>> 200 points above 3,500. >> and then 4%, 10-year? we'll continue coverage with jim and carl and faber and everybody else looks like a tough session join us tomorrow the sun will come up that's about it. "squawk on the street" is next good thursday morning. welcome to "squawk on the street." i'm carl quintanilla with kjim cramer and david faber the bank of england and the swiss hike interest rates adding to brazil, taiwan, and the fed philly housing starts disappoint oil is back to $113. we begin with the post-federally reversal, futures pointing to a sharply lower open with rate-sensitive tech stocks leading the losses

>> bitcoin back above $20,000 but at late 2020 levels. elon musk is having a nice meeting today with twitter staff. he'll answer questions for the first too many as he looks to -- well, we'll see exactly what his plan is for that buyout. on track to erase that post-federally, this is what the fed chair said yesterday about how far the fed must go to successfully combat inflation. >> i think we'll know when we get there, really. honest li vly, you would have positive real rates and inflation coming down by then, positive real rates across the curve. i think the neutral rate is pretty low these days, so i would think it would, but you know what, we're going to find that out empirically we're not going to be completely model driven about this. we're going to be looking at this, keeping our eyes open and reacting to incoming data on financial conditions and what's

happening in the economy >> one of the more interesting points he made, jim, that headline is what consumers feel and that's leading a lot of people to say oil is the key nat gas in europe explains a lot. >> it's a function of the freeport facility that david talked about yesterday looks like a longer outage >> end of the year potentially, for some, not all. >> right i think a lot of us puzzle over the following. how could there be such voracious, furious buying and beginning at 4:00 a.m., remarkable unwind. what happened? who was wrong? were the buyers wrong or the sellers? i come back and say there were a lot of people who were instantly saying, you know what, he means business, 75, and then a second thought people said if we parse it, he says maybe 50 he never said what you really

want which is, look, i will favor jobless, favor unemployment over inflation. i want people to stop being able to job hop, stop being able to get raises and get laid off. jerome powell is not that kind of guy so that's a hard thing for him to say what i see when he speaks is it troubles him to say what he has to do, which is favor capital over labor it troubles him. i think what a lot of people are thinking about is he can no longer be troubled he has to say, i have to go all in, people get fired, layoffs, and that will do it until we get some sort of resolution food, oil, and supply chain. he was unwilling except for right at the end when he said a young couple should be more concerned. he's got to bite the bullet. >> the median year-end dot plot has gone from 1-9 to 3.4 they've gotten more aggressive >> that's what i thought and why

i thought people bought. there are too many people who feel the heck with it, let's go volker i'm looking for a '94 scenario, le rate hikes and it works, three to six and it works. david, i think there are a lot of people this morning who have remorse and saying, you know what, we have to sell tech that's a whole other issue we have to sell everything, bonds, stocks, because he's a failed fed chief i heard almost everyone this morning call him a failed fed chief. >> really? it's gone that far >> i think it has. >> there is this label being appended to his tenure >> i'm not buying that >> i know you're not i know you're not. things turned last night, right? >> yeah. >> it's been a story i've heard a couple times the swiss we pointed out raising rates. you know the swiss national bank owned $177 billion in u.s. stocks >> yeah?

>> yeah. including a lot of tech stocks >> oh, my god. they're like tiger global -- >> no. you know, they change their language on a potential currency intervention >> david, that's -- >> they drop the one-sided commitment to guard against currency depreciation. they've been focused on keeping the franc strong, but -- and we won't know, but there is a question as to whether or not the swiss national bank with about $177 billion in u.s. stock may now proceed to start to sell some to keep the swiss franc stronger >> holy cow. okay so, let's say that -- >> by the way, don't know, but i've heard it from three separate people this morning asking the question. >> what's interesting is the stocks that got hit the hardest between 4:00 a.m. and 5:00 a.m. f were faang and a couple semis. isn't that the most obvious? look at the ones -- you isolated the ones that are most visible

you're not selling carvana you didn't buy airbnb. >> a lot of apple. >> this is what they poown. it makes so much sense >> again, the idea would be that you're selling to make sure you keep the franc stronger. >> they sell whatever they have, right? >> i don't know. i'm not sure what's going on, jim. >> when i was watching the sell-off and i said to myself, okay, they're not selling walmart -- >> by the way, raising rates your currency is -- you're helping your currency. it's not clear to me exactly >> do they think they know what they're doing mrn than anybody else >> i don't know. >> i was puzzling over why these stocks, the most name brand visible stocks, intel, too, these were the name brand guys, and the rest of the market was not going down i'm trying to think, who is urn

l -- unloading? there's an aggressive seller in the market place, but i lacked anybody who could be that seller you may have answered the puzzle >> these are names that are somewhat leveraged to europe you have ubs cutting abunch of targets on snap, meta, microsoft, google, pins, and by cutting targets, they take goog from 3,600 to 2,650. >> but the price targets are still well above one of the things that is most disturbing to me is when people cut price targets they still keep their buys. we had jeffreys downgrade five chemical companies that has to happen we don't have capitulation if everyone is cutting price targets and saying buy they don't need to cut the price target and have people lower the stocks >> they do research lately is of little value, and i'm trying to be kind >> i like that pretty good. >> yeah. what i also noticed in the last

24 hours, carl, is people are talking about a deeper recession. suddenly it went from are we going to have a recession and half the people are talking about it could be really bad i don't know >> retail sales miss and in real terms down more than 1%. you have the atlanta fed look at zero growth this quarter scott minor said you take consumption and maybe we're already there right now. >> you can't solve the supply problem. jerome powell is not going to be a refinery you can stop the demand. you can cause layoffs. he said that this is where david is going to the hate me but i'm going with it anyway. >> go with it. >> a company called dutch bros >> the annihilator >> just listen >> i'm listening >> 4,000 stores. they have materials but materials are coming down. >> okay. >> job hop people say, listen, i get this job, then i get that job

wage inflation that's what powell is targeting is wage inflation, but he doesn't have the guts to just say it he doesn't want to be a bad guy. he doesn't i said he was george bailey. >> wage inflation. >> it's running 3.5% below cpi in '74, it was 4% higher than cpi. it's not a wage-driven spiral. >> what else does he have to do? he has to cut demand he can't create supply supply is ukraine and russia and china. so he has to impact demand he has to hurt us, and he doesn't want to hurt us. i guess what i'm saying is he's too nice a guy he's jimmy stewart >> is he arthur burns? >> god, no he's smart >> he may be mr. burns >> yeah. >> that's what we need >> that guy is ruthless,

mr. burns. >> if he's watching, and he's busy, he's not watching, but he should be saying, look, i'm not going to the say stuff like 75 but then that's probably not the norm just say listen, malcolm x whatever it takes. just say it. >> it's necessary. >> why doesn't he say like draghi did draghi solved the problem when he said any means necessary. why can't powell say that? why? >> he's got a lot of different things pulling at him. gun lock i think sort of wrapped it up in a fairly effective way talking about his view i always like listen to jeffrey. do we have that in terms of the contradictory things he did say? >> contradictory >> take a listen >> the swiss so smart, david >> jay said a lot of things that were seemingly contradictory because he was trying to attack

things from different angles he really i think learned his lesson from may where he kind of spent some of his credibility by promising those 75 and doing a 75 and deciding on it apparently just days before so, what i took from jay's comments really is he's become a very short termist data dependent we're looking at everything all the time >> that doesn't sound so bad to me >> please all, please none two weeks ago if he said 75, you'd say, oh, my god, it must be worse than we think jay ate crow carl, what is he supposed to say? i was wrong about the cpi so i'm going 300 basis points now then the stock market goes down 25%. he doesn't care about the stock market he's trying to solve inflation and the stock market is just a by product, collateral damage. is that what people want he can't take it to 300 in one

