Strike, though. Thousands of uaw workers hit the picket lines. The first walkout to hit the big three all at once. Plus arm shares are, well, still looking good ahead of the open, looking to extend those gains from yesterday. It was the biggest ipo of the year and quite a significant day. And rally paused. Stock index futures, little changed after the best day for equities of the month. Lets begin with the uaw striking against detroits big three simultaneously for the first time in that unions history. Phil lebeau is in wayne, michigan, after talking to gms mary barra, and joins us with more. We are outside of the Michigan Assembly plant. It is the ford plant where they build the ranger pickup truck as well as the bronco suv. A very popular model. Heres what this strike is doing in terms of its impact not just at ford but also gm and stellantis. Total number of workers, approximately 12,700. Just under 13,000 uaw members who are now on strike at the ford plant here in wayne. The stellantis plant, thats the jeep plant in toledo, oregon, and the gm plant just outside of st. Louis in wentzville, missouri. Altogether, those plants represent about 15 of the detroit threes u. S. Production. Let me say that again. 15 of the detroit threes u. S. Production. Here are some of the strikers talking about the offers that have been made of a 20 pay hike and why thats not enough at this point. Its a start, but its not, you know, where it should be. We just got to keep fighting for whats right. Were ready to roll. Were going to hit it hard and were just going to go from there and say, we got to be out two, three, weeks, four weeks, whatever it takes to get what we need to get. Take a look at this. This is General Motors and the wentzville facility that builds their midsize pickups, talking about the gmc canyon as well as the colorado pickup trucks, and their fullsize vans. It runs three shifts five days a week. Earlier today, when we talked with mary barra, we asked her just how much of an impact is this strike going to have on General Motors and how frustrated is she right now . Im frustrated and disappointed. We put a historic offer on the table that not only has very significant gross wage increases, total through the contract, over 20 , that compounded is 21 , but we also have job security. We maintain worldclass health care. Theres so many aspects of this of the offer we have on the table that i think really is going to resonate with our employees. So, we didnt need to be here. Reporter as you take a look at how shares of ford, gm, and stellantis are indicating before the open today, keep in mind that there are no negotiations scheduled for today. There will be a uaw rally in downtown detroit later this afternoon. Guys, i think that we are looking at a strike here that is not going to be resolved any time soon. That doesnt mean they couldnt come to an agreement soon, but i dont sense that were going to see this resolved by monday or tuesday. Its a possibility. I just dont see it happening. Why, phil . I think theyre too far apart. And i think the uaw has leverage right now. Being blunt with you, i think thats the way that shawn fain looks at this. He believes that he can get much better than 20 , much better than the elimination or the reduction in the number of tiers, and tiers is where you hire a worker at this rate, eventually they make it to the top rate, but it take a number of years to get there. They want that gone, completely. Im not sure if theyre going to get it completely gone, but they are pushing in that direction. So, from their perspective, they believe that they have leverage right now. Do they . How disruptive is it going to be to these automakers . Initially, youre not going to see a run on these models where you cant find it in a showroom. But you stay on strike, if these guys stay on strike, it wont take long before ford dealers are saying, i got customers who want to buy a bronco and i dont have enough broncos. I dont know the exact inventory level for the bronco, but you go out four, five weeks, thats when that starts to happen. And thats really where you see the impact. Look, every day theres a strike, theres a Financial Impact for each of these automakers. The farther it goes, if you go two weeks, three weeks, four weeks, thats really where you start to see the big dollar impact for the automakers. Phil, you know, on that impact, what at the very top of the ask here, in terms of compensation and benefits as a percent of overall cost structure, i know the uaw says Something Like 5 . What are the real numbers . Do we know . In terms of what they get right now and in terms of what theyre looking for, david . Right, were they to get to the high end of what theyre asking for, im trying to understand what the margin picture will look like from the perspective of wall street here for these automakers if they give into the highest end of demand here from the unions. We asked jim farley that yesterday. He said, we couldnt do that. We could not afford to give them the full amount that they are asking for. If we did, this company would be bankrupt in a matter of years. Percentagewise, david, i think youre looking if you gave them 40 raises, you would likely bump up into the 7 , 8 percentage of revenues compared to where they are right now, which is about 3. 