Fed Day 1, Debt Ceiling Watch, Uber Beats, Chegg Plunges on AI Warning, J.J. Watt Visits Post 9 5/2/23

Jim Cramer (0:00)

It's Jim Cramer here. You're listening to the opening bell of CNBC's Squawk on the Street. Don't miss a minute of the action.

Carl Quintanilla (0:07)

Good Tuesday morning. Welcome to Squawk on the Street. I'm Carl Quintanilla with Jim Cramer, David Faber of the New York Stock Exchange, actually Faber's of Milken, once again in Beverly Hills. Busy Tuesday today. Plenty of big name corporate earnings, a Fed meeting begins, debt ceiling chatter, and inflation running hot in Europe, Australia with a surprise hike as well.

Our roadmap begins with investors on Fed watch as the May policy meeting gets underway.

Then there's Yellen's warning saying the country could run out of cash by June 1 and the White House and Speaker McCarthy have set some talks and A.I.'s material impact. Chegg with this hit to its growth, IBM forecasting 30 percent of jobs being disrupted. And then Hollywood writers also seeking some limits on its use and they go on strike. We'll begin with the markets and the Fed today, Jim, as we discuss some of the inflationary scares we were expecting an extended pause in Australia.

Jim Cramer (0:58)

Yeah, I just think that, look, things are still red hot.

And we haven't seen China really kick in yet. I think that we're probably the best of all. The reason why we're best is because we've been we've been raising rates so furiously that we don't even know if we're going to start getting some problems with the regional banks and all the growth is in regional banks. David, I don't know what those guys are saying out there. I have to presume that a lot of people must think one, that we're going to get some tightening and two, that the Republicans have everything to gain if they default.

David Faber (1:31)

Well, I don't think there's an expectation of default, at least. Again, that has not come up that often. I did speak to Joe Manchin yesterday, part of a panel I did with him and Darren Woods and I did ask Senator Manchin, who's obviously an important Democratic vote in the Senate, and he was just pretty straightforwardly saying no way we're defaulting. It's just not going to happen.

Of course, he's also a hawk when it comes to the budget. So he was kind of saying, you know, he believes they're going to get back to the table and they're going to figure something out, whether or not they kind of punted to or extended to the fall, guys, in terms of the budget process then and sort of incorporate it all. I think that remains unclear. But at least hearing from him, Jim, he's like, no, it's not going to happen. Obviously other people are perhaps a bit less sanguine.

Jim Cramer (2:15)

Well, what happens, David, if McCarthy's fired because they said they could fire McCarthy's trying to be reasonable. Other people in the party just say, listen, this is our chance to elect, say, Trump, because if Biden doesn't make a deal, then we can go on other news outlets that seem to be inclined to hate Biden and just talk about how everybody wanted to get their Social Security and their Medicare, except for Biden, who just was asleep at the wheel.

That's a decent narrative for the Republicans. Why don't they go for it? What do they care?

David Faber (2:43)

I don't know.

I can't answer that question. Obviously, you're expressing a narrative that I guess you're concerned about. I mean, how real are your and significant of your concerns then, Jim, given what you just said?

Jim Cramer (2:55)

Carl, 2011, we went down 19 percent.

A lot of people just felt we were in a bear market. The S&P downgraded our debt and then nothing happened. The S&P shouldn't have downgraded our debt. I remember Tim Geithner telling me this. It just doesn't work like that. But I just keep coming up with scenarios which just say as bad as things were in 2011, it's just, and I won't say bad, as contentious as they were, I'm trying to think about why the GOP wouldn't play the card of default, thinking that the American people are so out of touch that they'll just blame us ever present.

Carl Quintanilla (3:25)

Yep.

PIMCO's done some pretty good vote crunching, looking at the number of members who've never voted for a debt ceiling raise, even under Trump, and it's more than a dozen. But at the same time, Jim, the polling data says Americans are more in favor now of a clean raise than they were in 2011, and they argue there's no incentive to take this to the hilt.

Jim Cramer (3:45)

Well, the way I think about it, and get you involved, David, you remember this period as Carl, it doesn't have to be, if you're in the stock market, a default in order for the market to get hammered.