it's wednesday, august 14th, 2024, and "squawk box" begins right now. good morning and welcome to "squawk box" right here on c nbc. we're live at the nasdaq times square along with melissa lee. becky and joe are off. u.s. equity futures at this hour, still got about 3 1/2 hours to go, but right now the dow would open up higher, about 13.5 points higher. the nasdaq down, by about 5.5 points. all of this coming after the gains from yesterday's session. the dow adding 409. the s&p 500 adding 1.7%. and the nasdaq gaining 2.4%.

the nasdaq powered in part by a 6.5% jump in nvidia, down 12% from its low in august hitting last week. by the way, starbucks up 20%. dyed you see that? >> yeah, of course. >> more. >> 25. >> 25%. treasury yields, take a look at where we are right now. the treasury yield up. >> meantime we are watching shares of google or we should say alphabet. they slipped in after-hours trading after bloomberg and the department of justice is pushing to break up the company. that follows a court ruling that it was found alphabet mon monopolized the search market. that includes the browsing system. they could force google to share more data with competitors and

measured data. they'll oseek to block the type of contracts that were in the case. google said it will appeal last week's ruling. this will be the first effort by the government to break apart a company since its efforts to break apart microsoft back decades ago. >> there are questions along what lines are you ultimately broken up, and these behavioralal remedies that say you can't buy your way. >> that's what happened with apple. >> at the same time, it creates damage to p ale. apple has the right or you would think it has the right to sell its screen space the way cnbc would have the wright to sell is screen space if it so chose. >> right. the question is it too difficult for you as the owner of the phone and the user of the phone?

is it too onerous for you to switch? >> correct. but that's a question -- then you could decide if you don't like the way apple has approached this and made the switch easier, it's a different issue. >> that's exactly -- that was at the heart of the microsoft case, right? the windows operating system is it bundled. >> i happen to believe it's made it easier. i also happen to think it's yesterday's war. in an age where perplexity and they turn out to be something in openai and everything else. the whole idea that we're fighting over -- that, by the way, was interesting, too, in microsoft's case. that was a bit of yesterday's war. >> that is true. if you think google has an advantage and this may be the department of justice's stance and the market stance, that because of its dominance and search right now because of all these exclusive agreements, et cetera. it has a leg up in dominating the ai search.

the market doesn't believe that, though, action you mentioned. meantime google announced yesterday new ai features that are coming to android devices including the gemini assistant, which is exact will i what you were talking about. the features allowing users to brung the overlay on top of other apps to ask questions about what's on the screen. they gave an example of a user looking at a concert list and asking gemini to see if their calendar is free. google announcing its latest line of pixelized phones. they unveiled the iksle 3 watch as well. ite goets a larger screen, improved innovation of other google products including nesting cameraing and doorbell feeds, tv remotes and offline google maps. that's what i like. when you get stuck in a place where you can't get the map, no cell reception, that's huge.

by the way, the other piece of this, on the android phone, you'll talk to the phone, and it will be gemini powering it. and on the apple phone, it will be siri powering it. eventually all these things will come together -- either there ieng going to be a big split on all these things work or they're going to be integrated with each other. otherwise they would. work. if you say, oh, you can't use gemini, i'm just not sure. i think the future of this really is talking to your phone. >> oh, yeah. >> manually typing something in. >> by the way, that's going to end -- i think that will end a lot of the app economy as well in its own interesting way. >> how? >> because the truth is you won't even know -- you're going to say -- >> i think for an uber and a lyft, you would know where you're going. >> you say, i want to go home.

find me the cheapest price to go home. your siri agent or gemini agent is going to go ping uber, ping lyft, ping five things. the taxi company. you won't know where it's coming from. it will be interesting how it affects brands. a rumored food deal could by announced as early as today. mars is expect eed to buy kel a nova. the privately held mars is expected to pay 83. mars is known for m&ms and skittles and has acquired snack bar maker kind as well as nature's bacary. this will be the biggest acquisition from mars since it bought wrigley for $23 billion. a canadian craft light

brewery is buying four. it will expand tilray's portfolio. it has acquired others from anheuser-busch last year. the new acquisitions will elevate it to the fourth biggest owner in the u.s. according to a brewer's sit situation met rick. irwin simon will be on "money movers" today at 11:00 a.m. eastern time. meantime, ubs smashes the second quarter profit. doubling consensus forecast. ubs saying it partially offset a drag from net income, increasing by 15%. largely due to the consolidation of credit suisse, the credit bank leaping by 38% to $28 billion and the company's ceo sergio ermotti telling cnbc the

outperformance of a combination of good momentum on the topline and good cost productions, and that deal with credit suisse is turning out to be a winner with them. then we should tell you about this. after coa close in asia, they reported second quarter earnings, jumping 82% year over year as the gaming division accelerated. the company launched a new game in may. stocks closed slightly lower in hong kong before those results were released. intel has sold its stake in uk chip holder arm. it raised nearly $7 billion.% it's involved in a $10 billion cost-cutting plan. the stock is down nearly 60% year to date.

and chinese tech giant huw wow wow wie /* /* huawei expected to launch a chip that would rival export restricted nvidia h 100 % processors. and then there's this. let's talk activist. elliott management says it's going to launch a proxy. they plan to nominate ten directors to its 15-member board. it's been following back and forth, elliott saying it plans to call a special meeting. this would be rather than waiting for the company's special annual shareholder meeting. it disclosed its investment in june. it called to replace bob jordan,

and the chairman rebuffed those requests last month. you might remember they announced what is the biggest change in its business model in more than 50 years including the end of its own seating model and end of the premium models. i plan to hold an investor kay next month. a fight is upon us. >> 10 out of 15 board seats. >> yep. the point is they're going to get some. >> they're going to get some, yeah, yeah. >> they're going to get some. and i'm happy they made the move about open seating. >> whoever thought that was a good idea. i mean -- >> for a while, it seemed to be a great idea. >> do you like a mom mentality? sure, let's fly southwest. >> folks out there did love it for whatever reason. >> i guess so. talking about loving it -- loving it is -- >> mcdonald's. >> here we are about to mix metaphors. talk about loving it, starbucks

shares are surging by more than 24%, just after the company replaced its ceo with chipotle's brian niccol. we're going to talk about that with an analyst next. the july consumer price index hitting the tape. we'll brinthg at ahead. later this hour, don't go anywhere. "squawk box" rolling on with a huge show after this. pgim investments. shaping tomorrow, today.

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welcome back to "squawk box." starbucks closing by more than 24% yesterday after its announce management that chipotle ceo brian niccol would be replacing the current ceo. we broke that right here yesterday on squawk. it became news of the day. john tower, citi analyst is here. john, it's a huge move in terms of the talents, but it remains that a lot of the same challenges have not gone away overnight. >> yeah. there's a lot of heavy lifting ahead for brian and team, including figuring out, you know, obviously in the u.s., how you're going to get traffic back in the stores, how you're going to improve the customer experience, how you're going to improve the employer experience. what are you going to do with that market going forward? and there's a question about cost savings, unit growth going

forward. there's a lot to address. he's got a full plate coming into this role. >> that's the plate. the question is what do you think he's going to do, and can you walk and chew gum at the same time, which is to say, is there something you can do in the immediate term to try to bring customers back? i don't know if that's value-oriented menus. i think part of the thing they want to stop doing is discounting, which has cheapened the brand over the last year. at the same time, i'm imagining, given that the marketloves you, you're going to throw the cutchen singer in with everything. i would imagine you're going to say, e oom going to do a huge capital expenditure on technology now. maybe the next couple of quarters are going to be awful, frankly, because u ro love me so much. you'll see the fruits of my labor in two years. how does that all play itself

out? >> yeah, i agree with you. he's got carte blanche to do what he does with investors. i think you'll see a pull forward especially around the siren station remodel, which is effectively going to help with throughput. they look at the stores. it's been rolling at a slow pace across the u.s. what's going to drive traffic back in, i don't know. i mean, they've thrown a lot against the wall when it came to innovation. price points have gotten a little bit out of hand, and so, you know, they're effectively telling you by all the promotional activity they're doing right now. that doesn't seem to be working. but that's the route they've been going. will you see more of that in the future? perhaps a more creative means. you'll see it more with the app. perhaps more happy hours. i don't know. they've got to go after that

traffic because competition is not going to let up any time soon, and that's ultimately what investors are going to want to see is traction on the traffic side. if they're not getting that, they're going to ultimately hold his feet to the fire. but he probably bought himself about 12 to 24 months before anything really needs to come to fruition. >> what are the overlaps between chipotle and starbucks? is it almost the same in terms of income, demographic, is making a burrito as complicated as making an iced drink? i wonder what he'll bring to the table at starbucks operationally in terms of service, which is a big customer complaint, in terms of efficiency on that front. >> i think what he did at chipotle, he added some new menu items, but his whole thing was based upon the idea of simplicity, and how do you

improve throughput across the board over time including where they started a process. you might actually see in the next 12 to 24 months menu optimization where today there's an extremely wide range of options for a customer when they walk in there or do the mobile order ahead for what they can put on their beverages and in their beverages. i think that might get streamlined. if that's the case, it will help ore time. it might cost them a little bit o on the margin when it comes to topline sales growth. as long as it's ultimately translating into better profits and customer experience, it's likely going to play out in his favor over time. >> jon, what's your sense of the china question, which is to say, what do we do about china when it seems like there's a race to the bottom pricing-wise and others from all of the

o'competitor sets? do you play it out? do you say it's a huge growth market, we've got to say, we've invested so much? do you say, i've got to pullripcord? >> i think they stay in the market. i think global market operators will be better to run that business than what they've got in terms of structure. you can look at comparisons bet between young and young china. you get boots on the ground to really understand not tonal way the market works but also the politics of getting things going in different markets. you're going to see a more profitable enterprise in that market over time with global market operators. so it's probably the direction they end up going. >> lastly, yo talk about the capex spending. what do you think that ultimately looks like, and what

do you think the store experience becomes long term? >> yeah. i mean if we're talking long long term, i mean -- >> play it out two years from now. he's going to spend real money to upgrade the stores. what do you see? >> it's siren station. you're going to see a hot beverage station, cold beverage station, warming walls that instead of taking every individual order when a breakfast sandwich is asked for by a consumer. it's going to be heated in advance, kept on the wall, pulled off and handed to the customers. the drinks will be put through the system in a much faster manner. it won't look too different to the customer than what you see today, but the experience will be faster for the customer. it will be more ergonomically

friendly for the employee which will be better for everyone involved. the price point will be good without question, but overall it will be good for the customer. jon, we've got to run. but what do you think about chipotle? >> the idea that it's selling off -- he did phenomenal things for the company, but he built an awesome bench, and i think they're going to continue to run the script he's put in place over the next several years, and so i think the selloff years is overdone. >> jon, nice to see you this morning. appreciate it. >> thanks for your time. coming up, the united awe tore workers britaining the latest. plus, closely watched inflation data hitting the tape at 80t:3ime today.

we'll bring you the latest reaction from former kansas city fed president ester george. "squawk box" will be right back.

