basis points to tame inflation the ecb calling an emergency meeting to address, in its words, market conditions we'll tell you what to expect. the crypto carnage is getting worse. bitcoin now below $21,000 as firms that hold crypto look to reassure the markets it's wednesday, june 15th, 2022. "squawk box" begins right now. good morning, everybody. welcome to "squawk box" right here on cnbc we are live from the nasdaq market site in times square. i'm becky quick along with joe concern than andrew is off today. take a look at the u.s. equity futures. waking up waiting to see what's been happening with this green arrows right now dow futures up by 185 points

s&p futures up by 26 nasdaq up by close to 100 at this point up by 94 stocks were mixed yesterday. the dow and s&p 500 posting their fifth straight negative session closing light slightly lower. the nasdaq was up by 19 points that's a gain of 0.2%. if you want to take a look at where things stand, check out all three of the major averages off of the recent highs. you can see the dow down by 18 s&p yesterday closed down by 23 percent from the all-time high the nasdaq off by 33%. people are paying a lot of attention to the treasury market the 10-year yesterday yielding the highest level in two years yields have moderated ever so slightly this morning. the 10-year at 3.385%. got the 30 year at 3.378 the 2 year at 3.327% this market has moved up the yields have moved up

significantly over the last couple of weeks to the point where it is and asking people, is this orderly at this point. when yields move up in treasuries, it's because nobody's showing up to buy you have to offer more and more toconvince buyers to come in, and that's where things get a little bit tricky. let's take a look at crude oil prices at this point you're looking at crude oil, wti, off a little bit. it's down to $117.58 a barrel. brent is $120 a barrel and natural gas plunged after freeport l&g said it had a fire and would keep the plant off line a lot of gas will be available to store in domestic facility in winter when furnaces are fired up and demand is the highest we'll have more in a few minutes. the 75 basis points,they'r

guessing 75. morgan stanley, b of all all at 50 in the blink of an eye it has changed. the 75 being off the table in no way, shape or form is it off the table now. >> one of the measures that they were looking at fed funds, they had 90% odds that it was going to be 75. >> sri is going to be on we talk to a lot did you see the one piece of confetti. >> i did >> that's about how i feel in terms of celebrating. >> party is over >> we have confetti that comes down for ipos. one comes down. >> it just seemed fitting because it is gloomy it is really gloomy. >> yeah. >> a good reason for it. there's bad inflation, which can actually cause a recession

itself because people stop spending it can slow the economy itself >> stop spending on things they don't need. >> but it can impair economic activity so our answer to that is to really impair economic activity with higher rate and increase the borrowing costs of everybody, which increases the inflation you're worried about in the first place what we're trying to do is loosen things up in terms of supply so there aren't shortages. >> the fed can't fix this. >> would you raise interest rates so companies are trying to increase supply, it costs more for them to do what they're going do >> they can't fix this it's been the problem all along. this is something that has been all about the supply chain you have a lot of consumer de3457bd i take that back it's consumer demand from all of the liquidity out there and all of the money put out fiscally

too. >> that's another thing. a lot of what the fed does we went from 20 trillion basically deficit -- not deficit. like 30 trillion now we've done it in the course of both democrats and republicans are responsible for it we're at like 30 there wouldn't be a need for the fed to be so accommodative the idea of build back better, it's insane. yesterday president biden was yelling about things, come on man. >> unintended consequences. >> you can't be spending at this point. maybe they can't figure out a way policy wise to help, but they shouldn't keep -- news breaking overnight the ecb calling an emergency meeting to discuss current

market conditions. investors have been dumping southern european government debt after the ecb laid out plans last thursday to phase out its giant bond buying program, hike interest rates. the emergency announcement comes hours ahead of today's rate decision by the u.s. central bank the euro jumping against the dollar on the news european bank stocks rising. he disagrees with what richard fischer said yesterday they shouldn't be responding by forcing a 75 basis point they expected 50. >> he doesn't want the market to think that it can force the fed to do different things. >> sri said it's long past worrying about how you look. at this point you need to act. >> here's the deal equities are one thing treasury markets another and i think the treasury market is much more powerful.

the treasury market is why the ecb is calling this emergency meeting today. their treasuries their sovereign debt if you don't have people showing up to buy those things, that's when things get really concerning that is where you lose the sense of orderliness hopefully we can contain that. hopefully it's not an issue. >> i'm not sure. when equity markets start acting like this, that's when the mainstream media gets involved >> consumer makers. >> central bankers in particular. >> the wealth effect there used to be -- we really did assume there was a fed put the fed put is gone or it's so out of the money at this point it won't -- crypto's not helping. i'm wondering, the market's trying to bounce today the market tried to bounce yesterday. crypto did not it used to be leaning -- i don't know it is anymore bit koib is down again this

morning. katie stockton said 19.5 not far from there now lost more than 1/3 of its value since the start of june. i guess it would be redundant to say some really rich people have lost a trillion dollars because if they've lost a trillion dollars, they were very rich before a lot of millionaires and even tens and mondays of million -- hundred millionaires were minted with the crypto moves but a lot of that's go bit co investor backed loan. michael sailor was saying and what he wasn't saying. no margin calls yet at 21 and change he did point out that not all of

the bitcoin is pledged but the amount that is pledged, he doesn't expect a margin call and that there's plenty of liquidity. >> other assets, something they could -- >> if there were -- >> but it was a strange statement. he didn't say, no, there's no margin call, not going to be, don't worry about it it was interestingly worded. carefully worded. >> they always throw in el salvador problems in el salvador as well. back to micro strategy the company's cfo said if bitcoin were to drop below 21,000, it could trigger a margin call. that's a situation in which an investor has to contribute more funds that was sold out of the trade. here's a crypto tweet. meantime, buzz in the markets over a vague tweet by a founder of three arrows capital. an influential hedge fund that's

been liquidating crypto holdings how do you say this? he tweeted from his verified account. we are in the process of communicating with relevant parties and fully committed to working this out the firm reportedly started withdrawing state ether. that was from zhu su they redeemed it at a discount which indicated urgent liquidity needs. the firm has not provided any additional details 6 6:10 >> a.m. on the east coast. when we come back, natural gas prices plunging yesterday. we'll talk a closer look at the energy markets right after this break. and we are counting down to today's big fed meeting. more predictions from the central bank and the market reaction straight ahead. you're watching "squawk box" and this is cnbc

natural gas prices plunged yesterday after freeport lng said an export facility would be offline until late this year that eased fears of sky high prices for the coming winter months, at least in the united states joining us right now to talk about what's working in the

energy sector is rob bummel and amarita sen. rock, let's just talk about this explosion at this facility this was an export facility, meaning we are not going to be able to export natural gas for mo months maybe that's good news for people in the united states. lower prices what does that mean for the global market and people waiting forex ports? >> good morning, becky it created an interesting element. in the u.s. it created an over supplied natural gas market because freeport lng typically buys natural gas and exports it to europe. so that's why prices in the u.s. declined however, globally it actually created an under supplied market because that exported natural gas now is not available to other countries around the world. it can't really be replaced. while u.s. prices dek4r5cdeclin

prices in europe increased by 16% yesterday. >> is there any chance saying, huh, if we stop exporting this can solve a lot of our energy woes >> that's an option but i don't think that's going to happen it might solve some woes domestically but internationally it would create a lot of chaos. >> amarita, what do you think of this it's such an interesting example of what happens. we do have a lot of oil and natural gas in this country. it's a global market we have friends in europe we're trying to help out because they're being squeezed by the russians, too. if you are an administration, you are up against an election, you see how quickly that can knock down the prices are they tempted to kind of mess with that >> look, like you said, this is a global market, right so it's not necessarily a permanent solution this is an outage. it's an unforeseen outage.

