now the savings account well representatives from gold naup declined to comment on this. Whats the relationship as something thats productive, or is this is a pretty strong relationship and one that they both value a couple of years ago there was a lot of fanfare around the credit card, consumer lending, buy now, pay later at this point youve seen a lot of the reporting that that relationship as least has slowed down in part because goldman has completely retrenched from the Consumer Banking business. Going forward that begs the question of what happens to Something Like stock trading if it was an ambitious part of this plan that is no longer in the works, that has and is a threat to names like robin hood sf squared kate, thank you good to see you this morning thanks. When we come back, Leslie Pickler join us on highlights of insta cards firstday of trading. And dont mus clafios cofounders. They will be live in the 10 a. M. Eastern hour of sawk quon the street. Well be right back. Stay tuned to reflect. To be like wow. What did i do to get here . city ambient noise right. Work. You worked hard and its time for a bank thatll work hard for you. Everbank brings security and a guarantee. That youll earn a yield in the top 5 of competitive accounts. Going, got you where you want to be. Were the partners for your next move. Everbank. Advantage, you the citi custom cash® card automatically adjusts to earn you more cash back in your top eligible spend category. Hi. You dont have to keep tabs on rotating categories. This is the only rotating i care about. Or activate anything to earn. Your cash back automatically adjusts for you. Can i get a cucumber water . Earn 5 cash back that automatically adjusts to your top eligible spend category, up to 500 spent each billing cycle with the citi custom cash® card. I love it. Good night hey corporate types. Would you stop calling each other rock stars . Youre a rock star. You are a rock star. No more calling coworkers rock stars. Look, its great that you use workday to transform your business. But it still doesnt make you a rock star. So unless you work with an actual rock star. Hi, im ozwald. Hello ozwald. Pam, you are a rock i wasnt going to say it. All right, just five hours and change until the feds latest decision on Interest Rates. Central banks are are expected to hold things steady. He says there are four things standing in the way. Joining us is the chief economic write are at the wall street journal. When he writes it, they listen you concerned a lot of people recently when you said that, yeah, a soft landing always looks luke that in the even to nail that and that it was pretty elusive. Why are you writing about this now . You look back to when you dont know if the fed has enough to tut it in. When the ball as in the air, a lat has it go right and a lot can go wrong i think thats where we ar right now. And the piece of just sort of many t what could go i dont think is thattin flig and you should have more concern about reaction certainly racial onth other hand the fed could be the obstacle in that theyre saying they want to stay higher for longer and that means maybe not easing as quickly, you look at the experiences we have. So think those are the two main concerns here. Nick, dont look now but when people say volcker or had people say remember what happened back in the old days when we went to 21. . Its different this time because people say, well, we dont have the oil shock. Wait a second we do have the wang are starring to look a little carry and you per state police maybe it will start to look not quite as durch as we thought it was in the 70s and 80s. Thats a great point regarding stopgo. It assumes a certain amount of luck in 1982 inflation of still above 4 when he sort of called the dogs off and said all right, thats enough. He abandoned the monetarying a great counting because he thousand he had done enough. You can it and so i think that is important what happens in the developments that are outside of the feds cole could play a role here in whether we get kind of a mild recession. Nobodys taking another quarter point worst case snare i dont next week well probably see a nird very mild ful and so its hard at this point to compare this to the 1970s or 80s so your analysis at this point, is this an argument for the fed to stand pat and wait, look around, see what happens . You know, i think so. I think the question here is if you cause a recession here and youre had had because inflation of my 15 you can say its emboldened, too. People jewel jazzed vul kerr today because he fixed what would have been a woo, thats different from what woo it do you think that the fed is going to keep rates higher for longer . Because there are a lot of Market Participants who arent really agreeing with that, who think rate cuts will come as soon as early next year or end of next year its impossible to tell you tell me whats going to happen in the economy. Powell puts 50points on the table and then we have a fullblown raucous the next day later. If you look back to where weve been onnin in the Market Expectations new monththats different. Thats really the first time weve seen the market and the fed really on the same side here about, you know, when you hit the peak rate but how long youll hold. So that provide as little built more tightening of financial conditions which, mortgageyear mortgage operate money in so this is a tinch environment. The or thung ill ais that. In its kind of like thinking that this isnt an at. Because youve also to the quantitative itsening. Its another they e. Will it be Interest Rates or quantitative hiking . Theyve been pretty clear on this they want the Interest Rate tool to be the primary weapon here. So i think what they really want to avoid is having people like you and me sitting here before every fed meeting saying what are they going to do with the fed fund rate and what are they going to to with ball street but lets use a different term its on Cruise Control we dont want people thinking what are they going to do with this tool and what that tool am, whatever the terms is in reserves with an 8. 