good friday morning, everyone. welcome to "squawk box." live at the nasdaq market site in times square and your eyes do not seve you. it's -of-d deceive you. there is no joe, becky or andrew. there are, but not here. mike santoli is here. and contessa brewer here. it's pouring rain. i found that out the hard way. bring an umbrella in new york. futures. looking agents more, dare we say, "sunny"? sorry. dad joke. futures, mike, in the green. yesterday if you are keeping score at home the dow closed at its 25th all-time high of the year. dow now on track to add more than 1% just this month. >> yeah. >> s&p 500, adding more than 1%.

while the naz sdaq set to finis august lower. we don't know it yet. mike santoli could get august pop? >> more than half a percent swing yesterday. up 1% finished lower. the market, s&p 500's hung in there this week. essentially still this rotation. >> the only people working. this -- >> seems that way. machines are on, though. see it every day. market trade, plus or minus 5600 and s&p. as a matter of fact, past two weeks, since week ago monday, s&p closed within about half a percent of the 5600 line. plus or minus, every day. show you that we're hesitating below old highs. rotation's happening since july 16th, peak in the market. majority of sectors are outperforming s&p. just the tech. consumer services. communications services, and discretionary, which led in the first half. just kind of source of funds and declining in favor of almost

everything else. >> isn't it typical for the last week of august to actually be positive before a september seasonal -- weakness, though? >> say something is typical, yes. we did have the sell-off late july into the beginning of august. kind of round-tripped it. i don't know. >> we need to take those old maxims out behind the woodshed. >> and seasonality is -- >> september, you could say, dicey sometimes. >> goldman sachs note basically algorithms, hedge notes, going to bip no matter what. they're buying, buying, buying. every dip, buy, buy, buy. not humans making this decisions. it's software programmed to do that. if that's the case, say something probably get me whacked. doesn't matter what the news flow is. >> i would argue that's not really true. because it's in the absence of market-moving news flow that the systematic stuff just has control. >> exacerbated role in the markets. by the way, you tried to fight

seasonality this morning, and got totally rained on. so -- >> that's true. >> maybe you should pay attention to it. >> or watch -- >> the weather and seasons are. >> watch the news. i walk two blocks here in new york city came in like i literally jumped in a lake. that wet. kudos to the style staff here to make me look -- well, make me look like this, which is, you know, amazing. >> team effort. >> see how the treasury yields look? out for a transition. >> do it. >> 53-year-old bond right here. anyway, ten year is probably what you're watching instead. the yield there 3.856%. again, unless we see, jump in you're the market dude. unless we see huge whiff either way in the pce, personal consumption expenditures, probably not seeing a big move in the bond market today. gold prices. one of those gold bugs, you know who you are. gold prices at record highs down slightly. we hit our 33rd high of the year

for gold this year. gold miners, "fast money" last night. carter worth. bullish on the gold miners who just print or, shall we say, dig up, money. >> yeah. >> leveraged way to play it for sure. the trend in gold super positive. write your narrative why that's happening. could be lots of different reasons. all right? we have dollar's down. money seems to want out of certain places. like china. outperforming crypto in the last little stretch here. digital gold trailing physical gold. >> there you go. because gold miners make money, gold's at 2500 and costs largely fixed same for oil. check what i did there. check the price of kroid oil if crude oil. if there would be a sweet spot, people might, i talk to every day in the oil and gas markets overseas, domestic, whatever. if they were to say what is a

sweet spot. where the price of oil is enough that the oil companies become free cash flow monsters, but the consumer, while annoyed, doesn't want to pay $4, $5.50, whatever you're paying in california or hawaii, doesn't want to pay that but they will and gasoline demand remains high. they confan. >> that's why the called sweet crude. >> light and sweet. just like me. >> that's right. >> and starbucks. >> how i like my coffee. >> we learned how you liked your coffee just now. tell you something. had to repeat the order the show would be over. it's that long. >> it was not that bad! you know, it's my second coffee of the day. actually. >> it's early. >> it's early. the markets will end the week reacting to a flood of economic data at 8:30 a.m. eastern time. releasing the spending report. figures come along with the

favorite inflation gauge. personal expenditures price index, pce, expected to rise by 0.2% and also the second read on second quarter gdp. full coverage and the instant reaction to the numbers about two and a half hours from now. earnings largely taking a back seat today following nvidia's report on wednesday, but we have several highlights from last night including dell. shares higher after the tech company beat earnings expectations thanks to strong demand in its server business. dell saw an 80% increase in service sales, to $7.7 billion. nearly half for a.i. servers. dell upping its current revenue guidance slightly. stock up shiitely this morning ahead by five-plus percent. gain of over 100% over the past year. it is now once again an a.i. play. lululemon lowering guidance posting its first revenue miss in more than two years but shares movinghigher the ceo

expressed optimism on its call. a breeze through leggings pulled from shelves. concern about their looks. profits better than expected. a rough year, of course, down nearly 50% year to date. shares of ulta beauty slammed this morning. the makeup retailer missing on top and bottom lines cutting full-year revenue. same-store sales and eps guidance. the first miss in four years. ulta's ceo says the quarter did not meet expectations and that its market share continues to "be challenged." the to stock down more than 7% now. down more than 30% year to date. ulta and lulu, really competitive environment for these retailers right now. >> once seen as kind of owning their categories in one way or another. it's market share stuff really for both of them. expensive growth stocks and then

got eaten around the edges in terms of their franchise. >> also this sentiment that inflation is cutting into consumers' wallet share in a way. they're going to trade down for that competition. >> funny. i can't figure out retail right now. dollar general. 75. called last night. lost 25%. and dixon great, ceo. great interview, very positive. dixon. their comps outside of athleta doing well and best buy record high. best buy record highs dollar general losing a quarter. comes down to where's your spot on the income stream, i think. >> yeah. >> and there you are in the cycle for that category. clothing has actually been an uptick aside from athleisure and best buy struggling for a while. maybe a laptop cycle hitting it. >> a.i. -- >> is that what you -- >> what do i know? >> time? >> 6:08.

went 8 1/2 minutes without talking about a.i. >> no. i talked about dell. topping political news. vice president harris and governor tim walz giving a rare tv interview last night. first as a candidate. with cnn. you might expect drawing a lot of commentary onboth sides today. missed it, recap highlights. megan casella joining us with more. good morning. >> good morning, brian. good to see you so early in the morning. pressure on harris and walz in this first interview, and we saw harris try to strike a balance between defending biden's record including on the economy why also casting her a new way forward first priority at president boost affordability for middle class. stood by price gouging ban under fire recently talked about it extensively on this show and framed it as a with to reduce grocery prices and asked to respond why she hadn't implemented any of her ideas as

vp. take a listen. >> we had to recover as an economy and we have done that. i'm very proud of the work we have done that has brought inflation down to less than 3%. the work that we have done to cap the cost of insulin at $35 a month for seniors. donald trump said he would do a number of things including allowing medicare to negotiate drug prices. never happened. we did it. >> now, a couple other policy details from the interview. harris stood by biden's position on arms to israel. called for a cease-fire there. she clarified her position on fracking. one area she's been criticized for flip-flopping. >> made that clear on the debate stage in 2020. that i would not ban fracking as vice president i did not ban fracking, as president i will not ban fracking. >> what i have seen is that we can, we can grow and we can increase a thriving clean energy economy without banning fracking. >> on fracking and other issues, guys, harris defended her shifts

in policy stance saying her values have none changed but trump did leap on that saying harris remains part of what he calls the radical left. guys? >> thank you very much. all right. later on this hour, pollster and political strategist frank luntz joins us. looks at stuff reads both sides talks about it. joining us to break down the interview with his update where he believes the race stands right now. coming up next, the market is about to get a health check on the american consumer. one of the fed's favorite inflation data points. pce. undok out the expectations as we cot wn to the numbers. "squawk box" is coming right back. (grandpa) i'm the richest guy in the world. (man 1) i have time to give. (man 2) i have people i can count on. (grandma) and a million stories to share. (vo) the key to being rich is knowing what counts. the all new godaddy airo helps you get your business online in minutes with the power of ai...

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with comcast business, reliability isn't just possible. it's happening. switch to reliable comcast business internet with security and get started for $49.99 a month. plus ask how to get up to a $500 prepaid card. call today! the personal consumption expenditures price index for july released 8:30 a.m. eastern time. joining us with more on inflation and the fed's next move, bring in beth ann bavino chief economist, u.s. bank. >> great to be here. >> markets seem to be acting like last year's story in some respects want to file it away as a mission accomplished data point here. fair to do that? anything in this number that could upset the current stance? >> i think what the foactor is the fed seemed to indicate they're confident where inflation is going.

stabilizing. that's positive. that said, keep an eye on what happens with core prices excluding food and fuel and the super core excluding housing. super core excluding housing is over twice what the fed would like it to be and seeing something unsettling there would certainly put the fed on hold. >> you think enough to put it on hold? feels as if we have a point willing to look past a month to ma variation versus expectations? their consensus view where pce and core pce would be right now is kind of where the data are right now. in other words if they're saying we have clearance to go for a cut in september, i wonder just exactly how high the bar is for changing that? >> pretty high. also keep in mind, cpi and ppi came out, kind of gives you a hint what we can expect for today's numbers. they came actually a bit calmer than what markets expected. that would suggest that the pce

readings and core pce readings also will not disappoint. that said, fed saying we're done, ready, good to go. if they move away from that, they're going to need something extreme in order to make that call. >> i mean, we are also getting person income spending. extreme sensitivity to any signs that the consumer is tiring. you see these pockets of weakness. we were talking about dollar general just a little while ago. and then the labor market. while it seems like it's moderating and softening in a benign way, those who say not good hiring, falling away. where's the economy on the economy and labor side right now? >> a good point. one of the things i've been saying is this week initial jobless claims and also the personal income report were sort of the opening acts, but headliner is the jobs report next week. we're expecting -- when we saw the last month's numbers we thought market had overreacted for several reasons. one, july is usually rather soft

because it's the summer season. people aren't able to get the people in to even sign the contract. also that jump in the unemployment rate. i saw that as a good thing. rebalancing. you saw people cominging back to the workforce. held constant, unemployment would have been around 4%. that said, what the markets and fed needs to see, a rebound in those readings. they indicate they're a bit nervous about the jobs numbers. expecting about 175,000. could see see something a little higher? sure. that would be okay. if we saw something much lower say under 100,000, that would spark the fed's interest and make them a little bit more -- right now. >> what do the market's think about the fed's aggressiveness and need to be more aggressive? i asked because treasuries are poised for the largest monthly winning streak in three years. does that alter the market dynamic if at all for the fed to

cut 50 basis points versus 25 basis points if the market is kind of doing that job for them? >> probably helps the fed. again, the fed is focused on the economy. their target is what matters to them the most. we, right now, expecting 25, probably most likely 25 basis points from the fed. of course, only they know what will happen, but given that, as i said, the inflation reading seems to be coming into what they want to see, which is a calmer and more sustainable inflation rating and seem more confident about that. what happens with the job market will be kind of the final blow, you could say, for when they move. if we see, if they see calm numbers or numbers around maybe 175, maybe a little higher that would give them reason to move, and we think about 25 basis points. now, if you saw a much lower number, regardless what markets are doing, then they might need to be more aggressive. >> yeah. seems like slow is the preferred mode for the fed, i would guess,

if that's the soft landing scenario. right? we'll see if we get it. thank you. >> thank you. >> appreciate it. coming up, it's never too early to auk about ice cream from popup store to multiple retail location in major cities. museum of ice cream has customers waiting for treats and a retail experience. we'll talk to the ceo about the challenges of growing a small business in this economic environment. "squawk box" can coming right back. and they don't "circle back" they're already there. they wear business sneakers and pad their keyboards with something that makes their clickety- clacking... clickety-clackier. but no one loves logistics as much as they do. you need tamra, izzy and emma. they need a retirement plan. work with principal so we can help you with a retirement and benefits plan that's right for your team. let our expertise round out yours. daughter: hey, dad. dad: hey, sweetheart. daughter: what are you doing? dad: i'm gonna clean the fence. daughter: it's a lot of fence. dad: you wanna help me? dad: aim at the wall, but get closer.

