gains. we'll show you what's moving right now. gas prices moving and rising again in a sting of inflation sparking some action in washington we got that going for us a group of moderate democrats without with a new plan plus, rob walton, walmart heir buying the broncos. "squawk box" begins right now. >> good morning, everybody, welcome to "squawk box" here on cnbc, we are live in times

square, i am becky quick along with andrew sorkin yesterday, you did see gains across the board this morning it is indicated off by 150 s&p future is down by 18 after closing by 1% and you got the nasdaq by 1% indicated off by 36 points this morning. we had all of the target news and concerns of what it meant for target and retailers across the board. kind of shook off those concerns, target was only down 2.4% at the end of the day treasury yields, you see the 10-yr is yielding above 3.5% it is now yielding 3.001%. average gasoline prices hitting a new record, climbing another 3

cents to under $4.96 a gallon. prices in 17 states averaging above $5 a gallon. we keep adding to the number of states on that every day this week crude oil, you are going to see they're up again wti are above $120 a barrel. we got name like eog resources and conoco phillips and marathon petroleum all trading at an all time high. anything to do with inflation, this is the one that consumers noticed first. it is posted on signs where eve you go >> and the category for additional warnings for folks, credit suisse is warning it is likely to pose a profit loss as a result of the war in ukraine

challenging in the airsia-pacif region it is likely to lead to a loss for the entire group for the quarter, it is one of those banks that's been hit hard, continual and a never ending saga for this bank. that warning of putting pressure on other european banks as well. we'll be looking at red across the board. of course, this is hit the hardest down about 5%. meantime, shares of chinese maker, byd is rising over night. the company is set to send batteries to tesla very soon the executive says, "we are good friends with elon musk," tesla did not respond to cnbc for comments that's interesting >> after being competitors for

such a long time to have not just frenemies but friends that's an interesting development. >> elon musk often says he needs to make everything himself and the idea he outsource everything to competitors how does that work it is interesting and maybe speaks a little bit of how hard it is to come up with some of these supplies you are going to need of the ever increasing demand we got to branch out a little. there is not enough natural resources to hit the expectations that are out there in terms of where we'll be in years. >> did i just miss the massive buy recommendation on the interview sector i was checking to see who else is at an all time high but this

is not supposed to happen. >> no p, if you look at energy s the best performance for the entire year. >> some of these stocks are at an all time high the results are not quite there yet. >> accidental is the best performer but if you look at all the top performers, it makes a huge difference. i was thinking about novavax it got me thinking about it really works, you put in a messenger of rna and it generates something of immune response for

every viral works. it will make when you get covid much less bad than it would have been no one says it is like a classic vaccine. >> novavax is interesting because it is not rna. there is a market for it >> 21-0 that the shots outweigh its risks. advisers said the protein based novavax vaccine has comparable performance of the mrna. >> people who are afraid of the mrna shots, they think this could be a good market to them

there are people who are allergic i to some of the rna shots. this is a good alternative for them you need a way to get it to where it is going to be translated and into the gene product. there are people that are conspiracy theoriy thinks it is generic. reverse transcript has to be there to turn the message back into dna >> it is protein based >> it is a low bar, andrew >> for me it is like this.

>> one of my fprofessors want to know about reverse transcript, taking it back to mrna >> it does bring a lot of hopes and looking at science, there is a lot coming out of this and what we went through covid and the development, it brings a lot of hope for those dealing with a lot of diseases. >> it would have been a good way, david bit is just not and number two, when milton freeman can win one or paul crudeman can win one it is not science.

rob walton agreed to purchase the denver broncos for $4.65 billion. the ownership includes several members of the walton family and a major player, starbucks, the force may be with her to some extent, melody hobson. now, it must be approved by nfl owner since david tapper got richer his internal rate return is probably around 25%. >> go melody >> rob walton, i guess he's not related to the waltons how much is it

>> i know he's related, thank you. when they said -- all right, you want to buy this team, $3.6 billion, and he starts to write a check. that's about how long it took him to think about it, do you think? >> probably. >> so it is not 3.6 or 4.6 -- oh, i got another check here i don't think it matters to the waltons. >> i would not say that's the case i bet -- >> i think the denver broncos is really cool. they g you get to be in mile high city and a lot of history it is pretty cool. i like the colors. >> gomelody, i didn't know she

was apart of it. >> interestingly, i think melody becomes the first black owner, minority owner of an nfl team and you know the nfl had been talking to trying to do this it is quite an important first step >> great luxury box seats forever now. >> some expensive tickets, joe >> you guys could be there maybe i can go as one of your dates. futures is pointing to a e lower strategy we'll talk about strategy. as we head to break, there is a quick check of the shares of target after a warn of lower margins, i didn't do that it is over 200 >> i still don't understand why

the news is such a shock operating margins for the second quarter was the only news. now it is down 1.9% this morning. >> i see it. 268 is the high. 145 -- >> less? >> a little profit in the quarter. down another 2% there. bcu are watching "squawk box" on cn

you're a one-man stitchwork master. but your staffing plan needs to go up a size. you need to hire. i need indeed. indeed you do. indeed instant match instantly delivers quality candidates matching your job description. visit indeed.com/hire

futures right now in the red, 175 points in the dow nasdaq indicated down 56 later today, janet yellen, will testify in front the house committee. she's exepected to address inflation again. joining us now is elise. interesting comment at the world bank warning that inflation is

going to be persistent and so as glow slow growth and a list of country around the world that's entering recession and stagflation. why should we not be really concerned? >> core inflation is starting to show a lot of signs of coming down we are seeing that shift of goods from services spending the x factor here is going to be what's happening with food and energy prices. that's something the central bank understands that they can't entirely control heading into friday with the cpi print that we set to get, we expect to see some moderation in that core figure just as the consensus is expecting there is this possibility that the headline figure including food and energy continues to stay stubbornly high overall direct ansly answering

question, that stagflation scenario is something we find a low probability to but, certainly acknowledged that recession risk overall are elevated >> it makes me sympathetic of jay powell's position. the blunt instrument that the feds have may not work against energy and food. it has nothing to do necessarily with economic activities, so they got the kill economic activities will higher rates an it does not mean you fix supply and demand dynamics of food and energy the is risk of policy mistake i there. it is food and energy so i am not going to try to put a cap on that by raising rates too much >> right >> if they don't do that, they

may have done it the risk of policy rate is real. >> if the core figure does come down, there is a chance we do end up seeing that pivot from the feds unless long-term expectations start to anchor by those commodity high pressure. opec came out and said they wanted to expand their production capacity or rather than their production quotas the concern is they're not going to be able to deliver on those high targets we know a lot of producers are operating at full capacity and so i think people need to manage their expectations and just kind of accept oil prices are likely to stay elevated from here we got all of the different swirling dynamics going on with agricu agricultural commodities playing upward on food prices.

fed policy is the number one thing we have to focus on in terms of markets that's continuously evolving what's going to mean for the growth outlook depending on how much pressure they have to continue to apply via interest rates. >> concern of a spiral of food and energy you can't tell consumers -- oh, it is not cool, relax. they need more money and the labor market is tight and they'll be able to ask for more and you got wages up too, it is not just food and energy that could be a full-blown wage spiral theoretically >> it could, you can never say never, we are already seeing signs of the labor market cooling and obviously it is not a nail in the coffin of that wage price spiral debate, i think especially given all of these antidotes we are hearing

across the country, increasingl across the world of given how tight the market is, helps put down pressure on the growth that's been running so high. we have seen those figures start to turn over, it is a matter of those trends -- >> what does it mean exactly can someone like me? i can't even apply, right? since here they said private equity firms are now asking for little people to invest. people with 1 to $5 million. that won't get me at the door with you - will it what do i need for you to return my call? st st >> well, we'll return your call

no matter what t we are not just a private bank we have a self-directed investing platform that's assessable to everyone which is like me and my younger sister use. reach out to us, we can help >> i know what you are thinking, andrew -- you have no problem, your six jobs. >> elyse, thank you for playing along. don't you think is cool to say i have an account at a private bank, or do you? >> they don't need your time there. >> i don't want a bank that would have me. they would have someone like me, andrew >> coming up, we'll talk crypto, we'll find a bank for you in the cryp crypto world the details next and later we'll

talk about consumer spending with the ceo of ulta beauty. "squawk box" will be right back. so now... i want to thank you. i started investing with vanguard to help take care of you, like you took care of me. te quiero, mamá. only at vanguard you're more than just an investor you're an owner. helping you take care of the ones you love. that's the value of ownership.

our clients come to us with complicated situations that occur in their lives. for them it's the biggest milestone, the biggest accomplishment, the sale of a business, or an important event for their family. for them, it's the first and only time. we have seen this literally thousands of times, in thousands of iterations. ♪ ♪ i am vince lumia, head of field management at morgan stanley. whether that's retirement, paying for their children's college education, or their son or daughter getting married, our financial advisors need to make sure that they are making objective decisions, every step along the way. every time you hit a milestone, an anniversary, a life event, the emotions will run high. making sure that you have somebody, a team of individuals that have seen it before, have seen every circumstance and seen every challenge, and have your back when you need it most, is one of the most valuable things a financial advisor could provide to a family.

i am vince lumia and we are morgan stanley. "welcome back to "squawk box. a crypto offering that would increase assets into digital so it becomes mainstream after the bill yesterday we can start to see it >> senators say this is just the beginning. sounds like it is a long lobbying process to see who gets

regulatory control over this yesterday in this original bill, looks like -- cfdc has charge there. we'll see gary genztler, you see bitcoin down in an interview with bloomberg, levchin says his company offers longer term plans compares to apple service. he says there is plenty of growth for all involved. unlike similar services, apple will be integrated directly into the wallet app on its iphone i love that.