session. but he has to take the 300 so he's trying to do it a little more judiciously >> what if the ukraine dynamic completely reverses? then what? 100 basis points the next time a lot to balance >> not an easy job but he's got a low bar now everyone thinks he's an idiot. david, listen to me, one after another. they're very guarded i'm not. when someone says i don't know what the mistake was, he hasn't really explained it. that says between you and me, what a bozo he is. can we speak truth right? >> we do we do. >> you hear the conversations. >> yes nobody ever says he's a clown. >> first of all, that's all wrong. he got data on that front. look, we were on some path, materials prices were coming down >> it will start soon enough

we all know that. >> there isn't a person in the world including himself -- he came out and said, look, i screwed up >> at what point does it start to be too late look at empire, philly today >> never too late. >> housing starts. retail sales the samsung cutting some supplier deliveries reportedly in half this month >> intel too i mean, look, i just think that what -- we have a very bad time, let's admit it's a very bad time we have a central bank that was behind we have lots of stockings way too high >> continued inflation and no growth, right? >> but greenspan took rates from 3% to 6% in, what, 13 months and then the market took off right? it took off. >> i took a look at the swiss national bank, their largest holding is apple they own $12 billion worth of apple at the end of the first quarter. >> what are they using for --

>> apple, microsoft, amazon, tesla, and alphabet. >> oh, my god. >> and meta and nvidia those are their first top seven. >> i watched that tape closely that's exactly what they were selling this morning at 4:00 a.m. it's the swiss panicking >> yep so they got rid of their view they would only intervene in a one-sided way so the currency was fairly valued an they were open to selling. we don't know. >> those were the stocks that were getting hit >> right >> they're crushing qualcomm >> i don't know if they own any qualcomm >> they weren't selling -- david has the sell program list. >> there it is, qualcomm, but not a lot. only $740 million. >> i like how david sees this because when you see that level of panic selling, that says i'm not waiting for the buybacks

most of these companies have big buybacks i'm going to get out because it's my time, it's 4:00 a.m. in new york heck with that i'm selling. >> if the market doesn't rally after europe's close today, what happens? what do we think then? >> we think we're joining in the sell-off that would be very negative because not that it's david's thesis, which is a good one. can i call it your thesis? >> of a number of market participants the swiss national bank saying that they got rid of their view they would only intervene in a one-sided way so they're willing to step in and try to strengthen the currency to do that, you have to sell to buy. sell your stocks >> before 4:30, up or flat other than cap do they own any walmart? no how about a dollar store i'm saying the puzzle is about

4:30 to 5:30, why would you sell those and not the rest of the dow? i kept thinking it has to be more tired, global, carvana, but i'm saying it wasn't it was the big-cap names who does that much selling between 4:00 to 5:30 some guy really drunk on a bender or the swiss? >> who knows i cannot confirm that. >> it's your thesis. let's call the swiss i'll text them >> the ubs cut its rating on all tech stocks this morning >> tech games are highly levers to rates >> to sell at those hours when you know they're all buybacks is either panic or to be the swiss. >> i'm speculating it but you're going with it. >> people who would sell that aggressively between 4:00 and 5:30 when there weren't a lot of -- we had some ubs cuts but i can give you a apple positive

piece and google what david is saying is he's found a potential source of selling that will not confirm. it's possible they'll sell to a level -- >> we'll see what happens after lunch. when we come back, we'll talk some crypto, hear what gun lock said about 12k, how low it could go interesting calls on boeing, warner brothers, aco, dollar general. inner voice (furniture maker): i'm rubbing the arms of my chair... ...admiring the craft and detail i've put into it. that way i try to convince myself that i'm in control of the business side of my business. intuit quickbooks makes it easy for you to get a complete view of your business. so you can sit back and... ...relax. ♪ ♪ bonnie boon i'm calling you out. everybody be cool, alright? we've got bonnie right here on a video call. we don't take kindly to video calls. oh, in that case just tap to send a message. we don't take kindly to messages neither. in that case how 'bout a ringcentral phone call. we don't take kindly to no... would you can it eugene! let's just hear her out.

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can help you build the future you imagine. we get to stand for the "mad dash." less than eight minutes before the start of trading back to the home builders. >> we were talking it's a harder than people realize what jerome powell's job

is we can second guess jay powell all we want. some people want him fired or to resign we have to recognize his job is hard now, i want to go -- i gave you early dutch bros >> you did >> now we're going to do toll bros >> okay. >> $900,000 -- can i do that dutch v toll so what you have here is that this morning ubs, they slashed everything, really negative there. >> queyes. >> not slashing themselves they take toll down from 74 to 59 but keep a buy. look where it is this is the problem writ large what does that do? i mean, why not take it to 30 if you think it's bad now it's already down 40% for the year >> right. >> so at what point do you say, well, we're further along in the rate cycle or do you say, you know what, nobody's ever

bottomed this early in a rate cycle? >> i know. sort of to the give the analysts, i rarely do this, a little bit of tourouble it's not easy. we had a couple that were curious to say the least >> right if you're going to cut, take toll from 74 to 3 and go from buy to hold? get ahead of the darn thing. >> meanwhile, what do you think? >> toll is down 40%, sells for four times earnings. cut the earnings in half it sells for eight times earnings i would buy it because it will yield 3.5. it has a decent yield right now. bought back a huge amount of stock in the last few years. 30% of their buys are with cash. i'm not that concerned about the fact that mortgage rates go to 6.2%, but tested so i would buy toll at 37. >> i got nothing to say about that all right. except that an opening bell is coming up. and you can catch us anytime,

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keep your eye on shares of boeing today citi names it a high-risk buy with a $209 fair value they see 70% upside if they can resolve the 777 and the max. they also say if those things don't work out, $84. >> i like airbus what bothered me at boeing, i sold some for the charitable trust, we first br told about the 777 that we heard was wiring problem. and here it is now, it's still not solved that china order, you have it clear about the balance sheet. what bothered me about boeing was the balance sheet. there are very few companies with as weak a balance sheet >> took on a lot of debt the

beginning of the pandemic. we always pointed to that. then a turning point >> what was it 26? >> that was negotiated >> but they still have the debt. >> i think they thought they could do the debt deal, the equity deal. when i was talking about dutch bros, i said, guys, do an quit offer. you have enough money in the bank i'm not seeing the equity offerings i would be doing if things are as dire as people are forecasting. most of the companies i know, david costin, who i hope to see this afternoon, is saying that the buybacks are the biggest but if you're a crotcfo and you don't have a lot of money, this is your chance >> to you do that when you have to, not when it's a necessity, not a luxury

[ applause ]. >> you don't want to do it in advance of with when you need it >> they don't. they don't [ bell ] citi celebrating its 200th year anniversary and pride month. you mentioned buybacks, jim. today cigna, another $3.5 billion. >> i know. it shows you how much a fun it was almost bankrupt. cigna is doing incredibly well what's interesting, look at -- look at a stock like mosaic.

we need fertilizer in order to be able to have food the conundrum is all these are puzzles, carl. why is a company that is so needed to be able to make it so we have the food in what could be a famine situation sell at three times earnings that says get me out of everything a lot of the selling is get me out of this class. i don't care whether they're doing well or badly, hence, david, again, come back to the unnamed sellers. they didn't care whether the companies were doing well or badly, right >> not you're raising money to -- not just to defend your currency but potentially send it up higher. >> yes look, there's other ways to explain it you have a hedge fund that went bust but if that's the case, why didn't they sell -- >> it was out of europe. >> who was not able to sell at 3:00 p.m. yesterday?

who was not able to sell from 3:00 to 4:00 the people who invented the cuckoo clock. >> yes this is a theory -- i haven't put the call in to them. >> whole sale environment in europe right now german yield are highest prices up 775%. >> the russians are still cutting off nat gas. there's no solution for that the hope is the 2 mlb c f you can get to go over from freeport and that's gone. i have an idea name me somebody who's going -- >> well, elon musk is meeting with twitter staff and affirm his interest in buying it's one of the three names that are positive along with autozone and dollar general which morgan stanley says buy in the case of recession. >> you buy those in case of nuclear war. you keep your car until 1718 my dollar general, david, uh-uh.

