Yesterdays gains related to treasury yields tapering off. Coming back down after really watching them march higher. Above 4. 6 . 4. 54 is the yield for the tenyear treasury. We have seen calming down at this point of yields. We will see where that continues. Late last night in washington, lets talk what happened. Republicans passed three of four spending bills in the house and a push to avoid the Government Shutdown. Lets go to Emily Wilkins in d. C. With more on it. Good morning. Reporter good morning, andrew. You are right. There was a little bit of victory for House Republicans. Lets be clear, congress has no plan to fund the government before sunday at midnight. That means we are looking to have a shutdown at this point. The house and senate on looking to have progress today to keep any sort of shutdown as short as possible. The house passed three of the longterm funding bills. None prevents a shutdown. The hope is to build support for a shortterm measure that members will vote on here in a couple hours. Now that house stopgap package is it filled with cutting spending and spending money at the border. You have to figure out the stopgap measure to advance the procedural hurdles. Mccarthy will not take up the current bill in the house. We have a group of senators working to add a bipartisan Border Security amendment. Chuck schumer made it clear on the floor yesterday that anything the senate produces must have the buyin of both parties. Things are coming down to the wire. As i said for months, congress has only one option. One option to avoid a shutdown. Bipartisanship. It was true yesterday and it is true today and it will be true tomorrow. Reporter now even with wide support, the senate likely wont be able to move their bill the until after the shutdown has already begun because they have so many procedural hurdles. If mccarthy takes the senates bipartisan bill, co face a threat to his speakership. A lot of moving parts here, guys. A lot of unknowns and uncertainty. D. Krc. Is prepared to go into shutdown. Thats where we thought we would go. Emily, thank you. This brings us to the consumer stat. 4 million. Thats how many government workers would go without a p paycheck if the government shuts down. In 2018, the economy cost was 11 billion with that shutdown. Eventually, the workers will get paid. They will get the money. A lot of people dont have excess savings. They will not get paid while told to come in to work for essential workers. A mess. A mess. Not a way to run a government. No way to run a strike . I g the auto workers strike is going for a while longer. Uaw is expected to announce additional strike targets at 10 00 a. M. Eastern. Barring substantial progress and negotiations between now and then. Sources say gm and stellantis are growing inn kcreasingly frustrated from the lack of parpar participation from shawn fain. Fain has set the deadline before holding any meetings with the companies or counter proposals from a week ago. We have been hearing that. Phil brought us the emails where it said we have them where we want them. We are not talking. That was the gist. We will have a live update from detroit in the next hour. That town might be in a good mood, i guess, from last night. Green bay. Detroit has never been any good. Theyre good. They are good. They got that quarterback. I lost money. Sorry. Im okay. It wasnt a lot. More or less. 10. No croissant today. You could step up. Buy him a croissant. Ill get you a banana. Thank you. Two or three days ago, these were not any good. I have been saving them. Swear to god. Now they are perfect. Lets go. Lets talk about why you are looking at higher futures this morning. That is because nike shares are sharply higher. The company came out with earnings of 94 cents a share which beat the expectation of 75 cents. Revenue fell and margins slipped, but it was still above estimates. One metric was china sales which grew 5 year over year. That is slightly missed expectations, by the ceo feels good about the market in china and nikes position. He highlighted the return of sports as a driver of sales. Nike did maintain the fullyear guidance of the revenue growth. That stock is up by better than 8 this morning. In the meantime, the wall street journal reporting apple staff met with chinese officials to discuss concerns of app store restrictions. China is cracking down on apps to circumvent the great firewall including instagram and facebook and youtube and whatsapp. Iphone users can log on with a vpm. China will block those apps unless they register with the Chinese Government. The journal reporting that apple expressed concerns of chinas rules being implemented and affect users. Im not sure that will change the outcome. A Senior Executive has been barred from leaving Mainland China from kroll. A Hong Kong Based managing director specializing in co Corporate Restructuring informed his employer he could not leave in july. Neither he or his firm is the target of the investigation. Chinese authorities place exit bans on people being investigated or assisting with government probes. Worth noting that kroll is in the private investigation business itself. That is what the business is. It is a security firm. Here is the private investigator in china. Big investigator. What do you think is going to happen . Yeah. Similar story earlier this week or last week about someone being detained in china. No plans for us. Now to gamestop. Hours after being named ceo, ryan cohen