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the united autoworkers union filing charges with the national labor relations board against donald trump and elon musk. they argue they tried to -- >> you, you're the greatest cutter. i look at what you do. you want to quit? i won't mention the name of the company, but they go on strike. you say, that's okay, you'll all gone. >> the uaw says the federal law

prevents workers from being fired from going on strike and that's threatening job losses illegal. in a statement shawn fain says in part they want people to shut down and shut up and laugh about it. it's disgusting and illegal. the uaw has endorsed kamala harris for the white house. coming up, social security, and how it could play a role in the 2024 presidential race. ahead, we look at the s&p 500 winners and losers. . >> announcer: executive edge is sponsored by at&t business. next-level moments need the next-level moments need the next-level network

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good morning and welcome back to "squawk box." we're live at the nasdaq site in market square. look at the screen. the s&p 500 looking to open about four points higher.

all of that happens in about three hours from now. social security is a key economic issue that's top of mind for u.s. voters. new surveys show most machineries are worried about the government funding, many plan to rely on those benefits as a major sort of benefit in retirement. sharon epperson joins us with the findings. >> good morning. it's one of those issues that unites many americans regardless of their political affiliation. 69% rank social security as one of the top issues or very important in determining who they vote for in the upcoming presidential election. that's according to the cnbc all economic survey. the majority of respondents say 69% say a candidate sta's stand

the topic would make for an accurate vote. social is said to run out in 2033. at that time only 79% will be payable. 72% worry that social system will run out of funding in their lifetime. millennials and gen xers are significantly more likely than gen z and boomer os to say they worry about the social security program running out of money. and still many adults plan to rely on social security for their main source of retirement income. 30% say they think social security alone will provide enough income for them to live comfortably throughout their retirement. that's according to a new survey by nerd wallet. 31% in this survey say they do not and will not have a requirement account to draw from when they leave the work force. you can find out a lot more about this at cnbc.com, read the

survey results, and how to maximize your social security benefits. and you can scan this qr code or go to cnc.com/money101 with strategies on retirement planning and a lot more. >> it almost seems like there's a disconnect because most people are lee lying on social security but many don't expect it to be there. i wonder if it's the age group. >> it's interesting. the older people are worried about social security, but it's millennials and gen xers that are thinking they're going to be relying on social security, and it's a very strange dynamic in these surveys, the way that that played out. >> the notion that they're afraid of social security reform. reform has to happen if funds are going to run out. what are some of the reform possibilities that have been floated? >> there are a lot of different

reform possibilities that can be floated, but you can't count on that for your retirement. what i think is important for people to do is to figure out now what it could be. it may not be 100%. again, we said 79% of the benefits. but at least get that number. people don't understand it's not 65 for most of us that we're going to get those benefits. it's 66 or 67. if you were born after 1960, your full retirement age is 67. after that you get a reduced benefit. if you wait to age 70, you could get 8% more each year for what your benefit could be from your full retirement age to that age of 70. so you want to kind of wait longer if you can and get that -- go to ssa.gov. it's not hard to go in there and figure out what the estimate is from 62 to 70, depending what year you take it and coordinate those benefits with whatever -- hopefully you do have other

retirement savings and how much you're going to have to rely on for that that's guaranteed for the rest of your life with social security. >> good advice. thank you. coming up, key inflation ahead. we'll get you ready for the july price inflation index. a reminder, get the "squawk box" app onou yr favorite app and listen to us any time. listen to us any time. we'll be right back. helped pay for medical expenses, groceries, rent. it really helped close that gap. (whisper) go, go, go! (group) yay! go aflac! go duck! with expenses health insurance doesn't cover. find an agent. get a quote at aflac.com. wish we had aflac on our team. you can! (♪♪)

we are awaiting the consumer price index later this morning. our next guest says she expects inflation to be benign. good morning, julia. great to get your analysis on this. you're expecting it to sort of allow the fed to go ahead and cut rates in sepptember? >> yeah. we're looking for headline and core inflation on an annual

basis to move a tick lower, and for the composition of core inflation to be a reassuring factor for the fed. in other words, they've been watching for months and months to see if housing inflation would step down. we expect that to continue in the july reading. ongoing inflation and car prices and other goods prices and just a generally sanguine backdrop on core inflation. that should keep the door open. we think the door is open for a september rate cut. now it's around a cut pace. we think it has more to do with the market inflation. they need to check the box. we do expect the data to check the box toward bringing rates back neutral. >> chairman powell in the press conference said the fed will be data-dependent and not data point-dependent. here we are scrutinizing the

data point. i'm wondering what you think the acceptable range would be. i think markets are trying to figure out if it comes in hotter, what does that mean for how the fed acts? >> right. exactly. it opens the door wider. doesn't have much of an effect on pace considerations. but if it were a lot stronger, and in particular, i think if housing inflation were to firm up again, that would be a source of concern, at least for some on the committee. i think right now chair powell's assessment is given the growth backdrop that's moderated. given the labor market backdrop that's cooled considerably, that, you know, the time is now and he's ready to recalibrate, but he's got a big committee that he needs to maintain onboard with that direction of travel and that, you know, about half of them have been a bit more skeptical, have a bit more scarring or ptsd from being

behind the curve when inflation was going up and are more inclined unless there's something really, really worrisome in the market that's making sure it's backing at 2%. but, again, as chair powell has said, if you wait until inflation is back at 2%ing you've waited too long. if you wait until the market is outride weak, you've waited too long. that's the needle he's trying to thread as the leader of this group. i think the data will be superintendent portative and help him. but, again, a surprise, 0.3, 0.4 on inflation could make that a much heavier lift for him. >> speaking of tsd, a lot of your counterparts in shops on the street were really quick to change their forecast or rate cuts on one da pa point. that, of course, would be the jobs report. i say ptsd, because this whole

year has been a very difficult one to forecast. it felt like economists were worried they were on the wrong side of the vote, so to speak, once again when it came to the cutting cycle. what do you think happens in terms of the pace and just the flow of the cuts? >> so what we know from the fed's own forecast is that they have laid out for us a gradual pace of rate cuts, basically once a quarter or every other meeting, 25-point basis rate cut. that path was based on the assumption that the labor market would not weaken any further, that you would basically have trend-like growth and a very resilient solid labor market, but cooling inflation, and then you would go through this gradual recalibration lower. what we've seen in the labor market is more weakening. there's a lot of special factors in the july employment report. they will get august before the

september meeting, but not before chair powell's jackson hole speech. so i think, you know -- take aside the special factors in the july report. there's been cooling in the labor market for quite a few months now. really the whole year, we have seen the pace of job growth slow, the unemployment rate has moved from a low of 3.4% a little over a year ago to 4.3% now. so that is something that, you know, could tick lower in the august report, but you're still a lot higher than you were. i think chair powell has sort of sat up and taken notice. a lot of people on the committee, the dovish half has already drawn a line in the sand. this is fine, the labor market is fine, but we don't want to see it weaken further. that's a different scenario. that's a different scenario than we lay laid out in the june

forecast. the labor market has moved further and it has cooled further. so now there's not as obvious a reason to be this high operates. you want to get toward that neutral stance a little bit quicker. so we're looking for chair powell to lay out kind of a two-stage strategy. one where they go a little bit steadier in the first phase and they can slow down and feel their way in the second phase. it will be data dependent at the end of the day. >> julia, thank you. okay. coming up in just a moment, the race for the white house. we're going go focus on some of the swing states where vice president harris is gaining momentum. she's getting closer to trump in florida. meanwhile political strategist pollster frank luntz will be with us right after this.

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welcome back to "squawk box." the latest polls in the presidential race showing vice president harris gaining ground in some swing states and even eroding some of president trump's leads in florida. if an election were held today, she would win. joining us now political strategist pollster frank luntz. that's a turn. >> it's more than that. >> that's a plot twist. >> she's bringing out people not interested in voting for trump or biden. so the entire electoral pool has changed. if it continues in this direction, you have to start to consider democrats winning the senate and democrats winning the house. the actual people who are participating. she's got intensity now. she's got an intensity advantage, a demographic advantage. i haven't seen anything like this happen in 30 days in my

lifetime. >> how big is that marginal extra voter that she's bringing in? how much does that change the pool? >> 1%, maybe 2%. that's it. but that's enough. >> can i ask you, though, about the voracity, frankly, or the polls because you go back and look. there was a poll yesterday. if you look at where donald trump was in terms of what the polling showed back in 2016, under counted. you go even in 2020, under counted. and so you start to think about, you know, the margin of error situation where maybe she's up 1 or 2%. but is the trump vote fully counted? >> that's why my process is not just to do the numbers but also to do the focus groups. to listen and understand why folks feel this way. now my groups are broken up. young women say they're not

voting for him anymore. you think they were voting for donald trump and now they're voting for harris. >> the people who are undecided have all collapsed toward harris. the people who are weak trump have collapsed. it's a broad shift. i'm trying to do a focus group tonight of it it is a broad shift. i'm trying to do a focus group tonight for a major news outlet and i can't recruit young women to this because they don't exist as undecided voters. and you shift the demographics and you shift the entire outcome. there are issues, attributes, and the conditions of the country. the issues and conditions favor donald trump. he should be winning this election. but the attributes are so much in harris' favor that he's not, that the very attributes that trump office -- and the best example, you did the story on the uaw, why is donald trump

saying publicly i want to fire the same people that he's getting now, still getting, union members, it is ridiculous. it is as though he's lost control. and i know there are billionaires who watch this show, who are spending a lot of money on donald trump, and they don't understand why he's committing political suicide. >> what can he do? are these problems fixable? it sounds like the reason why women, undecided women are deciding to vote for kamala harris, those are things that cannot be fixed. >> yes. so there are three issues. number one, affordability. we should not call inflation ever again. it is housing, healthcare, food and fuel. and the people that trump needs cannot afford every week or every month. second, wasteful washington spending which you're not talking about anywhere. this was an issue over the last eight years, hard working taxpayers hate it when they see their money being wasted. third, it is not just immigration. it is safety and security. and i brought the headline here.

