gasoline is hitting an all-time high it's thursday, may 19th, 2022. "squawk box" begins right now. good morning welcome to "squawk box" here on cnbc we are live from the nasdaq market site in times square. i'm rebecca quick along with joe kernen and andrew ross sorkin. if you were looking for relief this morning, go back to bed you won't find it. futures are indicated sharply lower again. down 1%. the dow futures off 450. s&p down 60. the nasdaq off 207 this adds to the steep declines yesterday. the dow was off about 1,100 points down 1,200 closed down 1160

the s&p was off 4% the nasdaq composite was the big loser. down 4.7%. of course, these declines add to all of the declines we have seen in recent weeks and months if you want to take stock of where the major indices, the dow off 14.8%. high was 36,962. it closed yesterday at 1,490 s&p is down 18.6%. nasdaq off 29.6% at the close yesterday. nasdaq, which closed at 11,418 is coming off the high of 16,000 we are going to keep an eye on all of these things. yesterday, the loss started with the target reporting below expectations the company's expectations they got hit by inflation.

we are not able to pass the costs on to consumers and that stock was down 27% yesterday it is down once angain this morning. a decline of 2%. joe mentioned the declines target with the worst since 1987 walmart down as well the worst since 1987 the worst the two have sieen since black monday if you think things are getting better, the aaa average for a gallon of gas is now an all-time high at $4.59. it is over $5 in many parts of the country. this is continuing to tell you what is to come and the pressure we are facing. treasury yields are coming down.

the 10-year yield at 2.82% the 30-year is barely above 3% 3.008% >> what is the guess on the high gas prices in july maybe we -- >> it is a refinery issue. >> will we do it in litres will it be euro style $7 a gallon >> i don't think we have seen the last high. >> the vix is not cooperating, andrew it is not scary enough we're back to 3,900. on the s&p i'm talking about. >> what you are saying not cooperating? >> we need more fear than 32 >> to flush things out >> yeah. >> 100%. >> here is some of the

article -- >> my fear is this drags on for a long period of time. >> then again, we feel pretty bad and the dow and s&p are not in bear markets. >> the nasdaq down 30%. >> hopefully that -- scott minmi minerd has been on many times. the nasdaq could plunge 75% from its peak the s&p 45 from its top. >> why continued inflation? >> stagflation a serious bout of stagflation. not something that is supply chain issues go away i heard yesterday and i felt it was interesting. someone said i think valuations are getting sort of back to normal we're almost at the valuation from before the pandemic

it's like -- the pandemic takes us to unbelievable value why? >> these are the biggest declines since june of 2020. >> why did we get over valued? >> a lot of money in the system. central bank >> you remember some people thought that we were over valued before the pandemic. >> i know. that's true. so we could overshoot. katie stocktonon >> all of the companies were earning more money >> those are now not earning more >> right. >> we'll have katie on see if she goes -- last time -- every time i talk to her, she is shaking her head again i try to get her to say we could

be in support. she kept like -- >> she will not let you talk her into anything. >> stop that hold your chin barry knapp. we will get to barry i want everyone to visualize the speech everyone could use a george c. scott speech or patton-type speech you memorized lines from that, barry? you are managing partner at ironsides macroeconomics are you feeling anywhere near there's enough fear yet? >> so when the market crashed up to the fed end q2 in 2011, i was there. sorry, that was a patton quote. >> annd you'll be back. >> i'll still be around for the next one

>> i'm closing my eyes and seeing him. >> yeah. listen, i think this is more than sufficient or more than sufficient adjustment to the with drawl of liquidity. you were talking about this a little bit the fed gets a lot of blame for injecting too much liquidity obviously it wasn't just the fed that injected that liquidity into the system a year ago it was the american recovery plan and then it was the yellen treasury that injected $1.7 trillion from february through august by initially sending checks out and cutting bill issuance. it was a more aggressive injection than the fed it was always going to be difficult when the liquidity was withdrawn in the beginning of the year i thought it was worth 12%, not 20 20 is not unprecedented. this is what happened in 2011 at the end of qe 2.

in 2018, when the fed was going to quantitative tightening in the fourth quarter we had this occur. first of all, the famous paul samuelson quip there has been five recessions and 4% declines that have been false alarms this looks like the fifth. there's no credit cycle like there was with the 1990 recession with the savings and loan industry went down because of commercial real estate. there was no big tech investment boom like there was with a boom in stocks, but not the tech investment like there was in 2000 or housing credit cycle if you think about it in that context and consider that the average or median decline for recession is 4% for the s&p 500

and this is on the outer end of adjustments to fed policy. 20% is more than sufficient adjustment to all this i think the market will find its footing in this vicinity based upon that history. >> it always overshoots a little bit? you think we've done enough in terms -- that was a statement you made at the top. there was a lot of liquidity and it is jarring when you withdraw it you think the market is now adjusted enough. is enough fratd is doing from here >> i do. you were talking about valuation a bit. the market was surely rich, not relative to bonds, but rich outright prior to the correction the equal weighted s&p is

trading. the long-term is more like 16.5%. the cyclical sectors have not been leading the decline i saw the headlines when i turned on bloomberg. the stock is considering a recession. it is really not it is the over valued tech sector led to decline. it is over valued stocks that led the selloff. it is a valuation compression as much as anything now valuation is fair. who is to say it could not overshoot somewhat that's where i bring the history in to make a decision whether enough is enough it doesn't look to me like a recession in any meaningful way. we should be at a reasonable spot one other thing i would urge the viewers to think about is the best entry points during business cycles are clearly if you can buy at the depth of the

reception with the wherewithal to do that, that's great the fed policy corrections like qe in 2010 or the flash crash or the debt ceiling debate or 2011. those are great entry points i think this is going to be turning out to be a great entry point for people to put money to work for what i think will not be a two-year business cycle, but something akin to five or so there is considerable upside from here. >> i would say you are 80% fundamentals and 20% technicals, barry, in general? >> yes i know enough about what katie does katie stockton does to be dangerous. >> we don't need a 40 vix? we don't need -- blood in the streets. people say i'm never investing in the stock market again? we don't need those things to make a lasting bottom?

>> i focus a lot on derivatives. >> you admit that? >> in 2018, we had the huge spike in vol the vix never got to a new high. we washed it out when you look at the structure of the volatility markets, you see things like the premium for down side puts strhrinking becae people are raising cash. the same in 2010 and 2011. you don't get the premium expanding when the people were selling. they didn't need the insurance i'm at a conference in new york. the sentiment is bearish i don't think people need to buy that down side protection anymore. they have been selling it as

much as anything because they protected their gains and raised cash. >> barry, you sound calm and reassuring i wonder what are you doing this week are you personally buying? >> i have been a little bit. i have been nibbling at energy for sure y i don't think that is over yet i have been nibbling on semiconductors as well i upgraded tech this weekend i have been under weight tech since august ofof 2020. revisions are headed higher. trading at the same valuation of the staple sector. i'll take tech over staples at the same valuation level any day. i think there is a strong capital spending cycle to last through this sicycle. i'm picking up on the bounce from s&p 500 companies reporting

the cap x spending plans the various fed surveys look good there is a strong cap spending cycle in front of us software was a tough way to play that semiconductors are starting to get reasonable i think that is a good place to nibble >> any comparisons for what was around in the '70s and '80s? we are starting at a lower level in terms of interest rates you don't't see a multiyear wag price spiral that causes stag legis fl flation? you remember where the dow was >> i do. i was studying economics in 80

and '84. volcker was going through the inflation policies i have been comparing this period to the '60s with similar fiscal and monetary policy expanded the social safety net that led to health care. i would note through all of this and i think this is an important, but subtle point. when the u-curve inverted in march, it wasn't driven by the tips curve it bwas driven by the break curve. since that time, we had imported inflation come off strongly. prices from china were increasing at .7% a month. they were zero in april because of the strength of the dollar. the market is correcting you had goods prices come off from 12.5% to be low 10%.

so far this year peaked out for now how prices are set up to come off as well. inflation will start coming down you have seen that in five-year inflation break evens come down 70 basis points. things are easing up already i think that will manifest through the course of the year this is not about fundamentals this is the liquidity dynamic we discussed. >> if katie stockton comes on and says anything positive, we are covering the whole -- are you in vail? >> i'm in bryant park. in new york city >> will you go out -- you don't go out to ski? this is the best time in vail. >> barry is a block away >> it is nice in vail. golf season has started. >> fantastic out there thanks, barry.

it is not knapp. you keep the "k" but don't use it >> in germany and switzerland they use it. we have more coming up more on the losses in the markets and the biggest movers of the morning and the brutal day for retail emergency measuro address the baby formula crisis. you are watching "squawk box" here on cnbc >> announcer: this cnbc program is sponsored by truist securities sw ed two m go, literally right before this. (vo) iphone 13 on us. on any unlimited plan. for every customer. with plans starting at just $35. all on the network more people rely on.