we welcome the competition type of thing because it sounds a heck better than oh my gosh, we have to compete with them? >> expand the marketplace. >> it does any time you are looking at that that means your addressable market just got smaller because you have to share it and you have to share it a big player. the firm's stock was down on the day of the news on monday. i am not sure what the stock did yesterday. >> the one thing that made me helpful and affirm of the buy now and pay later feature. it is going to be different, you have to press out the pay first and make the decision on the payment is my understanding. >> although, what would stop apple from trying to do the sam thing with retailers ise is the firm kind of locked in? >> it is a different flow in

terms of how they structure it now. apple could change that flow, i am sure they could >> by the way -- >> they have done a nice job with customers check out process. >> that's a pretty important aspect because i have got paypal and i got apple pay and amazon pay, whoever that's got the butten button that populates the screen for me i would not bet against levchin, she he's so good at so many things, paypal and beyond. apple is a new entrance. you have to probably look at that and say welcome the competition, sorta, kind of.

anyway -- when we come back, the impact of rising prices. a group of democrats unveiling their plan of inflation. throughout the month of june, we celebrating pride month. here is "the new york times" columnist, james stewart >> when i was coming off of age, all the career field was closed off to one who's known to be gay. that may be true but anymore not going to limit myself. think big and do not assume that you are going to be cut-off from opportitunies simply because you are different. hey businesses! you all deserve something epic! so we're giving every business, our best deals on every iphone - including the iphone 13 pro with 5g. that's the one with the amazing camera?

yep! every business deserves it... like one's that re-opened! hi, we have an appointment. and every new business that just opened! like aromatherapy rugs! i'll take one in blue please! it's not complicated. at&t is giving new and existing business customers our best deals on every iphone. ♪ ♪

when it comes to cybersecurity, the biggest threats don't always strike the biggest targets. so help safeguard your small business with comcast business securityedge™ it's advanced security that continuously scans for threats and helps protect every connected device. the choice is clear. get unbeatable business solutions from the most innovative company. so you can be ready for what's next. get started with a great deal on internet and voice

for just $49.99 a month for 24 months with a 2 -year price guarantee. call today. good morning, well come bac to "squawk box," taking a look at the futures now 55 points now on the nasdaq.

>> janet yellen testified before congress yesterday, she acknowledged the way she characterized inflation was a mistake. >> chair powell indicated himself, both of us could have used a better term than transitory there is no question that we have huge inflation pressures that inflation is really our top economic problem at this point >> secretary yellen says she expects inflation to remain high but very much hopes it will be going down now she's going to be testifying in the house ways and means committee. br brian deese will join us live and congress kevin brady is

going to ask yellen inflation. good morning ylan mui

chairman susan bdelbene told me the voters are very focused. >> we know we don't help folks until we get bills to the house and to the president's desk. those margins are slim >> s gthe group is calling on t biden administration to do more on tariffs and on chinese goods. all measures that could possibly be part of a scaled back reconciliation package the group got months of working on this plan and got the input from jason furman and wendy edelberg it will win over voters come november >> ylan, thank you very much, el be watching later today to hear more about it. joining us now to talk to us is carlos gutierrez it has been a few months since we spoke to youmanaging. you got some experience with this because you were operating in mexico with high inflation? >> yes >> what was the inflation you were dealing with? >> 60% it ranged from 6% t0% to 100%

>> you said the ceos never dealt with inflationary environment like this and they had to get ahead of things and start marketing up and realizing not playing where the putt is. we have seen a lot of companies that have not done that. they didn't raise prices as quickly as they may should of and got hit in terms of operating margins and a lot of companies that had this happen to them. what would you say kind of watching how this is played out? a lot of them are playing catchup in a big way right now and taking extreme measures. >> that mornmorning, becky, thao having me. we go back to when he launch the term temporary inflation, that did some damage because i have never seen temporary inflation i think it gave people the sense that this is past and it is not

so much of a deal and six or eight months from now that we won't see it maybe inflation, now we are talking about peak inflation that gives you impression that it is all over inflation is 7.5% for months and years. i don't think the fact that peak inflation should give us any comfort. there are three levels of ceos can use, one is price, the other one is cost, and the third is capital, especially working capital which you don't hear a lot about. you don't hear people lose balance sheets for operating purposes if you can't take price increases then you really have to go after costs. that's any way you can get cost down to offset the fact that you can't take price increases if not you are not going to lose mar margins. it is interesting because breast

rates are going up, the cost of money is higher. you don't want to car carry -- working capital is incredible any additional value you have can make a little more money for you rather than being stuck at the white house. you have the supply chain issues so ceos are dealing with a tricky situation it is not just one dimensional there are a lot of conflicting goals that have to be managed and balanced i think so far i see a lot of people are doing a good job. you know it is typical when you are in a situation, there is a sense that you can carry on forever or at least carry on for a year demand is up and people order more i wonder sometimes people have added capital because demand was

up knowing that this was not going to be forever. so, there are a lot of different variables. it is not an easy time for ceos. >> i was kind of thinking about it after everything we have heard the last few weeks, heard from retailers and beyond. this is affecting every industry you see it and not just with retailers and you see it when it comes to the travel industry and the airlines they sold all these seats that they don't have the staff to kind of keep up with. everybody is chasing this demand but the consumer is changing so quickly and we are all moving at the same pace and the same speed because we are impacted with covid and things that came about from that. when they build up and ready to meet demand because nobody wants to miss a sale when demand is there within a few months, we can kind of change our mind. we are like locus, we all want things we can order from homes and fix our homes and we want to make sure we get things delivered to us. now, we need airplane to get

tested at the beach and we need a hotel to stay in there rapid change of consumers that's been so hard to keep up with, too. >> you are absolutely right. it is sort of like the difference between a fad or a trend. you know in a big sense is a fad. it is not going to stay forever. it is not a long-term megatrain. sometimes the behavior is like if it were going to be a long-term so at capacity that's dangerous because you are adding capital dollar. do everything you can because you have this huge surge in demand and all of a sudden it goes away. i think agility and flexibility and being able to manage and with ambiguity is key. you got to believe able to be willing the change on a daily basis if necessary because things are changing so rapidly

i think speed is also very important and to be able to gauge when things are changing and move as soon as you see that >> which is hard to do with the supply chains that's running months behind. >> that's why i say there is so many variables it is not just inflation and the supply chain and the ukraine and covid continues to be around all of these things have added onto the burden of inflation so it is a tough time it is a tough thing to manage through and you have to pick your choices but you have to be fast and you have to decide which way you are going because inflation hits you extremely fast if you are going to cut cost, that takes longer. >> let's talk about what happens next a lot of these companies, the great operators are responding as you have said, they're

looking for ways to cut cost and make sure they are reacting very quickly in the cases of a target, walmart, they are pushing back on vendors, you are sharing some of this pain with us because they're passing on all of these costs they're raising prices where they can in areas like consumer necessity. they can't do it for expendable items or things you may or may not need when does it catch with consumers and how long it lasts? the idea that 7% or 7.5% inflation can stick around for years. do you think that's the likely scenario here? >> i think it will continue to go on for 2023 or throughout 2023 inflation can be 7% for a year that's why the idea of peaked ip affiliation gives you a false sense of comfort

with buyers, strong promotions and strong brands, they tend to get the priciing through. it is the ones that don't have the strength that can't get pricing through. >> carlos, that puts us in terms of biden administration well below their double forecast, the fed -- 4.7, they doubled it from the mid two's. we make a lot of policies and assumptions based on estimates like that. you are saying a 4.7 does not cut it and not even close to where we are going to be this year or next year or the year after. >> 4 p.7% would be good news rit now. >> the fed and what they have forecast, i am having a hard time remembering when they were right. they always have been

underestimating. companies get this information and they prepare for information that the fed disclosed and very often is too mild. you want to be on the aggressive side and not be slow and let inflation catch up to you. i think 4.7 will be great. >> great >> wow >> it is been that way from the beginning, it is transitory. don't worry. >> i like what you said, yeah, we should have picked a better - like another word that means transitory or temporary or short lived or something or the opposite word. it is not that we picked the wrong word, you were 180 degrees from the right word. that was a weird way >> yeah, we may have picked the wrong word >> secretary gutierrez, we appreciate your thoughts on this we were talking about it

yesterday. i would love to have you come back and be our recurrent guest to talk about these things >> and you are a young guy and for you to say, you can't remember the last time they were right, that's scary. >> i can't remember the kel kellogg's jingle >> secretary gutierrez, thank you. a new warning about global gdp. we got the details next. later congressman kevin brady will tell us what he expects to hear from janet yellen today when she testies if later this morning "squawk box" will be back in 60 seconds. don't move

welcome back to "squawk box. oecd estimates go global gdp wl reach 2.9% today that forecast in january >> hasbro is set to prevail over alta fox board challenge meantime, coming up, the biggest

markets and losers in the s&p 500. we'll be right back. new projects means new project managers. you need to hire. i need indeed. indeed you do. when you sponsor a job, you immediately get your shortlist of quality candidates, whose resumes on indeed match your job criteria.

visit indeed.com/hire and get started today. ♪ ♪ wow, we're crunching tons of polygons here! what's going on? where's regina? hi, i'm ladonna. i invest in invesco qqq, a fund that gives me access to the nasdaq-100 innovations, like real time cgi. okay... yeah... oh. don't worry i got it! become an agent of innovation with invesco qqq

wel welcome back to "squawk box. our next guest says the safer option might be linear joining us is matt flank it's great to see you.

