balking at the terms. big vote of confidence the microsoft. satya nadella named chairman today is thursday, june 17th, 2021 "squawk box" begins right now. good morning welcome to "squawk box" here on cnbc i'm becky quick with andrew ross sorkin with mike santolli. this is the day after the fed decision if you check out the u.s. equities, you see significant pressure pretty significant in terms of what we have seen lately it has not been a lot of activity when you see triple digit moves, we pay attention

the dow was down 266 points. the s&p was down .50%. down 23 points it doesn't sound like major moves. these were the worst for both indices in a month that is why we are sitting up paying attention the dow closed below 50-day moving average the dow indicated down 111 points s&p down 14. the nasdaq was down by .25%. it is indicated down another 70 points this morning. all of these things, if you are looking week to date, it is thursday dow before the weaknesses, dow down 1.3% week to date s&p off .50% the treasury market is where you saw big activity yesterday the 10-year yielding 1.563%. if you look back where it had been, this is significant

yesterday. just watching. last sfriday, 1.455% mike, we have been watching for months david tepper was right >> they came off their highs and really went sideways to nowhere. what is significant is the two-year and five-year yields. those are sensitive to the f fed expectation of the hike. that shows you that whatever jay powell wanted to convey and convey well about there is no hurry. there's not a major change the market took it as we pulled forward. >> the two-year right now at 0.203% that is where there was a focus on these things. for the "squawk stack" we want to look at this through the

prism of the fed and potential rate hike. they will move rates higher than earlier if you look at the dots. you are still talking 2023 not this year. not next year. not until 2023 you have s&p utilities down 1.5% utilities were the worst sector yesterday. consumer discretionary was over .50%. regional banks was up. you had a bank like signature bank up 8% regional banks >> very sensitive to any move higher in short-term rates the fed increased the interest rate it pays it is a small positive for the biggest banks. if you tell me that the first hike in the overnight rate is coming, it does feed directly

into it. it is not just a 10-year >> the dollar was stronger it is stronger this morning after this holding on to the gains. if you want to look at gold pr prices gold is under pressure if you look at the stack, you will see that. bitcoin. we were watching bitcoin at $39,000. it hasn't budged a lot from where we started the week. >> gold is inflation adjusted yields which became negative market implied expectations went down the market is more attentive to it that under cuts gold and boosts the dollar >> gold and bitcoin are the alternatives to currency is there any reason to be linked >> vaguely gold will not go up a few hundred percent the way bitcoin did. they benefit from the similar impulses i'm not sure they will go step

for step microsoft said ceo satya nadella will replace john thompson on the board. thompson will stay on as director he replaced bill gates in 2014 the same day nadella replaced the ceo. under nadella's watch, it earned the highest earning company. >> do you that is an interesting decision it satya's credit, but unique from the corporate governance perspective, much of corporate america moved away from the chairman/ceo structure the idea of having an independent chairman has become a feature that so many companies have moved toward. once companies have gotten to the point of two, it is very

aware of why they are going back sdplc back >> it is a statement to satya and what he has done with the company. if you look at the stock, it is a nod to that. it is not something you see that once the chairman and ceo roles are split. to see them put back into the same person. >> it was very interesting to see what the iss and other proxy firms and other big investors like blackrock and others which really drove the push to the independent director and what they think of it again, to satya's credit a remarkable run under his leadership. in the meantime, 11 republican senators supporting the framework for a bill to get through the chamber if all

democrats end up backing it. 20 senators are endorsed the proposal to not raise taxes. it would revamp transportation and broadband and water, but not address democratic goals for investment and clean energy and social programs. as you imagine, some democrats throat evened to vote against the plan which they say does not do enough to fight climate change or income inequinequality one step forward and two steps back becky. >> axios was doing the research. they said you need 15 republicans to come on board based on the democrats you would lose democrats like better irnie sans said we will not vote for it unless we get assurances from krysten sinema and others to vote for our bills down the road if you say we will mush it back together who says we want a

bipartisan plan put together, then you will not get agreement from those individuals to say yes, we willing vote for the additional expanded packages in the road how many do they lose? do they have enough republicans to make up for it? >> get your calculator out >> you know the whips are running this right now. let's get back to the stop story. the fed moving up the timeline on the potential rate hikes. ylan mui is joining us lots to run through. >> reporter: becky, the forecast is moving higher the dots are moving closer we are finding that seven fed officials see a rate hike by the end of next year five projecting one hike compared to three officials in the last round two believe the fed will hike

twice. the majority of fed officials expect the central bank to raise rates by the end of 2023 jay powell tried to deflect attention from the dots and said liftoff won't happen well into the future >> rate increases are really not at all the focus of the committee. the focus of the committee is the current state of the economy. in terms of our tools, it is about asset purchases. that's what we are thinking about. >> reporter: powell said the committee started the discussion on tapering and if the economy continues to make progress, a timeline would be announced at a future meeting he said the process would be orderly and transparency he acknowledged there is a risk that prices will remain high he said the pandemic has made everyone humble about forecasting. he said the fed would not hesitate to use the tools to deal with persistent inflation

back to you. >> ylan, fed chair powell says please don't get blinded by the dots this is the committee members who may not vote in the coming meetings the market reaction tells you the marginal change was in the whole picture. even if it is focusing on the dots >> reporter: the bottom line with the fed is the move forward with the rate expectation means there is growing confidence that the recovery is taking hold and going faster than the fed expected that is actually a good thing he has a tough job to thread that needle. we do believe the economy is getting better the fed has to storespond to th down the road. that is not part of the discussion on the table. they are trying to make that

difference down the road. >> then there's the white house and now thinking about these things the treasury secretary was testifying about the time all of this was happening yesterday how is the white house looking at inflation at this point >> reporter: the standard caveat is the fed is independent. they are not trying to call for a rate hike or not the white house has to respond to the fed decision. i can tell you from my c conversations there was a feeling of val tidation of the d increase and expectation the rise in the gdp forecast of 7% was validation that the covid relief plan was working and supporting economic activity there was also the feeling that the labor market still has room

to run jay powell talked about his hope that the labor market could recover strongly it could return to pre-pandemic. i think the white house is really using that as an argument now for their infrastructure plan that you guys are talking about and the care economy plan. saying interest rates are low for a long time. this is the time to make an investment in america. >> ylan, thank you great to see you we will dig into what this means for investors. that's coming up after the break. also coming up after the break, the take aways from the biden and putin summit and other mutual interests to america. as we head to break, check out curevac shares the covid vaccine only showed 47% against severity of the

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i must tell you, the tone of the entire meetings, i guess a total of four hours, was good, positive

there wasn't any strident action taken. >> president biden and russian president putin holding historic summit we were there watching it on "squawk" as they got to the beginning of the meeting with us now is eamon javers with the take aways from the other side >> reporter: andrew, joe biden said it was important to deal face-to-face with vladimir putin. he said there was no substitute for the face-to-face meetings. the accomplishments were few the one thing they agreed to were to exchange ambassadors that is a positive take away they agreed to continue talking on nukes and cybersecurity an ongoing dialogue here no resolution here in geneva an intriguing moment yesterday in which joe biden hadn't issued

threats to vladimir putin on the cybersecurity. he laid out a detail plan if the united states decided to embrace the cybersecurity capabilities and respond in-kind. here is what he said >> what happens if that ransomware outfit was in florida and signalled a lifeline to the economy? oil. there would be significant impact >> reporter: that's biden saying he did not issue threats, but saying that is a nice pipeline you have there it would be a shame if anything happened to it he laid down the law behind the scenes to vladimir putin trying not to embarrass him on the world stage. treating him like a peer biden said he issued 16 areas in terms of cybersecurity and u.s.

infrastructure that are off limits he laid down terms of what would happen if russian attackers would hit those. that is where the cybersecurity debate stands. for his part, vladimir putin said this was a productive meeting. >> translator: we don't share the same positions in many areas. i think both sides showed a willingness to understand one another and to find ways to bring our positions closer together the talks were quite constructive >> reporter: a fascinating moment at the end. a flash of anger by president biden to kaitlyn collins asking if he could be sure vladimir putin would change his ways he snapped back. he said we will see over time what vladimir putin does here. i'm not convinced this one meeting will change anything that flash of anger shows biden

is sensitive to the idea he has been snowed under or naive in any way about vladimir putin and his intentions this is very much a first step here in geneva biden says the proof is in the pudding and we will see where it goes guys. >> eamon, i remember the idea of the duelling press conferences they were not duelling at all. they seemed to be collegial. you get the differences from the meetings coming out in other ways >> reporter: you know, you saw the russian press yesterday asking putin different questions from the american press was asking asking about the russian position on the world stage and flattering terms to vladimir putin. you saw the american reporters

asking him what he is so afraid of with alexei navalny and free and fair elections the difference of the approach is different putin stamped out any independent press in russia over the decades. a few independent reporters remaining there. their press is largely muzzled you get the different approaches and you get the american press with a wide ranging american press corps traveling with the president and a number of networks critical of joe biden traveling with him this week >> which one would that be eamon javers, nice to see you. nice to see the president taking on the squawk style. i thought the president taking on the short sleeves approach. he took off his jacket i thought that was an homage.

