good morning stock futures pointing to gains again, but are we in for another disappointing turn or something better we will show you what is moving. including nike and the banks crypto exchange ftx is downplaying the report it is considering buying robinhood we will show you the big pop from yesterday. scuttlebutt from the g7. emmanuel macron is talking about how to bring down oil prices and sending an opec message to president biden. we'll show you the odd hot mic moment on this tuesday, june 28th as "squawk box" begins right now. good morning

welcome to "squawk box" here on cnbc live from the nasdaq market site in times square. i'm rebecca quick. that's brian sullivan. joe is off andrew will join us later this morning. he has a big lineup with tpg capital jim coulter and eric schmidt. we will talk to jared bernstein and cathie wood and john williams that is coming up in the next three hours. we have a packed show this morning. let's look at the u.s. equities before we e get starte here in the green the dow futures up 162 points. s&p up 18. nasdaq up 45 brian, i heard you talking about this earlier we watched this play out yesterday. higher levels than right now and through the course of the session, giving it all back. that means we e are track for t

worst first half since i was born to before 1970 we are running out of days three more days left in the first half of the year, year to date, and we put it in the books. the dow is indicated up 168. nasdaq up 47 s&p up 18 points if you have been watching the treasury market, the 10-year treasury is 3.234. you are getting more pickup in the yields 30-year treasury at 3.345. brian. >> to your point, this is any pop and people sell it you know through history, the biggest runs of the market have come in bear market. we had huge rallies inside longer-term bear markets the biggest gains, trading gains, one day, three days, whatever it is, come inside

overall down markets every time we see that 10-year treasury move higher, becky, equities come down that is what we see. what is causing that move? i don't know yields were the same as two months ago as we talked about. every time it seems with the exception of last week -- one week in nine -- by the way, where it moved up, it didn't get sold it has been that kind of a market i'm not sure that's the kind of history mark you want to have. to your point in three days, june, the second quarter, the first half is over people will jump on it it. they will say politically worst first half to the year for the s&p 500 in 50 years. that is not the historical marker people want to have >> and it is not just yields it is any time energy goes back up that is a concern. that is the case overnight, too. >> yeah. i'm glad you brought it back to energy

oil prices are back on the rise after sliding for a few days it might be on the back of this. by the way, had this was yesterday later in the day at the g7 in germany. i'll show you the video and the sound. french president emmanuel macron rushing in and actually interrupting president biden with jake sullivan, the national security adviser, and macron jumping in all in front of reporters and cameras and hot microphones. maybe it wasn't an accident. macron saying the saudis and uae have little to no spare capacity to increase oil production watch and listen >> two things. one an , i'm at maximum and second, he told me according to us, the saudis can increase a little bit, but 150 or a little more they don't have the huge

capacities and it before six months' time. >> what macron was saying that the saudis can raise production 150,000 to 170,000 barrels a day. the head of the uae is who he referenced this was not an accident in my view, becky. you do not run -- you do not run in front of world cameras and within ear shot and say this macron has been on the tape saying he wants more iranian oil on the market and venezuelan oil on the market. he also may be providing political cover to president biden for next month's meeting with the saudis if not a lot happens or maybe macron is sending a message to president biden that the united states needs to raise output. becky, you and i know that these

things of things hot mics don't just happen. >> i watched the video, too, yesterday. if you played it out from earlier on, you saw jake sullivan walk over and say, okay, let's take this inside let's come out of this afterwards he came up in such a rush. i'm not convinced he saw the cameras. it did seem to me politically the message delivered from opec is forget about it you will not get much more for the next six months. that means after the november mid-term elections there is no relief coming before the midterms not from opec if you are looking for help right there >> by the way, opec's meeting is june -- june it is june, by the way i got that right it is on thursday in two days, becky. don't expect any change in the plan i was going back and forth with opec people after the scene.

they got a kick out of it the oddest thing is how the french president is running up to biden i agree with you i don't think biden knew that was going to happen. i don't think jake sullivan knew that was going to happen what is the french -- why is the french president the one delivering this message? that is the bigger question, becky, on all of this. we can ask helima croft. >> he has been in contact with them more than anybody the opec messenger the biden administration has not had a good relationship with the saudis that's why it is a big deal he is going there next month to ask on bend ed knee. these guys get used to cameras, but it is a surprise the microphones were as sensitive. it is not like macron was wearing a microphone when you are around cameras and used to seeing things at a distance

he did not cover his mouth to try to cover he leaned in i'm not 100% convinced that macron knew what was happening that was a video that i watched three or four times to get anything out of it the idea you have it is a rarity to get to capture something like that if not, try to figure out the original ad orchest orchestration. maybe we will get relief on gas prices it hasn't come through we spoke with jeff currie yesterday. why wti will not come down this was a short drop and you will not get relief. here we are at $111. you are right, with opec meeting this week, probably not huge