sent a memo to employees to emphasize he will take dramatic steps to ensure the struggling video Game Retailer survives and the email obtained by cnbc, extreme frugality is required. Every expense at the company must be scrutinized. The company has no use for delegators and money wasters. Cohen will not receive a salary in the new role as chairman and ceo. He he said im not getting paid. He made the case is it blockbuster or is it best buy . Sg g geeky employees help you with the video games. Digital business. Download it like an app. One blockbuster left or it was . It may be in alaska. Really . A great documentary. It was on netflix. The last blockbuster. Great film. Is it that . I dont know. For a while, that was the reason it went short and everyone squeezed the shorts and it became a movie. Now were back to reality. The brick and mortar with the game suppliers. Does that really have a future . Does it have a viable future . I was in one maybe a month ago. You were . Back to school shopping. We stopped by. They have a lot of other stuff. Toys and different things. They are trying to mix it up to get people to come in. It is still there, by the way. In alaska . It is in bend, oregon. Oregon. According to the folks at wikipedia. Interesting. Thats almost memorabilia. They should keep it open for that. Coming up, bill ackman making the case for his bet against longterm treasuries at yesterdays delivering alpha conference. A fully operational Video Rental Store and memorabilia. Like an 8 track. Later, House Minority leader Hakeem Jeffries will join us about the potential Government Shutdown. I have idea what he may say. You are watching squawk box on cnbc. Announcer this cnbc program is sponsored by baird. Visit bairddifference. Com. Woah. Constant Contact delivers the Marketing Tools your Small Business needs to keep up, excel, and grow. Constant contact. Helping the small stand tall. 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] across the globe, industries are transforming and businesses need to navigate the changing landscape to stay ahead. When you partner with barclays, every change leads to a bold possibility. You have the vision. We have the insights, Financial Solutions and Global Perspectives to help you make it real. Barclays corporate and Investment Bank powering possible. Nice footwork. Man, youre lucky, corpowatching live sportsbank 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. I think theres in the relative shortterm why rates can move a lot. We have a Government Shutdown. Going into a probable Government Shutdown. The worst technical environment in our lifetime for supply of bonds versus buyer bonds. China selling. Russia selling. Saudi arabia selling. You know, we have an economy that is still strong and inflation at 3. 5 to 4 and pers persistent. Our view is you are not paid enough to enter into a contract with the u. S. Government at a fixed price. That was bill ackman yesterday at the delivering alpha conference yesterday. Jo joining us to talk about rates is the head of the u. S. Rate strategy. I didnt see you nodding, but i read your notes. I felt implicit nodding. There are supply issues and not necessarily receptive buyers on the other side of a lot of debt issuance coming up. Absolutely. I think the supply demand dynamics are askewed as they have been. Foreigners have been stepping back. China is not buying as nearly as much. China is not buying. They have been selling treasuries. The elephant in the room for me is the fed. They have been unwinding their Balance Sheet. It is qt. 100 billion per month. Then you have banks and Financial Institutions also reducing their portfolios after the regional banking crisis. They have a lot of unrealized losses in the portfolio. Theres a lot of reliance on real money accounts in the u. S. As well as money market funds and hedge funds. Thats really where all the moneys going as opposed to International Buyers or the fed. We talked about it and pointed it out. You dont think about it. It is a vicious cycle because the higher rates are going, the more things cost which makes inflation stay high which makes rates stay high. Might go higher from here because of those things. It feeds back on itself. The higher Interest Rates go, the more the chances of Something Else would break. Now you are seeing overseas bund spreads. You know, our equity strategist is thinking 5 of the threshold when equities start coming under pressure. You know, the borrowing costs in general are going up. The Mortgage Market is under a lot of stress. The soft landing idea doesnt really work in your scenario . You know, orchestrating a soft landing will wbe hard. The fed has not succeeded that in the past. Ever. I cant think of it. Maybe if you go back to teddy roos roosevelt . 