$4.99. >> $4.99 9/10. red ink for two stocks that were pandemic darlings stitchfix and docusign losing a quarter of value it is friday, january 10th, 2022 andrew found a barber in d.c "squawk box" begins right now. good morning welcome to "squawk box" here on cnbc we are live from the nasdaq market site in times square.

i'm rebecca quick along with joe kernen and andrew is in d.c. >> i had this cut yesterday. >> afternoon >> no. >> the light is different. >> the light it was sticking out in back yesterday. >> it's a sunny day. >> i had a cowlick yesterday >> andrew's hair you never notice mine. >> i said the other day how big your hair looksed remember >> penelope noticed. >> it is a tv marriage and family all in one place. >> extended family spouses included let's look at equities you have the dow down 43 points. s&p flat the nasdaq up 46 this all comes after the shock yesterday. stocks were down sharply the s&p and nasdaq each down by

more than 2% then you had the dow off more than 600 points. a lot of the losses came just during the final rough hour of trading yesterday. all three indexes looking at another losing week. yesterday at this point, we were saying we're up barely from the week before. now we're not. now down by 2% or more for all three major averages we will see what happens today at 8:30. that is the number you can take a look at what is happening with the treasury market the 10-year note at 3% at 3.02%. the 2-year note at 2.86% and then gas prices are climbing national average rising to a new record of $4.99 a gallon aaa says the average in 21 states is above $5 a gallon at this point more states will hit that. yesterday, i paid $4.99 9/10

you you see crude oil prices sitting at around $120 a barrel. 122 actually it is up to $122.11. brent at 12$123.74. andrew i have highlights to bring you from the forum in washington yesterday. i spoke to janet yellen. we talked about her outlook for a recession. >> nothing to suggest inflation if recession is in the works as the fed tightens monetary policy to contain demand and bring inflation down, i believe there is a path through this that entails a soft landing with the economy essentially stabilizing. near full employment to maintain a strong labor market and not see a recession. >> i spoke with the starbucks founder ceo howard schultz and

the first interview since taking the role he says he is concerned about the mental health and safety in stores an issue he had not been concerned with over the years. not as much as he is today. >> there is an issue of safety in our stores in terms of people coming in who use our stores as a public bathroom. we have to provide a safe environment for our people and our customers. and the mental health crisis in the country is severe and acute and getting worse. we have to harden our stores and provide safety for our people. >> harden your stores. >> i don't know if we can keep our bathrooms open >> we spoke about capitalism and the role of ceos and his role as the progressive ceo. maybe now how that world has

changed. we will show you more of the video later in the broadcast i spoke to senator chris murphy fighting for gun reform on capitol hill he is in the middle of it right now. i asked about the letter written by ceos yesterday urging the senate to act. it did not offer specific recommendations. >> 90% of americans and 90% of customers. you are risking very little in being in alignment of 90% of people you serve i'm glad for the engagement from business leaders you are right. they can do more more can enter this fight. what i know about the great social change movement in the country, it has been business leaders and corporations pushed the ball dune the field. >> we will have more in the next hour including howard schultz battle with unions and words how he is

trying to manage that, joe i know we're also focused on disney that is quite the story from yesterday. >> i thought howard schultz was interesting. >> i thought so, too i had a question i was trying to go back. they opened the bathrooms and said it is welcome for anybody to come. not just customers was he running the place or after he stepped away? >> he was running the place. he was running the place no question. this is a distinction in how he is thinking about the business a lot of the issues they are confronting. they talked about this on the show with the idea of the third place and how the business has changed. the idea that people used to come there and use wifi and sit and have coffee. that is not what people do they come in and it is a grab and go situation >> i wonder how much of that is because of the situations in the bathrooms. >> no one with wants to hang out in new york city around a subway

entrance or exit at this point a lot of starbucks are in areas where i'm not ready to hang out in there i don't know about san francisco or l.a. or a lot of the big cities we see with the videos. you saw the recall out in san francisco. there is a real backlash against some of the crime. he mentioned that it has to do with who is out on the streets. >> anecdotally, across the street, when our producer is over there getting coffee. you have to wear a mask, but shirts and pants are optional. >> right >> it's because of the problems that howard schultz was speaking about. mental health and mental illness. having people in the stores. customers don't want to be there. you have workers who have to deal with that

>> it meakes it difficult for workers. in terms of the things they are prioritizing and what the employees want number one or two on the list after spotify, which is a benefit they give employees, is mental health services that is the service. having said that, it comes a little bit related to senator murphy conversation. there is a worry about security. this is not specific to starbucks in particular, but all kinds of stores around the country now and how employees think about that and how much they worry about that. literally on a daily basis in the way that we often don't appreciate >> retailers, too. it has gotten pretty bad in terms of people walking out the door home depot has a policy that says don't stop them we don't want you getting involved. >> most places do. difficult guys who have been arrested 100

times for shoplifting. if you need to use the facilities, you can walk into places where they say no i have seen a starbucks that said i'm going there i know i'll be able to use the fac facilities it is an issue of not being charged or questioned. you will see, andrew as you get older, duty calls more frequently. starbucks has been a refuge. >> maybe if you buy a coffee on the way out. >> duty? did i say duty i meant number one tell me about the shakeup of disney is the iger guy? was he doing anything wrong? firing peter rice. rice came to disney in 2019 along with 21st century fox,

didn't know the firing was coming no idea. ceo bob chapek told rice he wasn't a cultural fit at disney. he made the decision because rice, in his view, did not work collaboratively with others. chapek elevated dana walden. rice was a possible candidate to succeed chapek as ceo. that may have something to do with that. disney chairwoman said she has support and confidence of the board. >> the board coalescing around chapek >> we have seen that around. someone comes in and wants to see their own people is it more than that >> i don't know. a lot of questions whether bob

chapek would keep his job. he has a job through february of 2023 this fall will get re-signed or not. clearly the board has support behind him having said that, rice was considered the last iger era or the last of the hollywood talent centric creative piece of disney that part of disney. he had the relationships with hollywood. the creative community and media and advertisers. he was that guy. that's why a lot of people thought he potentially in a post-chapek world, could be his successor. a lot of people in hollywood are scratching their heads guessing and speculating about what happened behind the scenes. according to some reporting, no indication to rice prior that there was a problem or issue that raises more questions

>> consolidaconsolidation. >> they would not talk about a chapek successor in terms of a normal it ttenure >> look, i think there is a lot of -- >> he is only 60 and new to the job. why are people talking about successor? >> i think there are a lot of questions. some people are fans of chapek and others detractors. a lot of questions how he managed the business over the last year and a half the questions of what happened in florida and how that was handled with the governor there. that is a big issue. >> that is well documented the board card coalesced around chapek. before we go to break, let's look at shares of netflix. shares falling after goldman sachs downgraded to neutral. it is taking into account the

weaker environment the and alyst has concerns of t recession and levels of content spend. the stock off 3.5% goldman downgraded goodrx and roblox from neutral to sell. there is concern this morning after the declines in the stock market in the last hour of trading yesterday. >> i would like to go back and look at what the analyst said six months ago or a year ago what was the price target and prediction about netflix coming to this now, do you think this person, whoever made it, don't you think they were pounding the table at 400? >> 500, maybe. >> with a 550 or 600 price target i don't know what you use. >> you could say the same.

the market is human behavior mechanism. >> i know. why try? as an analyst, do your best to know inside out what is going on with the company don't try to pretend what the stock will do. >> you should know what the valuation of the company is and what makes it valuable and when it is cheap and when it is not. >> all of that is great. you have to apply a multiple. coming up, david einhorn says the fed is bluffing he doesn't have the tools to fight inflation. what he says to buy next. and later this hour, we get you ready for the key read on inflation at 8:30 a.m. eastern you are watching "squawk box" on cnbc >> announcer: this cnbc program

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green light capital's david einhorn with doubts. he spoke yesterday and said the fed is bluffing. inflation ain't going away so fast his words. he said the fed done'sesn't have tools to stop inflation. when it has to choose, he thinks it has to pick the treasuries. einhorn said it is best to have

some goald i have my rant as long as your clock is a ten-year clock and it is broken, it will be right at some point >> in 2018 -- 2013, he lost -- >> 2015, david's fund was down 16% in 2015. making a big bet gold punished by gold >> i'm like how many times have we heard this? he lost $630 million in the gold market he was down in 2018 for the same thing. sticking with gold because he knew the inflation policies would come around. he is probably right with what he is saying on the ease of things >> we both sat here like what?