news to change things from that persp perspective. >> they are there in part to bring down the cost of oil and inflation maybe inadvertently pop in the near-term, becky. that is the whole thing. g7 not getting out of the way and not a lot of concrete action was accomplished at g7 they had a beautiful wood burning fireplace in that one room, becky. i heard it was hardwood and cherry and scent of the wood in the bavarian alps. not a lot happening. let's move on. robinhood shares jumped after the crypto exchange ftx was considering buying robinhood reports that ftx was discussing a takeover of robinhood internally, but not made an offer. that stock halted on that report briefly. later yesterday, ftx's ceo sam

bankman-freed denied the report. robinhood declined to comment. last month, bankman-freed took a 7% stake in robinhood. becky, read the story. bloomberg did not say there was an offer on the table. it said there was discussion bankman-freed may not downplay the report, but agreeing with it we are not in talks now, because the report did not suggest that, and he also did not say we're not talking at all about some day down the road. he owns 7.6% of the company. an as the world turns with crypto. >> anybody would be opportunistic given the chance market cap for robinhood is $6.62 billion as of the close.

yes, it may not be in the situation now, but if the opportunity knocks, you never know what would happen with something like that. >> robinhood i don't know how much cash they have on the books. a few billion. it may not be $6 billion somebody knows i'm sorry i don't off the top of my head. at some point, robinhood was trading lower than the value of the cash on the books. if that is the case. buy the company and shut it down >> the day is all over. >> becky, i'll buy $100 off you for $90. >> the stock is ten times higher than it is now that is the story we have been watching for a while there you go the other big story we have been watchin if you don't like the news, wait

a wday. jetblue increasing the offer to buy spirit this raises the reverse breakup fee to $400 million from $350 million if regulators don't approve the deal remember, spirit ceo ted christi said the board found the deal a superior option. shareholders are set to vote on thursday we had the ceo of frontier with us yesterday what i don't get my head is chasing each other and chasing the bid hiregher and higher. there has to be a point where it doesn't make sense not yet. either this was the steal of the

century or there are no more airlines to go around. it is more of a chase. huge question if the doj will allow either deal to go through. >> i don't know how many offers there have been. maybe somebody knows pecu becky, i can't recall this many offers and counteroffers in one deal by the way, it is for an airline heading into what many consider a consumer and possible travel recession. somebody is a lot smarter than i am i can't figure this one out either as well you do you, spirit. >> not wanting the last chair. it is musical chairs at this point. only so many seats to go around. not wanting the last chair to go where you get to the point i'll pay $1 billion or $1 gazillion it has to make sense in some shape. they are making that case.

whether or not any of this gets by the doj has to be the biggest question >> by the way, you said seats to go around. have you flown the discount airlines we will be standing up at some point or triple hammocks on submarines that's next. >> did you see the story in "the post" where they have triple or double decker seats. you slide in if you are somebody who is claust claustrophobic, there is no way you can get me into one of the seats. i'll retweet it. >> i got to see it no doubt it is coming. how many people can you fit on a 737? all right. coming up, futures right now, for now, like yesterday, pointing to gains. we will bring you investment ideas. and later on, a special interview with ark invest cathie wood that is coming up at 8:00 a.m.

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welcome back let's talk about nike. nike stock down 2.5% right now the company did say demand held up in the recent quarter despite the lockdown in china and tough

consumer environment in america. nike said higher transportation costs and longer shipping times, you know the story, continues to weigh on margins earnings per share beat es estimates. sales in north america down by 5% the stock is down 35% year to date let's stretch it out and talk about the macro markets and get stock picks from your next guest. as that animation says it is squawk picks heather joins us now great to have you back on cnbc i love your picks like caterpillar. i know you have google, too. all of these things we talked about for years and now dirty with the company that makes earth moving machinery what do you like about cat tracker? >> first, thanks for having me great to be back on the show

i just think cat is a really interesting idea it takes advantage of the underlining picks and shovels of the company. >> literally picks and shovels of the economy >> exactly >> the commodities market. on the one hand, higher commodities are good you have money to buy cat, but you have less money to spend after you had to buy the commodities. i do wan wonder with higher fuel costs how the balance of power, if you will, pricing power, plays out with cat it doesn't sound like you are worried, heather >> this is a good example of taking a longer term perspective can give you a different lens. if you think for the next five years, i'm not worried about commodities now. we are worried about the trends in the economy like deglobalization and decarbon