the bigger process is the lack of refining factory and then covid led to the refinery. even if they would have come out with it, i know they are at least considering it, not going to say it's going to happen, it's not going to change anything the dynamics is the east coast needs a lot of products from europe and other parts of the world, whereas, the gulf coast tends to be oversupplied yes, there's the colonial pipeline but most of it is full. any kind of product export ban or crude or lng export ban, these are temporary measures they don't go to the heart of the problem, which is under investment the fact that now esg metrics are just not incentivizing more

inve investment >> we are reliant on gasoline being refined in other countries, whether that's europe, canada or lsewhere if we start saying we aren't going to export anymore, aren't they likely to say, we aren't going to export gasoline back to you? >> gasoline, that's kind of the key thing. gasoline exports are mostly to latin america. diesel will be the one to watch out for. europe does get a little bit of diesel from the u.s. the critical thing is if the u.s. were to stop gasoline or diesel exports the price internationally, just like in natural gas, will shoot higher east coast when it has to import those products will just have to pay a much higher price. it's actually going to be detrimental for consumers. >> that's an interesting thing you can understand politicians looking for quick fixes. i don't know that there are any. it may get the wheels turning in

their heads. a amarita, you have laid out an excellent case for why we are going to be looking at higher prices for a decade because of what we have done in terms of not being able to have enough supply, not spending the investment the only other side of the ledger is demand and demand has been very strong do we risk prices coming down at least temporarily if we actually do wind up in a recession if there is a big pullback in both corporate and consumer spending? >> for sure. look i mean, we are already factoring in a mild recession for the u.s. in the second half of next year. not right now. and a pretty deep one in europe for the end of next year but i don't think it's going to happen right here, right now. there is a lot of concern. there is a lot of pent-up demand i spoke with you guys from calgary, now i'm in houston. traffic is insane still, right

even at these gas prices i'm like, wow. again, people are just going back to work finally and you can just see that. the biggest change, which i think we are under appreciating, is asia. it shows it's up 40% versus 2019 thailand, korea, all of them china hasn't even opened up. there is still going to be a lot of pent-up demand. supply chain shortages should ease once china opens up that's going to be better for petro demand second half of next year we should start to see some of these negative impacts come through. demand has to -- that's the only balancing mechanism. demand has to come off because these prices ultimately or i would say even higher prices, we will get there first, will be unsustainable, right, in the long term. >> rob, i don't expect this is in your wheelhouse, or amarita becky, did you see this? kyle bass. we should have him on to talk about this

just looking at if we transition, looking at what we're going to need for all of these key materials that are used, and there's zblous way, this's no way. you need snem the most important kpen nents >> things for batteries. >> it's the same problem we're going out 10 years trying to figure it out rob, do you have any incite into that in terms of what would be necessary to increase production to get to where we want to be in ten years? >> yeah. well, joe, we look at that very closely. we follow the energy transition and watch what energy companies are doing both domestically and globally the key point, you made it, is that we need a lot of domestic production of these materials, lithium, copper, cobalt. >> graphite. >> yeah. you can keep going, right? so really what we would be going

from is a -- really an era ever energy security but we would be lying domestically on the resourcing from countries of the world. it will be the exxons and chevrons that will be the suppliers if we accelerate. >> some of these things we need anywhere between 200% more and 1400% more in the next -- by 2030 and you've never seen -- to be able to double the extractive capacity anywhere close to that in that period of time so we're back to drilling. >> drill, baby, drill. >> or mine >> or mine, baby, mine or both. >> rob, amarita, thanks very much thanks for bringing us with you on your world tour tell us where you're stopping next, we'll come along. >> coming up next, mortgage

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vo: music can help you express how you're feeling. when you can't find the language, find the lyrics. good morning, everybody. welcome back to "squawk box" live from the nasdaq market site in times square. take a look at the futures this morning. some green arrows. little bit of a respite here dow is up by 146 points. s&p 500 up by 22, nasdaq by 83 if you're in the market for a new car or truck, you may have seen stories about vehicle prices starting to cool off. phil lebeau joins us now to tell us a much different story. hey, phil. >> yeah, the truth is, joe, that the prices are not cooling off yeah, they may be down $100 but that's not cooling off

we're not seeing the decline that many people are forecasting. a few people are even talking about. j.d. power crunched all the numbers for us in terms of what transaction prices are now this is the prices we're paying at dealer ships forget about this wholesale business this is what you and i are paying look where it's at right now $45,502 in the month of may. up 17% compared to last year the problem is easy to see at any dealership you drive to. i talked with a couple of dealers in the last week and i said, are you seeing any softening of prices. they both asked me what i was smoking because there is no softening of prices. the inventory is just not there. the average data turn, it's on the lot 18 days. they get in, do the paperwork, already been pre-sold in most cases and it's out the door. the price increase in terms of vehicles is across the board, but you really notice it with your so-called green vehicles. plug in hybrid electric

vehicles, up 27% prices we're paying. pure electric vehicles up 24%. plain old old prius, gas electric hybrid, a new model, up 9% as a result when you take a look at tesla, ford, toyota, all of these stocks under pressure along with the rest of the market tesla performing the best of that group given its lofty valuation earlier this year. remember, ice vehicles, internal combustion make up 82% of the market market on the used side of the market used vehicles are topping $31,000. this is what we are paying and nobody in the industry, nobody thinks that it's going to decline any time soon. it may plateau and ultimately it will come down nothing goes up forever but it's not happening as of right now. as a result, the auto dealer stocks, autonation, penske auto group, carmax all relatively speaking compared to the market doing fairly well. and, again, that's relative to the market but, again,

everything is under pressure bottom line is this, guys. if you hear anybody saying i'm waiting for the prices to cool off later this year, it ain't happening. nobody is expecting it to happen that's a little reality check at the dealership >> i'm still an ice person, phil i don't know do you follow -- >> you don't know if you should be an ice person >> yeah, an ice person, internal combustion. >> right >> i'm seeing some things that some parts of the country are pushing back on laws that would mandate charging stations, and i just don't know if -- i guess it just -- any -- three steps forward, two steps back. >> right >> i don't know if i'm ready and i do -- you know, if you do go on a long distance -- people tell me it doesn't take that long to recharge but you do need the recharging station and -- >> you definitely cannot get in your car and just drive. you know that. you have to plan your trip

that's the bottom line the question becomes, how often are you making those types of trip, joe? i think a lot of people -- >> infrastructure -- >> we'll have it eventually. eventually it will be there, joe. do i think it will be there in the next year or two no eventually if you want to drive from chicago to denver, yeah, you'll be able to do some fast charging along the way, but it will take time for that infrastructure to come in place. over the next couple of years people will have an ice vehicle and they'll also have an ev and that ev will primarily be for driving in their local area. >> and that's for people who can afford those things. expensive cars. >> true. you're absolutely right. >> but are we keeping up -- is the infrastructure on pace to keep up with the fleets that are being produced the plans the automakers have for these things is there an evenly matched increase in these two things, like the number of vehicles they're going to be producing and the infrastructure that's

set up >> not it's not there, becky. there's areas where it is. parts of the country where you see the infrastructure is being put in place quick enough so that you see a true conversion into evs california is a perfect example of that. there's other parts of the country, you could drive for a long time and you don't see a charging station you mayo casely see one at a walgreens or some other place, but you really don't see them to the same degree in the middle of the country, especially when you get outside of the cities, as you do on the coast and particularly in california. >> phil, i'm thinking about -- now i'm realizing this the last time i turned in my leased car i said, you know, i've got a couple of nicks on the wheels, the nice wheels. >> yeah. >> do i need to get that fixed to turn it back in you know what they said? oh, we're selling this car you don't need to worry about anything we're taking it as is and we're selling it >> yeah. >> i think they were selling it for way over what my turn-in value -- >> absolutely.

absolutely you're better served, joe, i've talked about this in the last week you are better served paying and buying that vehicle when it comes off lease than selling it to carmax or somebody else instead of selling or turning it back in. >> you can't get the new car. >> one other thing, joe. a lot of people i've talked with lately have said what's this $550 disposal fee? that's a nice little how do you do when you return your leased vehicle. >> how do you do them back and say, forget it, i'm not turning in >> it's crazy, phil. i wondered about that. none of the normal lease turn back -- they didn't make it that clear what they were doing oh, yeah, no, just -- fine, just leave it, yeah, that's good. well, do i call -- and they go, no, we'll handle it. we'll handle it. >> please give us this vehicle we can make a lot of money on this. >> exactly low miles. >> absolutely. >> all right, phil thanks. >> they're looking for them.

coming up, the countdown to today's fed decision is on markets are now expecting a rate hike of 75 basis points and the afore mentioned sri-kamar will join us after the break. as a reminder you can watch or listen to us any time live on the app. sri is towering over times square i always wanted to do that that's cool.

in anticipation of more aggressive tightening from the fed, the 10-year yield topped 348. new 11-year high talking about the fed is kamal sr sri-kumar. we all are becoming sort of monday morning quarterbacks for jay powell and that's unfair we had the benefit of 20-20 hindsight. i just will say, sri, i don't want the chairman's job and i have quite a bit of empathy for the conundrum that the fed is in right now. i think you do, too. with that in mind, you know, be nice, but they have some tough things to do that in your view they're not going to have the intestinal fortitude to follow

through on. >> that's spot on, joe to begin with, what you said at the beginning, i wouldn't want jerome powell's job today. i would have loved to have his job one year ago in june of 2021 when i could have shown that i can show you what i'm going to do about it. that time has now passed and we come to the present and i watched with interest your show yesterday and we had contrasting views coming on the first side from richard fisher formerly of the dallas fed and then leon cooperman. and my view is closer to cooperman's in terms of saying the fed made an awful mistake. he called it a really bad mistake. there is no time for appearances. i suggested last saturday in my writeup that the fed increase

prices by one full percentage point and start the qe at $100 billion a month in reduction in the balance sheet. powell has said repeatedly that this is his hero if he needs it today at 2 p.m. is the time to show it, but he's not going to do it >> a year ago, sri, did you know putin was going to invade russia, invade ukraine how did you know inflation -- there may have been some other things involved in causing the current state that we're in? that was not a real question never mind theis j that's just what we keep hearing. you saw other factors contributing to this pickle that we're in. >> your question is actually a very legitimate one, joe what happened in june 2021, we didn't know about ukraine and putin at all what we did know is that the