an update on the national shortage of baby formula president biden invoked the defense production act to ge formula on store shelves >> the defense production act gives the government the ability to require suppliers to direct resources to infant formula manufacturers before any other customer may have ordered that good >> the president launched a program to use military aircraft to import baby formula from abroad they will provide $28 million in emergency funds to the fda

it will provide resources to prevent fraud products from being placed on shelves tan increase the agency inspection staff. that is good to hear nothing worse, becky in hedge fund land, these folks have had it bad. not worse than the families around the country maybe the end of the saga. melvin capital will return cash to investors. g melvin with the short position in gamestop. you remember they had to infuse $3 billion into the hedge fund to shore up the fund down 21% at the end of the first quarter for melvin the tech rout this quarter as intensified the losses

the beginning of that -- it is fascinating. i don't know if you spend time on reddit. a lot of folks are cheering. david might beat goliath it started the rout, but it wasn't the gamestop short that appeared to put him you under. it seems to be everything after he was effectively rescued by ken griffin that put him under ken and steve made a mistake in terms of which jockey they were betting on you might remember ken griffin came on the broadcast and said gabe was one of the great investors of his generation. >> why can't he come back in two years? >> with a new fund >> he could. >> remember what he was going to do he was going stay in business

and wipe out any and start new with the incentives. why isn't this part two? i have too much blowback and apologize for broaching. why doesn't -- two years from now, i'm back and he gets to do it again this is another roundabout and longer way to get back to doing it and taking? >> that may be the case. we talked about it at the time it seemed crazy when he said he was going to change the high watermark to get paid despite the hlosses there are investors and i talked to a couple over the last two weeks about the fund there are investors who were so early with him and did so well that i think they may take a chance on him. it's possible that could happen. this goes a little bit to when you get in it is like bitcoin

a lot of investors upset today who got in at $60,000 and never support bitcoin. if you got in at $5,000 or $10,000, you support bitcoin people like that with gabe >> his record was 30% a year after fees before 2021 that's why somebody might come back this also talks about the dangerous nature of shorting and how spectacularly that can fail. >> what is interesting is it is not clear the failure of the fund all of the trades that put the fund under were after shorting gamestop the gamestop is almost like a side show. it is everything else that he did and it wasn't strictly shorting he just literally seemed to make a lot of bad investments including long investments that were wrong >> yeah. >> hewait. he can come back in a year

i don't see how this is different from the last. why did i say i was going -- i can do it this way you really can't say anything about it he's a young guy two or three years from now? >> i'm not as cynical in that regard i think he was unable to keep the fund going i think the current fund -- >> he could start small. he can wipe out all of the money he oweses t s he can wipe out all of the money he owesess to get back to even take in fees again. >> you always have the option to find somebody to give you money. it is also possible he never comes back either. sets up a fairway office like so many others. >> he said something like it is clear to me i should not run other people's money. >> he'll be back. coming up, a closer look at the losers in the washout on wall street. the dow with the worst day since june of 2020 plus, we'll show you what is

moving right now later, retail wreck. target coming off the terrible day yesterday. in fact, the worst since black monday in 1987, which occurred on a monday. we'll talk about the inflation ack nd w oa ght ahead. blmoayasn monday yeah >> announcer: this cnbc program is sponsored by baird. visit bairddifference.com. girls... the chess club has gained an edge on our bake sales. we need more ways of connecting with customers, fast. i know some consultants with great ideas. can they help us improve our digital experience? absolutely. they've invested over $2 billion in tech. that could really help us manage inventory. and save us a ton of dough.

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welcome back to "squawk box. futures down 400 on the dow after the 1,100 loss yesterday worst loss in the dow in a couple of years. you can see the nasdaq which was

also succumbed yesterday and showed percentage losses down 172 the s&p down 53. let's get to dom chu on pga day. >> yes i want to talk to you about it i'll wait. i'll get through the content and love to talk about what i think about the marquee group we'll watch. >> i want to talk about the first group, too i have some background on that >> owh, i can't wait to hear that joe, you mentioned the nasdaq. epicenter for the down side voluatility and the drawdown since the record highs in the fall of last year. as you take a look at the biggest five companies in the entire market for the united states apple, microsoft, alphabet, amazon and tesla top four are the trillion dollar club tesla used to be there

now worth $735 billion. apple and microsoft and alphabet and amazon represent 25% when i point out that apple shares are down 1%, microsoft is down 1% and 1.3% decline for alphabet and amazon down 2%. that is on top of the 6% losses for apple yesterday. 5% losses for microsoft. 4% loss for alphabet and 7% for tesla and amazon in yesterday's trade. these are big moves with impact on the market. in if you want to put it in context, look at the moves from the highs and how we have come down from there. by the way, for apple o, over te course of the last year,

microsoft as well, is negative we down 23% in terms of drawdown microsoft is down 27% at this stage. alphabet is down 26% these are massive moves for the stocks in that so-called bear market territory the big, big, big declines have come from the next two on that list that is amazon and tesla if you take a look at the charts, it is a huge move in the overall massive move higher in tesla and move lower for tesla and amazon from the record highs for each, we are down roughly 42% to 43% off the record highs for each company. that is where the damage is being done in amazon and tesla end. by the way, if you want it in broad market context with the nasdaq composite trade overall, you mentioned at the top of the show the drawdown for the nasdaq at record highs at 29% to 30%. that focus is on the longer-term

chart. you may recall at the pre-pandemic highs in february of 2020, the nasdaq composite trade was close to 9,800 the level that people will watch here is just below here at 11,108 the reason why, joe, is that was the intraday low we saw in the biggest part of the declines last week before we bounced. some perspective in the longer term basiswhere we were. the pre-pandemic highs and we still have a way below that. joe, that is something to keep an eye on. >> a weeking ago that is the day bitcoin got to 25,000 that is 28 or 29 right now that hasn't matched the lows from last week still the irony of going back to more reasonable valuations after a pandemic the pandemic took us to much higher valuations. that's not just valuations, but

higher levels. absolute levels. that is what you wouldn't think at the beginning of the pandemic you shutdown the world and you don't think stock prices are going to soar. >> no, you wouldn't think it back then. if you put trillions upon trillions upon trillions of monetary and fiscal stimulus and taxpayer money behind it and stimulus checks. >> you are talking about the jordan spieth and rory mcilroy and tiger woods group off number 10 i was talking about the first group off number 1 sean mckeal and y.e. yang and john daly. >> two are past pga champions. >> two at southern hills

>> when i was growing up in my younger days of golf i watched with awe and certainly john daly the fact john daly can do what he is doing. bombing the ball the pga champions tour >> he is a character john daly. a character the entire time. he seems to get more colorful. his pants. >> not just the clothing. >> right his pants, too that is a group. a lot of great groups going off the back that i saw that i would love to watch. bubba with justin rose and pat patrick reed tony finau he is with hideki and xander. >> part of the pga championship which is great for me is the club pro guys that come up

there. i know they will not win it. 1% chance of winning it is fun to watch a guy like that who doesn't do it every week for a living try to do something. >> you fantasize thanks, dom. see you later. still to come, we will talk about the retail wreck target and walmart coming off the worst day since october of 19 1987 the inflation effect the dow down 200 points after closing down more than 1,100 points yesterday. during may, asian american pacific islander heritage month. here is new york sometimes editor ed lee. >> a big part of being asian american is finding allyship with other groups. we can't do it alone

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good morning welcome back to "squawk box" here on cnbc check out the futures this morning. what was a rout yesterday looks to continue. dow down 400 points. nasdaq would be off 168. s&p off 52 points. we should mention cisco is the biggest loser in the s&p 500 it is plunging after the company's current quarter forecast called for decline in revenue between 1% and 5.5%. analysts were looking on the other side for growth of 6%. chuck robbins blaming that outlook on the supply chain and lockdowns in china the company emphasized the demand for products remains strong becky. andrew, thank you. recent quarterly results from bellwether retailers as well fueling further major concern about the health of the consumer with the high inflationary

environment. this could be issues by retailers. target's ceo brian cornell talked about what went wrong >> the challenge for us in the quarter was the back of the house. from the freight and transportation standpoint. things changed from 13 weeks ago. we did not project, i did not project the significant increases we would see in freight and transportation >> let's bring in jan niffen and anisha sherman cover retail jan, let's start from the big box retailers. target and walmart getting caught flat footed here. not just with the increase of pricing for freight and anything related to transportation costs, but also having the wrong mix. too much inventory in the wrong

areas. that is really, really unusual to see those two get caught in a trap like that i wonder what happened what do you think? >> becky, i was the treasurer of the s&p 500 in '87 which is scarier than this. from walmart and target, it is surprising one thought we would do a better job because they wound up with way too much inventory at the wrong time and did not mark it up to cover cost structure it is bad timing these are two of the greatest retailers of the world they all got it wrong. it is just because the costs came so fast from so many directions there was really no way to adjust the pricing policies to get where they wanted to be. the problem with the supply

was -- it is still covid it is a snapback from the other side of covid. i'm saying this is a one quarter problem mostly and a two-quarter problem for parts of it. the last part, which is inflation, that's whatever it happens to be. that is the rest of the year and the first quarter before they sort it out. they will get inventory sorted out and pricing policies adjusted in two quarters >> jan, this is a case of a slower supply chain and a lot of things make it so they cannot react as quickly and customer that is changing more rapidly than anybody has ever seen sdplchseen >> that is what is happening i ran a business in '79. we ran through double digit inflation. nobody has seen it since then. how you handle it is all throughout the organization. you can't throw a switch and

adjust for 10% inflation which is what we're seeing not 8.5% if walmart and target just raised prices as much as costs, we would see another couple of points of inflation in the system >> that's what we can anticipate from here? another couple poibtnts as they companies adjust >> i assume we get to double digit inflation. higher than anybody reports so far at 8.5 i think we are running at a double digit rate. we will rollover and come down from here and things will norm normalize. it is not over the next few months the inflationary component over the next year to 18 months things come down and it will get better and the companies will be smart at handling. walmart and target will figure it out and fix what is happening here it won't p ssolve the inflation

problem. when we come back to the w.a.t.c.h., it will still be the greatest companies in the world and performing the best. they have to get to the other side of the mountain we're climbing >> anisha, penalople are lookina results and we're already in a recession. you don't think that is the case based on what you have seen in the retailers you cover? >> no, i don't i think there is a bifurcation of demanded. wester now we're going out and weddings and vacations. our spending habits are shifting you look at target and walmart with the mark downs and take a gross margin hit house ws