the world might have come to you, matt. i think a lot of people were trying to chase netflix for a very long time and boy, does the pendulum seem to be swinging the other way has it effectively swung the other way? or do you think ultimately we'll find some middle ground here >> i think there's going to be a lot of middle ground out there our challenges in recent days is we're painted with the same brush as everybody else. we have a very strong linear business great relationships with advertisers. it's a great promotional platform we still work closely with our linear distributors. your own company announced a venture with charter in connection to doing things with tv, the digital space. there's a lot of opportunity there. sup streaming is very important to us >> but what is your sense of the transformation of this space, which is to say that three

months ago, everybody wanted to be netflix everybody wanted to be a subscription-only business now everybody's saying maybe that actually doesn't work and those who whispered about it for years and years and years are saying "i was right, i was right. >> this conversation is inevitable i said this on your network three years ago. andrew. i think the belief that there was unlimited growth, these are businesses we've carefully curated our networks we kwawatch our pricing. we're a very different business. it's amazing how fast everybody's run away from netflix. it is still a property, the most amazing story in the history of the business >> as you see those folks maybe decide to focus on advertising for the first time, how it does that change the dynamic more

broadly for folks like yourself, and also in terms of spending. i mean, competition for content has been so difficult, in part, because you could argue folks like netflix, and i think they would admit now, were overspending how does that change things for an amc >> well, i think it allows us to keep promoting what we've been doing all along. we've been very aggressive with our story, that we don't spend crazy amounts of money on the content. there's opportunity to create. what we're really doing now is staying the course while the rest of the world is a bit off course, i think. and this will settle out a lot of what we're say something a result of the fact that, covid took, you know, an organized transition to directed consumer businesses off the table. everything moved fast, and that was great for the streamer

now what's happening is the universe is reaching maturity a little bit faster. but that creates opportunity for us >> how does it change the direct to consumer versus being an arms dealer netflix was very profitable for a lot of people for a very long time did that dynamic shift >> if you brelieve that netflix is going to have to control content costs, maybe being an arms dealer isn't as good as it was two or three years ago our business is transitioning to streaming but we have a great, great linear business. we very optimistic about the up fronts, we are very optimistic in the advance advertised applications and some of the

thing things we do with amazon we feel like we're pretty well-positioned, including the fast tv networks we're creating. we see a tremendous opportunity in the curated businesses. that's something that's gone hay way. nobody's talking about curation anymore. it's going to be good for those of house of us who have strong base businesses >> we got to leave the conversation there we'll have you back very, very soon >> great to see you, thank you, andrew >> talk about "walking dead" and some other things. >> "better call saul." >> i better call joe, though >> stock futures sliding ahead of the coping bell and we'll talk with the ceo of ulta, ulta beauty. "squawk box" will be right back.

good morning welcome back to "squawk box"

here on cnbc, live from the nasdaq market site in times square i'm becky quick with joe kernen and andrew ross sorkin right now you'll see the dow futures off by about 142 points. s&p futures down by 15, the nasdaq off by 26 treasury yields continue to climb, and think coney continueo squeeze a little bit the five-year's even higher than that it's 3.011 the 30 year up to 3.1555 oil prices closed at their highest level since all the way back to march. mo no give-back here. they're continuing to climb. breaking news from covid vaccine maker moderna. we had novavax earlier

>> moderna's saying the picture of what the fall boosters look like may be starting to shape up they have new data this morning, looking at a combo booster that protects against omicron and the original strain of the virus they say this booster provides a superior protection. they're submitting the information to regulators and hope it will be available in the late summer. looking at these data, we anticipate more durable protection against variants of concern, with this one making it our lead candidate for a fall 2022 booster the fda is getting together in about two weeks to discuss what the fall boosters should look like this of course has various forms of the omicron variant have been taken over in the united states. can you see this ba.2.1.2.5.

these sub variants becomes more contagious and better able to evade our vaccine protection >> couple questions on this. what are the odds that, come the fall, omicron is still going to be the dominant one? what are the odds that something else comes in. second of all, is pfizer working on an omicron strain and third, is it going to be quickly enough if the fda's only going to start talking about this in two weeks. is that quickly enough for them to produce enough vaccines to have them ready for the fall surge? >> yeah. on the first question, the jury is totally out there could be a black swan

omicron variant. the thought is that it will probably continue. but of course we can't predict whether that will help pfizer is working on omicron boosters the problem would be if they have to develop something totally new that they haven't already started working on that would cause problems for getting ready for the fall >> in terms of what moderna's doing, it's based on ba.1 or ba.2 there's been some talk in the medical community that actually, if it is 1, that you're not going to be able necessarily to protect against infection as well as you might want, to the extent that we want to get back to that sort of magical three or four month period where it felt like up against delta, it was working to protect a lot of people from getting it to begin with is that in the cards here or not? >> probably not, based on what

we're sea we're seeing here. this is the original omicron strain there have been various sub variants that have come since then that is a question how well will these protect against infection from these home c omicron sub variants or will it be more durable against severe disease >> this is where it gets complicated. if the spael ale is that there' any meaningful protection, what does that mean to the uptake of the vaccine. a lot of people took the vaccine because the advertisement which was accurate at that time was that it would prevent some degree of infection, right >> absolutely. without being able to see the

efficacy data, we just don't know exactly how well these will protect against infection. but at the same time, you've heard people say it may not be everybody who goes out and gets a booster every fall, maybe elderly people, maybe people who are concerned about bad effects of covid, like the flu shot, not everybody goes out and gets it even though it is recommended for everybody. >> meg terrell, thank you for bringing us that story appreciate it. some news just out from spirit airlines. phil ralebeau is here with that >> spirit airlines has postponed the shareholder vote that was scheduled for friday to consider its agreement, tentative agreement to merge with frontier airlines they are now going to postpone that vote until thursday, june 30th, while the spirit board considers the latest counter

proposal from jetblue, as well as its ongoing discussions with frontier, if there's going to be an amended merger agreement on top of what they have already agreed to. the shareholder vote scheduled for friday is now scheduled for june 30th. we'll see what happens over the next couple week, becky, as spirit continues to be courted not only by jetblue but this tentative agreement in place with frontier. let's see if that holds. >> we've been talking through all of this about how some of these deals, offers seem intended to confuse the shareholder base >> correct >> they're going to actually negotiate or are they putting it off to inform their shareholder base >> what do you think happens here? they've already got an agreement going on with frontier there's no doubt that they're in discussions with their shareholders and that agreement has already been amended once.

i bet any amount of money with the shareholders came back and said it needs to be a little bit richer to match what's happening with jetblue do they need to go back again to frontier and say we've talked to ourshareholders, this is going to have to be increased? or are they going to engage in real discussions since then, jetblue has been very public, very adamant that it does not believe spirit has negotiated in good faith really, they don't have to negotiate in good faith. they've got an agreement already with frontier, and they don't think jetblue's offer meets muster at this point >> it's interesting to watch the stock reaction at this point it's basically nil, which is unusual, because usually if you're going through something like this, you'd think oh,

they're going to postpone it, there are more sweeteners being put in but even investors are kind of weary of this. like ah, forget it we've seen enough at this point. >> that speaks to the skepticism in the market about both deals skepticism about whether it's with frontier, jetblue, would not get past regulators. that skepticism is real and in the market >> i've never seen something like this where the stocks don't budge. speaks volumes phil, thank you. it's good to see you >> you bet >> let's get over to dom chu, he joins us with a look at some of the morning's other top premarket movers >> we'll start with novavax. you did mention that they're surging, 18%, 19% at this point. up 15% rather. you've got volume picking up this is a vaccine maker that

cleared a key hurdle in efforts to get approval for its key candidate. the product by the way for novavax is seen by some experts and investors as way to get more people vaccinated, that uptake that andrew mentioned because it was developed with a more traditional vaccine technology like flu and hepatitis instead of the messenger mrna. you've got shares of affirm moving the opposite direction, down big this morning, due in large part to web bush so it's about a 40% down side. they've got concerns about a profitability for the firm those shares are down about 4% in the premarket if you're a cnbc pro subscriber, you can go to cnbc.com/pro

one last thing to keep an eye on with regard to wall street credit suisse, they're down about 7% right now because credit suisse is now warning that its current quarter profits could be losses, tied to its investment banking operations, and that's because given all the market volatility. given the war in ukraine, they think there's been a capital market debt that's happened. they believe that debt will carry into the entire group. so yes, more trading volatility, joe, good for the investment bank and everything else happening there, but because interest rates are on the rise because you've got geopolitical uncertainty. a lot of companies aren't issuing as much debt the warning is sending credit suisse shares down about 7% right now. i'll send things back over to you. >> do you think we've talked

about phil mickelson and dustin johnson enough how much of a watershed event is this >> i've gone back and forth. you know we have a sister threat w network in the golf channel. it's the characters involve thad are ginvolved that are getting all the attention. >> do they get paid up front >> that's the issue. >> they both said that this is because of the pga >> can phil come back and play in the u.s. open >> so, yes, because you saw the statement, right >> i did, but i didn't see how it could i thought they would forfeit their right to play on the tour events here. >> for the u.s. open it's different. the majors, it's different first of all, phil mickelson has an exemption to all the majors

pretty much because of his win this past year the usga says if you are qualified you get in if you exempt yourself you get in by winning tournaments and majors and whatnot the masters is invitational. phil mickelson is a past champion has a lot of history there the british open >> so you're going to continue to play here, dom? >> i am not renouncing any hypothetical card i would have on the pga tour. >> for 2 million would you >> i would do it for a lot less, because i'm not that rich. >> that's where the sticking point comes in who knows where that money's from >> i'll leave you with this. i know you guys are probably going to move on here's what i would say. there's no doubt about it that these folks took the money, and even dustin johnson was pretty

up front about it. this idea that if you take the money, that's fine but you're a grown-up. you take the consequences that go along with it that's the conversation that's going along with it, what's happening with the saudi money and everything else. and becky, the women have taken saudi money in golf. and nobody mentions that so but for the phil comment, i'm not sure this would be such a big deal >> i'm really sorry to twist your arm to try to get to you talk about this. can we talk a little bit about messenger mrna >> all right when we come back, a relative bright spot in the beaten-down world of retail this year. we're going to be speaking with the ceo of ulta beauty as he marks one year on this job ask him how he's managing inventory as people head out

more the stock has been a strong performer compared to all the other retail nam 's aually up for the year. you're watching "squawk box," and this is cnbc

this is xfinity rewards. our way of saying thanks, with rewards for the whole family! from epic trips... to jurassic-themed at-home activities. join over 3 million members and start enjoying rewards like these, and so much more in the xfinity app! and don't miss jurassic world:dominion in theaters june 10th.