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the museum of ice cream started as a popup in new york city back in 2016. the brand now has four locations with a new spot opening in miami next week and another one in the

works in boston, but this fun food and retail experience is not immune to the pressure of inflation. joining us, the museum of ice cream founder and co-ceo. thank you so much for being here. so for those who are unaware in our audience, this is an interactive immersive, instagramable space that really took off in this postpandemic desire to congregate, desire for those experiential, kind of social media-type venues. i'm curious whether or not you're still seeing that kind of voracious demand that you saw right as the pandemic was winding down? >> thank you very much for having me, and, of course, ice cream for breakfast is the best. yes. demand has, past covid experience demand at record highs. saying this for eight years which we came and invented the industry bringing the fact adults actually want to play like kids.

this is not just a family experience. this is for adults and social media isn't the driver. what's happening people were so tethered to phones during covid they wanted an turopportunity te out and experience. you saw popups across the country and places like us permanent museums and permanent experiences we're doing extremely well. 20 2023, a record year for us certainly. >> and as high as $90 depending the type of ticket and day you go. what do you get for all of that, and do you still see that type of pricing working for consumers these days? are you changing your pricing at all based on what consumer behavior is in light of inflation? >> yes. absolutely. tickets start around $24. average spend $74. bowling alley spending $30 to $50, urban areas much as $30.

disney raising prices and we're able to maintain price because we're doing really great. industry is struggling on pricing's you saw in 2023. not just our experiences, travel and leisure across the board prices rose too much given where we are with inflation and with interest rates. the consumer actually has slowed down in the first half of the year. we do have to be more dynamic and be more aggressive on pricing during the weekdays, but our demand has never been higher on the weekends. we're in markets like new york, chicago, singapore. not strong as post-covid, and seeing basket size reduced for now six or seven months. for our industry, the alert on for a while that we think interest rates have been too high for our consumers and really has been impacting the consumer in 2024. >> how does that impact your

expansion plan? we mentioned obviously the new location in miami, and boston, but looking out a little bit more long term, is the faltering kind of tourism that you describe there and the impact of inflation, impacting your ability to embark on more ambitious expansion plans? >> of course for us it's actually been a blessing, because the commercial real estate market has been very aggressive looking for tenants. you need anchor tenants in places like macy's et cetera. they're not expanding. for us, we are taking those spots of large boxes in main street developments in cities across the country and actually have the biggest pipeline getting major partners, simon and others to bring in consumers. this slowing consumer demand across retail, across malls across places like universal is

positive for us because our numbers have been very strong pap record 2023 and continue to have just strong, driving of families, moms and young adults, and that's, again, where the consumer is getting hurt is in the young adults with credit card debt and so we hope to see the fed lower interest rates and start giving relief to the consumers that really matter to travel and leisure. it's not the luxury consumer. it's the consumer that often has credit card debt that really drives places like vegas, and vegas maintained really strong. looking at major markets, major expansion markets and of course miami is an outlier market continuing to be so robust. >> interesting to hear that, the interest rate posture a benefit from the commercial real estate side, maybe less for impact on the consumer. thanks for breaking that down for us. >> absolutely. fight with the ftc on deck in aisle five. ceo one of america's biggest

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good morning. welcome back to "squawk box." live from the nasdaq market site in times square. checking futures looking for a positive open. s&p 500 ahead by just under half a percent right now. nasdaq looks like the outperformer up by 128 points. dow off another record close indicated higher by 80 points. meantime, ceo of grocery store chain albertson making his case why they should not block his deal with kroger when he takes the stand next week. eamon javers joining us. preview. everybody's complaining about the high cost of groceries?

>> yeah, brian. right. in this case, really ties in with politics and inflation of the moment all discussions seen on the national stage. we believe that next week is going to look something like ceo week in this $25 billion kroger/albertsons merger trial playing out in a federal courthouse in oregon. albertson's ceo vivek will testify before end of the week and ceos of kroger and cns wholesale grocers buying assets produced by the merger, are also expected to testify in coming days. at stake in this hearing is a preliminary injunction by a judge that would block the merger, which would create a $200 billion entity. getting that injunction would be a big win for the federal trade commission. i'm told he will likely argue the ftc is wrong about his competitors and that albertsons competes with costco, trader

joe's even whole foods and also likely to say the company is not likely to survive in its current form if the merger doesn't go through and severe consequences if the ftc is successful here, could include layoffs. scaling down operations or selling off portions of the business. now, one area where we think he will be on the defensive is albertson's decision to issue a $4 billion dividend to shareholders last year arguably depleted the company's resources at a critical time. that dividend benefited private equity shareholders and bashed as "looting" of the company by critics at the same. expect the ftc to pick apart that decision on the stand next week, brian. back over to you. >> eamon javers. appreciate it. quickly, eamon, is there one thing you think that's going to convince either side of congress that, you know, like one side's going to be like, prices are too high. other side saying something

about business, et cetera? do you think this will get anywhere, shorter version? >> yeah. look, i think if you're the biden-harris administration you pointed at this action by the ftc and say, look. we are doing what we can to bring down grocery prices. stop this mega merger we think will raise prices, protect consumers, protect union workers who negotiate with both of these entities, and that's what we're doing here. if you're the trump campaign you look at this and you've got a decision to make. right? because we've heard j.d. vance talk a lot about antitrust enforcement as a key way to help the economy, help smaller players, and to keep union workers in particular in their jobs. does the trump campaign look at this and say, this is something we support but we don't want to say that so keep quiet? or come out sort of with a traditional chamber of commerce line and say this is government meddling and has no business

doing that. we'll see what happens. >> yes, we will. eamon javers, thank you. good morning. coming up, vice president kamala harris and governor tim walz giving their first interview as running mates. did harris go far enough explaining her platform? frank luntz joins us to give his take next. and daily podcast, follow > 'lbeignymeti. >>wel rht back. she did. you were made to chase your passions. we were made to put them in a package.

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welcome back, everybody. in a long-awaited tv interview, first of the campaign. vice president harris and governor tim walz sat down with cnn. cnn began asking harris about priorities on day one if elected. specifically about her policy agenda which she is calling "the opportunity economy." >> you are right.

prices in particular for groceries are still too high. the american people know it. i know it, which is why my agenda includes what we need to do to bring down the price of groceries. for example, price gouging. what we need to extend the child tax credit to help young families be able to take care of their children in their most formative years. what we need to do to bring down the cost of housing. >> you have been vice president for three and a half years. the steps you're talking about now, why haven't you done them already? >> well, first of all, we had to recover as an economy, and we have done that. i'm very proud of the work we have done that has brought inflation down to less than 3%. the work that wehave done to cap the cost of insulin at $35 a month for seen jniorseniors. >> other highlights including supporting fracking. reversal from a couple years ago. joining us to dive in deeper, frank luntz.

you watched it. following your tweets. your main takeaways? >> surprised quite frankly. set the stage for viewers. she is ahead right now. she's either winning or tied in key swing states. had a small convention bounce because most of it came before the convention. i was not impressed as an observer and someone expecting more from her with this much time to get prepared, and i want to walk through eight different points and i'm going to do it quickly as i can. first, i call it dod. day one detail. housing credit, day one first hour, first day, first week, the first month and the first year. it's the most important thing voters are looking for to see whether you're serious. she really didn't itemize much more than talking points. second, it's not inflation. it's affordability. the fact is, food, fuel, housing

and health care has become so much more expensive. she said she understood it but didn't give ideas to address and solve it. third, emphasized repeatedly, my values haven't changed. accused of being a flip-flopper. it's not valuing. it's her. priorities. that's about all of us. four, you deserve. she talks once again as though it was still a convention speech. she did not itemize exactly what the people of the united states deserve in terms of their president in terms of, in her case, her policies. number five, the c word. talked about consensus, and a little bit about common ground. it's really common sense. because voters are not looking for an ideological president. they're looking for someone who can get things done a real record of results. six, in her attack of trump she should have said, he promised, he failed, it's time to give someone a chance to do a better job. compared trump's record rather

than shots at him. number seven a real record of results. ror, because in the end people look at the biden administration not as effective as the trump administration, and number seven, how would you feel if your kids spoke to you the way donald trump speaks to america? it's a simple rhetorical question. it's her strongest criticism of trump, and i didn't hear that last night and, finally, in a single word, the word i'm expecting her to say in the debates, "really?" her criticisms, her attacks, "really?" that one word defines the difference between harris and trump, and so i would have graded her a c in her first appearance. she's going to have to do better in the debate. >> okay. there's a lot there. i want to go on something that wasn't addressed, frank. you know, maybe i'm off. maybe nobody cares. we witnessed one of the greatest political stories in american

history. president biden saying, i'm in it to win it, i'm in it to win it -- i'm dropping out. no explanation. there was no discussion of that. do voter care? i thought there would be a couple of questions of, talked about getting a phone call. biden said i'm out, you're the nominee i support you. surprised there wasn't more on the background. like, who knew what and when? are you, or is that irrelevant to voters? >> she said that her first concern was for him. come on. be candid about this. the president telling her he's not seeking re-election. be candid and honest. this isn't authentic. you're the vice president listening to him tell you this you know the consequences of that. you know you're going to be dead center. you know you're going to get the job of a lifetime. it's being handed to you. she thinks of the president first. a group of students last night, i asked, to any of you, even one