i look at this, i walk into your office, and i don't know if you can get this. >> the new york post says $5 billion, shocking amount, new york city taxpayers spent on migrants and it is still going up. >> and people will look at this and go, damn it! or even worse. trump should be winning. but the attributes there are three things people are looking for, three different areas, four different components. number one, who has got results? trump actually can show it. trump has the advantage there. number two, a detailed plan of action which he's about to release tomorrow. and number three is genuine accountability, which the public thinks -- >> let me ask you two questions. one is, she is about it release a plan or we're going to start to see pieces of a plan that i think we'll hear about over the next couple of weeks once you get to the dnc convention and the like. does a plan

attractive or less attractive. right now there is very little to genuinely critique or attack if you were on the other side of it, right? you're not really sure -- it is all this amorphous thing. does she tack to the center, does she tack to the left? what are we about to see? at some point, if you have a detailed plan, no matter what it is, if you're on the other side of it, you can say let me nitpick this, let me nitpick this, let me nitpick this. >> if that plan of action, those details are things that the public wants, they will ignore the criticism and the soft voters will become intense voters. she's talking about the number one issue facing the country, and donald trump is talking about crowd size. what the hell, andrew? >> i'm not disagreeing with you. i'm asking you a slightly different question, does the policy piece become an advantage or a disadvantage?

and the other element of that is, it is possible, if she does, for example, tack to the center, i imagine the critique will then be, well, where were you -- are we supposed to believe what you're saying today or are we supposed to believe you before and then you get into this john kerry flip-floppy thing. there is going to be lots of ways that people will critique wherever she lands. >> if she's landing on making life more affordable for more people, that's the place to be. her weakness right now are male union voters who traditionally vote democrat over republican by about 20 points. trump is still outperforming her there. these paycheck to paycheck voters i speak of, don't call them blue collar, they don't link to that, don't call them working class, because they actually resent it. they are challenged every week, every month to make ends meet, they want someone to make life more affordable to them, even if she's attacked, she's being attacked for fighting to make things more affordable. >> we got to run.

the final question, what states to you are in play? >> it is the same ones we know of, pennsylvania, wisconsin, michigan. >> but then you're saying maybe florida something happens here. >> no. all trump needs to do is to win one of those states, he's now talking about the election being stolen. this is a line from governor chris sununu. you can't steal what you've given away. he's giving away this election and we will look back on today and i will post this, and say you've been warned. >> what do your republican friends say when you say this? >> they tell me yell louder. they tell me -- i can't stand up because i'll fall over. they say stand up, scream on shows like this, wake the hell up to the president, because -- former president, because this could be a sweep in november if he doesn't. >> frank luntz, we appreciate yobeg reu inhe. >> thank you for having me. >> thank you. coming up, a big week for

retail earnings. we'll break down some of the emerging trends in the sectors and get some names to watch. that's next.

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squawk picks is sponsored by wisdom tree, welcome to the future of investing. several major retailers reporting quarterly results this week. joining us with a look at some emerging trends, simian siegel. great to have you with us. home depot, is that a read through to any of the companies that you cover? >> yes and no. like always. i think what is so important, we're talking about consumer here, this is not financials, not biotech, very concrete, we

all do it, the problem with that is we all mistake the story. there is this huge negative cloud and i get it, there is no question macro, consumer. but there are companies that are winning and there are companies that are losing, they think we're losing that point. i think it behooves every company to recognize there are companies selling the same thing to the same people with completely different results, which means you need to execute and need to put out product. you look at a result and you say, okay, look, we're getting a signal that the environment is not what it was when it was great during stimulus. but a surssure you companies ar winning. >> the most obvious example would be lulu and nike versus an an aloon that just reported. >> we talked about this where all the luxury companies came out and that was a huge negative harbinger, even luxury is going. lvmh is telling us there is a problem. two weeks later they said there

wasn't. so they say maybe there is a little bit of a problem and we got hoka and on telling us it is not. same thing in denim and underwear. during covid, there was no reason to be a winner or loser. it was stimulus or it wasn't. that's not how companies work. companies are supposed to share, supposed to steal. that's what market share means. and that's what we're seeing now. but what is interesting is the largest companies, lvmh, nike, they're seeing the pressure. we read that as everyone is seeing pressure. there is a problem, no one is spending anymore. revenues across my group now are averaging up 3%. not 10%, but it is not down. >> you take a look at the activism that happened at starbucks with great results or seemingly at least for now up 25 from yesterday's session. why not for lulu and not for nike? are they ripe for that? >> who isn't? i think yesterday i had so many questions that immediately said is on -- on reported earnings

yesterday. it became, that's starbucks. so the amount of people that -- the stories that bunch starbucks, estee and nike together, there are so many similarities where you have to say, it is hard to be a manager in an environment where being a good manager is important. and so there were a lot of questions that flowed through. i'm not going to say nike is getting an activist. it is interesting to see. starbucks is probably their own conversation. but i think every company that we're talking about in the lagging category needs to look at the winners in their categories and say what are we not doing? when everyone is doing great, easy to let management have the pass, we also had a lot of conversations around nike, three years ago, my team wrote a report saying why are you abandoning your partners? >> to be fair, they were lauded for their strategy, higher

margin, it is great, people love it, and, now it is, like, no, that isn't the way to go. you need your foot lockers and macys of the world. >> there are a lot of companies that get lauded in consumers. it is so obvious to say, cut out the middle man and you'll make more money. >> is that the problem? >> the product, $50 billion of product. there is no question the innovation is this big question mark. but people like us challenge the innovation, where as people that are going into stores spending $50 billion are saying nike still stands for something, i think to your point, they got so obsessed with where they were selling versus what they were selling that they allowed for a hoka and on to come in. you don't eliminate the middle man, you become the middle man. we're coming to grips with that. three years ago that report was wildly contrarian. it is not anymore. understanding who you are, product is the core of who you

are. you need to be maniacally focused. >> simeon, great to see you. just past 7:00 a.m. on the east coast. you're watching "squawk box" here on cnbc. i'm andrew ross sorkin with melissa lee in for joe kernen and becky. among today's stop stories, a lot going on, the justice department considering a potential breakup of google after a judge ruled the company's search business is a monopoly and violates antitrust laws. elliott management launching a proxy fight with southwest airlines. it says it plans to nominate ten directors to the carrier's 15-person board. earlier this summer, elliott revealed it built a big position in southwest and was looking to overhaul the company's leadership. consumers spending more at small businesses in july, a rebound fueled by strong sales of general merchandise and health and personal care products.

the deal we told you about earlier has been announced. mars is buying kellanov for $83.50 a share. mars is financing the acquisition through cash on hand and new debt for which it says commitments have been secured. the deal has been unanimously approved by kellanova's board, stock up 8% here. a check on futures as we are awaiting that all important cpi data, july cpi. up across the board, as we're expecting at least. steve liesman is here with a little bit of a look here at cpi. >> some firming in there is what is expected today a little bit

in the monthly consumer inflation data. and the question after you had that unexpected improvement in june, is there enough affirming that it would keep the fed from cutting rates. that's not what is expected today as melissa is suggesting. 0.2% a negative 0.1, that was a surprise. the headline remains the same here, 3%. you have the tick down expected in the core because of the other numbers dropping out of the past. so a downside surprise could boost the chance of a 50 in september which is like 50/50 right now, but raise the concern that the economy is weakening faster than previously thought. the effect upside surprise depends on how tightly markets are priced for a modest gain today and how much confidence the fed has in its inflation forecast. yesterday raphael bostic said after strength on the path earlier this year, inflation the past several months has turned to a better trajectory that has given him more confidence it could head back to 2%.

he added he wants to see more data before figuring out what to do in september but expected there would be rate cuts before year end. stubborn housing inflation, you want to watch that at 8:30, the measure of owners equivalent rent peaks nine months after the broader cpi and has been slower to come down. you can see that there. it was somewhat behaved last month, some say, hey, inflation is real in that sector, and that's what's really happening in that data. others say it is bad lag data and the numbers are lower and will come down. today's cpi and yesterday's ppi, two critical data points, they feed into the fed's preferred indicator, the pce inflation numbers which come out at the end of the month. another round in september, a week before the fed meets. i will tell you, my friend alex monzara, he points out that the june 25 -- the june 25 fed funds contract is trading 200 basis

points below the current funds rate. >> 200. okay. >> 2 percentage points. >> yeah, yeah. >> his commentary this morning says -- i should read it to you, while stocks welcome the prospect of lower rates, it is hard to see the fed slashing 200 in a soft landing scenario. something's not right. rate futures are screaming hard recession, stocks enjoy a rollicking rally. so. >> a disconnect. >> an interesting disconnect. what is interesting to me, i think the futures market is right about where the fed needs to dgo. if they go down 200, they're still below what they consider neutral. i think the fed market gets there faster and it panicked to get there. >> yeah. wall street economists have set the expectation that there is going to be a screaming reason for the fed to cut really fast. >> some wall street economists. they went nuts. others have been a little

cooler. we talked about it yesterday, i was surprised how some of the big shops went and changed their view. right now, melissa, looking at the immediate future, you know, 50/50 on september. and then almost 100% certainty that we do 100 by the three meetings in december. >> that's a lot. >> that's a lot. a lot. but, you can also argue the fed has been late. >> yeah. >> and should have been there already or closer. >> right. >> see you soon, steve, thank you. >> coming up, which direction is the crypto community leaning in the presidential election? we're going to discuss with circle co-founder and ceo jeremy alla allaire. later, is the low cost airline model dead? model dead? phil l easy-to-use tools, the ts like dynamic charting and risk-reward analysis, help make trading feel effortless.