welcome back to "squawk box" this morning

the futures wrright now are in e red. the retailers have had a pretty uneven quarter with inflation, supply chain issues and inventory missteps at this time yesterday, we were talking about target but if you want a bit of opt mi optimism, check out ulta beauty. joining us now is ulta ceo dave kimball. thank fo thanks for coming in >> thanks for having me. >> if you go back to the pre-pandemic lows. march 20, 2020, the stock was at $148 that day. now it's $119. this has been a pretty steady march higher, because consumers were wearing a lot more makeup

for this eyes and lashes, with their masks up over this face. >> we are really proud of the results that we've been delivering but i really see four things that have come together for our business that allowed us to continue to drieft rve the resus that we have first you talk about the role as you express yourself to the world. category's emotional, connected, and increasingly, beauty enthusiasts are recognizing the role it plays. our business model is proven we're the only ones who do what ulta beauty does we're the only ones who bring price points from mass to prestige in makeup, skin care,

hair care, wellness. it's what we were created to do, deliver an assortment. >> mass to prestige. what's happening, are people trading up trading down >> what's great about an enthusiast is to give an experience where can you shop across price points. most beauty enthusiasts don't just buy across prestige or mass we're seeing strength across all categories first quarter was the first quarter during the pandemic that makeup comped positively since 2019 prestige was ahead of mass, but mass was still healthy, and each category delivered double digit growth it's broad based strength, motte just makeup. not just heair care, but all parts of our business. >> what's the future look like

for beauty and hair. i was kidding you. i don't need makeup. i need scalpels. there are things like fillers, botox. i take something, propecia, that grows hair don't you need to go with the innovation in the future can you get into that type of stuff? for someone that really needs help other than just, makeup >> you look pretty good. >> thank you that's what i was fishing for. >> what i would say is what's exciting to us about the category is it is so deeply personal beauty is not about the superficial. we talk to consumers all the time butte s bu beauty is about self-expression. it's much greater than a transactional relationship it's an emotional relationship and what we saw over the

pandemic, two-thirds, 67% of beauty enthusiasts link beauty to overall self-care and wea wellness what that means is how i'm taking care of myself, how i express myself to the world every bit as important as wellness the strength of the category will continue. there will be innovation, new waves, through the history of beauty and people expressing themselves to the world. ulta has continued to evolve we have services in our stores we continue to evolve our assortment we've added and expanded our wellness section it gives us a lot of confidence in the category as we look going forward. >> can you talk about what might be described as the influencer economy and the economics of that so much of your business now is driven by folks seeing influencers or others who have their own makeup lines, doing things on tiktok and the like,

and why certain people and certain brands work in an ulta world, may work in a sephora world. lady gaga had launch add product on amazon three years ago. gave up on it. just recently moved it to saf sephora and why that didn't work but why some of the things kylie jenner and others are doing. >> i've been there for eight years, but i'm paying most attention to beauty. and the role that social media and influencers have played has really trance formed the industry it is a great time, tan and it s been over the last several years to ra to launch big brands we've been proud to have a

relationship with kylie jenner, but makeup artists connecting online in instagram, on yooutub. beauty is a very entrepreneurial place. >> how much of your marketing budget these days is devoted towards that, devoted toward commissions and fees toward the influencer community rather than traditional media? >> we don't actually spend a whole lot on spending directly to influencers what we do is tell our story across all channels. social media is a big part of how we bring our story to life what's important is it goes back to the role that we see with beauty enthusiasts they love beauty they love being involved in the category >> you're paying kylie directly. she does her own social influencing things >> she built her brand

>> it's making sure you're advertising for that, too. >> well, we -- >> traditional advertising that's what she brings to the table. >> right, right, and she's building that brand like avenue other brand founder and >> target has struggled with inventory in a lot of areas. they've had too much of it beauty is not one of those cases. you have a store within a store partnership with target. how important has that been? >> we just started it last year. we're a maybe nine months into the relationship we've got 140 locations, we're growing, adding more this year we are really excited about the partnership. target is a great partner and retailer our opportunity there is to continue to introduce ulta beauty to the millions of guests that walk through their doors. it's also a great chance for our brand partners to introduce

their brands our brands have been really pleased with it. >> is it different customers shopping at target than versus the ulta store themselves? >> there is overlap. we see it as two key parts of the opportunity. one is to acquire new guests, people who have never shopped at ulta, but even more important is existing guests. we find again and again, we find ways to excite our guests and give them easier ways to engage in ulta, whether they're a store shopper, going online, downloading our app, using our salon. we get greater loyalty our partnership with target is the next big step in delivering for our guests >> there are so many questions about the consumer obviously, to this point, the consumer is really willing to spend on beauty items, things that make them feel good if we get into a recession inflation continues to climb and people have to spend on

non-discretionary items instead of things they want to buy they're putting more money into their gas tank, what's your plan how do you handle that how do you deal with it? >> we're certainly watching it very closely, and we know how the outlook is concerning in many ways. a really disruptive time as we look back over time, and we've never of course been in a moment like we're in now beauty is resilient, and it goes back because of the importance it plays in consumers' lives we don't think of it purely as a discretionary item because it's so important to how people, particularly beauty enthusiasts view their lives and show up in the world around them. what we deliver uniquely is this all price points as people adjust as we look at previous disruptions and challenges in the economy. if there's disruption or trade down, we can deliver that. >> are the margins tighter >> no, our margins are good.

>> it's 60 buck versus five on the products >> the margins are healthy and keeping them with the ulta beauty family is unique. we're the only ones who can do that so we feel confident that we'll be able to weather whatever's ahead of us, and we're very confident in the future of ulta beauty and how our model is positioned to adapt. >> congratulations on the first year and thanks for being here today. >> thank you very much great to see you >> dave kimball. when we come back, should americans simply resign themselves to waiting out the surge in gas prices? we're going to try to get information from brian deese let's get back to makeup with the aflac trivia question. how much does the average woman spend on makeup in aifim lete? we'll have the answer when we come right back. falling)

the aflac pre-pain show. aflac! paul is about to suffer a shelf-inflicted injury. luckily, aflac will help cover his unexpected medical bills. aflac! maybe you could use the money to buy a step stool. i have a step stool. so why are you climbing a shelf? the stool's on top of the shelf, isn't it paul... (shelf crashing) yeah... ♪ ♪ aflac! i could've waited to tell my doctor my heart was racing just making spaghetti... but i didn't wait. i could've delayed telling my doctor i was short of breath just reading a book... but i didn't wait. they told their doctors. and found out they had... atrial fibrillation. a condition which makes it about five times more likely to have a stroke. if you have one or more of these symptoms irregular heartbeat, heart racing, chest pain, shortness of breath, fatigue or lightheadedness, contact your doctor. this is no time to wait. how will your business adapt to change? contact your doctor. you could hire an office full of peyton mannings.

what's up, peyton? good morning, peyton. hold for peyton. they'd huddle.... welcome to the peytonverse. such a visionary. game plan... you go. no, you go! and call audibles... double our investment in omaha! omaha! omaha! omaha! or you could use workday. omaha. the finance, hr and planning system used by over half of the fortune 500. for a be-agile-like-an-mvp world. workday. for a changing world. dave doesn't need a posh virtual receptionist, because he cloned himself. while his clone watches the phones, dave can work on his code. and lead his team. dave trusts his clone like he trusts himself. so, in summary, we're going to sell the company. who's in favor?... perfect. but if cloning isn't an option for you, just get posh. virtual receptionists who can answer and transfer your calls, because you can't be in two places at once. (torstein vo) when you really philosophize about it, there's only one thing you don't have enough of.

time is the only truly scarce commodity. when you come to that realization, i think it's very important that you spend your time wisely. and what better way of spending time than traveling, continuing to educate ourselves and broaden our minds? (woman vo) viking. exploring the world in comfort. welcome back to "squawk box. according to money mag seazine,w much does the average woman spend on makeup in a lifetime?

ready for the answer $15,000, for a lifetime. what do you think? joe, i don't know how much the makeup that we use costs how much does the makeup that we use cost >> i was insulted. >> yeah. how much does a person spend on makeup in a lifetime would have been a better question we know that, sorkin don't pretend that we don't. >> i want to know what my lifetime makeup pspend is >> it's high >> coming up, it's worth it, believe me, for all of us. with gas prices hitting new records daily, what, if anything, can the white house do about it we'll ask national economic counsel director brian deese, but first, during these volatile and uncertain times for the market, cnbc is offering perspective on how to protect your investments in the midst of all this turmoil and here's cnbc senior personal

finance correspondent sharon epperson with a few quick tips on holding onto cash >> holding onto cash is critical in a market downturn a recent poll finds only 37% of boomers say they've made progress in creating an emergency fund they recommend keeping sufficient cash reserves in a savings account separate from your investments that way you don't have to tap into equities or other long-term assets if you need money for cnbc, i'm sharon epperson.

i didn't realize my dna could tell me if i had a higher chance for type two diabetes. so when my son gave me a 23andme kit, it was a wake-up call. this father's day, start a new health journey together with dad with $50 off every kit.