of you thought of the person telling you this rather than the impact it's going to have on you personally? she's had an issue with authenticity going back to the 2019 campaign. i say this as someone who is not taking sides in this. and donald trump has his own issues and i will address them on monday if you have me back. go through the same list with him. she needs to be authentic. needs to be honest and the questions that were asked of the vice president, why he didn't tell the truth in certain situations, all he did was deflect. he talked about his service. talked about his record. did not say, do-of-did not look the camera straight in the eyes as i am doing to you, i got it wrong and i apologize. for every child watching right now -- >> i think he said he misspoke. the term he used. >> how long did he speak? >> was there -- >> he gave a long explanation that had nothing to do with what

they were charging him with and a simple, i made a mistake, and i apologize. that apology -- afraid to do this because they think they're going to jump all over them. lead in the newspaper, if he says to every child watching me now, you have a responsibility to own up to your mistakes. you have the responsibility to aapologize. every parent listening would say, that's the guy i want. >> so, frank -- i spend a lot of time in wisconsin. and i was just there for a week and a half. i think spent like over a month in wisconsin this summer. okay? that's one of the most if not "the" most important state for the election. what i hear over and over again from friends that might lean a little left weren't voting for biden, not for trump. just weren't going to vote. they couldn't -- double haters they were called. now they're kind of poking around. harris saying -- i could vote -- you well know and we'll find out how big this is, frank. there are millions of people for

whom this is not a, what's this issue, what it's that issue. it's i'm going to vote for harris because she is not of trump. she is not biden. >> i agree. the issue for trump is not to make the personal attacks. the issue for him focus on policy. who do you trust more on affordability? whom do you trust more on the border? whom do you trust more to make america safe and secure and address issues of crime? when trump focuses on the issues, that's his strength. when harris focuses on personality, that's her strength, and she did some of that, and that she did relatively well, but what's going to happen in this debate is that they're going to see them side-by-side. and based on last night's performance, harris is going to come up wanting. i can go through the trump attributes if you want next week, but in the end the voters are comparing them. it is not a race in a vacuum,

and she was not, she did not do what she needed to do to put those concerns to rest. in fact, by focusing on her values rather than our priorities, that's a pretty big communication mistake. >> i can't speak for the show, frank, because i'm just filling in. we all are, actually. but i presume they might have you back, but not monday. because that's a holiday. frank luntz. thank you very much. >> not for me. i'm working on monday. >> not now, there is no day off for frank luntz, but as somebody i heard today said, i don't labor on labor day. >> there you go. coming up, elon musk and the country of brazil over his social media platform x. an update next. heading to break, wish baran buffett a happy birthday. at do whyou get a guy who has just about everything? "squawk box" coming right back.

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elon musk is taking issue with brazil's supreme court after it ordered musk's company x to appoint legal counsel in that country. it is just the latest turn in what has been a months long battle between musk and brazil over the social media regulations there. local media outlets also reporting the court already fined x for regulation violations and frozen starlink finances in the country to ensure that those fines are paid. coming up, we'll get a rundown of this morning's top stocks to watch. but, first, china's economy having a soft end to the summer. we have some new data on showing weakness across the board from many factories to consumer spending. "squawk box" is coming right back.

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welcome back. china beige book is out with august data this morning. the economy has a lackluster month with wiages slowing down from a year ago. joining us now with more on china's economic picture, shazad kazi. thank you for being here. it sounds like a deteriorating picture in china based on your analysis. where do you see the bottom? is it anytime soon? >> yeah, look, i mean, august, we're looking at a mild slowdown in the economy. we have to remember that july

and really the summer was actually not as terrible as was widely understood. so when we think about the third quarter overall, we're still actually trending in the direction of a very, very modest recovery continuing in china. just not a very happy picture if you're looking for an equities rally. >> speaking of a happy picture, protests in china are actually on the rise as well, with the china descent monitor at freedom house reporting a rise in labor and homeowner-related descent of 18% in the second quarter. do you think given that sentiment on the ground there that's more of an incitement for beijing to support or given the picture you outlined that they will let things work themselves out? >> the housing rescue package is pretty modest. what they're doing is slowly loosening all the restrictions they put into place. i don't see them taking the protests and responding to them right away by much more aggressive loosening of policy beyond what they have already done. making homeowners whole is -- it

should be a policy target, but beijing has not prioritized it as yet. >> what powers do they have? you wonder, i guess they could severely try to devalue their currency. i don't see that working. what actually can they do given this demographic, i don't think catastrophe is too strong of a word, do you? >> there is nothing to be done if you're looking at a picture writ large. the chinese economy is headed down for much more of a slowdown than today. we could be looking at a economy that doesn't grow, 1% or half a percent. i think the communist party understands that. they're not looking to have blowout gdp numbers anymore. they're very much focused on taking the slow growth, strengthening the economy from a military standpoint and saying, look, we're going to make ourselves the world's leading tech manufacturer and we're going to make the world dependent on us. that's what they're trying to do

now. >> jake sullivan is, of course, wrapping up a trip to beijing. what is the sense given obviously the election as it comes into focus that the harris camp will continue on this path that the biden administration has been trying to effectuate here in terms of stabilizing the relationship with the two countries, while trying to seek u.s. interests as well versus the trump history, which has been a little bit more combative, shall we say? >> i think there is probably going to be more continuity than not for the biden years. the problem is there is no harris china plan and the personnel that are being talked about that may take leadership positions are not china experts. so they're going to have to really dig and get the right talent in place if they want to have any kind of sensible china policy. if they don't, not only is that a weak signal to beijing, they will come under an immense amount of criticism for the next four years by the republicans. >> what do you think that plan should look like then?

does it look more like the trump plan with tariffs and more aggressive kind of posturing or do you think it is something closer to what biden has been trying to do? >> i think the first thing they could go for is really figure out why is the export control regime does not seem to be working the way it was intended, fixing that. there are lots of questions around restricting outbound investment, taking a look at that. working closer with congress on things like de minimis rules, which relate to companies, a whole bunch of stuff they could be doing short of just coming up with aggressive across the board tariffs that don't make much political or economic sense. >> thank you very much for bringing us the china beige book intel this morning. appreciate it. it is compa7:00 a.m. on the coast. our watching "squawk box" on cnbc. joe, becky and andrew all off today. >> how does that happen? >> what's that? >> how does that happen? >> i asked to be here. did you not?

>> no, no. >> this is a choice. >> among today's -- >> it is? we had a choice? >> yeah. happy to sit next to you guys. >> here's what makes it worthwhile. the key driver for markets today, the latest look at the fed's preferred inflation gauge, the pce, what consumers are paying for goods and services is expected to hold steady from june at 2.5%. the core figure is forecast to tick up to 2.7%. we'll have the numbers and market reaction in less than 90 minutes. bloomberg reporting apple and nvidia as possible investors in openai's fund-raising round. the reports come just one day after word that thrive capital is leading the latest funding round with a $1 billion investment. and we're wishing warren buffett a happy 94th birthday. the legendary investor got an early present on wednesday, when berkshire hathaway topped $1 trillion in market cap. it is now one of just seven u.s. companies in that club and is the only nontech stock to make

that threshold. >> congratulations to him. happy birthday to lacy o'toole who covers -- goes to -- you go to omaha. >> i do. >> becky goes to omaha. >> she is -- queen for a week in omaha when we go out there. >> also an oracle. >> that's true. just, you know, maybe the upper west side. >> would omaha be a good starting word for wordle. no, it is a proper noun. two as. a lot of -- i would like to buy a vowel. >> i don't play. >> one a. >> what's that? i got a 3 in wordle. i'm in a league. let's check the futures, don't give me that look, that's the second time today. look at that. you're welcome, america. dow futures are up 113 points right now. gains across the board, mike. we might go out, i'm going to keep saying your name so you have to look up at me. >> confirming there are two as in omaha. >> i thought you meant oracle. >> no, it is longer than -- no,

frank holland needs to save us with a look at this morning's premarket movers. frank, rescue the show. >> good morning, you guys. hope you're having a great friday so far. i don't think spelling bee is your strong point, we'll move on to the movers. dell, shares higher 6% in the premarket after beating earnings expectations, the most recent quarter on the back of a huge demand for its server business. demand for dell's a.i. servers and traditional hardware was up 80% year over year. the company also raising its guidance. you see the upside moves, shares year to date up over 50%. we're looking at shares of lululemon. the company cutting its full year guidance. lulu has been working to fix product issues after pausing sales of leggings after complaining about the look and the fit. gross margins coming in better than expected, moving higher up

over 4%. year to date, down more than 45%. we're looking at ulta beauty. shares are falling this morning. down more than 8%, big dropoff after earnings. you see the moves right here. fell short of expectations for the first time in four years. also trimmed the full year outlook. comparable store sales dropped more than 1% in the second quarter compared to 8% rise just a year ago. the company's ceo says the quarter did not meet expectations and its market share continues to be, quote, challenged. looking at shares of lulu, weak to date, down 11%. brian, back over to you. >> frank, thank you very much. coming up, demand for evs worldwide slowing, hyundai doubling the hybrid range as demand for electric cars slows. a $242 million loss. in europe, carmakers are slowing the transition to pure evs. we'll talk about the sector next. and later in the show, dan niles talks about this week's tech news and more. "squawk box" will be right back.

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counted 12 evs the entire trip, ten teslas, two were charging. hummer ev and one mustang mach e, problably missed a view. when you get out of the bubble, it is jarring. in california, teslas are everywhere. new jersey, teslas everywhere, a lot of rivians too. you go to the midwest, they don't exist. >> yeah, well, listen, brian, you know, we talked about this before a lot. early adoption happens early, obviously. for evs and that got a lot of attention, a lot of enthusiasm, not only from the automakers, but obviously from the government in terms of imposing their fuel economy restrictions, which really they say they don't pick technologies, but they knew very clearly that to meet those requirements you needed evs. and early adoption is -- i won't say it is easy, but it is a lot easier than mass adoption now and you're starting to see that. you're starting to see consumers

say, listen, you need to solve a number of things to happen for these ev sales it take off. and first it is -- there has to be more lower priced models in the marketplace for consumers to afford. secondly, as we talked about, the charging infrastructure has to be built out, it is in the process of that. but it not only has to be built out, brian, it has to be in locations that consumers can see, just like gas stations. these things can't be a couple of chargers behind the target. >> you nailed it. i drove on purpose, people are going to think i'm weird and i am, but that's for other reasons. i drove through every -- you know the rest areas, the plazas, service plazas, i drove through, i had to stop at a few to get gas and a few other things, in indiana, ohio, and pennsylvania. in ohio, one tesla charging. that was it. everything else empty. as far as i could tell, the

majority of the pennsylvania service plazas, the ones that if you're on the pennsylvania turnpike, you're not stuck to, but it is pretty dog gone close, mark, didn't have any charging at all. all we hear about is the billions going to the charging network, where are they? >> yeah. and, again, they have to be in very clear areas that consumers can see, because, you know, at the end of the day, it is a pr game as well, which is you have to drive awareness, not only of evs, you have to drive awareness of where are you going to be able to charge them. but the third thing i was about to mention, brian, which nobody really talks about right now, if you look at the forecasters, even jd power with the new forecast for this year, they still think by the time we get to 2030, you know, about a third -- one out of every three cars will be an ev. but what people aren't talking about is the inconvenience factor of the charging time.

