"squawk box" begins right now. good morning. welcome to "squawk box" here on cnbc. we are live from the nasdaq market site in times square. i'm andrew ross sorkin along with melissa lee and steve liesman. joe and becky are off today on this friday morning. let's show you where u.s. equity futures stand. it has been a roller coaster ride. dow up 97 points. treasury yields right about now sitting at -- we'll flip the board around. 10-year at 3.89. steve. >> hang on. we're still negative. news out in the last hour on

texas instruments. the latest company to get money from the chips act. the biden administration will add $1.6 billion to help build three new facilities in texas and utah. the projects will likely create 2,000 manufacturing jobs over time. vice president kamala harris will layout her economic plan in a speech in raleigh, north carolina today. she will call for the construction of 3 million new housing units in the first four years in office and the tax incentives for companies that build homes for first-time buyers. she wants to crackdown on the management software used by landlords to drive up rent across the u.s. she will call for the removal of the tax benefits for investors who acquire a number of single-family rental homes preventing from investors to buy up and sell homes in bulk. this is being soft launched by campaign officials the day after harris would crackdown on

alleged price gouging at grocery stores. in the meantime, president trump releasing the financial disclosu disclosure. trump received $513 million from the resort and properties, including the golf clubs. he has a sizeable position in cryptocurrency with a wallet and ethereum key that he valued at $1 million to $5 million. he made $300,000 on branded bibles, greenwood bibles, selling for $60 which include a hand written chorus of "god bless the usa" by lee greenwood. you can buy it for $1,000 on his web site. i don't know. are we getting the tax forms? remember the tax forms? >> i would think eventually we would. >> would we? >> i think most of them got out,

didn't they? >> the old ones. >> which ones? >> the newest tax forms? >> for '23? '22? >> i don't think you got them while he was president? he would always say -- >> are we over that? >> another inquiry? >> another trump normalized. >> do you want the tax forms from harris? >> absolutely. >> you want to see the tax forms from trump? >> yeah. >> what he wants and what he gets are two different things. >> where are you spending time banging your head against the wall? let's get to paramount. edgar bronfman looking for a bid for paramount. the word of the potential bid

comes a month after shari redstone agreed to sell to skydance media. ellison would have the right to counter any incoming bids. the story goes on. >> it is interesting. barry diller suspected when we were in paris, he said he had taken a look at it. he said he was out. suggested that it would be very difficult for somebody else to come in because you have to pay the $400 million. it is also the extra investment you have to makeover time. i don't think anyone thinks all is clear here. it is not just the investment you are buying here. you may have to put up extra capital. >> my attitude is this story went on for five years? then it was sold. now it's back in the news. can it be over?

>> it will be. in a couple of weeks, it will be. it is also unclear, by the way, whether shari redstone would agree to a different deal with another person. it is not easy. >> it is not just the highest bidder. >> the matching right and special economy. they could look at the two bids and look at them differently. >> paramount could do a 20-episode series on paramount. >> i don't think it would help stem their losses if they ran that series on paramount plus. >> it has been out there forever. on the planner, economic data with july housing starts due at 8:30 eastern. forecasters expect a drop last month. speaking of housing, a court settlement takes effect. that overhauls the way retailers

get paid eliminating the standard that home sellers were expected to pay a 5% to 6% commission split with the buyer and seller agents. buyers will sign agreement with the real estate agent before looking for homes and acknowledge the amount they are willing to pay their agent. that is expected to result in sticker shock by buyers who have the not been on the hook for paying the agent fees. analysts estimate that real estate commissions could fall 25% to 50%. much more on this story in the 8:00 hour. do you get this at all? is it clear to you? now you go -- >> you sign agreement before you look for houses. i pay 2.5% which is typically what an agent in this area, at least, would get. so, you agree the agent will be paid and ask the agent to structure it as part of the deal so you are not effectively paying. it takes money out of the deal. it requires more leg work and

thinking by the purchaser. >> earlier on in the process. right. all right. stocks to watch. auto desk falling after bloomberg reporting that the company used a strategy that it promised it would stop. the company ignored warnings about the risks of doing so. it offered discounts for companies willing to pay up front for multi-year contracts. it reduced long-term revenue and made it harder for the sales people to do their jobs. the company promised it would halt it 2021, but did not. the use of up front billing continues to decrease, but won't end in part due to customer preference. shares of h & r block announcing a 17% dividend hike

and buyback after earnings and revenue beating guidance. there's got to be -- they're doing well. that says a lot of the accounting costs of the universe. shares of applied material, also lower, despite the reported third quarter results that beat estimates. the chip maker forecasting fourth quarter revenue above estimates as the demand for the a.i. products. walmart is performing in the s&p 500. it out gained costco. it is up 38% after yesterday's earnings lifted the stock by 6%. you see walmart taking on the lead there. there's that ongoing debate, steve. does walmart indicate the consumer is strong or under duress and have to go there to make their dollars stretch. >> can i offer a third part that

walmart is taking a share of the others. that's why the other retailers next week is important. target is next week and et al.. i think as i said earlier this week, the rumor of the consumer death is exaggerated. i think they're under more pressure because the savings have run down. we still have decent incomes and this whole notion of incomes or salaries being higher than inflation. real income and wages have been rising for a pretty good streak now. that should help consumer spending and bring everything back down to normal. i think there's also this interesting shift you want to be aware of. we were all in the goods and then all in services and maybe now there's a shift back to a better balance of goods and services. goods are transparent to the go goods transparent to the market. the services, there are not that

many public companies. however, my big argument with the economic data set in this country is services are two thirds of consumer spending. we have one bad late series to measure services. we're really good, as i like to say, we have a great set of economic data for measuring the economy in 1952. >> right. >> right? i know they're trying, but we can do a much better job in trying to figure out. >> that's the concept being out outdated. our economy's changed. >> all right. i guess that's me. >> yes, it is, sir. up next, we dig through the flood of economic data and the fed's next rate decision. coming up, an interview you don't want to miss. an interview with richard clarida. "squawk box" is coming back.

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the sun is shining and it's not happening again. what was your read on the panic of -- was it just last week we had that panic? >> yeah. >> now, where we're at after a decent sales report and jobless claims not spiking? >> i always thought the panic was overwrought. we didn't have strong data suggesting the u.s. was going into recession or the employment market was going to collapse. i think the same things now, the economy is slowing, but it is still wealthy. certainly with retail sales coming in as strong as they did, consumers are still interested in buying goods and going to bars and restaurants. >> what is your estimate? i guess it was alberto musalem we heard yesterday from the wall

street forecasters. what is your probability of recession and what are the things that worry you? >> i think it is probably under 25%. you need to add some percentage. there is always some likelihood of recession. i think the things i'm really worried about are mainly e external to the u.s. economy. also things policymakers cannot control like disasters like hurricanes that impact the data. those are the things i'm worried about. i'm not terribly worried about the consumer. the consumer,certainly is, pulling back on spending. when it is pulled back to zero, many are still working and seeing wages elevated. that is income coming in. prices are high, but it is not the case that prices are rising as quickly as they were. let's give you the consumer some

re relief. >> dana, are there structures out there that make you concerned that the fed can't get back to the 2% inflation target? >> absolutely. one big structural factor is the fact that baby boomers are ret retiring. 10,000 a day roughly. that means we still have labor shortages. they're not going away. they may have eased somewhat, but if you look at the jolts data, you have a number of job openings and when you look at the sectors, it is healthcare and social services and leisure and hospital and government and construction. many jobs you have to show up and work for. any frontline jobs will continue to see labor shortages. that puts upward pressure on wages which we're seeing. the other thing is insurance costs. i don't know when they will stop rising. they slowed in terms of the rate of appreciation, but certainly

we're seeing insurance costs rise. the fed can't control those things. >> dana, i want to get to the fed in a second. i know you come out with this every month about people and security in their jobs? do people feel as confident as before if they lose their jobs, they can get another job or confident they will not lose their jobs? >> most people say getting a job is easier than not. however, i would say the differential. there is some concern presently about jobs. it's not that significant. even when we look out forward for the expectations measure, consumers have been saying the same thing. they have some underlining concerns about the job market. for the most part, they're working and they're fine. >> let's put it all together now. what is your expectation for the fed policy in september?

25 or 50 and moving along in the year? >> we do anticipate the fed will cut interest rates by 25-basis points starting in september and then 25-basis points in each november and december. here's why. the u.s. economy -- >> dana, i want to tell you you are a little bit below. i want to put the chart back up. we have gone to a different way of doing this. minus 25 is the market pricing and futures market pricing for september bringing it down to 5.13. another 25 in november which is in line with what dana said. the market pricing in 50 for december which is 4.37. 100 basis points through there. dan is alight on that. sorry to interrupt. i want to explain the charts on the fed funds outlook. >> absolutely. i think the market is anticipating we will have weak growth in the fourth quarter. we basically have gdp growth

bottoming in the third quarter and then picking up slightly in the fourth quarter. it's still going to be weak. i think the fact that the fed is getting a head start on cutting interest rates starting in september will have a psychological effect. already we're seeing mortgage rates fall and consumers will feel they will get a break. that may help the economy grow slightly faster in the fourth quarter. we'll see, but still we think the fed can go gradually especially if inflation doesn't fall as much as they expect. >> just add one thing, dana. i want your comment on this. i think this is a potentially dangerous time for the economy. i think this moment of transition to lower rates, if i'm the cfo of a company and i'm ready to go do a share issue or most importantly some bond issue and raise money, i might wait.

i don't want to do an issue right now at 4 when it might be 3.5 down the road. >> who wants to do a renovation? you put off the bathroom remodel to get financing costs lower. >> exactly. dana, is there any issue that the transition period would cause excess concern out there? >> the truth of the matter is businesses have been putting off the invest pments with the costf capitals. and homeowners, sorry, potential homeowners and then homeowners. this is already happening. it could potentially accelerate, but we've already seen this action. i think the psychological effect of mortgage rates coming off may be helpful. certainly if you are a business, you can still sit and wait. 25-basis point cut in interest rates is the not really going

help you. that's why we think the commeconomy will pick up more so next year. >> dana, thank you for joining us. dana peterson at the conference board. a programming note, i'll have live coverage from the fed summit from jackson hole. we'll have a bunch of folks as you would expect. fed officials. smart people. smart people. a little pretty nice background there. >> very nice. coming up, the fda doubling down on its plan to cut sodium in packaged goods. we'll bring you details on that straight ahead. later, the expectations for vice president kamala harris' plan with poti'slico jonathan martin. all that coming up on "squawk box" when we return.