1912 . I would say in recent memory it has90s. They cut in the 90s. The crisis where they cut rates by 75 basis points. We continue to expand until the equity market and tech bubble in 2000. Could the fed, if the fed is the biggest problem because theyre trying to unwind qt, could they stop the problem by stopping the unwinding . It is interesting you bring that up because we saw it this morning that bank of japan came in and started buying tenyear treasuries because they didnt want yields to rise meaningfully on the back of that. To me, it feels like a huge supply demand imbalance and treasury yields rising meaningfully and you have to see the fed step in and buy assets. It has been the bond market pushing rates higher to this point. If this is a situation where you just cant sell the debt and government has plans to issue lots more, that seems like the only way out of it if the fed steps in and says okay sdp. We saw that in 2020 with the spike in yields. The fed is your backstop buyer if you see a very large rise in yeel yields in the bond market. That is the scenario to play out. It is hard to see that right now because the economy is so strong and the fed is committed to keeping rates for higher for longer as well as unwinding its Balance Sheet. The fed says forget it and we are not cutting rates for the projections. We will not cut rates, but keep them there. Maybe they ease by keeping qt. What does that mean . It is not the worstcase scenario at 7 and beyond . We will not see lower rates than we see at this point. I agree with the point we dont really see lower rates in a meaningful way like in previous crises. The decline might be less dramatic this time around if the fed were to cut rates. Our case case is the u. S. Will into recession next year. If they orchestrated a soft landing, they have to cut policy or adjust policy a little bit to ensure they can remain stimulative. As we are unable to self debt, our borrowing costs are soaring on what we paid on what we issued. I was right. This is horrible. This is scary. It is. Im still an optimism. Im hopeful. About what . We will find a way to reduce deficits over the coming years. There are caps on spending. The tax cuts initiated during the Trump Administration are set to expire in 2025. There are avenues in which we can try to rein in the debt issue. It is not imminent at the current time. Thank you. What time is dom on . Dom chu . Well continue with the bad news. Ryder cup . Did you see . Four matches so far. Europes pitching a shutout. Ole, ole, ole. We will hear that. Some of our best guys. That is on top of it with the rain. Its friday and i have no croissant, andrew. Dont look at me. Thats what you said. Thats the point. Im trying to help you, man. You are doing it for me. Okay. When we come back this morning, speaking of, fast food. Fast food employees in california and delivery workers in new york city are about to get a raise. We have details after this. Later, a new report says the talks between washington and beijing could pave the way for a atto iisit by xi jinping. Th srys coming up later this hour. This is Spring Semester at over 13,000 us school districts, which have become top targets for Ransomware Attacks. But theres never been a reported Ransomware Attack on a chromebook. Which is why thousands of schools like the fairfieldsuisun Unified School District switched to google tools for education. So they can focus on teaching and 22,000 students can focus on learning, knowing that their data is secure. you know that unwelcome guest everyone wishes would just leave already . Thats covid19. So i got this seasons shot designed to keep up to date with recent variants. [thwack ] got it . 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. 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. Delivery apps uber and grub hub lost the bid to win the mandate for the app based delivery workers. That clears the way for the city to mandate 65,000 delivery workers to raise the minimum wage by 2025. The wage hike would result in fewer opportunities for delivery workers and pricing them out of orders and shift jobs from local restaurants. You see the stocks still up this morning despite that. Separately, california Governor Newsom signed a bill to raise the wage to 20 an hour next year. Calling it a world that doesnt exist. The minimum wage will have an exception carved out for restaurants which sell their own bread. What . I saw this earlier on twitter. Juxtaposed with gas prices. A picture of 7. 50. Workers can make 20 an hour, but to get to work, it costs 7. 50 a gallon. We have more companies on squawk box. The latest from washington on the push to avoid a Government Shutdown. Thats the effort. I dont know if it will happen. Well talk about Speaker Mccarthys strategy next. A live shot of the capitol. And later this hour, representative Hakeem Jeffries will join head to break, we hae a look at yesterdays s p winners and losers. Announcer executive edge is sponsored by at t business. Next level moments need the next level network. Move to the cloud. So, the question is. Cyber attack as cyber criminals expand their toolkit, we must expand as well. We need to rethink. Next level moments, need the next level network. [speaker continues in the background] the network with 24 7 builtin security. Chip . At t business. That first time you take a step back and see everything youve accomplished. I made that. With your very own online store. I sold that. And you can manage it all in one place. I built this. And it was easy with godaddy. I am doing this. With a partner that puts you first. Start for free at godaddy. Com sell good morning. Welcome back to squawk box. Were live from the Nasdaq Market site in teams square. It has been raining all week. Not ought tside, but inside wite markets. All lanes flooded. I was talking about here. Government funding runs out on sunday and Congress Still has no deal. For a closer look at the implications of the Government Shutdown, we want to bring in the Cato Institute director and Michael Linden who is executive associate director from the biden administration. Michael, lets start with you. You were actu