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excuse me. i'm coughing. welcome back to "squawk box." the crypto community awaiting policy guidance from the harris campaign. really choking. not on the crypto news, but on my coffee, if you will. digital currencies should be a nonpartisan issue by now, you would think, but they're not. joining us, circle co-founder and ceo jeremy allaire is here. save me from myself or my voice right now. what do you think is going on here, and this sort of very interesting political bifurcation that is taking place in the crypto community? >> it is fascinating to watch. as you know, i've been going to capitol hill for 11 years almost for a senate hearing on crypto in 2013 and have spent an enormous amount of time across republican administrations,

democratic administrations, you know, every which way. what is interesting is that if you look at what happened over the past year, you actually saw a lot of bipartisan work getting done. you saw major bills in stable coin. major bills in market structure advancing. it looked like this was a purple issue. and i actually believe -- i think crypto is purple. and, you know, i think now we're in politics though. we're trying to get people elected. so people are figuring out, okay, this is an industry here to stay, there is a lot of investment from that industry in the campaigns themselves, and so people are staking out these new positions, but it actually reflects in many ways, if you look two years ago, it would be very hard to believe that crypto is going to be a presidential political issue, very hard to believe that there would be major, major legislation, the industry would be where it is two years ago, very different

world. >> so, what do you make of the fact that obviously former president trump has taken this on as his issue, tried to say he's crypto friendly and we keep hearing but maybe you can provide some more insight at least behind the scenes because we haven't seen it publicly yet the vice president harris is trying to court the crypto community as well. >> i think that's absolutely accurate. and as has been reported, i participated in a white house and there were harris folks involved as well, a discussion last week, and what i can say is there is a concerted effort, both from the administration and the harris campaign to really get to know the issues, the players, the industry, the policy issues, et cetera. i think what the industry is looking for, very, very clearly, is clear statements, clear statements potentially from the existing white house and clear statements from harris as part of her economic policy agenda,

how is -- >> fair to say, this administration, the current administration has not been friendly to crypto or at least cast a skeptical eye on it? >> yeah, i think they have missed the boat on that. i think they have, you know, they caused american jobs to go overseas. they have made the cost of building in this space extremely prohibitive. and, you know, they created a situation where policy is being adjudicated by the courts, and not by congress. and that is not how, you know, a new technology industry should be developed. and so they really missed the beat on that. but, you did see later in this administration this pivot toward, okay, we're going to actually try and pass comprehensive legislation on a bipartisan basis. so, there is some move toward that. but is it too little too late? >> and do you see a distinction between -- gary gensler was appointed by this administration. where do you see him playing in

this situation? >> i mean, look, i think we're 90 days out from the obviously from the presidential electoral outcome. and there is a lot of discussion about harris wanting to, you know, build out her own cabinet if she were to win. obviously, we know what president trump would do. but i think, you know, who -- >> do you know what president trump would do? that was the other question i was going to ask you, he's made a whole bunch of statements about bitcoin, went to the bitcoin conference, but i don't know how deep he would even say he is just in fairness on these issues. >> it is hard to know that, obviously. but i think what does seem clear is that a lot of the people around him and his advisers and others have a somewhat sophisticated view on the topic. and so, you know, it is a kind of -- is it a delegation of not authority per se, but of really driving the policy agenda? but, you know, i do believe we

have reached a really interesting point where there has been incredible technology maturity in the space, it is happening at a very, very accelerating pace, more and more major companies, traditional companies getting into this. europe is ahead of the u.s. on this. comprehensive regulation, fully enforced. other markets very much moving to that. so this is a huge opportunity for the united states and it is a huge opportunity for the dollar and digital dollars. so, whatever the outcome, this is advancing. >> there was some expectation or hope maybe that donald trump at the bitcoin conference would say he would want bitcoin to be a reserve currency of some sort for the united states. is that still alive? is that the hope for trump administration still in your view? >> i don't -- he made a speech and said, well, we won't sell our bitcoin basically. so, i think there is a whole discussion now, i don't think it is a long discussion on is it a

good idea for the federal reserve to, you know, hold, you know, something like bitcoin on the balance sheet. that's more of a central bank and monetary policy question. >> that would have an impact on you, i would imagine, no? >> i think generally advancing policies that allow private sector innovation to grow, advancing policies that effectively make digital currency dollars that are built on these technologies flourish around the world would absolutely benefit us. so, we have been advocating for those kinds of rules for a very long time. we think this is a key moment for dollar competitiveness, competing with china, competing in the geofractured world and doing it responsibly. >> we have to leave it there. thank you, sir. >> thank you. >> appreciate it. up next, stocks on the move this morning and later,

forecasting, nate silver has a new book on the art of risk taking. he'll join us in just a bit. we'll be right back. >> announcer: time now for today's aflac trivia question. what five letters arenot currently used as a single letter stock symbol? letter stock symbol? th groceries, rent. it really helped close that gap. (whisper) go, go, go! (group) yay! go aflac! go duck! get help with expenses health insurance doesn't cover. returns. wish we had aflac on our team. you can! (♪♪)

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>> announcer: and now the answer to today's aflac trivia question. what five letters are not currently used as a single letter stock symbol? the answer, i, n, p, q and y. >> a check on shares of victoria's secret jumping after the company announced a new ceo. hillary super will take over the top spot effective september 9th. super most recently served as ceo of rihanna's savage x fenti. we have two and a half hours to go before the market opens. the dow would higher, 7 points higher. the s&p 500 up a little bit. want to get over to dom chu who has a look at this morning's premarket movers.

>> we'll start with fanduel owner flutter, the online betting giant is raising full year guidance after exceeding expectations on the second quarter revenue. that was boosted by continued strong demand for its strong u.s. sports betting franchise. monthly active users surge big 17% year over year. flutter entertainment, fanduel, up roughly 7% in the premarket trade. now a check on starbucks and chipotle after the biggest gain on record for starbucks since its ipo in 1992 when the company replaced its ceo with current chipotle ceo brian niccol. starbucks now you can see here trading one third of 1% lower. which chipotle has swung to the upsite. the sudden departure presents a new buying opportunity for chipotle and the firm is lowering the target price from 70 to 80. they're seeing some upside potential. big upgrades from a slew of analysts now as leadership tries to ease some pressure from

activists including elliott and starbird and others. for more on those calls, you can head over to cnbc.com/pro, subscribers get full access to the detail and analysis there. breaking takeover news from earlier this morning with m&ms owner mars acquiring kellanova in cash. total of about $35.9 billion if you include debt. this is that former kellogg's spin-off, with pringles and cheese its, eggo waffles and others. it was in takeover talks earlier this month. hershey was also looking to a potential deal. so you can watch shares of kellanova up 8% on the official news that it came out this morning. pay attention, because the ceos of kellanova and mars are going to join the team on money movers later on this morning at 11:30 a.m. eastern time. a conversation about just what drove the deal and it will be curious to see how the brands link up. back over to you.

>> and whenever a deal is announced, people say who's next? who's next in the food industry? utz has been bandied about as one potential target. >> what is crazy, it is the portability, right? all of these brands, i remember a time when pringles was still part of procter & gamble back in the day and that links to brian niccol, he was the general manager back in the day. everything kind of is moving around. a lot of portability in brands these days. >> absolutely. dom, thank you. dom chu. coming up, we'll talk inflation and e rkthmaets with rbc's head of equity strategy. and we cover it all with author of "fivethirtyeight," nate silver. "squawk box" will be right back.

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welcome back to "squawk box." check out gold this morning, hovering near record highs as we await cpi data later this morning. the price is 2512, up by .2%. our next guest says last week's sell-off relieved some pressures in the stock market, but didn't solve its major problems. here to explain is laura cavasina. we talked the day of the sell-off and now you say that a short-term bottom was probably

put in place. but what are some of the issues the market wants us to deal with. >> i was surprised on friday, we got the cftc data. i think i checked the file ten times, looked to see what other people were seeing. my data was right. we didn't really see any improvement in futures positioning. so we still look like we're pretty crowded, including in things like the nasdaq futures. i think seasonality is treacherous this time of year. and we got a lot of uncertainty around the election, we got new economic policies supposedly being dropped later this week. and then i think we're going to come back after labor day and investors are going to be wanting a lot of information from companies about how things are going in the economy, how things are going with consumers, one thing i remember, just in recent years, companies don't like to give a lot of information at that time of the year. they push off and don't like to give a ton of forward guidance. i'm worried about that as well. >> we will get information about the consumer, just not after labor day and september. we're getting it now, earnings season, and we'll get what could be the lifeline for the a.i.

trade when nvidia reports. we have been in a data point vacuum since the hyperscalers reported. couldn't that be enough to get us through that rough period? >> i think, you know, it is a question of have we bottomed? 8.5% was enough if we don't have a full on growth scare. but are we going to have the all clear? i think in my mind we can sort of have that be the low, but still chop around for a bit and not necessarily break new lows. i will say on the a.i. piece, i think one thing that was unnoticed in this reporting season is that, you know, not in the major megacap tech companies, but if you look at your everyday s&p companies, the end users of a.i., there is pretty good examples of use cases being discussed and i think the street completely ignored that. >> you like the defensive sectors better in this environment? >> i like value sectors better. we have looked at utilities as an overweight. that one we're still overweight. it has gotten less interesting on valuations. so we're still overweight there. but i would say my attention shifted more to things like financials right now.

we're still overweight energy. geopolitics are a problem. we always like having that in our back pocket. the financial valuations have improved. i might shift from the latter back to financials. >> 5700 is your s&p target for the remainder that you're sticking by it? >> yes. >> what is the rate cut backdrop that needs to happen for you to achieve nthat? >> our rate strategists are not looking for as many cuts as some others on the street and that's because the economy is going to muddle through. our modeling, when we went through an i'll spare you all the details on the model, we felt like if you looked at 55 to 5600 on the s&p, those highs we had a little above 5600, that was baking in, say three or four cuts from the fed, pretty benign inflation data, 2% on pce. so we think returning to those highs is appropriate for the rate environment most people are looking for. >> doesn't really matter what cpi does today? >> i hope not. we'll see. i agree with the idea we moved

away from living and breathing every inflation print and now we're focused on labor and a lot of confusion over the jobs report that came out a few weeks ago. i think people are going to be attuned to the claims going forward and we are as well. >> laura, good to see you. thank you. >> thank you. when we come back, we're going to talk about southwest making comments about elliott's proxy fight. and is the low cost carrier model dead? phil lebeau will join us. and july cpi, that will be out at 8:30 eastern time. the numbers and instant market reaction. that's all ahead as "squawk box" rolls on. every day, more dog people are deciding it's time for a fresh approach to pet food. developed with vets. made from real meat and veggies. portioned for your dog. and delivered right to your door. it's smarter, healthier pet food.