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welcome back to "squawk box." the food and drug administration is looking to lower sodium levels in food by 25%. it is a move to try to lower the chronic diseases. it showed early signs of success in 2021. early food categories showed the first phase which included cutting levels by an average of 12%. it is now seeking voluntary curbs from food makers like pepsico and kraft-heinz. >> i'm no joein joe's seat. should the government be doing this at all? >> i don't know. >> yes or no? >> i have mixed views about it. we thought pasta was great and carbs was great and fat was

terrible. now fat is better for you than carbs. maybe ten years from now -- >> you think sodium will be good for you? i think sodium not being good for you weathered the test of time. >> sodium is not great for you, but you need some electrolytes in your system. >> my argument is the government should do it if the market can't do it. my question is why isn't the market solving the problem of too much sodium in the food? >> i'll answer that. this goes to the free market, not free market. as long as we provide medicare and medicaid and taxpayers pay for everybody's healthcare, we have a vested interest in everybody's health. >> that's not responsive. >> what do you mean? >>s >> having a vested interest

doesn't explain a market failure. >> that's why you should say yes with the government. >> we have a vested interest. as a taxpayer, we are all shareholders because of the way we set up our healthcare system, for better or worse, we are shareholders in each other's health. for better or worse. >> we have a right, the government, to try to -- >> you have more of a vote in everybody's health than you think you do. >> it seems to me the government has a role in talking about the dangers of sodium. >> yes. >> to which consumers should respond with their preferences and companies should respond to consumer preferences and then there is no need for government regulation. >> why don't we intervene on these issues before we get to a point where we cover through medicare obesity pills and obesity treatments? >> because the government covers the obesity treatments, we

should have a role? >> i'm saying we should be preventive. we should be preventive in healthcare issues. >> my argument is more nuanced than that. >> you are saying why is the market not -- >> government says sodium bad. >> right. >> consumer preference. no need for government regulation about sodium. that's my argument. >> because consumers want to kill themselves. we are all trying to kill ourselves in our own weird way. we are all doing things we are not supposed to be doing. >> the lower quality foods rely on sugar and sodium to make it more palatable. >> now you are talking my language, melissa. you are saying the market cannot arbitrage. >> this goes to the fast food chains rather than whole foods or fruit which is more expens expensive.

that is on the margins. >> that's the key right there. that's the key. >> a bag of french fries with the sodium is a lot cheaper than going to mcdonald's. >> there's something about sitting in this chair that makes me ask those questions. it's not joe's political point of view. it's the chair. it's the chair. coming up, the politics of crypto. senator chuck schumer says the crypto bill can pass the senate this year. where they are donating money on the campaign trail. as we head to break, here is a 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 network. okay, team! oh, thank you so much i couldn't have done it without you. honestly, i don't do a whole lot here. i'm really just here for the at&t internet, it's super-fast so, any pre-launch concerns? what if nobody buys them?

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good morning. welcome back "squawk box" here on cnbc on this friday morning. we are live at the nasdaq market site in times square. we were in the glreen. the dow off 12 on points. the s&p is opening off 6 points. we have three hours to go,

steve. i love this story. the future of cryptocurrency regulation is one of the issues on the campaign trail and support from the industry is rolling in. emily wilkins is joining us now with more. emily, good morning. >> reporter: good morning, steve. democrats are now seeing cozying up to crypto and they are returning the love. they announced they will spend 6 million on ad buys in two democratic key races. gallego in arizona and slotkin in michigan. the announcement came before slotkin and other democrats joined on a crypto4harris call. they vowed to pass regulations for clarity. senator chuck schumer was on the call and he said it was hill

g deal was to pass a crypto bill before the end of the year. exchange and brokers and dealers would need to register with the cftc. the cftc would have the power to protect consumers. they want to strike a bipartisan balance to able to move through legislation. f f fairshake will pour $25 million into 18 house races. they will put $12 million in ads backing bernie moreno. he is challenging sherrod brown. he has been unwilling to engage on crypto legislation. guys. >> i will not ask the dumb question if they make the contribution in crypto. i'll ask another question. >> it's a good question. although they probably don't.

>> it's not a bad question. donald trump sold $1 million in crypto. if you want to ask about it, st steve, i'll ears. we'll go wherever you want. >> what do they want really? do they want protection and stability for the consumer or are they playing an action of don't hurt us or something else in terms of trying to get -- i don't know, crypto become part or a more common currency out there? are they trying to keep the central bank from issuing a digital currency? what is the end game here for crypto? >> reporter: steve, it is a great question. to a certain extent, a lot of things. schumer on the call compared it to a.i. he said we need to give them rules of the road so that investors feel comfortable and people using the technology feel comfortable and consumers are

not going to be hurt, but restrictions are such that you are blocking innovation. an th lot of the crypto groups been meeting with schumer and other democrats and other republicans trying to make progress. you have seen that this year. you saw the house pass that major crypto regulatory bill giving power to the s.e.c. and cftc. now you are seeing the senate try to do something similar. i think for a lot of these crypto groups, they see base regulation and base foundation for what the rules of the road are and they are hoping that inspires more confidence and use of crypto. >> are the contributions in crypto? >> reporter: i don't believe the contributions are in criminal t crypto at this time. that could change. >> thanks, emily wilkins. emily's coverage of the nexus of money and politics is a reason you should be watching cnbc.

>> there you go. >> you know what they're after. not just they're contributing, but what they're going for and how it shapes legislation in the future. >> shape. buy legislation. >> shape is a euphemism, perhaps. that's the cynical. >> legalize bribery. coming up, the seconomy taking center stage. vice president kamala harris about to set her proposals for the economy and her agenda. you can follow "squawk pod" on your favorite podcast apps and listen anytime. we're coming right back.

welcome back to "squawk box." let's get the latest on the race for the white house and what we know about the harris economic plan.

joining us now is our guest here. what do you think we are going to learn? there is some expectation it will be somewhat vague, but something about trying to bring down the prices at the grocery stores and the like. >> i think we'll hear the words middle class probably 73 times, andrew. yeah, this is heavier on vibes than substance. we will hear about symbolic issues of the cutting costs and her identifying with the middle class. she may refer to her childhood where she worked for a summer at a mcdonald's. some of this is biographical than substantive because she is new to so many american voters. i think the one thing we will hear, though, that is new is a plan to try to induce home builders to build more for

first-time home buyers. i think recognizing the challenge for a lot of people with housing these days. >> jonathan, do you think it would be a politically smart thing for her to get into details about tax policy or -- >> no. >> -- or regulators? >> no. >> all of the questions i imagine you may very well have for her about her economic plan. when do you think -- if you were advising her, when is it that she's supposed to tell the public about these things or is the plan not to? >> february of 2025. i mean, i'm only half kidding, andrew. i think her entire bet is to make this race a question of, you know, do you want the donald trump persona. democrats have flourished for almost nine years whenever donald trump is in the

headlines. when the campaign, when american politics is about donald trump and his conduct, democrats do well. so, clearly, that's going to be her strategy. you overlay that with some reassurance based on her biography and her messaging that she is somebody who is willing to cue to a centrist political persona. she has to put some meat on the bones just to get by the next 11 8 0 days. the question is do you want trump talking about this or that for the next four years in your living room and the bet is most americans will say no. >> one of the big issues is if you have concrete personality, it gives you that credibility and the plan.

does that become problematic when people say i need meat on the bones? >> i think it does if we see more activity like we did two weeks ago, obviously, when you have the really sort of unsightly unemployment numbers and a two-day collapse in the market. i think, you know, that raised fears of, oh, my gosh, maybe she can't run as a de facto incumbent. maybe she has to run from biden and the white house. i think, obviously, those fears the last couple weeks have been allayed because that did not be siege a broader panic in the economy. i think a lot of things with the economy and with external events and we haven't talked about a wider war in the middle east and wider instability abroad. i think if you have a status quo or better on the economy, you

don't have a wider war in the middle east, i think her bet, andrew, is to run out the clock and hope that trump, you know, day in and day out, says things that dominate the headlines and she can put together a cracker jack campaign and beat him just like biden did in '20. >> jonathan, republicans are already adding to the accusation that she is a communist and all that other kind of rhetoric around. does this back fire on her? how does this play in peoria? >> look, it's the best thing republicans have going to say she is trying to intervene in the marketplace. look, we told you she was more liberal than biden and it proves it. they're playing the hand they're dealt. obviously, it's not ideal when you have donald trump who is your nominee who is hardly the poster boy for the editorial page.