we heard this before >> okay, david joining us now is gunjan as the money and investing team with wall street journal. gunjan, did you get word we were plugging you and your great work yesterday? >> good morning, joe i had a family member ping me. i heard. >> because of the article. >> something interesting occurred to me that i wanted to ask about gunjan a lot of people are now thinking recession. you make that point. high gas prices can cause a recession. is it possible for inflation itself to cause recession even if the fed doesn't overshoot on raising rates? i always think of it the other

way. inflation goes up. fed tightens people pull in get recession can the fed sit where inflation gets so bad that consumers stop spending >> it's possible i would argue inflation is the main driver of the recession worries that we've seen this year a lot of it is driven by worries of the fed we will see at 8:30. inflation is the biggest risk to markets. it is why investors have sold stocks aggressively throughout the year it is driven the huge, huge rotation in the stock market it all comes down to inflation and worries about inflation. we saw stocks yesterday having the worst day in weeks ahead of the inflation report it shows top of mind >> because of the 10-year yield. that is where we get back to chicken and egg discussions. the 10-year yield above 3%

yesterday. if we knew the terminal rate, that is the big question, we know -- it is still low. anybody can deal with 3% we could deal with 4% probably i worry about the volcker scenario where you keep going higher and higher and nothing cools off. that entails the fed raising interest rates you think it can happen from inflation itself >> look, we don't know i think it comes down to inflation is a concern we have not dealt with in decades. this is so different from the market environment from the last decade to the point on treasury yields, it is a risk because it shapes the path of treasury yields. that dealt a blow to the high flyer in the past decade turn the stock market upside down with the tech under performance relative to the other parts of the market we have seen. >> you point out that money was

cheap in 1999 and technology got popular and storied stocks and beloved names in tech. we were forewarned that higher yields would hurt tech more than other industries because of the multiples. now it is happening. i don't know why we're surprised that it was the end result we have been saying this for a year, i think. >> right, but the trade worked so well for so long that people kept clinging to it. what is interesting is even after the recent under performance with tech off to the worst year in more than two decades, tech is still near record percentage of the s&p 500. it is really hard to let go of the trades that worked even though growth is under performing value by the biggest margin since the dot-com bubble

burst. i was struck by the comparisons of the dot-com it seems we're exiting the bubble or not unravelled yesterday. this is the time period. >> gunjan, thank you she only heard from one person i thought you would be flooded >> tell your mo thank for watching >> yeah. okay thanks, gunjan goldman sachs analyst is eric sheridan. initiated coverage of netflix in september of last year with the price target of 590. in his defense, neutral rating >> that's pretty good. >> that's about as bearish a wall street analyst gets >> the price target is going to be here, but i don't understand why. the market is crazy right now. i don't get it that is decent. >> the stock was down probably

in -- i'll go back and look. >> it went higher than that. >> okay. >> thanks, gunjan. when we come back, two stocks that were pandemic b darlings are now tanking and crude prices above $120 a barrel we wloill ok at energy stocks at the bottom of the hour "squawk box" will be right back. t a plan with tax-smart investing strategies designed to help you keep more of what you earn. this is the planning effect.

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time for the executive edge. rough 24 hours for pandemic darlings docusign have been cratering the stock off 26%. earnings last night. the revenue beat, but earnings at 38 cents a share missed

ex expectations of 46 cents guidance for the quarter and full year was roughly in line with the street's expectation. a huge drop for the stock. then look at shares of stitchfix. lower after the online styling service said it is laying off 15% of salaried positions. mostly in corporate roles and styling leadership positions that is 4% of the work force that is something lauren thomas broke yesterday from cnbc.com. that stock down 14% right now. the cuts come amid high inflation and waning consumer demand for items stock down 11% during the trading session after cnbc reported the job cuts. after the bell, stitchfix reported 72 cents loss per share. stitchfix said the rollout of direct buy option as freestyle did not go well as hoped and more shoppers have been spending

back to brick and mortar stores. andrew. vail resorts stock surging in the quarter from the same time a year ago. ski passes for the upcoming season rising 9% vail raising minimum wage for u.s. employees to $20 an hour or 30%. a lot of people buying up those ski tickets in advance coming up, the countdown is on in today's key read on inflation where we get you ready for the cpi numbers. throughout the month of june, we are celebrating pride month. here is the producer brandon gomez. >> change requires persistence after i came out to friends, i knew my family had to be next.

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vo: call 211 or visit 211.org 2-1-1 get connected. get help. good morning welcome back to "squawk box. live from the nasdaq market site in times square. the numbers are mixed this morning. dow down 86. the s&p down by 8. the nasdaq up by 13 points of course, this comes after steep declines yesterday both the s&p and nasdaq off by more than 2% the dow closed down more than 600 points in the meantime, latest read on inflation due this morning with the may cpi at 8:30 a.m.

eastern time joining us on what to expect is of chief investment officer and brian mcdonald always want to give us data and other things to look at that we may not look at. peter, i'll start with you what are you expecting and what do you think the market -- how do you think the market is going to react >> i think we're going to see the third month in a row with an 8 handle on headline we'll see a 6 on core. it is important to understand the may year over year comparison is 5% we will have 5% last may year over year and now 8% now the market knows this is likely to happen the key question from here is to what extent do good prices moderate the core goods component is 20% of cpi and that topped out on the rate of change basis

yesterday was in anticipation and today if it is around 8 , it won't be a supplrprise >> larry, do you think peter is right? >> i think the expectations are high andrew, you wrote the marquee hall of fame book on the financial crisis i wrote the second best. between the two of us, we reached millions around the world with our books on the last crisis i smell -- i want to ask you you lived through 2008 i smell a colossal failure of the fed. the fed is pushing no nothing now they are bringing forward price discovery on all assets. private equity and capital when you don't allow price

discovery for24 months and accelerate in a short period of time, that is a mess the fed -- things are moving so fast that the economists and fed cannot gauge how dangerous the situation is >> larry, you are in the jamie dimon hurricane or super storm camp >> you see elon and jamie flip like that? these are brilliant guys we run a bloomberg chat with 650 institutional investors in a number of countries. a number of people in the conversation are talking about the shift in the last couple months in terms of private equity and venture capital and tech space the shift in the jobs. you are seeing record rescinding the 24-year-old kid gets a job offer and rescind it you talk about 150,000 of these.

that is the first thing with massive job cuts bottom line, by september, we go to negative jobs and the fed has to back away >> peter, those are fighting words. what do you think? >> a soft landing by the fed is a rare occurrence. except for the easing and the tightening we have seen in the last 40 years, it will be almost impossible to avoid that recession is a like lay ly outce that is not a profound statement in the context of what i said. the fed is between the qt and rate hikes which is aggressive rate of tightening we know that the u.s. economy created by the fed has been on a foundation of easing >> peter, the issue and i think this is what larry is vasaying this is not baked into the cake. the market does not appreciate

this point already it sounds like heger leg to go am i wrong, larry? >> i think we see 3,200 by labor day. the fed will take the 14 rate hikes with quantitative tightening in there. i would like to ask peter, if they take that from 14 to 7 and the rate is 2 to 2.25 and when mr. bullard is promising 3.5 the bottom line is they stop in the 2 to 2.5 range and we get a rally toward the year end. >> peter, you want to weigh in on that? >> he is right if the fed just stops there. 3,200 is not crazy talk. right now, the estimate for earnings is 225 or 230 this year which is unrealistic to me

you clip that 10% and we go to recession, that is 200 you multiple at 3,200. the question is what pain point does the fed blink lower s&p? or economy or inflation that slows? you can be sure it is likely the s&p and economy and inflation story will take a backseat to that >> okay. peter and larry, thank you both. thank you for your kind words, larry. i don't know if we look forward to the expectations coming true. it might not be a great thing. >> i love "too big to fail." >> thank you you wrote a brilliant book as well joe? thank you, andrew. coming up, rift in the golf world. pga tour suspending 17 members with the combined net worth of $11 trillion now competing in

the liv golf event we will talk about the schism next with someone who has transitioned at the top. dominic chu. check out crypto bitcoin hovering under $30,000 reminder, you can watch us live anytime on the cnbc app.

i could talk forever about this we should be on morning drive, dom. let's talk about the rift in the golf world pga tour suspends golfers for taking part in the liv event they call it live, dom i went to break, engrained in my mind is this you remember the great harvey pinnock? >> yes >> you have to swing from the ground up. the right heel going back down as your right elbow goes back to your body. everything else follows from that i can't do it. i snap you -- how did you develop that beautiful, slow, lazy transition >> you know, what is curious about that before and i'm sure

you don't want to hear about my swing. >> i beg to differ we can learn you are a 4 or 5 >> i'm indexing between a 6 and 7 right now. that is what happens with small children at home the handicap >> you love to needle me >> yes, my swing is influx right now. it is something i'm working on for sure let's go through the content you mentioned going on the morning drive and whatever i'm finding a way to talk to the golf channel folks and go on with damon and eamon the pga tour announced they would suspend 17players you are seeing right there for competing in the liv golf tournament outside london. day one was yesterday. phil mickelson and dustin johnson and bryson dechambeau

recently the tour is saying these players are no longer eligible to compete in tour events or the presidents cup at this stage in the memo, the commissioner jay monahan said these players made their reasons liv golf fired back with the duelling statements. today's announcement by the pga tour is vindictive and deepens the divide with the tour and members. it is troubling the tour, an organization with opportunities for the golfers to play the game, is the entity blocking golfers from playing we are seeing sponsors start to distance themselves. late yesterday, rocket mortgage cutting ties with bryson dechambeau because he is now moving over to the liv golf event. the second one that will happen as well. we talked about the reverb rations in business.