and until that gets solved, and it will, in my view, with solid state battery technology that is coming down the pike, but that's not going to be until probably middle of next decade when they're available in volumes. >> you nailed it. you nailed it. you nailed it. solid state batteries, we're going to be able to charge a car in five to ten minutes. that's a gas station time. on my drive back from wisconsin, my longest stop, i just relooked it up, i track everything, i'm a weirdo, leslie, 16 minutes. that's my longest stop, all in, fill it up, doing other things. solid state batteries, mark, can do that. does the u.s. -- by the way, give a shoutout to your former company, ford. if i was in an ford f-150 hybrid, i could have done 950 mile drive from wisconsin to new jersey and stopped one time for fuel. you can do 800 miles on a tank of gas.

in a hybrid pickup truck, assuming you're not driving like a ding dodong. what does detroit have to do? >> you mentioned ford, for example, their strategy is spot on. they pivoted their strategy. their strategy is, listen, we're going to offer a lot more hybrids, more plug-in hybrids, make it easy for the consumer to not only be able to experience the -- an ev, at least a portion of the vehicle, but take away that range anxiety. so, you know, i think what the automakers need to do is expand their hybrid offerings. at the same time, they have to have a full court press on how do they deliver a low priced ev in which they're going to be able to make money. and in the meantime, brian, you've seen some of the figures for the automakers. you saw ford the other day. they're going to take $400 million charge, and maybe another $1.5 billion for impairments and asset writedowns

on their evs. that's the tip of the iceberg. wait until you see not only the other automakers come out with that, but the next shoe to drop is going to be the supply base. so, you know, it is really around developing products that people really want and value, offer a good hybrid lineup and then work like heck to bring in those low cost evs and initially maybe with the current battery technology, but then they really have to work on solid state battery technology to take away that inconvenience factor from the consumer, which nobody is talking about in terms of charging. >> i plan to drive soon from cnbc to detroit an ev like i did three years ago and track it and do all this stuff and we'll air it and it will be hopefully not terrible. mark fields, thank you very much. do appreciate it. >> when we return, reaction to last night's harris/walz interview on cnn and we're counting down to the fed's preferred inflation indicator. we'll bring you the numbers and the market reaction. we'll be right back.

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>> announcer: and now the answer to today's aflac trivia question. what company holds the record for the longest continuously listed stock on the new york stock exchange? the answer, procter & gamble, which has been listed since 1891. >> seems like we should have gotten that one. >> no, but we were debating it in the break. we had a lot of good ideas. bank and new york mellon. >> the first stock listed on the nyse, but not continuously listed. >> dupont was probably longer but they had broken up and changed their names. >> good question, though. meanwhile, kamala harris and her running mate tim walz sat down for an interview with cnn yesterday. vice president harris suggested she would be open to having a republican in her cabinet. >> i think it is really important -- i have spent my career inviting diversity of opinion. i think it is important to have people at the table and when some of the most important

decisions are being made that have different views, different experiences. and i think it would be to the benefit of the american public to have a member of my cabinet who was a republican. >> joining us now, tobin marcus, wolf research head of policy and politics. and good morning, tobin. i guess the first thing that the interview accomplished was to exist because it removes the talking point that she refused to sit for an interview. but aside from that, in terms of your observations, how might it change this race if at all? >> i would agree that the main importance of this interview is that it happened and she got through it largely without incident. you know, look, i think the most challenging element of the interview and one of the biggest clearest vulnerabilities for her is accounting for the shifts in her policy stances from the fairly liberal agenda she laid out in 2019 when she wastrying to appeal to democratic primary voters to the fairly aggressive pivot to the center that she's

been making recently on issues like immigration and energy. you know, i don't think that element of the interview was incredibly compelling. it is hard to imagine people who had really serious concerns about her coming away convinced. but i think she did the most important thing there which was to sort of reiterate she currently has the moderate version of those proposals. even if she can't account for exactly where the shift came from, which is hard to do, because it is a political calculation, she did, you know, send a message she wanted to send that, like i'm running toward the center, i want to appeal to swing voters, to moderates, republicans, including with the component about putting a republican in her cabinet you referenced before. >> yeah, i mean, obviously she's running as a sitting vice president. to some degree an extension of the incumbent administration. do we have evidence, do you think, that voters right now or the voters that need to be targeted by either campaign are really hinging on things like

policy consistency over years and the lack of flip-flops and, you know, the impression of hypocrisy or giving the ammunition to the other side to say you're a flip-flopper, when it seems as if these are known quantities, and you can probably lay charges like that on either side? >> yeah. i'm generally not a believer that flip-flopping is, like, a huge vulnerability since time in memorial politicians love to try to hit their opponents for hypocrisy and that generally does not work. i think the important thing from a voter perspective is there is a quite clear contrast between the two candidates. and, you know, on a whole range of issues. they are articulating starkly different directions they want to take the country. the choice is fairly clear for a lot of people in one direction or the other. for that reason, you know, from a harris perspective, i think mostly what she needs to satisfy voters, she's not going to come in and govern like a secret radical. more so than to give some really

compelling account of exactly what it is that changed over time. i don't think the people are going to demand total consistency. not going to get total consistency. but if they can satisfy themselves, that -- if she does get elected, she'll have a basically reasonable agenda and approach issues in a pragmatic way as they come up. that's mission accomplished for her. >> that's from the voter perspective. from investor perspective, as you talk to clients, it seems look a different calculus. what the market might need to reprice at some point depending on who wins is likely policy outcomes. where you to see the main swing here considering that we're probably going to have a close call in the congressional breakdown, and all the rest of it? >> yes, so, to me the most important consideration from an investor perspective is that trump, if he wins, will probably have unified republican control, and harris, if she wins, will probably have divided government. i think the senate leans pretty strongly to republicans, it will be very challenging for democrats to win in montana, which is probably going to be the make or break state for them. when harris comes in, these tax

policy ideas she's laid out that would probably need to get done on a party line basis, probably are not going to be on the table. so, in a harris presidency, the policy consequences for markets are more likely to revolve around the one hand how do the bipartisan deals work out on the $4 trillion of taxes that are expiring next year and on the other hand, how does she handle more routine regulatory issues? what does she do on antitrust. we'll see a pragmatic approach from her. on the trump side, he has more freedom of movement. i think it is a likelihood that they'll be able to move a party line fiscal bill through the reconciliation process in the senate, it is pretty high. we have to worry about what are the things that might get caught to help pay for tax exemptions. there is risk, partial i.r.a. rollback for that reason. and then the tariff agenda, he can do largely without congressional input and that is a very, very, very aggressive agenda. a lot of questions for investors about exactly how serious he is, which different elements of that, i had many conversations

with folks about that. on the trump side, there are much more real possibilities of policy change that folks need to get their heads around. >> tobin, there was a bloomberg poll conducted in key battleground states and they found harris is actually reversed or narrowed trump's economic advantage on key economic issues in particular as it pertains to the middle class, helping rein in housing costs and government benefits but voter trust trump more for gas prices and stock market performance. as you think about the various economic issues, which ones do you think will ultimately take the day in terms of garnering voters' trust? >> yeah, it's striking how much of a change there has been from biden to harris in terms of trust on economic issues, even though on some level, she ought to be tied to the same economic performance we have seen over the course of the past three and a half years. i think this is in line with what we tend to see internationally when you have

leaders in parliamentary systems get replaced because the economy is not popular. they tend to be able to shed some of that baggage in the way we're seeing with harris and trump. so, we have seen i think all throughout a lot of correlation between voters views on every different element of the economy. i was struck by a poll a couple of months ago when huge numbers of voters were saying that the stock market is down since biden took office, which it is not. i think that's a reflection of what was then a pervasive negativeity and now a more neutral environment for harris. so it helps her. she would love to see gas prices come down further, she would love to avoid the outbreak of wider war in the middle east. i don't know it is going to be one specific thing that makes or breaks her candidacy. in terms of the macro economic environment that markets are focused on now, like as we wait for these inflation and jobs

prints is, you know, at the margin, to the extent we see softening and it raises concerns about a possible recession, but also brings rates in based on expectations about the fed path. that does help harris. but the three-year, more important than probably anything else for her. >> that is the race that son between fed policy and the economy potentially slowing. tobin, thank you very much. appreciate it. >> thanks. coming up, calling dr. google. how google is looking to incorporate a.i. into figuring out if you're sick. "squawk box" will be right back.

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google is working on a.i. technology that can hear signs of sickness. bloomberg says google trained the a.i. mod wel with 300 piece of audio to predict early signs of diseases such as tuberculosis. it teamed up with an indian start to put that tech in smartphones where it could reach high risk populations with poor access to healthcare. >> that's amazing. amid geopolitical tensions, worries in a major iphone manufacturing hub are growing that jobs created by apple supplier foxconn may move

elsewhere. eunice yoon joins us now with more. >> thanks, leslie. the iphone has been a huge boost to workers in china. but times may be changing. in the chinese factory hub known as iphone city, people are gearing up for the launch of the iphone 16. apple supplier foxconn has ramped up hiring. recruiters pass out starter kits for the new hires with all the daily essentials and that includes a blanket. but recruitment agent says there aren't as many jobs as there used to be. foxconn hit its peak, he says. ma recalls when the factory employed 400,000. in 2018, the province shipped 126 million smartphones. today, less than half that. the iphone 16 is generating a lot of interest from potential workers here at foxconn. but with that is trepidation about just how long these jobs can last. foreign investors are souring on

china, and face pressure to redraw supply chains. there are numerous reports foxconn is also producing the iphone 16 in india, the first time apple's premiere phone would be made there. foxconn would not confirm that to cnbc. the government run media reports all is fine, arguing the next china isn't india but will still be china. but here, people remain worried. the street food seller caters to foxconn workers. there are far fewer customers, she says, compared to four or five years ago, my revenue is down 50%. we would have to send our best workers to those countries to train them and teach our craftsmanship to foreigners, says this foxconn job applicant. i don't like the sound of that. even though china's developing new industries, such as evs, traditional manufacturing is still an immensely important

source of employment and income for millions of people here. and that's why the chinese government is very sensitive and concerned about international companies diversifying their supply chains. guys? >> yeah, it kind of reminds me of industry towns in the u.s. like houston or san francisco. is there any sense of diversifying just the types of businesses in that city that would kind of help some of the swings and the concerns that people have there? >> yeah. absolutely. in fact, foxconn itself is developing a facility there that focuses on evs. so you are seeing changes being made by the company to accommodate what they see as chinese government policy that does favor these other types of industries. >> all right, eunice, thank you. all right, on deck, one of the most legendary traders in

america joins us for a rare interview about the bond market and an important new movie he's producing to highlight the dangers of human trafficking and child labor. that's next. and we are seeing a lot of green across the screen. nasdaq could have a huge day and maybe even turn positive for the week. stick around to find out. introducing maximo - our new ai-enabled solar robot. max makes construction faster, safer and more cost effective than ever before. and with max doing the heavy lifting, even more people can join the team. solar energy is changing the world, aes is changing the world of solar.