it is the best hand they have with her and it helps make their case that she somehow drastically is more liberal than biden. the good news for her, to be totally frank, guys, she is not inn come incumbered by the ideological ways. she will do what it takes to try to accomplish that and largely differential to what advisors tell her to what she should do on policy and substance . it is hard to recall a presidential campaign and party nominees were so little grounded in any real, you know, ideological world view. the great story in this election is a lot of the action is going to be taking place in january and beyond of '25 more than it is today because regardless of who wins, we don't know where they will come down on so many

issues, economic and otherwise. >> it feels a lot like huey long running in new orleans for mayor. promising each district a different, you know -- a different benefit. >> in north louisiana, he was catholic and in south louisiana, he was -- right. >> going back to the grocery issue which polls well in many respects, but if you look at some of the articles in "the new york times" and jason furman quoted as it is difficult math. will that undermine the argument? as i said, in the polls, it is a winning argument in some ways. if you think about it too long, then it may not be. >> you don't have time to think about it too long. you've got 40 or 45 days until early voting starts or less? >> there's a disconnect, too, jon

jonathan. she will sell an economy with inflation coming down and go after price gouging. prices are already coming down. >> a very short margin. >> they are not going down, but not going up as much. inflation is still stinging american voters, but just not as bad in terms of the increase. it is still dramatically increasing. the burden is on her to say what she would tdo on inflation. talking about price gouging is not ideal from the marketplace stand point. she is trying to buy enough credibility with the voters that she is saying something and proposing something with 80 days to go here. in truth, this is all window dressing and politics so she can beat trump and get to the white house. this is entirely about how do we fou find a way to offer just enough

to the american consumer. you and i know the issue is stop drop. >> final question, jonathan. i hear privately from folks around the harris campaign that, you know, one of the things you will hear over time is attack more to the middle on terms of economic policy and maybe on the regulatory front and other things. we obviously haven't seen that part yet. do you think that she moves that way or do you think she moves more to the left? for those viewers who care about these issues, what do you think we're going to be hearing? >> i think you'll be hearing in public a more populist positioning. again, we are in an election season. what are we going to be hearing in private talking to donors? perhaps something different. look, i don't think she's a deeply ideologically liberal figure. i think she is a classic california democrat pragmatist who is fine with the business community and has deep ties to

the business community. i think it will be up for grabs politically next year on a lot of economic issues. for now, for 80 days in public, i think she'll sound more like to borrow somebody mentioned huey long than bill clinton in economic philosophy. in terms of how she governs if they wins for the next four years? i think she is open to hear from wall street and the business community. >> that's my sense, too. we will see. jonathan, thank you. nice to see you. >> thank you. coming up, kroger is dr doubling down its pledge to lower prices if the albertson deal goes through. we will have an interview with richard clarida to discuss jackson hole and more. "squawk box" be right back.

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welcome back to "squawk box." kroger is announcing a pledge to lower $1 billion in price cuts if the merger with albertsons is complete. kroger agreed to the merger in october of 2022 to try to compete with larger rivals like amazon and walmart. interesting story. coming up, the media drama that never seems to end. now another bidder may be emerging for pamntarou. we'll talk to an analyst next on how this drama works out.

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edgar bronfman preparing to make a new offer for paramount gl global setting off a bidding war. what this means for paramount is senior analyst. barton, we thought this was settled. do you think this could actually happen? >> you know, look, never say never. i think it is a long shot for anyone at this point to out bid the ellisons and skydance with the resources and get the backing of shari and the board of diredirectors. never say never, but i would be surprised if this disrupted the existing deal.

>> in response to bronfman, any surprises? what would you surmise could be the relationship there if this were to go forward? >> to me, that is maybe the most interesting part of the whole report. the presence of roku was just mentioned. we don't know if they are dipping a toe in or if they are looking at this as something more meaningful. obviously, that platform as, you know, a really large presence gateway portal streaming to your television set for americans with the number one access device. they have the potential, one would think, to really rethink the bundle to leverage this. i'm just not sure roku is up for a disruptive investment. they have been talking to investors about efficiency and about improving margins and their revenue trajectory has been a little bit troubled in recent quarters.

they hope it improves. this is a blocking and tackling setup they have been giving to the world, not one that is prepare for a decent disruption. this is more of a minor league supporter rather than someone front and center to rock the boat. >> if it is minor league supporter, does that give you an indication of what roku needs to be in this landscape? >> certainly, i think roku is leaning into improved advertising capabilities. they have gotten new openness to progr programatic. they have a new head of sales from fox. i think they're trying to diversify from someone that is relying on the streamers with the platform for the subscription services and be a

mainstream adviertiser. i'm just not sure if they can do an lot to commit the p&l. it is interesting. we'll see what happens. >> bar ton, great to see you. thank you. it is just past 7:00 a.m. on this friday morning. you are watching "squawk box" here on cnbc. i'm andrew ross sorkin with melissa lee and steve liesman. joe and becky are off today. look at the futures. things are moving around just a little bit this a.m. as we flip it around, you see the dow now up marginally where it had gone red and now green. four points up. nasdaq, give it a point or point and a half. a couple of big stories to tell you about this morning, including the paramount story that melissa was talking about. texas instruments is the latest to receive money from the chips act. it will get $1.6 billion funding

to build three facilities in texas and utah. in the meantime, bipartisan lawmakers seeking answers from mark zuckerberg over illicit drug ads on his platform. they sent a letter to zuckerberg on the matter. he received the letter and meta will respond. tiktok telling a federal appeals court that the justice department misstated the company appeals to china oral arguments are set to take place next month. that will be a big story. meantime, epic games maker of "fortnite" and we have steve kovach here with more. >> they are launching the first mobile store on the iphone. you have one of the chief antagonists challenging apple

competing with the app store for gaming. gaming is the most lucrative part of the app store business. 70% of the business. this is all possible because of the eu digital market act which went into full enforcement this spring. it forces apple to allow third-party app stores on the iphone for the first time. the european commission says apple is likely not complying fully with the dna. apple is still collecting some fees on the third-party app stores. those fees are less than before. epic says despite the fees, it is going to be launching the store anyway. on the call with cnbc, tim sweeney said the fight is far from over. he will still push the ec to push apple to lower fees. epic's goal is 100 million installs of the store across

iphone and android. starting with its games at first, just a few of them. that includes "fortnite" return together iphone. it got kicked off in 2020. it wants to offer more games. this is just in the eu. in the united states, they lost the case against apple on this. it will be a while. the doj's anti-trust case against apple overlaps many of the regulations and that could be epic's best hope in the u.s. to do something similar. this is really interesting seeing that wall guard come down and chief antagonist go after apple on its overt turf. >> do you think they achieve these numbers? >> one thing is important. you have to go through a dozen screens, scare screens. if you install this, it opens up to malware. they see that as a barrier, not just to the fees, but the

process that the user has to go through to get the store on there. it is tougher to do it than just installing an app. maybe or maybe not. >> what does it look like? have you tried? i can't conceive what another store. >> it looks like an app store. this is focused on gaming. epic games does something similar on pc and mac. they sell pc games. it looks just like the app store. >> yeah. >> it's another icon. >> another icon. >> you don't go into the app store and find epic. you go to the epic store. >> no apple involved here. >> no apple involved. once you hit it, click on the thing you want. >> another barrier here besides the wonky process you have to go through. i was on this call with the epic ceo a couple days ago. they were saying the approval process for even just apps in

the alternate stores, it takes towns up to 30 days to get the apps approved. it seems to be taking a longer process to get this done. apple is pumping the brakes. >> does apple have liability here? if you go in and install a game in there and it ruins your iphone? >> potentially, we don't know. if you ask apple, this is a pri privacy night make and people's phones would be flooded with ma malware. >> the truth is apple is saying when you buy this phone, you are buying into not just the hardware, but ecosystem. >> play in our sand box sb. >> it's a structure. >> the second you have other

people building their own stores and crazy things could happen or not. they are trying to talk about it as slowing it down -- >> and new fees. >> and try to be careful. >> you can see it both ways. >> then the cost, by the way, to monitor the stuff to do all these things. it does take time. i do have sympathy to the situ situation. >> it does open up to the way it does before. i understand the approval process and warning people this could happen and this opens the phone up. that could be to prevent the liability. >> if they show you 100 times, if do you this and the whole thing -- >> is it any more cost to them to approve a game or scrutinize a game inside of the epic store compared to the regular apple store? >> that i don't know. >> it sounds like it may be the

same. >> i really don't know the answer to that. they have to approve the store and approve the apps in the stores. not the same way for the regular app store. pornography would be allowed in the third-party store. that is not allowed in the apple store. >> interesting. >> if someone wants to put a pornography store, in theory -- >> how much more money does epic make? >> the fees are less. if you ask epic, they want zero fees. that's never going to happen. the ec is having problems with apple. they say take away the fees or lower fees or we'll find other fees to charge you. like i said, the gaming is the lucrative part of the apple store. 70% of revenue. services is a huge part of the business. this is a threat to that. >> thank you, steve. >> thank you. i appreciate it. coming up, we'll talk markets and where you should be putting your money to work and

then the council on foreign relations michael froman will talk about the foreign relations and china tariffs and chance of a gaza cease-fire. we're going to come right back. ameritrade is now part of schwab. bringing you an elevated experience, tailor-made for trader minds. ♪♪ go deeper with thinkorswim: our award-wining trading platforms ♪♪ unlock support from the schwab trade desk— our team of passionate traders who live and breathe trading. ♪♪ and sharpen your skills with an immersive online education crafted just for traders. ♪♪ all so you can trade brilliantly. ♪♪

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all so you can trade "how do i not break the bank?" we gotcha, pete. xfinity mobile was designed to save you money and gives you access to wifi speeds up to a gig. so you get high speeds for low prices. better than getting low speeds for high prices. -right, bruce? jealous? yeah, look at that. -honestly. someone get a helmet on this guy. get a free unlimited line for a year when you add one unlimited line. plus, get a new google pixel 9 on us. bring on the good stuff. let's talk markets and stocks. kari firestone joins us now. kari, thank you for joining us. it has been an interesting couple of weeks. we have the leadership back in place above the august 8th levels. the semiconductor index with apple and meta.

the banks are back up. the uncarry trade is mostly unwound to it, but it is back in the past couple days. have we de-risked? what is your assessment of this journey? >> hi, melissa. i would say we had a scare. it seemed to be a panic. that was resolved because it seemed to be mostly technical and yen related and the carry trade. now we're about 2% back from that all-time high that was july of '21. it has been driven by the big cac names because their businesses are on track. we are waiting for nvidia which reports on the 28th. we see the beat jump with consumer discretionary which recently was down for the year. the market is up 16%. consumer discretionary is under 4%. all that has happened in the last couple of days. so, that's a shift. you know, we're seeing some money that's been moving into other parts of the market.