the first ones made the splash were justin johnson and rbc. this week is the royal bank of canada being played and dustin johnson is skipping that to play in the liv golf tournament there are all kinds of moves there is debate in the golf world about what power and leverage is out there for an organization like the pga tour and certainly for the sponsors it seems for now, the sponsors are siding with the tour face it, the pga tour does control a lot of the money in the game >> dom, to say this is confined to golf is naive this applies to almost everything how do you offer -- i don't know the report that they offered tiger $1 billion this is oil money from saudi arabia it brings up the notion. what will you do -- who will you

get in bed with just for money are they asking ian poulter is there anyone you wouldn't play morally for this i don't know what ian said >> he didn't answer that question >> i saw one of our pentagon officials say our pilots fly with saudi pilots now. it is not like we don't do anything with saudi arabia all of these things are brought up by the idea to be able to pay these guys is it a ten-year deal? how long do you have to stay to get $200 million >> if you cut the deal and i'm sure the agents are thinking the same thing for anybody making or thinking of making the jump from the pga tour to the liv in the future this is a very young alternative tour you don't know exactly how long this thing will last, nor do you

know what tolerance you have for putting money into it if you don't see a return that is acceptable to you. i'm speaking from the private investment fund. >> they can ge$200 million and never win a tournament >> if you are dustin johnson and his agent, this is the way to guarantee the money. you lose the sponsor there is a tradeoff. my point is if you don't see the top ten golfers, young ones like scottie scheffler andjustin thomas and jordan spieth jon rahm if one of those guys goes, you have a problem with the pga tour >> even andrew seems interested in this. >> this is a business story. the question i have is which i want to understand which i don't know what do we think the audience

thinks is the audience going to turn against the golfers because of the connection to saudi or because they left the pga? what do you think the broader populous is thinking >> here is what i would say, andrew i have spoken to insiders within the golf industry as as we as insiders on and around the pga tour, and it's a pretty decent divide. it's almost even about the guy whose are saying, hey, you know what, they're doing what's best for them and their career, and others are saying how could you be so disloyal to the pga tour and america. if you look at this from the business standpoint, joe brings up the saudi angle i would argue it could be anybody. if the hundred riches pet people got together and decided to fund a golf tour, the pga would still act the way they did >> i was just wondering fif the saudi piece changes this at all.

>> i don't think the saudi piece was an issue until phil mickelson brought up the ladies' tour is already taking saudi money >> and don't forget, andrew, the nba and china. they say nothing about china, and they actually get muzzled if somebody says something about china. who's worse? china or saudi arabia? it's really crazy. >> russia taking wnba mayers we'll be right back. when we come back, we'll talk about gasoline prices rising within a penny of $5 a gallon. this comes as wti remains above $120 a barrel. it will come as no surprise atth energy companies are the biggest gainers. we will have more on that story, next to be strong. to overcome anything. ♪ ♪

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coming up, we're going to bring you much more with my

interview with interim starbucks ceo, schultz we'll get inflation data in just a little bit dow off about 78 points. nasdaq looking to open about 15 in higher. we're coming right back with a lot more squawk just ahead

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ahead of today's inflation report among our special guests, seasoned market watcher, mohamad el erian we'll talk about what it means for companies like starbucks and this morning's big stock movers, including why goldman sachs is downgrading netflix to a sell the second hour of "squawk box" begins right now good morning, and welcome back to "squawk box" right here on krchb become. cnbc. we are counting down to the 8:30 consumer price index ahead of that report, take a

look at where u.s. equity futures are recight now the nasdaq looking to power higher, coming down just a bit here up about seven points all this may move around at 8:30 when we do get the number. but the ten-year note at 3 .033 >> one of the calls their morning that's getting the most attention is what's happening with netflix share 3.5%, shares are down right now in the premarket trade what what happened is goldman sachs has slashed it down to 186, pretty much where it's trading

right now. and they're citing amongst or thing concerns about not just the competitive environment in streaming video but also what's happening with a possible, possible consumer recession that could be at play sometime down the line so those consumer spending fierce, c fear, that's what has goldman sachs slashing the target price. also what's happening with docusign, which are one of the biggest decliners that you're seeing rec seeing right now 65 buck as share is where we're trading. docusign coming off a report that missed expectations they're also not laying people off, but they're not going to be looking to hire aggressively anytime soon here. docusign coming off a pretty

decent pop earlier on this past week with the lease-partnership agreement with microsoft and we'll end with a check on chinese internet it has been an outperformer over the s&p 500 over the last five weeks here mostly on the talk on the chinese communist party, whether they're going to be easing up on their campaign against some of these tech companies places like shanghai opening, if they can get it off the ground that's what's drive the performance. and you're seeing 3.5% gains there. and kweb, the k-web as some call it, is going up there. this is going to be a down week on pace for it right now, but there are some standouts we'll see if that sticks in

trading today. >> can you tell, that movement's all idiosyncratic or directly related to those stocks. we're not getting into bets as to what's going to and at 8:30 that's going to be the big mac rmacr story. >> we look at september '21 where netflix was trading. on september 3, 2021 it was 590. so this goldman guy went to a neutral, a price target. >> started it. >> yeah, initiated it with a price antarctictarget of where and it went above 700 admittedly that's about as good as the sell side ever gets with the stock like netflix you say i'm neutral and my price target is right where it is. >> that's essentially saying the

emperor has no clothes very i have to put it at 590. >> that's the worst thing you can say for sell side. regulators have upgraded their probe into tesla's auto pilot assistance system. this brings 830,000 vehicles closer to aabl possible recall what's the name of this company? >> stitch fix. >> say it three times fast >> stitch fix. >> stitch fix. >> stitch fitch. i'm worried about what else might come out of my mouth they see the sales slow down because they picked that name. they could change it is it too late to help us out? >> meta, facebook. >> i think ally jis is available

and venader. and meta/facebook is said to be rethinking its deals to pay for news content facebook hasn't provided publishers with any indication that it plans to re-up the partnership. they've paid an average fee of $10 million or more, including you to the "washington post" to keep the lights. prepare for revenue shortfalls the future's head of the anticipated cp "i-repi report, e looking at the dow down by 75 points the nasdaq is up by only 14

points a lot of questions about whether inflation has peaked, leaving the fed to possibly be less aggressive, although that may be an optimistic vuciew. joining us is jason brady. yesterday we were talking to a lot of guests who were saying it could be a better than expected number maybe if it shows any signs of coming down at all, the market will breathe a sigh of relief. but that was before we saw the really negative trade yesterday on the nasdaq and s&p, down 600 points for the dow the question is now, is there anything that would be an additional negative surprise for the markets or do you think there is a potential for the markets to trade higher if there's any sign that we've peaked and things aren't getting worse from here. >> i think there was tissue

rejection. it's obviously one of the most talked-about numbers over the last several months if not year. for us, what we're looking at is not just what does cpi look like but you talked about a potential consumer recession or slowdown the consumer is very strong on the balance sheet perspective. but just like corporate america, what we're shifting from is what is the revenue item to the balance sheet. strong balance shooteets are go. strong revenue isn't necessarily the goal >> i see you've been looking at something called the costanza trade. what is that >> it another version of buy th rumor sell the fact. a lot of what you're getting is good news is good news but a lot of what you're seeing

is good news is bad news with regard to the fed. they're very far behind. when you see very strong econom economic news it has to keep going. good news would have been high inflation. now it's not such goodness strong, either nominal or real economy that's driving inflation and certainly supply chain is really a bad, is bad news for the market so yeah. we're in the costanza trade. we'll see what happens >> it's a little weird to think that the market is potentially rooting for bad news i don't know if they're getting it right if the fed is serious about fighting inflation, you should be looking for inflation to come down bad economic news does not mean that the fed is fighting seriously. what jay powell has been saying is inflation is job number one, we will deal with this come hell

or high water. >> i agree the fed is in the worst possible position for a set of governmental officials which is that they're embarrassed they made a mistake. yellin has admitted that she was on this side of fed for these decision they work hard, there's no sort of malfeasance here. but what they're doing is saying, look, we have to catch up i would rather have the fed be credible than soft if the fed loses credibility we'll have much, much more volatility than what we've seen so far >> there are all these questions about when the consumer is going to roll over you'd expect financials to be doing well i environment, but the kearns about whether the consumer's going to have troubled times ahead has people staying away from the stocks some of your favorites are capital one financial, why

>> the consumer started to dissave and use some of these services there's increased borrowing and credit card spending but there is such a strong balance sheet that i don't see this as a redux of 2008. what you see is an environment where any type of recession could be a consumer slow down but not a balance sheet reduction. that gives us a lot of confidence and looking at the reports from the financials that we own, there is stress further down but you have to dig deep in that area to see any real stress so far. so it's a relatively strong balance sheet, and both from the companies and from the consumers, and that's what's give us confidence >> thanks. >> pleasure. >> we appreciate your time coming up on the other side

of the break, howard schultz talking about the push from some work workers to unionize. stay right here. you're watching squawk on cnbc indeed you do. indeed instant match instantly delivers quality candidates matching your job description. visit indeed.com/hire 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

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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 box. i spoke with starbucks' interim ceo howard schultz and talked

about labor and the battle with the unions >> starbucks unfortunately happens to be the proxy of what's happening we're right in the middle of it. because a company as progressive as starbucks that has done so much and is at the 100th percentile in benefits for our people can be threatened by a third party, that means any company in america can i've said publicly, i'm not anti-union, but the history of unions is based on the fact that companies in the '40s, '50s and '60s abused their people we're not in a coal mining business we're not abusing our people, but the sweeping issue in the country is that the businesses are not doing enough, and the business is the enemy. >> we also had a fascinating conversation about starbucks and the role of china. >> the fact that we are saber rattling back and forth between

china and the u.s. in terms of our diplomacy, which is so unhealthy, is so against what the world needs. the china economy today, not only because of the shutdown in shanghai, but china, just like the u.s., needs a positive wor working relationship with the united states, and we do with china. now with regard to the $360 billion of tariffs that trump put on, it is beyond my why the president of the united states does not lift those tariffs today. now that is not the answer to inflation. but inflation today is very different in terms of the cause and the effect of inflation in the past this is a global issue >> and speaking of inflation, i asked him about the impact on the consumer that he's seeing at starbucks stores all over the country.

