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Nasdaq up by 10 points. Halfway through the trading month of september, the dow is down by. 3 for the month to date. The s p 500 down by 1. 3 and the nasdaq down by 2. 3 . And treasury yields are pretty important because you do have a fed meeting this week. Right now the ten year is sitting right at 4. 34 . The 2year just above 5 and we will see what the rest of the week brings. Talking about what the rest of the week brings, here it is. Squawk planner for the week. The fed is the big story. Kicking off a twoday meeting starting tomorrow followed by a News Conference which will happen by jay powell. Wednesday expected to hold rates steady but planning to focus on the guidance, both economic and projections and forecasts for the rates at the end of this year. Few earnings of note, were going to hear from General Mills and also get fedex and kb home and darden will announce its earnings on thursday. Right now we want to get to the autoworkers strike, as joe mentioned the uaw not making much progress, rejecting the latest offer from stellantis over the weekend. Phil lebeau joins us right now from toledo with the latest. Phil, good morning. Reporter good morning, becky. Still a big gap between the uaw and the big three when it comes to proposed pay hikes over the next 4. 5 years. As we have been talking about for a couple weeks now, the uaw wants 40 . Theres been some talk about maybe theyll come down into the mid 30 range. Thats nowhere close to where the big three, what theyre offering over the weekend stellantis raised its offer to 21 . Ford is at 21 then you have gm at 20 . For ford, the talks over the weekend were deemed reasonably productive. Not a huge endorsement but thats what the uaw said about talks over the weekend. They are in the process of laying off 600 workers at the Michigan Assembly plant because work cannot be done due to the strike going on there. So as a result, ford says those 600 people we have to lay them off. Similar situation with general motors. It expects to lay off 2,000 workers at its fairfax, kansas plant where they build the malibu, the cadillac ct 4, the gm missouri plant where the uaw is striking, provides stampings that go to the fairfax plant. If theres no work in missouri, theres not going to be much work for much longer at the kansas plant for general motors. So that is expected to happen this week. And finally, as you take a look at shares of stellantis, one interesting issue here is the future of the companys belvedere plant which is just outside of rockford, its been idle since february. Originally they talked about reopening it as part of the negotiation, then they apparently took that back off the table. That raised the ire with the uaw. Guys, this is front and center. The uaw wants guarantees in terms of production and in terms of that plant in particular stellantis. Not a lot of progress here. Theyre still pretty far apart. Phil, when you said that the ford talks were deemed reasonably productive. I mean reporter yes. Same level 21 , what are they willing to give besides pay increases that makes that a different situation than the other talks. Reporter a lot has to do with dropping the wage tiers. Just to explain how the wage tiers work. They were put in effect back after the bankruptcies at gm and at chrysler coming out of 2008 2009. The auto company said, look, we cannot pay everybody who we hire the top rate. We have to adjust it. So you come in at a lower rate and then over a number of years you move up to the top pay rate. Well, the uaw has said, for many years, this is ridiculous. Somebody gets hired in at 18 or 19 an hour, it takes them 8, 9 years to get up to the top pay rate. You shouldnt wait to get to 28, 39 an hour. Whatever the top pay rate may be. So they want those mightily condensed or eliminated all together. The automakers believe that they can make movement there, but thats one of the key areas. Last week gm i think cut the number of years from eight to four in their offer. Is ford willing to cut even more than that . Reporter you know, becky, now youre getting into some details here that are its literally changing by negotiation day by negotiation day. So its hard to say, well, ford is going to do this and gm is going to do this in terms of wage tiers. Not all the wage tiers are exactly the same because not every contract is exactly the same. So, theres some movement within there. Whether or not ford is eliminating it completely or going down to one, i cant tell you because that is shifting day by day. Phil, stick around. We have more to talk about with this. We want to bring in tim higgins, wall street journal reporter and cnbc contributor. In his latest column, tim says that regardless of the strikes outcome, elon musk has already won. And tim, thanks for being here. That may be a little self descriptionary, easy to understand from all of this. Elon musk is not dealing with unions in the same way. He doesnt have any unions. Yeah. Hes not at the table but his presence is looming over. It gets down to the labor costs. The uaw workers at these detroit automakers on average all in about 66 bucks an hour. That includes benefits. At tesla estimated at 45 an hour. So from day one, when they start talks and talking about spending more, elon wins because tesla is cheaper to make cars over there for those electric vehicles. And its not just cheaper, its also theyre working to cut costs even more in the future. They have already talked about slashing manufacturing costs by 50 for the next generation vehicle. So the ua wx would probably say its a race to the bottom, but its a race to make electric vehicles profitable and tesla is doing that. Where as the likes of ford are not. The Biden Administration is going to get involved, tim. Im trying tofigure that out. Calls himself the most prounion president in the last 50 years. How does that when they go in to try to mediate, how does that work . I remember corzin was the governor of new jersey and negotiating with the public unions. And he was giving a speech saying were going to get you a great deal. So thats the perp thson trying protect new jersey taxpayers dollars from being from giving too much, too many concessions to the public unions. He was also the governor negotiating. Reminds me of the same thing. What line will the Biden Administration walk in this . Are they going to twist the arms of the big three . Well, its definitely a challenging position for the president politically, a, a long, self described car guy, labor pro, but the president is frankly frustrated with the Biden Administration, feeling like the Biden Administration has been pushing these automakers towards electrification of the automobile, putting money to incentivize that and yet worried that the worker is going to lose out. Estimates of 40 less labor needed for electric vehicles. This isnt just a concern for detroit. This is a concern for all automakers around the world. When youre talking about electric vehicles its less complex motors and less complex building thats needed. So, where do they sit in that new world order . Phil, lets talk just a little bit about phil is still here. Oh, youre going to talk to phil. We have tim. Tim and phil are both here. Thats confusing. Phil, lets go through again just the idea of what happens gosh now i lost my train of thought. Its our fault. What happens in a scenario. We spoke with harry wilson last week. He was at the table back during the auto crisis back in 2008. And was negotiating with them to give up a lot of things that the uaw is now trying to win back. Phils point was that, hey, this all makes sense if they want to get much higher raises. He thought the offers from the automakers were incendiary when they started out with the offer of 7 and 8 increases that they should get something closer to 30 but all the other things, pension benefits and some of the other issues that the uaw is trying to put back in, 32 hour workweek, he thought that was a nogo. Reporter yeah. Is that sort of frame of mind something thats there . I asked if they called harry to get back to the table because what he was talking about made sense from the longer term perspective of what was lost, what they should be getting and what would be so bad that it would put the automakers out of business. Reporter well, the 32hour workweek is one that the automakers will fight tooth and nail because their feeling is, look, you want to talk about pay increase, lets say youre going to increase the pay and im just throwing out a random here, ultimately settle at 25 . You want to cut the workweek down by 20 , thats another 20 raise on top of that 25 . And in addition to that, you take a plant like kentucky truck plant for ford. Its not going 24 7, but its pretty darn close over the course of the week. You move that down to 32 hours a week for the workers there, they will have to hire more people in order to continue production at the rate where they are right now. Thats the most profitable plant within the ford system. So, if you are ford, you dont want to hire more people. Youre in the process of trying to become leaner and more efficient. Thats the rub there when you talk about the 32hour workweek. I dont know, either tim or phil can answer this. Im curious if its a function of the stock. This actually goes back to tesla, talking about tesla being the winner in all this. For quite some time there was a period of time, at least, where it looked like tesla employees and those working in the factory floor were actually making more on an hourly basis than the unionized workers at gm and other places. This clearly appeared to be true two years ago and almost one year ago. May not be true today and has become a talking point. Have you heard this . And i assume this is a function of the stock price of tesla not being what it was a year and a half, two years ago . You know, its an element of the upside. Traditionally the uaw wants to in essence guarantee what theyre going to be getting. They have been persuaded to go with contracts that have bonuses tied to the profitability of the car company. But in the past, we have seen reluctance to go with Stock Options that are perhaps more spectacle, speculative in nature. They want to be tied to the dollars and cents of the company. A tesla is more like a startup. Thats how workers at the company from white collars to the Assembly Line have largely been compensated. And thats kind of the Silicon Valley mindset. Tim, my question were going to have someone used to be at the nlrb on later. You need to understand the economics of the unions proposals that they gave in 2007, they accepted a lot of concessions to sort of pitch in. She goes on to say now that profits are booming, they want a share. And how long do you think profits are going to be booming . Here is the New York Times today. They were talking about biden cracking down not necessarily on car emissions but just the overall industrial emissions. But theres going to be all kinds of emission standards, transition to ev. Do you expect profits to continue booming for the next couple of years for the big three . Well, thats really reporter joe youre hitting at this idea of the cost of evs for these companies is a real headache for these executives. In some ways they are funding that development from the profitability of their suvs and their trucks. If you look at that mountain of money that theyre doing from those vehicles, it has to pay a lot of mouths, right . That development of evs but also workers. Go on, phil. Making all your money with the big gas guzzlers, thats going away to the make the evs. Reporter it is going away eventually, joe. It is going away eventually. The question is when, joe. Right now the average transaction price for each of the big three, somewhere around 51,000. Gm is at the highest. Over 51,000 per vehicle. The thing to focus on here, north america. You know, i hear people say all the time, well, how much are they making in china or how much is ford making in latin america or with their pro division in europe. Thats not the concern of the uaw. The concern of the uaw is what are you doing here in the country where we are building vehicles . And profitability has never been stronger in north america. Record profits in north america. Thats why the uaw feels that it has leverage right now. All right, phil, tim, want to thank you both. I get the feeling well be talking to you a lot in the days and weeks to come. Another strike. Keep talking about strikes. Talks between the Writers Guild and Hollywood Studios are set to resume this week. The two sides havent even been at the negotiating table since august 18th. Whats today . September 18th. Yep. A whole month. Drew berry more is backtracking. He announced yesterday that her talk show would not return following blow back from her decision to resume production without writers. And she said shes pausing the shows premiere until the strike is over. And after berrymores announce, including the talk and the Jennifer Hudson show. Wow. Jennifer hudson show. Said they would also postpone their premieres. I thought of drew last week when i saw those aliens down in mexico. They looked just like like e. T. Plaster of paris mexican aliens. Their heads were a little smaller and their bodies werent quite as big. They were e. T. They looked like the whatever Steven Spielberg put together when theyre doing a show board or whatever it is, they stole those, sent them down there and said these are real. Thats what i thought about. She saw them and said, oh my god, those are real. Coming up, yeah, she got in trouble for trying to start up again, right . Is bill maher. Bill is. Hes on. He says hes doing it. Did he start this last week or starting in a week, i think. Hes an enigma, hes an iconiclass. Update unpredictable, isnt he . Which side . Update on the looming Government Shutdown. You like him for all those reasons. I do. I like him more. I like him more. House republicans putting out a new bill to extend the deadline. Details straight ahead. A programming note, dont miss treasury secretary janet yellen today on squawk on the street. I was told she was at a restaurant friday night. Yep. The interview is coming up at 10 00 a. M. Eastern. Youre watching squawk box on cnbc. 