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your next guest has probably one of the most amazing stories, not just on wall street, but american business. he built his bond business to be one of the biggest buyers of mortgages before and during the subprime crisis, turning into a family empire. when subprime crashed, he got crushed, lost almost everything. then he built it back bigger than ever and now he's putting some of his fortune to good use, helping to produce a new movie, a powerful true story about child labor and human trafficking called "city of dreams" out in theaters today. john devaney, new manner house films. we got to stop meeting like this, 15 years ago during subprime. we'll get to the movie in a second. you're not a household name but you are parts of the mortgage market, you are the guy that makes this market.

we have been waiting for this commercial mortgage-backed securities disaster and it hasn't happened, thankfully. you say things are really, really shaky now. >> yeah. the cmbs market is a disaster right now. many things are unfolding right now, the bond pricing is telling us that things are very, very bad. many of the triple b rated bonds and susingle a rated bonds have fallen, the liquidity is absolutely awful. initially when covid hit, the hotels and then the malls were hit because they were closed. malls had many tenants that went bankrupt, the hotels closed, there was some really big issues, hotels have recovered. only about five of the hotels are really still in trouble. but the malls have recovered. i greatly disagreed with carl icahn's bet, shorting the cmbx

12 index. he had that bet wrong. mainly because he didn't anticipate that the malls, when they hit their maturities wouldn't default like dominos. >> any sign it is getting better, john? if i have a $500 million indebted san francisco office building, class b property, is it getting any better for me? >> yeah. there is -- the biggest issue in the market right now is office by far. office has been hit by two things. the first is higher interest rates. just to give an example a four cap rate, where many of the offices were appraised, four cap rate on 20 million is 500 million. now the cap rate needs to be 7%, okay. that's $285 million. that's down 43%. even the absolute cream of the crop class a buildings, okay,

they're down 30%, 35% of value right there. that's not talking about work at home. so, there is this slow moving train wreck happening around america because of work at home. the leases are ten years, every year more and more companies are figuring they don't need as much space, they're giving space back, that's causing occupancy to go down. compounding the problem is the fact that we have got about ten cities in america that are in real trouble. there is crime, there is drugs, there is homelessness, there is bad politics and policies. your example with san francisco, the city, is just in a death spiral right now. and so the -- >> good morning to you too. >> there are dozens and dozens of office buildings that are defaulting now in chicago, denver, los angeles, san francisco, philadelphia is in absolute such trouble. it can be half the market that there is no lending in office right now. that because cap rates went up and the cities i just mentioned

are in such trouble that most, like half of all the collateral is worth quite a bit less than the mortgage values right now. there might need to be a bailout by the government or something to help out some of these cities, but there is real trouble. it is going to wipe out lots and lots of -- >> where do the losses sit and can fed rate cuts mitigate any of this as -- >> the fears about the regional banks are very founded. they had a third of all the lending and they're in deep, deep trouble right now. so, all the fears of the regional banks, they have a third of all the lending in commercial real estate, they're in serious trouble. if they have exposure mainly to the office loans. then the office loans live inside the conduit cmbs deals. with those deals, the office would be 20%, sometimes it is 50%, the deals that have more office in the conduit deals, the g is going to get wiped out, the

f, the ds. we own some d classes, four down from the top. we have bonds now that only have 2% delinquent. that means everybody is paying right now. that's very clean. and we're offering them at 45 cents on the dollar. that means things are in trouble. the ones that are delinquent, we offer those at 20 and 30. >> how you positioned broadly speaking. are you net short right now? >> i wish -- we did very well when i started focusing on cmbs in 2020, '21 and '22. we have a bit of an advantage because we're a dealer between all the clients. every two points we make per billion, we make 20 million bucks, and so we did real well. we got caught holding some of this stuff too, like everybody else and we're not hedged in some of our stuff went down in '23 and we broke even. but it was a really rough ride in '23 and now part of this year as well. >> you're a really rich guy. and you had a ton of stuff, lost almost everything, you built it

all back. very serious topic too. you're now -- you're producing, co-producing a movie called "city of dreams". it is based on a true story. "the new york times" has been doing a great job on this, here is "the new york times" recent headline, alone and exploited, migrant children work brutal jobs across america. when you started to dive into this topic, because people said maybe you can help us fund the movie, it is shocking how big of a problem child labor is and nobody seems to be paying attention. >> brian, that's exactly right. and some people say, oh, john got into the movie business, it is another business, it is real risky, maybe he's going to crack this one or whatever. you know what, the truth is, okay, is that i saw "city of dreams." i cried. and i don't cry in movies. i had tears dripping on my chin. i talked to the director and the writer until 2:00 in the morning and i was so moved by the issue of child trafficking that by the

next day, at 9:00 in the morning, i said, i'm going to give you the money. more than doubled the budget, and i knew that what i was doing was the right thing. and it was going to take this movie from 75 or 100 screens up to well over a thousand and amplify this very, very important topic to the whole world. and my family, my kids and my wife, i mean, we feel incredible about this. and now we have decided that trying to bring films that matter could be something that the world needs. >> it is a -- you gave me an advanced copy. i watched it. it is early in the morning. it is a friday, we want to feel good going into the weekend, a hard movie to watch, a good movie but the topic -- it is a true story. it is difficult to watch. and i can tell you this much, folks, if you don't know what i'm talking about, go down in the subway, there is a subway here, i'm on the subway all the time, there are kids that look 11 years old, by themselves, working and selling stuff. it is -- i don't know where they -- it is terrifying.

what did you discover as part of this movie? this is a whole underground economy of children. it is horrific. >> it really is. and some of it has to do with the policies at the border. our film isn't political at all. what happened is a lot of kids came to the border from very poor countries like guatemala, and the families paid $3,000 to $5,000 per kid and they thought the children could have a better life here in the united states. and if you go back and watch your own news stuff, there were tents with hundreds of children and they were all dropped off there and we welcomed them in, into the united states. >> but we need to take care of them and make sure they're protected and they're not. >> the problem is that the foster system does weekly and monthly checks on the children to make sure they're okay and what happened here -- >> in a normal -- >> in a foster system, we welcome the children in here, and sponsor families, some of the rules were changed, they don't need to be a parent or

uncle or anything, it can be anybody. some of the traffickers suggested the sponsor and "the new york times" article says there is homes in florida and texas with 15 to 20 kids all sleeping on the floor, not in school, and 15 passenger vans are picking up kids, 15 at a time, and they're cleaning pig slaughterhouses and doing the whole night shift. and we're allowing this all to happen under our noses here in the greatest country of the world in the united states. this is actually happening. >> and i -- the movie is out today. i want to give a shoutout to hannah dryer of "the new york times," great reporting, reporting on this. this is not -- it is not an easy topic to talk about. but it is happening and it is critically important. john devaney, appreciate you. after that cmbs discussion, i might need a nap or something. because we'll wait and see how it plays out. great work on the movie. best of luck. thank you. >> thank you, brian. >> thank you. "squawk box" will be right back. go deeper with thinkorswim: our award-wining trading platforms

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welcome back. gas prices have been falling ahead of labor day. the average price for regular is $3.35 a gallon. analysts aren't ruling out the risk of a spike. they say opec could extend production cuts beyond october 1st, which could tighten oil supplies and lead to higher er prices. coming up, the labor day travel rush is on. we'll talk tips and expectations after the break. and later, former energy secretary rick perry will talk oil prices and much more. we'll be right back.

travel within the u.s. is expected to go up 9% this labor day weekend compared with last year. according to aaa, tsa expects 17 million passengers at airports. joining us now to walk us through the numbers. brian kelly. points guy founder. brian, thank you for being here. so sounds like record crowds, but potentially lower prices if you're willing to brave them? >> absolutely. we're seeing prices down 5% to last year, and down 19% versus 2019. so it's a good time to be a traveler, and even looking forward to september, the average airfare is about $240

domestically. which is down about 10% from last year. >> can we take a step back and remind viewers what's driving the price declines? is it more muted demand, or supply capacity that i mentioned in the intro, that just is kind of riding itself out with the postpandemic kind of trends we saw? >> yeah. demand is really strong. consumers want to travel. we saw 3 million passengers screened over the july fourth holiday. the big reason prices are dropping, increase in supply. airlines flooded the market with new planes, bigger planes and increasing capacity on really popular routes. planes are full. but because there's so much extra supply, prices are really low. comparatively last summer i'm currently in spain. last year. british airways, first class,

shocking to me, airlines are discounting. >> haters will come out, brian kelly flying first class to -- how tall? >> medical necessity for me to fly in first class. >> i met the guy. dude, you ain't flying coach. been to a -- like you can't -- physical torture! all contorted. brian, it's weird. i've been to airports lately that have been packed, and been to airports shockingly bizarrely empty. i can't figure out the travel patterns. like you on a plane pretty much every week this year. >> mostly is related to the weather. yesterday there was fog in san francisco. 500 cancellations. that's when things really back up in airports. when things run smoothly, happened it to the tsa. processing lines really well. airlines staffed up.

when there's no external factors throwing things out of whack, airports run pretty smoothly. the numbers show. this weekend will be probably the busiest labor day travel weekend ever. >> you are the points guy, makes me think of credit cards. what's the interplay typically between credit cards and travel in the sengsse if rates are low, do you think that we will see more people inclined to spend on travel? they usually float the balances on their credit cards? >> absolutely. the credit card market, people joke that airlines are banks these days, because they're selling billions of dollars worth of miles to the credit card companies. credit card company, still, quarterly results, have been showing very, doing very well. you've got to play the loyalty game to win at travel these days. yeah. consumers are now doing more. buy now, pay later with airlines. saw it with consumer products now seeing it in travel. consumers, even if they don't

have the money today will put the purchases especially the younger generation value experiences over luxury items. >> brian, how is the equation changed, if it has at all in terms of lodging and whether it's going to be airbnb or vrbo versus hotels? at a time that's promotional, maybe are using things like points, seems like hotels get more attractive. wondering if that's shifted around? >> no. there was a recent article that the $1,000 a night hotel room is, i think twice at many hotels as five years ago now on average $1,000 a night. in europe, it's common now. italy, prime places. paying $2,000 to $3,000 a night for luxury hotels. that's upper echelon. in general lodging costs have gone up dramatically. i encourage people, airfare is cheap. buy that and then use the loyalty points for the lodging which can get expensive really

quickly. >> a really good tip. changing the way and where people do travel? i mean, if these $1,000 a night hotels tend to cluster in big cities, are people opting for more rural vacations? >> absolutely. and they should. look we saw barcelona, tourists with water guns to get them to leave. don't just go to popular places. instead of lake cuomo, lake garda, a local favorite just as beautiful and half the price for hotels. i encourage people to think outside the big city centers. also traveling the shoulder cities season. the fall in europe is spectacular and cheaper than we're seeing now. especially thanksgiving. airfares in business class less thanes $3,000 round trip for the thanksgiving travel week. didn't get to go to europe this summer going over our thanksgiving holiday is a great time to visit europe. not too cold and great pricing. >> and they don't have

thanksgiving. you don't need to be with the family. do what you want. brian kelly -- by the way, brian kelly. i agree with you. you have to fly business class. i endorse it, my friend. brian kelly, thank you so much. >> thanks for having me. all right. earnings. largely taking a back seat today thankfully. several highlights from last night including dell. shares higher now up about 4.5%. they beat earnings expectations thanks in part -- i'm going to -- mike, take a wild stab as why dell sales rose? what's the two letters we say? >> seems like there is, swrs in the a.i. food chain. there you go. all, these servers and systems. >> amazing. and pcs. idea being use the a.i. stuff at home you're going to upgrade not only this -- but your pc as well. by the way, dell saw an 80% increase. 8-0, in server sales.