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welcome back to "squawk box." low cost carrier frontier and spirit struggling to generate more revenue and their shares suffered for it, near all time lows. there is a question, is the low cost airline model dead or is it changing? phil lebeau joins us now with more on all of it. phil? >> andrew, it is not dead, but it is certainly in a bad situation right now when you look at shares of both spirit as well as frontier. let's start with spirit. it is close to an all time low. revenue is the issue here. the first half, down 8.5%. look at frontier, similar situation in terms of the look

of the chart. near an all time low. q2 revenue slightly different than what you're seeing with spirit. it is in a little better position, up 1% in the second quarter. here is the issue for these guys, weak revenue growth relative to the legacy carrier, and that competition from the legacy airlines, it is killing these guys right now. primarily because they don't have the premium revenue that you get whether it is with delta, united, american. really a number of the airlines that are out there right now. frontier and spirit, they are adding premium seats. they both mentioned in the last six months that they're going to be pivoting more toward offering their passengers either bigger seats, more leg room. more amenities, the kind of thing that has been so successful with the legacy airlines, but as you take a look at jetblue and southwest, we should point out that this pressure, while these guys are not typically your low cost carriers, they came up as low cost carriers and have pivoted their business, that pivot continues. southwest adding premium seats

in 2025. jetblue in the midst of adjusting its schedule. bottom line is this, you're looking at a model where it used to be give me $49 from chicago to kansas city, i'm on that flight. loads of people are on that flight. that's not enough anymore. you have got to give the crust more and that's what we're seeing the low cost carriers deal with right now. >> phil, while we have you, we have to talk about southwest. just commenting on the plan, proxy battle from elliott management. tell us what you know right now. >> well, late yesterday elliott essentially said we're going to put up ten people who we believe should be on the southwest board. the board is 15 members, they're nominating ten. and it is a pretty decent list. david kush, the ceo of virgin america, executives who worked with west jet, with ryanair, it is a decent list of people if you were to, say, start an airline. southwest came back within the last half hour and said, you know what, we tried to engage

with elliott, numerous times, elliott has said no, we made changes that elliott has brought up to us, remember they just outlined during their earnings report, andrew, that they're going to be pivoting towards more revenue generation through premium seats, red eye flights, assigned seating, and that there is more to come in late september. so, it is a bit of a stand still at this point. but it is clear that elliott is getting to a point, once it has more than 10%, it is going to push for a special shareholder meeting where it will try to nominate or it will nominate these members for these people for the southwest board of directors. the question, andrew, becomes where do you get the votes? you may have 10%, but you can't buy a lot more than that because the poison pill kicks in at 12.5% for southwest airlines. and once that poison pill kicks in, that's going to dilute the shareholder base for elliott, going to make it much tougher. so, there is discussions there, not terribly productive

discussions, but southwest saying they have been trying to reach out to elliott and have some discussion about how to change the airline. >> the question, though, if you're going for ten seats, you're going to get some seats, it would be hard to think you get no seats, the big institutional investors would typically give you a couple seats just to -- especially given where the stock price is, just to say, look, we want to have somebody pushing them further than they already have been pushed, no? >> absolutely. i think you're correct about that. now, if you get -- let's say two seats, three seats out of 15, how much of a difference is that going to make? elliott has a long track record, a very successful track record, we saw what happened with starbucks in terms of putting pressure on corporate boards. when you talk with leader at southwest, they say time and again, look, we are changing. we have made a number of plans that we have laid out that are going to be put in place over the next year and a half that should dramatically increase our revenue, increase shareholder returns, so it is not like we're

sitting around doing nothing. and so the question becomes, andrew, let's say that elliott is successful and gets a couple of board members out of 15. will it increase the pressure and make changes even faster at southwest? i think bob jordan and gary kelly showed they're moving and not waiting around. so, now it becomes a question of how much influence elliott can have. >> phil lebeau, we appreciate your perspective on all of it and insight, just as the news is crossing here. thank you. coming up, nate silver joins us next, he's got a new book out on the art of risk taking. futures meantime, we're waiting with bated breath so to speak for the cpi data for the month of july.

we'll be right back.

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name in the world of political election forecasting. and a new book he writes about the art of risk taking in the world of politics, betting and business. and so there is a lot in here to talk about. nate silver is here, founder of fivethirtyeight and his new book is out called "on the edge: the art of risking everything." here it is. we were just discussing what it takes to write a book of this size and magnitude. should we talk about politics first? >> sure. >> before anything else? since that seems to be the issue du jour. from what you can tell, do you have a prognostication if this election were called tomorrow? >> so we have a forecast for november. and a lot of things can change. is there more uncertainty in november. we have it basically as a tossup. 55% harris, 45% trump. poker player might care about the 55 versus 45 but it is anybody's race. >> what do you think could change between now and then? >> she had tremendous momentum

since appointed as democratic candidate. with the convention coming up, you get a boost in the polls from that as well. september, though, was a different story. you have the debate potentially. you have higher expectations with her as the front-runner. so, yeah, today, she looked pretty good. we understand there is headwinds, the economy, we don't know how that's going to be in november. >> when you talk about the d impact of debates, barring a candidate stepping out of a race, after a debate, how important are they? because we might have one, we might have three. >> i mean, you know, june was an outlier sized impact from a debate. remember, these races come down to, like, one point in wisconsin, michigan, pennsylvania, georgia, it is only a one-point swing. that could be decisive given how close american elections are these days. >> we were talking to frank luntz in the last hour and one thing that he was pointing out is -- he was arguing that harris has an advantage in many of

these states and is up, but we were also talking about how some of the stats back in 2016, 2020, showed that the former president, former president trump's numbers were almost always discounted or undercounted. >> for sure. >> how much we should be thinking about that in the calculus? >> look, the real margin of error on polling given the uncertainty of who we sample in polls might three, four, five points in either direction. you can't predict very seieasil. the real margin of error is pretty wide. if it is harris plus two in pennsylvania on election day, that's still highly uncertain outcome, for example. >> do you think -- reading this book, it seems to me that your brain is thinking about trade-offs, always. >> yeah. >> everything is a trade-off, everything is a risk. do you put your whole world and life into sort of percentages? >> no. when i get chinese food on a tuesday night or something like that, but big decisions, career

decisions, it is important to think in terms of expected value terms or financial investing, invest in index funds, right? that has high expected value relative to keeping in cash, for example. i'm not talking about, like, fun every day stuff. more the big picture stuff. >> one thing you talk about, it is sort of a framing in the book, the river and the village and the river is not a poker term in this context. i don't believe. >> no. >> but the river is a poker term -- >> i didn't know that. >> explain that for those who have yet to read a great review of your book. >> cool, the village is like the establishment, like "the new york times" and harvard, east coast establishment. the river is the world of calculated risk taking, so, you know, wall street, silicon valley, las vegas, basically. i'm a riverarian myself. i played poker professionally in my 20s, that's the inspiration for everything else.

you see the worlds clashing, bill ackman versus harvard, m.i.t. and penn, where you see this hypothetical landscape playing out in the real world. >> bill ackman, i assume, is somebody in the river, in your world. >> he's in the river, for sure. >> is harvard in the river or in the village? >> harvard is the village. >> we should realize, it is all like 1%, it is a clash within the % of people. most people don't care about the stuff as much. but it is a rivalry for intellectual supremacy, i suppose. >> who do you think is winning? >> financially, the river is winning, i think. look at silicon valley, it does very well financially. tech becomes more of the economy every year. >> so everything these days is becoming gameified. what color gatorade is going to be poured on the winning team, all that stuff. in that scenario for society, does the river become more dominant? >> yeah.

>> society as a whole, you know, embraces risk taking? >> it might not be great either, might be a winner take all economy, if you have high agency and good at making calculations, you do very well for yourself. but, yeah, i worry about, i'm not a big -- i'm not elizabeth warren, but i worry about the most powerful .001% becoming more do it abroad. you can't do it here. >> i advise the markets company. disclose that. in favor cutting down on the b.s. component essentially. people are already betting on outcomes how it affects equities and stuff like that. a direct instrument and not an indirect -- >> do you think instruments for everything? bet on what we're going to talk about on "squawk box" this? >> there are already. >> there are and there aren't. some regulated, some not. >> priced into equities and things anyways. why not let you bet directly would be my view.

>> what is the one thing you'd like to be able to bet on that you can't directly? >> like, elections, there is a lot of political risk that effects markets profoundly. in the u.s., restrictions betting on elections, for example. people bet through proxies. again, to me it's like, there's nothing wrong with betting on elections. you can bet on a football game, why not bet on an election? >> i feel you don't like this whole betting thing? >> no. i just don't know the implication. sports i understand. politics -- one last piece. inside information. so that's the hardest part about all of this. once you get into certain types of things there can be a true information advantage over others. >> that's fair, but also true in the sports market. an nfl reporter for espn bitting on nfl draft you probably know a few things about the draft.

political betting a special case in terms of equities, sports, everything else. >> nate silver, book "on the edge" you'll learn a lot. appreciate you being here. thank you. congratulations. coming up, starbucks s and chipotle, a new leader, and in the wake of the change we'll speak to a business professor and what nickel's brings to the table. later, esther gege worith reaction to cpa data and much, much more. we'll be right back.

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a new era begins at starbucks's pt company fired brian nickel away from chipotle and taking charge september 9th. its best one-day gain since going public 22 years ago gaining 25% on the day. joining us what's ahead for starbucks professor at dartmouth's tufts school of business. professor, great to have you with us. >> thanks. happy to be here. >> how much time does brian nickel have to get things done seeing they've had a spotty track record in terms of keeping ceos on? mostly because you have a back-seat driver. howard schultz still exerting

influence even if from sidelines? >> i don't think he has a lot of time. the previous ceo started march of last year and if you just think about that, he maybe has a year to go. i think people will be looking cagily what he does this fall and how quickly he can kurn thturn things around. genius to get this guy. a really successful ceo, turned around chipotle, taco bell before that. i think he's the kind of guy who actually could get something done. the question is what will he do and how will he do it and will howard schultz stay on the sidelines, leave him alone and let him do his job. >> a tangible problem able to tackle, the food-borne illness issue and able to nation. not saying that's the only reason he succeeded, but in the begins had a big win. sort of set the stage for the

rest of his ceo tenure. i'm wondering because starbucks is one that sort of a lot of industries, you know, whether it be nike or estee lauder. we had a retail analyst discussing this, a multinatural company running up against china and had dominant market share. a more amorphous problem to tackle. do you think the expectation to succeed is maybe too high at this point? >> yeah. i'm sure the expectations are too high, because this company has lots and lots of problems, as we know. including labor issues. the depersonalization of the brand. the move away from the kind of folksy-starbucks we knew way back when. how you re-invent yourself is a totally different question than how you fix technology or get rid of food-borne illnesses. he needs to come up with a