economy had recovered sufficiently and yet the balance sheet of the fed was increasing $120 billion a month with bond purchases. we also knew that interest rates were continuing at zero interest rate that -- those were the primary reasons why i said then that inflation is going to be high and sustained. putin and the continuation of covid, shanghai lockdown, all of those added to the pressure. irrespective of that, we would have had sustained inflation maybe we would have had 6%, maybe 7%, let's say. that would be still very elevated for the american public >> any chance of a soft landing, sri? go into where you think jay powell blinks. >> i don't see a prospect for soft landing and i tell you why. they have talked about the neutral rate of interest, the natural rate of interest and

being above 2.5%, which means by about september this month after three meetings you will be there. i disagree i think the neutral rate of interest is closer to 4% substantially higher that's the rate at which you are neither expansionary in terms of policy if you want to be tighter you need to go over 4% that's what you need to do to bring inflation down and in order to cut demand, and i don't think this chairman and the fed has the gumption to do it. they're not going to raise it to 4% and that's why i'm very pessimistic as to what they are going to do next. >> hey, sri, if theydon't, you know, the politicians are going to want to look like they are doing something. what if they try and institute price controls and say nobody can raise prices on anything, then what happens? >> yeah. then, becky, that's a good question

you go back then to august of 1971 that's what president nixon did. he did price controls and what you found was that in a couple of years there was -- goods were not available. you either pay a lot more than that in the market or as we are finding out in the case of baby formula, we are finding out various other items, they are going to disappear from the market that's not going to make the president and his party popular. second, i will add to your question, becky, what they also tried in the 1940s was something called ease curb control the federal reserve at that time came and said we will keep buying longdated bonds in orde to control interest rates at a lower level. that saved the day for a few months, but afterwards what happened was the market decided to test the fed. they kept on sending bonds hoping the fed would buy it.

eventually the fed and the treasury gave up and the long bond is shot up. so the quick answer to you, becky, is you can have alternative control measures they will work but a little bit then the situation gets a lot worse. >> sri, thank you. i ask because of our next story coming up. we'll talk to you again soon when we come back, new this morning. president biden sending letters to the ceos of major energy companies. brian sullivan has the details xt

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breaking news, president biden sending letters to the ceos of major energy companies brian sullivan joins us now with more what do these letters say, brian? >> well, they say a lot, becky we got one of them by the way, they went to exxon, shell,

phillips 66, marathon, but you get the point. they're about a page and a half long there's no way i can read them to you president biden sending letters in the last two hours or so. this is brand-new this morning, to the heads of these oil companies, asking them to explain why their margins are so high and basically demanding that they boost their production he talks about the price of oil and the president does say he understands refining capacity is a global challenge three million barrels have gone offline since the pandemic and there are other fact, tors. but he says the administration

is prepared to use all reasonable, appropriate federal government tools they love the word tools and they basically say they're going to have an emergency meeting convened, quote, becky, in the next few days for the department of energy and the national petroleum council vladimir putin's price hike, which price hike are both capitalized, i'm not sure y vladimir putin's price hike, all caps, are drive up costs for consumers. appreciate your immediate attention to this issue and efforts to mitigate the economic challenges that vladimir putin's actions have created for ameri america's families putin's mentioned like five times. but brand-new. >> this is really interesting. because whethen you say they'lls

all the tools at hand, do you think they mean tax incentives or we're going to force you to do this. is this a carrot or stick? i'm thinking stick >> i think's a lot more stick than it is carrot. by the way, they use the word tools t tools constantly they tuesday every day anyway. federal government tools and emergency authorities to increase refinery capacity and ensure every region in the country is appropriately supplied, talks about the production act they use the word tools again. >> i use it a lot, too, but in a totally different context as in someone is one >> i knew that's what were you thinking >> they know the media's going to pick this up. this is pure demagoguery it's not going to help the

issue. it's getting your eye off the real problems. just on break i was telling becky, i lived through the carter years every day i get a stronger sense of deja vu just one thing after another and i'm going to leave it at that, and i'm not going to go further into it. but this is not going to help. this is not attacking the root cause. until you admit what the root causes are, until you admit you have a problem you can't dool w deal with the problem. >> go into it, baby. you lived it you're an a little older becky's dad was an energy geologist. my father owned a gas station. i watched people get into fistfights because there wasn't enough gasoline. i was 9 years old, pumping gas at my dad's mobil station.

i was 9. >> but on inauguration day, january 20th, whenever it was, on his first day in office, iran released the hostages. and from there on out, it was a different world in the united states for the next eight years. and i don't care what anyone says if you weren't there, don't tell me you know something about it >> go ahead, brian go ahead >> no, no. i got the hook i got the music hook it's the audio version of that big thing on vaudeville they used to bring out. >> we'llen right back. >> i'm not sure this is it >> wlle' be right back and we'll announce some price controls we'll be right back.

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good morning, around welcome back to "squawk box" live from the nasdaq market site in times square andrew's off today we're up about 125 on the dow. on the nasdaq up 79, s&p up 20 check the ten-year we're talking about the interest rate, fixed income market all day today, because of, it is fed day. we'll see whether it's 50r, 75 oror 100. most people are expecting a three quarter number the biggest since 1999

breaking news in the last hour, president biden sending letters to major ceos of energy companies asking them to increase supply. he didn't mean it that he was going to shut doubt fossil fuel industry that was during the campaign asking them to meet for an emergency meeting. brian sullivan will have more on this story in the next hour. and we'll be speaking to energy committee ranking member, cathy mcmorris rogers. we hwill, later this hour. >> i think as brian mentioned, they said in that letter, the biden administration, that he would be willing to use the defense production act or any or tools available and necessary, and i think you need to think through what that might look like if you start to get severe government pressure, talk about a wind fall profits tax, more thoughts on the government being able to step in and tell you how

to run your business, is it still a great buy that people have been saying that's something we need to check on brian sullivan is covering the story very closely in the meantime, we want to get to dom chu he's got this morning's premarket movers, including bitcoin. >> as joe alluded to, of course on a fed day, a check right now on some of the premarket moves we see and some of the bigger banks with ten-year yields ticking slightly lower to 3.83%. so roughly six basis points before the so-called inverse where longer-term rates fall on shorter once j.p. morgan chase up bank of america three quarters of one percent right there, and about a quarter of a percent for goldman sachs. the big banks will be a focus on

a big decision day also check out what's happening with the mega cap technology trade. they did see a little move yesterday with regard to jockeying for position but apple shares right now are up about .5 of 1%. tesla shares are down about .5 of 1%. volatility will be a factor. also you mentioned the bet coin prices we are watching what's happening with the $20,000 level remember, before we had talked about this idea that 30,000, this area here, was a key level of support we've now broken below that. people are eyeing this 20,000 level as the next area we are down about 8%

20,475 if you take a look at the overall kind of ecosystem around bitcoin, it's not just those prices, but ethereum prices, we're touching the 1,000 mark almost for ether prices. but then micro strategy and bl bryant blockchain. micro strategy at current levels, right about a 1.7, $1.8 billion company at the height of february in last year. this was $12 billion company keep that in mind. as we watch those cryptocurrencies keeping a close eye on what's happening with that 20,000 level. that fall has led to a lot of market cap losses. >> so you're telling me that your producer tried to keep us apart. even your producerdoesn't want us together. >> so the way that it works --

>> i changed i went into the rundown. >> we're going to pull the curtain back >> i'm going to be quick >> i only talk about what the prompter tell please to talk about. >> they just told me, no cross talk there will be cross talk there will be blood. was a movie, i think >> about oil. >> about oil i don't get to drink fine wine very often but a red wine that's silky and smooth, that is your golf swing. one that can, and i saw it again yesterday. i saw him play yesterday, and it is like, it's so smooth and silky. that's all i can think of to describe and i'm just going to say, i get up at 3:30 we teed off at 10:30 i've been up for ten hours >> first of all, i thought we had this rule about what happens on the golf course stays on the golf course. >> we played together.