1 trillion dollar balance sheet, were probably not there yet. Nobody gives yes or no on recessions, they get percentages. Whether we have one or not, are you 37 im a reporter. I dont do i dont handicap these things its not my job. Its not my job. How many different pronouncers have you heard of your last name i found five earlier ive seen tamaro. Just say it with authority, that i it. If i say nick tem race are you okay with that my father might not like it but i always say it. All right we win sfw thats what we thought thank you, nick. We do hope to use your name a lot with in coming up, much more on the macks this morning. The futures rout now up 87, nasdaq up 40 all this in a few minutes when we peak with stay tuned. Youre watching squawk box on cnbc every day, businesses everywhere are asking is it possible . With comcast business. It is. Is it possible to use predictive monitoring to address operations issues . We can help with that. Can we provide health care virtually anywhere . We can help with that, too. Is it possible to survey foot traffic across all of our locations . Yeah absolutely. With the advanced connectivity and intelligence of global secure networking from comcast business. Its not just possible. Its happening. captivating music the first law of thermodynamics states that energy cannot be created or destroyed. but it can be passed on to the next generation. welcome back, everybody. Instacart set to make its debut, that was yesterday today is clavios turn leslie picker joins us good morning again its just day two for insta cart but already in the red this morning after a debut pop that lost steam throughout yesterdaystrading day to clos 20 below the opening print. It is still trading above that 30 per share ipo price but the gap is narrowing theyre down 5 in trading initiated with a hold rating say, quote, we think the next three years will be more difficult for growth due to penetration grains for Online Grocery slowing, rising competition and an ad business thats reached scale and is in the flatter part of its growth curve. It was a little surprising given that the offering had enough demand that the bankers felt comfortable raising the range at the high end but investors didnt see much upside beyond 42 and flipped it pretty quickly. That dynamic didnt seem to have much of an effect on klaviyo pricing last night it priced above its boosting range for a valuation of 9. 3 billion on a fully diluted ba basis, a greater than 2 gain would send klaviyos rating higher than two years ago. Klaviyo is a Software Company still growing at a pretty rapid clip with 54 growth it allows merchants to use data to send personalized marketing emails, text messages, et cetera, to acquire and retain customers and those insights are generated through advanced a. I. And data science there are a lot of private Software Companies watching to see how this one does, making this deal a pretty important barometer for overall ipo activity, guys leslie, thank you were you wearing red earlier am i imagining things . I was i had a baby spit up on it, so i had to change. I get it. I get it been there myself. You have. I know leslie, thank you well see you later. Im going to start paying more attention not likely. Coming up i dont know if i had you may have your own spitup on that. Exactly coming up, what to watch when re a t onig bell rings on wall stetndhepeng day as we get set for the feds decision a. From work. glen hey. Thats my mom. mom i think i have a much better plan. We switch to myplan from verizon. We get exactly what we want and save big. All on the network we can count on. daughter its a good plan dad that is a good plan. Glen looks like were not going to be needing you. So ill see you at work. son later glen. vo this week. New and current customers. Get a free Samsung Galaxy s23. Plus galaxy watch and tab. All three. All on us. Thats a savings of over 1800 offer ends soon. Its your verizon. The one thing we can never get more of is time. Or. Can we . This is watsonx orchestrate ai designed to multiply productivity by automating tasks. When you watsonx your business, you can build Digital Skills to help Human Resources spend less time generating offer letters, writing job reqs, and managing schedules. And spend more time on humans. Lets create more time for your business. With watsonx orchestrate. Ibm. Lets create. As markets wait, our next guest says the biggest pain im the biggest pain the biggest pain trade is a higher terminal rate. Lets welcome alexandra wilson, deputy cio of multiasset solutions at goldmansachs Asset Management continue to talk all assets, alexandra, but you are youre fixed income, head of global credit at mackey shields for a while. So, you are a bond and fixed income expert. Yeah, i guess you could