strategy that will take starbucks to a new place it hasn't been for quite a while. a tall order for him. >> do you see similarities out there as retail analysts, we had one on earlier, sees in terms of some of the issues that larger multi-national companies are now facing? sort of a common thread? looking at this from a, you know, a case perspective in terms of what is going on with these storied brands that had been the dominant market share owner losing all of a sudden they're dominance? >> well, i think you can't last forever. i think this is something that all organizations face. i've been studying companies for four decades. at some point they lose their luster and they need to re-invent themselves. starbucks has been able to do that more than once in its history, and needs to do it again. i think the markets have been difficult for starbucks, and have been pressing them. i think this move seems to have

gone really well. to get a bump like that, 25% a day shows that investors feel this was the right move. he has headwinds behind him but you still need a strategy to turn the organization around including potentially getting rid of value peoples, starting to make the experience more personal. coming up with new products that you could put in the stores. opening up new stores, closing stores. a lot to go on here. it's a complicated organization. it's a big organization. plus, you have the issues associateds with international growth and particularly china where starbucks has struggled lately. there is a lot for this company to focus on and for him as ceo to tackle. >> what grade do you give the board, the starbucks board? for doing what they've done, and i don't know if you want to look at first putting simmen in the job, allowing shultz to publicly announce disapproving with the

ceo and getting in the right guy? >> i hate to grade board members. i guess i would say passable at best. the decision to hire a non-food oriented person seemed wrong to me back in last march. so i think that was a mistake. allowing howard schultz to still be a part of the conversation and lob insults on linkedin even if not directly, all of that needs to stop. in some sense one of the biggest challenges starbucks has is they need to move beyond howard schultz. he was amazing. thought the whole thing up. we wouldn't have great coffee in the united states without howard schultz to some extent billions also orin smith on this side. operational genius able to build this early part of this century. more of that. operational excellence coupled with new sta trategic pushes tot

this company back on track and that does not include howard schultz, i'm afraid. >> thank you, professor. >> thanks very much. it is just after 8:00 a.m. east coast. you're watching "squawk box" on cnbc. i'm andrew ross sorkin along with melissa lee. joe and becky are off today but a lot of big stories to tell you about including the candy bar mars buying kellanova. price tag, $36 billion and guess what? it's all in cash. the deal, mars $24 billion of wrigley's in 2008. don't miss the acquisition on "money movers" later on this morning. and applications for refinancing home loans surging 35% last week versus the prior week. up nearly 120% versus the same week the week earlier. the justice department. reportedly trying to break up google in the wake of a court

ruling. the tech giant monopolized online severance. improve the chrome web browsers. maybe split those things among them. a look at futures. mixed picture. about 30 minutes away from july cpi data. dow looking to lose 8.5 at the open. s&p up by 1 pounl 5, looks like and nasdaq higher 2.5 points at least now treasuries of course a check here. two-year yield, 2.98. to mike santoli. all of this could change in 28 minutes. >> yeah. exactly, melissa. definitely markets hesitating ahead of the open for good reason, although holding on to the recent gains particularly s&p 500 a good comeback over the last five, six trading sessions. picked up a little more than half lost from the mid-july record high down to last monday's intraday low around

5100. taken us to the 50-day average. doesn't always mean anything. look back in the spring, 5%, 6% pullback. first rally stalled there and reload to get a little higher. so far definitely showing resilience indicating that whole unwind of the hedge fund carry trade and all associated trades was mostly an overshoot in the short term. still, of course, inflation and economic growth have to be calibrated looking forward. the nasdaq relative to small cap russell 2000. remember that exciting two weeks looked like we just passed the baton over to the russell 2000? never seemed likely that easy. you see for a moment nasdaq 100 an russell 2000 about the same year-to-date gain, and now you see this comeback much more about the perceived safer, large, stable growth stocks that triv the nasdaq 100. plenty of work to do. also you can say haven't broke that down quite yet.

inflation. hear about the cpi in a little bit. look at the five-year market implied inflation break even rate. what the market's best guess of inflation over the next five years. right around fed starting at 2% actually dipped below 2% not long ago. close to where you used to hover before the pandemic. this is not a wisdom of the crowds determination what inflation's going to be, because five years ago did see the inflation shock coming. shoppes the market itself is feeling inflation is last year's problem and hoping that the data support that view that the fed can move on from there, guys. >> all right. mike, thanks. mike santoli. joining us now on the broader markets ahead of this hour's cpi information, senior portfolio manager of dynamic funds. noah, are you a braver -- believer in the growth scare we seem to have had? >> i think it's okay. stabilized. things aren't necessarily

getting worse. i think the risk of a policy mistake heightened more recently. look at summer economic projections by federal reserve looking at a fed, unemployment 4.3% and fed funds 100 basis points lower in 2025. already hit 4.3% unemployment. rates are too high. whether the large move in volatility since the pandemic or the global financial crisis, whether it's these abrupt moves that are going on, i think the market is getting significantly more concerned about policy. we heard over the weekend one of the fed governors talking about ib flation coming down because of supply issues's that's not really true. at the margin demand is being, being choked off by higher rates. so i think the market is getting more and more anxious around a policy mistake by the federal reserve, and need for rates, certainly at least 100 basis points lower than where they sit

today. we believe the economy's fine but the costs of mistakes are rising. >> sounds almost like, i don't want to put words in your mouth, you think we're at an inflection point? right here the fed has a critical period of time in which to decide how restrictive they will remain in order for the economy to actually avoid that growth scare from materializing? >> we still have the growth scare with employment numbers that later on the claims numbers kind of ease people's concerns a little bit, but you can see how reactive the markets are. and that could feed on itself and so the fed has to be, fed needs to move things along. jerome powell's already said by the time inflation gets to 2% it might be too late. pce is running 2.3%. i think for market participants it's time to get this process along the extra rate hikes in 2023 and for insurance purposes

we're probably, can be dialed back. so we're at this point where the economy's fine. things are stabilized. for a lot of companies margins are better, prices have come down, but the risk of staying too high too long and impact on the labor market are as balanced and the market might be more sensitive to than maybe the idea that inflation will somehow come running back from the unique circumstances of the post-covid era. >> we've got an economy sort of balancing at this point? and could go either way. same time you think a lot of money on sideline koss come into the market, a positive. $8 trillion globally in money markets. how do you invest in that scenario? >> i think something you can control. some things you can't control obviously. assuming the fed doesn't make a mistake and we begin the process normalizing rates, that doesn't mean rates go back to where they were during the pandemic or zero bound. talking about fed funds probably getting around, look over ten

year yields are, 3.8 level and two year around 3.9. from 5.3 down to that level maybe lower. still an area of higher rates. over 6 trillion in the u.s., globally, money market funds not all going into the stock market. a lot end up in bank deposits. secular drivers of a.i. are continuing and will have an enormous impact initially on productivity eventually on demands generation, that secular opportunity is still in front of us. barely begun. and lastly i think that, from a -- when we look at a.i. and why sort of the u.s. dominates in that, it has a lot to do with the environment, ability to create businesses, keep capital and on a regulation side, the least regulations. the united states celebrates innovation. europe seems to celebrate regulation. one of things people don't talk a lot about in markets, the

chevron decision by the supreme court basically, ambiguity any law and legislation the regulatory indices filled the gap has come to an end. better legislation has to come out. corporations challenging rules basicallial rel lation passed by leg laer to bodies can go into litigation. important for the regulatory environment making it easier to do business and easier for companies overall. a lot of drivers, but the risks of a policy mistake from the central banks costs of high. do the right thing, upside for sure. >> noah, thanks. good to see you. >> nice to see you. thank you. coming up, breaking july cpi data on its way coming up literally in about 20 minutes from now, but next, social security commissioner martin o'malley will join us.

asking him about the recent news what's called record breaking cases. stay tuned. you're watching "squawk box" and this is cnbc.

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welcome back to "squawk box." quiet on the up phooers front awaiting cpi due out. single-digit moves across the board on the s&p, dow as well as nasdaq, meantime, heard earlier on the show how important social security is to voters and nervous about running out of money. talking about those issues and reporting a record backlog of open cases workers are trying to handle and so much more. we welcome martin o'malley. 89 years since the agency was founded. good morning. >> andrew, thanks for having me. >> appreciate you being here, 89 years in. the cloud that hangs over the whole of idea of social security, 89 years from now whether it will actually be

still here. >> yeah. social security is a remarkably ingenious and at its core an elegantly simple program. it is a pay as you go program, and as long as americans are working, social security will be able to pay those benefits. and while there's been a lot of talk about the so-called, you know, the depletion of that, the benefits shortfall in 2035, there's another crisis that's already here, and that is due to the fact that congress has reduced social security staffing to a 50-year low, andrew, even as the number of customers we serve climbs every day to a new record high. so we're doing a lot of good things on the anniversary of this 89th anniversary, but we have huge challenges, and a lot of really good people, though, tackling them head-on. >> so, but to speak to this cliff, this 2035, i've ccolina -

called it a cliff but you say doesn't reflect that? >> the cliff, so-called, 17% reduction in benefits if congress doesn't act to avoid that. good news happened a couple months ago, what you consult a cliff, i would call a 17% reduction in benefits, was actually pushed off another year into 2035 from 2034 due to better than expected job creation and also wages that are rising not just for the top 6% of americans but all across the board. so that was a little bit of positive news, but you're point is absolutely true. congress needs to act in order to avoid that shortfall, because half of seniors living alone live entirely on social

security. so this is a big policy question that needs to be tackled by the policymakers. meantime, we have a customer service crisis here and now, and we are tackling that, but congress needs to do a better job of putting adequate staffing in place at social security. >> i want to talk about staffing, but a larger sort of policy question, and it's about the compact that social security has in the american public. for many years a debate whether associate security should be means tested, and whether you could actually extend longevity of social security if, in fact, it was means tested. we've had folked like, you know, made an enormous amount of money. i don't need my social security check. others say, i put the money in. i expect to get the money out. what do you think? >> yeah, well, i've met him and he should feel free to send his money back and we'll put it in the trust fund. one of the things that makes social security in a time of

deep division and polarization in our country so remarkable is that 80% of americans believe that regardless of their political affiliation, believe that social security should be strengthened and should be extended and indeed even, you know, the benefits should are better than they are. right now, andrew, there is already in the formula of, a way of making sure that those that are in the lowest earning quintiles receive a better benefit than those at the top, and i'm sure there are policy considerations that people in congress will have about those benefits, but the, the truth of m matter is the fix to social security and 17% shortfall can

be pretty straightforward if people like mr. magone would continue to pay into social security, instead of being done with their social security obligations in the beginning of the year. that would greatly extend the strength of social security. in other words, right now, andrew, all of us pay up to $168,600 of our income. but after that, no dollar ever has to pay anything into social security. so that means people like mr. lagone or warren buffett stop paying to within social security within the 30 seconds into the new year while most pay the entire year. >> it's a tax increase no matter how you put it. >> right. >> bewhether you increase the amount put in in the future or amount of money they don't get out in the future. it's a question how you think about it, perhaps? >> it's also the math. we have great actuaries.