>> uh-uh what? >> i have a dollar tree that's killer two nice cards for a dollar. >> you did >> i gave one to schadam scheft' daughter hallmark cards are like $7 >> by the way, we hear about what musk said to twitter and employees, that will be a story certainly as we continue to follow the fate of that $44 billion buy. he's agreed to it -- far below where the current sock is. >> the ceo of twitter. >> what does he do does he stand to the left of elon musk as he's attacked by elon >> yeah. >> for that 2012 paper that was -- >> he's having this conversation with twitter employees potentially going to explain his thoughts about what he plans to d with the company

>> is he a capitalist? henry ford who are you? >> i'm not thinking about prague i'm tie vhinking about what migt happen to twitter stock today. musk says don't worry about the stuff i've been saying about the bots and you guys are in breach. he says, oh, yeah, the stock is going to go up a lot the other way, i want to buy it, but i don't know not at this price. he's not going to tasay either e of those things. i have no idea what he'll say. he's elon musk, nothing if not unpredictable. >> what did michelangelo say to, i don't know, his backers? >> are you equating him with michelangelo >> yes because da vinci i'm running out of icons >> got it. >> thank you >> we'll watch twitter shares again. by the way, the time is getting

xregszed e depressed now. as i've said many times if this continue tond pattern it was, you think you'd end up in court. maybe he changes the dynamic entirely today with his conversation >> anyone think of buying right now, buying things only two stocks that are up. >> what's a buy? >> wouldn't you see if stocks are down, maybe you should buy some >> he had his -- >> we're not at the -- >> we're not there i meant 9 to 1 >> by the way, losing $30,000 on the dow has not happened since january of '21 the dow jones industrial average below 30k. >> we're headed toward, what, the pandemic no i'll give david list of stocks that are just punching bags. you ready? doordash airbnb >> yes >> paypal. >> yes. >> carvana >> yes >> affirm.

way wayfair. shop guy roblox roku and block. those are just pinatas >> that's thrown out with the trash every single morning >> every morning it doesn't matter. >> on the curb for days before being picked up. >> the ceo of carvana buys 1.99 million shares and he's up >> the father of the ceo, right? >> it says ceo i'm just saying i'm looking at the stocks that are just down every single day >> jim, on technology, i think it's an opportunity, to talk about one of the largest buyout firms in the world of technology companies, toma bravo and orlando bravo. >> great interview >> interesting interview from berlin with mr. bravo this morning. i want to contrast his comments

i think with deirdre bosa on tech check in terms of their approach and thoughts about high-growth technology companies. take a listen. >> i think there's more pain to come i do, because when those companies really start getting down to answering the investor question that you mentioned, the path to profitability, they're not going to love what they see. that requires a lot of cost reductions it requires a lot of pain. and it's difficult to execute in a public setting >> that was what he said this morning. what he said three weeks ago take a listen. you can contrast the comments heed that this morning with what he said a few weeks ago. >> for us in private equity as a buyer and operate tomorrow of software companies, this

environment of five times forward revenue is the buying opportunity of a lifetime. there have been cheaper times. the global financial crisis, we're buying companies at two times revenue. after the dotcom bust, it was one to two bup s but it's not like it was in the past >> things have changed dramatically in a couple weeks >> on one hand i'm completely right and on the other completely wrong john fortt-like. is that the same person? >> people have noted the change in tone from mr. bravo spent time talking about their price cut a week and a half ago, questions about sale point because of how negative a tony it has

so many clouds and where is the bottom and it's hard to call the bottom revenue multiples in a handful of weeks >> that's emotion, panic >> wow. >> you can't do that >> holding up very well. we have seen a couple leverage loans on deals priced significantly lower, meaning the banks that made the commitment are taking a bit of a hit. that is now entering into some of the conversation when it comes to what seemed to be a number of leveraged buyouts that were in line for potential deems. i have no updates, by the way, on kohl's. what does that mean? ncr i think continues to make progress

but, you know, financing is starting to become a bit more of an issue >> that could be one of the issues why the bank stocks, which are huge beneficiaries of this, somebody may think they'll have some criticized loans because the consumer is incredibly strong and the enterprise blooetdalance sheet y strong just got the huge gift from powell >> meanwhile, capital markets activity, trading has been quite strong >> we had ford yesterday saying they're beginning to see delinquencies tick up. people at the end of the credit spectrum no longer able to finance car, 90% done with credit bloomberg ran a piece on credit spreads arguably ending q.t. sooner than we think >> right >> look what's trading lower today. it's carnival where you're getting 10% money. >> royal caribbean >> yeah. >> i guess those were meme stocks that were kept afloat

because now things are better, but there's a realization that they have too much debt. i really do want to see what happens when europe closes i think initially obviously there's just such shock that you could have it free and then such panic at 9:30. >> let me throw this at you. this morning the jpmorgan desk says, yeah, pandemic low was 14 times, actually 14.7 times >> right >> you do 15 15 times 200, get u to 3k. is that possible >> i don't think that will happen, but i could see how some people would say that. a lot of smart people i talk to say that's exactly what will happen i think that's too drastic i think things are better in corporate america. but jay powell is targeting unemployment he's not targeting capital he's targeting labor i think these people don't understand that that's good for

companies. see, he's saying, listen, i want companies to pay people less i want people to lose their demd maybe we'll get control of inflation short term and maybe the russians will do something that's not horrible and maybe china starts realizing their science -- >> that's funny because the tape right now says zero covid in china likely to go into next year according to the state department officials >> that's very bad >> out would be bad. although jpmorgan yesterday as well, jim, growth rotation to asia will happen sooner than we think. they're looking for 75 growth in china in q3. >> impossible. you can't have a lockdown end and then -- speaking of contour brands yesterday, david. i'm getting granular now. >> yes, you are. >> china not that bad, which is pretty interesting that means, you know, you'll get kind of low single-digit

but high single-digit, it's not -- it's not possible that everything is bad. everything >> it's not. but rates keep going up. people talk about a recession, now a more deep one than diskugszed previously. we don't know the terminal rate on fed funds we think we do on this point but don't. >> fred funds? >> did i say fred? >> bam-bam >> bam-bam was right >> yeah. >> i really like that. >> yeah. >> i spend a lot of time thinking do you ever show that video on a day when everyone is getting hurt, and the answer is no, but there is a belief, i think, that it's preposterous that everything is going wrong everything that's just a highly unlikely scenario >> we do have kroger raising their guide. 385 to 395 >> i was thinking sara's home

team is kroger they had good numbers, 4.1 same-store sales, beat the number big i like this, david >> tell me. >> kroger will be the first turn because you have fresh news. jabil, they had a good quarter you need to say, jim, that is yesteryear, before jay powell became not harry potter but henry potter what sure enough, sara has rodney >> start to, i don't know, wonder if people -- people look at the ten-year and think maybe it's just time, give up. when are we going to put in a bottom, jim? how about that >> remember i told you it was july 13th? my daughter's birthday, the only reason i said that one i think not everything could be this bad i'm saying it's highly unusual

that every stock should be down. there are a lot of stocks that do better if you target unemployment >> so you're looking for labor-intensive companies, wage-intensive companies who will be ostensibly able to pay less. >> yes >> over time >> mcdonald's was up today at 4:30 mcdonald's was up nicely they're big winner in this scenario i'm not going to get in the way of this union pacific freight train. >> when do we start worrying about cross, you know, leverage here that actually is impactin something there, or personal balance sheets or people did things we're unaware of in terms of home equity loans it's not the financial crisis in any way. >> put money down. >> it still can impact demand. >> of course of course. yeah 30% of these purses are with cash, but those can go away.