>> reporter: the setting on lake geneva is beautiful, but right in the sun it is really warm here i might take off my coat and join you guys, too >> eamon javers, we will see you in a little bit. we will return to the other story of the morning the fed. mike's got it. talking about talking about something. maybe it will lead to something. the fed moving up its timeline for rate hikes maintaining its current bond purchases and raising the forecast for inflation to 3.4% from 2.4%. seven fed officials see a rate increase some time in 2023 joining us now with what investors should do here is kari

firestone and joe teranova both cnbc contributors good morning to you both joe, we often have meetings with a flurry of reflection reaction. we got that yesterday. markets seemed to reprice a little bit for an incrementally h hawkish fed than expected. what, if anything, has changed with what matters for markets? >> i think the statement and sub scent p sequent press conference was what the market needed in aligning policies with the economic recovery and asset price inflation that we are currently seeing i was not concerned with the potential down side potential of a hawk dollars hawkish fed.

we get to think it is a condition to move markets out of the sideways range where we have an absence of investor money flow into the markets. we need to see that return this was a good first step >> kari, we have seen the market the character and leadership of the market has switched back and forth a bit. obviously growth led into nine must ago which was a value rally. in recent months, it has been a little more nuance than that it is not clear one way aor the other. there is big growth profitable companies and other ones where does this shake out with the fed policy getting to the tightening moment down the road and what it means for growth stocks for example >> what you say is correct there has been this shift

recently what has happened over the last month is that the top stocks, top performing stocks, of the largest cap -- take the 50 largest cap names in the s&p had been energy stocks and financial stocks, the big reopening play and value play that was going on for the first five months of the year for sure over the past few weeks, we have seen names like facebook and nvidia and paypal and google which had been struck had taken the lead the top of the s&p performance wise have all been technology or digital players. that says that it is an economic growth story.manageable. these are not companies that need to borrow a lot interest rates may go up in two years or a year from now from a

very low rates that's not a major concern to the growth aspect of these major players. that is a change in the market of course, their pe had been coming down and prices had been weak it makes sense they start to catch up it is more of a stock pickers' market and we are leaning away from the highest multiple of sales stocks that were driving a lot of attention in january and february as part of the amc and game stock and snowflake all of the companies had begun to come down this is a different kind of a market i think the fed reiteration of calm, the economy is growing fast, yes, we have inflation, but we are addressing it and it is mostly transitory makes s sense. >> nasdaq value is down. that is moving sensitive

joe, how you want to assemble a portfolio. you talk about another leg higher what would be emphasized in such a move like that >> mike, dispersion prevails year to date when i look at the s&p sector, the only sector i want to overweight is the diversification. i want to touch all of the s sectors. it is important to look at the two-year and ten-year spread that has come in toward 130. i like to see a bit of a steepening there in the yield curve. we can gain confidence with the businesses shoulds positively gain jim cramer talked about this yesterday. the market needs oil from where it sits at $72 oil has rallied from 62 to 72.

investors are not getting paid a similar return the xle has gone up half that. 8% is the higher oil price of $70 beginning to impact both consumers and corporations we will find out in the upcoming earnings i think there is a formula here that we need to increase the investor money flow. we got the first needed step yesterday with the better aligned policy from the federal reserve. >> i didn't hear jim say that yesterday. it deserves more attention >> oil from an asset to a headwind prices softening up. kari and joe, we have to run thank you very much. coming up when we return, headlines from cnbc's evolve summit pfizer ceo weighing in on the global vaccine rollout one quick break. chinese regulators launching a

probe into didi as the company is gearing up for the largest ipo in the u.s. this year. officials looking to see if the anti-competitive practices which squeezed out rivals unfairly regulators are looking to whether the pricing mechanism of didi's core riding business is transparent enough we will talk more about the report when we come back after this >> announcer: this cnbc program is sponsored by cdw. people who get it. enges. that's why we built an office obstacle course ... to prepare our people for anything. you're late well, cdw amplified services experts will consult with you to design, orchestrate and manage your most complex technologies to help you quickly overcome any obstacle ... without all of this. oh, that is better. who's that? oh, if you want coffee, you gotta get past tantrum. you're in for a brewed awakening. for technology that moves you forward, trust cdw amplified services

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box. cnbc's evolve global summit. i spoke with pfizer's ceo albert bourla i spoke to him about where life returns everywhere to the way it was pre-pandemic >> i believe that speaking about the entirety of the world, that will take us until the end of next year by 2022. with the volumes that will be available to vaccinate the whole world. i think the whole world will have enough volumes by the end of 2022 to have vaccinated and protected everyone i'm not sure this will happen for other reasons. i think that by the end of this year, the developed world will also be ready in this situation. >> becky, you know, you and i had conversations this week about how we are navigating masks and when to wear them and when to go without them.

i asked albert bourla about how he personally handles masking in the age of vaccination >> i try to be modest. whatever the health authority is recommending in the places i am, i try to follow. we need to lead by example so, for myself, i'm on the conservative side. i want to be careful i'm vaccinated i don't want to encourage everyone to fake the system and not wear a mask. i prefer to wear my mask rather than not i encourage others to do it. i think vaccinated people, the cdc said, they are having very good protection. >> it is an interesting answer a modelling idea the scientific medical issue of protecting yourself and then how do you model for others? he is in a unique position.

>> he is the ceo when you are the boss, that puts additional pressure on you if you are not wearing a mask, it says to everybody else you shouldn't wear one either. he is conservative this is a rolling and moving target my opinion changes on this day by day in terms of it. i feel comfortable outside that doesn't bother me look, it is weird. everybody is coming out of their cocoons of different stages. i don't want to offend anybody i don't understand getting offended by somebody wearing a ma mask do what you want i don't want to condemn somebody you don't know who is immunocompromised or has cancer or some other reason they are protecting people who have not gotten vaccinated or young kids

who are at high risk i don't want to make people feel uncomfortable. >> where do you land it's back. we mentioned this with eamon yesterday. we were watching president biden and president putin shake hands. physically shake hands. >> you didn't like shaking hands before you are a bigger germophobe than i am. >> the elbow bump and fist bump. the question is etiquette. if you don't want to do the handshake, do you have to preemptively >> you do this -- achoo. >> and this not transmitted through touch. >> that's true >> however, my experience so far is people who go to do a handshake, they make a thing of it it is always commented on. it is not just assumed. >> i don't want to hug anybody i back away from people trying to hug me.

i'm not there yet sdp. >> it is funny i go for a hug before a handshake. germ wise. >> i already have a cold i'm skittish from the cold thing.protected in the bubbles. now everybody is back out there, you pick up the general colds. that is a killer at 3:30 in the morning. i can't take that. i'm really glad to see everybody. i'm still gingerly going about how we do these things air high five. yeah >> you can catch the entire inter hview with albert bourla n everybody. you can see becky's interview with the ceo of dick's sporting goods in the next hour we will bring you highlights with more from lauren hobart of

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the federal reserve raised expectation for inflation which brought forward the imeline of when it will raise interest rates. we're talking about 2023 remember we are in 2021. joining us to talk about the issues of jay powell is jim. jim, you are waiting for the fed

to do something. has been calling on them to do something for a very long time were youyou apiesed by the actis you saw? >> no. these are very low rates and very high valuations dangling on the threat of the low rates. it is all very important i think what the fed, in effect, said is going to give inflation a nice running start it won't catch up at length. that is a strategy that failed in 1960. i'm not sure it gets here today. >> jim, you have been calling for this what the fed has been doing for a long time. you have been saying this is

going to be the road to ruin with high inflation. it hasn't happened yet why do you think that is >> i'm not sure incredibly high inflation, becky the inflation in the '70s that people refer to when they are talking about the risks ahead of us that started in the 1960s and chesney martin was the strongest historical in opposition of when the fed was rising of less than 1% for half a year he gave a running start. he didn't mean to. by 1967 or so, when the cpi was rising and about what it was rising in may then chairman martin bumped it with the horse is out of the barn you can try to restrain it you can't get it back.

he retired in 1970 and at the going away party he said he failed he meant to suppress and control and extinguish inflation now we have a fed that really wants to encourage it. the fed wants an average inflation. he wants a little more than 2% i think chairman powell yesterday, becky, said he observes that the pandemic was a singulary. what he did not mention was the response to the pandemic was unprecedented. astounding $3 trillion budget deficit and fed balance sheet and trending to $8 trillion before the great financial crisis $900 billion or less item. we are doing in way of public policy what we have never done before in these circumstances, the chairman is sanguin.

>> from the investor pers perspective, you see a silver lining that is an opportunity for investors. a couple of things you have been watches. watching one is a hedge one is the gold mining explain that >> as to gold, gold investors must come to grips with the fact that gold is a geological perspective. >> versusbitcoin. >> frustrating for those who think it is real money the market has not clicked on to it yet what is interesting in the world of interest rates, becky, the cost of hedging against rising rates is extremely low especially given inflationary back drop. harvey has come up with something which gives you the

opportunity to do what the ordinary do it yourself investor cannot do which is to get exposure to rising rates through a put option the proposition is you own up to $50 value and you own $20 of a treasury note and $25 of the put option in seven years, you either make money or you hedge as rates have gone up or you are out the value you of that option the $25 stock. this is only recently come into existence. it is a handy thing for anyone who has heavy exposure to assets >> jim, we have to leave it there today. we will have you back soon l a lot more to talk about you sdplchlt.

>> thank you, becky. coming up, more trouble for the cruise industry. and mohamed el-erian will have the latest from the fed meeting yesterday. we're coming back on "squawk box. >> announcer: currency check is sponsored by interactive brokers. the professionals gateway to the world's markets.

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welcome back to "squawk box. time for executive edge. royal caribbean postponing a voyage in july after eight crew members tested positive for covid-19 the crew were part of a routine testing. the crew was vaccinated on june 4th, but not fully protected "odyssey of the seas" will be pushed back to july 31st another crew testeds t spositiv but that sailed. we will talk to executive chairman tom rogers on the media landscape changing and more after this >> announcer: executive edge is sponsored by at&t business

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welcome back to "squawk box" this morning engine media heading to the nasdaq today under the symbol game, joining us to discuss is tom rogers he's the former ceo of tivo and a cnbc contributor who helped create the network it's great to see you. we often talk to you about sort of macro issues in media land. we rarely actually talk to you about engine media itself. let's do that now. for those uninitiated who don't either know engine media or don't understand the component

parts, because there are now many, tell us about it and tell us how to think about where this company lands and fits compared to other companies in the sort of media gaming space. >> well, thanks, andrew, for having me this morning my partner lou schwartz and i are very pleased that we have the symbol game and we begin trading today because we think we got game. we are a unique collection of businesses it's really a company where gaming and media meet. we have three gaming businesses. we have three targeted media solutions businesses and as a result we really have multiple paths for creating value we've talked a lot on this show about the decline of sub fees coming from cable and satellite and ushering in this new area of direct to consumer fees, needing

consumers to pay fees directly as a way for media business models to survive this new era, and what we are all about are creating experiences for direct to consumer fees to emerge we allow television viewers of sports to compete with one another paying cash games of skill. very different than gambling but nonetheless the needs of cash games for skill to derive fees that not only comprises the gaming businesses but as we've also talked about, audiences are declining on traditional television and to make up for advertising, targeted media solutions are necessary, and that's the other part of our business we're about providing ways for marketersnavigate the new

worlds of social media, influencerle marketing, programmatic marketing and the data and a.m. lit particulars you need to know in the world of live streaming particularly for younger demographics where to place your marketing bets. >> tom, if you're an investor out there taking a look at this company thinking about what they're doing best or not, are you supposed to compare it to another type -- an advertising company, to the nielsens of the world? i know there's a tracking component that you're working on or a more classic electronic gaming company >> well, i think we don't easily compare because we are a combination of assets. as i said, we' arewhere gaming d media come together. if you want exposure to new forms of gaming that are about competition, more competition people have, the more intensely involved they are, we have an

esports competition platform so exposure to new forms of gaming revenue is certainly one way to look at us. and if you are interested in exposure to how the advertising and marketing world are going to emerge through influencer marketing as you mentioned, we are sometimes referred to as the nielsen of esports with the data and analytics capability we had. that being a big area how to measure these areas for marketers. we give you exposure there as well so it's a combination of assets in gaming and media to give you exposure to the growing parts of those sectors. >> tom, we wish you a lot of luck with it i want to continue the conversation because i want to hear what you think of epic and apple and some of the new privacy measures that a lot of these platforms are putting together, which may make it easier or harder for your services to work and may make them more valuable ultimately i would imagine as well. looking forward to seeing you.