>> yes, i will confirm that you and i were partners in a match against two unnamed folks and we were hanging tight until the 16th hole. >> on 18, when i -- nothing. but it went close to the hole. newsbreak, dom, thanks it looks like at least a $100 bottle of just, it's just, he's so, and i can't do it, his transition news breaking overnight, the european central bank calling an emergency meeting. investors have been dumping southern europeangovernment debt after the ecb laid out plans last thursday to phase-out its giant bond-buying program and hike interest rates. the euro jumping against the dollar on the news, and european bank stocks also rising.

no water cups. no drinking fountains or water cups that's, you know, try playing out there as an old man with no water. joining us to talk about theness of the morning what investors should expect this afternoon anas anastasia amoroso. a lot of the dire warnings about the problems with painting yourself into a corner, and, you know, covid didn't help. i understand that. but reality's a bitch. it really is i'm sorry to use that technology but we are in a tough spot here as a country jay powell's in a tough spot i think the market, stock market is telling us that every day >> i think you're right, joe reality is tough and for the market, it's really boiled down to the plain and

simple inflation is still rising. nobody's been great at predicting it, including the fed, and as a rushlgts they're having to catch up to the elevated inflation with very choppy, i would say very sloppy policy this is why the market cannot find any kind of footing you get one message from the fed, and then something else happens, and they, high inflation ebbs and flows against that environment where the markets crave predictability they want a certain path, and the fed is not giving it to us it's just going to be really hard for now, the fed's reaction function, as long as inflation remains elevated they're going to get incrementally more hawkish. that's not a recipe for market upside it's a recipe for market downside i think we could stabilize around the 39,000 level. that was 60.5 times. but the trouble with that now as the market, you know, trades

below that is now the, we went from pricing in the rate of 2.6% in february of last year to now 4% by february of last year. so there's been a big move higher in rates. so it's tough, joe >> when we rank bad things for the economy and for the country, obviously, people think inflation is number one. is the most threatening and the most -- what's the word i'm looking for. it's bad and obviously, if you're going to orchestrate a recession, nobody wants a recession but if you're going to orchestrate a recession to deal with inflation, inflation must really be pretty bad because you'd never dreliberatel bring on recession >> inflation is pretty bad here's challenging part. there's a part of inflation that the fed has, to can contain, but

there's a huge part of it they can't. if you think about inflation print last week, it was about food and energy. what can the fed really do to rein that in are we going to cut back on eating are we going to cut back on driving? probably night i think the fed is trying to do what they can do what they can control, which is core inflation and there it's tough, too. first of all, core cpi has started to decline on a year on year basis that's a silver lining but if you look at the components, moves on a monthly basis, you still see sticking inflation elsewhere. i think what the fed is trying to do, since they can't really control the headline, they're trying to make up on the core side and trying to hike those rates. it is difficult. but joe, i would make a distinction between a low down and a true, full-blown negative

gdp recession. maybe this doesn't have to be a gfc scenario what makes for a major, major correction is when you have a number of xs, froth that has been built into the system when you look at credit fundamentals of companies, they're in really good shape yes, i think we have a slowdown or r on our hands, but perhaps it doesn't have to be the deep, deep recession as we've had before >> let's talk about this ecb meeting. it may be the adverse impact of monetary policy. talking about the spreads on italian bank bonds have widened just in the last few days. their this is what happens when central banks try to pull back

that liquidity the bonds you're trying to sell on these things. what they're probably going to do is take the roll off the german bunds but does it foretell some of the potential problems here? i mean, we've seen treasury yields move significantly over the last several days, too is that because we're going to have the same issue when the fed has been buying 40% of treasury issuance steps out of the way, and we have to wait for other buyers to h buyers to show up for this s stuff? >> the market pricing has to adjust so quickly. and these markets are adjusting in a liquidity environment that is really, really just terrible. that's why you get 30, 40 basis

point moves across the curve in a day. and i think that's why the ecb's trying to step in and think about what they can do this is not just fundamentally, but the second part of this, do we continue to face this as the fed unwinds its purchases. i know they're a big and huge buyer in the market. but it's about the stocks and bonds that have accumulated. i think that keeps rates what, but i think investors are starting to look to the treasury market when was the last time you saw almost 3.5% on a two year, almost 3.5% on a ten year. in this environment where investors crave stability, i think you will have buyers stepping into the treasury markets even when the fed pulls

back >> anastasia, thanks good to see you. >> thank you whethen we come back, we wi talk about the weekly mortgage data and find out if there is a leak in home buying. and later, real estate mogul sam zewil ll talk rising rate. "squawk box" will be right back.

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coming up, we're going to talk real estate and then the market awaiting the fed and their decision says a rate hike decision. probably won't be a cut. i guess we can say that. many on the street now expecting a 75 basis point hike. that would be bad. 75 basis point hike. we'll find out what it means for your portfolio "squawk box" will be right back. how many nba championships have the boston celtics won? the answer when cnbc's "squawk box" continues the aflac pre-pain show. aflac! paul is about to suffer a shelf-inflicted injury. luckily, aflac will help cover his unexpected medical bills. aflac! maybe you could use the money to buy a step stool. i have a step stool. so why are you climbing a shelf?

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. now the answer to today's aflac trivia question. how many nba championships have the boston celtics won the answer, 17 they are currently tied with the l.a. lakers for the most championships for a nba team >> that's highlighted in that netflix, is it netflix the story about the lakers

yeah, it's really good what's that? hbo. it was awesome jerry bus. you never, i'm going to bury you. you're never going to catch the lakers mortgage applications data out a short time ago, and it isn't pretty diana olick joins us with more hey, diana >> mortgage demand is now less than half of what it was a year ago. how's that for a headline? that's according to the mortgage bankers association sharply-rising inflation rates and a shortage of houses for sale are hitting potential buyers the 30-year fixed rate increased. it was the average rate for last week what you don't see on that chart is that rates surged much higher

this week with the average daily rate hitting 6.82% weekly daily mortgage application volume last week rebounded slightly compared to the holiday-adjusted week. mortgage applications rose but were 16% lower, compared to a year ago some of that may be thanks to a little more supply coming onto the market refinance demand rose 4% for the week but was 76% lower than the same week a year ago both purchase and refy demand were lower than before the holiday. the mortgage companies have announced layoffs, but yesterday two major real estate brokerages, compass and red fin, did the same >> for more on rising rates and the impact on the real estate market, let's welcome scott durkin i know you' sve said recently ta

rising interest rates are helping the market because people want to buy before rates go higher. what about when it gets above 6.25%. what happens now when does it stop being helpful? >> yeah, i think it's just going to continue to fuel the market, and with the possibility of them going even higher, we expect t that the market will be quite exuberant. >> i get the sense that people, if you're in a transaction are rushing to lock things in, because you certainly don't want to be caught out in the cold as things are pushing up. but you have to start to think when rates get above 6.25%, that's very high from where we were a year ago. and that sticker shock has to b slowing down or keeping some out of the market.

>> i think buyers have fatigue right now. especially buyers that have been in the market that needed to finance, because there's a lot of cash out there. so a lot of the cash buyers have trumped everyone and the buyers that need mortgages are a little bit tired. and also let's not forget, we have a severe inventory shortage and that, people may think that the market is slowing. it's just that there's nothing to buy and florida continues to be so hot right now. we've never seen anything like it and as you know, it's the off season for nflorida right now because of the summer month, but it's still very strong >> i do hear stories from realtors in my area about how demand is strong, but maybe it's taking a little longer houses that were going in two days are now taking maybe a week instead of five or six buyers,

there's one or two to choose from are you seeing that in other areas of the country as well >> we're seeing that across all of our regions, and i think it has to do with the fact that we are in the beginning of the summer for a lot of people, and they've just taken a break but you're right people are not walking in, buying it on the spot and signing a contract in 24 hours they're taking their time. and it is a bit frustrating, because if you're a seller and you've waited this long or you're chasing the market or your pricing is aspirational you're getting nervous but they do end up coming back and signing the contracts. and yes, some deals do fall apart, but there are other buyers waiting in the wings. >> how would you describe it in terms of what the fed is doing and what the market itself is doing, taking interest rates higher, what level would you say it becomes a problem look, it's an affordability question there's a limited amount of supply, but there's also got to

be limits to how high prices can go when people are paying more to the bank to finance this stuff. how would you describe the market and that interaction? >> you're right, if they continue to go higher, and it looks like they will, prices will soften. they'll have to. because you're right the affordability factor, it just becomes too high for the buyers, and they sort of retreat, and they take a break so that's a possibility. and remember, as you know, years ago, that mortgage rates were 16%. so 6.28 sis not too bad, but it is much higher than we've seen in years >> thank you obviously, this is a market that's changing every day. we appreciate your incites >> former federal reserve

nominee, judy shelton on what investors should take away from today's rate decision. let's take a look at futures this morning things are looking better here dow futures up by about 225 points s&p futures up by 33, the nasdaq up by 121. "squawk box" will be right back. lemons, lemons, lemons. the world is so full of lemons. when you become an expedia member, you can instantly start saving on your travels. so you can go and see all those lemons, for less. hey, did i tell you i bought our car from carvana? yeah, ma. it was so easy. i found the perfect car under budget too! and i get seven days to love it or my money back... i love it! [laughs] we'll drive you happy at carvana. (all): all hail, caesar!