look at, you know -- for example, if, you know, ken lagoen and warren buffett did not receive a social security ben nate would not have anywhere near the impact in terms of actual math and support for the program that actually extending, you know, their payments into social security would, for all of their income. and there are proposals out there to do that. the actuarial math is there what's not, the political will to tackle and challenge an issue like this. but, you know, everything has its season and everything has its time, and i believe, from my conversations with lots of people on both sides of the aisle, on capitol hill, is that there's the will to actually, you know, examine this and extend it for many, many years to come. >> on the 89th anniversary of social security how would you reimagine this program? route now it is structured as a

tax. no expectation a young person paying into social security through fikca taxless get the money put into the program back. should we look at it more like, i don't want to say investment fund, but something like that, an understanding will get that money back as opposed to paying it in as a tax? >> well when i was in college all of us said it wouldn't be there for us either but it is. because of the way the program is structured. there have been some policy proposals to talk about, you know, an arbitragened a the policy questions are things people in congress will have to, will have to resolve. from my perspective, and looking at the 89-year history of this program what makes it so stable is also the thing that makes it so popular. that people pay in, and that there is a benefit that comes

back, and that benefit will be there for young people as well, but congress needs to make actuarial adjustments from time to time, because the last time they did it was 1982, and in hindsight what they did was really to give the wealthiest people a break on what they pay into social security, and that's honestly what advanced, what you called, the cliff, what i would call the depletion of, that's what advanced it sooner rather than later, but it can be fixed. it's a pretty straightforward fix and there are other things like the one you mentioned that some people on capitol hill are interested in exploring as well. >> martin o'malley, social security commissioner, appreciate you join us on this 89th anniversary. thank you. coming up, breaking inflation data and expecting july cpi up 0.2% versus last month the decline of 0.1%. stay tuned. you're watching ing "squawk box

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welcome back to "squawk box." check out shares of chipotle, fell yesterday after starbucks poemped highly regarded ceo. upgrading chipotle to outperform from neutral. the firm saying it continues to believe chipotle can sustain market share garin nas more challenging macro backdrop for restaurants. also saying that it things the company is still in very good hands with its current executive despite the ceo loss. japan's prime minister fumio kishida will step down. he's been in office the japanese ran high irin living costs and political scandals. one operator called it a pulling a joe biden. coming up ext, the number

of the morning and the week. july cpi is just minutes, minutes, away. less than four. going to have it for you when going to have it for you when "squawk box" returns. while i am a paid actor, and this is not a real company, and they have top-tier talent and everything from pr to project management because this is how we work now.

welcome back to "squawk box." a little more than a minute away now from july cpi inflation data. ahead of those numbers futures up 14 points higher, dow and nasdaq up 5 points, 8 points. s&p up. treasuries likely to move around quite soon from now. ten year 10.831. two year at 3.935. rick santelli is standing by at the cme in chicago. steve liesman at the table here. rick, ahead of those numbers, what should we be expecting? what do you think is going to move this market? >> well, i think these numbers whether a little warmer now almost doesn't matter. a new split decision now aiming towards the labor side weakness to be the green light potentially for september rate cut. maybe this number will decide whether it's going to be a quarter point or half a point. the market at least seems undecided and we're getting close enough for that, for the

fed futures and options to be accurate, because the meeting's getting so close. usually within three weeks, a month, you really can't count on the members and you can count on the fed to be cognizant of the numbers. if there's an issue they will raise it. the other thing to talk about. timing. if it's not a data-dependent fed and the numbers of inflation, an election, it's a bigger whether they ease. numbers are hitting the wires right now for the july consumer price index. headline number coming in as expected. up 0.2 of a purse on a number follows unrevised down 0.1. went basically from biggest negative month over month change, a positive in cpi, since covid, 4-20. and now 4-20-20.

now up 0.3% number. and issue of course following 0.1, which just like the last number was comping towards the first several months of covid. now, if we look at year over year number, always important. we're making some progress. 2.9% on year over year cpi. we expected 3%. in the rearview mirror, it was 3%. 3% was the best, lowest cpi year over year rate going back to march of 2021. so this is indeed good progress and that number in '21 was 2.6. we stay comped to the same time period. finally, core ex food and energy. rearview mirror 3s.3. lowest since april '21 on the core it was 3%. now, many don't look at the

following, but i always look at the following opinion the indices. look at cpi actual index, it was an all-time high last time at 3.14.175. new all-time high. 3.14.54. core, same scenario. isle time high 318.386. is at p.372. indices never higher. never higher. that represents the definition's disinflation versus inflation. indexes keep climbing higher pretty much every month. having the markets synthesize this data, how? ten year prior, 382. now 386. gone from down 2 to basically up a couple. look at the the two year. from 392 up to 398.

to be fair, we are very close to 15.5 month low close on two-year prior to the number and 13-month-low close on the 10th. a week ago made those levels. i want to point that out. pushed 9 index, closed now to a seven-month low. throw it to the panel to debate. once again i wanted to bring up it's about timing. the fed eases 50 basis points in september, and inflation is a big election that's playing, how does that look to the general public? andrew, back to you. >> rick, stay with us. for more on the new inflation data i bring in a chief economist at smbc. ecosecurities and good life economist and our own steve liesman. steve, sitting there. i can see you squinting at those numbers. >> i want to read you something here. okay. so it looks like a lot of the

increase here was an increase in shelter prices. i pointed this out in the prior report that i was watching that. you went from 0.3 to 0.4. i want to double check that number on -- i think it was equivalent. i want to check that. yeah. owners 0.3 to 0.4 representing the biggest total out there. on the surface looks kind of disinflationary. i don't want to say deflationary but other stuff well contained. energy zero. food 0.2. let the panel take this away. except to point out while rick may or may not like the government, the government likes rick, because it's reporting that used cars and trucks fell 2.3%. we know rick loves his classic cars. >> expected. >> just another month in a row. 1.5 down after the prior month. 2.3 down. big declines. melissa, it's expected because

the government numbers are catching up with the private sector auction numbers. >> yeah. >> okay. joe lavorgna, start with you, sir. pretend you're inside the head of jay powell right this minute and thinking what? >> i don't know if i want that, andrew. a couple things to add to what steve was saying. if you look at the super core, that was just up 0.21. that's a soft reading. prior month slightly negative. a very soft reading a 0.21. core cpi, broader. that was 0.17. rounded up to 0.2. good numbers steve alluded to. if i'm jay powell i'm cutting 50 in september. >> whew! >> consistent with the last three cutting psyccycles they started pi 50. january of '01, september '07 and then, of course, the pandemic. >> interesting. not going to 25 basis points. more based on historical data? >> no. >> nothing to doing with today's

numbers, sounds like? >> i think it does. gives them confidenced inflation number, moderating. labor market is central, rick said earlier, but as long as they're comfortable on inflation a catalyst for '25. woebed ar the labor market last report was soft. go 50. jay powell told us rates are too high relative to neutral. why wait and just going incrementally? make a bigger move and hope you would have to do less easing later. >> can i point out that the market somewhat disagrees with joe? i think i agree with reasoning on that, but it went a little more towards a 25 on probabilities for september. very volatile. may change while we're talking. >> inflation not the problem. then you have to figure how much is really the employment story and i don't where you land there? right? that's the analysis. lauren what do you think? >> completely agree with the trend of what we're discussing. which is that the market narrative has meaningfully

shifted in the last couple weeks away from inflation being the key risk to positioning. and towards a broadening and weakness in the labor market being really, really what the market and the fed are looking for in that difference between 25 and 50 basis points. fed told us us doesn't need see deceleration and that's what's we're seeing today. this data point to me points to 25 basis points in september but consecutive 25 basis point cuts from there. looking at inflationary environment and ppi data yesterday that suggests pce deflator, what the fed really watches, is likely to move lower. so i don't think that this points to a need for faster cutting than that 25 boisz points. we'll look to the labor market report on september 6th to confirm that. >> so, joe i mean to lauren's point basically what we have here is the inflation numbers,

that's a green light. but what you've seen in terms of the difference between 25 and 50 is that jobs report from the other friday ago, and what will be key the september report. right now you see the weakness from the prior jobs report enough to warrant 50? >> yes. i do. yes. the labor market last month, if you look at the private job number excluding health care and social insurance, just up a 33,000. and we've had consistent downward revisions in payrolls. look at consumers' assessment on the current economy they think we're in recession, maybe we get a bounceback thain august. that labor report, volatile. if you're the fed and funds rate, nuell tral around 3% or less, why just go 25? why not be more aggressive and wait and see how things play out? labor market soft definitely going. 50, but see from a risk/reward

perspective balance of risk, suppo supposed to go more, not less. >> market traded like it was going to get a gimme or a weaker number. dollar traded softers, yields traded down. now kind of reversing. we had commentary, talking about this morning, the bond market's trading like a recession is coming. i don't know. the stock market's whistling past that. what's your take on this and how bonds are reacting this morning? >> whether recession or not don't forget the geopolitical issues of the day. played largely in what's going on in treasuries and as far as the dual mandate employment versus inflation. listen, i get it. certainly seems to me once again that the fed has a very impy trigge -- itchy trigger finger to ease.

i don't think 50. quarter points to keep the market with a carrot in front of it to kind of negate some issues of the day in housing. but at the end of the day, steve, we really haven't seen any progress on inflation. if somebody wants to be agnostic about it, not saying labor market isn't weaker, but take a step back, whether yesterday's year over year numbers, whether it's today's numbers on a month over month and even year over year with the progress, certainly not aiming for 2%. not even aiming for 2.5%. seems like aiming for 3%. i understand the pce is going to show less inflation in both the ppi and cpi but still not really at 2%. you asked me what treasuries are looking at. yes. i think there's a nervousness after the volatility we had last week, add in geopolitics and add in the fact that the fed basically sent a signal. unless we see something eye-shattering to the upside most likely going to quarter in

september and i think market's reflecting that. the real question, by rumor, self-fact when it comes to market and how they assess when the fed actually does the first rate cut. >> lauren, you want to react to that? >> i do. while on the topic of positioning risks, i think two really important things to point out. the first is that as steve was pointing to earlier, the internals of this report are pointing to an inflationary risk balance that is tilted to the down side. that's really good news for the fed and frankly good news for the market. i'm looking at things like shelter, motor vehicle insurance a little sticky, but those essentials are starting to crowd out pricing power in areas like food away from hoemt and more discretionary transportation like airfares. an environment risk of inflation to the upside and causing a more hawkish fed is moving to the rearview mirror.