>> congratulations, good luck. >> we've got game. >> thank you, andrew i like that. >> when we come back we'll have much more on the markets and the fed's inflation comments we'll be speaking with mohamed el erian stick around, "squawk box" will be right back. plan, you'll get unlimited premium data that can't slow down based on how much smartphone data you use. plus, taxes and fees are included. that's right, unlimited premium data and the iphone 12 pro on us. only at t-mobile. the leader in 5g.

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the fed shifting the time line for rate hikes as inflation rises and questions remain about when the fmoc will scale back the massive bond buying program. we'll get reaction and talk about the taper time line. the push to return to the office a read on what workers are saying about coming back and why it may not be a good thing plus dan ives on why the fed's latest read on inflation and the economy is bullish for big tech he's going to join us for perspective as the second hour of "squawk box" begins right now. good morning and welcome back to "squawk box" right here on cnbc. i'm andrew ross sorkin along with becky quick and mike santoli. joe is off today take a look at u.s. equity futures at this hour a day after

we heard from the fed and jay powell we'll talk about that in a moment you're looking at the dow down 90 points. moving around a little bit nasdaq off 61. the s&p 500 off 13 points and all of that following the federal reserve's raising its expectations for inflation this year and brought forward the time frame on when it will next raise interest rates for that story and more i want to go to washington where ylan mui joins us this morning good morning >> good morning, andrew. the recovery is picking up faster than fed officials expected that's putting rate hikes on the horizon. gdp is up 7% up from 6.5%. pce inflation is up to 3.4% and the projection for core inflation rose .8 to 3%. next year's forecasts are more in line with what the fed had predicted in march the long run economic

projections did not change and the fed is characterizing inflation as transitory but chairman jay powell did acknowledge that the bottlenecks in the supply chain were bigger than they thought and that inflation could end up being more persistent than projected >> all of us thinks that we think have, you know, really held down inflation. all of that is out there still when we get through this, we may be facing that nonetheless, is there a risk of inflation made -- >> the fed won't hesitate to use the rules if that happens. seven officials see at least one rate hike and the majority believe there will be more than one by the end of 2023 but as always, powell urges investors to take the clause with a big old grain of salt he said the discussion in fed is over the taper time line not about rate hikes

>> mohamed el erian and the president, queens college cambridge. we heard from the -- we can't call him the maestro was he right and was he late at this point, mohamed? talking about being the maestro. >> so he was right that the outlook is better. he was right that we should increase inflation expectations. they were right that we should bring forward the interest rate hikes, but they were i think too slow on two things one, in recognizing that there's a lot more uncertainty to what is still the baseline, which is transitory inflation clearly they're less confident about it, but i don't think they are humble enough about it that's the first thing secondly, if i were them, i would have started to taper

today. instead, we have a timetable that suggested they'll talk about it and share thinking in september and finalize it in december and initiate it next year i think that's going to be too slow and that's why i'm really worried about the risk of a policy mistake. >> so if you are an investor in the equities market, let's say, we can do both, we can do equities on one side, commodities on another, what are you supposed to be doing right now? >> so let's start with the third you had mentioned, the bond market. >> that's a fair market to discuss. >> because the least comfortable space right now is in the belly, on the five year that's what's most sensitive to the change profile if you are there, you've gotten hurt if you are in the equity market, this is not dramatic because the equity market in my opinion will continue to live in the

liquidity moment and the liquidity moment continues we've got to have ample and predictable injections of liquidity for the rest of this year so if you are in the equity market, that is not dramatic. >> this is game on >> sorry >> game on if you're in the equities market, this is a bullish sign >> you continue to ride the wave and that's an issue for financial stability, but for now you will continue to ride the wave you have people who come on your show and say this is bullish for equities why? because liquidity injections continue and they are ample and predictable. that is what investors love here >> okay. you were about to mention the world of commodities. >> yeah. commodities, you give the fed a huge hug, right? they are going to run this economy really hard and i do think we're going to have an

inflation over shoot it's not going to be like the '70s but economy is not built for high inflation and for the possibility that the fed has to slam on the brakes so that's why i think that if you are looking at the global recovery and if you look at the u.s. recovery, you are always worried about coronaviruses, new ones, new variants being the number one risk and that has been joined by a fed policy mistake that is how worried i am about a fed policy mistake. >> and you believe that that fed policy mistake ultimately manifests itself how or you believe it's already manifested itself >> i think it has started. it manifests itself by the fed not slowly easing off the accelerator so that does two things one to use a phrase that leon cooper man used on your show, even if you are bearish, you remain fully invested so we will

have continued exuberance in financial markets which closes a problem for financial stability down the road and then the second risk is that the economy over shoots on the inflation side and the fed has no choice notice what they tried to do yesterday, andrew. really interesting they tried to introduce an opportunistic element to the backward looking framework that is what they're going to struggle with. they're going to have a lot of difficulty maintaining the unanimity of the fmoc going forward. >> one of the topics that we talk about all the time is crypto and whether crypto is supposed to be correlated or uncorrelated bitcoin hasn't moved that much on this news are you surprised? >> no, because i think there are bigger issues facing crypto. you know my view on this how quick is the private sector adoption second, what do governments do so while this is supportive for crypto, more liquidity is

supportive because it's going to push more people into crypto as a risk mitigator while it is supportive, it is not the major price determinant at this point. >> okay. we will see, mohamed we will see. thank you for making us smarter this morning appreciate it. very good to see you >> thank you >> you bet. in other headlines at this hour, a shortage of homes for sale in the united states helped home builder lennar report better than expected profits resulted in higher sales prices and profit margins substantially higher than a year ago lennar sales up by half a percent. u.s. tourists are going to be allowed to visit europe this summer u.s. citizens have not been permitted to travel to europe since the pandemic began in march of last year and a new holiday in the united states is in the offing. the house has overwhelmingly voted to approve june 19th as a

national holiday after the senate did the same. president biden is expected to sign that bill into law today. that day is known as juneteenth. it commemorates the end of slavery in the united states in 1865 when slaves in texas, galveston, finally heard that news two years after it became law. coming up, dick's sporting goods ceo lauren hobart speaking at cnbc's evolve conference. the indexes are firming up a little bit futures, s&p down just 9 points. that would leave it abov yesterday's lows dow down 67. bigger losses overnight. nasdaq still underperforming but down 45 minutes. "squawk box" will be right back.

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(♪ ♪) whether it's a technology first,

(♪ ♪) a fashion first, (♪ ♪) a science first, (♪ ♪) or a first for us all (♪ ♪) whatever you hope to achieve for your business, cloud first helps you get to value...first (♪ ♪) let there be change accenture welcome back, everybody. the pandemic forced retailers to rethink how to get consumers what they needed and how to do it safely. i spoke to the ceo of dick's at the cnbc evolve global summit yesterday about evolution. like charles darwin never imagined this.

this is evolution that takes place slowly overtime but this is evolution that takes place overnight. >> we closed all of our 800 plus stores, which immediately put us into a situation where we had hundreds of millions of dollars trapped in inventory in stores and while we could do ship from store, we didn't have an ability to access the product for consumers in the market. so thanks to a long-time investment in technology where we were able to really get our platforms ready for such a crisis that we were not anticipating, we were able to spin up this curbside pickup in less than two days it worked and people started to adopt it and really changed the trajectory of our business it was really great, but it wasn't just a short-term evolution. i want to say it was years and years of planning for the unexpected that we did not know was coming >> although when you started talking about curbside pickup at the stores, didn't your team tell you it would take something like 18 months to get it up and

running? >> yes yes. i think that's the other lesson that we learned from the pandemic is when you have a burning platform, we can move mountains. actually, i think a lot about how we want to save and keep some of that scrappiness that we got. we use the term scrappy a lot at dick's during the pandemic it was never more obvious because that project was on our roadmap, it was on our long-term roadmap other retailers were having some success with it but it wasn't the first priority we had multiple other priorities and it was going to be an 18-month lead time so it was pretty exciting to see when everybody put everything else down and the tech team started working on this with everybody all in, it really came together in 48 hours, which was just amazing amazing team work. >> so dick's sporting goods went from this problem of having too much inventory at their stores at the start of the pandemic to not having enough as things reopened, as people started coming back in that was the big problem that has been persisting.

problems in the supply chain it's something that still keeps lauren hobart up at night right now. >> the supply chain issues, they never cease to amaze me. it just keeps coming where we think we've got things back in stock, under control and then, you know, there's new issues some challenges in vietnam right now and a few other places so that's what -- you know, if i were to say we have any sort of attack team out still really working on pandemic-related issues, it would be supply chain. that said, we really managed through all of last year to drive these comps with the inventory being constrained as it was we've developed i think a pretty good muscle at this. it keeps me up, but not for very long, at night >> guys, the supply chain issues is something we hear again and again. mary barra was on cnbc talking about the very same problems they were dealing with on this front. when you ask lauren hobart what they did, they're doing all

kinds of crazy things where they've released strict guidelines they had. they used to say if you want to send us your inventory you have to make sure it's on a hanger, it's wrapped, xy and z dump it in a box, we'll come and get it for you, we will take it all in one place and we'll select it from there they have incredibly relaxed standards of what they used to ask for and say. they'll even pay for things like air shipments if they think that it makes sense financially to do some of these things that's the huge chain we've seen yesterday mary barra was talking about how they're doing the very same thing with chips. they've been able to be more profitable and produce more cars and trucks than they thought they could do because their teams are working on these issues that's a big issue not going away this year it's a thing teams everywhere are going to be working on. >> it will be interesting to see how that trickles into margin. it's important on the volume side of things you have to get the volume to make it up on the margin if you are going to start shipping stuff by air or the

additional costs of sorting through things and does that -- is that a permanent change or is that something that is transitory, as jay powell would like to say? >> it's also the good problem to have right now i know people were using as their benchmark for pandemic supply chain issues how long it took you to get a piece of gym equipment delivered. even dumb bells it was ridiculous how long that was on back order there was a question of whether there was a big pull forward in terms of people buying sporting goods, not really clothing but other stuff that maybe they don't need every year. >> new kayak, new canoe. >> exactly. >> new bike. >> camping equipment. >> for bikes, you can't get bikes. walmart has been out of bikes for over a year. bike supply shops will tell you they're not sure how long it's on back order. the bikes they have are 750 bucks. there are some things on huge back order for this. you wonder if that demand will still be there she did think that it's changed people's way of lives.