$7.7 billion. some of that, yes, artificial intelligence and upped current quarter's guidance slightly, but dell stock, as i said, up about 4. with this move, i believe it's official. dell has doubled this year. >> 107%. >> i'm not a math whiz, but -- that's -- >> screen tells you that. >> sounds like a double. i went to an engineering college, santoli. >> as a theater major. >> i wasn't a theater matcher. >> you just said. >> no. i did theater in high school. >> you said you had a theater scholarship. >> no! a grant to help me get in. don't make me do "my fair lady." no went to virginia tech. >> theater. >> didn't do theater. got me into college because my grades were -- anyway, santoli's like, one hour left. >> surprised to hear you were theatric's. >> because i'm not dramatic

whatsoever? was that sarcasm. i'm not a psychiatry major. >> and lululemon posting first revenue miss in more than two years. sharing moving higher after the ceo expressed optimism on its earnings call. lulu working through a botched product launch recently pulled breeze-through leggings from shelves after customer complaints about their look and fit. profits topped estimates and gross margins better than expected. stock having a rough year. brian, not a math major either. looks like year-to-date down 47%. >> which, i think that's about half. >> close. >> is that right? >> i was a statisticing t.a., though. fun fact. >> 47% of people lie about what they did 82% of the time. 71% of the people know that. >> and paychecks to prove that. you're watching "squawk box" on cnbc. i'm leslie picker along with

mike santoli and brian sullivan. joe, becky and andrew are off today. and prices have rizzen in july measured on a year over year basis. the fed's preferred measure of inflation. the print could have a big impact what the central banks decides to do regarding interest rates at next month the fomc meeting. reports say apple and nvidia considering getting into openai value the power player at more than $100 billion. microsoft could also participate, the report says. openai said yesterday it's flagship chatgpt product has more than 200 million weekly active users, double the number of last fall. some of kamala harris's political donors trying to nudge her away at the tax to america's richest americans. proposal affects those worth $100 million or more with a tax call the so-called unrealized gains. the campaign advisers hearing

complaints from donors, but allies of the vice president have defended the plan to business leaders in private. a check on the futures, and looking solid. on the radio, we're not telling you what to do. no. up 149 in the nasdaq. which means if we hold it is possible the nasdaq, down, i think, mike, about half a percent this week. >> yep. >> could end the week in the green. futures up 149 on the nasdaq. to what doth you attribute said move? >> first of all, yesterday, if you had said 24 hours ago nvidia's going to be down 6-plus percent in reaction to guidance maybe not fabulous enough. nasdaq 100 and s&p 500 would finish flat on the day, two out of three stocks in the overall exchange up on the day. exactly what happened yesterday. say probably showing some resilience underneath the market. it's true. look at the s&p 500 on year to date. just kind of got back in a v

fashion most of that correction had into the beginning of august, but hovering here lately. i mentioned earlier. the last two weeks tethered to this 5600 level. yesterday towards the highs. last hit july 16th, date of the record. what's happening under the surface, interesting. not a carbon copy we were were in mid-july. look at the sector breakdown since that date, july 16th. staples and utilities up 6 and 9% or so respectively. then the nasdaq 100 off 5% and the consumer discretionary off 3%. so you see a little bit more of a defensive tilt. rate sensitive things, rallying as yields go down as we anticipate fed rate cuts. whether it's a negative verdict on the overall economy remains to be seen. could be rotating within the market because the magnificent seven have lost -- >> average seven. >> pretty much. even below lost some growth premium. semis 15% as group below they're

peak. >> do not hold me to numbers. not looking at them. looked at my fact set, data system we use, 31 s&p 500 companies hit 52 week highs. interesting names. didn't misspeak. best buy all-time high, at the multiyear high. jpmorgan, chase, american express. >> yes. >> pnc bank, multiyear high there. but really fascinating stocks we've been so stuck on nvidia. no disrespect. so stuck on this a.i. story, that what's happening is the goldman sachs, jpmorgans of the world, best buys and american expresss, notice i brought up your segment. >> paying attention. >> you're welcome. >> yes. >> which is they've been quietly doing really well. >> yeah. >>eleven sectors since the peak. 1% below the peak showing internally traction, and the one reason i was skeptical of this idea that the market could

broaden out from the magnificent seven, from mega cap growth to everything else is because everybody wanted it to happen. a lot of times it doesn't -- just not that easy. well, it wasn't that easy. a little mini panic, a 10% correction, people thought it would get worse and you're seeing -- >> a sunday special. had a sunday special. >> exactly. >> i know the guy that hosted it. market's up. >> flattened. look at twos and tens. neck and neck at this point. >> mike, go the to go. ask you a dirty -- dirty question here, which is, does the -- i know, the fed, the fed, the fed. does the fed matter right now? because the bond market seems to have done the fed's job for it. >> yes. although that's always contingent on the fed not deciding to run counter. i do think the fed -- >> get my broader point? >> yes. does matter that much.

25 basis points or 50, the direction of travel is known. bond market figured that out a while ago. bond market's happy the fed's no longer waging a head-long battle against inflation. >> perfect segue. coming up after the break we are going to have the latest data when many consider to be the fed's preferred inflation measure. it's out in less than half an hour called the pce. but we'll make it more interesting than that. plus, former energy secretary and governor rick perry will join us to talk about kamala harris saying she now supports fracking. huh. we're back, right after this. your record label is taking off. but so is your sound engineer. you need to hire. i need indeed. indeed you do. indeed instant match instantly delivers quality candidates

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what we've already done creating over 300,000 new clean energy jobs. that tells me, from my experience as vice president, we can do it without banning fracking. in fact, dana, i cast the tie-breaking vote that actually increased leases for fracking as vice president.

so i'm very clear about where i stand. >> that was vice president kamala harris speaking last night on cnn in her first tv interview since becoming the candidate. talk more about the two presidential candidates. more than two, but you get the point. energy where we stand, where we're going. former energy secretary rick perry served of course under former president trump. currently the energy chair of the america first policy institute. a group containing other former trump administration officials formally advises the trump campaign. governor perry good to see you again. it's quite the turn from harris but politically i think genius. tell you why. just got back from wisconsin. one of the most important states in the election. it's a state like wisconsin. people do not understand how much what happens in texas, your state, impacts jobs in wisconsin, in pipeline, other big lng players. if you don't support domestic energy it's going to be really

hard to win wisconsin and pennsylvania. >> it makes you ask the question, what happened? what happened between the time that she came out clearly saying, i am not for fracking. we will block fracking. there's not any doubt that was her position. so you ask yourself, what happened? and the answer's pretty simple. she read the polls in pennsylvania and wisconsin. wisconsin, people don't think about wisconsin being a major oil and gas company, but what it is, is a major developer, a major manufacturer of the equipment that is used to export lng. we don't think about that. pennsylvania being a major oil and gas producing country -- state, excuse me. the point here is, she is just reading the polls, and so then you've got to ask yourself, well, is it their actions that you're going to believe or is it

it their words you're going to believe? i suggest to you, knowing what this administration has done for the last three-year years from the standpoint putting a pause on lng, for instance. moving towards the radical movement out there. listen, if, god forbid, she gets to be the president of the unite, she's going to change her tune again. the radical environmentalists will be in that administration clearly making the decisions. >> do you think that? she saiaid it at the 2019 town hall. this is a reversal. politicians need to win votes. sometimes you need to go in directions that will get 35-of-that moderate more centrist voter that doesn't want to pay $5 or $6 a gallon for gasoline. on the record now. they're going to flip and go back to sort of -- we have record oil production right now. as you know.

>> the reason we have record oil production right now is because of the previous administration and what we did. up know, i think everybody understands that you don't just, here's a permit and all of a sudden the spigots open up. takes literally 24, 36 months at least for that energy to show up at the market. that was because of what we did at the trump administration. when i went in as energy secretary, president trump looked me in the eye and said perry, what i want you to do at the department of energy, what you did in texas. create jobs. go out there and promote that economy. and that's exactly what we did. we became energy independent because of trump era policies. this administration, listen, if you believe them, you know, god bless you. but i think they will say whatever it takes to get into the white house. and if you care about the cost of gasoline, you care about the cost of everything that's

impacted by the energy market, which is frankly everything, then i would be very hesitant to believe. hey, look, we're for fracking now, we're for energy now. no, you're not, and your record proves that you are anti-fossil fuels and that's what the american people can expect. >> there's -- without going on the political side of it, governor, you can agree there's so much energy. i don't want to sayegignorance, of energy knowledge even at high levels. people think take out a natural gas plant nuclear plant and build 5 million solar panels and that fine. not how it works. you still need the natural gas plant incase solar doesn't work. almost doubling up. i want to quickly ask about, not bragging. over there for years you know talking how us lng, marshal plan

and dirty secret germany is still buying a ton of russian liquefied natural gas. blown up by somebody, right? but still buying a lot of russian gas vis-a-vis ships. why are we pausing lng permitting for some projects? a lot of growth ahead. be clear on that. when climate change is a global issue. so i'd rather get it here where we do it smarter than get it from russia, qatar or somebody else. >> yeah. great question. and you might add to that list, we do it cleaner. that lng that you're getting from america is cleaner than that russian gas. here's the bigger issue from my perspective, brian. it's that this is about american jobs. the about the american economy. if you put this pause on, which we have done, that means they're going to get their energy from somebody else. and that energy's going to come from the russians or from people in the middle east that aren't our friends, from iran and, you

know -- that's the issue here. and i think that americans need to understand this, and you're right. we are not the most educated people in the world when it comes to energy policies. particularly global energy policies, but we know that gasoline prices and we know that grocery prices have gone through the roof in the last three years and it is very much tied directly to the price of energy, and the restriction of energy around the world. >> yes, it is. iran's a different issue. get you on, on a different day to talk about that. they are selling a lot of oil and making a lot of money. >> indeed they are. >> appreciate your time. >> god bless you. coming up, bottom of the hour, breaking pce inflation data. first, wrap up a big week for the tech sector and talk nvidia and much more with investor dan niles. don't go anywhere. quk x"om rhtac"sawbo cesig bk. g with the women's tennis association