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 got this. Lets go. Gobble gobble. Ive seen bigger legs on a turkey rude. Who are you . Im an investor in a fund that helps advance innovative sports tech like this Smart Fitness mirror. Im also mr. Leg day. 1989 anyone can become an agent of innovation with invesco qqq, a fund that gives you access to nasdaq100 innovations. I go through a lot of pants. Before investing carefully read and consider Fund Investment objectives, risks, charges, expenses and more in prospectus at invesco. Com. Rich, velvety coffee. Cafe quality espresso. One highpressure system that can do both. Brew to your Hearts Desire with the lor barista system. A masterpiece in taste. Now an update on the looming Government Shutdown, which could happen at the end of the month. House republicans released a bill after two factions, the Freedom Caucus and the main street caucus reached a deal. The bill would keep the government funded through october 31st. Scary, isnt it . Halloween. And includes cuts to domestic spending. Those spending cuts as well as immigration provisions would likely make their bill a nonstarter in the senate. Which is led by the democrats. The compromise, though, the deal could help speaker Kevin Mccarthy pass defense spending bill this week thats been tied off in a standoff between Republican Leadership and the partys right wing. And f words were coming fast and furious, supposedly, from f bombs. From gaetz and Speaker Mccarthy and really . Behind the scenes. Oh, yeah. And i dont think they were f friggen. The full on. Wow. Lets talk about what happened on meet the press yesterday. The new Host Kristen Welker sat down with former President Trump in a wideranging interview. Here is what he said about a potential Government Shutdown. Do you think republican hardliners should abandon their threat to shut down the government over their Spending Priorities now that there is this impeachment inquiry . No. If they dont get a fair deal. We have 35 trillion in debt. We have to save our country. You would support a Government Shutdown . I would shut down the government if they cant make an appropriate deal. Absolutely. Pretty good interview. There was a lot of sort of different pieces to it all. Trending 50,000 trends. She apparently referred to him as mr. President. And that made a lot of people very angry. I saw some other things that just said, so, meet the press, trying to get ratings. S saw fit to interview a rapist, trade ris even to put the guy who is leading i dont know whether its good or bad that hes leading the gop primary. He has like 60 . So its newsworthy to put him on. It almost reminds me of Anderson Cooper who said, i can understand if people never watch cnn ever again after we had donald trump on. So thats but, how does kristen walk the fine line between theres people mad at her for not conceding about something about abortion. To compare that to the situation that happened on cnn is totally different. Its a different situation. You thought he was coddled on cnn. No. Because it was a live format. Is isnt that good . Isnt both of them okay. No, actually no. I think its very hard to fact check him. I think its very hard given who he is and what he says to air him 100 live all the time. By the way, i think thats the policy of nbc news. I think i can say that straight up and down. Am i correct . You think its okay to interview President Biden. Everything hes saying is should that be fact checked maybe . I think theres a difference look, its impeerically raining outside right this second. You always come up with this. I said before. The things trump say are not factual but the things biden says are stretching . But i think stretching the truth a little . If youre going to sit here and criticize how journalists are approaching this, we have to have a larger situation. Im criticizing that Anderson Cooper said i can see why you would never watch cnn just for having a guy on town hall. I dont think its about having somebody on or not having somebody on. The format how you do it. There are people who dont want trump on at all. I know. People think that Kristen Welker did a very good job. She did. Platforming issue. Can i also say what trump just said what former President Trump just said about saying he would say he wouldnt do it if he were president. But he wouldnt do it when he were president. But when he was president he wouldnt have done that. Mulvaney last week said he wanted to shut down the government. Hes not total whack job. Kevin mccarthy himself says he doesnt want to shut down the government. If you have issues about trying to fix security at the boarderb youre not doing it if youre not paying Border Security guards. Same thing, issues about the country, not paying the Defense Department and their bills. He has big issues about that. People who look at this seriously dont want to shut down the government. You may want to negotiate for a tough deal, but ultimately shutting down the government does not get you to the point you want. There are people theres a whole contingent that thinks thats an effective way to cut Kevin Mccarthy doesnt, though. He doesnt . I hope he gets to keep his job. I think most rational actors dont want to shut down the government. I would say thats probably true. Its not a good idea. Most rational actors dont want to get to 180 of debt to gdp by 2030. I think you have to weigh how this all works. Im not saying you want to get there either. Trust me. But i the idea that we sort of say shutting down the government is sort of a normal course of action is crazy. We shut it down before. Doesnt stay shut down for long. If you extract some spending cuts, not the end of the world. People get paid eventually. Its a tactical strategy that has been used. I can imagine there are certain issues where the other side would think its necessary to do that. Depends on the issue. We have to go. When we come back, ipo news well get you ready for instacarts public debut. Next squawk box returns after this. I find that many latinx grow up in america trying to fit in. And fitting in is very different from having a sense of belonging. This country is what it is in big part because of our contributions. So, owning that, being proud of that and then looking up to those who have achieved their dreams. It is bipaa g rt of leveraging our hispanic heritage. Ever since she was a little ki, all maria wanted to do was bak. Im maria alvarez, owner of marias cakes. And im axel, proud to be her state farm agent. Her baking superpowers have brought sweetness to our community. I make delicious cakes to make special occasions even better. Maria doesnt just bake; she also creates opportunities. Small businesses like marias, open doors for communities to thrive. Support your community. Support small business. Is it possible to fall in love with your home. Before you even step inside . Discover the Magnolia Home james hardie collection. Available now in siding colors, styles and textures. Curated by joanna gaines. Welcome back to squawk box. Instacart planning to go public this week. On friday it raised its ipo price range from 28 to 38 a share. Plans to offer 22 million shares could raise up to 660 million. Pepsico has agreed to purchase 175 million in a concurrent private placement which provides a bit of a floor on that ipo. Of course, that was a company that had a valuation of something on the order of close to 40 billion at one point. And given the postpandemic world were now living in, both in the university of tech and just how people are using these things. But instacart, interesting business because we all think of it as something thats a delivery business. Thats really not actually where so much of the income now comes from. 30 of the revenue is from advertising. Advertising business but also an enterprise level business. They have become, if you will, the open table sort of back end Enterprise Software for supermarkets and other kinds of Grocery Stores and others around the country. So, its an interesting business to pursue. Well talk about this week. 39 billion valuation was 2021, right about the time you saw airbnb and doordash going public. Obviously fell drastically since that time. You look at the other stocks they have fallen since then, too. But they have slightly inched up the valuation i guess by about 8 or 9 just over the course of the last week or two y in other ipo news, klaviyo is raising its ipo target. The Software Maker is now set to price shares somewhere between 7 and 29 a shab up from 25 to 27. That public debut is expected on wednesday. News alert now were announcing it to you first before we tell you what it was on clorox. Cybersecurity attack it suffered last month will have Material Impact on First Quarter financial result. The breach damaged portions of the companys i. T. Infrastructure, wide scale disruption of the its operations. It is still valuuating the financial impact. When you said breach, all i could think of is you meant bleach. When we come back, its fed week. Well get you ready for the Central Banks decision. Former fed vice chair Roger Ferguson will join us next. Lar,te well be talking to former Kansas City Fed president Esther George. Squawk box will be right back. [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. There are some things that go better. Together. Burger and fries. Soup and salad. Like your Workplace Benefits and retirement savings. With voya, considering all your financial choices together can help you make smarter decisions. Voya. Well planned. Well invested. Well protected. The notsosecret to our success . Earn and keep trust. Build and maintain financial strength and stability. Deliver solutions that meet complex needs. Do right by customers, clients, and policyholders, always. Repeat daily for over one hundred and seventy years. Massmutual. Partnering with financial professionals, benefits brokers, and institutions. Another one. The fed kicking off another one of its twoday policy meetings tomorrow. Widely expected to hold rates at current levels. Joining us with more on what to expect, former Federal Reserve vice chairman and cnbc contributor, Roger Ferguson. I think we get a lot of news, roger, since last time you were on. I was trying to think of all the things that have happened that could inform your opinion and maybe the feds opinion. Here is a couple of them. 91 oil. I dont know whether that makes the fed more hawkish. Its a global tax which you think would help the fed if its trying to slow the economy down to some extent. The ecb raise rates but say thats probably it. And you had a couple of Inflation Numbers that were, i guess, i wouldnt call them friendly but they werent just horrific. So that has caused some people, roger, to say, no increase this time and maybe we have seen the last increase. Are you there yet . Im not there yet. Youre right to say theres been a great deal of data. I think roughly the way you described it is right. One little nuance i would make is the core inflation number ticked up on a month over month basis for the two readings we saw, which i think will raise a few eyebrows. So where i am, i think theres likely to be a pause here, but a clear possibility that the november meeting is, as they say, a live meeting. I dont think theyre ready to say we are now done. And partly because some of the factors, as you talk about, such as oil creeping up shows that while there are slowing in general, there still could be some things that drive inflation pressures in the wrong direction. So i think this meeting is a pause, but with the possibility of one more rate hike. And theyll tell us because theyre also going to release their summary of economic projections. Well see what theyre thinking as well. Has china bottomed, do you think, roger . And again, im thinking about oil and how thats going to impact the fed. It definitely does filter through to everything we do you would think. Its inflationary. Then again with china weak, maybe bouncing, and oil, you know, they buy in pet row dollars, too, i think. Its expensive there as well. So, those things could be deflationary or inflationary. Youre right to talk about the double edged sword of things such as china potentially slowing. I emphasize potentially because they are going to be working pretty hard to keep the economy on track. They have fewer tools than we do in the u. S. So i think the reason the fed is being, quote, data dependent and as powell said in his speech at jackson hole, will proceed cautiously is because the incoming data is not all pointing in one direction. As he said in his speech, theres disinflationary process under way but inflation is still clearly above the 2 target. Labor markets which they have been focussed on absolutely softening, but we still see, as you have been reporting, a lot of restedness we call it in the labor market. So i think this is a time for the fed to proceed very cautiously and in no way should they say we are completely done because i dont think they really know that just yet. And i think they want to be flexibility to do one more if need be. But roger, just one more . Because most of the market commentators we speak with around this say okay, its basically the same thing. Either theyre done or another 25 bases points. Thats not going to tip the scale too much. I think thats part of the story here. But because indeed ive seen a few economists that are even talking about a couple more. I dont think the data i think the data are really showing theyre getting the kinds of impact that they want. But yet, as we have seen, there can be some upside surprises. Thats why im thinking a pause here, open to another 25 bases points and as you point out, becky, the probability of 25 bases points is going to tilt us dramatically one way or the other is not great. But, given the fact they started late, i think they also want to be