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new this morning, the ecb is holding an emergency meeting to address surging bond yields. this comes as we are counting down to the latest decision from the fed later today on raising interest rates here in the united states. let's bring in the head of u.s. rate strategy and this emergency meeting from the enter-cb, you hthes the ecb >> they are trying to deal with surging prices at the same time

we're seeing global growth take a hit. as the ecb policymakers come together, the fed is moving into its second day of meeting trying to determine whether a faster pace of policy will be appropriate while we're waiting for retail sales this morning which is likely to show another indication that we're seeing ongoing fragility. it's going to be very difficult for central bankers to raise rates enough and fast as they would like without undermining growth entirely. >> what does this mean this is just telling us that a soft landing is going to be even more difficult than we already assumed? >> yeah, no, absolutely. i think central bankers just don't have history of being ail ability to orchestrate soft landing. t the sources of inflation that we're seeing right now, supply chain disruptions, labor market

shortages, and, you know, higher gas prices, these are not things that the fed really controls so it's, you know, the only thing that they can do is tighten monetary policy. and potentially even a recession down the line. >> how far down the line there are a lot of people who think we're already in a recession. >> yeah, i think it's really lar hard to fully pinpoint but, you know, if we do keep up the pace of rate hikes, to get to 4% m sin short order i think you're going to see a recession sometime late 2023 or 2024 if financial conditions also continue to tighten as much as they are right now >> lindsey, this is, essentially

the fed's in a box what do you anticipate hearing interest them? what's the best they can do with the tools that they do have? >> the market needs to walk back expectations the fed has been very clear that is not something they are considering. they will have to reaffirm that rhetoric and convince the market that we are seeing improvements in inflation and the fed does expect inflation to continue going forward. when we exclude food and energy, which of course consumers pay for, but from a monetary policy standpoint, this was reassuring as we sigh the improvement a slower pace of positive prefecture the fed is going to have to

rooe ro remind the market that we are taking steps in the right direction. aside from raising rates, the fed is also beginning to draw down the balance sheet which will essentially act as a de facto rate increase. even if we do see 50 basis points as we expect with the additional policy action it will feel more to the market like 75 bay basis points essentially so the fed is going to have to be very clear, and also reminding market participants that growth is slowing the consumer is slogan the risk slowing >> when will we know i guess the official decision has to be named by, you know, the council of economic, the economic team whoever it is that decides on a recession

but when will we floknow and be able to say pretty certainly, lindsey, that it's here. >> it will be certainly in the rear view mirror i think we'll feel it very early on, as we start to see consumers pull back more dramatically than they already have, when we start to see investment tip on into the red. when we start to feel growth slow markedly. so i think it's very clear that we're in a period of negative activity or moving into recession well before officials declare it >> what do you think about that, the fact that we could be in recession sooner how would you change your outlook? >> fundamentally speaking, i think the economy's in a very good spot. unemployment's at 3.5% manufacturing is still pretty strong but are you starting to see nascent signs of concerns.

that, to me is an important indicator that the market's starting to get very concerned about a meaningful slowdown in growth it's really a question of what happens to the consumer in the next six to eight months how much of a top line and bottom line it's going to have on corporations and corporate profit margins down the line so it's really hard to get active visibility on those metrics right now. as far as the fed i think is concerned, they really want to tamp down inflation, and what they're really concerned about s is the inflation expectations. the five to ten-year hiked up.

they don't want expectations to get entrenched in the system >> we've seen moves on treasuries in the last week. do you think we're going to continue to see more of that >> it's going to depend on the fed's message and their ability to communicate i think right now the fed will stay the course of 50 basis points up until september and potentially move back to smaller rate increases from there. i think looking at today's market reaction or the earlier market reaction, it's an overreaction and i do think that if investors begin to believe the fed's pathway, not ramping this up not moving tup to 75 basis point i think rates could trend down from here. >> what happens to inflation in that scenario? i think that's why the market's craving this pain. >> inflation is moving from the

supply side. what does raising the price of capital do to supply constraints? nothing. we have to look for ways to ease global supply chain disruption the demand side is already declining. >> an admission the fed can't fix it and stepping back out of the picture. thank you both very much what can washington do to help ease the burden on americans? we're going to speak to cathy mcmorris rogers next as we head to break. hooe here's a look at this morning's leaders and laggers as the dow has now doubled its premarket gain "squawk box" will be right back. (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.

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internet explorer. do we have to do something online now >> yes w, with a ouija board >> microsoft has essentially moved on from the internet explorer when it launched edge, its next generation browser back in 2015. internet explorer had its fair share of critics with some referring to it as the top browser for installing other browsers >> good one. >> mm-hm >> when we come back, president biden sending a letter to energy ceos saying above normal profits are unacceptable check out oil prices this morning. they're down, only to $118.52 a

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president biden sending letters to ceos of major oil companies we are going to talk to you already today congresswoman. you had a lot of ideas on thousanhow to open up the spigots. this wasn't one of them, calling the ceos greedy, saying that they're controlling what they're doing, just in terms of gouging and trying to pad profits. does this resonate with the american people obviously, or are they really talking about some price controls do you think they'd institute price controls or browbeat companies into some type of price control? >> again, i just ask the question, "really? is this really where the administration wants to go it seems like they are really

out of touch with what it takes to bring down the price of gas we had a hearing on price controls the house passed legislation a few weeks ago that was basically empouring the ftc with price controls and the administration with the ability to declare an energy emergency and lord knows what the administration would impose through an energy emergency. what we're seeing in america is the worst energy crisis since 1973 and when we had gas lines, panic at the pump. it makes it harder on hard-working americans it is increasing the cost of food and the administration made pretty clear on day one that this was their agenda, that they were going to shut down american energy, and it's time to flip the switch american energy is foundational to everything in our lives and this administration seems to be more interested in their own political agenda than what is

best for hard-working american families >> i had e-con101. that was a great year, 1776. supply and demand is not that hard to understand how it works, but then again, a guy named milton friedman won a nobel prize. it's not like there are any absolutes in economics do democrats go and take one type of economics course and republicans a different? they are 180 degrees apart on how they think economics works >> but also consider the administration, president biden has been willing to go to opec countries, venezuela, saudi arabia, and ask for them to increase supply, but at the same time, here in the united states of america, he continues to make it more difficult, shutting down american oil and natural gas

producers in particular that we have the cleanest, we have the technological innovations that have resulted in not only america just in 2020 becoming energy independent after decades of that being our goal, recognizing how important that was, but also leading and bringing down carbon emissions and yet the administration is willing to look to these other dictators and ask them to increase supply, at the same time continuing to signal to the united states that it's not going to happen here >> we still want to transition, that's what we're going to keep hearing. we want to transition. so five-year plans, ten-year plans aren't really going to get us where we want to go it's almost as if we don't even want to set out in doing the steps that are necessary to begin doing that maybe you think we should do xl keystone maybe loosen up the restrictions

on new refineries or e paxpandig refineries none of this is going to work today, tomorrow or next week these are all one-year, two year, three-year, five-year, what would you do today? >> what i would do today is unleash american energy and technological innovation tha there is technology. there is innovation. we should never have shut doubt xl pipeline. that's what president biden did on day one i've introduced legislation on the resources committee, it's the american independence from russia act, a comprehensive bill that would approve the keystone pipeline other pipelines, export natural gas, which is so important to our allies address the permitting on federal lands. this administration recently shut down the permits in alaska and off the gulf of mexico

those are signals that continue to make it more difficult. i was talking with a refinery just recently that was sharing with me how difficult it is getting the permits. this administration, on day one, made clear that they were going to shut down american energy for their own political agenda and it's harming americans it's making us less secure, increasing prices, making it harder for hard-working american families, and we need to flip the switch >> there's no new leases on federal p lands. really only 20% of the offshore drilling is being done we hear conflicting things we hear there are more rigs now than when trump left office during covid we hear all these different sort of takes on what's really happening. it's hard for the average person

to really flow know what's goinn at this point. >> in many of these examples, the administration is trying to distract from their true agenda, but i would just, the results, the facts on the ground speak for themselves, and the administration on day one shut down the keystone pipeline president biden had made it clear that he wanted, he wanted to wean us off of oil and natural gas, and yet natural gas has been the shell revolution, the technology around natural gas was the reason that we had been leading in bringing down carbon emissions the uk right now is in the eu is looking at making natural gas renewable. because they wreck into iz that that being the key to bringing down emissions we need to get this debate back on results and facts rather than distractions and confusing rhetoric that, as you just said,

confused americans >> congresswoman, i get the feeling that we're going to hear a lot of this. both sides using it as political talking points i agree with a lot of your points, that we could be doing more to try and help this and maybe working productively with, with the energy companies. but is anybody actually sitting down and doing that instead of playing politics with this is anybody sitting down with api, which has just sent out a letter saying here's the ten steps we would recommend is anybody sitting down constructively with ceos of these companies to say how can we help, what can we do? because americans are the ones paying higher prices in the meantime while this gets bantered back and forth. >> i've been to midland, i've been to texas. i've been to houston i've sat down with these american energy companies. i think that we should be putting midland over moscow. and yet this administration

seems -- i don't fknow whether they've sat down with these companies. they've sat down with venezuela, opec, to ask them to increase production i would urge them to sit down with american energy producers we've led, we're leading on the technology the innovation to, to capture carbon carbon sequestration we're leading in the technologies that are going to move to this clean energy future, and we need it to do it the american way we need to embrace american energy and all that it means to us it is so foundational to our lives, our standard of living, our economy, our national security, and, and we can lead the world. we must lead the world in both unleashing american energy and technological innovation >> congresswoman, if you think

we go 350 or 75 today, basis points >> oh, i'll be watching to find out. >> you know where to find us >> yes >> don't get that other one on there's only the original. congresswoman, thanks. appreciate t it sam zell will join us to talk about the real estate market and the state of the economy then former fed nominee, jude e judy shelton. "squawk box" will be right back.