like maybe we are living a healthier, more outdoors lifestyle. there's probably some truth to that i think all of us have maybe kind of embraced nature in ways we took it for granted before. >> i bought a bike during the pandemic. >> i bought a bunch. not a bunch of bikes for me but bikes all the way around for everybody in the family so everybody has a way to get back out there. i realized it had been a long time bikes have gotten much petter. if you can find a lighter one, it makes a big difference. by the way, the kids keep growing, too if you want to see more of this conversation you can do it by going to the on demand from the global event it's at cnbcevents.com/evolve. when we come back, a lot more on "squawk. the summer is here and so is the push to return to the office you've established a schedule, built an office space and have spent more time with family. is returning to the office even an option? jon fortt is right here this

week with on the other hand. we'll talk to him in just a moment later, greg ip of the wall street journal going to join us to discuss the fed and so much more one of the great tea leaf readers will be with us. as we head to break, here's one of aflac's trivia question do you know the answer software development laboratories was founded in 1979 and was later renamed to this. we'll have the answer on the other side of the break. "squawk" returns in just a moment ha ha. jill is certainly upset with that unexpected bill from her back surgery. aflac! let's see that one more time. ♪ ♪ (bleep) (wincing) oooh, right in the wallet! ouch! aflac! aflac would have paid jill cash directly to help with expenses health insurance doesn't cover. hold on, i think she's trying to give us a side-eye... because she can't turn her head! (laugh) get help with expenses health insurance doesn't cover. get to know us at aflac.com

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the aechks to today's aflac trivia question. software development laboratories was founded in 1979 and was later renamed to this. the answer oracle a big shoutout to mike he got the answer right. you said oracle or -- i couldn't think of which one it might be oracle, you went on that i beat them on the jumble. >> i thought -- for a moment i thought it might be lotus if you remember lotus but, anyway, i was 100% wrong. >> mike was right. >> in the meantime -- >> i had no clue. >> you were overthinking it. i think lotus is more obscure

than we would expect people to get. >> maybe maybe. >> though i remember it very well. >> these questions aren't too easy meantime, we're more than halfway through june which means next week it is officially summer before summer's over, a lot of workers will be returning to the office, at least for most of the week so the question, is that a good thing. jon fortt is here and he is going to weigh in on both sides of it. jon? >> andrew, no. returning to the office is not a good thing a year ago ceos were crowing about how well everybody was doing staying productive from home it's like they've forgotten. knowledge workers working from home spent 12% less time drawing into large meetings and 9% more time interacting with customers and partners according to a study london business school did in the pandemic and published last august. since then we've seen that the at-home option is important to morale morning consultant survey of

1,000 workers found 4 in 10 would consider quitting if they didn't get some flexibility to work from home innovative leaders are leading into it. digital payments platform stripe is offering workers $20,000 and a 10% pay cut to leave pricey areas like san francisco, seattle and new york altogether. the push to get workers back into offices isn't about productivity or working happiness. could it be about control or companies that even after the year we've had are resistant to change, that's more likely work from home should be the norm from here on out, andrew. >> h'm okay but there's got to be some benefits to being in the office, right? you're broadcasting from home right now? >> no. on the other hand, andrew, i mean, heck, no i hate working from home full time coming back to the office isn't all bad. yes, at the beginning of the pandemic bosses reported great productivity and workers said they loved it. a lot of us got sick of it more than half the employees

want to work in an office environment again at least some of the time, particularly young employees. a lot of us are discounting the effect that work from home has on young people. if you're already established in the workplace or industry and you know who to call to get what you need you're fine a recent survey of european workers 30 and under say 60% say working in a modern office environment with people has become more important than ever. steve jobs pushed to redesign pixar headquarters for collaboration with animators, editors and executives in the same building it worked well enough that some of the same principles flowed to the apple headquarters apple has said expect to be in the office three out of five days a week, usually monday tuesday and thursday flexibility is great, but flexibility, speed and coordination together at scale require great management so most of you should get the idea of spending half your time in the office by labor day. just saying. >> all right

so question. in five years do you think remote work is going to be the norm or not? >> andrew, i don't think so. just yesterday at evolve, i know becky was talking about her great session there, i was talking with qualcomm's incoming ceo and intel ceo pat gelsinger. when he was with vmware, he was talking about remote work. now he has labs and fabs and people who need to be in specialized environments roughly half of those folks need to be on site and a lot of these surveys indicate the clearer your job requirements are the happier you are to work. if you're newer to the office you don't want to be that disconnected for a lot of people it will wear thin after a while teams won't be getting the work done. >> one other question, jon, which is the generational issue. a lot of the surveys show that

younger people say they want to be in the office but anecdotally, especially when i talk to some of the managing directors at some of the big banks on wall street which are trying to bring people back as quickly as possible, the one group that they worry about in terms of not wanting to come to the office is the younger cohort, not the old er cohort. >> i'm not sure. i hear from younger people, i need to make those connections, i need the mentoring, i need to understand the corporate culture. that's harder to do when i'm remote i think you start to see teams fraying, people leaving for reasons you don't understand where people get disconnected. another thing gelsinger was saying those in person moments when companies bring people together, the stakes are going to be that much higher to try to drive morale, drive vision, drive that sense of cohesion you're not going to get the daily touch points. >> the off campus retreat, which used to be called a boondoggle

may become the norm and may not be a boondoggle. we'll see. >> nice to see you >> you bet >> should we do a boondoggle >> yeah, i think we have one coming up, don't we? >> i don't know. do we? >> yeah, maybe maybe. i'll talk on you. >> not that i was invited to. >> no, you weren't sorry. i think we have one coming up. still to come on "squawk box" though, greg ip of the wall street journal joins us to talk about yesterday's fmoc meeting and much more. later, senator pat toomey tells us why it may be too little too late for the fed's moves on inflation june is pride month. all month we are spotlighting cnbc contributors, business leaders and our very own cnbc contributors here's gt dave. >> the challenges i have faced of being part of the lgbtq plus

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given the rate uncertainty in the downside on the markets, we want to show you where the markets stand right now with regard to their record highs the nasdaq has a little bit of ways to go but still hovering near where we saw earlier this year however, the dow and s&p 500 stand pretty close away to where they were over their highs in the last couple of months. the dow industrials, the s&p and nasdaq all positive for the year the s&p up 12.5% that's something we want to keep an eye on. the next chart shows etfs. a key number given the rate expectations and the decision from the fed and the commentary, the financials have worked on a year to date basis

they continue to outperform. the bank stocks, the big ones and the regional banks here have shown a little bit of resilience despite the rate uncertainty they held up pretty well in yesterday's trading. positive for many bank stocks as well also want be to check what's happening in the credit markets and treasury markets they have investment grade bonds and high yield debt as well. on the investment grade side of things, that's the orange line a lot has to do with the down side move in interest rates and the up side move in interest rates overall. you can see the values declining there. look how steady high yield bonds have been. no real signs of credit stress yet despite the fact that interest rates are still at play then a check of course on the volatile parts of the market meme stocks and cryptocurrency check out amc entertainment, still consistently one of the top five searched tickers. down 2% in the pre-market. draftkings is 7th.

down 1/4 of 1% bitcoin at 39,153. ethereum ether flat on the day 2427 andrew, we'll check on the meme stock bitcoin stocks in the market. >> wonder how correlated they really are then. we'll see. dom, thank you for that. when we come back we'll talk about some of the other stocks reacting to the fed news yesterday. we're going to hone in on tech names. we'll find out what you need to be buying or selling in this current market environment as we head to a break, a look at this morning's movers on the nasdaq "squawk" returns right after this

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the fed has raised inflation hike time line joining us is greg ip. greg, you are the guy who understands what this all means, what this signals. so tell us, what was your biggest take away?

>> you know, as i look back on it, becky, it seems like it was only a matter of time before they started sending signals like this. think about their forecast when they first ruled out the average inflation targeting framework they thought the economy would grow 4%. now they think it will grow 7% we thought the unemployment rate would go down 5.5% this year they now think 4.4%. inflation, they thought it would be 2%. they now think it will be 3.4% throughout the entire nine months they had stuck with their median view no rate increases before 2024. that just wasn't realistic as i look back on it, becky, it seems like we shouldn't have been surprised that one by one the members of the federal open market committee would start moving up that date. why this particular meeting though and i think powell sort of hinted at that yesterday it's not so much that the forecast has changed that much since march because it didn't,

but their confidence in it has changed. they think they're more likely to hit their employment goal but even much more important they're much more likely, in fact they're probably already at their inflation goal which is inflation of 2% and maybe a little bit higher for several years. i think, becky, going forward the real issue here is do they not only meet their inflation goal, is there some risk of over shooting it. that's where some of the risk lies for the fed and for the markets. >> i was wondering yesterday, maybe you have a better idea of this does it seem like they are emphasizing one over the other of the two mandates? does it seem like they are focused on inflation than full job creation >> up until yesterday i would have definitely said yes certainly that they've never said, of course, we've abandoned our price stability side of our mandate, but if you listen to the rhetoric, speech, all about the benefits of full employment. let's get back to the full employment we had in 2019. not going to raise interest rates because we have low