another day, another record for gas prices the national average now just under $5 a gallon. jean raimondo said there's not much else president biden can do joining us, brian deese. i feel your pain it's a global phenomenon, obviously, the supply/demand characteristics, external things like wars and invasions out of

control, but that doesn't mean that you're in a position to sit back and not try to bring relief to consumers what are the possible things the administration is considering right now? >> absolute thin absolute tly i. here domestically, we consulted with the domestic producers. they are ramping up at historic rates. they'll get to a million barrels a day by october but we're putting a million barrels a day from the strategic

stockpile. the global refinery capacity is tight. we need more capacity online the united states refineries are running near max levels, but there is additional refinery capacity around the world. that is something we are focussed on diplomatically the second thing is making sure that consumers aren't getting taken advantage of it's when you worry about sellers taking advantage of consumers. so we're trying to keep a close eye on that as well. >> there has been attention on what one group of people wants to do with fossil fuels and what the other side would argue about fossil fuels you came from blackrock. i know it's a free market and people, if there's a market for esg, you're going to supply it

at blackrock but for whatever reason, whether the biden administration or democrats in congress or esg, have we hastened the transition to renewables? have we moved too quickly? and is that part of the reason that we're in this pickle right now? and i really haven't heard the biden administration say they're going to pull out all the stops. ease the permitting for drilling, for leasing. it's almost as if you don't mind the high prices that much because it makes renewables more competitive, and that's end game down the road. but for the next five years, we should be doing everything we can, do you agree with that, brian? >> yeah, i don't think that's at all a fair characteristization where we are the oil and gas companies took as much drilling capacity as

they could during the covid crisis refinery capacity came down significantly last year. and now the market is trying to ramp up. so those are market forces i think this is about a transition in the near term and the long term. in the near term we've been very clear that the industry does not need anything more from us to ramp up in the very short term we consult with them and the truth is they're bringing on rigs as fast as they possibly can, because they have a market signal to do so over the median term, it's also clear where the market is going. >> you really don't think that esg or, you know, trying to de-fund projects or the chill that it sort of cast in the last couple of years on the fossil fuel industry, you don't think that's had any effect on how much we've been producing? because that was the stated intention of it. >> as you said -- >> when it was working, everybody was taking credit for

it ro khanna said look how much they've cut back on fossil fuel production in europe why can't we get the same cuts here now it just seems that the left is in denial that there's been any pressure to leave fossil fuels in the ground. >> look, i think you said it it's a free market and people are investing their capital where they think they can get a long-term sustainable return and a lot of people got hit in the covid crisis, overextended and the industry pulled back and we don't have enough refinery capacity for exactly that reason. over the median term we are sending a message of where we are going to go. lower energy and lower carbon. we know the transportation market is moving to electric vehicles of course that's going to be a transition but our focus here is on how can we provide long-term technology

new n neutral positions. look at something like natural gas. natural gas exports up 20% this year from last year, and we've doubled, consistent with what the president said we would do doubled our natural gas exports to europe. so we are focussed on the immediate issues and doing everything that we can to try to blunt the runup in prices, which is unfortunately, a direct consequence of this war, while also facilitating what the market is drive. >> we worry about energy components, and we have forecasts of 140, $150 oil let's talk about where the core inflation is coming from not just energy. and i'm referencing some of the things that secretary yellin has said recently that maybe she misjudged how long-lasting and

how pervasive inflation would be and reportedly, in her memoirs, it's going to be something about that she questioned some provisions of the american rescue plan and the size of it and that was 1.9 trillion and a lot of demand was thrown into the economy. maybe it was justified because of the pandemic. but it was chasing fewer and fewer goods. we know that's what causes inflation and supply chain issue, and y, yet if it weren't for joe manchin, you would have layered on another $4 trillion in build back better would you say that was a mistake to try to pass another $4 trillion worth of spending for build back better in and you're still trying does that make sense >> well, you packed a lot in there. secretary yellin has spoken clearly to the allegations that you said, and she said yesterday

and it certainly is the case that nobody can look at the american rescue plan and say that's the principal driver of inflation. inflation right now if you look around the world is a global phenomenon 9% in the eu area. what we're focussed on now is trying to move legislation that would do two things. lower costs for families and lower the federal deficit. that's what we're foercussed on now. it's what the president laid out in the state of the union. and lowering the deficit would be complementary to what the fed is trying to do. we have the ability to do that right now there's sensible proposals on the table, but that is our focus >> honestly, brian, and i'm not going to ask for whom the bell toll, because we know it tolls for all of us. would you characterize, what's your feeling about joe manchin at this point in the

administration he's a vil rlain who didn't let you do what you wanted to do or a savior who saved from you yourselves >> he's a partner that we have worked with and will continue working with that's true for natter manchin and other senators as well there's a lot of agreement frankly among democrats and some republicans, too let's do things that we know will actually reduce families' costs, reduce their household balance sheets gas is hitting families. we could reduce prescription drug costs if you reduce those costs, they're in a better place. those are the kinds of things we're focussed on. >> thank you i do admire your service you're pulling in the big paychecks at all the big investment bank, you're trying to make a difference we wish you well coming up when we come back.

mohamad el erian and today a 9:00 a.m. special event, president zelenskyy will join the yale ceo summit on cnbc.com top ceo also speak with zelenskyy. stay tuned you're watching squawk on cnbc

in two seconds, eric will realize (laughs) they're gonna need more space... gotta sell the house. oh... open houses. or, skip the hassles and sell directly to opendoor. wow. get your competitive offer at opendoor.com

still to come this morning mohamad el erian will join us after our conversation with brian esdee, surging prices. you're watching "squawk box," and this is cnbc just ask your cvs pharmacist. we search for savings for you. from coupons to lower costs options. plus, earn up to $50 extra bucks rewards each year just for filling at cvs pharmacy.

i'll take celebrity endorsements -you should buy crypto trust me, i'm an actor - i'm in! (buzzer) -[narrator] investing is not a game so, be careful where you get your advice do your own research at investor.gov before you invest, investor.gov this is xfinity rewards. our way of saying thanks, with rewards for the whole family! from epic trips...

to jurassic-themed at-home activities. join over 3 million members and start enjoying rewards like these, and so much more in the xfinity app! and don't miss jurassic world:dominion in theaters june 10th. when it comes to cybersecurity, the biggest threats don't always strike the biggest targets. so help safeguard your small business with comcast business securityedge™ it's advanced security that continuously scans for threats and helps protect every connected device. the choice is clear. get unbeatable business solutions from the most innovative company. so you can be ready for what's next. get started with a great deal on internet and voice for just $49.99 a month for 24 months with a 2 -year price guarantee. call today. welcome back to squawk we're counting down to this

week's biggest number. mohamad el erian is president of queens college cambridge mohammad, i want to ask you a lot of things, but i want you to comment if could you on the conversation that joe was having with brian deese this morning about effectively whether you think that the money that the administration and congress effectively approved is what was the functional creation of the inflation problem we have today. which side of that are you on? >> for me, that comes way down on the list. above that are four things one is that the federal reserve got inflation wrong. it mischaracterized it, even today it hasn't acted fast enough two is the ukraine war three is that we hadn't thought enough about the energy transition and then finally, we had supply-side issues remaining so i think that if are you to

solve for what created today's inflation, those four things would account for the majority of the drivers unfortunately for the administration, people will point the finger at them even though they come really low down in terms of the causes of the current inflation. >> so back to the number one issue on your list, which is the fed. i don't know if you were watching the program earlier when carlos gutierrez was on he said the fed has been late in his lifetime and always. as a fed waptcher, why has that been the case? >> i think it's really hard to take the punch bowl away it just comes back to that the fed hasn't been late in terms of pumping liquidity in fact, it overstayed its welcome. but when it comes to making the difficult decision, this fed in

particular has been incredibly slow and has been incredibly slow in acknowledging its mistake, unlike the european central bank, we still don't have an explanation from the fed as to how they've improved the understanding of inflation >> so mohammad, later this week we're going to get numbers on where inflation really stands. there's an expectation it's going to come down the question is, does the market rally on that news? if it rallies, is it the right decis decision or the right move? is it a dead-cat bounce? how will you read it and how will the market read it? >> first the expectation is that coal will come down and headline will come down around 8.3% i think the balance of risk is that we print a higher number on the headline side rather than a lower number as to what are the implications?

the implications for the economy are crystal clear. everybody acknowledges that the baseline is stagflation and the risk is more to recession than high growth and as to what it means for most companies, target is the extreme of that it impacts both on the revenue side and the cost side so people are bringing down their profit forecast. what does it mean for market why is that translation the most difficult one? because we've still got so much liquidity sloshing in the system we haven't eliminated the liquidity sloshing in the system so the market has been taking the news much better than they would have otherwise but if i were fully invested right now, i would take some chips off the table. i would wait for more value to be created >> mohammad, we have, over the years, we've gone back and forth, had pushback on instincts that i've needled you about.

yesterday when target, i was talking. target said they sold tons of stuff previously, buoyed by the government stimulus checks now suddenly, the absence of government stimulus, combined with the supply chain, all of a sudden there's all this money sloshing around, and now there's no more stimulus at the same time,there's suppl chain issues you're quick to blame the fed for having too many dollars in the system, but you don't think the fiscal dollars have the same effect and my question was about not the 1.9 trillion, maybe we needed that, it was pandemic-related but the administration was, the house passed another 4 trillion. it's just, the senate stopped that from happening. you don't think there would have been any adverse effects additionally from what we've seen on inflation if they had passed another 4 trillion at the end of last year you're okay with that, too >> so, joe, what i think is

important is the balance between monetary and fiscal and we needed less monetary and on the fiscal side more focus on productivity-enhancing measures and on protecting the most vulnerable segments of our society, right so we had a composition issue that we didn't address fully, and as a result of that, the supply side isn't coming back as much the problem was too much monetary most countries are taking their foot off the accelerator on monetary side and trying to protect the most vulnerable parts of the population on the fiscal side. and i think that's the right mix, joe >> it just seems to me that it's all part of the same thing the monetary side allows the

fiscal side to go crazy and gives them cover for overspending and the rates stay low so they say oh, wow, we can do mmt. no big deal. and now we he no you can't >> and we haven't talked about japan. we're seeing the natural end of this experiment. keep an eye on japan, joe. appreciate it. thank you. when we come back. a lot more this morning. more expert commentary on the inventory issue at target and what they say about the retail sector at large. a special interview on the way with the former j crew chairman and ceo, mickey drexler.