5 , 4 . So, it would have a substantial impact. And again, jim farley was clear yesterday when he said, we just cant do it. There is a limit to how far we can go. Phil, we do expect to hear from the president today. Theres been some reporting that the white house is trying to see what kind of aid they could give at least to the smallest suppliers that might be affected. I mean, but a lot of takes about how limited or to what degree the white houses hands are tied here. They are tied to a certain extent. Look, were serious. We still see production going for 85 of the models built by the detroit three here in the United States. So, those suppliers, while they are impacted, theres going to be less for suppliers coming into this plant here in wayne, michigan, but theyre not completely shut down. So, there is an impact. Im not discounting that. But the white house is going to have to look at this and say, how much of an impact will there be for suppliers, and you know, when do we really start to see that hit those suppliers . Phil, busy morning. Phil in wayne, michigan, as we keep our eyes on the strike. Well talk soon, phil. Thank you so much. Meanwhile, streets trying to get their arms around the numbers here. Deutsche takes a crack at it, says the weekly production on these particular plants averaging about 3,000 units a week at ford, 4,500 at gm, ebit losses per week in the 40 to 60 million range, which deutsche thinks is manageable for now, but it reflects the unions strategy not to paralyze everybody but just inject enough uncertainty to create unawareness of what they may do next. Bank of america says that its a hit to gdp. Annual run rate of 1. 6 to 2. 1 , obviously, well know more given how long it lasts, but the hit comes from Industrial Production and manufacturing, not as much from Consumer Spending because the union apparently will be paying workers during the strike. They also dont think its going to be as big of an impact on inflation, though it does create upside risks for inflation, both on used and new cars. However, according to bank of america, and their analysts there, the manufacturers have been ramping production. They do have adequate supply, and there are increased signs that consumers have weakened their spending on autos. So, perhaps not coming at the best time for peak leverage for the uaw in that sense. Right. But to phils point, we could be having a different conversation if this strike is still going on three or four weeks from now. Sure. Shortages. Yeah. It will be a different dynamic, perhaps, at that point. The other question is what you mentioned the margins and what a wage hike would mean. U. P. S. , a lot of people have been looking at that. The stock has been very weak in the last few weeks. The cfo did an interview overnight. Their margins are getting squeezed on the back of these Higher Oil Prices now and the higher wages. Remember, everybodys looking at that as the teamsters got a pretty significant bumpup there and what thats going to do for profitability. If you look at the yeartodate chart, its underperformed market. And after ppi yesterday, highest number since april, big pieces being written about today is whether or not we need to revisit the corporate margin story because the general sense has been q2 results were about margins. Now, its got to be about demand, and how much more do they need if, in fact, margins are going to be compressed. Depends on the wages but certainly the oil prices have moved up, and that thats painful. We saw some of the Retail Stocks underperforming this week. Thats what happens when you see Higher Oil Prices, traditionally. It puts a damper on Consumer Spending. We know consumers have been prioritizing the basics, the staples, and they havent been buying as much on the discretionary items, even though, guys, the retail Sales Numbers were not bad. Nine out of 13 categories grew there in terms of sales. It comes off a strong july and august moderated but the core retail sales, seeing a bump up was actually a surprise, and thats going to filter into gdp. Yeah. As for the broader markets, on track for a positive week, s p, nasdaq up four of five. You had the vicks at a 44month closing low yesterday with that 12 handle. B of a today says its pretty much impossible to be bullish on valuation right now if you look at the s p as a whole. But equal weight, more in line with historical average. Just shows you how much the Big Companies are skewing that. Collides with what griffin told you yesterday about where we are. He was a little more nervous about the rally continuing. Heres what ken griffin said yesterday. Im a bit anxious that this rally can continue. One of the big drivers of the rally has been the, just, frenzy over generative a. I. , which has powered many of the big tech stocks. I like to believe that this rally has legs. Im a bit anxious were sort of in the seventh or eight inning of this rally. Part of it has been the soft landing story. Are you a buyer of that . The fact that we just havent gone into recession despite 525 basis points of tightening. It takes about a year to two years for an Interest Rate hike to work its way through the economy. Its not instantaneous. Were now at the point when were going to see the impact of these hikes really start to play out. Were seeing the job market starting to weaken. Theres been a number of news stories in recent weeks about how companies are willing to pull back with their paying for starting roles. Were seeing signs that consumers have had enough in terms of price increases. That theyre starting to walk away from products theyre trying to push through price increases. So, theres signs here that were heading very quickly into hopefully the soft landing, potentially a more difficult scenario moving into mid to late last year in terms of an actual recession. Always interesting to hear from griffin, who runs the giant hedge fund, citadel, of course, top earning hedge fund in history. And multistrategy, david, thats up almost 11 year to date coming off a record year last year. I thought that it wasnt allout bearish, but it certainly was more cautious on the soft landing view, on the fact that stocks can continue, because the headwinds are piling up and because he said were we failed the rate hikes with the lag and now were just starting to see it, which is a valid argument. Its something economists have been trying to figure out. Its always worth listening to him and his view. And obviously, i dont know how much you got into citadel every day in terms of just a percentage of the volume overall, given the size of that hedge fund, not to mention their market making. They are an enormous influence. Enormous. We talked about it. We taped a whole other chunk of content, including citadel, his expansion in miami, some of the strategies hes interested in, commodities