>> when i hook look at gas pric $6 and getting to $7 a gallon, we are on a collision course with how long the american family can continue to spend at the level they are it's hard to be optimistic unless there is a plan to get inflation under control. >> and while baristas have been back this the stores from the very beginning, we've talked about the t return to work for office executives and how he views hybrid work. >> i have been unsuccessful, despite everything i've tried to do, to get our people back to work >> you want them back. >> i want them back. i've pleaded with them i'll get on my knees, do pushups, whatever you want come back. no, they are not coppinming bact the level i want them to we're a very collaborative group. i realize i'm an old school

person and this is a different generation i've been schooled, don't say too much and i've embraced it >> embracing that, i think reluctantly clearly. but it's something that a lot of business leaders from various generations are trying to embrace perhaps reluctantly as well we'll bring you more of that interview and more with janet yellin and putting her response for elon musk calling esg a scam >> that was a really, really fascinating interview with howard i mean, andrew, he is recognizing everything that was one of the most open exchanges i've ever seen, about embracing some of the difficulties and trying to get his head id head around it. it means not letting everybody

who walks in the door use the barp you barp. bathroom i know people are going back to star starbucks. >> he said the reason he has come back into this role is effectively because he has to reinvent starbucks, what he thinks a business leader's supposed to be and clearly trying to reimagine his own role in the way business is conducted, even if it isn't conducted the way perhaps he would have wanted it to be, for example in terms of people back in the office. he's reevaluating what that looks like, what the makeup of them is. it's gone from hot drinks to cold drinks which is a super

stru structure in terms of infrastructure to make cold drinks and what that means how to treat employees one of the things we talked about, he's always had this line, if starbucks can exceed the expectations of its employees, the employees will exceed the expectations of the customer well, the expectations of employees have clearly changed >> and by the way, you're not an artist, a barista artist anymore. are you basically on a factory line like knocking these things out, and you've got to deal with cleaning up the bathrooms. >> the world has changed in the last 100 year. there was time when workers' rights were nonexistent. now by law, there are many things that unions existed for to prevent that are against the law at this point. and if you're over and above what any union is going to get for you, then that's why it's dropped to 6, to 7 to 8% i wouldn't call it the

reeducation of howard schultz. but there are certain thing, and i'm not putting him down for changesing his mind. if the facts change, what do you expect me to do, sir talking the talk and walking the walk, sooner or later, walking the walk you run into reality, and reality is a bitch we know where a lot of good intentions lead. they pave a path to hell, and i'm not saying he was naïve >> there's a lot of things we try to do where the best intentions end up hurting the very people you're trying to help >> as you might imagine i'm taking the opposite side he created that, retail employees around the country and potentially even around the world, in terms of creating that reality, he upgraded the, he, he individually as a pioneer, upgraded the expectations of those people by providing health

care, by providing education, by providing all these things >> paying for college. >> in ways that no other business leader was doing, and he led that. and so yes, i think for him on a personal level, it's disappointing and frustrating to see now the unions and some employees, but by the way, we should also say, contextually it's funny, i don't know if it's funny. we talk about it every day i think there's about 600 or 700 employees who have actually signed up to be part of the union or indicated that they want to. >> we gave him, what was our word we gave him the award. and i presented it to him and i said t w said t was pretty funny, because you got people like me to walk in saying i want a no-fought, thin foam skin latte and a $5

scone and give me a -- >> grande. >> a cd of that jazz musician and cach-ching, $22 for your vit to starbucks who would have paid $5 or $6 for a cup of coffee. how many stores are there now? and he's a young guy still his accomplishments are -- >> i like that he's going to be the old dog learning new tricks. h he's he's admitted that >> a no-foam, skim vente rlatte. >> i didn't even know what that was. >> i still get it. kudos to howard schultz for all those things >> and kudos to andrew that was very interesting interview. >> it was, and the first one

he's done since he's been back wasn't it, sorkin? or at least on air gasoline prices topping $5 a gallon, still cheaper than a latte in many parts of the country, not really. wti crude remains above 120 a barrel "squawk box" will be right bark. time now for today's aflac trivia question. tea is the second-most-consumed beverage in the world after atter. wh percentage of tea consumed in america is iced the answer when "squawk box" continue toed. 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...

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now the answer to today's aflac trivia question. tea is the second-most-consumed beverage in the world after water. what percentage of tea consumed in america is iced the answer approximately 75% to 80% welcome back to "squawk box," everybody. oil prices this morning, as the familiar story, they are on the rise begins. up by almost another dollar to 122.48 for wti

joining us is the founder and director of research at energy aspects. and rita, the question on everybody's mind is how high will it go do you have any answers when people ask you that, not only for wti but prices at the pump, because right now national average is at $4.99. >> i don't see any respite in the near term. i think crude easily go up her to $20, maybe an even $30. it's really about, at this sage, i stage, it's a thumb. we've talked about the lack of capacity unless prices go to the point that demand actually gets curtailed there just is no solution >> what, what does that mean in terms of prices at the pump? gas prices at the pump if were you to go to let's say

$140 a barrel for wti, what's the translation these sdmas. >> days? >> it's not a direct tr translation. prices have been much, much higher than wti and brent prices, so it doesn't mean just because wti prices go up another $20, gasoline will go up as much but it is summer drive season. we could we see $6 sure could we see another 20 cents to 50 cents? very easily, yes >> yes we spoke with jeff currie from goldman sachs he thinks we're in a period

where prices continue to crime and climb and climb, does that sound like a base case scenario to you does that sound like something you agree with >> i think jeff's come around to our view i'm happy to hear. we've been saying for some time this is not a cyclical story the reason we are here today and not, really nothing to do with russia, we were at $95 oil pri price, well before the invasion. this has to do with fundamental in investment now, even with these price signals, there is so little incentive, whether it be here, whether it be in the u.s. to reinvest because of esg concerns so the market is not functioning as it should that is why this is an

instru destr destructional story. >> what do they have to do >> it's not just shareholder t's government i'm hearing from ceo s, it's starting to change especially because some of the european investors are sitting in their offices at 37 degrees celsius without air conditioning it's not a them versus us. >> really quickly. we've seen energy stocks lead the way for this market the entire year. what you're saying, you don't think it's too late to get in if you haven't already jumped in,

right? >> no, i do think there's going to be a sustained ral limit however, there's always a thing with trading, which is risk reward could there be corrections along the way? gent yes, there could in general, yes, we are e are expecting a mild recession next year. >> thanking fs for your time evn when are you on the road doing these tours. still to come, we just getting started with this energy conversation, with the average price for regular gas reaching almost $5 overnight. heidi heitkamp debate next plus, we're about an hour away from the biggest report of the morning. cpi, consumer inflation.

that number is dmuue in one hous time the nasdaq up by 24. stay tuned you're watching "squawk box," and this is cnbc (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.

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good morning, and welcome back to "squawk box" live from washington, d.c. and the nasdaq market site. the s&p up a little over a

point. que we are waiting for that inflation data. one of the nation's most powerful single-family landlords is getting into the home building business. diana olick joins us from just outside charlotte, north carolina with the story. hi, tdiana. >> reporter: this is a grand new community built by american homes for rent i sat down with the ceo to talk about his new strategy of becoming a homebuilder >> it's more the production of homes for rentals, because this country is under supply in rentals. and today american homes is building high-quality single family rentals as can you see in this community with conveniences and the amenities and the sense of community that our renters are looking for.