houseware and basic an par re relate you look at other companies, tjx yesterday reported positive carbon m comp people are buying different things from a year ago retailers s miscalibrated demand you saw that impact withthe gross margin in terms of markdowns and inventory write downs this quarter >> if jan is right and we are looking at inflation rising to double digits, that has to pinch the consumer at some point when would you anticipate that catching up? >> this has been a debate going into the quarter it is not as bad as impact on the consumer the reason is the gratification. we heard this from price and we heard it from the value retail and fast food and qsr. there is a difference in the affluent consumers are spending

versus lower income. you look at the aggregate and demand is still healthy. we have pressure on the lower end of the spectrum coming into this quarter when we go into the back half of the year and we start comping against high inflation levels so the year over year inflation is not as extreme we may see that moderate >> anisha and jan, this is a fast moving picture. we appreciate it we have breaking news from phil on jetblue hostile bid to buy spirit phil lebeau. >> joe, for a third time, spirit board of directors said no we're not in the mood to make a deal unanimously voted to reject the tender offer from jetblue. they are also urging investors of spirit not to tender their shares for $30 a share to

jet jetblue. rejecting the latest bid from jetblue. spirit airlines chairman says our view is the proposed combination of jetblue and spirit lacks likelihood of obtaining regulatory approval while we face a long and bleak limbo period what does it mean for jetblue? they bid three times for spirit and this third one, temporarily, is not being approved by spirit. the board or the investors may say yeah, we're all going to put shares over or a lot of us put shares or enough of us will put shares with jetblue and perhaps that pushes this through at this point, the board rejected the offer from jetblue. by the way, we will be talking exclusively with the ceo of spirit airlines ted christie coming up. they are emphatic. they do not think this has any chance of going through.

that's why they're saying no again. >> all right thanks, phil see ya'. thanks a lot more coming up on "squawk. inflation pressure showing no sign of letting n sign of letting up we'll ask when we could see relief at the pump, next hey lily, i need a new wireless plan for my business, but all my employees need something different. oh, we can help with that. okay, imagine this. your mover, rob, he's on the scene and needs a plan with a mobile hotspot. we cut to downtown, your sales rep lisa has to send some files, like asap! so basically i can pick the right plan for each employee. yeah i should've just led with that. with at&t business. you can pick the best plan for each employee and get the best deals on every smart phone.

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welcome back to "squawk box. gas prices soaring to new record

highs. it's already up nearly 50% from one month ago and a closer look at rising energy costs as we try to figure out where this is headed global head of commodity strategy and cnbc krcontributor. thank you for joining us i don't know if you were listening to us at the top of the program, joe said, do you think we could get up to $7 a gallon, europe style, what do you think? >> i would look for potential demand destruction if we get north of $5. the price scenario to get to $7, that would, irth think, involve major escalation of the war in ukraine, but certainly, give be the lack of refining capacity, i do think we can be talking about the $5 a gallon scenario, which

is not great at all for the white house. >> in terms of getting to $5, what's it going to take, and more importantly, what's it going to take to reverse it in. >> the problem is we've already done the largest release from the strategic petroleum reserve. 180 million barrels. we've had the biden administration come up with a number of proposals, but we have no spr for refining capacity, and you cannot build one of these quickly. so we're basically dealing with two situation, the commodity super store facing possible sanctions in the coming weeks and the refinery capacity. so if are you the white house, there is no quick fix to this. something to be worried about though is china. china has kept a lid on oil prices the lockdowns there have been one of the bear factors of the market any indication that china is moving to end those lockdown restrictions, that would push oil a lot higher

>> when you think about not what the administration can do or not, but just the congross currents, assuming the white house sits on its hands, come, come the sum mer, come this fal, where do prices -- i don't want to say settle out. i hope we're not settling out at this level >> where did we see demand destruction in 2008? around $4 a gallon if you adjust for inflation, that's about $5.20 a gallon. but, again, you have to pay attention to what is happening with potential sanctions on russia, because there's no way to back fill russian oil if we basically lose the vast majority of its exports and there are other commodities as well. the food inflation story is also

incredibly alarming, given the fact that russia's essentially shut in ukraine's wheat. so we have a situation over the summer where it's not just oil it's natural gas it's food inflation that are the big, concerning inflation stories when you look at commodities. >> it is rippling throughout the economy. we're seeing it in shipping costs and just about everything. we appreciate it, and we look forward to talking to you again soon, hopefully with better news joe? >> the futures have improved on 300 on the dow and later, reaction to the selloff from kansas city fed president, esther george that exclusive interview coming up at 8:30 a.m. eastern. we're coming right back. what's on the horizon? the answers lie beyond the roads we know. we recognize that energy demand is growing,

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good morning, and welcome back to "squawk box" right here on cnbc. i i'm ann drew ross sorkin hate to say it, but we have a lot of red on the screen

about two and a half hours before we open, but if we did open now, we'd open about down about 280 points better than about an hour ago when it looked like we would be 400 down the nasdaq looking to open about 120 points down. the volatility index swis well above where it had been. it's up about 3.5% this morning. and let's show you the ten-year mot note if you're looking for tha mortgage, we can show you the 30-year fixed. inflation isn't getting any better, in case you didn't flow already. the aaa average is $4.59 in many parts of the country it's over $5 we're talking about whether it could get up to $7

esther george will be joining us in the 8:00 hour to talk about where things are let's kick things off this morning and figure out where stocks are of the dom chu's here >> the gasoline story a big one, because right now according to aaa ave aaa every state in america has uned unleaded with a praise over $4 maybe a little bit of the reason why you're seeing a pickup here is the premarket trade is there's a little stabilization in the retail trade that was a huge, huge part of the drag yesterday. we'll start with a couple earnings movers. neither of whom are in the s&p 500. check out bj whole sale. this was a stock down 16% in the retail washout yesterday but it reported earnings this morning. and it reported numbers for profits and revenues that came in ahead of expectations and

reaffi reaffirmed its full-year guidance, a warehouse business model for selling in bulk. it becomes more relevant than ever in the environment we're seeing bj's wholesale, massive, 16%, 17% declines yesterday we're seeing 3% to 4% gains right now. also, canada goose on the high end of things after big declines yesterday. we're seeing canada goose up 7%, 8% sales also coming better and it gave a forecast that was a little bit better on a full-year basis than some analyst forecasts out there were so canada goose shares up about 7%, 8% right now it cites a number of things. and we'll show you the premarket

trade for many of the names that took the biggest shellacking led by walmart and target. walmart is now down fractionally, two-thirds of onone percent. all of these guys took huge hits yesterday. it looks like the selling pressure is there, not quite as severe we'll see whether there's a stabilization trade. hopefully there's a little damage mitigation. although i know kohl's is out right now as well. >> you know, i still like my canada goose i got pmy canada goose coat i'm going to davos next week but i don't have to ware it. >> i'm going to a trade conference in scottsdale, arizona, so we'll be in very different climates >> yeah, you wouldn't need that. and a whole new wardrobe i will say that, thank, dom, i

will say that it's, it would be nice to go to davos in the spring but do you mind if we hold down the f the fort here? you have broad shoulders you hold down that davos duty, and we'll stay here as long as you don't mind >> i don't mind at all i'm good >> this is what dom just said. the stocks taking the biggest shellacking yesterday, and these are the stocks that took the biggest hit. he said, did you hear him? >> yes >> he plays with us. i think he plays with us let's get to the mega tech stocks >> you're telling the truth. >> he did. don't they say the stocks take a dump amazon, tesla, all down.

gene, how did you sleep last night? just as the first question >> well, you guys get up early in the morning, so it's an early morning for me outside of that, i slept not so well related to the market i still am cautious, and i'm encouraged about what happened with bj wholesalers and canadian goose, but it doesn't change the bigger picture which is ultimately we have cisco, netflix, and you can justify each of them, whether it's a supply chain issue or something around content schedule. but you have to look at the bigger picture, and this is what keeps me up at night we're starting to see the tip of the iceberg of a be pro.