you know, if you're targeting the consumer trying to get the job hoper, the person who is doing better and you're saying, listen, you're not going to do better, then, yes, kp homes should be down, toll brothers should be down i'm seeing selling pressure from stocks that would not normally be down because they have big buybacks, they're doing okay >> right >> i could make a scenario that says they're not doing that well i don't have that. i could say it can we just all admit that stock have gone down a lot >> yes at the present moment, in fact, the nasdaq is down 31-plus percent for the year >> is that the top >> s&p down 22.6% for the year >> right so say there's been some damage. >> there has been. is it fully reflective of the earnings potential of companies in a recession >> no. but i'm just saying that you conceivably, if you have two more 75s, you'll look at toll

brothers and say, you know what, that reflects the damage because there is a housing shortage, there is a demographic, many baby booms because of no, you're not -- >> the problem is cpi is such a lagging indicator that by the time they know it's working we'll have maybe overdone it that's the fear. we don't get pce until the end of the month >> but he has to stop inflation. he has to. he said that yesterday of course he back tracks maybe i'll do 50 i can give you a speech of what he should have said. should have gone in front of that press conference and said i'm not taking any questions i'm going to stop inflation by any means necessary. but no >> nice to think we may get to a point one day where things are normalized and we're not dealing with the zero bound all the time and we have interest rates we can remember from 20 years ago >> i think we need to do that.

>> you don't think it will happen mid-90s? 6%, 7% g interest plus? remember that thing? >> yes volker -- >> and by the way, the economy was doing pretty well. >> well, yeah. >> yeah. >> december 5th of 1980 -- >> i'm aware of what volker did. i'm talking about a normal period that -- unusual period we've had for the last -- >> we had 17 hikes that's pa lot of hikes in 2000 the greenspan/intebernanke fias. aig turned out with a lot of houses >> they sold a lot of insurance on -- they sold an enormous amount of -- some things that all went bad, yes. >> i'm saying that it does matter to me that corporate

balance sheets are much belttter corporate balance sheets of the cruise lines, theirs are not better >> no. >> i'm going to posit something because somebody better posit something. i'll posit okay i'm not positive but i'll posit. what should rally today, colgate, bristol-myers, clorox, merck, and pfizer. because if we go into recession, those companies do better, they'll be able to lay off people if they have to, but able to get employees for much less money, and that's what works that's what we should be looking at >> and those employees will come to the office. >> they will if they're told >> that could be a better thing. >> itch three friends who are sick right now it ice like they're dropping -- fortunately they've all been vaccinated >> none will end up in the hospital, so that's a good thing. >> do you know what humana said to me? >> i'm -- >> what? >> i'm talking about the fact

people will come back to the office if they have less leverage with their employers and employers want them back. >> that's empirical thinking broussard said it's not like the flu. >> yes >> the serious infection rate is lower than seasonal flu. >> that's why rate is less than flu. >> are we treating it as any different than -- >> well, not in china. cigna, you know, they announced a buyback in. >> $3.5 billion buyback. >> how much is that down guys, come on, don't sell a buyback. a $6 million repurchase, nobody cares about -- >> semis are really -- the picture is about cap ex cuts, if this news is true about halting inventories are that bloated

that you're telling your suppliers to stop? >> ford has been the one most hurt by semis shortages. >> i'm reading the downgrade of warner bros. discovery, obviously a name -- >> it was not -- >> thank you, guys move to a neutral rating you're absolutely right. it's very kind of neutral, exactly what you expect from that, not necessarily saying the stock is overvalued, but pointing out the direct-to-consumers strategy, the performance of that stock has not been good at all prior to the deal, since the deal they're 4 1/2 times levered, though jpmorgan for its part believes they will overachieve on the synergy guidance. >> doubts the company's ability to grow in aggregate.

>> you have a neutral rating, but you see eight bucks up on a $14 stock. what why would you have a buy the price target is 22, 8 bucks up on a $14 stocks >> a company that goals down five more points i don't know. >> that's why i find research maddening. sometimes it's worth reading i told you the swiss sell this, every name you know, we feel switzerland is a very beautiful country. >> there's no gum on the sidewalk one thing that's taken out yesterday's low is bitcoin we do have sound gunglach talking to the judge yesterday.

>> brought 30, it looked on a chart basis that 20 was going to happen really quickly, and it did. but the trend in crypto is careerly not positive. i mean, it topped out a long time ago i was with you in july last year, and bitcoin was up like at 60,000 or something. then it drops down to 30,000, it's going to break down rally back, it looks likes it's being liquidated i'm not bullish at 20,000 or 21,000 on bitcoin. i wouldn't be surprised at all if it went to 10,000. >> remember the beginning of that where the character says -- it's the second, but he says first thing we do, we kill all the speculators? actually lawyers, but that's another -- jamie sees this down

to 15,000. he needs a win >> that would be a win if it. >> the speculators are evil. well -- >> the speculators, these all the things michael as ha stop. he can't produce more wheat. >> i just bring everything back to jay powell. >> what do you want me to bring it back to. >> michael saylor, he's an evangelist for bitcoin, the ceo for microstrategy. they have 129,000 bitcoin, here's what he had to say yesterday -- >> that was a good interview >> he's still a believer. >> the time horizon is ten years. so the crossover point is four years. nobody's ever lost money visiting in bitcoin for four

years. if you want a surrogate for the book value of the bitcoin network, it would but the four-year simple moving average. that's about $21,685 bitcoin has only touched that point a couple times in its history, and those have always been great buying opportunities. bitcoin is on sale >> there you go. that means right now the price is below that. he didn't say he was necessarily buying, but he indicated it's a buying opportunity. >> waiting for the bitcoin buyback, i guess he's a neil diamond fan. >> i'm a believer. >> i saw bitcoin's face. >> he's a believer he saw her face. >> that's the line. that is about the value of

his analysis what people make fun of jay powell, you should make fun the that fella. >> i asked him a lot of -- every time there's still a lot of people who follow on twitter, certainly like to see the interviews. >> you'll have adobe to give us some more clues tonight? >> yeah. the company is doing well, but it doesn't matter. he's been an unbelievable ceo. adobe does a lot of internet commerce tabulations in this environment, he could beat the numbers, do a buyback, raise estimates, and that would happen is the type of the line would be down 2% >> they don't have any walmart, and it's up. >> that's what i told you. >> that's why i mentioned it. >> this is just a giant puzzle it's a giant puzzle for people at home.

that's what it is. we're trying to put the pieces together why is home depot down >> in addition to adobe, what do you got tonight? >> ferguson, nothing like having a solid hvac company from britain tell the truth. >> everything could turn on thousand he may know about the swiss not buying if he's a good hvac guy. i don't know david has the third man buyer. >> we'll put it to the test midday and see if we get a turn the for the time being, dow down 675, first trip below 30k in about a year and a half. i had no idea it was that easy to diversify my portfolio!