important. the primary risk for the market so long. now the primary risk for the economy is actually the market itself. we're looking at a bifurcated environment. bifurcated consumer, lower-income consumers are starting to see stress. upper-income consumers doing well. the thing that will shake that consumer spending which is 70% of u.s. economic activity, is volatility in the equity and bond market. so while we can discuss the fed's balance of risks, as joe has rightly pointed out, the idea that cutting 50 basis points might help the fed get quicker to a policy rate that's more neutral, i do think that the fed has to be careful about the balance of risks on the financial stability side, and the idea that a severe drop-off in the equity or bond market from here can actually hurt economic outcomes. >> hey, quick, guys. on that motor vehicle insurance.

up 1.2% again. and i think that's, again, continuing the insurance business, i guess, continuing to try to reflect an increase in costs of motor homes -- of autos. and the idea that we will get eventually, hopefully, some relief in the housing and shelter area. something that will loop. give you some optimism for the move ahead on inflation. >> steve, thank you. i thank joe, lauren and rick in chicago. >> thank you. >> thank you all. appreciate it. coming up with the new cpi data what it means for the fed and possible interest cuts many want to see. esther george will join us. cryptocurrencies trading postcpi. seeing gains across the board. stay tuned. you're watching "squawk box" on cnbc.

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box." futures now following the july cpi data. looking at the dow, which moved lower. now flipping aroundalities bit. dow jones industrial up about 18 points. 17 points. nasdaq up about 45 points. s&p up about 10 points. also show you the ten year note. sitting at 3.856. mo moved slightly. two year 3.972. steve liesman is staying with us. i'm curious from both of you, melissa the here as well, in terms of the equity flip there, literally happened in the past three minutes. can you explain that? >> the point changes are really not that much in a percentage basis and you can see this is sort of an extension or confirmation of yesterday's gains. right? saw strong gains across the board. s&p up a percent. nasdaq up, you know, more than that. >> steve, you were looking at, you know, just what economists were expecting, shouldn't say economists. bond market expecting in terns

of a rate cut. >> yeah. >> and move towards a 25 basis -- >> a little bit. look, things flop around. now gone from a 50 -- i don't know 502, 53% probability. now 61% probability of a 25. so -- i kind of thine idea of being a little bit more chill on rate cuts makes sense. i'll tell you why. i think the fed believes it has plenty of room to reduce rates and still be restrictive. right? so first of all we're not debating the direction. we're going down. that's easy. we're debating -- >> going down on inflation. >> down on rates. on the fed funds rate. we're debating the speed and cause of the speed. right? are re getting there? maybe you have the january 2025 feds fund rate there chart? i don't know if it's available. debating. there is a 100% probability that the fed is 100 basis points

lower come the december pmeetin. that's where we're at now. do the math. 150 in there. right? >> yeah. >> 25, 50 -- >> thank you. much faster than i am, melissa. i was going to get there. exactly. got to have 150 in there. so let's game that out. are we going to be all right? powell steps up starting off 25 -- lavorgna interesting point. always start with 50 as a down payment. i think somebody knows a little bit more, just a little bit more about this than i do. maybe a lot. >> joining us with a look how the fed is likely to view the cpi report former kansas city president esther george. great to see you. thanks for joining us today g. to see you. good to be here. >> what do you think, just talking about what the fed opens with in terms of size of the cut. what's your hunch? >> so, melissa, i think today's report certainly is good news. they want to continue to see

disinflation continuing. i am not -- in the camp of thinking that a large cut in september is where they might land and, again, we'll see more data before their meeting. which may provide a number for them, but this report, whilerep shows we have elevated inflation, and i think an economy that has been pretty resilient, so it gives them time to really think about how they calibrate. >> how should we think about inflation and where it stands now? if they go with 25 basis points as an opener in september, do you think that we're going to get to 2%, or are we -- or should we assume that maybe the end point could actually be higher or that the long and variable lags will continue to work its way through, and we

will eventually get to 2%? >> well, i think the fed's been pretty clear that they intend to get to 2%. i think they must do that, because that is their stated target. the ability to anchor their inflation expectations really depends on doing that. so, the question is, really, how bumpy is the path to getting there? and everyone has gotten caught up in hoping that this is a soft landing story, and that may still very well be the case. but it does complicate for them really thinking about the speed, the time to that destination. even as they contemplate -- and i suspect they are contemplating when the right time to cut is. >> esther, would you think that the fed believes it can get to where it's going even by cutting rates? in other words, how much belief do you have in how restrictive the fed would be, even if it took a hundred basis points off of the funds rate here?

>> well, this is always the big question, steve, isn't it? >> that's the ones i ask. >> because we don't know exactly where the equilibrium is in the economy. >> right. >> we estimate where we think that end state is, but i think, as you've heard the fed chairman say, when he talks about looking at the totality of the data, when he talks about trying to figure out where the balance of risk is, it is really trying to sense from the economy, both the backward-looking data for the trends, but also in the anecdotal information they're getting, just how restrictive they are and how much they're going to need to move, and so i think that's going to be the important conversation in september. maybe less about starting the cuts and more about what is the destination. >> esther, did you miss planning jackson hole this year? >> did i what? >> did you miss planning jackson hole this year? >> i did not miss that. it's a terrific conference, and

i look forward to seeing what comes out of that meeting. >> esther, thank you. thanks for joining us, esther george. when we come back, some key ocmors as we make our way toward the opening bell on wall street car, where are we going? we're here. (♪♪) surprise!!! the future isn't scary. not investing in it is. car, were you in on this? nothing gets by you james. nasdaq-100 innovators. one etf. before investing, carefully read and consider fund investment objectives, risks, charges, expenses and more in prospectus at invesco.com daughter: hey, dad. dad: hey, sweetheart. daughter: what are you doing? dad: i'm gonna clean the fence. daughter: it's a lot of fence. dad: you wanna help me? dad: aim at the wall, but get closer. daughter: (gasps) what the?! daughter: alright. dad: side to side. when you work with someone who knows a lot and cares even more... you can do this. ...you're unstoppable. (♪♪)

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little more than half an hour to the opening bell on wall street. dom chu joins us this morning. >> melissa, here's a quick check. we'll start with a number of big movers in the food and beverage space, if you will, kellanova surging by over 7.5%, the m&m's owner, mars, agreeing to spin off. mars is going to pay $83.50 a share all cash to kellanova, almost 33% in terms of premium for the firm's closing price at the start of the month. the pringles maker will now join mars snacking and will be based in chicago when the deal closes in the first half of 2025. on the lunch side of things, brinker falling over 13% on an earnings miss. this is all overshadowing a jump in fourth quarter sales from higher prices and an almost 6% jump in traffic. and then shares turning lower by 1% after seeing its biggest gain on its ipo day, starbucks here,

down by about 1%. seeing a number of analyst upgrades this morning, hoping that the ceo switch-up will reverse course for the company as activist investors starboard and elliott kind of move into that stock and circle around it. state of texas down 1%. andrew, back to you. >> thank you for that, dom. meantime, want to talk tech. joining us with a closer look at some of the biggest names in the sector, constellation research principal analyst. good morning to you. i don't know how much the cpi matters to the tech world, really, but help us through what you're thinking about as it relates to some of these big names, including nvidia. >> yeah, it's a great point. tech is a flight to safety and also a flight to growth and that's why it's been a stalwart. last week was just a -- august 8th was an anomaly, but everything has come back. amazon is back. nvidia is back. apple is back. and nvidia is all eyes on earnings until august 28th, and of course, what's going on with amazon, people are wanting to see if they can actually take

the cloud to the next level. but in general, what we've seen is companies that actually had digital business models, companies that actually had the a.i. in the cloud story, are doing really well. >> talking about the a.i. cloud story, what do you think of google and this idea that it's going to get broken up, and how you think the market's reacting to that? >> i think the market's waiting to see if they're going to win on the appeal, and i think that's going to be the most important piece, but the conversation is about remedies, about break-ups, about proposals as to what types of deals are in place. i think that's what people are going to spend time on. they want to know, has google really violated section 2 of the sherman antitrust act, and more importantly, i don't think they're going to allow any more exclusive deals with apple and other mobile but consumers aren't going to search on bing over apple. there may be a mechanism that says, if you decide to choose bing or duck duck go, here's what you pay out and you create a menu of options. >> at alphabet, 162 bucks, though, do you say that's a deal, or do you say that's

overdone? >> i think there's still too much risk there, but it's a deal if you believe in the a.i. story, and it's a deal if you believe the sum is -- the parts are greater than the sum. >> how do you feel about apple right about now? warren buffett clearly feels a little more skeptical. >> it's hard to bet against warren buffett, but i'm betting on the refresh cycle. we've gone from a 5g refresh cycle to an a.i. refresh cycle on 500 million phones that are out there, so i think there's a lot of growth there, and of course, apple intelligence is going to prove the services revenue line going forward as well. >> i agree, but the question is whether it's a super cycle situation this fall or whether you think it actually takes an extra year. >> it's going to take an extra year, but i think you're going to start seeing it over the holiday season. >> okay, ray, we appreciate you being with us this morning. thank you. >> thanks a lot. meantime, let's take a final check on the markets right now. after that cpi number coming in, giving us some sense that, what

do you think, 25 basis points? 50 basis points? that's sort of the question mark. dow up about 40 points. nasdaq up about 30 points. s&p up about 9 points. treasury yields, ten-year, 3.852%. we got the two-year at 3.970% and you got a big thank you to melissa lee. >> pleasure. >> for -- pleasure, you say, with such a bright smile. we'll see you at 5:00. make sure you join us tomorrow. "squawk on the street" begins right now. ♪ good wednesday morning, welcome to "squawk on the street," i'm carl quintanilla with jim cramer, david faber at postnine of the new york stock exchange. futures are steady as cpi does come in light, first time since 2021. that's two dovish prints this week as we await retail sales tomorrow. our road map begins with the inflation picture. likely keeping a rate cut on the table for september. plus it