a problem. and the problem is a recession when you start to see these bellwethers tip downward, you will see more of them. it's not going to be in the march quarter, obviously we've seen that play out it's about the june and september quarters i think we'll see more of that and one final thought is that ultimately these issues don't typically correct themselves within a quarter just like netflix, they had that big step down and then a subsequent step down to answer your question about how i feel about big tech right now, i'm really concerned about the sub tastantive recession investors are going to use those as candidates to take risk off, i think over the next few months if i may just one more minute here i don't want to bury the lead. i do think this is a cautious environment. i am optimistic that once this

bar gets reset, 2023 is going to be a standout year for tech. you just have to be conservative now and be opt policeimistic toe back half of the year. >> let's say the nasdaq is down 30%, gene, and we mentioned scott minor from guggenheim said that the summer of discontent could bring the nasdaq down 75%. so you figure between 30 and 75, we'll find a place where it stops? >> i think that's probably a little bit too, even too conservative by my measures. i would say the way to think about theiis is we're not at the about th bottom yet i think we're halfway through. the substance about what's happening with economic data and inflation. and the market does a tee decenb

of discounting things in the future a lot of inyour guests, we've talked about that. the capitulation point usually happens whether happens when a company lass a b has a bad quarter. and one final piece, in terms of trying to navigate where the bottom is. i think there are global factors, you've outlined them in your show today that's impacting food pricing, but it's something that i pay a lot of attention to the reason is that the fed is not going to get inflation under control until it gets commodity pricing under control. yesterday i looked at seven key commodities in the u.s., it's

like gas, natural gas, lumber, orange juice, and they're still 11% up from before the pandemic. they need to be up 50% if you want to get another pulse, at least the pulse i'm watching is to keep an eye on those commodity pricing. >> i don't think you cover cisco, but do you expect a bump up in other companies? >> i did look at the notes on it, and they talked about the components there's about 4200 key components but when you think about manufacturing hardware, there is, you need all the pieces to get the product out the door, so they were attributing a lot of the issues related to the supply chain, and i think this is kind of the trap. when we look at what's happening with these companies is we can

justify some of the misses related to supply chain, for example. they're real issues, don't get me wrong but i think in the case of cisco we have to look at something very simple is that their backlog isn't growing as dynamically as it was a year ago. and that's softening in the e enterprise >> where does tesla fit into this i think shareholders are asking for a buyback. >> i think this is a $2500 stock. in my opinion over the next few years, i think that's one of the company that is can be at risk in the near term yes, it's down, but any stock that's up measurably over the next couple year, as blunt as an instrument that is, big briefer

in the company >> what did you make of the s&p taking it out of their esg fund? see what elon thinks of that and maybe some of the climate stuff i was surprised by i didn't realize, as great as tesla is on other things there are more complicated issues. >> two answer. one, i guess the more pragmatic answer is tesla's never been strong on the g side of esg. there is some e in there i think they're doing a great job on e the second piece is that the whole concept of esg, when i look at the companies in there, i think it's just political. i don't think it carries much sun st substance in terms of what these companies are doing. i'm not a big believer in that index in the first place but to answer your question on tesla is that they've never been strong on the g. they're going to lose those investors, the index off of that and pick up other investors who

believe that they are doing good on that e side, which i do think they're doing good on that environmental side >> gene, thank you >> thank you >> always good to see you, but especially now with so many questions that are being raised. when we come back, much more on your money and the markets jj kinehan joins us after the break. and spirit airlines has rejected the jetblue offer. ted christie will join us in a couple minutes to talk more about it and as we go to break, another retailer whose bottom line was hit hard by cost. kohl's earning 11 cents a share. wall street had been looking for 70 cents that stock initially dipped on the news, but it has recovered those losses believe it or not it's up by about%. 1 probably worth taking a look at

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. let's talk more about the markets right now, a particular focus on what's happening to the retail investor, joining us is jj kinahan trying to understand what you're actually seeing the retail investor doing >> i don't think it's necessarily the retail investor taking us down it usually is institutions in this kind of action. but what i will say, andrew is that the retail investor has been quite a bit as, you know, you've talked about a lot, more reluctant, if you will, to be involved for a number of reasons. the inflation, as you guys have talked about all morning, geopolitical crisis going on, and let's face it. it's just not stocks it's across the board where

you're seeing a lack of buyers we went through this whole period, you know, in continuing through about six months ago where it was a buy the dip mentality. the buy the dip mentality has disappeared. the retail investors haven't disappeared. they're just engaging less, many of them because they're going back to work don't have as much time et cetera and i think many of the investors who have come into the market over the last couple years skewed younger, which is wonderful longer term for the markets, but many of them have never seen a down market of, so i think that's causing people to take a step back and say what do i do now and the final thing i would say is there's no true catalyst type story. we went through this long period of time where there was a different sort of story stock if you will, coming out with positive news. unfortunately, you guys have been reporting there hasn't been a whole lot of positive news on a lot of stocks recently, and

with the recession, et cetera, i just think that many retail traders are looking for a cat list to get them to you know put more money back in the market. >> we always try to -- >> go ahead in. >> we always try to play a little bit of a history game in terms of trying to comp this against something else you've been back in history. you've been around a while you've seen out retail investor has lived through various cycles, which cycle does this look like to you >> i would have to say, andrew, it's probably more toward the end of the 2008 cycle, pause we went through a period where people were still engaging we're still seeing clients engage the after 2008, the worst of the news came out and people were a little bit unsure, they started, you know, to nibble if you will at stocks.

we're definitely seeing some people playing with some stocks. i thought yesterday was interesting in that many of our clients either bought target outright or sold some out of the money puts, because what's happening now is it's not necessarily people are going into the market to buy the overall etfs, et cetera, or the indeces, they're still staying with some individual names that they think things are being overdone on. you know, joe started the slow today talking about vix and the fact is we haven't seen that panic in vix at all in volatility right now, trading about a 32, which would imply a 2% move per day. this's not crazy as we've seen bottoms. one of the mistakes we've seen investors make is say this is the bottom and go all in this is the point where you have to think leveraged price and where will the stock move reasona

reasonably over the next few months no horn goes off overall, i think putting a little bit of money to work at a time is real litly the most impothing a retail investor can do right thousand. >> unless they get burned so badly that they say forget it, the whole place is a casino. and the odds are rigged against me, and i don't want to come back in. what are the risks of that >> we've heard that that happens, and what people realize is that part of it is what's your strategy in going into the market if you are going to treat the market like a casino, it's probably going to act closer to that are you going in with good principles in how you're using your money fundamentally, and just going in, listen, i think

most people in some part of their portfolio do have that part where they're like, okay, i'm going to take a little shot here that should be a small part of your portfolio overall it should be i'm investing for bralank, be that n event, retirement, college, whatever it is and trying to generate income over that. cash-covered calls, cash-covered puts, whatever it may be a lot of people have gone in with a casino-like mentality if you do that, it's probably not going to work out in the long run as i've told you before, i think one of the great things about the past few years, besides the fact so many young people have come nin >> i want to ask you about your own industry for a second.

ftx is going to be expanding into stock trading you saw an ftx member buy a piece of robinhood do you think there's a big conol dags play that may take place in this space there was a thought that ftx might buy a gold pman sachs or something. do you think there might be a big gobble up the opposite way >> it certainly could be, andrew, and people see the opportunity that is are out there right now. the announcement this morning, my first thoughts were, more competition. i think one of the reasons most of us got into theis industry is because we loved competition what happens in competition. >> one team, one firm, whatever it may be, looks for opportunities in the other and tries to take them over or have them join their team, so it

wouldn't be surprising to me if you see this again, not just in this industry many, but speaking specifically about this industry, which i know more about, yes, i think that's a real possibility, andrew, as many of these businesses are valuable but just going through perhaps a little tougher time on their stocks >> real quick, because i know we have to go bitcoin, oddly, i don't floknow it's odd or not, it's actually hung in. what do you make of that in. >> people are looking for a positive, i think it is a positive that bitcoin has hung in and the reason is, over the last year, bitcoin has certainly been a measure of retail confidence, if you will. and so the fact is that it's hanging in there we'll see if we can see some of the rest of the market where people used to go to microsoft and apple to lead us back. maybe they're going to look there pointing forward, andrew

>> jj, thank you when we return, spirit airlines' board unanimously rejecting jetblue's offer, moving forward with frontier's offer. we will talk to ceo ted christie next "squawk box" will be right bac luckily, aflac will help cover his unexpected medical bills. aflac? - (whimpers) i don't think he has any candy in there. am i at least going to get hit hard enough to forget this? nobody is going to forget this, ever. (bat hitting) - ohhhh i'mma call his momma. aflac! aflac!

thous just moments ago, spirit airlines announcing the board

l has unanimously rejected the jetblue offer. >> thank you very much, let's bring in ted christie, ceo of spirit airlines in miramar, florida. there's the news that you voted unanimously to reject the $30 a share continder offer from jetb. is the primary thought is that you don't briefelieve this deal would go through >> that's the issue. we believe there to be a significant regulatory issue we hired some of the best in the field, worked with jet blue over the better part of a month and a half and reached the conclusion that it's not likely to be approved but to be honest, you really don't have to be an expert here. what we have is jetblue in the middle of a quasi merger with

american airlines, one of the big three that they comport to compete with, and then attempting to buy a competitor and take seats out of the market and raise fares. and that's untenable >> during the extensive talks, jetblue itself admitted that a lawsuit from the doj seeking to block the merger was a 100% certainty. are you basically saying jetblue said to you guys, yeah, we know we aren't going to get this through without having to go to sdmort court? >> yeah, that's what they told us it really does call into question what the motive here is and it gets to the deal that we have on hand, which is a very attractive merger agreement with

frontier it's going to deliver tremendous value to our shareholders, and i think they're looking to create a lot of dust and distraction in the market and attempt to confuse our shareholders, and while they put a number out there that may be interesting for people to look at, theiis i not a lottery. we don't treat our shareholders' money like it's a lottery. so we're advising them to approve the frontier merger so we can create this ulcc that will deliver tremendous value to the market >> there are a lot of people who think that the profrontier merg would get a very close look from regulators >> we think the odds are really good, which is why we proceeded with this. we've evaluateda number of opportunities over the years, and in this market with this administration, what we're trying to do is enhance

competition. that's exactly what the frontier transaction does we think that narrative plays well with the doj ran the government and what they're trying to enhance from a competitive standpoint so we think our chances are really good. >> ted, have you talked to robin hayes about this since it's begun in when you and i talked on tuesday you flat out said these guys are misleading the public when it comes to representing the discussions that we've had have you told mr. robin hayes, look, you guys are muddying the waters here with a bunch of malarkey that is not true? >> well, robin and i have spoken over the last month, and yes, i am frustrated by the commentary, to imply that our board didn't go through its diligence is a misstatement, and quite frankly, it's an insulting. we have an independent board l here that's done considerable

work are on the surface, we'd love to have a competitive offer but theis is dee lucery and to imply otherwise, we think is insulting >> would you admit this likely ends up in court whether it's frontier or spirit, claor jetble >> i couldn't even handicap that, phil i think we have a very good story to tell with the frontier transaction. we encourage our shareholders to vote yes and we will proceed with the process with the doj. we're in exchange of information with that as well, and we think we have a great story to tell. and when the facts come out about what this merger will do

for the competitive space, we think it's going to be a real positive thing >> ted christie, ceo of spirit airline, busy week, ted, thank you very much for joining us today. just a few hours after the board of directors unanimously rejected the tinder offer from jetblue. yet another twist and turn in this ongoing battle between jetblue and spirit where jetblue says yeah, we think this deal can still come together. >> thanks or that, phil. coming up, what you need to know as we head towards the opening bell on wall street. we have your blportfolio covere with some of the brightest on the street katie stockton will be our guest and jeremy segall will join us it leads up to our interswru esther george. all that's ahead we'll be right bac rem sleep,