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morgan brennan is a maternity leave. we lose dow 30k since january last year. more central banks are hiking, and housing not that assuring, either tesla falling in early trading after the company increased prices on its u.s. models amid a jump in supply materials. check on the twitter, trying to hold on to gains thin there's warners brothers, citing a make roe environment that could impact spending. >> let's get to the broade

markets erasing yesterday's post-fed rally steve liesman is still washington, dr. cirque, he has more in the largest increase in interesting rates. >> taiwan raised today also, and brazil yet the european central bank, it could be next month form all of this follows the fed's massive 75 point hike, as we're in the process of a global easing of money. here's what powell said in july. >> clearly today's 75 basis points increase is an unusually large one. we done expect moves like this to be common it -- we will houns mares or

decision one keen develop is no longer thinking they could can solve the problem with a few modest tweaks. you can see it in the new forecast, 3.4% for this year, that's up from 1.9, that's meeting where the market was's the 2.8% in the march survey, then they have some cuts built in, they still they the long-run rate is still around 2.5% areas. steve stanley writing, the fed is attempting to grace reply stage manage what is in reality a panicked rush to easy money. the funds rate has been negative no most of the century

that's a full generation, guys. >> steve, a question for you the fed still things we'll see growth this year now everybody is talking about whether there's a shot at a soft landing, which looks like a more remote possibility if we get zero growth in q2, which is what they're predicting, after negative growth in q1, then qq3 and q4 have to be great what's realistic >> i think the kept sim in your question is realistic, sara. i think there's definite some yeses about the growth trajectory i know the fed is banks on the yesterday that we still have the momentum from the rebound of covid, and people as they move from goods to services, people coming out, that's the essence of the fed's belief in growth here

a lot of job open position powell thinking we can get rid of job openings, not necessarily jobs perhaps in the teblgd industry, perhaps some crypto workers may not be so gainfully employed. >> and mark zandy, who is here well to both of you gentlemen. can they pull oaf a soft landing? >> better than even. you talk about gdp, but you talk about jobs, there's a lot of growth, right? 500,000 on average over the past year, that's going to slow, but that's by design, and i would expect job growth monthly to get

down to $150 per month when you're creating that amount of jobs, that's not a recession. that's a soft landing. >> but if we see negative economic growth in a couple quarters, that's a recession. >> not necessarily the recession is a broad-based persist president decline in economic opportunity broad-based is the operative word if you're sitting on the official ash terse of recession, and you say i've got job growth and unemployment is -- how can you call it a recession. >> you can't have a recession with 3.6% under employment. >> more importantly the job creation the decline in gdp was trade that's is also going to be trade -- i think we'll get growth, but in terms of jobs, at the moment it feels pretty good. >> scott, does that distinct

matter to the market, which is another rough day on the dow, increasing talk on the street that it's going to be hard for the fed to do, a soft landing? >> well, i think it's certainly the discussion now i think there's the economic activity and the earnings responsibility to that, that many investors will focus on we know that historically economic activity will tend to lead earnings, let's call it by two quarters or so so any falloff on economic activity through the second half of the year may not be fully felt in terms of what your '22 earnings extra jects torrie is that we need to contend with. >> mark, if employment is not our biggest liability, is it housing? how worried about today's data and the notion that housing leads? >> i'm surprised about the housing numbers. i thought the single family

would hold up better, because we have a severe shortage of homes, but i think it's a gut reaction by builders, 6% mortgage rates, that's more than double, let's see how it plays out maybe they're pausing here a bit, but i expect home building -- here, the most interest rate-sensitive economy is housing, right? we have tos weaker activity. i think this is by design. we need housing to weaken. by the way, i don't mean to sound pollyanna-ish. i don't think we should talk ourselves into a recession, and at the end of the day recession is a loss of faith and business people say, my gosh, i can't sell what i'm producing. that's a loss of faith, and we

don't need to talk yourselves into this. >> it's interesting. there was a poll -- b of a had a surveying, what needs to happening for the fed to blink s&p 3500 or oil below 90, what is most likely right now >> i think you hear that oil is going to go down that path, as we move through the tail end of spring into summer i think the energy price area is where you want to go immediately as a lead indicator of where the inflation trend can go, but i would probably focus more on that again, what i would probably fall back on here, in terms of the broader discussion is our view has been that the 3650 level would account for a mild recession condition, and we're kind of flirting with in a level as we speak. the question becomes one of the market pricing, somewhat akin to

a recession, but as mark points out, the odds are not 100% at this point the question becomes, how do you n navigate here? >> can i jump in the key is oil prices. the reason we're in this mess is oil prices -- and you can connect the dots back to the european union's decision to sanction oil, which i get the sentiment. i understand, but that sent it from 95 to 120, 125. so we've got to get the oil prices down. that's the key here. if we are lucky and get some supplies from saudi, uae and frackers, we'll be able to navigate through. >> that's a by if. >> there's a lot of ifs. >> we have inflation before. >> oil prices were headed south.

we were below $70 a barrel before it came on the radar. my guess is -- who knows the counter-factual, but my counter-factual would be, if russia had not happened, we wouldn't be talking about inflation. >> significant reduction of gdp will have an effect, too. >> exactly scott, i'm looking at my screen, there's nothing green. what has the most allure you've got to go out and talk to whoever it is you talk to and tell them what to buy. what are you telling them today? >> what we're suggesting, as i said, the issue is, okay market level files like we're pricing in manage akin to recession. what do you do between here and there? we're suggesting leading with a bit more of a defensive approach, which is a way of staying in the market, but not

certainly overly aggressive. health care becomes a sector to us that looks attractive here. also overweight on industrials, but the bias is there on the service side, we're overweight financials, but they're underweight banks will be like diversified financials and insurance, and we main a materials overweight as a knock-on effect from higher oil prices and ongoing traction in the underlying production side we think there are weighing you can position on a relative basis to do well on this uncertainly time i think where we're backing off a business is the more classically economically sensitive exposed. an example there is we move to an under weight, those areas that are going to be a bit more directly negatively impacted by the rising rate circumstance that many consumers will now be

facing. >> it's safe haven in activitier and procter & gamble today, the only two green spots today that was a shocking move overnight with the swiss national bank. they the bank of japan is out on friday this is a currency that's also been devalued in a crazy way, double digits. we're starting to get into moves in bonds and currencies where people think back to crisis, bailouts, that sort of thing is that on your radar at this point? >> there's certainly a lot of stress out there if the u.s. economy is close to recession, that many parts of the world will be in recession i week surprised if europe, uk another example -- correct me if i'm wrong, i think the bank of england is forecasting to

recession. >> they're closer to admitting it, but they hiked 25 basis points today. >> you're right. the global situation is more tenuous. if it's only the prism of the united states of america and our economy, we are very much driven by the american consumer the consumer is sitting pretty. >> are they? >> yes, they are unemployment is low, job creation is strong, there's a report number of unfill job positions. people locked in the low interest rates most importantly there's 2.6 trillion in excess savings out there. i just did a calculation across the income distribution, even folks in the bottom of the distribution has some saves. that won't last forever. we need oil prices down, and moderation by the end of the year >> the counter would be revolving credit making new highs, personal savings as a

percentage of income hitting lows. >> okay. look at the data all bank credit card outstandic, all retail card outstanding, it's less than a trillion. it was higher before the pandemic so it's coming back, of course, and the other thing is considering the inflation. you're talking about a nominal number in i'm using my card to buy gas, obviously, or the other thing is is a shift of spending i'm traveling on a plane, i'm using my card, right there's no information in that credit card data. >> there you go. >> but there's a lot of risk here, but i'm getting a little annoyed at the hand wringing and the angst. there's a lot going on in the economy. we just need a a little bit of

luck, and then deft policy. >> i thought you said debt policy >> if i were king for the day, i wouldn't have raised 75 base points i thought 50 was plenty. all the fed has to do is slow growth and keep expectations down i think 50 was going to do it. this makes more sense in the context of what the fed told us yesterday. >> you and ester can hang out -- >> that is the most bizarre thing. i never would have thought in my wildest imagination, but i would of goo home, and it makes sense. >> mark zandi, thank you so much and scott chronert, thank you as well asset managers convening in berlin leslie picker has some highlights for us. >> reporter: hey, david.