sagdecarboniz ae decarbonization. short-term commodity prices are not concerning >> okay. kind of following up on that if i buy a bunch of caterpillar tractors and ship from the east coast to the west coast. the cheapest is not by ship or truck or obviously plane, but rail it sounds like you think with higher fuel costs, that rail companies, like union pacific, unp, may be net beneficiaries because they are the least expensive way to move a lot of stuff a long way >> that's right. sticking with the picks and shovels theme. you are getting access to the underlining part of the economy that benefits whatever products or equipment or whatever needs to be shipped across the u.s i think union pacific is interesting. there is cyclicality in the business you can see firms like this get

under priced that is what we're seeing. >> i guess something about a train stock that's magic i referenced google earlier. you go from heavy machinery and trains to this i think harvard business school studies would say google has what they call in fancy educational terms a moat it is what they do there are some competitors, but i wonder if the moat is a mile wide and mile deep and nothing and nobody is getting across it. >> i can write a book on moats and competitive advantage overall. >> you did >> yes, i did. in 2019. >> i did not know this. >> it's called "why moats matter." >> i want viewers to know i had no idea. i want to read it now. i love moats mozart >> i think what you will find in

there and absolutely still holds true today is the network effect is the most powerful source of competitive advantage. that feels like an obvious thing to say today in 2014, there were few companies benefitting from a moat that came from the network effect google is a great example and alphabet is a great example. having a net cash balance sheet and continuing to grow and at least more than twice the rate of the overall economy the company that got pun p ishey the re-rating. >> throwing off so much cash even in an ad market that is probably tight especening. caterpillar and google and a book on moats and now the wordle word of the day.

moats. m-o-a-t-s. that's my first workd. >> me, too. >> moats is good you know what i start with >> do you do the same word every day? >> not every day a lot of times if you start with adou. you have story and o and y with those first two you get all of the vowels and y. >> i did lolly that wasn't a good first word. >> don't double the letters the first time >> triple. moats. >> that's good sometimes i use mouse or mouth >> irate >> i like that one

three vowels audio. three or four vowels again a few that you can knock out vowels early on. that's my way. when we come back, shanghai disney has been shutdown since march. a reopening is in sight. we have details on this next. as we head to break, check this out these are buy rated stocks from barclays the bank that expects to yield steady or growing dividends through next year. nustar and viper and sl green and medical properties trust and restaurant brands topping the list "squawk box" will be right back. >> announcer: squawk picks is sponsored by wisdom free the modern alpha pioneer.

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shanghai disney plans to reopen on thursday the park has been shutdown since march 2 1st because of the covid cases. resort started opening in areas a week later ticket sales resume tomorrow and capacity levels will be controlled the stock up 2.5%. in a related story, the g.o.a.t. stocks in china trading on news that china is easing quarantine requirements for international travelers. from 14 days to 7 days wynn macau and sands china and air whine are all higher. still seven-day lockdown is

something that might take people a little getting used to. >> i don't know if you caught it, becky. our rbi today on "worldwide exchange" was about the chinese stock market they had an incredible run indexes are up 13% in a couple of months. had they had 500 stocks up 50% off the lows in less than a year 100 stocks that were up more than 100%, aka, a double jim cramer says there is a bull market somewhere that's right it's a bull in china >> it bounced back from the horrible crash in march. the harder they fall, the better they build back up that is a wild ride. >> it is you know, watching eunice yoon's reports the last couple years, becky, i don't know if they effected you like me people talk about locked in from the outside.

what people don't understand, they they get quarantined, it is not like, hey, would you please go back to the apartment it is i'm going to take you to the apartment and lock the door from the outside you will not be able to leave until we say it is okay. i cannot imagine what many people have gone through on over there. let's hope it is over. let's hope that is over and they will open up and stocks reflect a more optimistic couple years it is bad here, but a lot worse there in what they he ave done >> for sure. we have a long way to go on tuesday. coming up, workplace sigpsycholy could the recession impact the return to office as we head to break, let's look at the winners and loser he is we started hot and ended down. futures are up on the dow. sckt of oil and gastos doing well yesterday we're back after this.

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good morning welcome back to "squawk box. 6:34 on the east coast dow futures are up 184 nasdaq up 58 points. we were here yesterday and the stocks came in and we ended lower. jpmorgan chase and citigroup decided to keep their dividends unchanged. citing strength capital requirement. it this news coming after all of the major banks passed the fed stress test last week. rival banks announced bumps. bank of america to 22 cents a share. morgan stanley raising to 77cents a share. wells fargo boosted by 20% at 30 cents a share.