had a good year last year. Hes interested in that as well. Youll be able to hear it monday night. Were running it in primetime on cnbc. Cnbc leaders, 8 00 p. M. Eastern time. Monday night. Youre making us wait a long time for that. Its good content. He talked about desantis. It was good content yesterday too. Good. Thank you. Youre welcome. I thought what was notable is he said he doesnt expect the fed to get to its 2 inflation target unless we have severe recession in the United States, which doesnt mean the feds going to have to keep hiking rates. He thinks one more rate hike. But because of all the fiscal stimulus thats out there, and he sounded quite an alarm bell about whats happened with fiscal spending and the impact that that could be having on the bond market this year as a headwind to both fed policy, inflation, and the markets. Yeah. Real yields on the tenyear approaching 2 . Thats close to a 14year high. Interesting to hear him tell you small chance, maybe, of one more hike, which puts him in the camp of citi and bank of america as opposed to goldman and Morgan Stanley, who say, no hikes. In fact, Morgan Stanleys looking for a cut in march. Cut in march. So, heres what will be the most interesting and potentially marketmoving thing. There might be one in november and december, but the real news is going to be we get a new dot plot, the sep, the forecast from the fed as far as what theyre going to do next year and that will be the signal of how hawkish they are, how much they think theyre looking to cut into next year. The market is looking for cuts in the first half of the year. So, thats where theyll be able to sort of signal if they want to walk the market away from those cuts on the higher for longer side of things. If they move if they tighten a little bit their outlook for next year to 75 basis points of cuts, which is what economists are expecting for the next year, thats still less than the markets expecting. Yeah. All depends on the data, of course. Weve gotten some this morning in importexport production. Lets get to rick santelli. Yes. Good morning, carl. Were awaiting our august read on Industrial Production and it is hitting the wires as i speak. Were expecting a number of 0. 1 , much better, up 0. 4 . That is one solid number. As a matter of fact, how far back do we have to go . That is the second best number, actually, the third best number of the year. Third best number of the year, so we want to pay close attention, especially after its coming off of a very solid up 1 . Utilization, also a much improved. 79. 3 expected. 79. 7 is the number we have. Thats the best number of the year. You have to go back to november to find a better number. And just for the sake of context, i do want to point out september of last year at 80. 83 on utilization was the best going all the way back to 2008. So, you could see th wveate started to drift lower. Should be no surprise. Squawk on the street will return after a short break. 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. Only at vanguard, youre more than just an investor, youre an owner. Our Financial Planning tools and advice can help you prepare for todays longer retirement. Hi mom. Thats the value of ownership. Explore endless design possibilities. To find your personal style. Endless hardieĀ® siding colors. Textures and styles. Its possible. With james hardieā¢. Loving this pay bump on our allowance. Its possible. Wonder where mom and dad got the extra money . Maybe they won the lottery . Maybe they inherited a fortune . Maybe buried treasure . Maybe it fell off a truck . Or maybe they switched to Xfinity Mobile the fastest mobile service. Save hundreds a year over tmobile, at t and verizon. Now i can buy that electric scooter. Im starting a private equity fund that specializes in midcap. You do you. Switch to Xfinity Mobile today. Wow, you get to watch all your favorite stuff. Its to die for. And its all right here. Streaming was never this easy, you know. This is the way. You really went all out didnt you . Um, its called commitment. Could you turn down the volume . Here, you can try. Get way more into what your into when you stream on the xfinity 10g network. Shares of arm appear to be ready to extend some of those very strong gains yesterday that it saw in its first day of trading. Of course, the company returning to the public markets. Its a chip designer, and it did finish that session yesterday. Look at that. Added about a quarter of the market cap. 51 was where it was priced but now exceeding 65 billion in market cap, and thats actually above where masa and softbank recently bought back 25 of the company from the vision fund at 64 billion. Of course, still a lot of questions in terms of that valuation. Given its at the very high end now, a lot of things are going to have to go right for the company, but you have to give a shoutout to the underwriters here. They did a very good job. And its not an unimportant one, given how important it is to get the Capital Markets open when its when youre speaking of ipos. Got another one coming next week with instacart we can talk about a bit, but when you talk about arm, of course, one of the key questions will still be, okay, youre saying you have revenue and profit growth. Is that going to come from volume or is it from price . I asked that question of rene haas. How much of the future growth and revenues in profits for the company, and you discussed the growth trajectory, is going to be simply price increases . I do believe theres a view, and perhaps you can address this as well, that youre not capturing the appropriate value for your product. Is that a key component of the growth that you see . To some level. But more broadly, we see huge opportunity to deliver a lot more value of the stack. One of the things that we see around these complex chips being built today is that they just take a long time to design, much longer than they did, and the cycle times to build them get longer and longer, so that puts a lot of pressure on our customers who are trying to design these complex so