>> so what should investors think when they were buying a stock as a landlord. now you're a home builder as well >> five years ago there was little concertain. do we understand the risk and to we execute the investors have come back they love the concept. we have hpeople come to us because of the build-to-rent concept. there are $50 billion chasing build-to-rent in the last 24 months >> why is your stock down along with the builders? >> real estate is an interest-rate sensitive industry and the value of real estate is inverse to the interest rate

so all of real estate is down. we have actually performed about tho performed better in the last six weeks than the whole industry as a whole. >> reporter: names lbig names a getting involved in the first quarter of this year, 13,000 new homes were started as rental, an increase of nearly 63% from the same quarter one year ago becky? >> this is such a fascinating story. who's the market this is kind of targeting? sure, the home market may be undersupplied. ave and if you did rent, do you ever get to the point where can you buy? is this like rent a center

or is this where you can save enough to buy a hugouse >> i spoke to a couple who just moved here they had come from california. they simply didn't want to buy right now. they said it's the top of the market, didn't want to catch a falling knife. you look around here, these are brand-new homes, the rents are four bedroom, $2400. there's a porsche sitting right over there some millennials don't want to buy because they know the market's going to be difficult, they may not see the returns that they want they also want the mobility. the people i spoke to yesterday can work remotely now, they moved to north carolina from california because they wanted to be closer to family that's what we're hearing over and over again, and that's what

these homebuilders are banking on >> if you have these others g getting into it does that mean it's going to keep price flaited for even long center. >> longer >> that's the story. is it the kitchicken or the egg the big landlords are brkecomin builders they expect to see demand continue not just a pandemic play >> thank, diana. when we come back, $5 gasoline, the impact on consumer behavior and what shgtwainon

should or shouldn't try to do about it stay tuned, you're watching "squawk box," and this is cnbc ♪ ♪ ♪ (sha bop sha bop) ♪ ♪ are the stars out tonight? (sha bop sha bop) ♪ ♪ ♪

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the national average for gasoline is soaring. toward $5.

just below $5, 4.99 $4.99, the highest level ever reported. joi joining us is heidi heitkamp and kevin o'leary, investor, venture capitalist, cnbc contributor, overall wonderful guy all the time $4.99, heidi, makes me laugh it's on sale today, $4.99, not $5 it's rough, rough on consumers >> and joe, i used to say that when you inflation adjust it that this wasn't the highest price ever now when you look at inflation adjustment, it is the highest gasoline price ever. and it has huge political ramifications. and the question for the biden administration is how do you respond to the concerns in ways

that consumers will listen and so this is a big, big issue for the midterms >> and a big issue for your, the state you represented. very important to north dakota have you seen a more difficult operating environment since the biden administration took over, heidi? are you a person who say it's all just been, you know, free market forces, supply and demand, pandemic shutdown production there's esg factors. how do you see in i figure your const constituents probably wish they'd open up, not slow walk all these things, more leases open, more refineries, more pipelines. you know, joe, it's all of what you listed but the question is, how much of that does the president have control over and right now the message that we need to send to investors is that this is not a short-term problem. this is a long-term problem.

and investors should feel comfortable coming to the table with additional capital for additional drilling. now with that said, drilling is up about 60% nationwide since biden took over. you know, i don't blame president trump for the low drilling rate. that was part of the pandemic. but when we look at the growth in drilling rigs, it's there the problem that we're having is not just certainty in government regulation it supply side you know, or supply chain. where wodo we get the manpower, the equipment,s and the all-important infrastructure, which is the big bottleneck for a lot of oil and gas development. >> that's what i've said, too, heidi, and that is that yeah, it can't be solved, we can't fix high gas prices in a week, two weeks, six months. but we're going to be using hay

dh hydrocarbons in five years we should do it now. >> joe, one thing i point out u when we look at what it's going to take to make this conversion, this terms of critical minerals, we don't have them so we've got to get in the reality pool and balance our objectives on climate and energy policy we're not going to have a sustainable climate policy until we have a sustainable and affordable energy policy, and people need to get in the reality pool >> kevin, heidi, you roprobably don't have much of a problem with her she's a democrat but in ano oil-producing state. so she's reasonable >> what's so ironic is her state, or ex-state, is actually

the solution to our problems it's been akusccused of fracking they have absolutely huge infrastructure there that allows them to sequester the carbon and push it back underground again and the citizenship there endorse it is because they get paid a royalty if their home is sitting above it carbon is inert. i'm seeking clean energy for data center, and they have one of the most unique states that nobody knows about i don't know why the president doesn't ply there and point to the future of energy being exactly what they use in north dakota they still use traditional hydrocarbons but they sequester the carbon and they have thees exxons and chevrons there we need to transition in the

next 25 years. the message has been shut down alaska, the offshore, the xl pipeline, make the leases almost impossible to get. how about carbon taxes the whole global infrastructure on energy is based on future forecast if the president said i was just kidding. we need energy security and starts talking about look, we're going to open up that xl pipeline again even if he flies to saudi arabia and says look, let's get more energy to the u.s., we can't refine it. we stopped building refineries decades ago. all of these solutions are at his fingertips, but he's in a big political bind north of $5 in 21 states is going to affect him in a brutal

way. he needs to move now and you start by jawboning that's what moves the futures market you start talking transition that's the solution. it's at his fingertips, and fly north dakota and see what they're doing. those guys have it right >> you know, joe, we did, when i was in the senate, i was instrumental in passing something called 45q, which i'm sure kevin is well aware of, which is the of squestrien we've got to have an honest conversation about how we do th this transition and how we make this possible. not just for our country but for the rest of the world. the reality is when you look at climate and the advances that weav

we've made in climate is because we've converted coal to natural gas when we generate electricity. that's been wiped out by the expansion of the universe coal globally we've got to have global solutions but we have to lead with innovations here in this country and be fuel ago tnostic i'm trying to protect the climate. making sure that the hydrocarbon industries make the transition like at objeccidental, if we dot do it now, we'll suffer the political ramifications if we're democrats, but we'll also not achieve climate goals and drive up energy prices and risk a global recession >> heidi, senator heitkamp, thanks you and mr. wonderful, it's been great to you have on i could have you on against,

anytime there's a debate you should be here, because you're so good. coming up, bitcoin, no exception to the volatile markets we've seen this week we are joined from the world's largest crypto conference. to adapt in the changing world, you could hire a professor of theoretical mathematics. we all know this equation, right? he'd crunched numbers day and night. that's it. to maximize profitability. morning. i have quarterly numbers that are beautiful. and forecast revenue from every corner of your organization.

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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. check out this chart comparing return to the nasdaq and bitcoin. it used to move in tandem, but not true at least of late.

joining us is gray scale ceo the world's largest crypto conference we have talked, perhaps, pejoratively about bitcoin often looking like a nasdaq stock. and for a long time it did if you looked at that chart, but things have seemed to die verge a little, michael, what do you think's happening? >> well, i think for a lot of investors, crypto and bitcoin in particular is an area that helps them diversify their portfolios. i will say with this recent pull back in prices a lot of the conversation has been less around near-term volatility around crypto and a lot more investors are focussed on regulation and wanting regulatory clarity >> so consensus, historically, was one of these conferences where, you know, thousands of crypto enthusiasts went. but invariably, you used to see in ahead of it and oftentimes after it a real surge in crypto.

do you think anything like that is happening right now. >> well, i think certainly it will be easier on the ground in austin this year than having consensus move to this festival model. we're really seeing a broad range of tool and organizations. everybody from the protocols themselves and the engineers on one end of the spectrum all the way to the other side where we're actually spending time with not only politicians but some of the largest pensions and endowments and actively exploring crypto allocation. so it's a different kind of consensus but great to be back in person-t nonetheless >> i was talking to janet yellen the labor department, she has come out against that, she said i don't think that's a great

idea i imagine you're on the other end of it. >> well, i got to say, i think it's a little short-sighted and a little knee-jerk reaction to be restricting access to bitcoin in retirement accounts as you know, a lot of investors who are thinking about their bitcoin allocations are doing so over the long term they brielieve it's early days m this asset class what better to think than in a 401(k) some of the reasons a lot of people have bought gray scale's products is because it gives them direct access to bitcoin in those exact type of accounts but ultimately, i think this is something investors want >> it's always good to see you weste wish you lots of luck at consensus. divergence is interesting. still to come, the wt aiis

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good morning, we know americans are being squeezed by higher price in about 30 minutes, we're going to find out how hot inflation is getting. we're bringing you those numbers and instant analysis from

mohamad el erian, and janet yellen's reaction to a tweet from rapper cardi b. the final hour of "squawk box" begins right now good morning, and welcome back to "squawk box" here on cnbc spanning the globe live from the nasdaq market site in times square, also andrew is in washington, d.c. i'm joe kernen, along with becky quick. u.s. equity futures, tough session yesterday. what's it, like 600 points? it didn't look like that early on and the ten-year didn't go from, you know, 290 to three and a half it went to 305 or something. >> a little bit of a freakout,

because we do have some big numbers coming up. >> we do have. and that could move the bond market, and here are the treasury yields, and it's all interrelated maybe we'll see, people have talked about some moderating of some of the core constituents, maybe not food, maybe not gasoline, but maybe some of the other stuff. hope springs eternal >> we are also watching shares of netflix this morning. that stock is down after gold plan sagoldma sachs downgraded the stock the analyst said they have concerns about the impact of the consumer recession as well as heightened levels of competition and levels of content spend. netflix share down by 4.7% but as part of that analysis, goldman downgrade good rx, road blocks and ebay. you can see all the stocks are

down by 3.5% goodrx down by about 5%. let's get to mike santoli. this number is probably more important than the jobs reports we've been getting recently. there's going to be a lot riding on, this and it's really kind of unclear how the market's going to react what would be good news? what would be bad? >> clearly moderation from last month's levels of inflation, mostly at the core level is what everyone is looking for. i'm not sure everybody is confident in it, which possibly explains yesterday's late-day selloff. we talk about this unusually tight range, less than 3%. that gave way yesterday. so you did kind of break below the lower end of it. it didn't really change the setup. really have to get to the 4200, 4300 level to prove itself more than just a bounce off those level. is this going to be some type of a reset, have we flinched enough