goldman sachs raising 25% to 50 cents a share. jpmorgan chase and citigroup, becky, are not >> not you have to be worried about what is happening with capital requirement levels and what you keep around especially worried about a coming recession recession fears are rising with the high inflation you have to wonder what it means for the labor force and return to work. let's bring in the harvard business school professor and author of "remote work revolution." tom was going to be with us. we can't find him at the moment. i'll play the role of tom this morning in the back and forth debate i think had this is a situation and i would agree to some extent that workers are more likely to come back in if they are worried they will get laid off you want to be there and get face time. maybe you are less likely to get fired. would you agree? >> it is interesting because to

tie work arrangements and flexibility to macroeconomics or fears of recession is a dangerous game to play the hope is companies are not pressuring people. for people to seek more face time and seek more opportunities and seek more development is not a bad idea it is really important to understand and take a long view when it comes to return to the office versus return to work work hasn't stopped. hybrid work is still work. remote work is still work. >> i get this from a lot of places i know people who are firmly established in careers and feel like i'm never going back and i don't have to. i figured it out i'm working well from home my guess is there are people less developed in careers and people looking for upward mobility and looking for

connections and important to be in the workplace i can understand ceos or heads of companies i need the face time because i'm trying to figure out how to identify who the big performers are. it is not easy to do especially with little face time in the last two or three years. that adds up what i'm shobcked by all of lif is back to normal except for work what gives >> you are absolutely right. when we look at survey data, those who are entering the work force or early in the careers do want in-office work and face time with others to build networks and learn, et cetera. that is absolutely true. that is only about 14% of most employee populations it is a small number on the other hand, the idea that

work has stopped because of not being able to work in the office with others is just not true we've entered a new world of work where employee expectation is about hybrid work employees have proven to be productive and constructive and connect with clients and stake holders by still working from home so, this is the new world of work had thi this is the new world of work. to push people back into the office -- what i hear all the time is the question why am i here i can do this and stare at the screen all day at home why am i here? the office has to be used as a tool for specific purposes and uses for leaders, it is time to embrace the reality.

re we're two plus years beyond covid. >> workers set the guide line. that changes from the take the job and shove it market for the last two years to the position of the corporate overlords are back and i pick and choose the 10 people on the team out of the 20 of you. you better sidle up to the boss if you want to come back and stay if you watched us for decades, that is how it happens workers have the upper hand and the business has the upper hand. right now, it has been p the workers paradise i don't see that sticking in a recessionary environment. >> we need to see what workers companies are going after. if we look at the way the economy heis moving. the digital economy. the same workers that companies are fighting to attract and retain will be difficult to

attract and retain do you want people who will acquiesce and come into the office with buttss in seats or give access to you have to understand they want the flexibility and get it so we have to compete for them >> sidah, thank you. a little contentious we will bring tom back next time sorry for the cross messaging there. thank you for your time. >> good to see you, becky. >> take care all right. coming up, this is the big one for becky. berkshire hathaway buying more occidental warren buffett buying more and betting on on a bankrupt

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warren buffett showing more love for occidental petroleum. it raises its stake to 16.4% occidental shares doubled this year as oil prices soar. i think you made the point last hour, brian. buffett is buying at higher levels than where he started he bought at the dip before things took off in march he started buying there and bought a chunk of it if you look at what has happened to the stock recently, it has come down off the highs. my guess is he was buying opportunistically. every time it drops, this is the stock he likes a lot he told us at the time he loved what vicki was doing with the company. thinks everything she is doing is right he is still of that opinion to buy additional this is a huge stake they built

up quickly you would not be able to buy like that in the open market they have been able to do it carl icahn was unloading some about the same time. >> best single performing large cap oil and gas stock out there. they continue to buy maybe that's why it is the single best large cap oil and gas stock. coming up, ftx downplaying, sort of, the report it is interested in buying robinhood. we will ge coming up. here is what ftx vice president told us last week. >> we have been interested in the robinhood business model we launched ftx platform we acquired a broker dealer some time ago to provide that service. we announced we acquired a

clearing broker dealer we are interested in that space and trying to give people a single investing experience on the app. crypto, stocks, options, across the board. we like the robinhood model to provide all in one service we think we can do a better job with transparency anroind utg and these things we have been keeping a close eye on had them.

. welcome back billionaire ron pearlman may are found salvation from an unlikely source mien stonge. but revlon may not turn out like other mien stocks like hertz