careful not to stop too early. And so i think thats another thing thats factoring into all of this. We have seen some meetings in the past where the fed chair seems to not saying he tries to satisfy all people at the same time, but when he doesnt hike, sometimes hes hawk irk. When he does hike, sometimes he seems to be dovish. He kind of tempers things. I saw one headline and one of the financial websites that said, jay powell doesnt have to hike rates this time do derail the stock the tech stocks, which means i guess theyre expecting him to still be somewhat hawkish. Do you expect that in his commentary . Actually i do. I think what i expect the pause, as i said, a couple times. I expect him to be clear that were not that they are not done, still data dependent. I think hell point out places where they want to see more progress and clearly leave open the possibility of one more hike in november. I think it may sound sorry, roger. I was just saying recession next year, first half of the year, second half, no recession . Slow down . Labor weakness . Does it ever come . I think we certainly going to see continuing slowing. And i think whether or not that will be a recession has become more of a close call. Those that are expecting a recession are pointing to the fact that consumers are weakening as well. And that we dont know yet the full impact of the dramatic hiking thats gone this far. So i would say recession still possibly on the table, though the odds have decreased. Slower growth certainly on the table. And you know, lets hope, fingers crossed, that in fact, the elusive soft landing does actually occur, but not a done deal yet on any of those points. Roger ferguson, checking in on monday. Good idea. But expect to see you what are we doing, about every two weeks . I think every monday practically. Were you on last monday . Great to see you every monday. Helps us launch the week. Sit really every monday . Were you on last monday, roger . I dont think so. I think ill be on the fed meeting this week, though, to try to wrap up analysis exactly what they did. Okay. Well see you then. We do have much more on the fed meeting ahead. Former Kansas City Fed president Esther George will join us at 8 30 a. M. Eastern time today. And reminder, folks, you can get the stbe of squawk box on our daily podcast. Follow squawk pod on your favorite podcast app and listen any time. Well be right back. And relentlessly work with you to make them real. Since my citi custom cash® card automatically adjusts to earn me more cash back in my top eligible category. Suddenly lifes feeling a little more automatic. Like doors opening wherever i go. [sound of airplane overhead] even the ground is moving for me yall seeing this . Wild and i dont even have to activate anything. Oooooohhh. Automatic sashimi earn cash back that automatically adjusts to how you spend with the citi custom cash® card. [mind blown explosion noise] welcome back. U. S. Equity futures at this hour, woohoo, green across the board now. Okay even more green. Up a little over a point. Not a lot going on. Crude prices 91 and change. Bitcoin is up this morning. Pretty good move. We dont never know when to put that up and when not to. I think its 27, what is it, 27. 120 up about 600. Had a good day on thursday or friday. Meantime, lets talk about roark capitals 9. 6 billion deal to buy subway. Its on regulators radar. The ftc officials taking a closer look at the possible deal and antitrust implications in particular the way subway defines competitors. Now atlanta based roark owns dunkin, jimmy johns and more. Adding subway would create a company with more than 40,000 restaurants nationwide. Thats three times the size actually of mcdonalds. Gives them market power when it comes to employees and other things. Typically firms owned by private equity firms have not been subject to historical sort of antitrust regulation. This is a bit of a stretch, isnt it . I dont know. Look, i know subway has more stores effectively than mcdonalds. Thats because a lot is a store within a store or small sort of popup places. Its not full on stores when you look at it. My guess is they have said theyre not competitors but the ftc said somewhere in their own documents it says, yeah, we compete with a jimmy johns or some of these other companies. And the question is, what do they do on labor . What do they do on look, in certain markets everything is local. In this kind of business, everything is truly local. But if you were in a small town, and the only two restaurant chains were a jimmy johns and a subway, thats actually not great. And its owned by the same people. Doesnt it feel like a stretch by the ftc . Seems like. Anticompetitive stuff. Just more of what they are trying to say. Seems like it. They do have a huge market. Huge market share. That has an impact look, in new york city it has no impact. But if you are in a town where every single restaurant chain is owned by the same company, thats a thing. And you have to think about what that means. Quarterbacks love subway. Patrick mahomes is constantly got a new justin herbert. Across the board, they have all these guys, man. They go crazy. A lot of quarterbacks apparently really love subway. Maybe theyre getting paid by the endorsement. You think . That might be. When we come back now jared is not there. Well take a closer look at hes not available. Hes in jail. Well take a closer look at china signs of economic recovery and restricts on mobile devices. Reminder, watch or listen to us live any time on the cnbc app. Beautiful shot of the capitol there on what is otherwise a gloomy day. But light coming right from the rotunda. Ssues . 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. Power e trades awardwinning trading app makes trading easier. 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Just 25 when you bring your own phones. Guaranteed for 3 years. 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. Welcome back to squawk box. U. S. National security adviser Jake Sullivan and chinas foreign minister met over the weekend to discuss the possibility of a meeting between chinas president xi. Joining us, peter, founder of zban advisers. I cant figure out where these discussions are supposed to lead at a time when it seems politically at least in this country that there is no political appetite for greater cooperation . Oh, absolutely, and might i add greetings from shanghai. First of all, discussions are good no matter what level they may be at, especially over the course of the past year, but i think its very fair to say that right now the only bipartisan issue that both sides of the aisle are agreeing on is that china right now is to be contained, and the chinese are pretty much well ware of that. As things move forward, its going to continue to be a contentious issue, especially given that were heading into a hotly contested shall we say 2024 president ial election. But when you think of the current risks out there, is it is the risk to american or multinational businesses doing business in china, is the risk the way the Chinese Government is going to approach this or, frankly, you talk to a lot of american businesses, they worry more about the pressure theyre going to be receiving from u. S. Lawmakers . Oh, i think its clearly coming from the u. S. Lawmakers and the likes of mike gallagher, a representative for wisconsin and the select committee, and you know, there was comments made just last week where, you know, there were organizations that wanted to speak and representative gallagher made it a point to say, oh, they only wanted to speak anonymously, and given the fact of how the select committee has been structured, theres no question why they would want to speak in such a way. But from the risks related to on the ground in china, the advice weve been giving to all our clients is twofold. The risks are not materially different than theyve been in the last two or three decades. Two or three decades. Two to three decades, yeah, ever since w. T. O. , right . You think theres no more risk today than there was before. I didnt say no more. I just said materially not as much, and that essentially the likes of and ive heard you on tv before talking about like w what advice would you giveto nike and starbucks and the like, just keep doing the business that is the business. That is what got you to where you succeeded in china. I do believe there should be pushback, were talking about the first and second largest economies in the world that are quite frankly different. Theres no nuance. Its just that were talking very different markets with very different, you know, rules of engagement in terms of the local operating environment. I think the bigger question, though, is these multinational businesses are by default trying to diverse fay way from china in relation to supply chains as we know as relates to chips when it comes to tie an. Part of thats a National Security issue. Part of its a business issue, but the question is the more they do that, how does that change the relationship with china . Well, again, i mean, it really comes down to exactly what is happening in terms of the divestment. You know, theres a lot of conversation about moving to india these days. Five years ago it was all about moving to vietnam. Is that actually taking place or how much of the reshoring back to the United States is underway. You know, we had foxconn in wisconsin. Big deal was made of that. It never really came of anything. There are struggles in arizona with tsmc. And i think theres a drastic unfortunate under estimation of just how strong china has built its ability to manufacture within the mainland, and these organizations are just having to figure out how to navigate within what i think is existing currently and to a certain extent on the margins look to elsewhere to where they can, you know, expand or move. Peter, we got to thank you because we have some breaking news and were up against a hard break. I want to talk to you again very soon. Peter coming to us from shanghai this morning, thank you. All right, thank you. Some of that news on tesla, the wall street journal is just reporting that saudi arabia is in talks with the ev maker about setting up a manufacturing facility there. The report says that the talks are at a very early stage and could fall apart. Saudis Public Investment fund is the majority owner of the rival ev maker lucid. Were going to talk a lot more about this. Its not just saudi arabia interested. Also erdogan from turkey had ke conversations with elon musk yesterday. Well tell you more about what they are pushing. Squawk box will be right back. 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. 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. Gold isnt merely a commodity. Its an investment in people and communities. At osisko, we strive to build modern, safe, and sustainable mines that benefit all. Think big. Shape tomorrow. Osisko. Good morning. The feds september meeting in focus for investors this week. Well tell you what to expect on Interest Rates where you should be putting your money to work right now. The white house dispatching a team to try and help resolve the strike between the big three automakers and the uaw, a live report is just ahead. And House Republicans releasing a bill after two factions, the Freedom Caucus and the main street caucus reached a deal. Can a shutdown be averted . We will hear from two former senators as the second hour of squawk box begins right now. Good morning, and welcome back to squawk box right here on cnbc. Were live at the Nasdaq Market site in times square. Im Andrew Ross Sorkin low with becky quick and joe kernen. A gloomy monday morning in new york city. Lots of rain as climate week begins, u. N. Assembly. Dow up about 15 points higher. Nasdaq up about 12 points higher and the s p 500 up about 3 points. Lets show you treasuries as well. The tenyear note sitting at 4. 35, but youre looking at the twoyear over 5 now, 5. 060. Oil when you think about wti crude youre looking right now at 91. 98. So continues to move higher and then crypto to the extent that thats a barometer of risk on or risk off, youre looking at bitcoin sitting at 27,000. Its actually continuing to make a move higher quite recently eth up as well. A couple of quick headlines, instacart plans to go public this week. On friday it raised its ipo price range to 28 to 30 a share aiming for a valuation of up to 10 billion. It plans to offer 22 million total shares and it could raise up to 660 million in that ipo. Soft bank is reportedly looking to invest billions of dollars in Artificial Intelligence following a windfall from the blockbuster ipo of its chip business arm holdings. Reports say soft bank may strike a broad partnership. And clorox said a cyber attack it suffered last month will have a Material Impact on its First Quarter relesults. It caused wide can scale disruptions of its operations. Clorox says it is still evaluating the extent of the financial and Business Impact from that attack. The stock off by about 2. 2 . The bleach breach. United autoworkers president shawn fain rejecting a 21 pay boost offer from stellantis calling it and other offers from ford and gm a no go. Phil lebeau joins us now with the latest in the middle of a bunch of beeping horns. Hey, phil. Reporter hey, joe, were outside of the jeep plant here in toledo, ohio. Weve got about a dozen uaw members who are picketing at this gate. There are several gates here. These are not the only people picketing here at this plant. This gives you a sense of what weve seen every time we go to one of these plants. Heres an update in terms of where things stand. Stellantis did raise its offer and didnt get much of a reaction from the uaw. The president said on the morning news shows, the uaw president said were ready to amp this up if theres not much progress. Meanwhile, the white house is sending a team to detroit not to mediate talks but to keep the conversation going and perhaps generate more conversation and move towards a resolution. The big gap in pay offers is whats getting the most attention. Weve talked about the uaw at 40 over four and a half years. Stellantiss most recent offer 21 , same with ford at 21 , and then youve got a gm at 20 . You mentioned that the 21 raise offer over 4. 