i sat down with orlando bravo a short wile ago he's founder of thomo bravo. i asked if he thought the sector has bottomed. >> there's a potential big recession in front of us investors want profitability in software, which mainly does not exist and it's hard to call a bottom of revenue multiples. investors are trying to figure out if they race they stockses what is the bottom before these companies come in and get profitable >> so bravo reiterated his belief that growth at all costs is dead. the focus is on the bottom line, on profitability, yet he is still a bitcoin bull >> of course it's going to go through crashes, through issues, through regulatory issues, because it's so young, but people will figure it out, the industry will figure itself out.

bitcoin in particular. >> so are you still personally invested in it >> personally i am it happens every time i buy it, it goes down. >> we also spoke about twitter and his rumored involvement in musk's takeover. he said the firm did look at it, but decided because it's not enterprise software, they decided to pass on teaming up with musk on this one. however, he added, quote, musk will make this deal work guys you're short on time, and you didn't have a chance to talk about the price cut -- >> reporter: i did. >> i know. >> i did hear a different tony in him from just weeks ago. >> yeah, he definitely had this -- you could heard it from

the quote we just shared with you. he says there is a big recession in front of us not there may be or could be, there is a big recession right in front of us he said early on cnbc europe there's more pain for the tech sector out there you know this about the industry it's notoriously optimistic, especially the investors who tend to invest in silicon valley, invest in tech companies. also, extremely optimistic, so you hear that, one saying there's a big recession in front of the you, a change of then, but us unique, given the circumstances of the current environment. you're starting to hear more and more investors say thing like that. >> leslie, thank you so much in the meantime, may housing starts and building permits, much bigger declines than economists had expected. our diana olick has more on what's been happening with

housing? >> a big miss on both starts and permits, housing starts fell just over 14% month to month, down 3.5%. the street was looking for a 2% decline. if you break out single family, which is what we're watching, the builders are clearly worried about rising home rates. we saw that in the builders sentiment numbers. building permits, they felt 7% for the month, essentially flat overover year, but the lowest level since september of 2021. the biggest drop was in multifamily, but single family down 5.5%, all of this because affordability is getting whacked by rising mortgage rates the average on the 30-year fixed started the year over 3%, it's now over 6%. builders had said they were still seeing strong demand, with

pricing power, but just jet, john burns, a noted housing analysts, told us on our financial adviser series that builders are starting to drop prices that's obviously going to hit revenue going forward. there's a big supply of unfinished homes in the pipeline, which fed chair powell noted yesterday. he said the fed is watching home prices, quote, quite carefully back to you guys. >> that was my question, what is happening with prices and quite are they not coming down as these mortgage rates skyrocket i was also -- i spoke to the home de depot cfo, he said as l as people think they have good proo issing, they're not going to invest in it. >> when you talk about home prices, there's a difference between home prices declining,

and home price gains shrinking normally, historically that should be 4% to 6% in a balanced market do we see prices level off year over year, which would be healthy for the housing market that's what most are predicting. maybe flat for a year. now, do we see some local markets that have overheated perhaps in florida, phoenix, austin, texas, those really overheated markets do we see prices fall year over year that could take a lot, but homeowners are sitting on trillions of equity, because they have just seen their equity rise so quickly over the last three years. you know, it's the home buyers out there and potential sellers really watching the prices. >> i don't know if we've had a

implants to talk about redfin's comments earlier in the week, but the idea this is not going to last for months or quarters, but in their view, for years. >> that was a long blog, he said this will be years you know, i've known glen a long time he tends to be dramatic, but i have spoken to him on the phone after that, and he was not being overly dramatic. he said we see it in the numbers. we tent to go to open houses over weekend i was looking for one to go to, and they said, yeah, we canceled ours, because we don't expect anyone to show up. there's a lot of concern in the market glen did say we do expect to see the demand come back at the end of the summer into the fall, just as things settle down and the roll tilt in rates settle

down >> he mentioned that in the blog he mentioned the stock price as well >> and the layoffs a painful picture over at redfin by the way, it is notable today, with the two-year yield is lower, so we're going to keep an eye on that. meanwhile, bitcoin, still the lowest level, slipping 60%, some crypto bulls do see the drop-off as a chance to buy the during this period of time as michael saylor told us yesterday. he said it's all a matter of timing. >> if your time horizon is ten years, it looks like a risk-off store of asset the crossover point is four years. nobody has ever lost money investing in four years. if you have a surrogate for the book value it will be the four-year simple moving average, that's about $21,685

bitcoin has only touched that point a couple times in its history. those have always been great buying opportunities right, bitcoin is on sale. >> joining us this morning is jill hupper, also a partner in slow ventures. jill, good to have you back. good morning he kept coming back to this idea of a four-year horizon what percentages of bitcoin's constituency that's that kind of basis. >> it depends on whether you're talking about individuals or the money you're following the bigger, morse institutional money or the last few years in particular have does that kind of patience. we're talking capital money, which that explicitly a ten-year time horizon, and it's really

the retail consumers, who in drawdowns like this tend to hurt he's not quite right in the sense there were some consumers who got in above 20k, and of course we're testing that level now four years later >> do you think if in fact that marginal retail buyer is gone, what kind of cap does that put on price action over the next year or two? >> i think we're in a long drawdown period here i think we as an industry are going to have to take the stairs back up and climb out by building real utility. i think it's a healthy wash jute one doesn't want to as a builder, as an investor, in the long term, being in a market that's driven by short-therm price action, by speculation, by as let's be honest over the last

couple years you don't want to be building in a markety elon musk's comments on twitter will drive the trials action as dramatically you want it based on real fundamentals, real utility being built by the technology. i think that's the knowledge and also the opportunity for us building in the space now. >> jill, tell us what that looks like then, real building of utility, that staircase up what are some of the things we should measure on in terms of actually building it >> yeah, absolutely. i think there's a lot of potential that's been uncovered through this last run, whether it's use cases in it is nft, new forms of collaboration, whether it is some of the good things that came out of the defi run, and i think there's a lot of use

cases we have yesterday to see, the payment space where should bit coin was initially design for payments we have yesterday to see real adoption on that for cross-border payments, for payroll, b 2 b pavemyments those also building the infrastructure for these times of applications, those are the ones that will do well, where did, c. money is flocking to now, and i think those are all causes to be optimistic, again, for the long term. >> i have a more macro question related to just the price declines that we have seen in bitcoin and across the crypto space. a, whether there's a systemic risk, and b, we didn't have bitcoin in a big hiking cycle like this. i wonder what the transmission

mechanism is, how widely owned it is and whether it will start to impact consumer behavior and spending is there any way we can quantify that or look at that >> well, yeah, one of the beautiful things about this technology is that a lot of this data is widely available on chain, fully transparent it is possible to go in and get a sense for these things i haven't looked into the details of those constituents, but my sense of things is while, yes, i think another order of tens of millions of americans own some form of digital asset, i don't think this is where people are feeling the pain. i think they're feeling the pain at the pump with rising rents, with rising mortgage raites.