>> really interesting. shares down 15% yesterday. still up over 500% from their lows two weeks ago revlon, of course, declared chapter1 bankruptcy on june 16th hertz was sold out of bankruptcy last year and john rated a huge windfall for many investors, but revlon is a different company. its losses have been growing for years of the its at the time has grown to over $3.5 billion, and its market cap is only about $365 million you look at the bonds. those are trading way below par. the senior notes at 64 cents on the dollar of the other train of is about 16 cents on the dollar. that means bond investors believe there is little chance of getting paid in whole and they have to be made whole

before the equity gets any payment. they have been able to boost ron pearlman's stake bankruptcy experts say he's likely to get wiped out in this bankruptcy investors in wall street still calling on other investors to quote, squeeze the shorts and buy more so a lot of rocket emojis still around rv on the chat board. >> this has been a financially-troubled company, largely for the better part of 20 years heavily inat the timed revlon, the financial fortunes of this company have been up and town forever, and ron pearlman, to his credit, i guess, has kind of of been a master of pulling strings and coming out ahead, at least for himself. >> well, yes, it's been a

highly-leveraged company this is a stock that back in the late '90s was up around 400 bucks or more. and now it's like six bucks, and a lot of that is a story of acquisitions, leveraging the company to take cash out, his daughter's the ceo so yes, personally, he has benefitted from this he has tried to set a lot of his own assets, that didn't work the restructuring didn't work. this is very different from hertz, which is kind of a one-time sudden pandemic shock that then came back. this is a troubled company for decades. >> yeah, just so much debt on the books. any consumer shock is going to call so just be careful out there, folks. is that a good thing in just be careful with revlon, it's not hertz. >> yes, yes, that's the message. >> or maybe it is. robert, thank you very much.

meantime, shares of robinhood jumped 14% yesterday after a rumor said ftx was interested in buying robinhood let's see. managing director and senior research analyst at piper sandler joining us now rich, good to have you on. i know sam bateman, the comment about no active discussions is being portrayed by some as a quote, denial. he owns 7.6% of robinhood. if i say there's no active discussions, it doesn't mean that i'm not thinking about making it. i wouldn't call it a complete wipe out, would you? >> good morning, brian first, thank you for having me yeah, you're absolutely correct. and i think you pointed out

earlier this morning that the initial bloomberg news report that broke the story stated that there was no formal take over offers in the works. no formal m&a talks in the works. i've gotten to talk to that reporter, and there's nothing that sam said afterwards that changes the story. the story is that they're actively considering it, but you pointed out earlier today. >> yes, and by the way, thank you for listening and watching worldwide exchange, rich, where we did the story, the broomberg story was widely misconstrued as ftx was ready and just basically set to pull the trigger on a deal that's not what the reporter or the article said, to your point. it was that there was some consideration about it some of that got all spun up as

oh, ftx is going to buy robin hood that's not what the original story said that said, rich, robinhood is sitting on $6 billion of cash. and i joked with becky earlier in the show. i'd be happy to buy $100 from her for 90 bucks at some point, once robinhood gets below the dollar of its cash, a deal seems like a no-brainer >> yeah, absolutely, brian that cash of 6 billion is about spt $6.90 per share. a significant amount of cash we ought to know this morning, that really talks about, i'd say, the dna of the two companies. robinhood and ftf, you know, we both, we have the ceos of both, one at a recent conference, and they have the most innovative company, covered e-broke ran space for a long time.

robinhood brought in the whole wave of the zero commissions that the industry has gone through. and ftx, probably not as heard of in the u.s., because this isn't their stronghold, but ftx is one of the most innovative exchanges in spot crypto worldwide, and they're bringing in what they call newspaper-intermediate year. they had to have a whole day of round table discussions to debate the pros and cons and this is what sam has done at a very young age so a very innovative company >> very young age. barefoot in the bahamas. obviously a very smart guy 6.90 a share in cash on robin hood that's something that we're going to watch going forward really appreciate your insight we'll see where it goes. thank u have a great day

>> thank you still to come this morning two big hours ahead. we're going to be talking to white house economic adviser, jared bernstein and john williams we'll see you in just a little bit.

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session. the fight for spirit airlines continues jetblue sweetening its offer we will bring you the new details on the fight that never ends and president macron of france delivering bad flus to president biden about the oil crisis look out, we will bring you the news and the reaction that we've seen so far in the oil market the second hour of "squawk box" begins right now welcome back to "squawk box," everybody. we are live from the maz tack market site in times square pan from the upper peninsula in michigan i'm becky quick along with brian sullivan swroe is off today andrew will be joining us from

aspen. jim coulter and eric schmit will be joining us from aspen this morning coming up in the next hour u.s. equity futures right now indicated higher you're looking at some pretty decent red arrows with the dow futures indicated up by about 1806789 the s&p indicated up by just over 21 points. however, we saw the gains evaporate yesterday. down 18% for the s&p for the year-to-date so far, and we are almost running down the clock on the second half. it ends later this week on thursday take a look at what's been happening in the bond markets this morning you'll see that right now, ten-year is yielding 2.53% five-year is yielding even more than that, 3.31% and oil prices have been a huge part of the story.