the broadening of the market has beenlessly all year. it seems to starting to an occur and we had warren buffett buy on the news. july retail sales up against the consensus. brian niccol moving to starbucks from chipotle. all those ignited this rally. >> what do you make of walmart at this point? they had great earnings. the second half guide still and the full year got raised, but performance aided on to the guidance. it is the number one stock in the performance on the s&p 500 retail to date. it's forward pe is 31. above the market multiple. is it worth it? >> it's not a cheap stock here. i think the market is really looking at the glass half full scenario. the fed will lower interest rates and we do not fall into the recession.

we have been in a soft landing. there is a lot of talk about the softness we heard through earnings season where earnings beat for the quarter, but revenues were light. a lot of the benefits came from cutting costs and margin improvement. from every part of the economy, whether it was software or he healthcare or financials. tech names said revenues were not -- they just didn't come through as much asp expected. walmart is the stock here that we see consumers were spending. they saw it across all demographic sectors and while people traded down, they still came to the stores. food is more of the business now than consumables or the typical retail products. customers come to walmart and if they're feeling stretched, it is more likely they'll buy private label and they trade down and that is exactly what walmart is offering them. 30 multiple. that is fairly expensive. the market sells for 19 times

next year's earnings. earnings pexpectations are strong. the estimate is 15% growth next year which is a big ask. we have to see consumers spending money. the consumer is 70% of the gdp. they are the north star. if walmart is leading, we will see what happens in the next couple weeks with target and across the board with retail also holding up. >> are you placing retail bets, kari? walmart was talking about the majority of the gains in market share came from customers with $100,000 households and more. they are buying discretionary like the pillows andt-shirts and things like that, was actually flat for the quarter compared to previous quarters. is that good read through for target or a bad one because they are just gaining the share? >> it is unclear to the market whether it is good or bad.

target is under performing. target is a difficult stock. they mentioned this. the consumers have not been back enforce. what we know, people spent their money at home online and then renovating their houses. for two years, they spent money on travel and vacations and experiences and concerts and restaurants. now we may be entering a period where the spending is more at the mall or retail because you can go to the mall many, many times for the price of a taylor swift concert and that may be what's happening. we're shifting the sector toward traditional retail. we will see in f that follows through with the the others in the field. it is a good thing the fed is lowers rates because credit card debt goes down and increase in delinquencies. one name with walmart, good. tapestry, 2% growth in revenue and the stock was up big

yesterday. we have to see if the revenues come through in the next month or so. we'll hear more and back to school. >> kari, great to see you. thank you. still to come, michael froman of the council on foreign policy will talk to us and the fed looking at the first rate cut in four years. we speak to cam harvey, the investor of the inverted yield curve about the risk of recession and more. >> announcer: time for the aflac trivia question. rs o musk is the most followed peonn x. who is number two? the answer when "squawk box" returns. gap in your health insurance? yeah, it didn't cover everything when i got hurt. good thing i had aflac. (aflac duck) hmmm the cash i got from aflac helped pay for medical expenses, 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.

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>> announcer: now the answer to the aflac trivia question. elon musk is the most followed person on x. who is number two? the answer former president barack obama. welcome back. the u.s. gears up for the election and voters are awaiting cues on the vice president kamala harris policy should she get collected. we have michael froman from the council on foreign policy with

us. good morning. >> good morning. >> do you believe there is a lot of policy with vice president kamala harris? >> i don't think there is a lot of opportunity to show daylight at this point. i think more will come out over time. >> if you speculate what that daylight looks like, what would it be? >> i think a lot of convergence on russia and china. i think she is focused on the reducing casualties and the humanitarian crisis. those are the usuaissues that president biden has been doing. >> she is doing it in a more outspoken way? >> i think that is right. yeon i don't think there is a fundamental policy yet. she will have to see where she makes a difference. for now, it is the biden-harris administration. she has been loyal. >> what is your sense, you said china. we were talking about tiktok

which is appealing the ruling. she is not public yet on the subject of tiktok for example. >> not that i'm aware of. there is a convergence of china with republicans and democrats in terms of everyone trying to be as hard as they can vis-a-vis china. i don't expect a lot of daylight there between her and china. >> do u.s. and china relations worsen no matter who is elected? 12k3 >> it is up to china. they are waiting to see what happens in the election and decide what they want to do. the issue of overcapacity of engaging in an export related economic recovery plano oppose to the stimulus plan. that is dependent on beijing, not washington. >> i was thinking this morning about the future of the world where the federal reserve cuts interest rates and takes its

foot off the neck of the economy and the economy can grow and the world's supply chain is not able to supply it because of the barriers and tariffs that have been put up in place. i'm concerned about a global inflation that would come if we can't do it. are higher tariffs coming either way, michael? >> the trump campaign laid out a tariffs campaign of 60% of everything coming from china. most people close to the campaign say that's a really transactional move to get countries to come to the table to talk about various issues in the economic relationship. the peterson institute, the think tank on economics, have come out with a report saying this costs of the average american family $1,700. it is a tax on the american family. president biden kept in place

the tariffs he inherited from donald trump. one question from the harris administration, if elected, can some of the tariffs be lifted? they are not strategic. we don't need to make t-shirts and toys in the united states, but still having a tax on low-income americans who spend a bigger portion on those products. >> one of the questions we have been asking about economic policy, but maybe the question about foreign policy, too, is how deep the vice president needs to articulate her views during this election process at all? the clearer your views are, in some ways, the easier they are to at least be critiqued or at attacked? >> does she put it in position at the stime of the debate was foreign policy or economic policy that runs deep? can you effectively stay at the

surface? what's the best political approach? >> i'm not a campaign expert. those of us who work on foreign policy would like to think the campaigns really are determined by policy. i think it ends up being about a lot of other issues. i think the other issues will come out on the campaign trail and debates. particularly with the short window of campaigning, 90 plus days, there is less opportunity to layout new policies than introduce herself to the american people and former president trump making his case about why their character is he should be the next leader. >> how consequential is the campaign for ukraine? >> i think it is consequential for trump. he says he can end the conflict in one day. i think president biden has been firm on supporting ukraine and providing them with everything

possible they need to push the russians back out of ukraine. i think vice president harris has been close to the policy as well. i think there is a real distinction with the two candidates with ukraine. pro probably the most important one. >> good to see you. thank you for coming in on this friday. coming up, the look at stocks ahead of the opening bell on wall street and we will have richard clarida with us to talk about the economy and the recession risks. "squawk box" will be right back.

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welcome back to "squawk box." i'm dominic chu. microchip technology is moving higher with the help of piper sandler. they raised the target price up from $100 from $90. they are citing numerous growth levers. that stock is poised to ramp up. analysts at wells fargo giving fox the upside potential with the sports streaming venture with warner bros.

discovery. those are higher by 2.5% in the pre-market. by the way, for more on the calls of the day, head to cnbc.com/pro. you get access to the detailed analysis of the reports. we end with applied materials. that chip stock lower by 1% despite the third quarter results that beat estimates. it is forecasting fourth quarter. >> referee: krevenue above expec expectations. some folks see this as a leading indicator of the chip trade. back to you, melissa. thank you, dom. we will talk the risks of the recession with campbell harvey and new details emerging of vice president kamala harris's economic plan ahead of the dnc.

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earlier this morning, i credited you for inventing the yield curve. congratulations. that was a mistake on me. >> thank you. >> you are the person who sees the yield curve as a recession indicator. i would like you to update us on how that's going or not. >> the yield curve has got a record of 8 of 8 with no false signals going back to the 1960s. it is a leading indicator. the lead time varies between 6 months and 23 months. we have been inverted since november of '22 and inverted for the 20th month. this is a leading indicator. i want to contrast the yield curve and indicator with the so-called som rule which is not a leading indicator. it is a lagging indicator. i think people misunderstand that. >> so, you are saying you still have three months to get this

right, if i'm not mistaken? >> so, not exactly. historically, the lead time has been 6 months to 23 months. so, if it goes 23 or 24 or 25, i'm not sure, you know, that's within what could happen. >> fair enough. so, i guess my question has always been as it has been a pleasure to have you to to talk about this. is the inversion of the yield curve cause the recession? what is the relationship of the yield curve to the recession? >> originally when i published this idea in the 1980s, it's been a long time, this indicator would pick up expectations of economic growth. so, if you think about interest rates, they contain expected inflation, but also expected real interest rate and that's linked to expected real

activity. however, recently the model has changed. the yield curve is more causal. people see an inverted yield curve and it changes this behave. as a ceo, when you see an inverted yield curve, you are less likely to pull a trigger on the bet-the-farm type of investment in the face of the inverted yield curve of 8 of 8. you don't take that risk. that investment is decreased. the employment and layoffs and 5% to 10% of the workforce. the yield curve is a causal mechanism. i believe it has slow ed economc growth and it is a risk management tool. >> cam, i heard the economists describe this moment when we will be cutting interest rates as the most dangerous time. to what extent does that feed into your theory here in that

when interest rates are changing and, say, perhaps about to go down, you actually cause more delay in investment decisions? >> so, uncertainty is bad in general. so, uncertainty holds back economic decisions. as for the cut, really what the fed needs to do is to undo the damage of raising the rate too high. so they overshot in my opinion. they inverted the yield curve. you talk about a causal mechanism. they inverted the yield curve and have pushed us toward slower growth. what they need to do, quickly, and this should have happened far earlier, move the rate down hopefully substantially. at least 50-basis points in september. >> cam, i'm curious in terms of it becoming a causal indicator at this point. i was going to ask you with each passing month, you wonder if the

8 for 8 streak is going to be broken. the fact it moved to be a causal indicator and altered how people act within the economy and altered the path of economic growth, could that recession actually be averted at this point? >> yes, hopefully. actually hope my indicator is wrong. nobody wants a recession. i do believe that you are correct and this is an important insight. often a popular indicator that does really well like stops working. i think that what my indicator is doing is people see it and they see the track record and it changes behavior and it actually slows growth, but in the context of risk management, this is really important. so, companies are not going to be surprised if a recession starts later this year or early 2025. they are actually ready for it.

what we don't want is a surprise recession where companies have to slash their workforce. as soon as you do that, that makes things worse. it deepens the recession. think of this indicator as actually slowing economic growth but leading to a situation where we can have a downturn without a hard landing. so slower growth rather than something like the global financial crisis which nobody wants. >> cam, we have to go. you said 50 in september. how aggressively should the fed bring down interest rates here? >> i will be very disappointed if they don't lower the rates by 50-basis points. real-time inflation, if you use let's say zillow or apartments is 2% or below already. there is no excuse for cuts at least 50-basis points. indeed, they should have delayed

the last meeting by two days to get the important employment data. >> i know what you are thinking about for september. i mean over the course of this year or so. how much should they take off the funds rate? where should we be a year from now in your opinion? >> in the low 3 range. 3.5. >> wow. 200 or so off where we are now. >> a little less. yes. >> cam, i feel smarter this morning. thank you for joining us. >> thank you for inviting me. coming up, new details emerging about vice president kamala harris's economic plan if she were to be elected president. details after the break. housing data will be released. well which talk about the issues facing homeowners. "squawk box" will be right back.