yes, this doesn't help, but this is not a major driver of consumer sentiment i think that would be talking about the tail wagging the dog here i think it's the other way around. >> finally, jill, after years and years of hearing bitcoin was a message, now we're hearing more a. that prices could rise if there is relief in interesting rates. >> yeah. this is indeed the great irony of this drawdown, right? for years we have all talked about bitcoin as having a fixed supply, being a hedge against inflation, and of course the way it's behaving right now is not at all the case. the reality is bitcoin has always teed the line of being, yes, it's a fixed-plus asset that may replace gold in people's portfolio, and being a

very high risk high beta technology, and it's certainly acting as the latter at the moment saylor made this point in the clip ahead of this you have to look out at a much longer-term time horizon for bitcoin to shed its status as this high beta/high risk tech asset before it grows into its promise, but i think it still does have as an inflation hedge. >> thanks, jill. we'll talk soon. jill gunter, thanks. >> thank you. a key concern is consumers' use or abuse of credit courtney reagan has more on the real story what's going on with consumer credit >> yeah, you know, sara, at

least so far consumer credit doesn't seem to be strained. at least not yesterday bank of america admits the overall consumer outloy is difficult to read. it in the first 28 days of may, but that's actually below 7% growth in april. both of those below the rate of inflation, so adjusted spending growth is actually falling further, bank of america notes that median checkeding and savings accounts remain above pre-pandemic levels, it's that households aren't used credit cards too fund higher bills. they're turning to buy now/pay later options a bit more, but they're not markedly increasing there, either. affirms active yours grew in the recent quarter, but cfo says delinquencies are just slightly

above 2019 now, many retailers, of course, offering their own credit programs that generate additional revenue when consumers carry a balance. macy's said, quote, bad debt levels in its portfolio were more subdued in the first quarter than the first quarter last year, and while it expects it will rise, the pace of the increase will likely be slow you than macy's had previously anticipated. the xrt is faring better than the 15% loss, which includes some of the largest credit card and buy now/pay later firms. right now it's too early to say for sure whether it's simply a return to pre-pandemic normalcy or, of course, shifting categories where we spend more on services now that we have stocked up a

all those goods. >> so many disruptions all at once wither about an hour into the trading session. stocks are in selloff mode today. we're reversing a -- the dow is down about 610 points, pretty broad today, s&p down 2.7% every sector is red right now, energy getting hit the hardest financials right at the bottom of the list, what is holding up best, consumer staples doing a little better. and it's the nasdaq, again, feeling the brunt of the pain, pretty much all red. apple, microsoft e. amazon, meta, tesla, those are all dragging the most. our dom chu looking at the names taking it on the chin. >> what you just told us about the levels, it's important to note these are lows for the years as well.

each one of those major indices had hit fresh lows toes from the record highs, we're down roughly 19% from the record highs there the s&p 500 is down roughly 24% from the record highs, so deeper into the so-called bear market territory that some traders like to look at, and we're talking 34% declines from the record high and the nasdaq compose et overall, just to give you the context of where we have come from as you look at the overall sector look we've been talking about, maybe no surprise, it's the economically sensitive ones that are doing the real, real laggings so far today. the energy, consumer discretionary, really the worst performers, and the consumer staples still down, but holding up the best. that we're looking at overall, it really has become some of the

nickly sensitive names, ones tied to whether we're spending more money karn van, norwegian, royal caribbean, consumer finance companies, courtney reagan just talk about that buy now/pay later. both companies tied very much to consumer lending credit cart issuers, down anywhere from 8% to 8.5%. at one point today there were only about four, five stocks in the entire s&p 500 that were actually green on the session. church and dwight, and p & gg are, and dollar general getting some help from themorgan stanley upgrade, basically saying they may benefit from -- and of course the technology

trade. within the s&p 500 and the nasdaq 100 overall, these are the names that are most heavily weighted apple, microsoft, alphabet, amazon and tesla, all the way up to 6%. as of last check, carl, with the overall nasdaq 100 trade, these stocks are now responsible for the -- just about 36 to 38% of the total decline in the nasdaq overall. they make up about 40% of the index. as you look at the technology trade, that's the real driver of things so far. apple may be seen as the bellwether for whether or not people want the appetite to dip their toes back in the market. back over to you, carl. >> a great summation, thanks, dominic. jeff gundlach predicted the

rate. >> by september that range will be 250 to 275. i don't know the difference to raising it to 3 now to raising it in two stapes inflationary is so high. the idea it's about to come down to anything close to 2% level is completely out of the cards if you look at the data right now. >> joining us, former atlanta fed president dennis lockhart. thank you for the time today. >> thank you, carl. >> one point that i know you would agree with is because we're in a bit of a news vacuum. we won't get pce for a few more weeks, then earnings, the lagging nature, you think 75 is likely next month? >> i do. i don't think they're going to have enough information to take their foot off the pedal, now that 75 has been established, i think they'll look at the situation over the next six

weeks and not learn enough about inflation and certainly not see in all likelihood enough evidence that inflation is declining to not following yesterday's move with another 75 >> how do they incorporate any other incremental information they may get from the market themselves testified credit spreads, financial conditions. >> well, certainly they're interested in financial conditions that was emphasized by chairman powell yesterday, so they will take that on board, but the primary focus of the committee, of monetary possible is the read side of the economy, and i -- i have often said that they probably will not react to market performance or market activities unless they see that it's really undermining their basic narrative.

>> i feel like, though, the talk today, dennis is the two-year is louder, so you're seeing flattening, there are increasing concerns about a recession so in that kind of environment, where the fed has followed the market signals, why would the fed do another 75? why wouldn't they go down to 50, because the data -- and they are data dependent, is showing that the economy is starting to slow. >> if you recall from the press conference yesterday, chairman powell said -- and i thought it was extremely helpful, they're looking for a series of month-over-month inflation readings that convince them they're making progress in bringing inflation down. between now and july they're not going to have a series by the september meeting, they will have three reports. the interval between the july meeting and the september meeting is longer than the

normal interval between meetings so they have a lot more information by september they're front loading the rate rises that they feel are necessary. it's clear they're headed to something like 325 to 350 as a range by year end, and the consensus around that strikes me as pretty strong i think the dots show that i just don't see why they would have reason to back off in july. >> well, if the economy is significantly weakening, and inflation maybe starts to come down, i'm not sure how much they can do clearly they can do a lot on demand and that the bring down inflation, but can't do anything about the war in ukraine, can't boost energy production, can't boost food supply, so it just feels like there's a lot of stubborn inflation they can't

fix. >> very fair point in other words, i made that point before, they was teal that can allege demand, but this is an inflation with multiple road causes, some of which are not addressable by monetary possible unless, the fed appropriately has taken responsibility for bringing the inflation rae do you, has to do what it can to some extent think may have to use their tools more aggressively, and i think that's what we saw yesterday in the policy >> finally, people love to focus on atlanta fed's gdp tracker yesterday that goose egg got a lot of eyebrows raised what kind of color would you add to that number >> yeah, i looked at it myself,

and it's a head scratcher from my point of view you know, everyone is saying, and i think retail sales to some extent show that, we still have strong demand in the economy, the consumer is still spending the underlying economy is pretty strong, all things considered, and yesterday we're in the third month now of the second quarter, and that's when gdp now tends to be most accurate, because it's just an accumulation of data that adds up as to a gdp figure. it's a head scratcher for me i would have to go back and study it more carefully. it's not an infallible indicator, often misses on the inventory question, but it is a conundrum, i have to say. >> well, we're going to find out its telling power in the weeks to come.