in advance of the cpi number that there's the makings for relief once we get it energy and bond yields have kept up the pressure on stocks, so it's been unable to let the stock market get free of those concerns here you see the refiners, that shows you tight refining capacity for jet fuel. then the trance psports and what the squeeze and what it means to the fed take a holook, though, at the market expectations over the next decade. this is the break-even inflation rate you're well off the heissighs f back in around april this is not some kind of

predictor of what the market is going to be. they're saying eeither we're going to have recession in that ten-year span or have the fed go to great lengths but it does suggest we're pricing in some moderation the trend has been how fast we get there. every fed official says we need to see multiple months that inflation is sliding pretty much the next two meetings, maybe the next three >> the ten-year break even inflation rate, what would it look like if could you take a much longer look at that chart, if you go back, say, ten years >> it was, interestingly, it would peak lower, it would basically hover in the 2s, which is where nainflation was. but back in the early 2010s, did you see it get up to try

tthree. the market overestimated it's subject to supply and demand for inflation protection itself but it does show thaw iyou that not unusual to be up in the 3s it hit 3.6 in march. now it's around 3.1 orr somethsomethin like that. >> if we, we're hoping there's moderation in things that aren't food and energy, but if that is offset by bigger spikes in food and energy, how would the market take that? >> you know, it might find a way to worry that that's going to restrain growth. i think we're primed for a relief attempt, if you can

squint and say okay, the peak inflation story remains at least plausible, then maybe you get it, but i'm pretty bad at guessing >> you think we're primed for that just because of the selloff we saw yesterday >> everybody'ses been pretty defensive so far meantime, we less than 25 minutes away from the highly-anticipated cpi numbers what is your number, sir what are you expecting? >> well, i'm going to answer becky's question first, and that is i don't think there is going to and divergence between core and top line food and energy week, know what the trend has been there, but what has been anticipated and the retailers gave us an unignorable forward indicator of this, we are experiencing

tremendous inflationary pressure for services they missed this they missed the change this consumer demand from goods to services and so, too, has the inflationist peak crowd missed this last month services accounted for about 40% of that number it's growing, it has doubled to 4.9% i think we're going to get a really disappointing number. i think it's going to be 8.3, 8.4% at least. remember, we've jumped from 4.2% april 2021 to 5% may 2021. and that given ha that base effect, given that the fed program for frightightening has in place for a few month, i think the market will have a very, very melancholy day today. >> ooh, ooh. why do you think the market, to

the extent you're right, and weal we'll see in 25 minutes whether you are, why hasn't the market anticipated that piece yet >> we all talk about this a lot. nothing's ever in the numbers until it hits the tape there's a percentage of the population that believes something different. until it actually hits the tape you have people with divergent views. do i think that some people started to act upon this view yesterday? absolutely that's why we saw that turn in the middle of the day and the downward draft throughout the afternoon. once it hit the tape, it hits the tape and the imanication will be that the fled have to get more aggressive about its tightening program, and i think we're going to have to start talking about 75 basis points again. >> and therefore, are we talking about recession again. and i will say, and i think

we're going to show some comments a little later from secretary yellin she does not say she thinks a recession is in the offing is that just political oopt mi optimism >> it could be i'm not going to try to get in her mind but keep in mind that politicians or say things that don't turn out to be true. they said it was transitory, and i think it's the polar opposite. i think we will end one inflation above 6% than 3% because there are embedded structural ish thus will continue to push this. wage inflation will push this. service inflation -- >> if you're right, three, and you're an investor out there

watching us have this conversation, what would you do? >> i would reduce your exposure to historically low levels but where you have to be exposed, go where the hundred i honey is. where they have prove than they can protect their margins if not give us march jib expansmargins. at least the earnings growth give us visibility into some perform. >> announcer: performance in an environment like that. p when we come back, what

janet yellen had to say about inflation anwh sd athe would do if anything, differently and a response to cardi b. that's coming up after this. 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.

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actually two out of three are in the green, we haven't seen that. nasdaq turned first up about 38 points the s&p as you can see down. kind of flat >> meantime, kind of flat. meantime, treasury secretary janet janet yellen has admitted the use of the word transitory was a mistake. but she talked about what she would have done differently knew things have turned out the other way. >> i wouldn't do it differently. i was very supportive of the american rescue plan i recognize that there are all kinds of risks that the united states faced when president biden took office. and things can always happen that you don't expect. the world's very uncertain and my assessment was that the

biggest risk the united states faced is gunemployment was very high >> i also asked the treasury secretary about how it looked for a recession, specifically in re reaction to a tweet from a rap star do you know who cardi b is >> yeah, i don't have that much time for it, but i am alive, you know >> cardi b tweets out over the weekend, when y'all going to announce there's a recession coming and so i wanted to you react to what cardi b's saying. >> don't look to me to announce it i'm not going to announce it i don't think we're going to have a recession >> also got into a fascinating conversation about tesla and elon musk and specifically when tesla was dropped from the s&p esg index, he tweeted that esg

is a scam, and i asked the secon secretary of state about her reaction to that >> there are a lot of companies that want to make a contribution to addressing climate change in particular and are making commitments, and i certainly wouldn't say there's anything that's a scam about that, but often it's very difficult for investors to have the information to know what concrete actions lie behind that and so things can call themselves green, and it's, there's insufficient information to be able to tell exactly what the basis for that claim is. >> and we also got into it over fidelity's decision to say they're going to offer crypto investing as part of in 401(k) mans for companies that want to offer it to this employ ice.

anemployees. >> it's not something that i would recommend. to me, it's a very risky investment >> there you have it the last time we talked to her, joe, she had become a little crypto curious but i think when it comes to retirement investing for most americans, she's not there yet >> you've still got to just make a comparison that maybe netflix wasn't great for someone's retirement plan either >> that's true >> i mean, there's risk everywhere and i'm not going to blame secretary yellin, but years of easy money from the fed, which may or may not have been necessary given the backdrop of the pandemic and everything else, but they certainly inflated a lot of the assets that could spell doom for people's portfolio if they got caught up. >> the only point i would make is that they still have not caught regulation up with bitcoin or any of the crypto at

this point it's not the fault of the crypto, it's the fault of the government for not keeping one it >> and the cftc guys have gom a long way the very first thing i got was my ct. a, my commodity check. that cost $5 they didn't though anything abknow anything about me. >> they didn't know what a dummy you were >> in terms of the cftc was like the wild, wild west. it's much better now you remember that guy we used to have on with the crazy hairdo? what was that guy's name >> the former head of the cftc >> brad, bart, bart simpson no, not bart simpson bart chillton. he should been the permanent head of the cftc that's what i think of

i would rear haather have, maybi don't know >> made his claim. >> i would tell the two senators, maybe upgrade your agency >> janet yellen hasn't weighed in on that just yet. i said janet yellen hasn't -- >> she did seem like a holder or not a stacker. >> she was having so much fun yesterday. >> you asked about cardi b >> will, when she said, the best part was when she said "you know i am alive." i asked if you know cardi b. i am alive i live hire ere on the planet. do you knee lot? >> she's cooler than you are >> she is cooler how many songs could you mention about cardi b? >> maybe i'm not alive >> i know that one >> i think january etet yellson

alive on that count than i am. when we come back, we a few minutes away from may cpi data we will bring you the instant analysis all as soon as the data hits "squawk box" will be right back. oh. what kind? one that hits the ball better. okay... i gotcha. let's go to the hitting bay. ♪ ♪ ( golf balls and items crashing to the floor ) oops. maybe we need a new driver for the cart too. you're a funny guy. ( golf balls being hit ) oooh that's nice. that one definitely hits the ball. c'mon, get in. ehhhh, i'm good. suit yourself. oh no, no, no, no, no! ( tires screeching )

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welcome back to "squawk box," everybody. the futures this morning, we've seen things treatighten up a bi.

the nasdaq is up by about 40 points we keep reminding you this but you already know this if you drive, gasoline prices continue to climb the national average rising to a new record of nearly $4.99 a gallon according to aaa. the average in 21 states is above $5 a gallon and no relief in sight when you check crude oil prices crude up by just over a dollar to $122.50 a barrel. our panel is standing by getting the latest read on this number may cpi data is out momentarily, don't go anywhere, you're watching "squawk box," and this is cnbc.

welcome back to "squawk box" on cnbc. we're just a few minutes away from the cpi inflation report. it's a big one so we have an expert panel with us jason furman under president obama and professor.