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. the dow jones industrial average had its biggest decline since june of 2020, and that's the same for the transports and add in the s&p 500 joining us now to tell us what the charts are saying now possibly about the markets is katie stockton, managing partner. i've seen people like with tea leaves and stuff, and then i've

seen people do cards, and they look at things the this is better than that these are historically indicative, the things you look at have happened again and again in the past, but there's no guarantee they happen again in the future but they're certainly useful i guess i'm just selling technical analysis, because there's precedent for it let me start with who's leading whom at this point you've made the case that crypto, as a risk asset, was actually leading some of the, either the equity markets or the nasdaq s&p, dow. do you think it's still in that position as sort of the pace car? >> i certainly think that bitcoin and others are reflective of market sentiment, and of course this is a highly sentiment-driven market. as a technical analyst, that's really what we're trying to

measure. we're trying to understand market psychology. so when you look at bitcoin right now, it did break down, as you know, and saw that down side follow through to support roughly 27,000 very natural place for it to stabilize, and i would think that bitcoin would look a bit better than it does yesterday, this morning, so i guess that would suggest that bitcoin is indeed giving us an indication or an earlier indication of market sentiment as we come in every morning, and right now it's suggesting that we still could see a relief rally or oversold bounce for the market on that liquidity front. >> bitcoin held 27,000 in your view, even through it did trade under 26 >> we look for trends to be more

decisive than that a one-day low doesn't brick a support level. we usually wait for a couple weeks. below that level, the next support, if you go back to the 2017 highs, the former resistance level of rou roughly 19,500 can you range that to 18,300 so you can see that 27,000 is really important, because below that, it's not to say that the bottom drops out >> already, a lot of people have written off bitcoin. didn't like it from 5,000 all the way up but what about the s&p at this point? what is the support level and has that held, we're back where we were a week ago what's the most important level? >> the most important level for us is about 38.15.

that's of course still in tact, and really so are last week's lows if we had to guess in a couple weeks we think the market will be higher, and yet quwe're not recommending that our clients add exposure but be respectful that it's reflecting the weekly charts, monthly charts and there are no catalysts as of now we suspect that a longer-term low won't unfold until september, october, and between here and there where he're lookr morevolatility >> you think the bounces are to be sold. do you have technical expertise in the vix what does the vix indicate do you think the vix gets to 40? and that would be after we see this snap back which you near term think would be a

possibility. after that, do we finally get a new high in the vix, as we hit the eventual lows you're talking about by september >> i think we will and i don't think it's imminent by any stretch but the vix is into a higher volatility regime, and we see it as a transactional gauge of market sentiment how are they positioning for risk and managing through that and the vix does tend to spike very high as you know, and when we have that kind of market sentiment associated with major lows right now, market sentiment is extremely bearish. that could be the stuff of a short-term low we have signals that support a little bit of an oversold bounce, but we don't have extremes in measures like the vix. some things are missing on that market internals front to suggest that it's a major low that we could have at hand here. for the vix itself, we have higher lows now in place if you look at the slope of the

200-moving day average t is now pointing higher, and that reminds us that we can expect more of the same, hopefully not in terms of what we saw yesterday in terms of these 4% day-to-day moves which are unsettling, but it shows that the down trend has a hold. >> do you think that the dow and s&p move into bear plarkt territory by september >> yeah, i think we're in a cyclical bear right now. we're looking at a nice buying opportunity. >> sorry, but they're playing music. the eventual low, the final low on the s&p would be in what area, do you think >> you know, i suspect that 38.15 is at risk of breaking on the next major downdraft beyond what we think will be a short-term bounce. so the next supportive level around 3500. and that seeps like perhaps a natural level for us to get that bottom we really just roll with it as

you know >> i've heard 3500 from some people and others have said, i think we had, you know -- >> 39.23 yesterday >> that would put us in bear market territory thank you. >> of course >> i don't like my life being dependent on what bitcoin does thank you, katie all the important markets in the world depend on what happens with bitcoin that's no way to run an economy, is it? you saw michael sailor said under no circumstances would he ever find a reason to sell bitcoin. >> i saw what he said. but then, you know, read, read greg ip in the journal i don't flow know if you saw tht

piece. we've learned in 13 years that it's not a currency. it's not a store of value. it's not a hedge against inflation. and he says what it is so sailor on one side, ip on the other. we should a boxing match on the air. we could do it as pay-per-view >> he's a commentator. >> he's a pretty good one. up next, is the retail rout a sign that the recession is coming we'll be right back.

welcome back to "squawk box. consumers may be more hesitant to buy goods as prices soar. question is, does this mean we're headed for recession it's on the minds of just about everybody. and john ford is he forte is he in >> walmart sales weren't down, they're pretty strong. target's sales numbers were good, too. it's just the profit suffered from fuel, labor and inventory cost and lowe's and home depot said diy project spendings going strong lowe's only missed revenue

because the coldest april in 20 years delayed spring shopping. let's take a step back and be levelheaded. stocks are rationalizing, yes. inflation is high, but there are plenty of things going well in the economy. inflation may have peaked. with the pandemic easing, people are shifting away from goods into services. consumers are still spending that gives room to engineer a softer landing it's going to be a tough economy, but not a shrinking one. >> these results are from the first quarter, before the rate hikes really started so backward looking maybe? >> true. on the other hand, andrew, get used to the idea now we're going to have a recession. the question is just how long.

68% expect one recession storm clouds already gathering. walmart revenue was okay, because working class customers wanted refuge from price spikes. consumers hit the brakes on buying patio furniture and appliances and started spending on experiences instead home depot and lowe's painted a rosier picture but beneath the surface, even that doesn't look so good. home depot revenues did well, but that's because people bought less stuff for more money. it's not the weather target didn't blame weather for shortfalls in the same categories rising interest rates will make us think twice about using home equity as a piggy bank for home purchases. we've been promising ourselves a fun summer after two years of covid lockdown

it's going to be time to tighten belts by fall. hello recession. >> the numbers from cisco yesterday, you're a tech guy they don't help either >> they don't help that suggests that business spending is in some question it's been generally the ente enterprise software spending that has held up but it's not a good sign when enterprise hardware. there's share losses in there, too. but we'll see where that goes. >> john fort >> becky quick >> whethen we come back, oil pr, pain at the pump for all bit way, aaa has its highest price ever again for the national average i think it's $4.54 a gallon at this point we're going to be speaking to

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welcome back, everybody. let's take a look at the futures. in the red, the dow futures are off by 268 a better picture but still

coming off a very serious decline yesterday with the dow off more than 1100 points. 4% for the s&p, 4.75% for the nasdaq both of those are indicated weaker as well if you want to take stock of where we stand, the dow off by 14.8%, the s&p 18.6% and the nasdaq down by almost 30%, before the red arrows you're watching this morning. joining us to try to help make sense of the markets, if anyone can do that, is jeremy segall. you keep seeing these losses, we keep seeing these losses and wondering if this is the bottom. what do you think? >> well, becky, thanks for having me on you know, up till now, the big, all the declines since january

has been rising interest rates, rising discount rates. profits were doing very well it began to feel different when we got walmart, you know, miss, target miss and fears of others. now we're getting, i think, and i think that's what happened yesterday. the ripple of concern of the numerater evaluation as you know, stock prices are the numerater profits, the denominator interest rates we've had the interest rate increase, that's caused the decline, very understandably the question is, is that numerater now the profits vulnerable and i'm very conflicted on that, because, you know, theiris was first quarter. that month and a half ago we are more than a month and a half

away we had april retail sales which were don't, 80% to 90% of the company reports were good. they weren't blowout the way they were in 2021 but till very good is this isolated to bad vendee signifi inventory decisions? it's isolated, but i understand why there was concern yesterday in the market. >> we had target ceo brian cornell with us yesterday, and he said the start to may was good in terms of traffic and sales and what they're seeing. the issue with both target and walmart, they had much higher costs that they did not pass on to the consumer. they both sounded like they were going to get better in the second part of the year. but if that's the case, you're going to be talking about double

digit inflation, not the 8% cpi or slieftly higher than that, but consumer prices that go up double digits. to this point, the companies have been eating it. if they pass it on to the consumer, much bigger numbers. and whether the consumer can hang in there and what the fed does with all that >> yeah, and, you know, i've been, you know, warning about inflation, becky, for a long time the huge monetary and fiscal push that we had, you know, it's lagged, and it's going to be pushing through the system maui now we have the gasoline prices. we might had a month of double-diblg inflation however, i was very surprised they didn't pass it on because when you have increase in cost and when you have, most consumers with purchasing power, i understand the gasoline is squeezing some and might be

squeezing some in the dem graphic that is going to target and walmart more than oh, but most firms listen to their earnings reports they have not had trouble passing it on and maintaining our margin so, you know, why do they eat it when they were actually passing it on last year. i'm not absolutely sure. but i do think we're going to have inflation for another 9, 12, 15 months, maybe not double digit, but 6%, 7%, 8% inflation. i just hope the fed doesn't overreact, because we are going to get over it you don't want them to say oh, my goodness, we're not controlling it, because they have put a lot of restraint in, and, you know, of ththey've gotb watching all these developments. steady as we go. i think we're going to solve this inflation, but it is going to be longer >> jeremy, thank you great talking to you >> thank you, becky.