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and food. on the tax front, we are learning harris is calling to restore the child tax credit and expand it to provide up to $6,000 for families with kids under 1. she wants to expand the earned income tax credit and reduce taxes on health insurance premiums. she wants to cap the cost of insulin at the cost of $30 and limit spending are prescription drugs for $2,000 for ll. to cancel medical debt for millions of people. on housing, she wants to use tax credits to incentivize construction on 3 million homes in the first term and providing $25,000 in down payment assistance for first-time buyers. she wants to ban corporate gouging in the grocery stores. it will be celebrated by

progressives, but it has earned criticism from the economists who compare to price controls and exacerbate price controls in food and housing. for trump's part, he is offering his ideas this week.g electrici costs by half within a year byp the 2016 tax cuts and cut regulation. again, of course, economists have concerns this would increase the debt and drive up prices. there is a long way to go before this becomes reality, but shos us the priority the candidates have carrying into november. >> we have fello.

what we are just seeing is, you know, ways to sort of give out and no concern about debt. let alone talking about if we really want to bring down inflation as a sustainable way, we want to think about productivity and innovation. i don't see anything like that there. >> ben? >> yes, this is just a partial plan. i would expect the vice president will come out with details around innovation and productivity. this is aimed squarely at household costs. i disagree with the assertion economists will not get behind this. housing shortage is the driver of inflation in the past four or five years. the vice president coming out to

add 3 million more homes in the market should be welcome by most economists across the board. >> go ahead. >> she is also putting increasing demand more with all these credits. just becausehe says 3 maore units built, we should look at thg zoning restrictions. that would do it without increasing the debt and bring prices down. >> the federal government, i agree local zoning laws are part of this, but the federal government doesn't have discretion over local zoning. it has pressure over the tax code. the way i look at this plan is the extension of the biden administration approach which really doubles down on the it is the best tool for stimulating greater supply by home builders. >> allison, if you were queen or

king for the day, what would you be proposing? if you were just after growth and thought that was a winning strategy -- by the way, a winning strategy for the elec electorate, not just for the public. >> i mean, this is the challeng popular, particularly price controls, do tend to poll well, but, i mean, i'm an economist. not a politician. in my view it's about explaining to the population what is good -- what's going to grow the economy. to be honest during the clinton administration a lot of his policies were popular. people were happy to see the debt reduced, and people were, you know -- a little skeptical of nafta and the end i think it did work well. so if i were president for the day i would get rid a lot of subsidies, tariffs. i would extend the tax credits that encourage innovation, and as i said, sort of think more carefully about reducing the

debt. >> yeah. ben, does anybody care about the deficit here? should they care about the def deficit? >> people should definitely care about the deficit. just heard from megan before this segment came on how president trump wants to extend the 2017 tax cuts. i haven't seen a plan to pay for that. around $4 trillion to extend permanently. that makes any of these proposals pale in comparison in cost. so i think the biden administration has been pretty responsible on debt. the ira e i.r.a. more than full for. high hope, vice president harris would continue that tradition. >> thank you. we have to leave it there. coming up, a coincidence or master plan? warren buffett now owns the same number of shares of apple and coca-cola. more on what that move means and where apple stock could be headed. later, richard clarida will be

quk x"ilbeig "sawbo wl rht back.

warren buffett now owns as many apple shares at coca-cola

after having his apple stake an even 400 million. speculation he's done selling. joining us, head of technology research. ben, great to see you. >> hi, melissa. >> any sort of verdict on apple shares whether or not they've peaked, or no? >> an opportunity for folks on that monday morning when it opened up. i feel apple's in a generational upgrade cycle. first the install base of phones are old. we have that going for us, but then apple intelligence only works on the newer phones, and we think we'll be form factor changes going throughout the years as well over the next few years. so we're pretty upbeat. i know he sold, but i think he's got other motivations. >> there is skepticism, though, regarding apple intelligence and how much of a force will be in the upgrade cycle. if you really pared back expectations in terms of that being a driver, particularly because it's highest end of the phones, what does that upgrade

cycle get you in terms of valuation? if it's the most conservative estimates for apple intelligence? >> we have a bull case where within a few years we have apple earning well over $9, even approaching $10, in our bull case. but in the historical cycles we've seen growth that can well eclipse 20% in iphones, but the way we look at it is expectations are relatively low. the street's only in midsingle digits. iphones this year. less the next. looks beatable. should be a gradual upgrade cycle and come to its peak in 2026, in our opinion. even gradual is better than what we've had with the lack of growth, and very profitable of a product. we are really upbeat. i think among the mag seven's, good visibility and growth accelerating. >> for nvidia awaiting earningses on the 28th. wonder how it sets up on august 5th. people are doubting this. all stocks back above pretty

much august 5th levels, roughly. >> right. >> so where are we in terms of the setup going to those numbers? >> there's been what we call roi fog. everybody worried is there an roi. the most subjective thing, probably, within our coverage questions lately. but we feel that nvidia is really still the market leader, still dominant, and they are really set up well for next year. the reason is a lot of the apps that are coming are going to start inferencing, video is a big cat last. open to see that. i think that the blackwell concerns there was a pushout, a little overblown. we think that the hopper stuff is going really well for them in the near term. hopefully there's no air pocket. >> ben, have you thought when might be a time to think about investing in the people that are buying the chips from nvidia? as to whether or not that would mean something to their bottom line? >> well, nvidia actually invests in some of their own customers. >> right.

>> in terms of investing, you mean in other equities? >> say nvidia is either overblown or fully valued here, and nvidia make as chip. that chip is like an input into the process. somebody's using that chip. they're going to make money with that chip. who's going to make money with the chips nvidia is making? >> well, first, it's going to be the clouds. hyche scalers, meta, microsoft, google, amazon. they are going, they create tools and folks join their clouds and start creating a.i. apps. now, a lot of people, hey, i'm not using it. bored with it. we need to start seeing enterprises lay data on some of the tools these companies have, including their models, and start generating returns. what it's looking like right now is that it helps them cut costs, which means some people, which may actually help the fed's reasoning here, but it does look like a lot of the leading tech companies are using a.i. to keep

the count down. >> an incestuous circle here. >> no. i think a lot of companies led by tech but a lot of earn priz prize -- enterprises using it. also coding, a lot of stuff in health care. i actually do work with mount sinai. really optimistic what it means for health care and diagnoses. >> in the chip race we heard this morning texas instruments is receiving some chips act money. how do you think that rollout is going, and is there going to be a better backdrop for our national champion in the chip sector. intel, which has been, you know, really troubled stock this year. >> yeah. well, look, i think that we have to remember about the chips act, it's not just the intels of the world. there's also tsmc, the leader. undisputed champ of manufacturing, and we need to get their expertise over here. they're a friend of the u.s.

so they're going to be getting some money. and where i'm focused more is on the real leading-edge stuff. a.i. chip stuff. obviously texas is a little different. remember, the chips act also investing in packages. a company amcore that can benefit as well as the entire ecosystem. you know, so reported, very worrisome may lose china revenue. but the chip acts money could underpin moregrowth for them and replace that revenue. >> two very quick questions. is intel fixable? >> it's -- >> 20 seconds. >> yeah. 20 seconds? no, look. it's been -- yes. i think it's fixable. they need, you know -- i've said before on your air, on the later show, look, this is like a boeing kind of situation where we really need this company to work. >> right. >> and they are -- it's going to be very hard to kick them out of

the enterprise. however, amd's going to gain share. we need to see them stop the bleeding soon, but should be a few more quarters of share losses. >> do you have a view on this epic games app store? situation? >> not surprising. was in line with my expectations. all of our work shows that actually a.i. and apple intelligence and what apple's doing in services may actually help the app store, but i view it not a surprise given the regulation we see in the eu. we're watching carefully. i'm optimistic about services for apple. >> you don't think it will c change the dynamic? buying on epic as opposed to apple store? >> talk to apple and look at results, it's not like users love going outside the app store. there's a convenience. you know it's secure and going to work. you've got to stop what you're doing, go outside? it's really, would you do it? you know? it's only special, certain kind of high users that might actually want to go outside the

walt garden as you said in a prior segment. >> ben, good to see you. >> good to see you. thanks for having me. just after 8:00 a.m. on the east coast. you're watching "squawk box" on cnbc. i'm andrew ross sorkin along with melissa lee and steve liesman. joe and becky are off. a lot of top stories. another twist. leading executive edgar jr. getting ready to make a bid for the company. "wall street journal report"ing that partners for roku and for tris investment group still a steep climb ahead. given a breakup, via matching right by the ellisons and et cetera. so, if it bids going up against skydance media bid. see where it all goes. meantime, meta, drug advertisements on a group of lawmakers that sent a letter to ceo mark zuckerberg. concerned the company is failing to prevent these ads from