hey businesses! you all deserve something epic! so we're giving every business, our best deals on every iphone - including the iphone 13 pro with 5g. that's the one with the amazing camera? yep! every business deserves it... like one's that re-opened! hi, we have an appointment. and every new business that just opened! like aromatherapy rugs! i'll take one in blue please! it's not complicated. at&t is giving new and existing business customers our best deals on every iphone. ♪ ♪

think he's posting about all that ancient roman coinage? no, he's seizing the moment with merrill. moving his money into his investment account in real time and that's... how you collect coins. your money never stops working for you with merrill, a bank of america company. t

good morning we are set to open down this morning, about 140.sdo points oe dow. let's show you treasury yields we are sitting right now at just over 3%. we've got a big lineup kevin brady will be joining us on what he plans to ask janet yellen about fraiginflation whee testifies before a house committee today and mickey drexler will weigh in on target's profit warning and what it signals spirit airlines has postponed its special meeting on the problem frontier deal. it will continue talks with frontier and jetblue we talked about this in the last hour this is a situation where the

rot r vote was expected to be happening this friday. right now the market's not budging much on any of this. frontier's up by h4% phil lebeau was talking to us earlier and investors at this point, the market thinks neither of these deals has an easy chance of getting by regular raters employees inside roku have been speculating about the idea of a possible acquisition by netflix. internal chatter has heated up after the stock window was closed for all employees, preventing any of them from selling vested shares at a time they normally would be able to do that. stock is up by 6.7%.

let's get back to today's market story. mike santoli joins us now. all right, we up a little yeste yesterday. future the down a little today where are we in this cycle >> over the past two days, the s&p 500's regained pretty much to the penny what was roslost w. you'll see it kind of matches up to some degree with the february lows market is attempting to absorb this and leave those lows behind you know, in terms of the areas that would define whether this is just a little bit of a reflection reflex bounce or the start of something more

it's the down s10%. all stocks in the world, aside from the united states, that's the acwx, those are both outperforming the standard s&p 500. if you go back farther than year-to-date, it's the opposite story. this is about pay back from the heavy skew that the s&p has toward the big mega cap companies that have been the biggest sources down side pressure take a look at the energy story as you can base it against crude oil and the equal-weighted it is tick for tick. feeding into the cash floews it's kind of come back together. nothing really has changed

even though the rest of the market has tried to pick itself up off the lows to some degree >> what's percentage right now of the s&p made up by the energy sector >> it's getting to about 5%. it's about 4% of all the holdings i think there's 21 stocks in the s&p that are in the energy sector it's actually quite low by historical standards i think it actually ticked below 2% at the recent lows. it's a big catch-up move, based on multi-year weakness on energy >> there's an old statistic i'm forgetting right now, but for every dollar higher you tick at the gas prices at the pump it takes out of the discretionary spending but it gets redistributed in some place or another. >> it's a less-severe effect per dollar at the pump than it used

to be. cars are more efficient, but it's definitely pinching at these degrees. >> we'll see you later a group led by billionaire walmart heir has agreed to purchase the denver broncos. and the deal is now subject to review by the nfl's finance committee. and then must be approved by nfl owners it would be the first sale of a nfl team since billionaire david tefer bought a team for about $3 billion. and i don't know i think if you do the internal rate of return, go back five, ten, 15, 20 years, they all look good i remember two friends with the

bucs some of those guys didn't want to do it, thought it was too much and some of the other guys said just shut up about it and just do it, base climtically, and the got glen hutchens. and the celtics rook good. this is a very good series both teams have to play defense. they just have to. >> there was a buzzer beater the theird quarter. >> do you think sports teams are maturing at all? >> i think of it in terms of netflix. we thought netflix was the new, and i've read articles, andrew, saying, you know why you're having these problems? because you suck you do you suck you, it's horrible

and in a staircase, that's a horrible advice from you sorkin >> the staircase on hbo max. that was a recommendation. >> whatever you suggested to me, i watched that, and i was furious. i'm furious that guy's out i'm furious that guy's out >> what are you talking about it in. >> such a good show, though. >> the sports goes on as long as there is money and when of a hyou've got appled amazon to bid it up. >> dateline could have done that in one episode >> and it would have been documented on becky's point, the question i would wonder, you see such a runup in valuations. the biggest valuation jump was frankly a decade ago now it's more compressed over time does that sort of, does that valuation compress more and more. large numbers or does the

industry just become more financialized? >> it's must-see tv. lock at s look at sunday night football. i'd love to own the broncos, too. look at the ticker, talking about the fed. >> speaking of when we come back, treasury secretary janet yellin saying that inflation is at unacceptable levels in her testimony to the finance committee yesterday. mmtsndtalk more about those coen a the state of the economy with congressman kevin brady. that's next. "squawk box" will be right back. . grab those shoes and get in. which ones? all of 'em. buckle up. coolers? rack 'em and stack 'em. oooh hit me with that kayak too. look at these drivers. time to go clubbin'. dad joke? it's father's day. oversized load coming through.

who you calling oversized?! the cart.

as a business owner, your bottom line is always top of mind. so start saving by switching to the mobile service designed for small business: comcast business mobile. flexible data plans mean you can get unlimited data or pay by the gig. all on the most reliable 5g network. with no line activation fees or term contracts... saving you up to $500 a year. and it's only available to comcast business internet customers. so boost your bottom line by switching today. comcast business. powering possibilities.™

welcome back to "squawk box" to washington, where a new group of moderate democrats are trying to come up with a plan to fight inflation. >> the coalition is releasing an action plan for inflation today and pushing to get their party to act tougher on rising prices. they call themselves the "get stuff done caucus" and they say that the voters have seconder shock and just want washington to work.

>> good policy is good politics. people want to see, want us to show them that governance is working and that we're focussed on these issue and moving forward. >> the proposals go further than where the white house is right now. new dems are calling for broad relief on the taxes on chinese goods imposed by former president trump. moderates are also focussed on nuts and bolts issue and are calling for an overhaul of immigration. the group said fighting inflation requires an all hands on deck strategy and urged the administration to take those additional steps to bring down prices and focus on what it's c calling an affordability agenda. they want to hammer home that message to voters ahead of midterms in november >> thank you we'll continue this conversation write now on the democrats aplan

and what he expects to hear from janet yellen texas congressman kevin brady. before we get to janet yellen, i'm curious what you think of the democrats' plan. n there's elements that you probably agree with. >> i do. but i do think a focus on workforce would be hugely helpful. we are still missing several million americans out of the workforce i think would be very helpful in manning production lines, assembling products, delivering and servicing them. i think that's an area of bipartisan support we could reach. >> where do you stand on tariffs and china? that was something that was imposed during the past administration >> yeah, i'm not a fan of tariffs. they are taxes so my philosophy is less is

better and zero's best president trump used those to drive china to the table on the phase one agreement, which i think was a significant agreement. i think now is the time where we look especially at a fair transparent exclusion process so that small, medium-sized businesses in america that can't get those goods sourced outside of china, we certainly don't want to hurt them or their workers in the process i think that is going to be an element of discussion in this china-competes conference committee. >> look at this, we might have bipartisan agreement this morning, congressman we could get something done. this could be something. >> let's hope so i'm not sure that will happen at the hearing today. i have a great deal of respect for secretary yellin, but right now i think they got it wrong. we have a shrinking chieconomy, slower job growth and raging inflation. while you're tempted to ask, how

did you get it so wrong, the real question is why are you continuing to get it wrong because the secretary and the administration still is pursuing major spending bills with higher taxes that will drive inflation worse. and there's real concerns as well about this global minimum tax and its impact on america. so i think we'll have, i'm very respectful of the secretary, but i think she'll face some tough questions. >> we were talking to mohamad el erian earlier, and i don't know if you agree with it but he was putting the administration and actually the money that was funneled from congress to the rest of america, i think he put it at number four on his list of reasons why the inflation problem that we're suffering, he put ukraine on that list as well. do you think that's right? sfw wrong >> inflation was already nearly

8% when that war was launched. it doubled took off after the nearly $2 trillion american rescue plan. so no doubt. fueling, spending, incentives that kept workers disconnected from their job weremajor i think traders of inflation, then not addressing at all this supply chain crisis in any meaningful way i think my worry is we've got an economy that's in a wage price spiral we have blooming recession and about 80% of americans say the president's economic performance is poor. i think those are probably driving some democrats to have an agenda separate from the president. >> congressman, secretary yellin's recent comments were characterized as a mea culpa, but they really were more given what i know now i was wrong, but i didn't know putin and i didn't know covid was going to be so

persistent but apparently, she does say that she had some concern about the size of the american rescue plan at 1.1.9 trillion but she was fully on board at the end of the year, selling the build back better for 4 trillion and that's where i think the difference between when she was fed chief and when she's part of an administration, she's got a, you know, she's got to sell the what have it is that they're selling at the time. how could you be for that 4 trillion if even the 1.9 trillion were you questioning, and maybe we needed that 1.9 trillion. i don't know about people staying home and not being able to work and all the things that happened from that but certainly, that made more sense than the subsequent 4 trillion that they were proposing, but she was on board. >> no, she was more than on board. secretary's one of the most-respected members of the cabinet, no question about it,

so her words matter, especially coming from her fed background so when she was urging congress to act now and act big repeatedly, and she assured us at the time that she did not believe that the american rescue plan would create any inflationary pressure, she was wrong. and at the time by the wary, it was well over the fed's target rates when they were urging more spending in these packages so, yeah i'm a little skeptical about, about that claim i wish she would have gotten it right the first time, but now the question is, are you going to start getting it right. because they're still pursuing the taxes, the spending. i think some of the same problem the problems that have fueled inflation. >> before we go, i got to ask you two questions.