say that if anyone is, you are i know we use the term loosely i think if i were to just summarize your thinking, we may not necessarily be out of the woods yet in terms of the fed, of the tightening, of the having a recession off the table. Yeah. You know, very much so like the market are expecting a hawkish pause today, and while youre seeing things be a little bit better on balance, theres an asymmetry in how theyre going to approach this, in particular as it relates to being data dependent because were starting to see things like oil prices come back up we saw what happened in canada yesterday. Now, you are also seeing the reverse side of that where you saw in england, surprise to the downside so, yes, its a very difficult market to call its hard to say exactly where they will be going but we do think that they will keep that hawkish rhetoric in place. Even the news backdrop that we see, the union, the uaw, this makes for bumpiness in the data that the fed is going to try to analyze, but you think that risk is that they need to be more hawkish . The risk is that they will be, because the primary asset that the fed has is their antiinflationary resolve, and theyre not going to want to put that at risk, so we do think its important to Pay Attention to that, and particular the markets kind of pushed that to the wayside, so while its not our baseline expectation for the terminal rate to go up materially higher, its a big risk, in particular as it relates to how people are positioned so, the so, they have to talk tough and look tough, even though theyre not acting tough, but that can be selffulfilling in the markets the markets can Pay Attention to how theyre acting and maybe then they dont have to do more . Thats very strange. But all markets are psychology anyway, arent they . Yeah, theres a huge psychology to the markets. One of the things as it relates to the pain trade that we talked about, and this is, again, it is not our base case scenario, but if you start to get anything in the terminal rate that goes up to 6 , we do think that that brings things somewhat to a screeching halt because of the psychology of that handle of six, and that will cause consumers and corporates to completely reevaluate their willingness to do things and you didnt even breathe the word seven or the word eight, and we had nick on, and we dont talk about volker anymore, because weve decided, no, nothings the same, and then im suddenly looking at oil. Im suddenly looking at wage price possible spirals, and we dont know were not going to 7 in two years or three years, do we i dont think you can say that with certainty. I think your point is very valid. One of the things weve been focused on is that next year will be anything but average, and all youve seen is both economists and sellside analysts reflect back to say probabilities are lower. In fact, weve seen some probabilities that are the longterm average of recession for next year, and for us, its just hard to square that you think its more likely than average that we have a recession . Yes stocks arent cheap they are not cheap. I mean, it depends on what blends youre looking at it from, but if youre looking at it versus bond yields, youre actually at the hundredth percentile in terms of valuations in the earnings yield gap since 2005 so, youre not getting paid a ton to take a tremendous amount of risk right now. That being said, a. I. Could lead to the investment and productivity to really keep things on the upswing, in particular as you start to see breadth across the index thats something you didnt think youd be saying a year ago, isnt it . That is very fair but one of the things we i just mean, suddenly, a. I. Could save us in terms of productivity thats amazing, isnt it it couldnt save us in the 70s or 80s so we really have to think about technology and how that bears on the economy and productivity yeah, absolutely. And in fact, were doing a lot of bottomsup singlename analysis and when we look to allocate in our portfolios, were very focused on active management and their ability to do that and really differentiate because you have seen a rising tide lifts all boats, and so we do think the next couple of quarters, youll start to see some of the rhetoric come out of, were an a. I. Company, and youll start to see who really is and isnt have you been on squawk box before i have. We like having you in studio. Maybe its it goldmansachs finds theres a reason theyre preeminent. They found you at mackey shields . Thats where i was before joining. Thank you. Goldmansachs, thats why its such a good firm. Am i allowed to say that is it a giant squid . Depends on your perspective. I think for people who follow the markets goldmansachs theres others i dont want to just single them out, get in trouble, probably. Good to have you on. Thank you so much for having me it is time to go. Watch at 2 00. Watch for the rest dont change the channel make sure you join us back here tomorrow. Leave it on overnight squawk on the street begins now. Good wednesday morning, welcome to squawk on the street, im Carl Quintanilla with jim cramer, david faber at post nine of the New York Stock Exchange fed day has arrived. Decision at 2 00 p. M. Eastern, and with it, some optimism for the equity bulls futures are green as yields come off these cycle highs. Tenyear, 4. 34 , oil is down, uk cpi runs cool. Our road map begins with the fed expected to stand pat on rates today. And speaking of