running. and kroger out saying it will cut grocery dollars after, and maybe "if" it completes its merger with smaller albertsons. could lead to higher food prices. kroger says the promise lower prices at albertson's by $5 million. always hard to enforce these things. say i'm doing x, is there a remedy? sure. need to do this and, you know -- >> i'm supposed to read the futures board but i don't have a board to read in front of me. >> we can get you one. >> there we go. nice. right there. or is if -- there we go. >> you ask, you receive. eight points down on the s&p. 22 on vij and nasdaq down 30 points. worse over the course of the morning here. looking at treasuries, let's

see. yields are down 386 on the ten. 4.03, don't forget the 4.035 on the two year. millions losses on that. and dominic chu and the millions, trillions, billions lost just this morning. before 58:00. >> right. steve, melissa, andrew. i'm supposed to tell you about some of these morning movers. german pharmaceutical giant baer, that company seeing a surge in european trading up by about 10.5% so far after scoring a big legal victory here in the united states over claims that exposure to its weed killer roundup causes cancer. a u.s. appeals court ruled for the company against claims that baer owned monsanto violated state law failing to add a cancer warning label to those roundup products. so baer, up 10.5% however you want to pronounce is here in the

u.s. shares of estee lauder falling. cutting the beauty's rating from neutral to buy reversed and upgrade from march. bofa, sluggish growth in it china reason for the down grade. and look at nike. shares of the athletic footwear and apparel giant and dow component rising 0.75%. stock grows over 5% you may recall thursday after big ackman's pershing square revealed a new stake in the company. worth $220 million end of june. keep an eye on nike. analysts in play today. big analyst calls of the day head to cnbc.com/pro. full access to all analysis there. andrew, back to you. supposed to toss it back to you. >> thank you, sir. have a great weekend. i want to talk more about the markets this morning and welcome our guest, cio and

senior portfolio manager at an investment group. good morning. >> good morning. >> what do you make of this wild ride? a week and a half, now two weeks of crazy? almost like it didn't happen. forget it happened? >> maybe not, though, because actually since the july 10 data point the nasdaq still underperforming. russell 2000 valued by 1,000 basis points. time will tell if that marked a pivotal moment. i think that one of the key, obviously, indicators, obviously, inflation reading coming down. something i would posit is that if you look at the spread, andrew, between the two-year bond yield and the fed funds rate, let me be clear. two-year bond yield set by the market. the fed funds set by the committee. below 18 months. go back and look at this to all the way back to the '70s, this is generally predicted aggressive rate cuts, and that duration matters. so i think when you look at the setup, you have a really

interesting dynamic in some of the less loved areas of the markets. more exposed to interest expense on their balance sheets. >> okay. what is your expertise come september? in terms what the fed is going to do? >> well, i'll say this -- the two-year bond yield is telling the fed to take 140 basis points out of. okay? look where that yield sits relative to the funds rate, 140 basis points. look bat historically generally taken the stairs and then take the elevator on the way down. back to 2000 raised twice first and second quarter and january of '01 pulled 50 out. i think they need to pull out 140 and that's based on what the bond market is saying. how quickly they do it is up to them. i would say late to the party doesn't mean you get to overstay your welcome. seems to me we're doing that now. i'm a little nervous about the prospects of things getting more challenging for these companies. >> you talked about the stairs and the elevator. what about an escalator?

>> what about an escalator? they took an escalator on the way up. >> for you, does that mean you think 50 basis points comes in september? >> i think should be 50 basis points. probably won't. i think -- i think they want to give the opinion that they are moving in a very methodical way. generally that's not what happens. some data points comes out like inflation or the unemployment print, that starts to jolt them. again, i think that investors should be thinking about the areas that would be benefiting from less interest expense and one of those areas is reits. not very loved. >> right. >> but point to two areas actually beating s&p 500 year-to-date a lot of people don't realize. materials and regional banks. both beating. considering nvidia makes up a large portion of s&p and powering so much of the gain. already seeing interest rate sensitive play working out in the marketplace. i expect it to continue. >> you're coming on our air here, a guy talking about a

sector that's not yet fully valued with a thing that's about to happen? >> well -- >> is there more to come? >> look at valuation dislocation in region many banks, it's material. something i like to always point out is that what occurred in 2023, okay, with the regional banks, that was a liability crisis. not an asset crisis. an eight crisis occurred in 2008. very different. the rates come down, that should be, further alleviate pressure on the balance sheets and capitalization of regional banks is far better than in 2008. the area has a long way to go, steve. >> a time and place to be buying commercial office real estate? or too early on that? >> i think commercial office real estate is hairiest and hard hardest and i don't think you freed to go there. industrial rates, well positioned strategically an benefitses from a.i. chips,

robotics, automation. work the warehouses. remember the scene? "indiana jones" last scene of "raiders of the lost ark" in the warehouse. a story for the industrial reits going forward opinion i like other area it's than just the office play. >> what about small caps? probably the number one area to benefit from lower rates. >> correct. one thing i point out. look at interest e expense as percentage of total debt, okay, for the russell 2000, that's highest since '04. for s&p only highest since -- >> i don't hear you saying go buy the russell 2000? >> don't do that. companies are not profitable, not high-quality and shouldn't own. if in small caps active management plays a heavy role. to be quite candid ed, look at that opportunity set a lot of companies won't be able to navigate the environment. a lot not able to push through the costs to the end customer.

>> thank you for coming in. have a good weekend. >> thank you, andrew. coming up, dive into the health of 9 consumer after new insights ththe form of earnings and retail sales numbers. later in the hour, former fed vit chairman richard clarida will join us. stay tuned. you're watching "squawk box" on cnbc. you have to make it. and if you want a successful business, all it takes is an idea, and now becomes the future. a future where you grew a dream into a reality. it's waiting for you. mere minutes away. the future is nothing but power and it's all yours. the all new godaddy airo. get your business online in minutes with the power of ai. ♪ i wanna hold you forever ♪

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welcome back to "squawk box." taking a look at futures now. set to open lower across the board at the open. s&p looking to open down by 12 points. nasdaq down by 50. dow down by about 22. as for food prices seeing it here hover about $76 a barrel. down 2.5%. check out dollar yen. a lot of talk about the yen carry trade getting reloaded. memories are short. we do have trading at 148 against the dollar. >> so much fun before unwinding. do it again! >> exactly. >> same thing. consumer retail sales blowing past estimates and walmart posting better than expected results after yesterday's 6% gain.

now it's the best performing retailer in the s&p 500. but we also saw starbucks roughly the ceo, replaced. having trouble with the consumer. joining us now to talk about all of this, greg poortell, kearney global markets lead partner. good morning, greg. >> good morning. >> so let's just start with the topline issue here. is the consumer dead? alive? what's going on with the consumer? >> we've been talking about the consumer's death for a long time now. >> right. >> they continue to surprise us quarter after quarter. the consumer, particularly the u.s. consumer, has been incredibly resilient. that doesn't mean not under stress and doesn't mean they're not being very selective about how they spend their money. >> okay. and -- greg, when you look ahead, can the consumer keep up these kind of strong numbers? >> we're tracking consumer stress, and the two largest components into that consumer stress index are the economy,

and the way the consumers feel the economics, and geopolitical issues. both of which are intensifying as we go into the back half of the year. so the u.s. consumer, and actually the global consumers, are under enormous pressure making management teams have to be very smart how they connect with them. >> greg, i was -- >> going to be very difficult going forward. >> i was talking to a ceo manufacturer here in the united states and said, oh, just forget the next six months because it's the president's election season's do you see a connection between the ledgvel of consumer spending either way and the presidential election season? >> we expect the holiday season to be positive. interesting is, this particular election psych canpsych preside cycle will be nasty and play into where they spend their money. looking for comforts rather than

extravagances. >> melissa and i this morning at 6:00 a.m., like yesterday, came up with three reasons why walmart's doing well. melissa, you had two of them. >> cei stealing share. >> that was mine. you it two others. >> challenge and walmart, stepping down. >> two reasons greg. what's the reason why walmart is, did so well? >> really two things. seen every management team, regardless of industry, really put inflation management tools in place. cost-cutting. walmart has a system to do that better than most companies so when you look at their ability to really take costs out of the system and thereby pass it on to consumers, they have a track record of being able to do it and you see the results. >> when kamala harris talks about price gouging in the food business, what are margins like in the food business right now? are there -- is there evidence of gouging in those margins?

>> it's hard to say "gouging." it's very difficult for food companies to take costs out of their supply chain. particularly when faced with sustainability pressures and commitments made on that front. even if you take a company like starbuck, cost of coffee globally continues to rise. flexibility to take costs out when the those commodities are going up is really difficult. it's not so much there's gouging. just limited opportunities for those companies to take cost us out unless they change formula and fact size. that's what we're seeing in the it restaurant channels. >> is the problem at the manufacturing level or -- not much the consumer-facing companies can do? but there are some, perhaps, companies with price-setting power at the manufacturing level? >> not so much price setting. it's flexibility how they manufacture. if you can create ingredient flexible, formulation

flexibility, that allows you to get more price variability and pass it on to the consumer. it's a flexibility and agility question more than a pure manufacturing question. >> greg, thanks for joining us this morning. >> thank you. coming up, we are going to speak with former fed vice chair richard clarida. but next, inside an effort to create a whole new category of live experiences as consumers can't seem to get enough. the julia boorstin is live in los angeles and going to have that story. julia, a preview? >> well, andrew, it may look like i'm at an english soccer stadium prepping for a big match this afternoon, but this is actually a giant l.e.d. dome and i am here in los angeles, and this dome will be full of soccer fans in just a few hours. i'll tell you how this company wants to shake up entertainment. that's coming up, after the break.

welcome back. we are already talking a lot about consumer spending. now we're going to focus on one company betting people will keep shelling out for live events, but in a slightly different way than you might expect. julia boorstin joins us with a very cool story. good morning. >> well, andrew, right now we're here in a dome. start-up kcosum. in july this company raised $250 million and a valuation over $1 billion. backers including mark lasese and original investors billionaire steve wince meresol capital.