we brought thaw video earlier this morning about what president macron was saying to biden. we'll talk more about that in just a little bit but i think that's.impetus of the higher prices wti at $111.36 >> the two disagree on the probability of a recession we look at the divergence and maybe who's getting it right, right now. steve in. >> good morning, brian, from main street to wall street, recession is the growing concern. americans think we may be in a recession receipt now. wall treat banks printing high probabilities of one on the way. but the fed sticking to its guns that it's not the likely outcome. among banks, goldman's at 30%, a little elevated.

bank of america at who, and citi at 50% normally, economists think there's a one in 24 probability. the best case scenario is a soft landing with a slight rise in the unemployment rate but risks of a more significant downturn are rising fed officials are publicly saying otherwise j. powell says he does not see the likelihood of recession particularly elevated right now. from st. louis, they say they don't think it's a good possibility. and from san francisco, recession is not the most likely outcome. in general, fed officials almost never forecast a recession it's a bit like a driver of a karsaying we're definitely going to have an accident. you don't do it when you can possibly avoid it. let's see how the market is priced the peak of the terminal rate

turning to 3.8% by april 2023 but coming down bit year end to 3.5% some say the market itself is printing a recession or downturn when the fed creates so much economic weakness it has to reverse course you have to believe that recession is not the only way to get a handle on inflation, but they won't say we will discuss with john williams right here. and if you could get either refining up, oil prices down, the fed would have an easier job, but you seem incapable of handling your industry there, sullivan >> yeah, i've tried forever to open up a refinery they just won't let me do it it's all the nimbies i'd like to pat solar panel in my house and a refinery in my yard i got yes on one and no on the other. a lot of people are beginning to

mutter that maybe jackson hole in august is kind of when we get that shift do we get the, eh, maybe we're going to stop raising rates at some point is jackson hole a possible timeline for that pivot? >> i don't think wrackson hole is the -- well, it could be if the data suggests that the fed can pivot, but if you're telling me that oil prices are going to be down, that commodity prices are going to be down, inflation, that there will be some sense that there's a handle on inflation, jackson hole could be that time. i think the fed's going to take a step back. i really hope, brian that the fed goes through some sort of introspective process of how it helped create and how it didn't react to the greatest inflation in 40 year i think this is a big mistake institutionally, and very not begun to hear the federal reserve address this and say

introspectively, we messed up, and why was that >> there has been some good news some commodities have started to come down in the last couple days and weeks we're watching that closely. maybe that helps the fed's story. thank you very much. take care. >> all right >> note to steve liesman, that was the biggest softball pitch ever steve, avid fly fisherman. how important is jackson hole going to be this year? you should have said very, very important, make sure you're there, steve >> absolutely, very to be there. >> were you setting him up. >> we used to to a lot more fly-fishing in jackson hole. i will acknowledge it began as a bit of a scam. but as you know, we will do something like five or six sets of news there. the amount of fishing has gone down even though the amount of fish has gone up >> is the amount of time at the managy moose, is the managy moose time up or down? that's the key >> that's work

>> that's true >> that is no, i'm teasing you, teach i know and jackson hole has been important for a number of years. >> i'm just a little bit angry about this, becky. i had a nice thing going, now it's gone. >> work gets in the way, as always steve, we'll see new a little bit. when we come back, jeremy siegel will join us to talk about the markets. his views on the risk of recession and much more. before we led to a break, nike shares are lower after reporting earnings of 90 cent as hair. that beat estimates by 9 cents revenue also beat. but total sales in china were down by 19%. sales in north america down by 5% the pig concern had to do with inventory levels surging they talked about ongoing supply chain disruptions and all of these issues with higher freight costs, higher logistics costs and all of that eating into the profitability in the short term. that's the reason why the stock

is down two 252. this morning. "squawk box" will be right pack.

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wharton business he's been right on a lot of the policies we wonder if can you give us an update on where you stand right now. we just heard from steve about how this debate between economists about whether or not a recession is coming and how deep it will be, where do you come down at this point? >> well, becky, i think we're actually in a mild recession i think we're having negative gdp growth in this first half, and, you know, actually recession is defined as two consecutive negative growths, but the average is going to be negative we're really in a slowdown and certainly, the fed has to raise rates. but when the data i'm looking at shows that slow down is going to continue into the third quarter. a little-watched isn't is coming out this afternoon the money supply, and that was a sense that gave me all the

information that we going to have that inflation back in 2020 and 2021, it has slowed down dramatically in fact declined last month, i think this month, it's out at 1 check. i think it's going to show another decline. in the last 60 years, that's an extremely rare occurrence. what does this mean? that means that we're getting a handle on inflation, blue official nation, it's still going to be in the statistics over the next six to nine months we really had inflation of 12% or 13% but the way the bureau of labor statistics actually prints out the inflation, especially in the housing sector, is so slow that those housing price increases, and we all know we're going to get later on, they show data over 20% year-over-year. look at the bl, it says we've only had 6% inflation.