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good morning welcome to "squawk box" here on cnbc we're live from the nasdaq market site in times square. i'm becky quick with andrew ross sorkin and joe kernen. this morning the dow futures up by another 227 points. the nasdaq off by 89 and as for yesterday, let's give you a few of the ugly facts. it was the worst percentage basis for the dow and s&p 500 since june of 2020, almost two years ago. so you have to go back to the beginning parts of the pandemic for this at the market close, only eight stocks in the s&p 500 were higher target was one of the main cat

lists for the selling yesterday. it lost a quarter of its value and turned in its worst day since black monday back in 1987. that's the same we saw from walmart. and new records for gas and diesel prices, suggesting naigs is nowhere near ending or paepa peaking at this point. treasury yields are indicated lower. you saw this flight of people getting out of stocks and running to the relatively safe haven of treasuries. we're going to be talking markets all this hour, including what you need to know for your portfolio in these volatile times. and of course we have a can't-miss interview with kansas city fed president, esther george at the bottom of the hour everyone wants to know what the fed's going to do in the face of all this >> for much more on wall street,

don't disappoint us. for much more, let's get over to our senior markets commentator, mike santoli did you watch katie? yeah, 3500, the eventual low, but not until we get some type of bounce that doesn't take the vix to where most people think it needs to go to measure the fear that make it is a lasting bottom >> question. >> maybe we get intermediate bottoms where the dow and s&p visit bear market territory. >> yeah, that's kind of the mutually shared frustration path some signals pointing to the mid-3,000s area. we peaked around 3400 before the pandemic in the interim, for a couple weeks now, i've been pointing out there is this krus tering of targets, around 3800 to 3900 that's where we right now.

basically, the s&p 500 index fund, you mult my that by ten, that gets you to the index level. there's this big gap up on t friday, pretty much closed that. a holot of things going on expiration week. but big picture, what's going on is what we expected to go on valuations coming in, the economy shows and the fed tightens, and services take over from goods we don't know where the fed's going to end up, but we know what they're going to do this summer becky mentioned bonds finally getting a bid in this. diversification starting to work two weeks ago, they were basically in the same spot year-to-date stocks continued lower finally, we get a hlittle relie

on the bond side it's not about new naigs inflation fears. yesterday, it broke a safety trade that was going on. take a look at the pharmaceutical index this idea that you have an indiscriminate selloff, a messy phase, it sometimes feeds into the idea that this is the overshoot, maybe in the short term as katie was saying, you're probably going to get some relief in time soon, maybe not necessarily right here in price. >> okay. michael. so many different asset classes to look at, too. i know, it all kind of makes sense, though, doesn't it? and historically, we've seen nothing is completely unheard of or new or novel, but it's never exactly the same, is it? that's where that expression comes from

>> no, exactly the broad drivers are pretty familiar, if you look at past cycles we started in an odd place it's been a really compressed economic cycle all the way remember 2020 into 2021, no pull backs. this idea that the real economy was on its back and financial markets were thriving, what we see a little bit of the reverse of that going on right now arguably >> and we've pointed out a couple of times, who would have predicted. now we're saying now we're just getting back down to levels from before the pandemic. >> right >> as if the pandemic would take us to stratospheric levels who in that, when that was happening thought that closing down the planet would make for lower stock prices then it went to 4700 as we were entering, it, going into the pandemic it went back

up there >> and by the way, another reason that people are looking at that mid-3 thousands area, it would give back half of the gains from the pandemic. >> gapins from the pandemic. it makes no sense. >> the gains from the pandemic, fed and the fiscal huge -- >> stimulus. >> and the stay-at-home frenzy and certain pbeneficiaries. and peloton. >> and the big retailers that were allowed to stay open through all of it. >> thanks, mike. >> talk about even wall street bulls feeling the sting of the recent selloffs. our next guest cut his s&p target to 4900 from 5200 from last night's close representing a roughly 25%. joining us, tell us about that

decision and tell us about where you think, where do you really think we're going to be, let's call it christmas time 2022, christmas time 2023, jonathan, to this point. >> i mean, first of all, if we look at your first question on why we took our numbers down, we didn't take our earnings numbers down, because if you look at this earning season, companies are beating by 7%, margins, you know, putting aside what we've seen at target and walmart and some of the big tech companies, margins have held in much better than people thought, and revenues were on fire. but the big issue was that the cost of capital has gone up a ton. i mean, we were, it wasn't too long ago that a ten-year treasury yield was 1%, and now we're at something that's a little bit less than 3%. and we don't really see it going back down to that 1%

so you have to adjust your outlook based on your positions. the one thing that i think will support the market a bit is that credit spreads blew out, and so extra cost pour cfor companies o borrow beyond treasuries, you're not seeing loan defaults, bankruptcies the performance of the underlying credits are great so we think that, you know, effectively you get some of that multiple back that we've lost recently and some of it's probably lost here >> hey, john than, we've been having a debate all morning whether this is a moment, given where the market is, to leg into it, effectively, and we've had hots of different views. there's a technical analysis that says maybe. maybe in the summer it gets better, maybe in the fall it gets worse, maybe you don't want to be buying i think germany had some anxiety, but we've had other

whose say this morning when things are bad, get in where would you be in. >> i'm clearly on the "get-in" camp, but i think it comes down to one simple question, maybe it's not a simple question there's always a recession in your future. the question is, is it three months away? or is it three years away? if you believe we're going to see a recession between now and the middle of 2023, you don't want to be legging into this if you brielieve as i do,la it's go going to take long toreer to kie cycle, it doesn't mean that everything is fine all the bearish arguments that the consumer is strained and, you know, we heard recently for some retailers, i mean, that's not fake news, we know that's true but if you don't have a

recession,earnings continue to go up, and credit spreads and the vix will come down, and that will be good for stocks. >> jonathan, from your lips, let's see if that's where it's headed look forward to talking about it again very, very soon. thanks becky? >> thanks, andrew. coming up, one of the biggest tesla bulls on the street cuts his target we're going to talk about request. and after a break, has asit managing giants like black rock and van guard accumulated too much power over the markets? some think so and they are out with a new bill to curb that power. alaska senator dan sullivan will join us. you're watching "squawk box," and this is cnbc that's your why. it's your purpose, and we will work with you every step of the way to achieve it.

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ours or a mix of both. with the nation's largest ip network. from the most innovative company. bring on today with unbeatable business solutions from comcast business. powering possibilities™. one of wall street's top tesla bulls cutting his price target on the company to a thousand from 1400, dan ives, managing director of equity research joins us on the squawk news line to explain his call. i guess, dan, it's not as simple as, you know, seeing a stock that's breaking below 700, when you have a $1400 price target. you normally wouldn't have a 100% appreciation. i don't know how long your price target, i don't know what the duration is, but i've seen a lot

of analysts just do that when they're wrong about which way the stock's headed and they lower it so they don't look redeck ridiculous >> yeah, and that's never been our dna. it all comes down to china china is the key part. and tesla, i call it an epic disaster what we're seeing so far for the june quarter, i think for delivery as well as production and the zero covid issues, deliveries are going to be soft and the trajectory is going to be a lot lower for the rest of the year that's why we're lowering the target and cutting numbers, over the next few weeks, there are darker days ahead for tesla in terms of the delivery side >> now that i recall, 2500 on tesla. your bull case, even 1400 or a

thousand, where it is now, is in large part a story about china >> china's the hearts and lungs of the tesla story and we were optimistic, you know, that they were going to be able to navigate some of these issues better than expected. but everything we've seen over the last week makes us a little more negative in terms of june and the second half. we call like we see it and we're still bullish on tesla in terms of the long term, but then look, you combine this with the circus with musk and twitter, it's just a category 5 storm for investors in terms of feeling like musk is basically out to lunch when tesla has never needed him more with supply complain issues and china. >> how much of it is a supply concern and how much of it is a

demand concern for you, the lockdowns and how long does it last and how badly has china itself and president xi screwed this up screwed up the whole covid response >> look, china's a nightmare situation. in our opinion because what we're seeing from a supply perspective, i mean, that's the key you've got fremont, and right now, the logistics, even getting the cars on the freights have been extremely difficult and then from a demand perspective, it's 40% of deliveries in terms of china and you have, you know, a lot of consumers that are locked in their apartments, let along locking for a tesla. so that's why this combines, really creates what goes from a massive tailwind to a headwind, you know, in china which is why we're lowering the price target here.