the company opened here in los angeles in july expanding to a second location in dallas opening end of this month. working to launch another venue in atlanta to open in 2026. now, they have partnerships with nba, cirque du soleil and nbc sports fox sports and tnt sports to stream game it's, live streamed games, like u.s. open tennis championships, nhl games, horse cases, college football and basketball games and premier league soccer matches. ticket prices range from $22 to for some programs and some seats, $200. but the average ticket is $33. now, today at noon pacific, 3:00 eastern, this venue is showing its inaugural premier league soccer match as part of its nbc sports partnership. >> we'll never replace going to the live game itself and being there, that energy, but we're going to get close to it and we're trying to give fans another fantastic offering to be that best version, to be their

best fan and experience it. like they never have before. this notion of that third type of category. really what it is. it it's not at home, not in stadium. it's got elements of both. >> now, this unicorn start-up cosm isn't the only one. diversifying bringing live sports and concerts into venues and imax theaters showing the paris olympics just in this past month. so, andrew, cosm wants 30 to 40 of these venues by end of the decade. we'll see how full it is later today. >> i don't know if camera folks can do it or guys in the crom r control room can do it. there are actually seats behind you. can the camera pan out a little bit? part of it is we have the banner

at bottom of the screen. i think folks didn't see right before there are seats there. okay. so this is -- there you go. okay. now we see what's really going on here. >> yes. >> this is a little bit like going into a sphere or somethisomething and watching an event? >> the sphere has about 18,000 seats in the sphere. 1,700 people can fit in this venue between this theater, we're told 750 people. more seats down there, which would feel like right on the, right by the sort of the bottom where the soccer match is getting set up. what you're seeing is a live stream to this, this soccer stadium. in stratford, england. getting set up. the game starts in a couple hours. outside, more l.e.d. screens and people can fit out there. andrew, for context they don't want ta call it a theater. they want to call it a venue. treat it like a concert. get up, cheer, sing along. get drinks.

there are couches up here. not like an official dark movie theater where they want people to sit and be quiet. a different kind of venue. >> fascinating. and this now, i think, explains it. panned out, julia, everybody understood what was going on. such a tight shot earlier that we weren't sure whether it was a green screen or what was happening. now we all get it, and it's very cool. and i may have to go buy a ticket for this. >> not as cool as a sphere, which we can talk about next. up next, breaking housing data. stay tuned. at least, not the way it could work. your people are buried in busy work. and you might be thinking... can ai make it all work? it can. on the servicenow platform, ai transforms your entire business. your people work better, your customers are happier, and todd... well... he's practically euphoric. practically. so, let's get to work. (♪♪)

rick santelli has the housing data. rick? >> yes. i'll start with the month of july. expected to be in the vicinity of 1 million 330,000. seasonally adjusted united nations comes in on the light side. 1 million 238,000. a big miss here. 1 million 238,000 seasonally adjusted annualized united nations, lightest level going all the way back to may of 2020. may of 2020. so that's way through the rearview mirror, and in terms of permits, expecting a number around 1 million 420,000.

also on the light side. under 1.4 million. 1,396,000. how does that comp out? 1,396,000, back to june of 2020. so on the start side, that's, what? about down 7%, or near that, considering the revision now from 1,353,000 to 1,329,000. and permits, saw it cross the wires. these aren't terrific numbers. take it all in a macro view i'm sure hurricane beryl, considering construction in the southern part of the country may have indeed impacted these numbers negatively. in terms of interest rates, chart of the average 30-year fix, it started to move lower towards the end of july. a good chunk of that, of course, happening in august. so probably see a bigger

positive effect in the august numbers than the july numbers and most likely see the gps get back on track and get some of those weather-related events out of this particular number. as we sit right now at 402 and a two year that would be down seven on the day. down three or the week. and hovering at 387-ish on the 10. melissa, down four on the day. down seven on the week. we want to continue to monitor as the ten-year note right now is basically hovering unchanged for 2024. back to you. >> what a ride. rick, thank you. rick santelli. and joining us with more on the numbers. diana olick, what's your reaction and the impacts weather could have had on this number? >> everybody makes that weather argument at some point when you see these numbers come down. but the issue here, i think is, looking at multifamily versus single family. i always like to break these two out. you have single family down 14%,

but you have multifamily up slightly for the month. multifamily has been down considerably, because we have this massive supply of new rental apartment construction come on the market this year, but so -- you know, that's not unexpected to see that, but when you see that down 14% month to month, down 14, almost 15% year over year in single family, rick touched on mortgage rates. it's not just the mortgage interest rate for the buyer that the builder's concerned about. it's really their own interest rates. borrowing costs. hearing that more and more from the builders. heard that in the builders' sentiment survey saying the costs of land, labor, materials, everything. also their own borrowing costs are hampering them from putting more holes in the ground. that's going to obviously, hopefully, improve this fall, if we do see rate cuts and we see interest rates come down. again, as rick said, we saw the 30-year fix come down, starting to come down in july. really didn't hit sharply until august. so we could see better effects

of that in august, melissa. >> and, diana, quick, the difference in the effect on the existing home market versus the new home market of lower interest rates. isn't it true that a lot of the new home builders have been buying down those mortgages for buyers? so there could be very different -- >> absolutely. >> right? >> yeah. absolutely. most big builders we talk to say buying interest rates down. seeing a rate around 7% on 30-year fix in july, builders would be buying you down to about 5.5% for some of these best buyers. so that was a great incentive. that's why you see the big builders getting so many more people in the door on sales, but, again, a lot of the country, now builders are consolidating. you see the big builders have a bigger market share but in a lot of the country you are seeing mid to smaller builders who can't afford to buy down interest rates given their court. it's up to big builders do that

and, again, talking how it's hitting their margins but doing better than the small to mid-sized builders who are really struggling. >> diana, stay with us. we want to pivot how realtors are getting paid starting tomorrow. how dig a shift is this in the real estate business? >> a landmark antitrust settlement in the housing market that will fundamentally change the way real estate acts are compensated when you buy or sell your home. agreeing to take offers of broker compensation off the listing base they use. in addition, buyers have to sign agreements with compensation with their agents. in the past both buyer and seller agents usually paid by the seller. now the seller doesn't have to. some say this could lower agent commissions, maybe even lower home prices. >> okay. diana, stick around for more. i want to bring in president of re/max. good morning to you. what do you think? >> good morning. how are you?

>> what is this really going to do, starting tomorrow? >> listen, as you just heard a couple changechanges. offers's compensation stale luoed. of course, a written buyer representation agreement will be signed between the buyer and the agent prior to showing property. what's interesting about this is the fact that buyers agencies have been around since the '90s in the u.s. and 20 of the 50 states, these written buyer agreements, they've already been required. however, in the other 30, the agreements have been widely used. they just weren't required. so i think -- go ahead. >> what's the unintended consequence of this we're not thinking about? >> you know, i think that actually this shines a light onwhy being represented by a professional and trusted agent is important for both buyers and sellers. making sure that your interests are represented in the transaction and that you have a

transparent conversation about compensation is critical. >> diana? >> curious. there's been a lot of talk about the first-time buyer who really relies on an agent because they may not understand the process of buying a home. you know? appraisals, assessments, contingencies all of those things. if the buyer can't afford to pay for their own agent and choose not to is that going to be a problem for first time buyers coming in? >> i think that's where a professional agent can step in and help a buyer navigate. as we know, commissions are always negotiable, and what was possible pre-settlement is still possible postsettlement but buyers need to rely on professional expertise to walk through to the process and understand what does happen and whatten is the directive if a seller is not offering compensation. >> so can i go to the broker say i'll pay you 2%? >> commissions are negotiable, and always have been. >> and the broker can decide not

to take my business -- if i'm offering too little? >> agents provide a very valuable service, and they deserve to be compensated. it is up to them to articulate their value, determine what they charge for their services and, of course, it's up to the seller and/or the buyer, as to whether or not they want to pay their commission. >> amy, how long am i locked in to a particular agent or broker, if you will? meaning, i sign up with you. i say, we're going to look for properties. we look for a bunch of properties. i don't decide i want said properties. or i don't want them at those prices. i don't know. six months pass. something else happens in my life. i then want to actually go back and, oh, all of a sudden one of the properties is lower. can i go back without that agent? am i locked in for two years? what's going on here? >> ultimately buyers need to ask these questions, and a quality agent will campaign is timeline, what the terms and the scope of

the agreement are in order to help a buyer make that best decision about how long the agreement should be, what the scope of services are and the compensation that's being offered. >> amy, do you buy this argument that it will actually lower home prices, because the seller doesn't have to pay for the buyer agent commission, that they might take that off the home price? >> great question. look, the price of property is determined by supply and demand, and foundationally, there are benefits to a seller for having a representative party on the other side. just like for buyers. it's important for sellers they hire a trusted professional who can walk them through what are advantages having someone represented on the other side? helping them navigate the complexities of the transaction, making sure they're it interests are being represented and it can really smooth a transaction over. i've been an agent and broker for almost 30 years. i recently moved and relocated. i hired a professional agent, because that local expertise,

that knowledge -- >> and no longer paying -- you're the seller not paying 2.5% to buyer's agent anymoring, picked up by the buyer does that price -- where does that money go? >> i think the prices a are negotiable what a buyer is willing to pay and a seller is able to accept. >> i did ouch college a real estate reporter, should you hire a buyer's agent? and there was a lot of reasons for people to do that. especially in the crazy real estate market that was florida back in the late '80s. i think that's good advice anyway. >> i agree. represented by a trusted professional is critically important, and they can walk buyers and sellers through these changes, what they mean, and how their interested are represented in the transaction. >> amy, appreciate it.

thank you very much. >> thanks for having me. >> have a good weekend as well. >> you bet. coming up, former vice chair richard clarida joining us on what we've learned from a biga outlook on jackson hole. the classic car. monterey car week in california and he's going to join us after a break. robert, what's the monterey festival happening out there? >> steve, talking about nvidia stock before and if you would look at what is the nvidia classic cars right now? it is this. the lamborghini mirror outperforming every other model pup up 30%. this car, about $2.5 million. we're going to tell you what's hot and what's not here in monterey as nearly a half a e ction dollars in car crosses thauion block. that's coming up, right after the break. it should be called wiffle tennis. pickle! yeah, aw! whoo! ♪♪ these guys are intense. we got nothing to worry about.