unemployment understandably the market waived off a lot of the incremental news that seemed bad for the inflation side and focused on the employment side. we saw powell yesterday start to recalibrate that a little bit and there was also another interesting innovation, i think. powell also several times said that their whole story is that this rise in inflation is transitory, it's a few bottlenecks and supply shocks, et cetera. the quick question is if that transitory rise in inflation starts to raise public expectations of inflation, that's a real problem because those expectations can become fulfilling they might have to respond to that and that in some sense means they would have to abandon the plan a, which is wait until unemployment gets below 4% and start to move right now. it's not at all the base case. powell was emphatic about that, but i think it's sort of an escape clause in their plan that the markets until now have not

really been that aware of. >> greg, to what extent do you think this adjustment in the way the view is presented certainly reflected in the sort of consensus outlooks by a lot of the committee members is a bit of a break from what powell has been trying to emphasize for months, which is we are really going to be tolerant of the inflation side of things we are very committed to the new mode only to outcomes, not to people's outlook we're going to wait until it's right in front of us and maybe that's why the market had to kind of shuffle its feet a little bit on this because it's a little bit of a contrast with the mode of emphasis that powell and brainerd may have been presenting before. >> that's exactly right. i don't think the market was prepared for the fed to literally change its rate outlook because the inflation picture had looked worse given, a, the emphasis on full employment and, b, the emphasis

on full outcomes i think it's partly because they were thrown for a loop by the sequence of events here. i mean, even though they say the idea that as unemployment goes down, inflation goes up, even though they say that doesn't work, it's central to their view of the world and the view of the world they've had for the past nine months is we're not going to get inflation sustainably above 2% until unemployment is below 4% there are a series of freak events shortage of semiconductors, shortage of lumber and ships stuck in the suez canal. the economy as it were went off script they're kind of struggling with that right now they're trying to sort of say we think that, you know, six to nine months from now things will go back to the way they were, that the old inflation picture will reassert itself but they can't be certain there's more risk out there than they were prepared for. >> greg, when i kind of think

through everything just given time to think through yesterday's decision, kind of play it all out, i'm kind of looking back at this thinking okay this doesn't come as a surprise i don't know that there's anything else they could have said without looking like they were completely separated from reality at this point. is this a ground-breaking moment or is this a no duh moment >> at first i thought it was a ground breaking moment but the more i thought about it it felt like more of a duh, no kidding moment it didn't take many dots to move it from 2024 to 2023 a few meetings ago there was some market expectation it would move to 2023 they just missed that by one dot. so it didn't take a lot of movement by several committee members to get us to where we are. like we were just discussing a minute ago, the outlook has been approving for a long time

without that dot changing. in some sense they're catching up to where the market already was. so i kind of think that after we all had a little bit of time to digest this, we're all going to sort of come around to the way of thinking, well, yeah, this kind of makes sense. maybe that's one reason why not with standing a little bit of indigestion in the markets yesterday there wasn't that severe of a fallout. >> let me ask you a question i know this is a little outside your purview you've been doing this a long time you understand the markets even though economics is your main focus. we talked to david tepper a while ago who pointed out that he thought we were going to be sitting with rates kind of frozen the 10-year sitting where it had been by the way, he's been right. since he said this several months ago, we haven't budged. we've been stuck between 1.45 and 1.6 on the 10-year how long do you think something like that lasts? what do you think it takes to kind of break that log jam and get movement headed in a different direction, especially

as the fed is saying, okay, maybe it's coming sooner our raise for interest rates sooner being relative. we're still talking about not this year, not next year. >> my own sort of like mental forecast is that we're going to continue to see the economy more or less unfold as the expects this year with this inflation pressure slowly dissipating as things like the used car price spike unwinds but the economy remaining relatively solid with each passing few months the fed's confidence in their forecast improves, more of those dots will move into the earlier years. liftoff will become earlier and that will be priced somewhat in the 10-year treasury yield and it should kind of grind its way higher all of that said i would never have guessed it would have dropped from 1.8 to 1.5 in the last few months the way it did like a lot of folks sort of really scratching my head saying what's going on here maybe it's partly positioning as risk parity funds and other

people respond to the volatility by increasing their gross positioning. maybe it's the fact that the fed's -- sorry, that the treasury's borrowing needs have dropped because they're running down their cash balances at the fed so there's just less supply. those technicals i think they're perplexing everybody maybe that's a lot of the story. those can reverse very suddenly. so i guess i would say based just on economic forecast i would expect some grind higher in yields over the next 6 to 9 months but david tepper's right. these technicals could hold it in here much longer or maybe not. >> greg, thanks. good seeing you. we'll talk soon. >> all right thanks, becky. up next, why dan ives says the if he had statement is very bullish for tech stocks. he joins us after the break. later senator pat toomey on why he's considering inflation isn't transitory and why the fed is falling behind the curve. "sawbo wl rhtacquk x"ilbeig bk. ?

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tech stocks moving lower after the fed dropped its time line for raising interest rates a bit. while the nasdaq recovered most of the losses by the end of the session you can see big tech stocks are in the red again this morning. joining us now, dan ives wedbush's managing director of equity good morning to you.

i can see being bullish but why would what the fed suggested be incrementally more hawkish be a net positive for the tech group? >> i ultimately think this puts out the realistic goalposts for the fed. better than most tech investors were hoping for. we view this as a green light with risk on assets across the tech space we think tech stocks are up 15% second half and you look at the underlying growth that's transformational in cloud, cybersecurity, ev, ecommerce but it's kept a cap on it over the last four or five months now i view this as a risk-on moment and the biggest opportunity that we see given our view 16,000 nasdaq end of the year. >> what about the very largest nasdaq stocks though are necessarily reflective of a

risk-on environments i ask that because these are big, financially stable companies. they're kind of in the quality category, super profitable, much more stable than the average company. then off to the side you have a lot of the more maybe earlier stage, you know, down the road they're going to be profitable but not right now. it seems like those are two different animals. >> yeah, you've got to put them in two different buckets when you look at a microsoft for example, part of why we think that's north of $300 this year, i think the street's still massively underestimating the digital transformation in terms of move to cloud we think 2 trillion in spending. that's going to benefit not just microsoft, amazon, google, ibm and others docusign, z scale or crowd strike, it speaks to what i view as a golden age for cybersecurity and clouds those stocks are going to be expensive. i think they continue to grow into the valuation i've seen from my conversation the appetite for risk on going

to the second half of the year i look at yesterday and that was sort of what i view as sort of the green light to now for this next stage higher despite the haters continuing to hate in tech. >> what about apple? what do you think has been kind of restraining that stock for a little while and how does that kind of story and the perception of it change? >> yeah. that's sort of been on a treadmill because i think most investors think that's in the rear-view mirror, but i continued to look at our checks in asia. this super cycle will continue well into next year. i think the monetization story is in the middle ninning of playing out. the antitrust, $15 overhang on the stock. i think we're sitting here late july when they come out with those numbers handily beat the street i think chip shortage a bit overstated for apple all the supply chain checks continue to give us confidence a year from now.

it is a $3 trillion market cap. just to hit on tesla just for a stock that obviously has had to give back a lot of last year's massive gains looks like it's a little bit plotting between there's a lot of excitement in ev going on now. where's the field position in that stock >> digestion period you have from all angles. gm and ford have done a great job. you have vw and others the street's digesting more and more competition when i look at tesla it's a $5 trillion green title they're going to continue to leave that charge. despite the skeptics, china continues to show up for strength in the month of june and going into the second half that's when we have $1,000 price target i think it's a painful digestion period rather than the end of the bull cycle given where we view ev still in kind of the first, second inning of playing out. >> any slices of tech you feel like still are a little bit treacherous or not as well advantaged here? >> to me it's hardware i mean, i see more and more from

our cio in conversations, i.t. manager. you're seeing more and more move away from hardware towards software cybersecurity, cloud i'd be under weight some hardware pieces and more bullish on software and that's where i see a lot more of the next genentech nothing is going look at ibm. that could be a potential rerating story. >> ibm focus on cloud being a net positive because it's de-emphasizing hardware? >> exactly i'm not going to compare it to microsoft and the delve golden touch. you look at what happens in ibm. they're starting in the hybrid cloud, benefit more and more that could be a rerating stock as we get closer and closer to sort of the splitting of those businesses i think arbin is in the middle of what could be a pretty significant turn around of ibm that's one i'd watch out for. >> it's certainly still cheap. quietly performing real well recently, dan.

thanks a lot for the time this morning. appreciate it. >> thank you. >> andrew. on the other side of this break, senator pat toomey is going to join us to talk about the fed's inflation warning and why there could be a bigger problem down the road. you don't want to miss it. plus, we're expecting the latest read on jobless claims in the next hour. we'll bring you those numbers as soon as they cross first, take a look at futures. the dow off 87 points. s&p off 14 points and the nasdaq quk"et points. "saw rurns with a big hour ahead as the show rolls on after this get decision tech from fidelity. [ cellphone vibrates ] you'll get proactive alerts for market events before they happen... and insights on every buy and sell decision. with zero-commission online u.s. stock and etf trades. for smarter trading decisions, get decision tech from fidelity.

good morning the fed moves the markets. new messaging from the u.s. central bank pointing to possible interest rate hikes sooner than we thought this hour we're going to talk about the impact on some key stock sectors, its portfolio insight you can't afford to miss. and signs of progress on a bipartisan infrastructure package in washington. guess we know you've heard that one before but now there's a critical mass of lawmakers that may mean a deal can actually get done the final hour of "squawk box" begins right now.

good morning, everybody. welcome back to "squawk box" here on cnbc i'm becky quick along with andrew ross sorkin mike santoli is here with us on the set at the nasdaq market site in times square joe's off. we've been watching the u.s. equities after the fed's decision and weakness cooling out here dow futures indicated off by 104 points this comes after a decline of 3/4 of a percent yesterday for the dow. down by 266 points s&p futures off too. down by 15 points after losing 23 yesterday and the nasdaq is down by about 70 points after a loss of 33 points yesterday. the dow and the s&p both turned in their worst performance in a month yesterday. dow was closed below the 50-day moving average we'll see where things continue to trade take a look at the treasury market that's where we saw more activity yields moved pretty significantly yesterday.