it's one where they're going to have to navigate some pretty choppy waters ahead over the coming weeks and months. >> i don't know if you heard us in the last hour we were talking about this esg issue with the s&p 500, esg index. and yesterday he went on twitter and effectively said he would be voting, he said he used to vote for democrats, now he's going to vote for republicans do you think any of these things have any equipment impact on ss >> this whole twitter situation's been a black eye for musk and it seems in the medium term a bit of the brand the esg situation, that was the surprise of the street, but the way musk handles it, it's just another ring lling brothers cirs show from a stock perspective, many

investors, especially in a jittery market have been so frustrated, they don't want to see musk handling it this way, and ultimately it's just further tainted the tesla story in the near term. >> very good, dan ives, thanks for the quick turn around. you put out the note and we brought it to our viewers. that's what we like to do. thanks >> thank you our next guest is a lawmaker who just introduced what's known as the index act the bill is intended to rein in the power blackrock and rvanguad have these days. for more on this, let's bring in the man who introduced the bill, senator dan sullivan of alaska, and senator, welcome why did you introduce this bill? >> morning, becky. look, it's a simple bill, and it

is intended to get the voting power back to the beneficial owners of the shares, not to the index fund managers. and the big reason is the market distortion of the power that these index fund managers have t the numbers. now they fluctuate, depending on where the market is, but over $20 trillion, trillion, managed by the big three, blackrock, vanguard, state street, over 25% of ahares voted on in public companies are voted on by these three. and they're the largest shareholder and are 90% of the s&p 500 companies. and so to me, that is an enormous market distortion and we need to bring the shareholder power back to the beneficial owners of the shares. this is really a quirk in the law that they have this much power to vote the shares nothing against these companies.

they've done a great job in terms of lowering fees and doing passive investors, which investments, which many american had investors want but they don't want them to have all the power, particularly in terms of corporate governorance. >> senator, that's a pretty rational argument, something that's been argued by a lot of big investors. charlie munger brought it up what's in the bill that would keep democrats from wanting to sign off on this it makes sense to give the vote back to the person who actually owns the shares. >> yeah, becky, you mentioned my co-sponsors. take a look at some of the smartsm smartest, in my view, senators in terms of investing. pat toomey among others. but i will tell you this i've been in discussions with a lot of senate democrats, and many are very interested in this

issue. from some of the more moderate democrats to some of the most liberal democrats. and they're all concerned about what i am concerned about, this huge market power and market distortion that really isn't meant to be. again, think about those numbers i just put out there in terms of their dominance. that is something that usually concerns members of congress on both sides of the isle, and i will tell you this i was very close to getting a couple of very prominent democrats to co-sponsor this so there's a lot of bipartisan interest in my bill, i can tell you that >> senator, here's the complicated part, and i'm curious where you land on this the truth is that most people who buy into a 401(k) plan put money in various indeces they, it's sort of a set it and forget it situation. most of them are not studying the market they' they're not studying the companies in those indeces

they're not interested in it it's unfortunate, but it's the reality of the situation most people don't vote, they let others vote for them and that's sort of, in a way, what's happening here. and so the question is, is it to take the power away from a blackrock or a state street to vote at all? is it to just simply give them the option in some cases that's what's happening now. that option is there in a way that it perhaps wasn't before. what's the right answer in the balance? >> it's a really good question and it's a combination of both and i know you've talked to larry fix. black rock is already starting to do this themselves. and remember, they don't dig into all the details of each of these companies either they invest in the broad-base index funds. so it's not as if they're getting involved in the nitty-gritty of each of the companies they invest in, in

terms of management, in terms of what they want having done for that company but i will tell you this i think it's a little condescending to say the average american doesn't vote the shares, which is true, therefore, they shouldn't even have the opportunity or power to do it. in many ways, not voting is a vote itself. so to me, it's both too much power with these index funds, who were never meant to dominate corporate governorance but to make sure that investors who are the beneficial owners, if they want to vote, they can vote and that's what my bill does >> mm-hm so that's a pretty rational conversation about an issue that is important to wall street. let's get to one that really gets people heated up. and that as 's what's happeningh oil and gas prices right now alaska is a state that has a huge a crude production, but

your gas holine prices at the pp are some of the highest in the nation north of $5 right now in your state. >> you know, becky, i was home whoever the weekend. and this is the issue. high prices at the pump, high inflation prices that are crushing american families, crushing middle class families, working families in my state, and this is a self-inflicted wound from day one this administration has been focussed on shutting down the production of american energy, limiting pipelines and infrastructure, getting investment firms to squeeze off capital to the energy sector of the you know, since i was last on your program, let me give you three additional examples of this the biden administration canceled the cook inlet lease sale two weeks ago, a big hydrocarbon production area in alaska they took half of the natural petroleum reserve of alaska off

the table. that's the hottest oil reserve in the world right now in terms of discoveries, and they issued new nipa rules just three weeks ago that are clearly meant to make it harder to permit pipelines, lng terminals this is a clear hostility toward the energy sector. they've been doing it since day one, and it's clearly the reason we have high energy prices in america that's driving all the inflation challenges that we have in this country right now >> senator, i'd say that those are some of the reasons, i don't think those are all of the reasons. i think there are a lot of lot reasons, esg, and they're paying back shareholders who have been long-suffering for some of these issue. this is also a refinery issue. your state knows that well you have a lot of crude but you

don't have a lot of refinery capacity you have to take the crude, ship it to california, texas and come back, that's part of the reason why you are always having high prices >> >> look, we have some refinery capacity in alaska but in terms of moving energy, this administration is not willing to permit energy infrastructure, whether it's p pipelines like keystone. and you mentioned esg. that is tied to my legislation, the index act, there's always this mention that investors don't want t maybe black rock doesn't wantit, but i think americans realize we need more energy over 60% of americans think we need to produce more american

energy from our own country. that's where the market is disconnected from the average american and we're seeing that in terms of prices at the pump natural gas prices have doubled in the last two years. these are things really impacting not just the economy but working families throughout the country. >> is t senator sullivan, thank you. when we come back, esther george will join us live.

welcome back to "squawk box," rick santelli here with breaking news. initial claims for the week pops up 15,000. last week's 203,000 drop down to 97,000 we're up 21,000. that's still some of the lowest levels since the late 1960s but still higher than expected if you lacook at continuing claims, another 1969 level that's good news, of course, and we also see our may read on

philly fed 2.6, 2.6 2.6 is the weakest number going back to may of 2020 when we had of course all the issues going on with covid. we have the relationship between weak equities coming back, meaning we see the hedge against the volatility and equities. turns out to be some buying in treasuries andrew, back to you. >> thank you, rick appreciate t it when we come back, we're going to be live with kansas city fed head, esther george.

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welcome back to "squawk box," everybody. weak quarterly reports from some of the biggest retailers like target and walmart helping to stoke it selloff let's get over to steve liesman. he joins us with a very special guest you're going to want to listen to. steve, good morning. >> becky, good morning i'm here in kansas city, with kansas city fed president esther george doing interviews the way we used to do interviews, which is live and in person. thank you so much for joining

us >> morning. >> i want to talk about the market the last few days of the it's gone down and it's weak this morning talk to me about the way you look at the stock market in terms of the economic impact does it get to a point where you feel like financial conditions have tightened too much? >> so looking at the stock market is an important price signal, as many others are to watch and see, and this is a time of unternsy it's been a rough week in the equity markets, and i think the combination of the uncertainty going on in the world, the fact that the fed is beginning a rate hike regime causes investors to try to figure out where do they settle on how valuations might come out so i think in some respects, not surprising that you see this volatility on the other hand, not to be dismissed, to watch and see what signals it's offering for tightening financial condition, which we've been seeing for a while. >> is that something you're after, is a weaker or lower

stock market >> i think what we're looking for is the transmission of our policy through markets understanding, and that tightening should be expected. so it's not aimed at the equity markets in particular, but i think it is one of the avenue through which tighter financial conditions will emerge >> i think i ask this for a lot of equity holders out there. how do you know when enough is enough you're down almost 30% on the nasdaq, 18% on the s&p how do you know when financial conditions are tightening up, and what about the economic impact >> so, for a fed policymaker hik hike me, when i am focussed on when enough is enough, is looking at our inflation target. right now inflation is too igh and we will need tomake a series of rate adjustments to bring that down. we're also going to be looking at what's happening on the demand and supply side to know when those things might come into better balance for us

>> let's talk about the demand side there were reports yesterday from some retailers that suggested maybe there is some trouble ahead for the consumer what do you see when you look at consumer spending right now? >> so, in general, steve, when we look at households, they've been in pretty good shape. people have jobs by and large. their balance sheets look better than they have in some time, and they're spending, and they've been spending on goods as inflation has become a major factor so now people are having to think about the price of gas they're putting in their car, food prices. we do hear from people in our region, businesses and others, that tradeoffs are starting to emerge so maybe when they go out to eat they're not getting an appetizer. they're skipping dessert around that so those kinds of things, i think, are going to begin to feed through the tdata to see ho consumers are responding to something they do not like, and that is high inflation >> when you look back the big pivot goes back to 2021, when

you hlook at the ever huolution you feel confident that you will be able to bring down inflation? >> i think we will succeed in bringing down inflation, because we have the tools to dot heavy lifting on that as it relates to demand and we do see financial conditions beginning to tighten. so i think that's something we'll have to watch carefully. it's hard to know how much will be needed to make that happen, given all the moving parts that we see today in the economy. >> you've said in the past that you think we ought to get to neutral quickly, or i guess the chairs use the term expeditiously, what is neutral, and how quickly ought we to get there? >> that's a good question, because we don't know what neutral is, as you know. neutral is an estimate, and that is particularly hard to focus on today, because when you have high inflation, when you see these imbalances that we have here, when we see how persistent

these supply constraints have been, i'm not sure picking a number around neutral is really of much value. i think for me, what's more important is at what point will we see inflation level out and then begin to decelerate that, i think will tell us something about where we need to go with monetary policy. >> when we first started, you were talking about the uncertainties out there, and one of the uncertainties with the market is how far do you go. i'm just wondering in your testify definition, shouldn't the real rate be a positive number? >> well, you would generally expect that to be the case >> zero for 14 years or below. >> we have been at zero for many years. >> negative. >> that's right, but because inflation has been higher. remember, over the past tech aid, there was a lot of concern over whether we had sufficient demand we weren't thinking about the supply side of the economy and thinking that inflation was hoe

because demand wasn't sufficient we now looking at robust demand where supply constraints are fueling this high inflation. so we have to address the demand side again >> so these are high concepts, but they boil down to basic math, right? if you look at the funds rate over the last 50 years or so, 1% is not crazy for a real funds rate, right? you have 2% inflation on top of that, it's a 3% rate, and then if you need to cool the economy down, you might add a percent on top of that, which is to say it wouldn't be crazy for somebody in the market right now to say the fed needs to go to 4% to combat inflation how do you think about that? >> i hear the calls for that i think it is too soon to point to what might be there could be any number of scenarios that would drive us there. but on the other hand, let's think about where shift might come in consumption.