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good morning wall street waits for the fed. we are expecting at least a half percent interest rate hike today. but there's a growing sense it could be even more this hour we will speak with judy shelton

meantime, crypto prices plunging bitcoin hitting its lowest level in a year and a half and president biden calling for more production from u.s. oil refiners, saying current gas prices are not acceptable. we will have all the breaking details ahead. your final hour of "squawk box" begins right now good morning, and welcome to "squawk box" here at cnbc. i'm joe kernen along with becky quick. andrew is off today. u.s. equity futures now, 273 points, a pretty decent bounce, a little bit more than was ever indicated yesterday, which didn't hold anyway in a volatile session that would have been thursday, friday, it was

thursday, friday, monday, tuesday. all crappy, all bad. all down >> nasdaq was slightly higher yesterday. >> nasdaq slightly higher. >> it is fed day most people expecting 75 basis points you can see the ten-year, 336. cryptocurrencies coming back ever so slightly this morning, with bitcoin back above 21,000 it hit its lowest level earlier since late 2020, down at under 21,000, one piece of news potentially weighing on prices, a cryptic tweet. how do we mean that? a cryptic tweet that's got a double meaning it was crypto and it was cryptic. we're in the process of communicating with relevant parties and fully committed to workin

working this out it's unclear what he's referring to but we will keep you up to date as more details come in. let's tar let's start the hour by getting right over to dom chu. almost had a seven handle on your score yesterday, dom. >> it was the first time that i really felt good t it was a really difficult course >> you helped keep us in it until almost the bitter end. it was definitely a good outing. anyway, so some of the morning movers we got headlines out of hertz global it comes out and says it has about $200 million left in its previous stock buyback authorization, so it's going to authorize a new $2 million stock authorization. that bit of news is helping hertz global shares. it's shed about a third of its

value over the last year and a very volatile trade. but that little bit of a parttick higher will get to you $18.17 higher watching what's happening with robinhood shares they are down. $ $7.03 the last trade there getting no help from atlantic equities who've downgraded this stock to the equivalent of a sell rating. saying that the combination of things like less user engagement, declining trader volumes. the threat of more regulation means that these shares will not see any potential upside catalyst anytime soon. by the way, at yesterday's close versus that $5, you're talking an implied 30% down side watch those robinhood hashares

some of the travel and leisure names saw a drop yesterday, we are seeing a bit of a pop. carnival up 3.5%, norwegian cruise lines up. can you kind ofly throw airline into the mix and win resorts i'll send things back over to you. >> thank you we'll see you later. we're counting down to the federal interest rate decision it would be the biggest rate hike since 1990. joining us to talk about the fed, the markets, the economy and more is sam zell it's been a while since we've seen you >> thanks. >> good to see you, and good to have you here today. but the last time we did see you, you said the fed needed to

move very aggressively this was back in january they didn't, so now what is 75 basis points enough to catch up from behind >> well, i'd answer you two ways i'd give a i'd give you a prifediction as o what i think they will do and what i would do. if i were chair of the fed i would raise interest rate a full point. the fed is supposed to be independent of politics. you know, how many times do we have to play this same game where the fed keeps falling behind the reality you know, we have got overstimulated the economy by a big factor we have to take the punch bowl away and you have to recognize the fact that when you are raising

rates to buy a point, it's really not much. maybe percentage wise, but i think there's more than enough room within the economy to absorb a couple hundred point basis increase in the risk rate. >> we talked a lot this morning and in the last weeks and months just about the eye tidea that t problems in the economy right now not really anything the fed can fix. the fed can only break on the demand side of things. >> but the fed controls demand i mean the reality is, i've been around for a long time a piece of legislation used to include, you know, i don't know,

100 million or 200 million, and all of a sudden it became trillions. and suddenly, we couldn't get the money out fast enough. i think the whole country owes joe manchin a giant thank you for stopping what would have really been a catastrophe, catastrophic result. >> you mean in terms of additional spending coming from washington >> and that whole buyback better bullshit is unacceptable and unfortunately, we only had one is th one senator who stepped up to the line when everybody should have recognized that this was a disastrous policy. >> what are you seeing in terms of inflation, the higher rates we're already seeing in yields this is nothing historically, but are the higher interest rates starting to get to the point where it slows things down in commercial real estate. we've watched it in residential

slow down somewhat >> i think what you're seeing right now is, you know, a lack of confidence. i don't think that the rates that have been increased to date change much. it's the anticipation that changes. so we're seeing a lot of commercial transactions being put on hold. you know, you're looking at the cost of financing is up 80%, and it's not only up 80%, it looks like it will be up more than 80%, because rates are going to continue to go up. so, you know, everybody, you know, wants to make decisions, predicated upon, well, what happened, you know, in the past. and i think right now the focus is what's going to happen in the future, and i think that's materially impacting the confidence of people to go

forward. so i would envision that at least for the near term, and near term is the next six months, i would think that real estate transactions will be lower and, and the deals that get done will get done because of conviction. and people will defer and say i can wait until next we're. >> the latest is the biden administration blaming oil companies for fattening their profit margins at the same time they talk about the putin price hike and how inflation is global, they still seem to think that it's one of at least tie it to corporations in this country. i'd said earlier, i was around for the carter years, i don't flo know if they're going to do any price controls do you have any sense of deja vu things hit the fan it's one thing after another

and i remember those four year, and it was a long four years >> the carter years were all about trying to blame somebody else except themselves. and the same manner, joe biden owns this inflation. if he hadn't you know, provided and encouraged the massive amounts of liquidity added to the system under the guys of covi guise of covid, we wouldn't have this day. blaming somebody doesn't avoid the reality that the real blame is on policy or lack thereof >> and the policies forced the fed's hand and the fed becomes political, because the fed has to give the fiscal spending, has to give it cover. and they're almost stuck in a box. and it feeds on itself they're like co-conspirators

>> but i think that president trump was hectoring the fed to not raise rates. >> even worse, yeah. >> and that was follow ed by biden doing exactly the same thing and the fed acquiesced. >> i was reading the letter, the letter from the biden administration or signed by the president points out that refinery capacity dropped in this country and it dropped in 2020 because of the pandemic he's asking them to ramp that back up. i don't know how quickly that happens. this is not like you flip a switch and things come back on i'm just saying those higher costs for gasoline, the bigger difference, the bigger spread

that you see, even though oil prices have been at this level before we're seeing much higher gasoline prices. than is because of the capacity issue. i don't know how can you expect these companies to turn things around and say okay, we're going to produce tomorrow. it doesn't happen that way >> no, it doesn't happen that way. and almost every step the biden administration has taken has been negative to oil so if you own refineries today, would you, you know, double down and increase your commitment to produce more when you know that at the first opportunity the biden administration will go the other way and cut off a pipeline or stop drilling or make drilling very expensive? and what we need to do is drill. we need to recognize that the solution to quote-unquote carbon neutral is not a ten-year solution it's a 50-year solution. and we've got to be prepared to

have carbon energy available to, for a smooth transition. what we've tried to do is pass all these anti-carbon rules that have discouraged investment. and therefore, we're short supply and if we're going to get supply, we need a change of policy in washington >> emergency meetings with central bankers is never good, sam. breaking news from the emergency ecb meeting, julianna joins us live from london hey, julianna. >> joe, good morning just pout from the european central bank which announced this morning that it was gathering to discuss current market conditions. the real issue here is the widening in bond spreads in europe the peripheral countries have seen their bond yields rise to a higher degree than the core

countries. thin they have announced think are going to be addressing the fragmentation risks out there, being the widening of some yiemdyi yields more than others. the ecb says they will be applying flexibility and reinvesting redemptions. they're going to be using an existing tool in their suite of monetary tools to address fragmentation. additionally, they have said they have mandated the relevant committees to accelerate the completion of a new anti-fragmentation they're going to use existing tools for now to control widening spreads and be looking at the introduction of a brand-new tool, designed to address fragmentation risk all of this, joe, comes as the european central bank announces

major policy shift much like you're sieeing state side and they're a little bit behind their friends at the federal reserve. here is the news out of the ecb, and you are seeing reaction there in the markets as a result >> let's get back to sam zell who we talk about one type of inflation. you've been talking about asset inflation for a while, sam, and have been concerned about valuations, given the fiscal and monetary bubble that has been built up, the worse the party, the night before, the worse the hangover how concerned are you that this was, i don't floknow if it was e mother -- who was the first, saddam hussain, right? was this the mother of all bubbles? >> i'm a little cynical.