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welcome back. most of the magnificent seven lower on the week. worst performer nvidia, fell after it couldn't quite meet the hugely inflated expectations that had built up into wednesday's earnings. joining us now on big tech, dan niles. niles investment management founder and port follow your manager. saw an interesting stat in producer's note for this segment from you. that the mag seven declined on average 4% the day after reporting results versus rising 4% after q1 results. does that suggest to you a sentiment shift or a fundamentals shift? >> well, it's clearly a fundamentals shift, because if you look at results of the magnificent seven, you forget all the hype, after google reported, before revenue estimates went down. after amazon reported estimates went down. after microsoft reported,

forward revenue estimates went down. i know it's popular to talk about a.i. because these stocks are driving the market, but at a certain point you want to get a return on all of this money you're investing, and if you're forward revenues are going lower not higher but capex going up, at some point those two things are going to collide, and we saw this after covid, where spending took off, and then slowed down dramatically as these same companies went through a digestion period. that's what i think you're going to see happen as we get into next year. >> the digestion period indicating that there needs to be a very clear roi on all of this capex spending, some investors feel dissatisfied by jrnlgby? >> exactly. look at nvidia poster child of a.i. during covid obviously everybody had to get online and all of these same hyperscalers went ahead and spent a lot of money. if you go back and you look at it, during 2021, revenue growth

for nvidia was up 62% year over year. 2022, revenues up 6%. and the stock went down from peak to trough 66%. so if you look at capex spending over the last two years, and you see nvidia's nvidia's last year grew. this year over 100%. next year you'll see a dramatic slowdown not only from spending from hyper scalers and nvidia's revenues as those hyperscalers grow into all of this money they've spent that's not actually generating increase in revenues. that's what you have to deal with and we've seen this after covid, but investors obviously don't want to believe this, because it's going to be really painful, but you can see it in the revenue figures for the big hyperscalers and thoushow they' doing down, not up after

reporting. >> asking you a rates-related question pertains to capex. a lot of what we've seen the last few years defied econ 101 in terms of capex spending because of this clamoring for a.i. as well as the enormous amount of cash on the balance sheets of large tech. as you do see rates come down, is there an argument to be made that more of the capex spending could be kind of built up by those who haven't necessarily been spending? because financing that capex suddenly becomes cheaper? >> yeah. i think if you think about the market, july 16th, that's where the s&p hit its peak. the s&p is down about 1% from there. the magnificent seven are down 8%. but the equal weighted s&p is up, too. so we've been saying this for a while. in terms what we're looking at, to invest, it's the areas that benefit from rate cuts. so it's areas like consumer staples, utilities, telecom services. other sectors of the market, because it's that other 493

stocks, our belief, that drives this market to new all-time record highs, and we still, don't get me wrong. we like apple, we like meta. we see revenues there doing well. they had before revenue estimates go up, but you have to look outside of just seven stocks through the rest of this year, because rates going down will benefit a lot of other sectors in this market, just like you brought up. >> working with about 70% of the s&p market cap, i guess. talking about the 493. trying to drive the index to new highs. i guess, dan, for that to happen you must assume the economy's going to hang together pretty well and therefore earnings growth can spread out amongst for companies? >> absolutely, mike. we look at jobs as the number one driver of everything. if you think about this whole debate, what's the economy going to do. hard to imagine the economy slows down that much. if you've got 10% more job openings than people unemployed.

the same reason why several years ago saying not transitory migration. two times as many job openings as people being employed. look at that, look at gdp running around 3%. the fact the fed's probably going to cut three times this year to get the fed's fund rate to where it running. get the pce report shortly. look at all of that and say, okay, shoulding good for the economy in general and other stocks people forgotten about, who i think will be pretty well over the course of the next 12 months where a lot of the magnificent seven i think you're going to see revenue growth actually slow down a little bit. that's not a bad thing. these other 493 stocks can do quite well, which is what we've seen signance middle of july. >> using dips in the mag seven as buying opportunities, or at this point given estimates in the future you'd be sitting that out? >> well, right now the two we

like, we like apple a lot. i mean, apple's had no, very little growth for the last three years. grew 4% two years ago. 0% last year -- sorry, 2% two years ago. 0% last year. 4% this year. next year driven by people, i think, actually upgriupgrading iphones last did during covid, great rate will be over 10%. interesting. meta very testing. other names in there. i think nvidia's going to go through obviously capex digestion, we've talked about. microsoft should worry you, because despite their relationship with openai they missed their numbers. amazon obviously, ecommerce, i thought there would be share gains. do that profitably. margins came in worse than people thought. with google, i don't see how they keep 90%-plus share in search when you have all of the spending on a.i. going on and you've got to believe some of those companies take share and

then tesla is just obviously in a tough competitive environment. really, go through each one individually. it's not a uniform buy them all or sell them all. >> not a stock picker anymore. dan, thank you very much. >> thank you. coming up, the number of the morning and the week. july pce inflation data, after this. 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,

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rick santelli standing by at the cme with breaking pce inflation data. rick? >> yes. we are anxiously looking at the wires for this july read. maybe some of the most important data points before we get to, of course, the september meeting. right now we're looking for the number on a headline to be up 0.2. here it comes. up 0.3 on personal income. up 0.3. a little better than expected. remember, back in may it was up 0.4. if we look at the spending side coming in up half of 1%. exactly as expected. in the rearview mirror up 0.3. half of 1% is the best since march when it was up 0.7. now look at real personal spending. up 0.4. better than expected.

double rearview mirror that equals where we were in may to find a higher level go to december of last year. now, let's look at that pce index month over month. up 0.2 exactly at expected. however, it is a little warmer than the up 0.1 in the rearview mirror. look back towards april it was up 0.3. now, let's look at price index year over year. expected to be up 2.5. it is up 2.5, and it equals last month at 2.5 and all of these 2.5s happen to be lowest level since february of '21 and remains that way, of course, because it was the same as last month. if we look at now the core pce, start for the month over month. up 0.2. as expected. same at rearview mirror and core pce year over year expected up 2.7. on this one a little better at 2.6 equals our last look at 2.6.

2.6 really is the lowest the last two months going back to march of '21. how did the markets react to all of these data points? at 3.90 on a two year. still at 3.90 on a two year. 3.85 on a ten. still 3.85 on a ten. two years down. tens up five on the week as they sit and, of course, preopening equities are about the same as well, and i would like to point out with all the volatility any fx, peso, yuan, the dollar up slightly on the day and up on the week. mike, back to you. >> yes. rick, stay with us for more on the new inflation data. bring in executive vice president at the heritage foundation. and director of the hutchins center of fiscal and monetary policy at the brickings instii -- brookings institution. and david, confirming the notion

inflation is well in hand in terms of knowing the trends. the forecasts are basically proving out to be pretty close to what the numberings and the moved on to paying attention to the growth side of things. make sense? >> absolutely. a no surprise pce report. not good, not particularly better than the market, and not worse as expected. that means steady as she goes. fed chair powell made clear he is focused on the labor markets and signs it's beginning to soften. that they actually -- they don't ever say mission accomplished or take a vick ttory lap, that's b luck, but he came pretty darn close. two-handle on inflation persistently and reasonably could forecast it will continue to come down over what they said the medium term. whatever they want it to mean. they're free to focus on the

other side of their mandate and that's what they're doing. >> for as much as these numbers are coming in right in line with consensus and pretty much in line with where the fed's own outlook in the dot plot suggested they might be at this time. benign on that front, of course, not at target. i guess you have to make some kind of a judgment as to whether they're headed to target, whether, in fact, the fed much cares if they get there quickly? >> yeah. that's right. i mean, i think overall it's right on target. however, when you take a step back you're looking at price levels that are 20% higher since the biden-harris administration took over. people are feeling that and it's a matter on the supply side of the economy, regulatory state holding back american businesses. spending side just have congress that's really out of control. >> i mean, you have also pretty much record profits in the private sector, and seems as if while, yes, no doubt about it. people are still anchored to the

higher price levels right now, if we get fed rate cuts if that seems like it could refresh some buying power in, let's say, the housing market, as mortgage rates come down, do you think we're not going to be able to sand off some of the edges there, derrick? >> overall i'd say it's encouraging. certainly looks better than it did six months ago, but we have to remember that the american people are seeing those persistently high prices not coming down. we know that, and slightly above target still at 2.5, 2.6%. so you have to see that in the context of it that the economy is doing okay, but you've got american people hurting out there. seen that with credit card data. seeing people spending money they don't have on things they have to have. groceries, gas and rent. >> yeah. david, i guess this is the big question now. i mean, the soft landing premise has been obviously not confirmed but certainly not been refuted

by the numbers coming in. you have to test it at all times. consumer side of things, employment side of things, eye of the beholder whether hanging steady or is eroding. how does it look to you? >> i think first of all, if you had asked me 18 months ago what i expected, it would not like anything like this. i think this is pretty damn good. 3% growth second quarter. inflation gradually coming down, supply chain conditions ease. for many people wages rising faster than inflation. we are, we maybe don't have a soft landing but certainly approaching the runway. i don't think that's in the eye of the beholder. it is true, of course, that people's perceptions are as derrick said. prices are higher than they were before the pandemic. and that's true. economists like to look at their real wages and adjustment for prices and people don't tend to do that, but i think the concern now is, is the fed moving too slowly? there are signs of erosion in

the labor market. the conference board data this week on people who say jobs are hard to get is moving in the wrong direction. still looks pretty good, but the trend is not our friend. unemployment has risen and if it keeps rising that could be a harbinger of things to come. what we have to worry about now, i think, we're in a good place right now. the question is, where do we go from here? can we continue strong growth with inflation coming down? or does the fed have to move more quickly in order to head off the downside risk, which both chair powell and read the minutes, the fed staff warns about the real economy might deteriorate faster than they anticipate. some has to do with what's going on in the rest of the world. china, ukraine, the middle east. all of those things could be shots and more likely negative than positive ones. >> in your neck of the woods a little north in the great state of wisconsin, and you know me. go anywhere, talk to anybody. talking to car dealers, boat

dealers. nobody's selling anything. okay? and it dawned on me i think we've totally underestimated the stimulus from the ppp loans. people building homes and buying boats and buying cars with ppp loans they did not need to pay back. not saying it's caused the economic boom, but i really got the sense this summer talking to a lot of people that were underestimating that, and now that money is rolling off and i hope i'm wrong, but i worry what the effect is going to be at a trillion one in credit card debt and all the ppp money. true story, rick. talked to a guy selling boats. had a customer come in, lost his job but got rehired cash by his boss and started companies to get ppp money and had 200,000 dollars in the bank and was unemployed and bought a boat. that blue my freaking mind.

