What higher for longer means with Interest Rates. We had conversations yesterday that to me were troubling and i started to think about things. It was transitory. The supply chain part. Transitory. There is maybe an underlining rate of inflation that is higher and it is harder to deal with and it has to deal with crude. It reminds me now it is supposedly not like the volcker era. Wages and unions and workers demanding more. The wage price spiral that picks up and higher wages. Thats what the fed is watching. We paused and only to restart. It was not putting a stake in the heart of it in the first place. A little bit stays and it comes back and you do higher. Stop again. It was the stop and start of the 70s which is what happened. Is that happening again . If you look at inflation in other parts of the globe, it is higher. The uk is operating at 6 . They dobnt have the dollar. That bugs me. 3 . South america averaging 30 . It used to be higher inflation. How many is a candy bar in zimbabwe . I dont know. A couple trillion zimbabwe dollar. The candy bars are smaller. 100 grand bar. Costs a lot more. A lot more than that. A quick look at treasury yields. I wasnt paying attention. Bring it back. 10year treasury is 4. 43 . You are talking significant pick ups in yields. Crude oil prices are sliding below 90 a barrel. That is something to celebrate after what wie have seen recently. Down. 88. A weaker economy would bring oil down. It is a supply issue sdp. A supply issue. An an update on the Writers Strike. David faber reports that they are near an end to the agreement. People close to the negotiations say the two sides hope to fine finalize a deal today. Without a deal today, the strike would go to years end. Why . I know if it gets into the holidays. I think there was still a window in october if you didnt get it done today, you could get it done by the middle of october. Are the actors we really know the actors could not do anything without the writers. They would be like what do i say or do . News anchors . Like news anchors. If you settle the writers, do you actors say okay. The actors have a tougher situation with a. I. The a. I. Situation for writers. That is harder for writers. Glenn close told us last may said she has been asked name dropper. She told us here on cnbc. She did. She told us it was going to be a she had been asked to do th things where she would go in and they film your entire body and they can do things without you being there. If they get around those issues and making sure the same thing. The Writers Strike will give them a template. I think is a sticking point. They will have a template for the streaming issue. I think they take instructions from the writers. Read the prompter. The closest the two sides have come to resolution since the strike began on may 2nd. Oh, my god. I dont know this is going to cost us money. David faber, i dont know what he is demanding in his labor action. He will join us at 8 00 a. M. We get a choance to talk to him. He should come in studio. Maybe we can talk him into this. Ill call him. He will be happy. Lets get to the latest on the auto workers strike. Dp gm and stellantis laid off additional workers because of the consequences of the strike. Gm halted production in the kansas plant because of the Critical Issues needed for the striking facility in missouri. It would continue to bargain in good faith. Stellantis said it is laying off 370 employees at factories in ohio and indiana because of the shortages related to the strike. Those plants make parts for the jeep vehicles for the toledo plant where workers are striking. Stellantis send a new offer yesterday without providing details. It is reviewing the proposal. We will talk to an executive from the Detroit Chamber of commerce who is talking to parts suppliers for months in anticipation of strikes. It ripples through. It does. Shares of broadcom are lower after the report of google talking about dropping broadcom as a supplier of chips as early as 2027. Dp google wag considering designing those inhouse. Those shares are higher right now. Not broadcom. If you are looking at marvell technology. One is a comic book and the other is marvell. Up 3. 5 . This is not our fault. They should have thought about that. Biontech should have thought about that name. Biontech. Why do that to us . Keep us on our toes. Antioch . One oak. Why do they do this . There are people that decide on this. Probably get paid a lot to decide this. Federal reserve held rates steady, but pointed to rates staying higher for longer. Liesman joins us now. Steve, i saw your band mud crutch on sirius. You broke through. You made it through the big time. I almost took a pictures to send it to you to say i cannot believe you made it mainstream. Im not sure what youre talking about. Are you reading the prompter as you are required to as an anchor . Your other band . It is the moon custards. Im sorry. I was trying all right. Hey, steve, are you worried about wage price spirals and oil shocks like the 70s . Im worried about that. Im not, joe. I think this is a really different environment from the 1970s. Thats what we said. A lot of the analogies to the 70s fall apart, joe. You know, put the bellbottom jeans away, man. Theyre back, too. Steve, what about the last one point or two points hard to get . About. I think they can get there, joe. You are asking a profound question which is can we go back to the low inflation world we had and are the supply chains so different now . Joe, i want to talk about what i would call this. The fed left rates unchanged. I think what they executed yesterday is a virtual tightening. What did they do . They continued to forecast another rate increase this year. They raised average forecast for next year. They boosted the growth outlook. You look at yields and it is a virtual tightening. Powell explained better growth was the reason why the