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but the choice won't be easy with exceptional offers on the e-class sedan, c-class sedan, cle cabriolet and cle coupe. hurry, these dream offers won't last forever. come in now through september 3rd. welcome back to "squawk box." futures right now still in the red. more in the red than it had been since the morning began.

not sure what's troubles market but down on the dow 25 down on s&p and 119 down on nasdaq giving up big gains from yesterday. check out shares of rivian. commercial delivery vans used by am sann. t amazon. citing a parts shortage. haven't heard that in a while. a fleet of classic cars worth hundreds of millions of dollars about to go up for sale. we have all the details and a look who is doing the buying. robert? >> good morning, melissa. good to see you. more than 1,000 cars expected to cross the auction block this week here in monterey and pebble beach. this is the biggest auction of the year in the classic car market and the biggest test for a market that is losing speed, maybe even seeing a bit of a correction. last year sales here fell 15%. this year could, they're hoping for an all-time record with sales up around $460 million.

wipe the optimism? well, sellers have come down in price. they're dropping reserves. getting a little more realistic about what their cars will sell for, and dropping their reserves. at the same time, you have new wealth creation, particularly in tech here in california, and especially from a.i. so that's replaced some of the crypto grows and some of the ipo wealth we'd seen prior to that when it comes to buyers. >> the collection's built out of some of the crypto millionaires, and we don't see that right now. there's certainly a lot of tech influence out here in monterey, northern california. pretty close proximity and i'm matching a lot of nvidia employees are here hoping to fill their new garages with something, and i can't blame them. >> so one of the most expensive cars selling, well, this top lot over at rm70s is a 1960

california spider gt. the model made famous by ferris bueller, of course. gray one estimated at $18. million. this is estimated $8.5 million at broad rarrow actions. what's changed in classic cars both the collectors and the cars are getting younger. so 1950s and '60s cars dominated sales for years replaced by 1990s and 2000s cars like this one. this is a 20085 porsche career gt. sold in 2005 for around $450,000. this one's selling for around $3 million here this week. guys? >> robert, i wouldn't think they would, but do rates actually impact this market? does anybody finance the purchase of one of these classic cars? >> they do, melissa.

rates impact this market in two ways. at the, let's say, lower end. so anything under, let's say, $400,000, $500,000, a lot of that, maybe half, is financed. interest rates certainly played a role last year. what's at the top of the market, what affected the market last year was that the wealthy would -- given interest rates, fed fund at 5%, they could put their cash in treasuries and get 5% or cash equivalents rather than buying a car. so it hurt in returns at the top. rather take the high interest rate returns than put it in classic cars. at the bottom it was funded. now that interest rates are expected to start coming down in the fourth quarter is one of easy radioens people are optimistic and could get a record year here this year, melissa. >> robert frank, great to see you. coming up in a minute, a canvas interview on the fed and the next steps the federal

reserve can take. richard clarida joins us in a moment. do not go anywhere. "squawk box" coming right back on this friday morning. it's all the things that keep this world turning. it's the go-tos that keep us going. the places we cheer. trust. hang out. and check in. they all choose the advanced network solutions and round the clock partnership from comcast business. powering more businesses than anyone. powering possibilities.

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welcome back. joining us now for his take, richard clarida, global economic advisor at pimco. thanks for joining us. >> yeah. >> all right, so, let's talk about next week. what do you expect to hear from fed chair powell about the direction of monetary policy and interest rates? >> steve, thanks for having me on. i think we have a preview, because i do think the chair will be inclined to stick pretty close to the press conference after the july 31st meeting. he also was at centra and on capitol hill, so i think he will basically stick to the message of acknowledging substantial progress in reducing inflation, acknowledge that now that they're close to the inflation goal that they're now definitely a dual mandate central bank. we heard from austin goolsbee recently about they're really now focused on sticking that soft landing and making sure

that they maintain, if they can, maximum employment. i would not expect him to give any broad hint, about 25 versus 50. i do think that, in september, will be data dependent on what we get on the employment report. so, maybe he'll use this as an opportunity to give a little bit of a retrospective on the last two years. of course, two years of jackson hole, important speech, the "whatever it takes" speech, by that's what i expect. >> richard, i want to know how you reacted or how you might have reacted as a policy maker, which you recently were, to the events of the last couple weeks. we were going to hell in a handbasket for a couple days there, when the jobs report came out, and then the market sold off on monday. and we had that little bit higher than expected jobless claims. then, jobless claims came back in. they didn't shoot through the roof. then we had strong retail sales. how do you incorporate all this? and are you surprised at how the

market and even some of your economist friends reacted to all this? >> well, look, i will say, and i was actually traveling in latin america when a lot of those events were happening, and i made a note to myself that if i were back as fed vc, the way i would be looking at it in realtime is i wouldn't be inclined to adjust my view on monetary policy because carry trades unwound and equities had a correction from very lofty levels, and so i'm glad subsequent events have sort of put that into context. i think we have a lot of information about the economy, underlying growth is around trend. labor market has come into better balance. you know, jay powell says they don't want to be data point dependent, and i think that makes sense. but i would emphasize that i do think that there is special importance in what we hear about the labor market. if the next print that we get early september looks like the average of the last several, i would be inclined to think that

they go 25 and signal more on the way. you know, if it's the disastrous report, negative payrolls and big rise in unemployment, we'll go 50. >> richard, you just underscored a point that i think i try to make a lot which is that the market thinks the fed thinks about it more than it actually does, but i want to move on to another point here, which is, where do you think -- how much can the fed do here? and would it still be restrictive? it's asking you, where do you think neutral is? is the market crazy in thinking about 100 through the end of this year and 200 basis points of cuts a year from now? >> i don't think that's crazy. i start with the dots. they're imperfect, but the dots indicate one scenario, which is a very soft landing with inflation gradually returning to 2% from above and the funds rate follows that down over the next two and a half years. that path could make sense, but

also, you could make a case, as goolsbee and others have, that it would be rather restrictive to keep the funds rate where it is when you're at 2.1% inflation. i think we could get more rapid reductions down the road than are in the dots, but i think that's sort of a reasonable starting baseline. >> what is the argument against 50 basis points in september? >> well, you know, there is precedent for that. the maestro, greenspan, had a cycle in 2000 when the first move was 50 ahead of a meeting, so it can happen. there is a risk, and you know, during my time as vice chair, we saw this firsthand. we had an unscheduled meeting. we preferred that term to emergency. we had an unscheduled meeting in march, and we adjusted rates and adjusted rates 50, and the market reaction near term was, oh my gosh, this is terrible. >> that was an emergency meeting. this is a scheduled meeting. >> yeah.

well, that's true. and again, they could -- exactly right. they could tee up 50, you know, have plenty of chances for communication between now and then, and i think there is data that we could get that -- for which that could be the move. my own sense is, you know, the market, i think, pretty well understands the fed reaction function. they didn't go at the july meeting, but markets began to price in cuts, and so, my inclination would still be to begin with 25, but ultimately, 50 could be justified. >> richard, i have this idea of thinking about it, and i don't know if it's too much of a metaphor for actual monetary policy, but you might want to maneuver yourself into a position to be able to provide stimulus to the economy if you need it. >> yeah. >> if you did 100 now, you're still not going to be providing stimulus, according to your own calculations -- i don't mean yours. i mean those of the fed. you're still holding back the economy. what do you think of that idea,

which kind of supports melissa's idea, doing a 50, get to the point where you can provide help quickly and then make a decision about whether or not to provide it. >> it was interesting at the july press conference, i'm not sure if it was you, steve, someone asked the chair, the 50 versus 25 question. my recollection, paraphrasing, is he said, we're not thinking about that. here's what i would say on that. i do think there is, although it may be diminishing in importance, i think there's some path dependence here in the following sense. the last three years, and i was a charter member of team transitory, the last three years have not been kind to that initial call. all's well that ends well, perhaps, but i do think the fact that there has been an inflation overshoot for the last three years is a factor that's probably influencing at the margin both the timing of the

first cut and the pace. and so, i do think, at the margin, it could be relevant for some members. >> it was transitory, richard. it's just tran-si-tory. >> and i was a member of team transitory. i didn't say it would take three months or three years. >> richard, thank you so much for joining us, and we'll probably check back in with you again when jackson hole comes around next week. >> super. thank you. and a programming note here. we'll be bringing you a big slate of guests from jackson hole. >> with this guy. >> i didn't know that was my lead. thank you for picking me up. i'm going to be out there and we're going to have a lot of smart people on from there and it's about the transmission mechanism of monetary policy next week. >> you know what's going to be interesting also? we're going to have the overlay of the dnc convention happening at the same time, which i imagine will then get into the conversation. >> i've got to check my notes as to whether or not that happened four years ago. i don't remember it happening four years ago.

maybe the dnc didn't matter because it was biden? i can't remember. i'll have to go back and look. >> powell is going to speak on friday. >> powell will speak on friday, and that will be right after harris will speak on thursday night. so, you have a lot to talk about. >> for an august, right? >> enjoy in august weekend. melissa, thank you. mr. professor, thank you. join us next week. have a great weekend. "squawk on the street" begins right now. ♪ good friday morning, welcome to "squawk on the street," i'm carl quintanilla with mike santoli here at the new york stock exchange. cramer and faber have the morning off. premarket, just south of flat. s&p now up 8% from last monday's low, just 2% from some all-time highs. our road map begins with that winning week for wall street. does the rally have more legs? plus, the weakest housing starts data since may of 2020 as redfin says the share of million dollar

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