if people don't buy as many goods and move out into more normal patterns of consumption, maybe we don't have to go as far. i think from war we are today, steve, though, we need higher interest rates we will begin the runoff of that large balance sheet, and those are going to be key components over the course of this year in determining what effect we'll have on demand >> you have spoken and give and very important speech in the last several months about how to think about the balance sheet versus the interest rates. talk to me about how you put those two together is there some value you put on, i'm going to run a half trillion dollars off the balance sheet and this's worth a quarter point. >> it's a big balance sheet. we've add trillions and trillions of dollars to it so the runoff is going to go faster as the f 1 c has laid out than it did before and i've holooked at various

estimates. some are up to 1 .5%. i guess at the end of the day, when i look at that balance sheet runoff t, it is to step bk from our footprint in the financial markets. it is to return duration to the market and let the markets begin to take on the price discovery process. the fed has intervened on. and that, i think, is really the important focus. again, just like moving our interest rate policy, we are going to have to watch how the economy responds because this time we will be going faster and we'll be doing that in an economy and market maceplace tht h looks more volatile. >> i want to ask you ast stupid reporter question.

are you in favor of the fed going 75 basis points? >> i think deciding the amount we have to do will really be a function of what we see. i am very comfortable right now with doing 50 basis points, and, again, because i see the combination of that balance sheet runoff taking place at the same time. so i think moving deliberately, making sure we stay on course to get some of those rate quincreae and then watching. i think we're good at 50 basis points right now, and i'd have to see something very different to say we need to go further than that. >> when fed chair powell took it off the table for a period of about, i don't know, 14 hours or so, the market loved it. and then it seemed like it reconsidered that 75 was off the table and then it hated it i want to know what you walked

away from that huge up and down. does the market seem to want more rate hikes? fewer rate hikes? >> my sense is what the public wants is some clarity, and they want to understand how can we eliminate uncertainty. monetary policy can be a source of your honor certainty just like everything else in the economy today. i think our commitment is to communicate clearly, i think that's what the fed chair was doing in his conference when he was talking about whether we would see the next rate hikes. that gives the market a better sense. >> president george, thank you it's fantastic here, and thank you for spending your time with us >> thank you >> back to you, you're in nasdaq in the city. >> of course of course. yes. yes, we are. >> of course >> can you either enjoy a steak or great jazz while you're out

there i think. coming up, jim cramer's first take on the trading day ahead, prus much more on the markets. futures down about 330 stay tuned, you're watching "squawk box" on cnbc

want to get down to the new york stock exchange and talk to jim cramer we had esther george, jeremy

siegel who's not that bullish, katie stockton who thinks maybe things get better by the fall. would you be nibbling rate now or not >> i think you have to nibble a little bit, but not big. it didn't do anything much yesterday. you can buy companies that i think make thing does stuff, but they have to be totally american we have chuck robbins coming on. and it's really possible to think that there is an epic disaster going on in china, and it's impacting so many of our companies that it is just very difficult to try to find one of the handful that is not impacted we're so intertwined with china. it's interesting the stock market's really important in terms of diminishing the wealth effect which may make people spend less i do think you guys earlier had some stuff about what the department stores did wrong. i mean something like kohl's, talk about missing the mark.

it's just one bad thing after another, andrew. one bad thing after another. >> but is it, you think -- but do you think that the strength of the consumer is the problem or it's just the cost? and right now everybody's eating that cost. i wonder about two this goes to the cisco issue, which is it hasn't bled over for the most part into corporate spending and i wonder when that hits. >> right enterprise is still good, andrew great point. if there is a savior to this market, it is enterprise and the consumer balance sheet the consumer is not doing what anyone -- the consumer has become is this total wild card if you go over brian cornell's comments yesterday from target, he said consumers want sunscreen. okay tan, don't burn. that's, like, you don't want them to just want sunscreen. if they're traveling, then we have to listen to what phil

lebeau says. the idea, by the way, of the spirit merger, can i tell you right now never happens, never going to happen, and all the advisers who are trying to make that deal happen just must be desperate to be able to make their payments or actually in -- >> and could we go a conversation without mentioning elon musk, mr. cramer? >> no. you have to talk about him >> between his comments yesterday, his political comments, dan oz taking down those numbers as well. >> the political comments were extraordinary, weren't they? if you watch the time of when he's sending these, i mean, you know, look, i don't sleep much, but he's sending a tweet pretty much every hour around the clock for days now how do you do that >> andrew and jim, on a complete aside, andrew, we were talking about $7 gas and maybe $5

probably the top it's different in every state. i happened to see this article what's going on at washington state. did you see this they ran out of gas in some stations now the washington state gas stations are adjusting their -- what they're able to show because they need two digits they had to stop at nine the it too offensively the article is "washington state gas stations run out of fuel, prep for $10 a gallon." seven won't be nationwide, probably, but in different states, what could we get to >> add a piece of tape with a "1" on it? >> add a piece of tape good guess >> wow to. >> there's one 30 miles south of seattle that had to recalibrate its -- those little -- they have a -- >> i'll take a gallon and a half, please what do you say? i think france is cheaper. i don't know, andrew, what do you think? aren't you going to europe

>> i'm headed over there saturday night >> can you get us some metric system conversions when you get over there about the state of washington versus say, i don't know, geneva >> we'll do a full report on fuel maybe we'll bring some cameras with us for that part. >> that's why we need electric cars >> the battery prices for electric cars going up too >> not enough lithium. >> joe, do your pga picks and come back. >> okay. i'm just excited that -- you see that first group john daly, mcneil and wang how about the tiebreaker >> tiger group with mcilroy and spieth >> jim cramer, see you in a couple minutes, my friend, on "squawk on the street. more to come back in just a moment.

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i think our commitment is to communicate clearly. i think that's what the fed chairman was doing in his press conference when he talked about where we would see some of the next rate hikes. and i hope that gives the market a better sense, even though we don't know at this point how far that will go >> that was kansas city fed president esther george with us a few moments ago. luz young at sofi, we've had a

lot of varying opinions. it runs a range of maybe we're getting close to some type of bottom in terms of valuations, according to barry knapp maybe there are eventual lows at the end of the summer. do we have a print of a bear market in the s&p and dow, liz >> i think that we need one in order to confirm that we've hit a bottom but i'm still not going to search far bottom in all of this unfortunately, i think we still have a couple months to get through some of this volatility. what we saw yesterday was that we finally got some indications that the strongest links that we've been depending on were breaking down. we've been talking theoretically for a long time about what needs to happen to bring inflation down, and you think about just the simplest definition of inflation, it's more money chasing fewer goods. so we needed demand to relax what we're hearing in retail earnings is the consumer is at least shifting their spending

patterns and that companies are trying to react to that. so this is now in practice how inflation comes down >> but if it's just smifshiftin it's one thing if we see consumers pull back, and we already had a negative gdp print once, i don't know whether the classical notion of back-to-back quarters means a recession. but when you go from just shifting what you spend on that, that could be next then our problem is not inflation. we tackle inflation, then we've got a growth problem or a recession. >> right and i do think that we'll see a pullback in consumer spending, and we probably do need to see some downward revisions in those goods-sensitive sectors in earnings for the remainder of the year so looking at consumer discretionary, even industrials, some of the earnings numbers are pretty strong as far as expectations go. we probably need to see some of that come down just because the consumer pulls back in spending doesn't mean

we're going to contract in the economy. and the negative gdp print in the first quarter was not because of the consumer. so there's still more of a buffer there they can reduce their spending without taking us into negative territory as long as that trade drag isn't as much of a drag in quarters going forward i don't think we're going to see a recession in 2022, but i do think we still need to see softening in some of this economic data before we can flatten out in volatility and move forward and i think we still have a month or two of that >> liz, we have about 30 seconds, but are we on the way from becoming the employees' market to an employers' market jobless claims are rising. more companies are talking about layoffs. >> i think the first thing we see is that the job openings start to be reduced, so there's 11 million jobs out there, companies will decide we can't hire all of those people, and that will be an indicator that we're slowing a little bit i don't think we'll see a huge spike in unemployment or that the labor market is going to

suddenly become our biggest problem. >> we have to go, but i wonder, what's worse, inflation or recession? then we have the specter of both at the same time >> inflation, hands down hands down, inflation of course. inflation would take us into a recession. >> okay. liz, thank you markets back down but not out, i guess. >> join us tomorrow. bye-bye. good thursday morning. welcome to "squawk on the street." i'm carl quintanilla with jim cramer david faber is back on set a fresh round of recessionary worries are driven by kohl's and cisco. philly fed disappoints and the 10-year yield near lows for the month. speaking of cisco, we'll talk to ceo chuck robbins on set in a few moments. we begin with the markets after yesterday's sell-off, the major indices extending their losses from record high