5 years by stellantis getting no reaction from the uaw. President shawn fain said its definitely a nogo, and then he also said yesterday the membership is fed up as you take a look at shares of ford and stellantis. They will be back at the bargaining table today. Those talks will continue. As for general motors, the uaw met with them yesterday issuing a very simple statement, we met with general motors. Hard to say theres much progress when thats the statement you get from the uaw. Guys, were going to be monitoring it all day long. I think well hear more from shawn fain. I know well hear more from shawn fain over the next couple of hours doing some of the morning news shows. Well see what he has to say about the state of negotiations. So a lots been written about the differences between this strike and previous ones, and the element of surprise and striking all three at once, but able to open up new i guess avenues, strike other places. When is the next do you expect Something Like that to happen to keep the big three sort of on their toes later this week . Reporter well, who knows when its going to happen, joe. They havent said we will make an official announcement at this time and this date. They have said that they will do it the same way they did it last week, which would be a facebook presentation, a Facebook Live presentation at 10 00 eastern time. So if we get a press release sometime during the day saying shawn fain has something to say at 10 00 tonight its a pretty good bet youre going to hear him announce further locations, whether he does all three, maybe one, maybe two, that remains to be seen. Again, theres no time frame for when we may hear about more strikes. Could the automakers afford 30 , phil . Reporter could they afford 30 . Thats a relative question, joe. Are they going to go bankrupt at 30 . No. But if you say give us 30 , also a 32hour workweek which is essentially another 20 raise on top of that in addition to cost of living adjustments that would take where they are right now, 62 to 65 an hour all in for a line worker, that would move it way up. You have to think about from gm and ford and stellantiss perspective, they have to look at how do they measure up against their competitors this north america. Foreign automakers are at 55 an hour, tesla is estimated to be at 45 an hour. That gap gets to be substantial if you go up to 30 and you give some of the other things that the uaw is looking for. Both sides need to take wherever they are with a grain of salt as to where we finally end up. I guess thats the way it works. But i dont know. Shawn fain certainly is definitive. I wonder. I woender how it finally resolvs itself, phil, youll let us now. Thank you. Reporter we will. Thats when you heard from harry wilson last week. Harry wilson, one of the negotiate tors back in 2007 to try and figure out how to get the two sides together and get some concessions from uaw. He says shawn fain has been masterful how he pulled this off, but now the talk that he is using doesnt necessarily leave an off ramp for finding a deal because he is digging in in such a deep way. So well see. In the meantime, the feds going to be beginning its twoday policy meeting tomorrow. The markets are widely expecting the are central bank to keep keep rates unchanged. We want to bring in the president of sri kamar global strategies. Youve got a pretty stark concern about whats happening with the economy right now. You think we could be in fullfledged recession by the end of this year. That is what i expect i think you have a recession thats been delayed by an enormous amount of stimulus coming from the fiscal side and monetary side. That can delay a recession, but u cannot denial it. The signal is coming very clearly from the bond market, especially the treasuries yield, the two to tenyear yield curve being inverted starting july of last year, so we have been inverted for quite a while. I face the question from clients from time to time, if that has happened and it is 14, 15 months ago, why havent we seen a recession yet. Right. The change that we have this time is we have not had enormous amount of stimulus at the same time as in the past cases. So thats why i think it is getting delayed, but clearly the signs are that there is an exhaustion in terms of the economy, and that is going to show itself in terms of a recession. What signs are you pointing to . Because a lot of Economic Indicators right now are pretty strong, if you look at the jobs market, if you look at across the board places, it looks like we have seen inflation maybe come under quite a bit more control. Thats why we think the fed may be almost done if not completely done at this point. What do you see besides the twoyear, tenyear, and the bond market. Lets look at other things. The manufacturing growth has been down its been negative for about fiver or six months i a row. The s p global expectation of the economy has also been down. The Consumer Sentiment coming from the university of michigan, latest number was down, which is also not expected. And so what it suggests to you, is that the consumer on which we depend for 70 of gdp is finaly going to find the end of the rope in terms of spending, and that has taken a while in time. Its been so much in terms of the government money in the consumer hands and thats going to change. Those are three different farce. Then you talked about inflation. Yes, inflation is down, but the core inflation may be down, but the headline inflation is headed up. Thats my key thesis. The central bank focuses on the core inflation rate which excludes fuel, excludes energy and food, but then in this case we have domestic price of gasoline starting to rise with the brent and the wti crude that andrew spoke about a few minutes ago skprgs thand theyre going continue to go up, and that will be reflected in the price of gasoline and the headline right. Whats the fed going to do . If theyre facing a downturn in the economy but also facing inflation thats coming back on a headline level at least . Will they stand pat . Will they raise rates . Will they have to cut rates as theyre looking at a declining economy . Thats a great question. The European Central bank has one mandated inflation. The fed has two mandates and its illogical. You cant deal with both at the same time. You have to giver up on one of your targets. Because of the fact you may have a recession plus inflation staying high, the fed has to decide what to give up. And in my latest writing ive been saying with elections being just over a year away, the fed simply gives up on inflation. How do you give up . You cant say a 3. 5 inflation rate is okay for me and we have succeeded. It affects credibility. So instead of pausing just in the month of september, you increase in november lets say and then december through the first few months of 2024, theres an extended passm. You never raise rates again. My expectation is its a pause and after which the rate wills come down. It also depends on when the credit even happens, if something breaks in the system, then youre going to see a rapid reversal, and we saw that in march with the banking crisis, the quantitative tightening came to an abrupt halt, and in 15 days, the feds assets went up to the level of last november. So your message is listen to the bond market, not what fed officials are saying at this point. Exactly. Listen to the bond market, and also one more, dont lizsten to the equity marketment look at october of 2007. The s p market hit a peak record level, but the bond market was suggesting a recession, and in the case of the economy, the bond market is a better predict than the equity market has been. That gives us a lot to think about. Thank you very much for having me. Later we will be talking to former Kansas City Fed president Esther George. When we come back, legendary golfer, 24 time pga champion and philanthropist gary player joins us after the break. Squawk box continues after this. [due at target in 5 ] copy that. Make a hard left down the alley. Announcer this cnbc program is sponsored by baird. Visit bairddifference. Com. , bac. 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. The first time you made a sale online with godaddy was also the first time you heard of a town named dinosaur, colorado. We just got an order from dinosaur, colorado. Start an easy to build, powerful website for free with a partner that always puts you first. Start for free at godaddy. Com the gary player invitational on one of the worlds leading charity golf series begins today in glen arbor club in bedford hills, new york, benefitting pancreatic cancer research. Dom chu is there and has a very special guest. How are you doing, dom . Joe, i couldnt be better. The weather is starting to break a little bit right now. Here at glen arbor, the gary player invitational is getting ready to kick off. I am joined here by gary. Thank you very much for being with us on cnbc. Dom, its an absolute pleasure, and you know, its raining, but the day is what you make it, so were going to get out there and have fun, and when you think of who benefits from this day, we got a great sponsor in baronburg, they put up a lot of money, bringing pros, ladies and men and businessmen who come here and contribute at the auction. In the last few years, weve raised 700,000 for pancreatic cancer, and you have all the scientists and people from nebraska, the university of the Medical Center of nebraska here. Ive been down there. Theyre so sophisticated and do a great job at trying to cure cancer. So also if you look at this golf course, dpglen arbor, what theye doing for the young people at this club, not enough golf courses encourage young people and give them permission to play. These young boys are coming here from College Getting scholarships, improving their education. Weve always said if somebody out educates you, theyre going to outdo you. And so its very important, im such a believer in good education, good manners, and bringing the children up correctly. After all, you live in the greatest country that has ever existed, the United States of america. Teach them to honor the flag and to honor this great country. So coming here is a pleasure, glen arbor, of course i designed one of the 140, and really ill tell you theyve just been given the award of the metropolitan golf riders association, and this club richly deserved because they have a sanctuary here, not cutting down trees. Dom, its becoming a disease in america. These golf courses are cutting down trees. They should stop them. In india if you cut down a tree you should go to jail. Every golf course is right on a highway, all the pollution is coming across. You cant cut trees. You plant more. I plant tree. I will never see the shade, i will never be able to use the timber in building, he said but im leaving something behind thats what weve got to do. These courses, as soon as they have a tree, down it goes. A tree thats been there for 50 or 100 years. Theyve got the best greens ke keeper in the world at dallas, texa texas, prunes it out, gets the light in, the oxygen. Weve bot to stop this. Can you take us through why pancreatic research, why the university of nebraska Medical Center . What was the impetus, and what was the driving force behind why that was the charity you decided to choose to be the beneficiary of the funds you raise here . Thats a wonderful question because if you take today in the United States, one out of two and a half people will get cancer or heart attacks or diabetes. So americas a very unhealthy nation. Theyre the most obese nation in the world, 80 of the nation is obese. So this is something weve got to fight, but my wife, the main reason, my mother died of cancer, my sister died of can cancer. I said my wife. My nieces had cancer. My daughters had cancer. Every you meet has had cancer, so with my wife dying of pancreatic cancer and i was with my wife for 72 years, an incredible woman. She helped me become a world champion, and so i thought that was most appropriate with a family thats had a lot of cancer, and with so many everybody you meet, theyve got a brother, a sister that has died of cancer. Youve got to make sure we do other things and rely on technique. Weve got to exercise, make sure we dont eat too much. Weve got to make sure we sleep. Make sure we laugh. There are lots of things that combat cancer and this has got to be taught at schools, but its not. The School System in america is not to be admired. Theyre not in the top 20 of the world. In south africa our kids speak fiver languages, dress well, honor the flag. Its very important to educate people whatever the subject may be. I think joe has a question for you as well now, gary. Just talking about fitness, youre amazing, mr. Player. A thousand pushups asknd situp still every morning. Is it really a thousand . Do you have someone counting for you . How do you do sthat . And even in south africa, you put your steps in your backyard. Youve got 200 steps to run up and down in the morning in south africa. Obviously exercise is a huge part of why at 87 you shoot your whens the last time you didnt shoot your age, gary . Must have been because you first shot it in the year 2000, i think, you were 64. You shot your age 23 years ago well, ive beaten my age 3,081 times in a row. And trevino said whats so good about that, im almost 88, ive got one month to go to 88. He said youve got to shoot 16 over par to break your age, thats not very good, and hes right. But exercise, now i cant do a thousand situps anymore i probably do an average of 150 to 200. Ive still got this like a plank, and im in very good shape. I always walk upstairs in airport as and i live in airpor. I keep exercising. Its imperative. And i sleep well. I laugh a lot. Laughter is a great medicine. So all these things. I read, i keep my mind sharp. Ive traveled