and i did a little -- >> i'll be there tomorrow, joe >> i'm trying to figure out where you're coming from joe stiglets but a major stint with larry summers i'm trying to put all those things together to figure out how you feel about inflation you've written extensively about the feds being behind the curve. michael strain, economic policy studies director at the american enterprise ensinstitute. andm mike santoli. what has been more the cause

do you ascribe any causation to fiscal policy? the american rescue plan or do you really put more of the blame on the fed being late to the game in terms of dtaking awa some accommodation >> you know, joe, it's all of the above. and i'd add president putin, too. that's a real factor the rescue plan was too large. the fed stuck with its expansionary policy for way too long and then we take that and add on top of it some really bad luck from the rest of the world and all that's combining together >> michael, any disagreement with that? you can agree jason. we don't always try to get you guys to argue. >> i just want to amplify, if you look at 2021, i think the american rescue plan was responsible for about 3 percentage points of the inflation we had in 2021 if you look at the fed, i think

it was very hard to justify the fed's decision to continue purchasing mortgage-backed securities we would have had a lot of inflation if it weren't for the invasion of ukraine. of course the invasion of ukraine exacerbated that problem as well. so we're getting hit with the perfect storm. >> mona and cathy, can you split a minute so mona, why don't you start, 30 seconds. >> this is a tale of two numbers. headline and core. wti is up 7% in the month of may. another 7% in the month of june alone. core, we're starting to see sign, glimmers of hope better lumber pricing, bet are

ubetter used car pricing and cath eay, i'm sorry you're last can i call you cathy b >> can you call me cathy b. >> disruptions are there >> rick, it is now time, are yo plenty of time after you give us the numbers for may cpi. >> yes, we were awaiting the may cpi. and one percent on the headline number of 1% definitely hootter of .75% so we're close and that 1.2 is a 17-year high going back to 2005 strip off the all-important food and energy, it's still hotter than expectations. up .6 of 1% and to put a face on it, the high water mark was all the way back in april of last year,

up .9, a four-decade high. these are the money ball numbers. year over year headline, 8.6, a new cycle high usurping march, which was 8.5. that was the highest since 1981. now 8.6 continues to be the highest since '81, because the comp is 8.9 to 11.8% also hotter than expectations up 6%, following 6.2% high watermark there, 6.5, and that was in march. and that was the highest since 1982 but remember, even at 6%, coming down from the high watermark of 6.5, that stand alone is still the highest since 1982 so these are super stubborn numbers. and our esteemed panel has lots

of brainpower there and they go in lots of categories joe as to why inflation's here the all or above mentioned out of all the above, energy, energy, energy and, you know, there's so many comments here about the administration can only do so much you know what? we all said that about the fed and then there's this thing called forward guidance. so the fed gets the market to do things long before it takes action by telling them what's in their head what lies down the road. what was the forward guidance with this administration on energy we know the answer maybe they can't get things to happen faster, but by giving positive forward guidance, by not closing pipelines. by not talking preelection about how much they don't like fossil fuel, maybe things would have turned out a bit different, joe, back to you. >> we're going to get rate to o our panel. i know i'm taking a risk from

santelli to santoli. but the reaction has been swift in the stock market. >> you've nailed it on the name. yeah, it has we were bracing for something that had the potential to be an unfriendly number, and we got it just for context, the s&p 3500, we were 100% down below yesterday's close. i guess you'd have to say the peak inflation number remains plausible. the peak inflation notion but maybe not persuasive and if you think back, may 2022 was when the math was supposed to start working in your favor on the annual number so that clearly is not the case. and it basically just means the fed sees zero openings to lighten up on its rhetoric and plans for half-point increases in the next few months >> we'll go back to you about where we started, jason, and i want to ask you a theoretical

question, a comment on what you just heard >> yeah, you look at the monthly number that's what i'd look at, not the 12-month i'd look at the core the monthly number it was an 8% annual rate for core cpi can you point to special factors there. car praises ices were up in may. airfare was up a lot, some of that is people resuming their travel take the special factors out the underlying inflation rate here is high and rising. the fed was behind the curve last year and i think they're there now. they're going to do 350 50 poin the next two meetings. and this number will keep it there. >> when i watch the stock market

on certain days, i think it's worried about the terminal rate. are we undershooting or overshooting for what we think the fed finally stops, and the reason i'm asking you that is if the fed stopped raising rates k inflation alone cause a recession? i always think that inflation causes the fed to shut down business activity with higher interest rates >> but if they didn't raise too much, can inflation itself cause consumers just to say no mas i'm not going to, i can't afford it, i'm not going to, an everything shuts down. have we stheen this historicall? >> no. wages are rising higher wage have been behind price, but at some point, i hope, they'll catch up i think the fed's raising rates at a decent clip i think they need to be clearer.

my modal expectation, i think they're going to have to do that >> doesn't scare me. >> sorry, at least 4 i don't think the market's ready for it, though they've not priced that in >> four week, would have killed for four where we go, mona or strain. or are you going to argue with jason? >> i love to argue with jason. i think this is a bad headline number inflation is a real problem. if you look under the hood you see much less of a problem in underlying inflation the two big things i am worried about are shelter inflation and less energy inflation. those look a lot better than the headline look, they look bet are

than the headline core look as well that's the real question the real question is are we in for a period where we see wages pushing up prices and price pushing up wage and wages pushing up wages and pushing up prices or are we in a period with high gas prices and the economy starts to normalize and the fed can get it under control. this tells pleasme that we're nn for five years of misery >> why is that, i don't understand >> it tells me inflation is not accelerating throughout the economy. again, durable goods inflation has been declining shelter inflation has been rising service inflation has been riegz. but we didn't see a big acceleration in shelter inflation last month we didn't see a big acceleration in services, less energy last month.

and so if things are kind of plateauing along those dimensions, then i would expect that hir that higher interest rates will be able to cool off demand >> i'm dying to get to cathy just so i can say cathy b, that is going to stick. but mona, what do you think? >> we're in the category where michael's falling out on this. while headline inflation will ten t ten t continue to see inflation. services and shelter and rent are about a third of cpi and we're seeing rents moving

higher but over time that is correct should be a supportive factor for lower core cpi. also around the tech layoffs for example. over time that will play into lowerwages as well we think generally the components of core cpi should trend better the fed's core metric is, rates can't impact wti or energy and food prices all that much. it's really, their focus should be on bringing down the core and hopefully over time that's a trend we'll see. >> cathy, i practiced, too it's kind of a waste if i start calling you cathy b after i practiced. what do you think? >> will, i think this is still a concerning read for the federal reserve. i do agree mona's point

when i look at, you know, rental prices they actually did pick up. they were at .6. they were at .5. service prices are picking up. core goods aren't falling as quickly as some expected remember in march people were cheering oh, we reached the peak in inflation we just found out today we didn't we're higher 8.6% so gasoline prices are going to stay high. this is going to cool and we should see cooling along with wage growth as well. but i think it's going to take a bit more evident by the federal reserve in time. and i would think that 50 basis points next week, july, this puts 50 basis points on the table for september too, i believe. >> you look at some of these numbers that go through this you're talking about medical

costs going up airline fareses going up. rent, shelter cost >> have you ever done this this is on air >> i'm trying to see this tiny little graph >> does it bother you that i have no gralasses >> you have one weird contact. i know too much about you. new york city i think cathy's take is right. there's something to take out of each of these things, but i'm a little surprised how strong these numbers are. furniture prices are still going up that's where we thought we'd be seeing big discounts these things are not cooling off yet. and if you look at what's been happening to the ten-year. >> do you think 4% will do it,

rick that's what scares me and wages continue to go up. >> wait a second, i take back. it's below 3% >> what's terminal rate in your view, this cycle, rick >> it's kind of like a camel you're exactly right, becky. that's what i've been trying to wave at the camera for ten-year yield notes are going down it means we're guns hot for the fed. but i think that pump in the middle to answer your question, joe. the terminal rate is going to be somewhere between, a little higher than the two-year rate and probably a little bit less than where the ten-year ends u meaning even though ten-year rates have a 320 interday high, and maybe we'll get a hiregher

interday high. way below the 4% jason was looking at i think inflation in many areas and commodity prices in many sectors is going to come down. but i think that some of the stubborn issues, energy, food, labor, especially the first and third. energy and labor, they're not going to be. and in terms of rents, i know becky was trying to comb through the numbers. rent is now over $2,000 food's over 10% higher these numbers aren't going to go away and when i do these cpis every month, we're going to see positive movement. and those that won't have the luxury to call with things that are stubbornly high discretionary purchases >> who want in >> i'm a little more worried than jason, to answer your

question to him. i'm a little more worried than jason about inflation slowing the economy on its own if you look at what's happening, most workers are seeing their real wages decline, their inflation-adjusted wage decline. hous households are siegeeing real income decline and when people have less money then people have less purchasing power, they buy less stuff households are telegraphing this, saying they're going to pull back. con consumer sentiment is lower now than it was during the lockdown. which is a shocking, shocking fact maybe it happens after summer vacation season, but at some point consumers have to pull back >> the mic is open we don't actually have to pass it >> consumer, you know --