forecast for the higher funds next year. Rather than point to inflation more persistent, we have seen inflation be more persistent in the course of the last year. That has not appeared in the latest data. Here is the forecast. Leaving one more hike in there this year. Leaving the funds rate forecast next year by. 50 in 2025. Taking a half a point of cuts off the table they previously pencilled in. At the same time, the fed doubled the growth forecast and boosted the outlook along with lowering the Unemployment Rate. It showed more confidence in a soft landing. No recession means higher rates. There is trouble ahead. Powell said the fed was looking at the Different Things out there and including Higher Oil Prices and Government Shutdown and higher long term yields and auto workers sts strike. It is hard to know if these end up hobbling the economy. The fed forecast is wrong in all sorts of ways, but a surge in bond market yields shows the investors see the higher for longer statement seriously. It also raises the question in forecasting better growth and higher rates, is the fed making a mistake to bring about recession it avoided so far . Joe. Steve, we are talking a lot about it today. A lot of fed speak going on. The markets dont like it so far. They were up for a while yesterday. Closed down. Down again today. What do you attribute that to, steve . The fed took away something that the market could trade on which is the idea of potentially rate cuts next year. It was getting closer to the idea the fed was going to stop and if inflation came down, rates would come down. You have to puzzle over the idea. Powell said it was more growth than inflation persistence. It is also inflation persistence in there that the idea that the average fed thinks it will stay higher or require more rate hikes to bring inflation down. I think the reason why things are different from the 70s, joe, is the fed is resolute about bringing inflation down. It has pretty good Political Support on this and the economy has done a lot better in the wake of these rate hikes so far. So, i think so far were avoiding the worst part of the 70s. We will have a strong number in the third quarter. It is not the 70s yesterday. Not that it couldnt become the 70s. What would make that . If the fed gave up the ghost on fighting inflation. This then would be the 70s. It could be the 35s. We dont need to go to 21. 5. That is the depression, joe. I dont mean that. We dont need to go to 21. 5 prime rate. Who knows if we do and go back to 6 or 7 or 8 because of the last stubborn intractable . Right. You have to ask the question how much is it worth it . Would you plunge the economy into recession just to get that number duown . I said we will talk more. We will talk with Roger Ferguson later this hour. He is probably cheering. He has been predicting we have more work to do. Also coming up, fedex shares rising after the company delivered earnings. We will dig through that report next. Squawk box is coming right back. Weve been through a lot in our countries. High inflation, our governments changed a lot. Many times entrepreneurship is a necessity because you cant get a job in latin america. My advice is just go for it. Go for it maybe your parents did or your grandparents did back home. When you make it, lift somebody else up. Announcer this cnbc program is sponsored by baird. Visit bairddifference. Com. Rich, velvety. Coffee. Cafequality. Espresso. One highpressure system. That can do both. Brew to your hearts desire. With the lor barista system. Now brewing peets coffee. [soldier] take a look at this . With the lor barista system. Theyve left us a gift. [soldier] i think we misjudged them. I love horses. birds chirping [soldier] we should open the gate. Lets see what charlotte thinks. [narrator] at crowdstrike, we monitor trillions of cyber events to detect threats and prevent breaches before they happen to keep your business from becoming history. We stop cyberattacks. We stop breaches. We stop a lot of bad things from happening. Crowdstrike. Protection that powers you. Time for todays big retail number. 4 is the increase of Consumer Spending over last year. Bank of america said yesterday it is hard to see a u. S. Recession as the Great American consumer keeps spending. Fedex shares are higher this morning after stronger than expected profit as it continues cost cutting. Revenue fell shy of estimates. It is raising its guidance. We have the managing director at cowen with us. When we get to the point where cost cutting helps make numbers is not great, but to some extent revenue was slightly below. I guess they pass along extra fuel costs which is not a problem. Would you characterize it as a good quarter . Yes. I have been cover the company for a long time, joe. Most of the time they missed and stocks have gone down. This time they beat on the bottom line. They continue to cost cut as you pointed out. The top line was better than expected which was in ground had to do with the u. P. S. Potential strike. They picked up some accounts, probably 600,000 packages a night in july. They picked up freight from yellow freight. A lot of it was lowmargin business. Fedex delivers a good value proposition. They were able to win a bunch customers based on service re record. Interesting, helane, with the other issues at other competitors. There by the grace of god, are we in an environment where they are next in line . Thats a good question. Heres how we think about it. In 2020 and 2021, they talked about pulling volume forward from 2025 and later. Because of the pandemic, they fast forwarded growth. We came into 2022 and as the year started to reopen, growth slowed because people are going back to stores as opposed to ordering everything online. We have seen the huge declines in cargo volume. I think the Fourth Quarter last year in general, cargo was down 14. 