you'll see the 10-year note is trading at 1.575%. still below 1.6% the 2-year note trading at 0.205% let's talk about some of the other stories investors are talking about today. first infrastructure 21 senators part of a bipartisan group working on a roughly $1 trillion package it's significant because it includes 11 republicans, more than the 10 that democrats would have to get to vote with them to pass a bill without using the arcane budget reconciliation process. simultaneously the biden administration's working with democratic members of congress on a go it alone strategy they may use if they can't reach a bipartisan deal with republicans. so we'll see where that ends up heading. meantime, the justice department now suing to block insurance company aon's deal to

buy willis towers watson for $35 billion. the doj saying it would eliminate competition in several different markets. aon and willis towers says this shows a lack of understanding of their businesses, clients and markets in which they operate. but the trust busters are coming. new title for microsoft ceo satya nadella is chairman of the board of the computing giant the vote by microsoft's board was unanimous. he took the title of the world's most valuable public company standing number two behind apple. shares of microsoft have risen 600% since nadella became ceo in 2014 we've said it's a credit to him but also an interesting corporate governance decision given the move away from the combination of the ceo and chairmanship roles in one person

they typically have moved the opposite direction becky. >> that's right. let's get back to that story of the -- that wall street's focused on this morning. that's the new projections from the federal reserve about when they might actually raise interest rates central bankers are now indicating that rate hikes could come as soon as 2023 and fed chair jay powell says that they are now talking about talking about tapering bond purchases. let's get over to mike he's standing by the telustrator. he's talking about how the news has filtered through the market. mike, can we please stop saying two things i'm sick of first of all transitory and talking about talking about. >> i second both of those counts i do think the transitory by definition, it's either going to be or not be hopefully we can stop talking about it the s&p 500 did get a little bit of a jolt. that incremental move towards potentially a mirror moment of liftoff for interest rates did kind of send the market down 1%

briefly yesterday. the key though here is how the market has flattened out just hovering near the highs the s&p 500 since mid april. we got to 4205 yesterday at the lows we may break below that or get near it this morning the fact that we flattened out so much. so many stocks fallen out of the up trends. you've lost momentum it's not where people will look at the chart and say maybe it's rolling over or breaking down. we remain 1% of the highs. the nasdaq has a little bit of a different look here. it was not really clicking towards highs consistently this has this look of maybe three little peaks right there obviously remains to be seen get its footing. there is an old saying that there's no such thing as a triple top if it gets to the high it breaks above. that also remains to be seen theoretically the nasdaq should being disadvantaged with higher rates. we don't know if that's going to play through take a look at the 5-year treasury note yield.

this is part of the treasury return curve that could have a dramatic reaction. march/april time frame it shows you we're pricing in potentially a couple more rate hikes within the 5-year span. somewhere between the 1 to 5-year span and that shows you it's up more than the 10-year was. that was most of the adjustment that the bond market had it wasn't about inflation because actually market implied inflation expectations went down it shows you that basically we've had to sort of readjust the outlook for inflation and the fed's potential response to it, becky. >> mike, it hasn't even been 24 hours but i think listening to greg ip it's starting to occur that we're starting to play the game they moved it up to 2023. when do they move it up even sooner you know, this just seems like it's the beginning of a movement, certainly not something that we've seen the end of. >> i don't think the fed is going to willingly get on that train to say that it's just

inexorably going to go that way because what was pulled forward was the kind of committees, you know, straw poll as to when each person thinks the first rate hike will be it's not binding not even all of those committee folks are voting members so i predict what's going to happen is fed officials, fed governors are going to get out there to re-emphasize they're in no hu hurry. taper has to be done before we raise rates. maybe they're going to try to take some of that back over the coming days and weeks. at some point we get into that mode where good economic news is maybe not going to be welcome by the markets but i don't think we're quite there yet because it's still, you know, pretty long runway before we get to 2023 >> i agree with your idea they're going to tamp down expectations, hey, this is going to be a slow process i also bet if you look where the dots move next time, they move closer up. they'll predict a rate hike next year and maybe the fed is upset with themselves with putting that dot cloud out there

that might be a clearer messaging sign than what they're saying. >> it's definitely a source of frustration. i think it will depend on whether in fact inflation does continue to recede from the recent highs that's the thing that they're most worried about the fact that the market saw they pulled forward the potential for rate hikes because their inflation view changed a lot, not because their economic growth outlook changed a lot that was why it was slightly unsettled. >> giving them away once again. let's talk more about this federal reserve chair jay powell made a point at the post rate decision news conference that the central banks sees a much healthier jobs market on the way. >> i am confident that we are on the path to a very strong labor market, a labor market that shows low unemployment, high participation, rising wages for people across the spectrum i think that's shown in our projections. it's shown in outside projections. if you look through the current time frame i think one and two years out we're going to be looking at a very, very strong

labor market. >> right now the national unemployment rate stands at 5.8% but our first guest this hour says that the labor market is being held back by lawmakers who are passionying people to stay e than they are to go to work. joining us is pat toomey the ranking member of the senate banking committee. let's talk this through, senator. your argument is this is a distorted job market right now lay that out >> sure. well, becky, you know, if you can receive unemployment benefits indefinitely that pay more than it pays you to go to work, well, certain number of people are not going to go to, would. i think that's just common sense. i think the big picture we shouldn't lose sight of is our economy is not in a recovery mode, we're in a full blown expansion. now we've got a really robust expansion. as you know, the fed is projecting 7% real gdp growth

this year. unemployment getting down to 4.5% and with prices rising all around us, it's still -- it's 2023 before there's a median agreement that we get off zero and we're still buying bonds at $120 billion a month the thing that i can't understand is when you have really robust growth, tremendous improvement in the employment market and right now we've got about as many job openings as there are people looking for jobs and prices are rising it's not like the inflation picture is benign and they are still in such an accommodative mode this i think is dangerous. >> senator, is your beef with the fed or is it with your own house and senate >> it's both it's both. >> you guys are the ones that gave these extended benefits >> well, not the most recent round, right the march bill passed exc exclusively with democrat votes, right. that was a huge blowout spending bill that had nothing to do with

covid. the economy didn't need it it was counter productive. i opposed it as did every republican in congress prior to that, last year, we were in a very different place look, in march when we first passed these extraordinary bills, you remember what things were like a year ago march i still didn't think it was a good idea to systematically pay people more to work than not working but it was a price the democrats insisted on to do the overall rescue package that's how it got started. this going on indefinitely is just a terrible idea, but that's only part of the problem i really do think that what the fed is doing, this unbelievably extreme accommodative policy when you have a really robust recovery -- expansion underway, i can't reconcile those two. >> isn't this a problem that to some extent is starting to solve itself i mean, i think you have 23 states that have said they are not going to pay those extended benefits anymore by the way, they run out in a couple of months anyway. i feel like a couple of months

from now we're going to see a much more realistic picture. >> i think the picture gets better in the fall and, yes, you're absolutely right. there are a lot of states, not the most popular states, but there are a lot of states refusing to participate in this. i'm concerned about what kind of taj we'll be doing on the inflation side by then i'm concerned also that the fed has backed itself into a dangerous paradigm, which is to say when you establish that the target isn't to keep inflation below 2%, it's to average 2% over some indeterminant period of time and now we're above 2% but don't worry, it's all transitory that forces the fed to sit back and wait and we know monetary policy affects the economy with long and variable lags so how long are they going to wait and how much are they going to have to do then to catch up? >> so what would you like to have seen the fed do yesterday

>> well, look, i think tapering should have started a long time ago, frankly so i would like to see a more definitive movement. it's nice that we can now talk about tapering and it's not squared. you don't have to talk about talking about it look, we need to get on with this in my view. i would have hoped that the median projection for moving off zero on fed funds wouldn't have been 2023 but would have been next year. i just think we need to move towards normalizing as soon as we can >> what do you think the fallout from that will be when we do right now i think the basic expectation, at least in the markets, is that you will hear more plans about this maybe in august from jackson hole, you'll hear more plans about when they plan on starting to sell down the bonds or stop buying at least. that could come a little later this year. if they ease into it like that, it's probably something that the

market would take well but you worry that it will be too late in the real economy at that point? >> well, i mean, better than never but, yeah, it's kind of late yes, i think that is what the market expects departure from that would be somewhat of a surprise i would rather do that think about the housing sector, right? is it possible to have a housing sector that's more robust? is that even possible? right? prices are going up so rapidly in some places that people are priced out of homes. i'm not projecting some kind of calamity there but prices are going up too fast and there's a scarcity and yet the fed is buying $40 billion of mortgage-backed securities every month to depress mortgage rates. why is that necessary at this point? >> if the fed stopped doing that and raised rates, it would make housing prices more expensive as mortgage rates went up that's kind of the paradox that you're stuck in at this point. >> no, i think -- well, i think

actually the interest rates tend to get capitalized in prices, right? if interest rates went up a little bit at least you'd put a serious damper on the escalation of prices and that would be a return to something like approaching normal so i think that would be a lot healthier. so, yeah, i'm sure eventually we will get there yeah, i get the expectations that we'll learn more in jackson hole and we'll probably start getting specifics and maybe things start to change next year, but i'm really concerned we've also got -- not since world war ii that we've had an expansion of the money supply that we've witnessed in the last 18 months so it's not as though everything is completely normal but there's a supply bottleneck so that explains the price spike somewhere. no we have unbelievably accommodative policy that's got to be driving this. >> senator, let me switch gears a little bit and ask you about this infrastructure bill it sounds like there are 21 of your colleagues who are prepared to sign onto the bipartisan deal

that limits the scope of things and looks very much at just traditional infrastructure, bridges, roads, tunnels. you're not one of the senators -- >> right. >> -- that signed off on that just yet would you consider that? >> i'll consider it. it looks like it's close to some of the principles i've been talking about from the beginning of this, which is number one an infrastructure bill should actually be about infrastructure i think they're keeping it to the scope of actual infrastructure number two, we shouldn't undo the 2017 tax reform and my understanding is that this framework does not include raising taxes. what i think the main way we pay for this ought to be is to repurpose money and money that never was spent and had anything to do with covid we have many hundreds of billions, probably over a trillion dollars in that category that's the best way to pay for this rather than just more deficit spending and creating more debt than the fed is

probably going to buy. so i'm looking at it closely i'm open to it i will say getting 10 or 11 republicans looks like it probably wouldn't be enough because we have some democrats who are refusing to go along with the package that doesn't include the expansion of the welfare state. it's going to be tricky, but i'm open to looking at the specifics in this proposal. >> that's why i ask. t they need probably 15 to 20 senators but it does sound like what you've laid out before. why are you kind of holding back at this point? what's the hangup? >> no, because -- well, there's a lot of details have not been worked out how is it actually going to get paid for there are some plug things in there not very specific and we don't know how they're going to work for instance, there's this notion that there's going to be private financing. what does that look like is the government going to set up an infrastructure bank, capitalize it and what's the source of repaying those private loans? how is that going to work?

we've got no details whatsoever. it's an interesting idea i'm not ruling it out but the details matter >> senator toomey, thanks for your time today. >> all right thank you. >> take care we've got a lot more coming up in just a moment after this the latest message from the federal reserve. pat toomey just talking about it we'll talk about the top market take aways former dallas president richard fisher is going to be with us. tomorrow current st. louis fed president james bullard will be with us right here on "squawk box. it's going to be a wide ranging interview. it's exclusive you do not want to miss what he's got to say. he'll bring us inside the room stay tuned 'lbeig bk tethwel rhtacafr is

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juneteenth a federal holiday june 19th holiday commemorates the end of slavery in the united states it's already a holiday in 47 states and the district of columbia president biden expected to sign it by saturday which would make it the country's 11th federal holiday. mike. new jobless claims from the labor department and what's next for the street's top financial stocks now that the fed is at least talking about talking about cushing its asset purchases. stay tuned, you're watching "squawk box" on cnbc don't forget to subscribe to our podcast. you'll get interviews, original content and behind-the-scenes access look for us on apple podcasts or on your favorite podst acapp and subscribe to "squawk pod" today. or it could be the day there's a cyberthreat. get ready for it all with an advanced network and managed services from comcast business.