more miles than any human being ever. Im traveling around the world to a great extent representing companies, and im meeting 30 people a day on different subjects, different topics, so it keeps my mind sharp, and i think you can avoid alzheimers to a degree as long as you exercise this as well as your body. All right, dpagary, before w let you go, theres one thing im curious about, the longevity aspect of your life. Its obviously diet and exercise, theres a lot of technology that can go into extending peoples lives as well. Do you think that Artificial Intelligence is going to be something that improves humanity in the coming decades . Well, like everything theres good and bad, and i think ai is a tremendous invention, but as long as we dont take it too far. And with the human being, will we . You know, here everybodys inventing atomic bomb, you know, i mean, are we going to stop with ai . That concerns me to a great deal. Longevity is something that the schools are not teaching children without being repetitive, under eat, exercise, laugh a lot. Read. How many kids read and write anymore. Thats the thing. So there are secrets, they always use the word luck in everything. Luck is the residue of design look at a man like djokovic, hes my sports hero. He was the most unfair treated. He was barred from playing in three tournaments. I was barred being a south african for years. Had i lived in america and not been barred, i would have won a lot more majors. Gary player, thank you so much for joining us here on cnbc, and becky, i just want to let you know that i walked through the breakfast line and gary has always waved me away from the eggs and bacon and told me to go right to the juices on the other end of the table. He eats like its last supper. Im going to say one thing quickly if i may, one thing quickly. Arnold palmer and Jack Nicklaus and i traveled the world for years promoting the game of golf, so whatever the new system is that theyre coming up with, its going to benefit world golf, which is important. All right. Becky, gary player, probably one of the most storied players in golf history through hundreds of years, a real pleasure. Well send things back over to you. What was it nine majors, nine majors and had he mentioned had he been here born in america. When he tees off at augusta, he hits it past everybody else, jack and watson, he still pipes it every time he does it he swings so hard. Does he hit it past jack . His grip. Hes got a strong grip. Hes got a really strong grip. And gary, you end up in your divot, which you dont see that very often. He ends up standing in his divot he swings so hard. Right . Its true. They said that to sam snead, they said, you know, ben hogan ends up in the divot from yesterdays play. He says if hes that damn good, why doesnt he hit it to the left or the right of it . You end up in the divot from todays play, thats the thing because youre moving i remember you told me that. Anyway, thats great. Well done. And thank you, dom. Avoid the bacon, especially. Got 150 situps to go, i think if he does 150. Me too. When we come back, is the diesel market flashing warning signs for consumers . We have that story next. And later, key factions of the House Republican conference reaching a tentative agreement to keep the government funded m temporarily and avert a shutdown scheduled for the end of this month. Well hear from former senators evan buy and judd greg about the looming shutdown. Squawk box will be right back. 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. vo while you may not be a pediatric surgeon volunteering your topiary talents at a Childrens Hospital your life is just as unique. Your Raymond James Financial Advisor gets to know you, your passions, and the way you give back. So you can live your life. Thats life well planned. Hows the chicken . The prawns are delicious. Oh, i have a shellfish allergy. One prawn. Very good. Did i say chicken wrong . Tired of people not listening to what you want . Its truffle season ah thats okay. Never enough truffles. How much are they . Its a lot. Oh okay im good, that its like a priceless piece of art. Enjoy. Or when they sell you what they want . Yeah. The more we understand you, the better we can help you. Thats what u. S. Bank is for. Huge relief. Yeah. Diesel prices rising steadily this year, and consumers are starting to feel the pinch in what could be considered a hidden tax. C cnbcs Pippa Stevens joins us now. Diesel prices are surging and that is bad news for consumers since tankers, trains and trucks all run on diesel. So when the fuel price rises its often passed along to the consumers and it is almost like a hidden tax on the delivery of all goods. Oil hovers around a tenmonth high following production cuts from opec and its allies. The loss of saudi and russian crude is hitting the diesel market especially hard since their medium and heavy grade oil is more distillate rich. You can see this reflected in prices. Heating oil futures are up 30 in the last two months. And at the pump, while regular gasoline has held steady over the last month, diesel prices are up 0. 23, and theres no sign of any easing on the horizon. In the u. S. , inventory levels are 11 below the fiveyear high and with refinery maintenance season coming up, its unlikely well see any type of meaningful restocking of supplies. And weve already heard Companies Start to warn, most notably the airlines about what the impact of those higher fuel prices mean s. So what do you think that hidden tax e qualls . That is a question for someone who has economic background. Diesel transports every single good we buy at the grocery store, all of our flights everything runs on diesel. It is the work force for the economy. It filters through to every aspect of our goods. Pippa, thank you. Appreciate it. Still to come this morning, a Government Shutdown lookming over washington. s talks between the writer guild and Hollywood Studios set to resume for the first time in a month. Well get the latest on where things stand. Youre watching squawk box, and this is cnbc. Right now lets get an update on the looming Government Shutdown that could happen at the end of this month. House republicans release add bill after two faction, the Freedom Caucus and the main street caucus reached a deal. Emily wilkins joins us with more on that front. Emily, good morning. Good morning, becky, there has been an agreement, but some republicans are still opposed to it, meaning a shutdown is still on the table for the end of this month. That agreement would fund the government until october 31st, giving lawmakers more time to work out the details in a longer term spending bill the temporary solution would also cut most domestic programs by 8 . Thats with exceptions for military and veterans programs, and the shortterm agreement also includes the gopbacked immigration measures like resuming construction of the wall at the southern border and redist restricting the right to seek asylum in the u. S. Not included in the package, a Provision Requiring employers verify their employees are eligible to work in the u. S. While the agreement is a major step for House Speaker Kevin Mccarthy, lawmakers arent out of the woods yet. That handful of republicans have said they oppose the stopgap measure and plan to vote against it. Congressman Matt Rosendale said the package would be, quote, a continuation of Nancy Pelosis budget and joe bidens policies. He also called the temporary measure a gimmick and called on congress to move all 12 individual spending bims. The house plans to vote on the stopgap legislation on thursday, even if it does pass it is likely dead on arrival in the democratically controlled senate. Its not clear both chambers can reach an agreement before september 30th. Were going to discuss this further, emily, thank you. Joining with us more on the headlines out of washington, former senator and New Hampshire governor judd gregg and former indiana governor evan bayh. Weve had people on saying a shutdown can be an effective way to get a point across in terms of spending. Would you under any circumstances ever say its justified, judd . No. If you look at history of shutdowns, i went through threw they accomplished virtually nothing and significantly impacted the house membership by having people in swing districts lose their elections. For republicans, shutdowns are essentially playing russian roulette with all the chambers full. We always lose on this exercise. And it isnt necessary. Thats the point. You can do so much to get this Government Spending under control and the deficits under control just through reaching agreements on key elements of whats causing that spending, and that would be a comprehensive agreement on social security, for example, kp comprehensive agreement on medicare. If you put every van and i in a, we could make a dramatic. Evans too conservative for his party, and im too rational for my party. Youve got this movement that basically doesnt want compromise and doesnt want to govern. Evan, when the contingent in the house, whether its the Freedom Caucus or the most i dont know what youd call it. I dont want to say theyre extreme far right because do you ever hear extreme far left when they talk about bernie or aoc. Yes. Or elizabeth warren, i dont hear it. Not from most people, not from most reporters. But those guys and gals, they think its almost like a fool me once, fool me twice. They see 33 trillion. They see whats happening, okay, go back eight years if you want, but they see what weve done and where we are and say were left with no other recourse other than Something Like this to get peoples attention. Well, its an emotional reaction to a difficult situation, and first, id like to say i think judd was spot on in his analysis, and one of the difficulties youre having this morning, joe, is youve got two hopefully rational former senators and governors trying to explain the internal politics of the house of representatives. You m theyre trying to make a point. You have problem solvers, people like judd, myself, and there are others there who are elected to try and reach principled compromises to solve the great issues that face our country. And this massive budget deaf skpit deficit and growing debt is a big problem for ourselves, our children, and our grandchildren. You can get people in a room, which used to happen, and solve the problem or at least make progress. The problem is the American People have elected a divided government, and the house in particular is very narrowly divided. So a few radicals on either side and there are some on other side whatever you want to call them, joe can bring the process to a halt. And these people dont think they were sent there to solve problems. Theyre there to make outrageous statements to get on Cable Television and that raises the money frlt theres a small sliver of the American People who will send donations to these people who say im here to fight and im going to bring the whole house down. For the vast majority of americans they look at this and they say we elected these people to solve our problems and theyre actually creating another problem, and that leads to more disillusionment with government, which then leads to frustration to vote for autocrat a s and demagogues and brings our political process into great ert disrepute. If this does pass am i the only one that finds that ironic that the problem would be pushed to halloween . Yeah, october s31st, thats pretty spooky. It can be a great day, my wifes birthday, and judd, i thought it was interesting, the three shutdowns you went through were all republicans. Did you say that . They were all by the house of representatives. But you didnt like it because it hurt not because they did it, but you said they ended up losing seats because of it. This wasnt your only point. And spending was not reduced. And spending was not reduced. To address the underlying structural problems which are creating this deficit, and it hasnt happened to be 15 of the budget, which is discretionary defense spending. Thats like arguing over angels dancing on the head of a pin. Whats driving the fiscal problems of our nation are entitlements, and pretty soon interest on the debt, but the thing that we can actually address, which would change that, is the entitlement accounts. Interestingly in the house they have that problem solving caucus, which is bipartisan. They came up with a comprehensive and thoughtful approach to how to get the full deficit issue before the congress and actually address it, but its been ignored, and instead you have people who shout from the corner asks really dont want to get in the middle and mix up and get something done, which is not the way you govern in our system. Our system requires that you get in the middle and mix it up and reach an agreement and then you move forward. Thats not going to happen with this house bill. I give the house credit, if they actually pass this bill and send it to the senate, the hot potatos in the senates hands. I dont think it will be something that mccarthy can ha handle because hell lose his speakership or be challenged if he tries to put on the floor whatever the senate sends back. Evan, if you were Speaker Mccarthy, how would you i m mean, we know about wrangling cats and all that stuff, but how would you approach this if you were him . Its a true dilemma, joe. In the short run hes got to placate that small sliver on his far right, other side he cant get anything passed, and they might bring down his speakership here in the next few weeks in the long run as judd pointed out, weve seen this before and the party that causes a shutdown tends to not fare very well in the next election, ask that could defeat the number of moderate republicans in swing districts, which would bring down his speakership. My guess is that you try ask live to fight another day so you do everything you could to try and kick it over to the senate and maybe rational heads will prevail. Two things, we need to get through the next election. We dont need this on october 31st. We dont need