texas amou.g on behalf of elon musk, have you followed that? >> i saw the story last night. have not talked to the attorney general about it obviously, there is a question about these bots and what are legitimate accounts. i had not read the reasoning by the attorney general on the lawsuit. so, you know, don't really have a good insight into the approach here >> and then i was going to ask you, your own texas resident, matthew mcconaughey in washington yesterday talking about gun safety and responsibility, trying to bring people together. do you think he did? and do you think he changed any minds? >> well, i don't know that celebrities really change minds as we're weighing these serious issues what i do know is there ought to be a focus on keeping guns out of the hands who aren't eligible, whether they're criminals, the mentally ill. i really worry, the one common thing about these shooters, their families are broken.

their lives seem broken. they're isolated and angry and unless we address that root cause i don't think we'll ever solve this problem i hope there's common ground there. >> i hope there is common ground to find a way to keep guns out of those peoples' hands. thank you, congressman coming up next, roku shares rising on a new report that insiders at the company have been speculating about a possible acquisition by netflix. and enplater, former j. crew ceo mickey drexler will join us. we'll be right back. and you had to wrestle a massively complex supply chain to satisfy cravings from tokyo to toledo? so you partner with ibm consulting to bring together data and workflows so that every driver and merchandiser can serve up jalapeño, sesame, and chocolate-covered goodness with real-time, data-driven precision. let's create supply chains

that have an appetite for performance. ibm. let's create. your shipping manager left to “find themself.” leaving you lost. you need to hire. i need indeed. indeed you do. indeed instant match instantly delivers quality candidates matching your job description. visit indeed.com/hire

roku shares are rallying in free market trading. employees inside roku have been speculating about the idea of a possible acquisition by netflix. people familiar with the matter say interm chatter within roku was heated up after the streaming device maker abruptly closed the stock trading window for all employees and prevented them from selling vested shares when they normally might have been inclined to do so let's get insight, it would be a big concession from netflix that maybe they need help they can't, they've, their

content creativity is dried up so they're going to, you know, try to move into this area but you don't think so >> joye, i think this is one of the more ak surd things i've ever heard think about what roku is it is an operating system built into device and dongles as well. and everybody wants to run on top of that tv operating system, whether it's disney plus or netflix. but owning the business. netflix owning hardware and basically prioritizing one hardware, meaning themselves, over the thousands of devices that net friflix runs on seems completely antithetical to what they've built over the last 20 years. it's very hard to understand netflix' core business is not

advertising, will never be advertising. will a portion of the business now become advertising 25%? anything is possible as they embark on adding an advertising tier the core netflix subscription is staying. they're going to add a lower advertising tier it's always going to be a smaller portion of the business. so spend $20 billion, let's just say, to buy roku, to make t advertising this huge, huge piece of the company would seem very out of character. >> why spend 20, when you could spend 100. i mean, would you be surprised why roku, why roku employees might be drumming up some interest >> look, joe it doesn't surprise me at all. if i'm a row cue employee, this

specu speculation has been kicking around think about what's happened to roku they're facing a lot more competition. comcast just recently announced a joint venture with charter samsung is getting more aggressive google if you walk into a best buy, you si see a much bigger influx of google we're going into a recession economically but that's hurt roku stock the real pressure has been competition for tvos is heating up that's exactly, if i'm netflix, i'm benefitting interefrom thes operating war. you're going to add a tvos war on top of the streaming wars

that sounds crazy. >> is roku, you think, going to go the way of tivo >> look, roku is a market leader in tv operating systems. i think anthony wood has done an incredible job of getting out in front with software that's easy to use we would walk the floor. the challenge now, if you walk into a best buy and look at tvs, they all kind of look pretty much similar now, they all sort

of do the same thing which is why they're creating content. why we said they should buy ad advic advise yoe the competition is going to get more and more intense. you've got huge players, amazon, google, charter, comcast, you've got a lot of players out there that make this that much more difficult. roku is going to spend a tremendous amount on content over the next 12 months because they see the opportunity to, you know, create advertising inventory to differentiate the roku brand >> when i read articles, you're mentioned in a lot of them, they talk about how reid hastings

looked shocked about what was going on. >> they mentioned you. you've never seen, you said netflix, the future's never been uncertain. they looked vulnerable, they didn't look like they were going to take over the world and now that's sort of the consensus. i don't know where they top out at with subscribers. time heals all wounds. are you fileeling better? content would be nice. have you got anything for me i spend a half hour looking for things that's time i spend on netflix, then i move on to major league baseball they got anything? >> i mean, joe, i'm shocked you're not watching "stranger things season 4. >> i'm strange enough. what do they need to do.

>> there's one thing, the driver of why the stock is where it is and why reid felt vulnerable in that last conference call. i don't think reid hastings ever assumed that they would lose $2.5 billion on peacock. i don't think they would lose $2 billion on paramount plus and pluto. i think the amount of losses that have piled up at the streaming competitors were much, much larger than he expected is that tough to change where someone like a paramount or your company, comcast pull back on some of these investments? we'll have to see, but in terms of what they need to do, this is 90% plus can you talk about password sharing and advertising, they all help honestly, this is about content it needs to be more consistent

for $17 billion, they need more massive hits it is simply that simple >> very talented people out thayer there's money to pay them. i don't know why they can't figure it out. >> give it another six months, joe. >> wme figured it out. it can be done thanks, thanks, rich >> just not enough of it >> when we come back, former j. crew ceo, mickey drexler, known as the merchant prince jnsoi us. squawk coming right back to go beyond ordinary etfs. and strengthen client confidence in you. before investing consider the fund's investment objectives, risks, charges and expenses. go to flexshares.com for a prospectus containing this information. read it carefully. you'll always remember buying your first car. but the things that last a lifetime like happiness, love and confidence... you can't buy those. but you can invest in them. at t. rowe price, our strategic investing approach

can help you build the future you imagine. can help you build 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. then let's take back our market share. checkmate, chess heads. girls, i said “bedtime”!

welcome back to squawk some of the headlines making stories right now or stories making making headlines may be a better way to say it. amazon got rid of 3 million phony products the company has been under pressure to tackle phony products amazon say it is also saw a drop in intellectual property infringement last year and americans continue to spend at a very fast pace. consumer credit rose greater

than expected, $31.8 billion it was spurred by strong increasing credit card use inflation isn't yet keeping americans from spending, due in part to savings built up during the pandemic but the credit piece may be part of it, too international travel, bookings for foreign travel from the u.s. are almost at pre-pandemic levels now bookings to south america and europe are well over 90% of the levels but to the asia pacific region are still lagging. mainly due to china's covid restrictions andrew, thank you. shares of target down yesterday after the company warned of weaker profit margins for the

quarter. investors fearing that target's warning may be the tip of the iceberg as retail companies absorb higher costs related to labor, energy and the supply chain. joining us is the legendary mickey drexler the former chairman and ceo of j. crew, of gap, founder of old navy many more thing, too mickey, it's really good to have you here, because this is such a crazy time in retail we've heard so many stories reported over the last couple weeks as these companies come out with earnings and stuck with so much inventory that they thought customers wanted that they don't what's happening here? >> well, i call it the perfect storm. i don't remember anytime like this it was 2008 of course, which was a tough period but it is a perfect storm. now every piece of our business is affected, and necessarily not positive now i don't have a degree in

economics. very a degree only in selling shmockers. i did competitive shopping on saturday and competitive shopping usually means apparel. i went to a car dealer i went to the supermarket. i looked at airline prices and i'm trying to think of what else i looked at. i didn't look at freight prices. at the car dealer, seconder prices and above premiums for certain cars. if you want to buy a car, and i wasn't buying a car, four to six-month wait and used cars are selling at same prices as they sold for as new cars in a lot of cases. food, see that crazy. i go into a market >> 5.70. >> unbelievable. sticker shock everywhere in our business, cotton,

freight, flying a lot of goods adds to the cost of goods. where else did i competitive shop a number of other places, and i just wanted to get a sense as a consumer on what they're looking at a cup of coffee, i think, at starbucks is $7, maybe a cappuccino so it's reminding customers every single day about what's going on from an inventory point of view, when i was on the show about a year ago, where we, not us, because we're so small, thank god, not thank god we're small, but everyone was up against a really great year in 2021. 2022 was a warning you can't, you know, grow so much year over year. everyone's comparing it to 2019. i'm not sure why and the stimulus is not around anymore. if you look at the business, these are all huge challenges that we have

real estate nonly in good locations and city, and best malls is up. otherwise, mall business is not great. so, and i can't speak, because i'm not running a big company, but i still have a lot of friends running big companies, and by the way, i'm kind of happy i'm not running a big company right now. we have a small company, small office i sit at a table with two merchants. i don't need a loudspeaker all i do is raise my voice so it's kind of new for me and quite enjoyable doing that in any case, i see huge issues prices of apparel, and i get seconder shock on that, and very to say, we're always incredibly sensitive to prices, and we're not passing all costs on to consumer i'm not sure how long that will take now inventory is the enemy of every retailer in the world and

assortments. and i think we're all oversorted every time i've been oversorted my whole life now we're looking at best ten items, best 15 items, be in stock on it. casual dressing from a year ago. you know, sports clothes that were classic and basic, well, everyone has enough inventory on that, probably too much. we actually have a little too much inventory and i call it on core, you know, goods that sell all yearlong, but you're tying up cash you're tying up inventory, and i think the customers are looking for a little more. a little more style, lots of weddings, lots of bar mitzvahs, lots of everything happening now. and weddings delayed for a year or two, which, you know, whatever >> i've got too much inventory of all that stuff in my own closets, mickey. we heard from target yesterday that this is going to be a

one-quarter problem. they're going to get rid of all this inventory, move it quick limit my question would be what are the best operators doing recei right now. where it's going to be very friendly inventory for the holidays coming up which means what you're only going to have so many things? you're not going to put yourself in a position of getting caught like this again. >> who knows that answer i don't know anyone smart enough show me the experience someone has in this crazy inflationary market, in a place where but it out and buy a tee shirt today, i would say not at alex mill, $90, $100 restaurants, airfare it's almost insulting. and so i don't know who can say it target's a great company, but they're also up against basics they're up against outdoor furniture, indoor furniture. everyone was buying furniture like crazy so there was, it's a weird, very difficult year to forecast

now i guess if you're running a public company, nothing, target's the best. you might say that but prove it and we'll see what happens the stock to sales ratios from what i know, it's not a lot. and the retailers kind of don't talk much about that, or sales, i'm looking at inventory if inventory's even flat and sales are down 15 or 10% comp, you have an inventory problem. so i'm not sure what i hear, and i usually don't believe it much. i believe what i say because i say it and i think it's right but i think it's too difficult to forecast for the flex quarter. this is not a quarter-to-quarter problem. in my opinion. are car prices going to come down you can't even get a car this quarter. milk prices? i'm not in the milk business, but they're too high >> everything. >> everything's too expensive.