i'm, it's like calling tops on the market or bottoms, for that matter, but clearly there's been excessive asset inflation. that's beginning to soften but, again, i go back to the very first thing i said. the issue is credibility and the fed's credibility, i think, has been lost and it needs to do something that will re-establish that credibility and convince the world that it intends to take inflation and get control of it. >> you know, sam, you have not liked bitcoin, you've been a bear on it and we're watching bitcoin come back down. that was the bubble that built up from all the liquidity that was out there. whet when it drops like this, when

it's down closer to $21,000, do you like it? or do you stay away from it at all costs? >> i basically stay away from bitcoin at all costs for the simple reason that i do not understand it. i do not understand its security i think that when it's all said and done, any kind of currency without the backing of a government in some fashion is unlikely to work i don't understand all the losses that have occurred where, you know, where bitcoins have been siphoned out of institutions, and consequently, i've not participated, and i've been very, very critical of it, and continue to be so. i think that bitcoin at 21 is cheaper than it was at 40, but it ain't cheap >> if the fed were to do what you'd like to see them do, raise

by a hundred basis points, that probably would, in the short term inflect more pain on the markets. you're somebody who's an investor in a broad array of different categories and stocks, what are you doing right now i know the last time we talked to you, you were still investing in energy stocks what do you like at this point >> i think the answer is that, you know, our enthusiasm for investing capital somewhat muted. i think the standards of what we're doing is somewhat muted. i think that every new deal we look at gets, goes under the knife of inflation, and we look at the various parts of it, and we look at, you know, where is inflation having its impact. i think before i said this, i repeat it again. i think that since volcker, there's been a reduction in the

reliability of the cpi with the result being there, i think inflation is a little more than the 8.6% that the load-laded suggests whatever pain it requires to get it done, the first pain is the best pain. >> you said a hundred basis points, but then you pointed out it would only get us to 2.5, which is historically really low. what do you think would, are we in a little bit of a different era, where what we think of as high interest rates and low interest rates from ten, 15, 20 years ago, that's no longer, we can't use that as a, to base things on? what would you consider to be high what would be high enough to handle inflation at this point,

sam? >> yeah, my best guess is that over four is the goal and the faster we get there the better >> it's still very low, though, right? >> still very low based on historical standards but i think that it could represent, you know, a huge increase in the cost, and remember, we've got something called funding the federal government, and the federal government has gotten shorter and shorter in its funding, and i think it's run the gamut in how short it can go. and so raising the short-term rates from where we are to four is going to -- >> it's not a real return, though we don't need to get a real return on fixed income ever again versus inflation >> i couldn't agree more we have to get a real return, and part of the problem i'm describing is the fact that the spread between the real return and the return being paid was 4%

and 5% that's unsustainable i think you can live with a 1% for a while, negative, you know, spread, where real interest rates are a point higher than, than the existing rates. but only for a while i mean, we got to get back up into the positive territory. >> sam, you said that you don't like the markets right now and in times of market dislocation like this, like we've seen recently, you know, the traditional theory is that cash is king you need money, you need to be able to pivot, you need to be able to move quickly, but when you're talking about higher than the cpi ratings, usually with high inflation, cash is trash, because it's worth less every week how do you come down on those two sides right now. is cashking? is it trash? or something in between. >> again, if the fed does what it says it's going to do, it's

going to reduce liquidity by 90 billion a month. that won't take long before we're dealing with a much, much less liquid environment and we're where cash in effect is going to become king in anticipation of that, i think everybody is putting much greater value on cash today than they did a year ago. >> sam, we always appreciate your time, it's really good to see you again. >> my pleasure i look forward to being in studio some day soon. >> we look forward to that, too. we'll see you soon coming up, we'll get you ready for today's big fed decision would a 75% basis point hike be enough to calm inflation worries? lkdy shelton will join us to ta it over stay tuned you're watching "squawk box" on cnbc

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welcome back to "squawk box. rick santelli here with wide breaking news from cme hq. empire manufacturing, minus 1.2. that follows 11.6, which was negative that was a huge, huge drop we were expecting a positive number retail sales for may, down .3 of 1% and a negative revision from .9 to only up .7 in the rear view

mirror the first minus number since december of last year when it was minus 1.6. if you strip out autos it moves up to .5 and if we look at autos, if we look at the control number it was unchanged versus 1% last month that got halved only up .5 of 1%. import prices are .6 of 1% the high watermark was 2.9 in march, a ten-year high if we look at ex-petroleum on import prices, year-over-year, 11.7 the high watermark recently was up 13% in march of 2022.

let's go to ex-fport prices mon over month up 2.8% the high watermark there up 4.1. and that was in march, the all-time high. best isn't the exact word i would use. export prices year-over-year, up 18.9%. that's the highest ever since recordkeeping in 1984. we see interest rates have come off a bit, but they have been literally literally on a tear. it makes me scratch my head. did they think extricating themselves from huge subsidies that kept interest rates negative was going to be easy and painless the southern economies and banks are holding gobs of securities whose values are dropping like rocks. back to you. >> what did you make of the letter to the oil companies?

is it just jaw bboning, rick or is it the beginning of something they might try to say in terms of wind fall profits or price controls anything's possible with these guys >> i keep this really simple we need the type of forward guidance that the fed use with regard to energy it needs to come from the top. needs to come from the president. heck with the letters. if he really is serious about helping what's going on with supply in a country that not long ago was trying to ban fossil fuels, who's kidding who here he should make a speech. he should go on live tv and look into the camera, forget the teleprompters, that he will do everything in his power to try to prime the energy system of fossil fuels to generate more supply, and he won't get a bit combative on the other side of this when things start to ease up because can he play all the games he wants but we all know what the real

forward guidance is from this administration into the energy complex. and there is no doubt about it, that it needs to change. the type of lip service we're getting going the other way doesn't ring true. >> all right, rick, steve liesman joins us now with more how do you handicap a shoft landing now, steve, do you think it's still possible? >> i think it's still possible you have to think the odds are lower now for a soft landing, and i think the fed thinks that getting away and setting the economy right, getting inflation under control with a modest or mild recession would probably be, i don't know if it's the base case over at the fed but probably a victory i want to take a quick stab at these retail sales, one is pretty definitive proof that people spending more on gasoline is hurting spending elsewhere. if you take out gasoline from

this calculation, you're down 0.7% another thing going on, no offense to my good friend phil, but he can't seem to get the auto industry straight here. we're down 3.5%. i was hoping he h'd get his actt the w together with the autos we do see, it looks like you look at a whole broad spectrum of things, things like furniture, building materials, those things are down. once you layer inflation on top of these thing, these will be negative as well starting to see some impact from the higher gasoline prices, and i think we're going to have downward revisions for second

quarter gdp at this point. >> all right, steve, thank sgr you new morning, president biden sending letters to the ceos of the major energy companies brian, what do you think >> there are seven letters, shell, bp, exxon, a few others long, oddly worded to be perfectly blunt with you odd capitalizations, a number of letters written to the ceos here talking about refining, profits. really, they're going after the industry that's gist of it. you're making what they consider record money we'll get to that in just a second why aren't you producing more oil kind of a thing. more to your point earlier in the show, more of a stick than a carrot number of points being made. now this follows, and maybe it's not an accident, a letter that was sent from the american petroleum institute to the white

house last night, kind of laying out a ten-point plan in their view about what they would like to see done. of course this is the oil industry's trade group the api speaking so they're speaking for the oil companies. some of their plan that they are recommending to the biden administration to help ease what they call the energy crisis, lift federal land restrictions fix the permitting process evaluate fcc climate controls to increase capitol flows and extend steel tariffs remember, becky, these tariffs are raising the price and availability of tubing to make wells and pipelines, et cetera calling for an emergency meeting put on by the department of energy in the next few days. we don't have a lot more on when that might happen. this is big oil versus biden and vice versa in a bigger way and by the way, i just want to say something. there's a lot of talk about

record profits and record earnings i think what the administration has talked about is what they call crack spreads which is the difference between a barrel of oil and the finished, refined product. by no means are these companies earning record amounts of money. i want to be extremely clear on this look at valero, one of the companies that had a letter sent to them. their quarterly earnings were far larger in 2015, 2019, and 2014 than they were last quarter. chevron had a quarter in 2000, what was it, 2011, it made 10.9 billion or whatever, made 7.9 billion last quarter nobody's saying the oil and gas companies aren't making any money, they are, and they're making a lot more than they used to, becky. but as far as quarterly income and earning, it's just not true. refining margins for some of these companies may be at records, but as far as record

earnings and operating income, the best years for the oil and gas industry was joe biden's third year as vice president in 2011 as you, i just showed you the numbers. they raked in money >> brian, the other thing, the idea of being able to immediately refine more. this is not an instant fix it's going to take some time, some spending. and some incentives to the spending to get more refining capacity back in this country. the letter itself, i read it, too. the letter from the president points out that they cut the refining capacity back in 2020 of course they did that's when there was no demand for any of these things. these aren't, you know. >> and i want to tie this in to a story, becomy, ky. >> let's bring in our next guest. judy shelton is a senior fell

lfellow just before we talked about the fed, judy, how about jawboning these price gougers in oil and across the board, the profit incentive might be causing quite a bit of this inflation. >> it was highly inappropriate for president biden to send those letters in my view it was wrongheaded and i think mean-spirited. because he's suggesting that the oil companies are profiteering and i think he is trying to and solve himself and his administration from his own policy mistake, than's reprehensible. >> in your view, and we do need to try to do something with inflation. we're going to talk about the fed and what we can do are there anynear term things t

we could do that don't take one, two, four years? we keep asking people who criticize the biden administration what they would do and nobody's got something that's going to bear fruit in the next three months, say >> i would underscore rick santelli's message, about giving forward guidance if you're in that industry and you are sensing that the administration is determined to squeeze you out and to make it impossible to engage in new explore air, that's discouraging i think it's very important that we emphasize the liquid natural gas part of the energy industry, because america is really good at that. and we could help out europe quite a bit. and all of that would be very important in terms of putting

russia in its place and helping to relieve some of these constraints. >> does the fed have a magic bullet, whether it's 50, 75 basis points what would you like to see what would be f nothing's perfect, what would be the best thing out of some bad choices? >> well, i see the 50 basis points versus 75 or 100 as a parlor game, and i give your steve liesman great credit for making that the hot question at the last press conference following the fomc meeting but to me, it's kind of appalling that a slip of the tongue, that fed chairman jerome powell say we're not looking at 75 basis points, just 50 this could be the news of the day as the fate of the global economy hangs on that.