the middle of the election cycle and then have a National Conversation about what were going to do about this problem. Hopefully the candidates of both major parties would address it. At least we could try and get a National Consensus on the difficult decisions, and they are difficult, that have to be done for the best interests of the country. The temptation is to play politics in the short run. Theres always an election coming up. Long answer to your question, do everything you can to pass it through the house. Kick it over to the senate, and hopefully the senate will come back with something that can be a template for actually getting the thing done and would convince the 6 to 10 to 12 radicals in the house caucus that thats the best theyre going to do and they should take it. Judd, is there any doubt in your mind that we have the best system in the world of governing, this is what we have, right . Well, we do, but the system is under great stress right now skps and its under stress because of this massive populist movie of both parties, which i dont think madison ever anticipated would be so dominant. Basically these movements do not tolerate compromise, and madison structured a government of compromise. Thats why we have three branches of government, and thats why theyre different in which Party Controls them. Its really not functioning in the context of the way it was supposed to function today, but it will in the end. We always solve our problems. We always address them. We get laeeaders who are willin to make the tough decisions of stepping on the toes of their own people in order to get things done. Im fundamentally optimistic about the future of this country, and im not going to worry too much about the fact that they want to cut 8 out of a discretionary account, which is really marginal evgt on any effect on anything. Im more worried about the fact that nobody seems to be stepping up to the table on the issue. Judd gregg, thanks, evera bayh. Thank you, joe. And thanks to my hoosier come pate yacht becky. Dwere going to get the latest on the Writers Strike and the impact being felt by studios. Take a look at futures as we head to that break. Hings about to turn negative, dow now off about 47 points, nasdaq down about 54 points. The s p 500 off now close to 10 points. Well talk about it, squawk box returns after this. You know when you have those moments . That time to reflect. To be like wow. What did i do to get here . city ambient noise right. 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Saudis Public Investment fund is majority owner of rival ev maker lucid. Reports say musk has spoken with indias government, ask yesterday he met with turkish president erdogan in new york and was invited to build his next factory in turkey. Erdogan offered collaboration opportunities between spacex and tu turkeys Space Program and invited musk to techno fest, thats turkeys aerospace and technol technology. Contract talks between studios and writers expected to resume this week, but can a deal be reached . Were going to talk about that after the breakm. We dont know but well talk about it. Later were going to talk to former Kansas City Fed president Esther George. Squawk box will be right back. With the lor barista system. A masterpiece in taste. 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. Welcome back to squawk box. In a change of plans, the Drew Barrymore show has decided to reverse their decision to have shows during the strike. Matt, lets talk about that and lets talk about what you have in the newsletter this week which is this idea that Drew Barrymore but the power of social media has helped the writers and the writers union. Absolutely. Thats been a big differentiator in this strike, versus what happened 15 years ago presocial media. The writers have galvanized each other and the public on their side. It was a big factor in the Drew Barrymore decision. She got absolutely destroyed online when she announced she was going back, even though theres no agreement. How do you think about the Drew Barrymore piece of it we were talking about bill maher a little bit earlier and his decision to come back . Bill maher sort of hovers above all of this. His brand is antiestablishment and i think he likes that everyone in hollywood is angry with him and there may be picketers outside his show. But thats not Drew Barrymores brand at all. Shes the nice friend next door. Thats how she gets guests on the show and why people like her show and shes become a villain of the strike. She does have wga writers on her show. It wasnt enough in this climate. When the social media mob comes officer like that, its really hard to put up a fight. So there will be a meeting scheduled this week at some point. Do you look at this as a thaw in the dialogue . I do. I think the fact that the writes are initiated, this they went to the studio and said let have a meeting on this. I think it does mean theyre willing to at least engage in some of the issues that they have put forth in their proposal. It doesnt mean we have a deal or that theres any actual momentum here. It just means they are willing to talk but in this strike, that is actually a big deal. How do you think though, matt, theres also been talk that theres been some kind of back channel negotiations around the actors side of this . Is there any benefit to the studios to try to get to the actors first if thats even possible. I dont know that thats possible. I think the actors are sitting back and saying the writers are being pretty aggressive here. Were going to let them go first. We dont strike first and whatever the writers achieve, the actors will try to improve on that. I dont think its the pay increase thats going to be the problem, the difference between the 4 and 8 . Its the bigger issues, what you do about a. I. , what you do about keeping writers employed. Which side has to give more . Its the transparency issue. Theyre very adamant that they provide more data about who is watching what shows. And they want a metric for success. You get paid more in success. The studios have been reluctant to agree to that, but i think thats where theyre going to give and where the writers and actors are going to get big gains is on this transparency issue. The writers room thing where they want more writers in the room, well see if they get that. And the a. I. Thing, i think the studios are pretty much aligned with the writers at least on that one. They have a few things to hammer out. The actors have separate issues on a. I. , their performances, they want to protect that, but i think the transparency issue is where the studios have to give and i think ultimately they will. Timingwise we got to go but whats the earliest you could see the writers piece get solved in. The earliest would be this week but early to mid october is still the goal. Thats where you could salvage some production by the end of the year. After that i think were looking at early 2024. Okay, matt. Thank you. Im sure well talk to you more about it all. Thanks. When we come back, were going to talk to former Kansas City Fed psintrede ester george. And the latest on the auto makers strike including the hit it could have on the economy. Squawk box will be right back. 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. Esther george. Good morning. Ready to amp things up. Its currently day four of the strike. And its fed week. Investors standing by for the latest Interest Rate decision. Well talk about the key factors central bankers are weighing. And well speak with Esther George. The final hour of squawk box begins right now. Good morning and welcome to squawk box here on cnbc, live from the Nasdaq Market site in times square. Eye joe kernen, along with becky quick and Andrew Ross Sorkin. The market since the beginning of the show we were green across the board, just fractionally in the dow and now the dow is down about 50, nasdaq is down about 57 points. It was a rough session on friday, which followed a really good session after the cpi and ppi were both in. Plus its raining today in new york. And its monday and its september. You know, its coming up, i think fall is coming like any day, isnt it, three days, Something Like that . It felt like fall over the weekend a little bit. Theres the 10year. Well talk about that and the 2year is above 5 now. Oil continues to be on peoples radar screens, about 91. Thats the question, is it the high end of a range of 70 to 90 or is it on the way to 100 . I wouldnt be surprised if either at this point. Ford and jeep maker will be back. Stellantis raised its offer. Uaw workers want 40 raises over that time span. He says his members are ready to amp things up. The white house is sending a team to detroit to help keep conversations going. I dont know how thats going to improve the state of affairs. A group of conservatives and more moderate leaders in the house announce a bill that would avoid a shut down at the end of the month but it includes 8 budget cuts for most agencies. Lawmakers may very well have to go back to the drawing board to avoid a shutdown. Meantime, saudi arabia is speaking with tesla and elon musk about setting up Manufacturing Companies in those countries. They say they have been floating the rights to buy minerals and paper. Turkeys president asked elon musk to build a factory in his country. Also telling musk his country was open to communication between a. I. And satellite services. Lets bring in mike santoli. What are you watching this monday morning . You mentioned it was a tough friday for stocks. That was a big quarterly options expiration date. A lot of times volatility can expand after that and were in a tough seasonal period. Mostly what i see in the s p is an indecisive take. Weve actually hugged the 50day average within 1 or 2 of it for one of the longer stretches in recent years. You mentioned oil prices, maybe bond yield. On the other hand earning estimates moving higher. Its really now qualifying its decent, prolonged consolidation after that very strong move into the end of july for the s p. But it also has not been the the most broader, inclues itch rally. Look at the russell 1,000, equally weighted. On a onerear basis we still kind of have an up trend in place but its in the middle of the 2023 highs and lows, not really decisive. Yields matter more on the small cap side of things. And xle, with Oil Prices Going to above 90 and the castros looking pretty good for a while, this is a threeyear stock. Looks like either top of the range or potential breakout. Seems like people are pretty bullish about energy and feeds into that latecycle psychology. You think it going to be how much more is left in this expansion, joe. Were going to continue and whether we really are moderating at this point, some think so in terms of economic activity. Joining us is president of yardeni research. Ed, welcome. You think we go from a 4 gdp growth and that gets cut in half. Were headed for 2 for a variety of reasons. That does mack sense to me. It looks as though we had sm, particularly the strength of the consumer was very popular movies. But we are seeing some slowdown in consumer confidence. This increase in gasoline is unnerving to consumers. Its a price that everybody can see as they drive down the road and seeing it going up again i think could weigh on Consumer Spending. You got uaw strike, you got yeah, i i think we got to throw that in. Possible shut do you, europe in recession. Its just a lot of things. So you think the feds done. There will be a pause and then there wont be any hype next time either. I think federal government officials that the federal funds rate is restrictive enough, it will slow the economy down and bringin plaugs so i think when we see the dot plot, the summary on went from the fomc, i think they are going to show they arent going to raise your federal fundraiser during the last meeting. I think an increase in november is still possible but you you this big change will be an increase in the fed funds an implied decline but much less than maybe they were forecasting last time. Last time they forecast a 100basis points. I think now they might go for more of a 50 decline next year. You still have 4600 by the end of the year on the s p and then you think better next year. You think there can be new highs, i guess, 5,400 by the end of 2024. I know that generally speaking fed watchers like to criticize the fed and suggest that theyre always wrong about their forecasts and what they are doing, but i think theyre actually getting it right this time and we may very well have immaculate disinflation where inflation comes do you without an economywide reing and, if so, i think earnings will continue to improve next year. I think this year i was expecting 4600 by year end. We got there by july and i looked away at all those issues you. And these yields that were going to be left with are basically where we were prior to the financial crisis. You see this as almost a normalization. And life goes on. Shut absolutely to the great financial crisis is behind us and i think we are normalizing again. Before the crisis, the inflation premi premium was around 2 1 2 . Energy love. Still overweight energy, i. T. , even financials and then materials. Yeah. Yeah. Again, im not looking at this as sort of a trader. Im looking at it as where you want to overweight over the next 12 to 18 months. And i think as some of these shortterm problems get resolved, the Economic Performance would be pretty good. Im actually looking for productivitylike growth over the decade. Im fundamentally bullish for the outcome of the economy and the stock market. Zp you mentioned it and did that really happen . Financial crisis and the great pandemic and then a horrible war. Russia invades a neighbor. I mean, the only thing thats left is like the zombie apocalypse. Would you bite your tongue and then all better off if theres a zombie. You dont want to hold any assets in that environment. Whats left is a risk, i could be wrong. Inflation could make a comeback here, sort of a twin peak situation. The bond market would go to 5, 5 1 2 . Be glad that are not,ing. Thank you. Good day to have you on this morning. Always a pleasure. And on that cheery note, when we come back, we are going to talk more about fed week, investors gearing up for the u. S. Bank as latest with former Kansas City Fed president eis it. Prepare for takeoff. That company is working on lek truck air telecommunicationies. Dont go anywhere. Well be right back. Old school meets bold new thinking. At 87 years old, we still see the world with the wonder of new eyes, helping you discover untapped possibilities and relentlessly working with you to make them real. Old school grit. New world ideas. Morgan stanley. Im so glad we did this. Im so glad we did this. Im so glad we did this. Im so glad we did this. Im so. Glad we did this. [kid plays drums] life is for living. Lets partner for all of it. Im so glad we did this. Edward jones nice footwork. Imman, youre lucky,is. 