that's the way they calculate it only when they turn over rental, turn over houses so j. powell and the fed have to recognize we're going to get some bad prints that are going to ten on that actually represent past inflation that has to move through the system so i want drn. >> are you no you urging caution on the fed's part to maybe say slow it down a little in. >> yes hook at the money supply lock at sensitive commodity prices all the other commodities are down what i mean is, yes, we have to go through with increases. but, you know, who knows if things slow down, maybe the choice is between 50 and 75, maybe it will be between 5 and 50 mane we're not going to get to the 350 that the market thinks

by the end of the year i just want he the fed, the fed tightened so very late the latest in history in an inflation cycle not to overreat on the other side and say oh, we'll slam on the brakes no matter what. because a lot of that inflation has got to go through the system and they have to accept the fact that they have made that mistake. we really can't reverse it without totally crushing the economy. so these are things that i want j. powell to make sure that he understands, because we know history of policy is a pendulum that often swings too far in one direction. too much ease, panic and swings too much tightening. just keep alert to those facts >> jeremy, it's going to be hard for j. poul powell and the rest of the reverve, the fomc to

follow that advice because we're an all armchair quarterbacks they have gotten so much criticism for being so late on this we had ken landgoen on here yesterday, he's close withstand bruckemiller who is an incredible market investor, and the opinion from a lot of these people has been that, look, you need to keep raising rates and raise them rapidly 75 basis points wasn't enough. ken said yesterday he thinks they hud raise 100% basis points a full percent you're going to get pressure from any one buying grosses, trying to fill up their car. those things aren't going to roll over very quickly either. oil prices were back up today. >> yeah. oil prices are certainly one of the, on an up, take a look at a factor that's much more important than the consumer price index than oil prices, and

that's housing prices. we definitely have sown a showdown in housing price increases. we've seen a slow down in a lot of, even agricultural prices metal prices raw material prices. where we won't see a slowdown is labor costs. labor costs are going to ten to move up, because there's, we've got to compensate the people for the 20, really, we've had 12% to 15% inflation and only had increases in wages of 5%, 6 p 7% those service prices are going to continue to rise. the only way you can do that is totally crush the labor market you know, my feeling is, housing, maybe agricultural, and some of those other prices are already reacting

it's going to be hard, because, because powell has to say, these react with a lag we can not just like inflation started 12-15 months after the sploefgs money, as money has really topped, it's not going to slow down tomorrow. >> well, i don't know how they do it, professor you talked about housing we talked about that data, we did this on my show. it comes from the census bureau. there are of% o to 8% americans who can't afrpd afford this rent or are late on their payment my landlord didn't cut me a break. i lost my job in covid screw him, basically, sorry for the language i'm not going to pay and now they're going to raise rents again. millions of people are facial eviction and rates are expected to continue to climb coming out of this post-covid low yes commodities have come down

interest rates are up. revolving credit prices are up rents, as we just said, are going up i just wonder where that money is going to come from from consumer if it's not the federal reserve. i just don't see how they get as aggressive as they say they r housing is a much bigger risk than thestock market, is it not? >> in asset size, it's just as big or slightly bigger you bring up a very important point, because this inflation has really magnified the haves and have nots. two-thirds are in their shape. they own this own home and they gain tens of thousands, hundreds of thousands. what about the renters, have no erk wit. they're sieg rollover at 15 sprs, 0% increases and you're absolutely right. they are the ones that are going

to be the big losers, and that's why, you know inflation is a tax. and it's a cruel tax it really hurts a lot of the people in the lower income brants much more han those in the hire income brants and if the fed really stood much firmer in 2020, 2021, particularly, this gap won't be here but you're right this is magnifying that difference maybe that's something fiscal policy and congress has to do to allocate it. but it is very unfair what has happened there in the housing market between those who own the home and those that are centing the home >> professor, thank you. i have a feeling we will be checking back in with you very soon because markets are changing quickly. inflation changing quickly all kinds of issues, but thanks

for your time. >> thank you very much all right, coming up, the battle mt. skies raging ever more jetblue once again sweetening its offer for spirit airlines. there's a hair holder vote on the problem tear vote nearing. phil lebeau will join us how many offers and countier offers have there been for spirit i've lost count. then jared bernstine will join us to talk about the latest from the g-7. what was done, what was not. the fighagnst ait inflation, dow futures, they're up. we're glad you're up with us we're bark right after this.