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welcome back to "squawk box. we are a little more than an hour away to the opening bell. dom chu joins us with a look at some of the morning's top pre-market movers. dom. >> andrew, here are a few stocks to watch in the prooe-market trade. shares of kroger are down. it's been volatile over 50,000 shares of trading volume this is after the grocery giant reported quarterly sales it raises full-year profit forecast and kroger's board authorized a new $1 billion share buy back program

nonetheless, outperformer over to date now down 3/4 of 1% shares of ford are higher by north of 2%. this is after the automaker said a key measure of profits for the quarter would be significantly higher than the same time last year it also says that customer interests in upcoming vehicles like the bronco suv, the maverick compact truck and all electric etransit commercial van all remain strong. ford is issuing those statements ahead of an investor conference. we'll end our shares of another electric vehicle maker fisker. it signed a long-term agreement with auto components and systems maker magna international to help build the ocean electric suv. andrew, those shares up 2.5% right now. >> dom, another stock moving this morning, a shortage of homes for sale in the u.s.

helping home builder lennar. that shortage resulting in higher sales prices and profit margins that were substantially higher in the same quarter a year ago becky, it's -- you know, we talk about lumber, we talk about construction costs it's getting interesting. >> it is i mean, lumber prices have come down pretty significantly but they're still so much higher than a year ago. up 14% year to date. so watching that has been really interesting. then there's a very interesting story on bloomberg where they were talking about how thieves are really targeting commodities like they haven't in ways before going after construction sites where they're stealing the lumber right off overnight because it's just lying there. copper prices have been something that have been really interesting, too i don't know we'll see. it makes sense to see lennar making hay while prices are up and they can get the leverage. i think it will take time before pricing power comes down in the industry even though pricing for those commodities have dropped.

when we come back, we're going to go in depth with the latest fed decision with someone who knows the central bank inside and out former dallas fed president richard fisher will join us. on "fast money" tonight, pop the popcorn. wall street's summer blockbuster. what's driving the action in amc. you'll hear from some of the biggest members of the trade the "fast money" crew will be there to break it down 5 p.m. eastern time stay tuned, you're watching "squawk box" and this is cnbc. a? at new chapter, its' innovation, organic ingredients, and fermentation. fermentation? yes. formulated to help you body really truly absorb the natural goodness. new chapter. wellness, well done.

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welcome back to "squawk box" on cnbc. rick santelli standing by the cme in chicago with breaking economic data. good morning, rick >> good morning, mike. well, we're moving the wrong way on initial claims. we were expecting the number to be close to 360,000. the last look 376,000. very close to the 1967 average vol initial claims we moved up, 412,000 412,000. and if we look at continuing claims, also a bit of a wrong direction move 3,518,000. we are a whisker under 23 3.5

million last time. that gets revised up 3.517 to 3.499. basically almost the last same as this week's although this week is just a bit higher, 1,000 to be exact. if you look at philly fed for the month of june, expecting a number around 31 pretty much what we received 30.7 30.7 just to give you a rough idea for april we were at 50.2. that is an historic marker for the philly fed mike, you know, i really enjoyed your opening today because you nailed it. if you look at where tuesday's closing yields were by far 5-year, the real world financing rate is up a dozen basis points as it sits right now around 90 basis points here's something fascinating we closed the 30 year at 2.17 on tuesday and it is now 2.16 and

change it's not only down from yesterday and the previous day which is giving you a showcase about how the longer maturities are appealing to more global investors with more of a buy and hold scenario than some of the true financing that goes on in the five-yearand one thing we also like to point out is the notion of how we're slowly pulling reality forward isn't shocking to anybody regarding dot plots. remember, it's outcomes. sooner or later the outcomes are going to most likely be a lot more similar in the real world than many dot plots. i think many in the marketplace get it but they're holding on to their positions as long as they can. back to you. >> small adjustments see if they filter into that with this stutter step in claims appreciate it. rick santelli. we'll continue this conversation right now getting to our top story the new economic messaging from the federal reserve. stocks falling as the fed revealed central bankers have

moved up their time line for projected interest rate hikes. talked about the dot plots the fed increasing the interest rate forecast and the economic growth estimate. for more on all of this, let's bring in richard fischer. he's senior adviser to barclays. great to see you this morning. let's just start with your immediate reaction to what jay powell said yesterday. >> first, as a retired dot, i agree with rick santelli by the way. these are just guest estimates and as we know, they forwarded their guesstimates as to when they might raise rates, et cetera my reaction was no news i mean, i thought this was fully to be expected i thought jay powell was very honest and very frank on reti retirement in terms of how it's impacting full employment, how we get there also, very frank about the possibility they may be wrong on

their inflation forecast they'll see it and if they are, they'll adjust so i found nothing surprising. the adjustment of some of the words but a bit more importantly the way they expressed themselves in the press conference i was surprised there was any market reaction whatsoever the thing we know is this. we're moving in a direction of less monetary accommodation over time and that's been confirmed there's no doubt about it, it's going to happen. >> so jay powell has effectively said that he'd prefer to be late than early in terms of moving. do you think he's made a mistake by not moving fast enough? >> i think you have to be very, very gentle here because we learned in 2013 if you express yourself in a way that you move forcefully quickly, you get a harsh reaction and that can come back and bite you. the market reaction bites you on the economy. it's a delicate path i argued against qe 3 and the

continued expansion of the balance sheet. as i said then, it grows without control and it can take over the system if you're not careful so i think we've gone much, much further to expand the balance sheet punching through 8 trillion by the end of the year and we'll have to see how quickly they can cut it back without disrupting the economy and having a market reaction becoming disruptive and undermining confidence. >> let me ask you about this question about what's transitory and what may be the new normal because if, in fact, the fed is going to take its foot off the accelerator you do have this issue which we've been talking about this morning about the potential new infrastructure plan you might have the exaccelerator pressed down on a different side >> yeah. this is the risk that they run with the new reaction function that they've outlined. they wait until it's confirmed, it's not ransitory it won't last and then they

raise rates or tighten on the balance sheet. that's a reactive mode the problem is as i've said on this show plenty of times the risk is rather it takes a while for an adjustment in monetary policy to impact the economy there's a lag. if you wait until you see the whites of the eyes of nontransitory inflation and then you adjust, then you're going to have a 10 to 18-month lag for it to take effect on the economy and expectations can get worse and become more gripping that's the risk being run. i pray that they're right. i hope that they're right but that's the risk that they're running. >> we've heard from jamie dimon this week, we've heard from paul tudor jones and others ahead of jay powell's comments that they believe inflation is here, it's real and they're preparing for it >> yeah. i see that in the corporate world as well. i'm on the boards of pepsico,

at&t and health care which i sit on now all the cfos, ceos i talk to are quite worried about it here's the point you can't just make an overnight adjustment to inflationary pressure you have to adjust cap ex, supply lines, et cetera. it takes a while to work through the system most of the corporate cfos and ceos i talk to are expecting this to continue on through next year that's the question. how transitory what's the period of being transitory but i think one thing to remember is this, jay powell, like any other modern fed chair, does not want to go down in the record books as being an arthur burns. i think he is very sensitive to the fact that there's the risk that inflation can get out of control. there's a risk that the model they have right now cannot be correct and as soon as they determine or he and the committee determines that that risk is real, they'll adjust

accordingly. >> richard, what -- >> my point is this. we know the direction we're going, less accommodation over time the question is what's the time frame? >> i don't know if you were listening earlier in the program when mohamed el erian was on he effectively said this is still game on for the equity market the equity market is looking at this saying liquidity is here. it's still a green light in a major way, but he's suggesting that long term it could create stability problems in the market >> yeah. look, we're at very high valuation levels one would have to consider that as they continue it's been fueled by cheap and abundant money and that's likely to diminish over time. how are businesses doing businesses are swinging back thanks to demand and particularly with the consumer being as robust as the consumer is long term who knows.

i would just say right now with every hint of a basis poin possibility of increase whenever it happens in terms of interest rates, that diminishes the way you discount the present value due to cash flows. i admire him i think he's usually right. >> would you want to own commodities right now? >> i would say this, we've obviously seen a burst of demand, enormous price inflation across the commodities spectrum. one might want to lighten up a little bit in terms of their commodity exposure, but there still is enormous demand, particularly as we have this incredible economy in the united states coming back like gangbusters. can i just say one thing i just finished reading jeffrey garner's brilliant new book on "the three days at camp david" where president nixon changed the way the world operated this is perfect today for president biden. he said his economic witt on

fiscal and monetary policy, the way he's using it has no parallel in modern history points out, this is what he said, budget would have staggering deficits, the federal reserve is trying to push the economy and block every means for assault and battery. this is like 1971. people think of '78, paul volker this is '71 working its way through. different circumstances. enormous shock to the economy. they had the oil shock we now have the pandemic shock, recovering from it but every means except for assault and battery has been tried by the federal reserve and now it's time to tamp that down. so we'll have to see what happens going forward. >> okay. so if the fed tamps it down, the question though if you were advising senator pat toomey who was just on the program, talking about fiscal policy and you were talking about president biden and the administration, how do you -- how do you think about the budget at this point

>> it's late the economy is roaring along every means is being used to accelerate the economy it's happening on its own dynamic and i worry about these fiscal excesses that could make an overheated economy and, therefore, stoke further inflation and put the fed in a very difficult position. >> right richard, final question for you. paul tudor jones says 5 p% of yu wealth should be in bitcoin today. 5% should be in gold what do you think of that? >> yeah, well, i've always felt and i've stated for a long time, bitcoin is a purely speculative medium and no underlying value the fed is going to break in, so much for anonymity and all of that stuff i think it's a purely speculative medium some people are good at it pretty average investor, i think it's a risk medium we'll just have to see how that works out.