>> so i just wonder, this idea of better days to come we talked to carlos gutierrez today, the former congress secretary who also used to run kellogg and was there running their operations in mexico when he was placing 60% inflation on an annual basis. he says may see inflation moderate, but that doesn't mean it's going away. you may take about 7% or 7.5% inflation for the next year or longer that's a scary thing to get your head around too. >> it's different when you sell a commodity like cereal. i got rid of the sugar cereal, but when i want a snack, i take a commodity cereal when you have fashion and it changes every year, you don't have to design new food every year, although it's a fashion market, everything is. but i don't know from 7.5% it's much higher in the apparel world. just when i speak to friends of

mine or shop stores, it looks like it's 10% to 15% and i'm stunned. i have sticker shock on everything i see and you know, i know a lot of people they say i don't pay that much for -- fill in the blank so cereal's way different than apparel. and the other thing about apparel is they buy when they're emotionally emotionally excited about the goods or when the prices are cheap. and even when the prices are cheap, i think there's a little more sensitivity to quality. but i am a big brieliever that e goods, look , it's in the bible. you must move forward, you must go to where, skate to where the puck is going and when steve jobs ran apple, he was a fashion merchant, one of the great merchants in the world

of course he did great products and they had a monopoly on them which is really trickerrific fo them, but i don't flow know how forecast this. everyone feels psychologically poorer if they're a stockholder. rent's like craze kny in new yo. they were giving discounts two years ago. then it goes up 30% a year later. >> mickey obviously knows what he's talking about with apple, too. he was director from 1999 to 2015 we appreciate your outlook on all this a very difficult business, and it sounds like you think it's going to be difficult for some time to see. we'll have you back soon >> thank you very much good to see you all. still to come, jim cramer gives his first take on markets this morning futures about where they've been they softer this morning not, let's see by 4:00

here's a look at the yen the dollar hitting its highest level since february of 2002 against the japanese currency, we'll be right back. ne 13 pro w. that's the one with the amazing camera? yep! every business deserves it... like one's that re-opened! hi, we have an appointment. and every new business that just opened! like aromatherapy rugs! i'll take one in blue please! it's not complicated. at&t is giving new and existing business customers our best deals on every iphone. ♪ ♪ ♪ ♪ connecting to opportunity is just part of the hustle. ♪ ♪

opportunity is using data to create a competitive advantage. ♪ ♪ it's raising capital that helps companies change the world. it's making complicated financial concepts seem simple. opportunity is making the dream of home ownership a reality... ♪ ♪ ...writing new rules and redefining the game... ...and driving the world forward to a greener energy future. (applause) ♪ ♪ opportunity is setting a goal... ...and charting a course to get there. sometimes the only thing standing between you and opportunity... ...is someone who can make the connection. at ice, we connect people to opportunity.

want to get out to the san francisco bureau this morning where jim cramer joins us you've had quite a week taking the pulse of silicon valley and the west coast we've also seen the target news which continues to baffle at

least this market. is this a tale of two cities or a tale of just one world >> i think everything's slowing. it's slowing kind of on plan housing seemed to be slowing on a plan with mortgage applications lower, retail obviously slowing, trying to figure out where the inventories could end up right now it's in the wrong place. here companies are dealing with the idea that maybe they have to make money, that the old story of how their sales are going and recurring revenues, not enough it doesn't please. so you have companies that are trying to make money but they make money in meager fashion what happens is, andrew, we're looking for places to hide we can't just own camp else's soup and smucker's >> give me your upside prize you've been out there now three days, four days now. three days what's the one thing you say, you know what, i didn't realize that this could be something >> i had no idea this cybersecurity had gone from

being ransomware to being let's shut down the business and you better pay everybody's paying they're either paying palo alto or cloud strike or they're using the proud guys the people who say, you know what, this is only used for blackmail, well, let's put it this way the blackmail business is alive and well those companies can't help it. every day they come to work and they have more and more orders because the bad guys are getting bigger and better at what they do >> we've been talking all morning about getting inflation figures later this week. when you think about the trade into those numbers, what do you expect them to be and how do you actually expect the market to react depending on where they land >> well, since those number, what we've found is there's just inventory everywhere because whether it be gasoline a high

price, people worried, stimulus running out, jay powell being hawkish, i think it's going on plan it's miserable when it goes to plan remember, we don't want a crash landing but we're landing. it's not like we just want to keep flying and everything is terrific one industry after another is going to roll over, and i think that people better get used to that and come in and say you know what, we need health care, food stocks, got control over inflation. there's fewer and fewer stocks that really work interest rates are going to go higher, it will reverse whatever happened the day before. it's not a great market. what happens, it won't become a great market until we have softness everywhere. we still have some strength. we need to see it roll over and that's not happening at all. >> we will see you a couple minutes on "squawk on the street." tune in to "mad money" opportunity for a special lineup jim will btaintoe lkg ceos of

cisco, okta and snowflake. guys, excuse me. i didn't quite get that. i'm hard of hearing. ♪♪ oh hey, don't forget about the tense music too. would you say tense? i'd say suspenseful. aren't they the same thing? can we move on guys, please? alexa, turn on the subtitles. and dim the lights. ok, dimming the lights. alexa, turn on the subtitles. and dim the lights. nurse mariyam sabo knows a moment this pure... ...demands a lotion this pure. new gold bond pure moisture lotion. 24-hour hydration. no parabens, dyes, or fragrances. gold bond. champion your skin.

this is hannah, she's a posh virtual receptionist at the ready 24-7 to answer your calls and assist your clients. you can't be in two places at once. let posh answer. posh virtual receptionists. when you need help it's great to be in sync with customer service. a team of reps who can anticipate the next step genesys technology is changing the way customer service teams

anticipate what customers need. because happy customers are music to our ears. genesys, we're behind every customer smile. 30 minutes before the opening bell yum head of investment strategy,

episodic you were on seems like you were on in the last couple weeks or so and think you're somewhat defensive, but we can't bury our head in the sand what are you doing >> i think you have to be sort of defensive in this environment. we're going to continue to see whiplash the things we're hearing not only from companies but from the economic data is it's finally all catching up with what the market told us was going to happen we're seeing a lot of these indicators roll over we're finally hearing from companies that earnings may not be as strong for the rest of the year as we originally thought, and all of that needed to happen in order to fight public enemy number one, which is inflation and i think as investors for the next 60 days or so as a lot of this data rolls in, we're going to continue to see bumps and it's okay to sort of sit on the sidelines with your money, but you have to be prepared that the second half could be a lot better than the first half once we get past some of these big data releases.

>> we've had a discussion and we separated core inflation from food and energy, and it highlights the conundrum, really, that the fed has because it's hard to control food and energy, inflation, and we don't know how long the war is going to last. there's a lot that we can't anticipate that the fed really doesn't have tools to address. what do you think? is inflation rolling over or is it going to be persistent for years? >> i think at this point inflation is leveling off. i'm comfortable saying that i think the highest level is behind us, but that doesn't mean it's just rolling off thf and will fall down to comfortable levels by the end of the year we're going to get a summary of economic projects from the fed at this next meeting i would expect their projection of pce is going to rise, particularly for 2023, and we're going to be able to set better expectations about how they might fight that to your point about core inflation versus food and energy, the thing about food and

energy is they're not optional items for consumers, so there isn't a substitute we still have to spend money on that and that's what's affecting consumer behavior right now. consumers can change their mind on a dime about how to spend money going forward. businesses can't do that that's why we see some problems with inventory and a lot of businesses trying to catch up with how consumers have changed their behavior >> what do we get, kind of an uncomfortable amount of stag place? we did see, you know, the world bank and different global entities talking about a lot of countries are at risk of a sharp slowdown base on what's happening. so we're going to go into a slow growth period with persistent inflation? because that's not good. >> right i think that is going to be the case for a number of months here, but one of the things we're seeing, an indicator i had been sort of waiting for to roll over was the housing market and we're finally seeing that happen

too. you saw mortgage applications fall again today the last piece of that market that needs to fall is home prices that happens with a lag, but that's a big ingredient to show us that inflation has gotten to its highest level and is coming down >> all right thank you. we'll check back good to have you on this morning. >> bye see you tomorrow good wednesday morning welcome to "squawk on the street." i'm carl quintanilla with jim cramer and david faber coming up, a couple days of combines and that near 1% rally on tuesday, but futures are weak as the 10-year yield stays elevated, oil at $120, and the tenth straight day of record high average gas prices at $4.97. mortgage demand falling, continued inflation headwinds and some signs the economy could be headed for another quarter of negative growth.