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. 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. Welcome back to squawk box, everybody. Weve been watching the futures this morning. We started out in the green. We ended up in the red, at least at 8 14 in the morning. Still a little while to go before the opening bell, another hour, 15 minutes. Nasdaq indicated down, s p futures off by close to 10. Were paying attention to the small cap russell 2000 index. It lost 1 on friday and is down six out of the last seven weeks. You can see this morning heres where things stand. 1847. And meantime, electric air Company Announcing plans for its First Electric the commonwpany announced it going to be building a manufacturing facility. Thanks for joining us this morning. Im curious, why dayton and why this location . Good morning, phil. Its incredible to be with you. Im here in the Wright Brothers home. The Wright Brothers made the impossible possible and brought aviation to us all. Its incredible to be here in dayton to be selecting ohio for our first scaled manufacturing facility. Dayton is home to wright patt Patt Patterson air force base. Its home to an incredible aviation workforce. Ohio provides more parts to boeing and airbus than any other state. Its third in the nation for manufacturing. And thats really critical as we look to where were going to site our manufacturing facility. And in addition the incentive package that both the state and Lot Community provided was really spectacular. And finally, our key partner has its largest northern manufacturing location just down the road for us here. All good reasons. It wasnt long ago you guys received faa certification to begin flight testing with your prototype. How often are you doing these test flights and what are you learning so far . We are flying regularly and making really spectacular progress and since we last talked, we rolled our first aircraft off our pilot manufacturing line in marina, california. It really demonstrates the momentum that we have as we are scaling this technology and were so excitedabout the progress were making on certification with the faa. The faa is really hitting its stride and providing time lly responses. As a company we are leaning into the next fphase of certificate f i have case, which is testing. You have commercial service slated for 2025. Do you still expect most of the early air taxi rides, if you want to use that term, to be to and from airports or in other urban locations not necessarily going going to an airport . The airports are the pillar of our service in any locality. We have a partnership to provide app experience, washdelta has invested more than 10 billion to best in class air infrastructure and were really excited to be working to leverage that infrastructure and build our on takeoff and landing locations a the those delta locations. But there have been more than a few critics in the last six months to a year that say for the projections that joby is putting out there, we think theyre too optimistic and we dont think this will be as widespread as theyre projecting. What do you say to that . Were taking a very incremental approach. Were going to take this step by state police and grow this into something that can be part of peoples daily lives. Were so excited about it. Does that mean youre going to produce your projections in terms of daily flights . We are very excited about what this can deliver for customers and, no, were not reducing our projection. On a big day, the founder and ceo of joby, as you announce breaking ground in dayton, ohio. I will send it back to you. All right, phil lebeau, busy. Youre all over the place. Get back on that strike. We got much more on the united auto workers. Well speak to an official if the u. S. Chamber of commerce and much more under President Biden and president obama. It will be interesting, though, another march requestspo i well tell you what to expect well tell you what to expect afte r insting routa cartgo. If you dont know youre watching squawk box on cnbc. 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. Connecting to opportunity is just part of the hustle. Opportunity is using data to create a competitive advantage. Its raising capital that helps companies change the world. Its making complicated Financial Concepts seem simple. Opportunity is making the dream of Home Ownership a reality. Writing new rules and redefining the game. And driving the world forward to a Greener Energy future. applause opportunity is setting a goal. And charting a course to get there. Sometimes the only thing standing between you and opportunity. Is someone who can make the connection. At ice, we connect people to opportunity. Welcome back to squawk box and welcome to our studio audience. Leslie pick are joins us now on instacart. Today is the big day, leslie. Hey, andrew. Yeah, its going to be a pretty busy week ahead for ipos. Instacart set to finalize its price after the bell today. After hiking the range, its expected to opt to something at the high end or above the high range. That means it is likely to have a valuation around 10 billion or above by the time it starts trading tomorrow. Marketing Automation Platform clavio opting to increase on stronger investor demand and theyre expected to set its price tomorrow afternoon and start trading on wednesday and both of these come on the heels of the biggest ipo, arm, traded up 25 on day one last week. The u. S. Ipo market reopened in dramatic fashion goldman said in a weekend note. The firm said its barometer is more consistent with a normalized back drop with new issuance thanks to a jump in the s p 500 this year. But this product coming to market is pretty dissimilar to that in the most recent cycle peak in 20202021. They will do a down valuation. Goldman argues the hyper valuations from that ipo class of two to three years ago made for some pretty poor aftermarket performance. A third of the backed companies in 2021 came to market with valuations exceeding 15 times sales. None of them outperformed the russell 3000. Goldman sachs leading this particular ipo, the instacart ipo. My question to you was going to be whether you think they could actually increase the valuation again tonight. Well, they could increase the valuation by pricing above the range. I believe sec rules dictate you cant price it above the range more than 20 from the high end. So, yes, they could raise the valuation by pricing above the range but only within a certain window. Leslie picker, well see what happens tonight and tomorrow morning when this thing goes public. When we come back, a lot more on squawk box. Former Kansas City Fed president Esther George will be joining us. Plus, what is ahead for the rest of the year. You dont want to miss an interview with treasury secretary janet yellen. Thats at 10 a. M. Eastern time. You dont want to miss it. Stay tuned. Squawk box rolls on after this. 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. 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. Welcome back to squawk box right here on cnbc. If youre watching the futures this morning, we have turned into the red. Dow futures down about 15 points, s p off by 6, the nasdaq off by 44. The treasury market is looking at a twoyear above 5 , 10year back about 4. 3 , too. You are looking at higher yields. Crude oil has been pushing higher. That could be a big concern, especially with what to think about inflation. Wti up another 1 to 91. 68 a barrel. Investors are looking ahead to wednesdays Rate Decision from the Federal Reserve. Most are expecting the central bank to stand pat but obviously well be listening closely to any new commentary from chair jay powell. Joining us is Federal Reserve president and krceo esther geor. Many think theres only 25 basis points. Is that the right way to be thinking of things . The fed has not yet achieved its targeted inflation rate of 2 . The chairman and fomc members have been clear about their resolve to get there. I expect at the conclusion of this meeting there will be more in insight offered about where they are, how close they are and that might include keeping the higher rates. A previous guest says he thinks we could be heading into a recession. Sometime in the next few months he thinks well be in a re recession, and its going to put the fed in a pretty tough position. Hes basing this not only with the 10year and 2year spread but manufacturing and Consumer Sentiment turning down. Does that sound like a plausible situation . I think that should be among the scenarios that markets and all of us should be thinking about. It would be very unusual to see a tightening cycle that has not resulted in a recession. What magnitude i think clearly you could come up with a variety of assumptions to try to determine that. But i think what weve seen so far is the economy responding to those higher rate increases and then it really a question of how durable, how resilient that economy is to adjust to the rates in process, whether the Federal Reserve will feel like it has to do more. So too soon to call a recession, i think, just like its too soon to call a soft landing. It does, though, put the fed in a bit of a quandary. Its got a dual mandate. One, it needs to worry about inflation, two n, it needs to worry about whats more important right now. I think the price is clear, they have to restore pricing of the common and weve heard that their focus is returning to a 2 target on a sustainable basis and i think in line with not ignoring the employment mandate for sure but understanding that the cost of high inflation bringing it down could result in impacts to the labor market. But dont you think in terms of getting to 2 that theyve got time, a lot more time than perhaps the market even expects . I think theres a sense that somehow theyre going to race towards 2 . Now if it takes them another two years, maybe thats okay. Well, i think this is where its important. And the reason that you would see a committee pause at this stage is because they want to see the direction of the data. They want to see what momentum is behind, the disinflation that weve seen so far and to know what that trajectory is. I think its hard to see without much clarity. They dont have to race to the finish line just yet but i do think they will have to get growing confidence that they see the numbers moving in the direction that helps them meet their mandate. High oil prices can be inflationary and deflationary, i think. Netnet, how do you think it slows down economies around the world i would think but also filters through to just about everything. If you throw in the uaw strike and a possible Government Shutdown, isnt there a lot . Its kind of like tale winds for the fed in slowing the economy, isnt it . Could be. And i think particularly Energy Prices are so salient for the consumer. You see them every day, you experience that when youre filling up your gas tank in particular. And so those higher prices can affect demand. It can also affect, though, peoples expectations for future inflation and i think that is a place where the Federal Reserve is going to be very mindful of what impact future inflation does the effects of higher wages and things like higher gas prices have on the task ahead of them . Obviously things have gotten a lot trickier. If you were still a Voting Member on the fomc, how would you be voting this time around and in november . Would you be more inclined to a hike for more inclined to wait and see. I think id be comfortable waiting a the at this point and ive learned not to second goes my colleagues were im on ahead of them in terms of loolk being at the data, understanding you a and so todays meeting an important one as always in terms of hearing, how their discussion went and how they see the future of the committees action. What concerns you the most at this point . Would it be Energy Prices hiking back up, would it be Consumer Spending slowing down a bit . Would it be the potential for some sort of a credit issue, things we havent learned about yet, weakness in the banking by this quick move in rates. I i thought about the impact of these hyper rates for some time on the banking sector. Even though we saw some early reactions from a few banks, the issues of adjusting your Balance Sheet to these higher rates i think has yet to fully come through. So i would keep an eye on the banking system, even though there are no obvious problems there but there are unrealized lossesin that and those looking for other signs of credit weakness into how that translate into the. If thats the concern then the market maybe is right in thinking that the cuts to the Interest Rates are coming sooner rather than later because if theres a shock, thats basically the feds only tool. Well, certainly if theres a shock, if theres something that hits the economy thats unexpected, it is the feds only tool and you will likely get a reaction. But i think in terms of looking at rate cuts out into the future, the commitment they are getting to their target for inflation. So either one of those scenarios could cause a reversal of the policy weve seen but you just really cant know at this stage. Eis the former president of the Kansas City Federal reserve bank. It been great talking to you today. Coming up, an update on that uaw strike. What does each side want ant how lets get another check on crude oil, almost 92 now. On friday west texas intermediate closed at its highest level since last november. Were adding another 1. 