dennis, thank for your time. >> thank you sara, earlier you mentioned the swiss bank decision to raise rates. something that caught our attention, we mentioned extensively in the 9:00 hour, t the swiss banks owns u.s. stocks, and as well as raising rates, they adjusted their language on currency intervention that perhaps implicitly signaling that they might use foreign asset sales to further strengthen the swiss franc why is that important? because when you pull up the last 13-f for their ownership of stocks, those are the things you see. those are the biggest names on this they own some 12-plus billion dollars worth of apple

microsoft, amazon, 3.6 billion worth of alphabet, and on from there, meta, nvidia. it does not mean in fact this is selling that has been taking place, but people did note there was a changeover night certainly seemed to be out of europe in terms of the futures what would been relatively flat, if not up position from that. >> she dthey droppeded descripto the swiss franc being -- it had the biggest jump on this news today. >> i have to admit -- i tweeted this, i was unaware of their enormous holdings of u.s. storks, and how concentrated it was in tech. >> they own many, many names, but certainly the bulk of their assets are in some of the biggest names as you might

expect >> not a coincidence those are selling off the hardest today. >> may not no comment from the swiss national bank. we're going to take a quick break here down 788 now on the dow. tech is getting his hard the s&p down 3.3%. every sector is red. energy financials and industrials are the hardest hit. it's a cyclical sell-off we are seeing some buying, at least on the short end of bonds. we'll be right back here on "squawk on the street.

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you do a lot of commercial loans as well. so give us first of all a snapshot, are you seeing any impact of these higher rates so far? >> i think the k commercial construction as well. are you seeing impact of the higher rates in terms of your business >> i think the impact are psychological at this moment people are saying is this the right time to be doing my next project or what we're thinking about. i think a will the of our builder clients are considering what's the trend is the trend that rates will continue to g hio higher or aree going through a time period here yesterday was interesting. short rates went up 75 basis points mortgage rates went down i think the fed is doing what every one wanted it to do and

being a lot more scircumspective and what is the next project >> how does that impact the way you position your balance sheet? >> good thing about construction lending is it's a long term process. projects start many years before they come to fruition and take many years to complete we have a very conservative underwriting approach we don't give credit to those. we have been lending through the worst of times we probably increased our portfolio the largest back in 2008, 2009, believe it or not. that underwriting model has taken us through good times and bad. it's conservative and disciplined approach that doesn't mean our building clients aren't sitting back saying i don't think we're going to get a higher price a year from now or 18 months from now >> that's what they are saying now. >> that they're not.

>> what is the expectation in terms of prices falling? >> i don't know about falling but i think people are concerned about the rent inflation that you've seen if it's a multi-family project being built. the affordability of the next home will be able 8 or 9 or 10% higher i don't believe anyone is believing in that. we're believing the trend is flat >> diana said it would be a win if they got to 2%. >> flat is probably more realistic. >> what about inflation on their business in terms of what they are communicating to you all the materials and everything else and how that similar pacting costs at this point. >> that's a really interesting topic. that is forcing a change in the entire business model. we're seeing more people go to pre-fabricated type, not necessarily homes but panels and parts of home. it's really changed the dynamic of how housing is being built because the labor is not there the availability to get a lot of

materials now are being sourced locally as opposed to buying that great german faucet now we're bieg something here in the u.s. we can't get it from germany or a foreign country. it's changing how builders are thinking about the time line of being able to produce their product. >> there was some comments from the builders last week or two about average size coming in a little bit is it being completely offset by the cost of labor, for example >> i would say no. having lumber come down the way it has, i think it's sort of an indicator of what's going on in the market that was a typical story of something completely constrained by what happened during the pandemic yet the building trade was still moving at a very, very robust pace the lumber prices spiked and now we're seeing that same amount of demand by the way, there's an enormous

amount of demand in this country for housing. we're two to three million houses short of what we need for true replacement value that underpins be entire market. that's something we need to keep the mind sdp >> you also have a pretty good r read on small business you were the first to disburse the ppp loan >> our small business clients probably have never felt better than they do right now they have some of the best balance sheets they had. they have more liquidity than before manufacturing has orders going out as far as the eye can see. i think it's a good economy for most small businesses. however, they are all taking in this news, they are listening to what's going on and even though interest rates may not directly impact them or high gas prices

may not directly impact them, they are saying, wait a minute, maybe things will slow down here i need to be a bit more cautious which is what the fed wants to happen >> talk about a negative wealth effect people have money in stock market may not consider buying a new house with the s&p down 3.3% just today what's your sense and again, back to the idea of if you navigating smd like that in the past or if this is kind of new >> we needed this. we can't live in an environment where prices keep going up to the sky. where it costs $130 to fill up your car we cannot survive in this type of environment we needed a pull back. yes it's painful to watch it on the screen that's not really an indication of what's happening, i believe at business level. i think personal finance is better now thanst ever been before

they are doing a good job of jawboning and getting the economy to slow down i believe the market is going to react appropriately. i believe we will see lower rates before we see much, much more significantly higher rates. >> all right that's a good place to end and great snapshot thank you. >> you're welcome. the department of transportation calling for a meeting with airline ceo to limit travel disruptions this summer phil lebeau has the latest >> the meeting will take place this amfternoon it's a virtual meeting pete buttigieg will be meeting

with the ceos of major airlines. the goal and the reason for this meeting is to avoid some of the disruptions that we have seen certainly earlier this summer as well as last year when there was not enough staff and you had cancellations. in particular, i'm told that pete buttigieg wants to avoid what we saw during memory day weekend. overall, it was not as bad as last summer. there were issues with some airlines and the transportation secretary wants to make sure that doesn't happen again. all of this comes as a number of people who are flying, at least, so far in fist rst half of this month, 2.25 million per day. that's up 24% compared to the same time last year. we're not at the june 2019 levels air fare reality with so much happening with the economy, with inflation, people are saying who is buying tickets right now.

that's the first drop of the year high was 410 round trip from may, all of this, keep in mind, 18% higher than the same time last year not a good day for the airline stock. they're all under pressure not a surprise they've been under pressure for some time. the question that is starting to percolate within the industry is what type of demand, at least with domestic flights will we see once we get past the summer vacation season. remember, so many of these trips, guys, were booked back in april and march. people said, i'm going i got to get out i'm going to spend money i'm going to take a trip that's what we're seeing right now and in august. will we see the same level of demand in september and october? that remains to be seen. >> market is telling you there are doubts when will we get a look another whether this robust, crazy demand will continue >> i think we're starting to get

some indications the fact you see the average domestic air fare starting to tick lower, that tells you the airlines will be a little more prudent about their ticketing fares as well as their scheduling i would say by the time we hear from the airlines with their q2 financial report, we'll get a much better snapshot of what to expect in september and october. >> got it. thank you. airlines down a lot today. really anything tied to the economy especially transportation before we go, share out shares of kroger. the company beat expectations for the quarter. raised its full year guidance. not helping the stock though the stock is down 2% we have an exclusive interview with the chairman at 3:00 p.m. eastern. i asked jim cramer why kroger was down he said because it's a stock kroger has done really well during this inflationary environment where consumers are focused on the basic in a

recess recessionary environment maybe it wasn't enough to get it done i'll ask the two that key questions now. how is the consumer doing? are they slowing down? shifting to value, using more coupons and is inflation coming down at all especially on food, which has been painful >> see you then. most important trading hour of the day, 3:00 to 4:00. >> it's not just us saying that. it's like a volume thing >> we're already past time tech check starts now. good thursday morning. welcome to "tech check." stocks are lower especially tech apple, amazon, nvidia down 3%. plus t