2 . Were coming into a period of time where we are not going to necessarily have the great peak peak, but the comps look better. For them, negative issues were this is fiscal 2024. Were in fiscal 2022 and fiscal 2023. As we go forward, things should look a little better. Joe, they did 90 billion in revenue in 2023s fiscal year. They are on a may fiscal. We think getting the last 10 billion to 100 billion is difficult and probably not until the second half of the decade because the Revenue Growth has slowed a little bit. Are we at peak margins . I was thinking of labor issues. We have seen that number at u. P. S. 160,000 a year. What is the disparity with fedex and competitors . The real number includes benefits. Its not necessarily the average with the driver pay which is closer to 85,000 and you add in the benefits that u. P. S. Offers. For fedex, they have pilots unionized. You reported a few weeks ago that the pilots rejected a contract which surprised me because it looked like a good contract. Fedex is shrinking express and shrinking air operation. On the labor usuaissue, they us independent contractors and they tend to pay standard industry wages. I think they mentioned on october 1st, they are giving another wage increase. They are catching up. Because they are nonunion, they have a different footprint than u. P. S. Meaning what with for which stock you recommend . Thanks, becky. We have been outperforming on fedex and u. P. S. We think margins at u. P. S. Will be under pressure for the second half of the year. Then fedex as i said, we dont see that same margin pressure. 280 price on fedex. It is not you like the union shop. I will not connect those dots. I dont want to get canceled. Helane, thank you. Thanks, joe. When we come back, disney ceo bob iger said the company will quiet the noise around culture wars. We have the details on what that means after this break. A programming note for you. Ill moderate a session at the Economic Club of new york with the japanese primary fumio kishida. We will talk about the demographics in japan and navigating the negative Interest Rate policy. We will have the latest on squawk box tomorrow morning. Announcer this cnbc program is sponsored by ibm. Ibm. Lets create. Can you trust the results . Your business doesnt just need ai, it needs the right ai for your business. Introducing watsonx a platform designed to multiply output by tailoring ai to your needs. When you watsonx your business, you can train, tune and deploy ai, all with your trusted data. Lets create the right ai for your business with watsonx. Ibm. Lets create. Dad, we got this. We got this. We got this. We got this. We got this. Yay we got this. We got this life is for living. We got this lets partner for all of it. Edward jones time for the executive edg. Disneys bob iger is vowing to quiet the noise of the culture wars. The company has been embattled with the governor over the states rules over schools teaching Sexual Orientation and gender. That is moving to the fight over the florida theme park and it is something that either side has fared well with here. Thats what wie were talking about. Its a loselose scenario. A lot of issues s a lot of issus with a candidate gaining traction. It is reported that ron desantis has fallen in a lot of polls. And disney sdotock is down. That looks to me like not a retreat, but you are not out in front as much as you were. Quiet things down. If you can get out of that, i dont think any Company Wants to be in the middle tof it. Some of it started before iger came back and would have been handled dcifferently had he bee there. Just tie it to the part of the chapek and desantis. I tie it to some of the backlash to just how woke disney is across the board in a lot of ways sway s. Thats a fair statement. What do they have at the theme parks . All of the characters are canceled. Maybe with the strike settled, they can get new characters. I dont know. Nobodys perfect. You cannot erase everything thats happened in the past. If you are trying to calm down the noise around the political situation, thats something you can control versus a lot of things you cant. Right. No more comments on it. Coming up, the big take from yesterdays fed decision. Well get reaction from former fed vice chair Roger Ferguson next. As we head to break, here is a look at yesterdays s ps winners and losers. Announcer executive edge is sponsored by at t business. Next level moments need the next level network. 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. 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 good morning. Welcome back to squawk box live from the Nasdaq Market site in times square. Futures are in the red the day after the fed decision to pause with the potential for another 25basis point increase down the road depending on what happens, obviously. It is amazing how many nuances we can figure out by things that occurred to me. Knowing the fed doesnt know if they are in restrictive territory or not. That may be part of the reason you see the downdraft in the futures this morning. We have known what was coming. This was a period of time where jay powell admitted we dont know. We will keep all our options open and see what happens next. There is more tuncertainty. That can lead to volatility in the markets. Jay powell says that he will hold rates steady for now. Signalled another rate hike for later this year. A lot of questions around that. Joining us right now is former fed vice chairman Roger Ferguson who is also a cnbc contributor. Roger, jamie dimon said yesterday he expects more rate hikes will be necessary for what we have seen in Commodity Prices and in wages. You had Jeff Gundlach saying he thinks oil prices will require more rate hikes as well. What do you think . Actually, i think they are right. I think what the fed pointed out yesterday is there is still a great deal of Forward Momentum in the economy. They clearly expect they wil