>> richard fisher, always good to see you appreciate it. >> thank you for having me always >> of course, always thank you. when we come back, jim cramer's first take on the markets as we make our way towards that opening bell. plus, top financials analyst mike mayo will lay out what yesterday's rate hike projections could mean for bank stocks in your portfolio quk x"n ook.you're watching "sawbo okrir cnbc.

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let's get down to the new york stock exchange. jim cramer joins us right now. jim, a lot of stuff i want to talk with you about. why don't we start about your reaction to the fed and the market's reaction to the fed what are you thinking this morning? dow futures down by 113 points maybe this wasn't as big of a deal as we were saying it would be ahead of time. >> i'm going to take a contrary view to everybody who's spoken about this i thought jay did a good job i think he did exactly what he should be doing. you can't move things too fast doesn't want to repeat the errors of 2018 for him, janet yellen in 2015 in december it was calm. it was collected everybody wanted him to do something crazy and wild that's not jay's nature and i applaud him. he's been right. he is right. and all these other people are trying to say that it's wrong. they've been saying it's wrong for a long time and they have no credibility. he's got all the credibility. >> the market is taking it in

stride, right? >> absolutely. absolutely look and see how ford's doing, lennar is doing, kroger. we're back to usual. the big, bad event that occurred one day jay is going to get a lot of credit. people are going to say, wow, look at the way he navigated this look at the way he navigated the incredible decline in the economy, how he came on the "today" show the exact bottom enough is enough one day this man is going to get credit he's certainly not getting credit now it's beginning to cause to me a suggestion that perhaps people are idealistic and they're idealogues. >> i don't think that's a new thing. i think that is the case you can kind of tell exactly who's going to say what kind of reading back to what they've been saying for a decade >> right >> give me a break he's doing a good job. i know i'm a -- i'm an army of one here he's doing a good job i just like him so much.

i think he's learned a lot he's very professional he knows how to handle everything he looks like a fed guy but he's really pro worker. i think he's just amazing, but that puts me very much alone except for maybe his family. >> yeah. >> maybe. >> i think his family likes him very much. >> i think he's fantastic. he should come to cnbc he's dynamite. i mean, the guy has just really got it and everybody else who's criticizing them, i suggest they look themselves in the mirror and say have i done as good a job as jay because the answer is no >> wwjd? what would jay do? >> i don't know what the story is becky, the guy is fabulous. >> jim, i want to ask you about oil because we were talking about you earlier, not sure if you were listening, and somebody brought up that this was a point you made yesterday and i think it's a pretty important one, just this idea that oil prices keep going up. that's a concerning thing. if you want to look at something that could hurt the consumer and

hurt the overall picture of the economy. >> yeah. and a lot of it is the drillers are simply not drilling as much as they did. the oil companies have all turned into -- they're kind of like greenpeace. they're all afraid there's going to be a challenge. exxon lost the most important challenge. engine one, nobody had heard of including themselves got some board seats and that was it. blackrock saying listen, we're done with you guys flaring your darn fool heads off. suddenly we have this oil guy saying, listen, the only way we can cut down on emissions, we have to cut down on drilling they're down to almost 2 million barrels a day. that was the swing permean was the swing. when you have them on and talk to them, it's amazing. they sound like your kids who are saying, hey, dad, you're wrecking the earth come on, it's like they make me feel guilty. those guys like probably

recycled green and brown bottles. >> wait a second, you've been calling for this for a long time with these guys saying this is a new paradigm, new, younger investors are not going to invest with them as fossil fuel companies, they want to see something different. >> they've changed. >> maybe it's not in their heads. >> no, they've changed >> no, i've hammered them. i was friends with them. i was the only guy who liked them they used to come on the show. now they hate me i say you've got to change i don't care they have come around to my view that unless you become more environmental, the younger generation and blackrock are going to vote against you. now they're all afraid they're going to get fired by a board. look at the board of exxon it looks like the board of a charity devoted to making -- to planting trees >> so i think it was goldman sachs maybe earlier this week that said oil could push back to $100 do you think that's a realistic scenario. >> that was an over reaction he wanted to get our attention he was an attention-getting guy.

that's great. >> it reminded me back in 2008, 2009, maybe it was 2007 before everything went haywire, was it a $400 barrel of oil. >> they were so ywrong. look, it's not like we'll have to come back and look at them. hey, looking at $100, that's kind of their game i mean no, i'm not going there i think that the bias is right, that it goes higher, but the $100 is just to get us to talk about them, so here we are talking about them. >> it worked. >> i would rather talk about lupe. >> what? >> or the sixers >> why do you hurt me, becky >> i'm sorry we like the sixers, too. my brother and mom and dad, all devastated by all of this. >> robbins texted me, he is from

atlanta, at the end, ouch, sell cisco. chuck robbins. right in my face home depot sell home depot, too they're from the area. coca-cola. sell them all. sell everybody having to do with atlanta. that is a critical breakdown that is not unlike 1964 when my dad bought me world series ticket, the thing my dad for me was sports >> it's bitter jim, great to see you. talk to you tomorrow. >> andrew, how are you doing, buddy? >> i love you, man i love you. >> you are the best. all i could do was say did you love that andrew piece it was great. >> he was so good that day that was really good >> hey, someone, give me tickets, you can't just get in. >> you need tickets. have you been?

all right. so i missed that part of the interview. i figured i would just show up you can show up. >> you can show up >> you can show up early in the morning. >> think about noon. >> you can show up at noon at the little island. it's extraordinary it's the greatest. >> you are so spot on. >> i got to get back in line with new tickets >> jim, see you. >> you got any tickets >> the sixers lost help me here all right. wow, you have no juice at all. >> crickets. >> bye, jim. see you in a few minutes >> bye >> all right, as we've talked about this morning, the federal reserve standing pat on interest rates at the latest policy meeting but internal projections now show the central bank's first rate hike could be sooner than thought and it could be a critical development for the financial sector joining us now to talk about the stocks, mike mayo senior analyst at wells fargo good to see you this morning obviously, bank stocks reacted

relatively positive to the news and a rate hike in a couple of years, and how does that filter into the value of bank shares today, for you >> well, inflation can be either heaven or hell for banks, and for this, we had to go back to 1970s, my 1970s bag, and in there i found a disco ball and some pretty bad inflation. so back in the '70s or even 1994, the inflation caused unrealized securities losses, derivatives losses, asset liability mismatches, so too much inflation is hell for banks. but we think what's happening now is a dose of heaven. and so higher rates sooner can allow banks to finally earn more money on all of those deposits that they've gathered, and so this means that assets reprised faster than liabilities, a bank

like bank of america has grown deposits equal to the sixth largest bank in the last year. and they spent a lot of money on gathering those deposits, branches and technology, sales and service, advertising, and they haven't been able to get the value forit, because rates have been so low consider this. over the past year, the decline in the bank industry net interest margin has been the greatest in a century. so if the fed is going to raise rates, and as of yesterday, they gave an indication of two rate hikes in 2023, where as before, they had zero, then that should help reverse the decline in the net interest margin, help to improve traditional banking revenues, and give a tail wind to banks when they haven't had it, and as a reminder, you have not been at the start of a fed rate hiking cycle in six years and you're starting from a very low level of rates, so you know, yesterday was good news for banks, we think it's good news

ahead. >> yes, obviously, on the credit side, things are going in their direction, too consumers are flush. all the rest of it what about the trading issues in the shorter term, you know, for some of the big banks warning things have slowed down in the second quarter >> look, capital markets are still stronger for longer, nobody expected capital markets to stay as strong as they were in the past two quarters, corporations front loaded a lot of their financing needs, but i still think relative to where expectations were before, a lot of the banks are saying it is going to be like 2019, it is still going to be probably between 2019 and 2020, so that's still better than expected and don't forget the biggest two positives for banks. number one is credit quality, we now think that banks will release almost all of the reserves that they built up from the pandemic, and you should see that when they report earnings next month and the other positive, it's imminent, is capital return, we think banks will return twice as

much capital as the prior year, after next week's fed stress test, so we summarize all of this as two-one-zero go for the banks, two times more cap return, the one relates to reserves going back to day one of the pandemic, and the zero, we think that banks increase deposits by zero percent with the first few fed rate hikes and that falls to the bottom line again, especially for bank, such as bank of america >> all right mike, thanks for wrapping that up for us. b of a, at 54, at yesterday's close. "squawk box" will be right back. that building you're trying to sell, - you should ten-x it. - ten-x it? ten-x is the world's largest online commercial real estate exchange. you can close with more certainty. and twice as fast. if i could, i'd ten-x everything.

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let's check out the markets, one more time, before we hand things over. you'll see right now, the futures are still weaker, dow is down by 97 points, not as weak when we started the program this morning, that is after declining just over 230 points yesterday s&p 500 futures down by 15 the nasdaq down by 64. the one thing i saw is the dow futures moved below the 50-day trading average. dos that matter? >> short term, a little bis loss of momentum, it is usually not something that redefines a trend. 200 is a little more important

>> mike, thank you for being with us. >> great to see you. >> that does it for us today, andrew, i'll see you back here tomorrow >> see you tomorrow. >> right now, it's time for "squawk on the street. good thursday morning, and welcome to "squawk on the street." i'm scott wapner with jim cramer at the new york stock exchange, david and carl have the morning off. and looking at the stocks, continuing the post-fed slide. not so bad the dow opened about 90, there is the s&p, nasdaq, following suit as well our road map starts with what else, the fed. about to shift gears inching closer to tapering, and investors are preparing for volatility ahead. plus, mr. chairman, microsoft backing ceo satya nadella in two decades and the tech gse