3 today on the gasoline price, coming off a 2 gain last week. Gas is up about 10 this year and closing in on 4. Youre watchinsg quawk box, really, everybody eaves favorite morning show on cnbc. 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 mlb chooses tmobile for business for 5g solutions. To not only enhance the fan experience, but to advance how the game is played. 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Hes also of the view if you just make lots and lots of bets in the same sector, one or two is going to hit it out of the park as opposed to finding some Small Company its a v. C. View of the world. On a much bigger scale. And a breach damaged portions of the companys i. T. Infrastructure. Clorox says it is still evaluating the extent of financial and Business Impacts from that attack. The stock right now down about 2 . In roark capitals deal to buy subway is under scrutiny. Officials are taking a look at the deal and possible antitrust complications a particular concern, the way subway defining its competitors in its own Franchise Agreement documents. They already own duncan brands, sonic, jimmy johns, which i think are subs and more, adding subway to its portfolio would create a company with more than 40,000 restaurants nationwide, which is throw times of mcdonalds. When we come back, we are going to talk about the uaw, whats the latest there, what were seeing. Weve got debate going back and forth on that. Well also talk markets and get you ready for trading. Futures in the red, dow down by 34, nasdaq off by 43, s p down by 7. D can get the best of squawk box in our daily podcast. Just followed squawkpod on your favorite app and you can listen any time. Squawk box will be right back. Im hearing different ways for me to screen for colon cancer. Its time to use my voice, ive got a choice, more than one answer. I sat down with my doc. We had a talk. Knew just what to say. I asked for cologuard and did it my way. Cologuard is a oneofa kind way to screen for colon cancer thats effective and noninvasive. Its for people 45 plus at average risk, not high risk. False positive and negative results may occur. Ask your provider for cologuard. I did it my way its day four of the united autoworkers against detroits big three automakers. Ford announced layoffs on friday. That company and jeep maker stelantis but they called the latest raise offer a nogo. Joining us, a former member of the Labor Relations board, now with Harvard Law School and the executive chief policy officer from the executives of congress. The white house correspondents dinner. Professor, can i call you sharon now . Please call me sharon. Call me to dinner. I dont like to take any amusement or satisfaction out of it but its fascinating how you would recommend the Biden Administration to approach this, sharon. We had harry wilson on last week. He was part of the task force factoring the crisis and he said that the uaw has a point. They shared a lot of the sacrifice after that and have not really participated in the up side that woor seeing. Were seeing. So you can understand a number even 40 . But you point out the booming profits. My thought is past performance is no indication of the future. Could you think the outlook is bright from the big three for booming profits to continue from here on . I certainly think that the outlook will be brighter if the companies treat their workers in a way thats fair. There are a lot of variables that will determine the future of the auto sector. Lets remember that labor costs are actually a very small part of these companies costs. So to position whats going to happen at this bargaining table as determinative of the future success of these companies is not exactly accurate, but the companies have over these past years have since 2007 when as you recounted, the union did di great concessions to save this industry, the companies have increased ceo pay at a very rapid rate. They have given out billions of dollars in stock buybacks, so to now say, oh, we have to be so careful about the future and ask workers again to be the ones to absorb risk about the future, theyll be most successful if they come to the table in good good faith and negotiate. But a hobbled employer doesnt help anyone. We know ford lost 4 billion in trying to do the ev transition. We know that the Biden Administration is on the cover of the New York Times today. The emissions standards are going to be in the next ten years, almost prohibitively expensive for a lot of industries. It seems at this point they are facing a very daunting future, the uaw, and it doesnt help anyone with the automakers end up like they did several times in the recent past, and thats what you ive heard the 7 or 8 of labor but ive heard it can be quite a bit more. Do you think 7 or 8 that labor costs for the big three . No, its going to be the lot worse if you look at these uaw demands. It would be one thing if the focus were talking about how we share in the future growth and profit of the automakers, but the uaw is looking for a 40 pay raise. They want workers to be paid for five days when they only work for four. They want to return to defined benefit pension systems. That is a recipe to put these companies into bankruptcy, and that serves no ones interest. I think the question we have to ask is, why do they feelso emboldened . This isnt the first time weve seen demands like this. Its been the summer of strikes, and this is a bit of a pattern, unfortunately, i think its being fueled in part by the Biden Administration and this push for unionization at all costs. And we saw a little bit of that in the president ial march on friday, so were deeply concerned. We have to restore balance. Workers deserve a pay raise, but not the type of things that the uaw is demanding thats only going to result in these Companies Going out of business. June, if this were to actually make it more difficult for the u. S. Economy in an election year, do you think that is in the back of the mind of negotiators that are being sent by the Biden Administration . This doesnt help anyone, and it doesnt help the president in terms of his reelection efforts. Okay, so, to be clear, first, the president is not sending negotiators. There are no members of the administration that are going to be sitting at the table. Sitting at the table are the company and the union, and i just want to say to question is loyalty of the uaw and their members to the future success of these companies, theres just no basis for that. I mean, again, lets go back to 2007. This is a union, and these are members who sacrificed a great deal to save the Auto Industry in this country. Now, in terms of the sort of political ramifications, i think the best thing for the president s politics is whats best for the u. S. Economy, which is to have a thriving middle class. Thats at the heart of bidenomics. That is what the uaw has been at the heart of for a hundred years, of building good middle class jobs in this country in manufacturing. So, i think getting a fair contract is the best thing, both for our economy and for the president s politics. Neal . Well, listen, you have the uaw over the course of the weekend saying 20 pay increases are simply paltry. I think, joe, you said it best. The past indication of the last decade isnt a guarantee of future performance. I would be a lot more reassured about the uaw leadership if we were talking about how we expand the footprint of these companies and how workers then share in that. These companies have been sharing quite a bit of record profits with their employees through profitsharing programs, but thats not the focus of what the uaw wants, and so i think were right to be concerned, and what were focused on at the u. S. Chamber is the ramifications of this through the broader economy. Weve already seen additional layoffs as a result of these strikes and thats just in the Auto Industry, but think about all the service employees, the restaurants in detroit and around these plants who are counting on these workers being in their jobs. Theyre Collateral Damage in all of this, not to mention the fact that the American Consumer is going to end up being paying for these huge wage increases and huge benefit increases. Thats the thing that concerns me, sharon, is down the road, lets say tesla has a lot of competitive advantages, so lets say that during the ev transition, this makes the big three even less competitive in trying to compete against tesla and bmw and mercedes and everywhere else. You give all these things out. Next thing you know, were faced with where the government events or taxpayers are on the hook for wages that got just went up too much and hurt the companys profitability to the point where it couldnt innovate and it actually was bringing on layoffs. You dont think theres any chance of that happening where a company could be hurt because its not as competitive because of these wages . No. Absolutely not. Again, this is a union and companies that have bargained for a hundred years to build this industry, and theres just no reason to think that the uaw does not want to have these companies be successful. But they want them to be successful in a way where that success is shared. Im not hearing a lot of concern about increasing ceo pay, increasing stock buybacks. But sharon, thats just optics. If you take the 20 or 25 or 30 million, thats de minimus for what were talking about at the success of the company. Maybe optically, it looks bad, and its a politics of envy and everything else, but you take a defined benefit, put that back in, 32hour workweek, a 40 pay raise, i mean, the ceo issue, thats just a talking point. Thats not that doesnt hurt the bottom line of the company or the future profitability or ability of the company to compete. I disagree. Having a company that is committed to building good middle class jobs, to treating their workers fairly, to giving these workers a voice in what the future of the industry looks like and how all of the workers, the companies, the shareholders can win the ev future, thats the best thing for this company. Its the best thing for the workers, and its the best thing for the communities. When you talk about what the spillover effects of a strike might be, lets talk about the spillover effects of for communities when workers arent paid a good middle class wage. These communities depend on uaw workers making a decent income so then they spend their money in these communities that have stood by these companies for generations. Thats the way that you can best grow this economy and to have everybody, again, win the ev future. Okay. I think getting lost in this is the fact that the these three companies have actually put record offers on the table. Were not talking about zero and the demands of the union. Were talking about 20 plus pay increases. Were talking about signing bonuses. In excess of 10,000. Were talking about increased health care and retirement benefits. Thats what the companies have put on the table. Clearly there is a cost to all this. Clearly there is a point at which if you keep piling on, pay increases and benefit changes, that you actually put the financial viability of the company at risk. If that wasnt the case, why didnt they ask to simply double the wages . There are real costs here, and were playing with fire. Neil, thank you. Sharon, thank you. We got to run. Were putting our commercial endeavor at risk if we dont leave right now. Thank you. Appreciate it. Joining us right now, at least for a little less than two minutes to talk strategy for the trading week ahead, stephanie link. Were going to be hearing from the fed later this week. We got these earnings reports and a lot of anxiety, stephanie. What would you do . Stay calm. I dont think that its going to be a big event on wednesday when the fed does decide. I dont think theres going to be a decision in terms of a change, anyway. I dont think they probably even go in november, but rates are going to remain higher for longer and thats because the economy continues to hum along. Last week was really positive with regards to data, industrial production, retail sales, final demand, initial claims, across the board, the numbers are coming in better, but thats leaving inflation higher, unfortunately. So, thats why we have to learn to live with higher rates, but earnings are estimates are going higher. Capital markets are actually opening up, which is very healthy, and we get a very big key report tomorrow with fedex and their earnings, and i care less about the numbers. I just want to hear what they have to say in terms of whats going on around the globe. Okay. Stephanie, that was beautifully concise and insightful all at the same time. We appreciate your indulgence this morning. Thank you. See you soon. Lets take a quick final check on the markets before we hand things over. Futures have been in the red, at least for the last hour and a half or so. Well see right now that the dow futures are indicated off by about 18 points. S p futures down by five. Got about a half hour to go to the opening bell, so that could all change. Weve been watching yields and so far it liooks like the twoyear is well above 5 at the moment. Right now, its time for squawk on the street. Good monday morning, welcome to squawk on the street, im Carl Quintanilla with jim cramer, david faber at post nine of the new york stock exchange. Stocks kicking off the week mostly in the red with plenty to monitor. A fed decision this week, the auto strike enters day four, ipos on deck, oil, nearly 92. Our road map begins, though, with the big week ahead for investors. The feds next decision, front and center. Were going to talk to

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