>> go ahead. >> consumers turned really pessimistic started in august of last year. they keep spending like crazy, spending for this quarter at about a 4% annual rate, twice what it normally is. we gave them so much money that it's still quite a lot there if they want to continue spending out. so i work you know the american consumer may be gloomy, but they're booking an awful lot of airline flights. >> janet yellen said some of those things to andrew, too. they feel a lot less wealthy they don't have stimulus money coming in. i was looking at the food cost up 9.5% or something year over year and when you tstart realizing you're going to pay more and more and you don't have the same amount coming in, you can understand why they feel hless

wealthy. >> i'm motte trying to say things are good. i'm more worried about excess demand in the next six months than i am about the opposite, which i think means more consistent inflation i think the fed's going to stay at it longer than rick think it's going to stay at it i don't think it's going to solve itself >> how do you dwiel eal with tag demand on one hand and i saw news about families driving liis, literally trying to you know, by the way, could be a your return to working from home so they can avoid paying gas. i think you're going to see this division and then what do you do about it >> look, right now if you tamp

down on the economy, you're going to slow wage growth. we're in a bad situation where we have a lot move price inflation than wage inflation. may have been slow the economy, slow prices more than wages. i just don't know which of them slows more but we're not in a sustainable place right now. >> i think wages slow more and the fed's going to have a hard time controlling global energy prices and global commodity prices that are purge pushing up gas prices and grocery bills. that is going to force the consumer to pull back. >> to add on a bit, i do think that we have enough momentum, and it was mentioned earlier, we have enough money.

savings during the pandemic. and the labor market's still hot. and consumer spending. we agree, it actually could be closer to 5% annualized in the second quarter i think we have to maintain and avoid any kind of hard landing for the consumer and the economy through this year, at least through the fall but come next year, that's where we're more concerned, right. we are this an unsustainable place here inflation these cool and for that to happen the federal reserve has to stay aggressive and to tamp down demand it's hard to get at that right the baseline is yes, they could pull this off. but the risk arising that we get a harder rapiding landing for 2. >> i agree on that timing. >> sorry >> i just add quickly that what we're seeing in yield ths is interesting too, with the

ten-year flattening markets. perhaps it comes back onto the table as the fed clearlies that clearly has to continue that could push the inversion narrative over the next few months which also then keeps the whole value versus growth regime on the table again it's hard to get growth to come back to the table if we're starting to see some of those yields move higher >> thanks to jason, michael as well, cathy, rick and mike than will do it. andrew >> thanks, joe want to get straight tout to the cnbc bureau in san francisco where jim s is do they have to go 75 basis

points? >> just get it over with 100. see if things showdown i think jay powell is measured o bring things down, but measure is not going to cut it anymore if he does something that makes people realize, holy cow there's going to be a recession, unless we cut back, there's more of a chance to be able to get through this we have to feel that there's going to be a recession of shorts andrew, the one thing that keeps coming up is the consumer is not going to be the source of it we talk a lot about the consumer looking at the food. the consumer's balance sheet is great. i'm not whistling past the graveyard, versus 2008 we have to do everything versus 2008 i think 2008 was something that really drove the stock market down, and this is going to take a lot of the parts of the market down but not all of the parts of

the market down. >> brings the market to where. >> the market would go higher. >> if your company is losing money, it doesn't matter, you're not going to get more money, and those companies are going to go under and get big layoffs. i think there's engineers. think about it that was the height of the problem, and the market is creating a glut of engineers now, we have gluts of goods. we're going to have gluts of cars because the semiconductor is coming through. we don't have gluts of housing yet. 5 1/2 to 7 mortgage is going to create that. i'm listening to everybody and coming back with the same thing, you get gasoline down, and we have nothing to talk about six months from now. that's got to come down. if president biden decides that he wants to speak to the largest producer of oil in the country which happens to be in texas that would put him with the fossil fuel people, and he doesn't want to do that. his base doesn't want to sit

down. >> i just want to go back to this, 100 basis points, you think the market rallies. >> absolutely. everyone is waiting for ji pojay powell to show his teeth then they realize the fed isn't going to let this get out of control and the market rallies. >> handicap the fact that he does that at this point. >> i still think he's incrementalist i think he feels that that could be too much like december of 2018 but everybody's in better shape than 2018. it's worth doing it's just, he's got to get ahead of all of the people who sit here and talk who are expecting that they need 75, and they would all be appeased. it would be over it would be over because he'd done something that just said, you know what, i know you all think i'm asleep at the wheel. here's 100 go knock ourself out, do what you have to do, now we're going to slow down and see what

happens. then another 50 and the panel will come on and say he didn't do much. if he does 100, then what people say is, wow, hold it, just a second, he's way ahead of us got to get the neigh sayer, and price cutter targets out of the picture. >> jim, never one to hold back appreciate it, and appreciate all you have done in this awesome week of coverage in the valley fantastic. >> jim, before croyou run away,f he were to do that, 100 basis points, what would the market reaction be. >> initial down and then up. we're going to have a guy at the fed who just says, listen, we're going to whip inflation now. we're going to kill it, and that's all there is to it. you go about your business but there will be less inflation at this time next year. >> jim, thank you, and we'll see you in just a few mings. in the meantime, let's bring in

moha mohamed el-erian president of queens college cambridge. what do you think? if he were to do that, jay powell were to go ahead and move 100 basis points, shock and awe, we have gotten to the point where you can say you're going to tamp down inflation and that is priority number one, and people may not believe it until you actually, what was the hank paulson phrase, you have to get out and show them. >> he needs to regain control of the inflationary narrative he's losing total control. he has to do something you've heard me over and over again, the first step should be explaining why the inflation costs are so wrong for some long he's got to move he's going to be chasing the market, and he's not going to get there. >> if that is what we have seen, 383 points this morning on the dow futures even after the 600

plus points that we lost yesterday on the expectation that this would be a hotter number what happens if he raises 100 basis points out of the gun, surprises people how far down do we go before things stabilize >> so remember, you've heard me say we are pricing three different risks, interest rate risks, that's what you're seeing right now in the market. second is credit or recession risk we haven't fully priced that in, and then god help us, we don't have to price in liquidity risk. what happens, i think you get rid of the interest rate inflation risk by hiking aggressively, and giving a clear message, but you're going to have to deal with the credit risk, so my gut says jim is right. it's going to be a bit of a v. we've come down first before we recover. >> okay. the numbers, way hotter than expected, and let's just talk through some of those issues we thought that we were going to be looking at headline numbers

going up we know food and energy prices are going up, but that was up by significantly more than anticipated, up 1%, versus up 7/10 of a percent, but then it was even the core, without those things, still hotter than had been expected. we're talking about numbers up 0.6%, on a year over year basis, the core itself up by 6% that's huge. >> yeah, and i was with you a few days ago, and i said i'm baffled by people who are confidently saying it has peaked becky, if you think take the first ten days of june, and if they are what prevails for the whole month, the next measures are going to be even higher, so inflation has not peaked we need something to happen to stop this inflationary process flooding the economy, and building its own momentum. >> we also had -- also said the other day that the american rescue plan and build back better wouldn't have been a

problem. even just had jason fuhrman acknowledge it was a problem i don't know what it will get you to take to backtrack. >> i said it's the fifth reason. the fed is first, the war is second, and the energy transition is third. and then the supply side >> we've argued stuff for years. we've argued about that more than the mets over the last 15 years. >> you don't even talk to me about the mets when they're first playing. >> i just said it. i just said it the reds have been doing better since they started out 3 and 30. >> i have been waiting this whole season the reds are coming back 300 average. >> i'm going to ruin it right now. i'm predicting a subway world series. >> joe, please don't please don't we got a collapse as usual >> i know it's tricky to call direction of the market alone, but timing on this, i have heard

some people talk about how they think this summer is going to be testing new lows, maybe as you get into the fall, you see things really drop before it picks back up by the end of the year does that sound like a fair assessment or is there too much to figure out on a timing front here >> it's hard because there's still a lot of liquidity sloshing around. i want to see the restoration of value process happen quickly because they're starting to be really attractive opportunities. there's liquidity risk overhanging the market. >> where are the attractive possibilities you're seeing. >> in tech there are some really appealing opportunities in tech, but i keep on stressing, we haven't dealt with the liquidity risk yet, and i'm hoping we don't have to. that one would be more painful than what we have seen already. >> how do we avoid dealing with it. >> by the fed regaining control and not causing an excessive tightening of financial conditions that becomes a problem in itself.

becky, there's a lot riding on the fed regaining control of the inflati inflation narrative, not just for the markets, for the economy, social stability, for politics, this is an important moment. >> you think they can regain it just on the core, and that would be enough that people are going to be able to look past the headline inflation, the food, the gas prices that they pay on a daily basis? >> economically, yes, politically no we tend to talk about call we tend to make adjustments. for the person in the street, it's all about headline, and that is what plays out in the politics for the economist and the market, they can regain control. >> okay. naun thank you for being with us. it's good to see you as always, and thanks for the quick analysis. >> subway series coming up >> please no, joe. >> could happen. it could he's doing that so that the mets

don't collapse he's saying the mets collapse. final check on the markets maybe not. can we just go into the weekend. >> no. we're down 461 after 600 yesterday. that's a thousand in two days. nothing looks real good on the screen join us next week. we'll see you back here, sorkin. "squawk on the street" is next >> cue the desk. good friday morning, welcome to "squawk on the street," i'm carl quintanilla with jim cramer and david faber. headline hits 1%, above estimates, year on year, a new cycle high even course steady from last month's 6/10 futures adding to thursday's late day swoon, and we are watching the curve today we will begin with a maze hotter than expected data jim, you talked about it with becky. every major component, nothing fe