and we get into these labels of a hawk versus a dove in terms of the stance of the federal reserve officials. i think for the real economy, what's more important is to try to analyze how exactly will higher interest rates help to bring about increased supplies of goods and services. i think we're just accepting that the fed says we can't do anything about supply, so we're going to kill demand, and now it's a matter of daring them to go as high as possible i don't think it's clear at all, given that the fed doesn't carry out monetary operations the way it did in the volcker days what it will really do, that is the fed will be paying banks and money market funds more interest to keep the money locked up in depository accounts of the fed, doing nothing, not buying anything, so i guess that affects emand, but not

channeling into productive enterprise which is what we really need it's the small businesses who are going to pay the price for escalating interest rates. i think if we get out of this inflationary crisis it will be in spite of the fed. what we really want to do is reduce regulations, have better trade and energy policies and unleash the american economy it would like to grow. but right now we're going to hit it with one more obstacle, which is uncertainty about rates, except just the general sense of groo gloom, that it's only going to get worse. >> it just seem that is it doesn't make a lot of sense that if you're worried about things costing too much that you raise the cost of doing things inflation is already up. it slows growth. it could be recessionary, and then you combine inflation with higher interest rates, and the same people that a lot of the same people that are dealing with the higher inflation are now dealing, they want to expand

or increase production now they're dealing with, it just doesn't seem to make sense. tan and it all comes back to your notion that the fed is too intertwined with the real economy at this point. and it's happened over a period of years, and it's happened, what do they say, gradually and then suddenly. and there needs to be some rule-based accounting when we finally get out of this. is recession worse than inflation? if we're willing to bring down a sharp slow down, inflation must be worse it must be the lesser of two evils. >> this is the problem and the thinking that's a false tradeoff. i think we could see recession as well as inflation, because if raising interest rates is the only thing the fed can do, and that is not resolving the real

problem, which is not sufficient supply for the pent-up demand, then you're just punishing the economy for no reason. and what is worse is there's two kinds of kinds money now, money used in the real market and speculative money. when we see what the european central bank is doing, my fear is that 25 base point does matter in that world, because you have hundreds of billions of derivative instruments that are geared to these tiny changes in interest rates and that is where could you start to see things come undone. and then, of course, as in 2008, a global financial crisis ultimately punishes too. >> how high do you think we need to get we were talking to sam zell, he says we could be a point or two below in terms of real returns we are getting with interest rates versus real inflation.

you said in the past that rates might need to go above inflation. how high would we need to go and is it going to be too high to orchestrate a soft landing? >> well, in theory, and it's the framework that provides the theoretical backing or the fed's policies, if you're trying to contract the money supply, then the real interest rate has to go up, and so if you increase the nominal rate, but it's still lower than the inflation rate, then you're still in expansionary monetary policy mode so to get out in front of 8.6% >> okay. no one's talking about that. >> right in. >> no one's talking about anything close to that in fact they think we get to 4 or 4.5 so that's not, what does that mean quickly? we got to go >> i think it means the worst of

all worlds not resolving inflation. >> okay. stagflation. we've, it's a portman tu that we hoped we wouldn't be using again. coming up, jim cramer's first take on the trading day today. >> he'll be up hold for peyton. they'd huddle.... welcome to the peytonverse. such a visionary. game plan... you go. no, you go! and call audibles... double our investment in omaha! omaha! omaha! omaha! or you could use workday. omaha. the finance, hr and planning system used by over half of the fortune 500. for a be-agile-like-an-mvp world. workday. for a changing world.

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down to the new york stock exchange, paula creamer joins us now. rick said that -- >> jimmy -- that was spot on i thought that was spot on we really are -- i'm waiting for us to be the saudi arabia of coal what happened? sent a letter to these guys? first he blasts exxon. exxon is the only company that's adding refinery. he blasts them then he wants to talk about the

profits. i mean, okay, so let us build more pipelines, build more refineries i have to tell you, joe, they're an easy target, but they're not real i mean, you call it demagoguery, a little strong, but it's kind of -- doesn't really help the situation. how about that >> when rick said in a perfect world i wish that president biden would do what rick said to do, let's, you know -- not a -- it doesn't have to be a moon shot or anything like that, but let's really try to pull out all the stops and, you know, cut out the blame game, pointing here, pointing there, and let's just -- you guys do this for a living tell me what we need to do and i'll make it happen. that's never going to happen, jim. >> no. all the companies on your screen, that's what they wanted to do. they're willing to meet, carbon

capture, building pipelines, streamline, in return they'll produce more why would they produce more? they know the president doesn't want them to the president wants to go to saudi arabia i don't know, joe. when it gets cold, wear a swepter. go by a cardigan >> i wasn't trying to get deja vu but i was all over again. >> i had it a second after you did. jimmy carter >> you remember things did seem to improve very quickly. maybe because i was a stockbroker. it was 1981. we were at 800 next thing you know -- >> remember we were going to, like, bomb tehran. >> bomb, bomb, bomb. >> trying to get everybody out

in the helicopters we just felt horrible about everything then studdenly -- >> disaster in the desert. >> sun came up thanks, jim. see you in a couple minutes. with my hectic life, you'd think retirement would be the last thing on my mind. thankfully, voya provides comprehensive solutions, and shows me how to get the most out of my workplace benefits. voya helps me feel like i got it all under control. voya. well planned. well invested. well protected. ♪♪ making friends again, billy? i like to keep my enemies close. guys, excuse me. i didn't quite get that. i'm hard of hearing. ♪♪ oh hey, don't forget about the tense music too. would you say tense? i'd say suspenseful. aren't they the same thing? can we move on guys, please? alexa, turn on the subtitles. and dim the lights. ok, dimming the lights. new projects means new project managers. you need to hire.

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futures higher as we await the opening bell and the fed's decision jim paulson, you're pretty laid back how are you feeling this morning? >> well, i guess i was feeling worse still headed to a market, becky. i didn't think we'd get one, but here we are. you know, i think the biggest thing now is whether we'll have a recession or not, and i just don't see that for a number of reasons. i think the biggest one is just the quality of balance sheets and the corporations, households and the banking sector overall i think we have a midcycle slowdown, a rate iccup, and i see more evidence right now, becky, that inflation is peaking

than i've seen in the entire inflation cycle. core cpi, core ppi, core pc, all those have rolled over for the last two months in a row that's the first time that's happened the commodity prices, the only thing driving it is energy if you look at agriculture or industrial prices, they are flat to down now. wage inflation has clearly slowed so i think as the summer unfolds we're going to get more comfortable that inflation has peaked the wage structure is already high enough outside of what the fed has to do. and i think the market could have a pretty good lift yet in the second half. i could be wrong, and i'm nervous about it, but that's where i'm at >> i mean, that would be great news if inflation is peaking i think people have questions about that, especially when it comes to some of the core items like food and energy it's great news if you see the inflation having hit in some of those nondiscretionary items --

or some of the discretionary items, but it's the nondiscretionary items that have so many people concerned about things when will you be able to say, okay, this is it, you just have to wait for the next new prints to come? >> well, as i say, i'm fairly encouraged i know there's a lot of panic since friday that was mainly because of the headline number, 1% gain due to energy, but outside of that, the core cpi rolled over, the core ppi, core pc has rolled over you know, we've got, as i say, wage inflation in the last four months is 3.75%, which means the headline 5.2% number is coming down when i look back historically at the headline being at 8.6% with wages at 5.2%, generally when that happens, cpi comes down it follows the trend so i think there's a lot more data saying inflation has

already peaked, and now we've got rate structures, the 10-year, the 5-year, and the 2-year yields are above their average yield. i'm not sure they have to go a lot higher if they don't, then i think a fundamental -- stay the course >> thank you from your lips we're out of time today. join us tomorrow it's time for "squawk on the street." good wednesday morning welcome to "squawk on the street." i'm carl quintanilla with paula creamer and david faber live at post 9 of the new york stock exchange fed day, futures benefit from a small drop in yields especially after import prices ex fuel show the first decline since 2020 and retailers down decision day for the fed will it be 50 or a bigger rate