>> well, you just answered the question. where did inflation come from? i think you're describing one big io of it and as far as how wonderful the economy's doing. listen, first of all rates are creeping up as we're talking, because we largely avoided talking about income and spending. those numbers were pretty good. blur your eyes, hard to see recession there. second thing is i think david and by the way david, reading your stuff and listening to you for so many years when you were at the "wall street journal." nice to be on with you, but real wages might have caught up lately, but they didn't catch up when we were at 9.1% and as derrick pointed out, the problem is inflation rates have come down, prices have not. think about wages. okay? everything's still more expensive, but your wages didn't keep up on the front. they're keeping up on the back. doesn't matter so much. still not really ahead of the game. talk about economists ts tinker with real wage numbers, what brian and i see are real people dealing with it with their

wallet and, trust me. the high prices aren't going to go away and until we start to see about ten months in a row of actual minus signs on cpi or some data points. >> and rick, i don't think -- david, i don't think we want that. we don't want deflation, right? prices going down. deflation. a bad thing. happened in the '80s. >> especially when in debt, brian. when you're in debt almost $2 trillion on the budget, 35-plus trillion carrying along. almost definitely the best way to get out of it is growth and inflation. so you're spot-on. >> fair enough. >> derrick, i hear it from people and on the tape on twitter, x, whatever you want to call it. i think home insurance crisis will be the semi -- maybe not a black swan but a gray swan. nothing the federal reserve can do paying 33% more for home

insurance or 40% more for car insurance. happening across america only going to get worse. i don't know what jay powell can do to bring down somebody's car insurance rate. >> exactly right. >> derrick first then david comment, please. >> exactly right. the average family has taken about an $8,000 hit when you take both inflation and higher interest rates into effect. people are still feeling that. what worries me even more, harris decided she's going to adopt the biden budget proposals for a whole series of tax increases. you have taxes on unrealized capital gains. i don't think many of us think that's the right way to go. you have highest tax rate. could go to 44.6% on long-term capital gains and dividends and a corporate tax rate they want to boost ahead of china, above china and see way above the global average. i think these tax increases potentially could be a big drag on the productive side of the economy. >> david? >> well, two things. one is, i'm not sure that the

trump tariffs are any great bone to growth either. two candidates throwing around lots of ideas and i don't really understand which will stick. you're right to focus on the housing theme. we have a number of problems in housing's actually jay powell had some control over housing costs if he brings down interest rates and that leads to lower mortgage that can offset increase in insurance, you're right about. housing supply problem in the u.s. predictions. many state and local that are preventing the increase in home building and apartment building, and i think the political system is beginning to focus on that. in part because politicians are sensitive to what people are really worried about. i actually think as many people are more worried about their ability to buy a home or kids' ability to buy a home than they are about what's happening to the price of used cars and things that get measured so well in the government data. >> true.

certainly takes a while to emil r r i orate that if it's going to happen. coming up, what the pce inflation data could mean for the federal reserve and its rate-cutting calculations. former st. louis fed president james bullard hopefully just heard us and maybe comment on everything we just talked about. maybe not boat prices but whatever. treasury yields following the new data seeing den-year yield 3.877%. you're watching "squawk box." it is the final adtring day of august, and we are back right after this. (♪♪) what took you so long? i'm sorry, there was a long line at the thai place. you get the sauce i like? of course! you're the man! i wish. the future isn't scary. not investing in it is. nasdaq-100 innovators. one etf.

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as it's breaking news animation says, headline july pce. personal consumption expenditure. coming in lower year obeb over . cooler than economists forecast.

futures up before and still up. nasdaq futures, leslie, up 148 points. i think it's because we're here. >> oh, definitely personal. yeah. >> you're welcome. i speak for all of you, i think. you're welcome, america. joining us now to talk how the fed e will likely view the latest inflation date st. louis fed president, former, now the dean of mitchell e. daniels school of business. great to have you here. i want your take on today's pce data and whether it signals to you, mission accomplished on inflation? >> this was a good report right on track with what markets were expecting. this will put the fed squarely on a rate cut in september. and i think it's going to be 25 basis points, and i think the debate now will shift out to the november-december meeting and the baseline there, 25 basis points on each of those meetings

as well, and it is a soft landing, and it's, i think it has been achieved. i think jay powell's speech at jackson hole was essentially recapping the success of monetary policy over the last two years. >> soft landing. sounds like still expecting a gradual cutting of rates. 25 basis points, maybe some debate thereafter. what are you looking for in next week's payrolls report that could change that dynamic for you? >> yeah. i think this is -- i think the debate, because of jackson hole, i think the debate's shifting. now if you got a surprise in any of the upcoming reports, i don't think it would efaffect septemb and later in the year, focus on november. for instance, the payroll report was very hot showed a thriving jobs market, that might call

november into question. about whether the committee would do anything there. if it was a very weak report, let's say, you know, close to zero or something, then you might get debate whether they need to do more, but i think the "do more" would be further out in the future. not at the september meeting, because i think they would shrug off any data that's coming in now, between now and the meeting, as just one data point, and they wouldn't probably react to that. >> hmm. >> i've seen criticism that people believe the fed may be acting too short term. obviously they need to be data dependent. obviously we are in unprecedented times during this cycle. what do you make of that criticism? especially as we kind of reflect back. i know the fed is also doing that retrospective looking back at just the massive inflation we did see over the past few years, and the monetary transmission mechanism and the potential gaps therein?

>> yeah. too much short-term-ism. i don't really think so. i would interpret the first half of 2024 as time when the committee was buying insurance to make sure that make sure tha didn't resurrect and go back up higher. for a moment it looked like it might go higher, but it ultimately did not and this report today confirms that, so i think it maybe was wise to be very careful and make sure that inflation was really coming down to the 2% target before they started an easing cycle and so that all makes sense, i think. >> jim, i don't know, did you hear -- it's brian sullivan. did you hear the previous conversation? >> yes, i did. >> listen -- >> you want to talk about prices? i would like to know -- listen, you've always been a great guy and straight shooter and congrats, purdue, great school,

boilers are also up in price, i want to point that out, but here's the thing, how much -- we know we needed 2020 covid disaster economy shutdown, how much do you think the 2021 covid stimulus and the ppp covid stimulus contributed, if at all, to inflation? >> i've been telling the story about the causes of the big inflation, and it's very much that the march, april 2020 response to the pandemic was big and it was meant to be big, and i think it avoided a financial crisis, but then you got another package passed by congress at the end of 2020 in december, bipartisan, very large, that was because of the georgia election and then again, when the democrats came into power, they

passed another package, it's the two last packages that were overdone and that's what led, right after that, we got a whole bunch of inflation and we're still keeping the policy rate, you know, very low in that environment, and then we had to scramble in 2022 in order to bring this under control. i very much think that that's what caused the inflation. a lot of that spending was actually, you know, basically going directly to people's bank accounts, that's about as close to printing money as you can get. i think a new congress coming up in the future should learn from this, all you get is a bunch of inflation if you try to do stuff like that. >> if you look at the economic proposals of the two candidates running for president, you would say that there is a risk for that inflation to continue due to the impact on the deficits. is mixed government kind of the only way to combat that if there's divided government in terms of party? >> i've been telling audiences

that that's our best hope, that you get a split house, senate, white house, somehow between republicans and democrats, and that probably would keep the spending down, even very narrow majorities are hard to work with, so you probably wouldn't see a lot happen. still, i would like policy nationally to kind of return to what i would say is a little more sensible grounds and try to put us on better footing going out into the future. it doesn't seem to be happening. both parties seem to be going more and more into bigger and bigger deficits out into the future. >> yeah. also contributing, i guess, to that uncertainty for november-december for the fed and into 2025. jim, thanks so much. really appreciate your time. >> great, thanks. >> coming up what to watch in e rkthmaets today. stay tuned you're watching "squawk box" on cnbc.

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joining us now on the markets on this final trading day of august is brenda, the chief investment officer and cnbc contributor. good morning. it's great to have you here. in the last couple days we got,

you know, i guess information that the gdp we entered the current quarter at like a 3% annualized pace of gdp, inflation seeming on target 2.5% for pce. seems like things in the macro are okay even if people are concerned about where it goes from here. how does that set up your market view at this point? >> it's been a little bit of a choppy quarter. we started out in a choppy way, but as time has gone on, we've certainly learned as you've just described, i think the scenario for a soft landing is really starting to play out. so we're seeing it on the corporate side, corporate earnings have largely been better than expected, appreciating at a double digit pace. this week, normally a pretty quiet week at the end of august. that isn't the case anymore with the likes of nvidia and salesforce reporting, as well as a lot of retailers, but still providing a great view into, you know, what's actually happening in corporate america. i think the way we play this,

you know, i think certainly it makes sense to have some broad exposure to the equity market. i think that's one thing we've been encourage by this week is that the mag seven and nvidia have not acted particularly well yet the market has really held up. we've seen this continuation of a broadening trend where areas like small and mid equity have performed well, a lot of other sectors are really holding up, and so we think there is still opportunity in the equity market for sure. i'll also add that bonds, this quarter, have certainly been acting a lot better as well and have really for the first time in a long time been solid contributors to growth. >> bonds, no doubt about it did their job in the correction and have actually been positive on a month-to-date basis as well. i assume you're kind of behind the idea that you can look outside the megacap growth area and find things that haven't moved that much or reasonably valued. where in particular? >> absolutely. i think even within tech there are opportunities and i think

salesforce which report the this week is one of those opportunities. you know, we've seen that software space just has not acted well and i think it's because we're in the midst of a lot of transition and companies are kind of pausing in their decision making process, but i do think that salesforce has an excellent offering. they talked a lot about asia which is meant to really help companies tap in to their existing data as it relates to the sales process in addition to even training sales people, so i think they have some very relevant products and i do think there is a tremendous growth opportunity and the company has been financially disciplined really improved margins significantly, have stock buyback in place and dreamforce coming up is a catalyst. >> margins have done pretty well. a little bit of skepticism out there on the street. see if that does create further opportunity. great to talk to you. thanks so much. >> thanks so much for having me.

>> let's get a final check on the markets here. we have a setup for somewhat positive open about 40 basis points upside of the s&p 500. we got dow up 50 points right there. happy labor day. >> no, no. we're on tv at 3:00. tell people to tune in 3:00 p.m. eastern. >> i'm on tv at 3:00 every day. >> i am. tune in. >> thank you. good friday morning. welcome to "squawk on the street." i'm david faber with wilfred frost, we're live from post nine at the new york stock exchange. jim and carl have the morning off. futures as we get ready to wrap up the week, the month of august. kind of wrap up the summer. sorry to say that you can see that we are headed for a bit of a higher open. >> you're going to province next week. >> thank you for telling everybody. you know my travel plans. our road map, my summer is not over, but theirs may