jetblue making another sweetened offer for spirit phil lebeau has that story are you keeping track? how many is that at this point >> i am keeping track. we have a nice little chart we'll show new a second. this is the fifth offer by jetblue. here is the enhanced offer yet again from jet blue. they're now offering 250 a share, an immediate dividend

so the day they approve it, then, you get your 250 a share an increase of $50 million and they've also added a monthly ticking fee of ten cents a hair starting in january. that would be paid every month until a possible deal gets regulatory approval. you take a look at the timeline of bids. we are now counting. it's five. we were counting before. but it's five now. this fifth one is a pending offer, and today frontier is outblasting jetblue, saying it would lead to a dead end the fact that no misdirection or must ter will change proposal is the reverse termination fee, because jet blue's proposal lacks any realistic likelihood of obtaining regulatory approval. wow, gout read that release,

that came out in the last 15 minutes. they have more to say about jetblue saying basically, these guys are con artists don't listen to them about this getting regulatory approval. as you look at spirit, there is a hair holder vote scheduled for thursday now the question becomes, do they put that vote off we should hear something from spirit one way or the other in the next day or so as to whether or not a, do they accept this bid, not likely, do they regent it again do they say we're going to further engage in tarks with jetblue? and as you take a look at stocks of jetblue and tron tear the vote on thursday is strictly on the frontier bid merger it is not for them to say i like jetblue more than i like the frontier offer it keeps going back and forth, fiefr times. is the fifth time the charm? based on what we've seen so far from spirit, i'm motte lure it

is >> fill, the ceo of frontier on with you yesterday they were talking about that iss recommendation for their vote, which they hadn't had before i just wonder, will iss clab its mind again because that's pretty important. shareholders who aren't following every tik tok here >> look, if jetblue were to get iss to change their opinion and come back to jetblue being the superior bid, that would obviously be important i think at this point, it's pretty clear to the shareholders these are the offers that are out there, and yes, they have been dramatically enhanced since the very first ones in march, actually, i think it was february for frontier and early april for jetblue. but it's pretty close to as much as you're going to getter hoo. the question comes down to this if you're a spirit shareholder,

do you think a bid with jetblue will get regulatory approval if you to, then go with jetblue. but there are some strong arguments that regulators would shoot this dead and it has no chance of success. it doesn't mean that the problem tear would be approved, but that's what you have to ask yourself if you're a spirit shareholder, which has the better chance. >> if either of them >> you're right, if either of them >> you better make sure if that deal does get accepted, gets approved, that the doj signs off on it, otherwise this is just whistling. >> and becky, we've talked about this before. the biden administration takes a much mortise minuted, maybe not disciplined, a much more skrut hawaiied rue of mergers and acquisitions and i think that when i look at

what they're doing with the northeast alliance between jetblue and american, i don't know there's a good likelihood that any deal may get ultimately rejected by the biden administration and that's something also to be considered >> we will watch and see what comes next what's coming next on "squawk box. jared bernstein will join us to talk about the biden administration's fight against inflation. then coming up at 8:00, do not miss our interview with cathie wood her stake on everything from tesla, crypto. maybe her favorite stock right now is zoom. that's a big interview 8 eck m.cha. eastern time. dow futures up 206 this is "squawk box," we're pack right after this

all right, welcome back to "squawk box. hope you're having a freight tuesday morning. let's talk energy, why not oil back on the ride kind of an odd scene at the g-7 meetings yesterday

macron running on biden, told president biden that the saudis and the uae have almost no spare capacity to increase production. watch and listen. right now oil is back on the rise above 110 here, above11.17, friend brent crude let's go to helene kraft

croft. and we'll get the investment side angle on this i've got to start with you, and i've got so many questions about this you wrote about it in your note about macron first off, why is emmanuel macron, the french president, the one delivering this message that he actually got wrong what is macron, when did he become the oil whisperer in >> think about french president macron the russian whisperer. he had a hot tip saying being look, there's very hill spare capacity out there that is not a thing that is unknown in the market. but the numbers that he suggested, that there's 150,000

barrels left in opec, that was sort of a shocker number now we look at that time and say, yes, there really is not a lot of spare capacity. we think if you look at april 2020, shock and awe. if you look at that number, you could say potentially, yes we think the saudis could maybe do an extra million fatherly quickly. but like beyond that the opec secretary general at our energy conference, globally, there's probably 2.5 million barrels a day extra capacity but there's not anything to deal with additional disruptions, and as we're heading into the european sanctions on russian oil. >> and they say that the opec annual bulletin is out today. macron reminded me of like one of the opec reporters running up and whispering that angola's going to raise production and everybody freaks out

that said, macron has also been the guy saying we need more iranian barrels and more venezuelan barrels this might have been a strategy with that. but do you think he was also nudging president biden saying if you want more barrels, mr. president, it might have to come from you from america >> well, i think macron is really trying to push the issue on the iran nuclear agreement. there's talks set to resume. but it's actually the iranians holding things up. they're demanding that the revolutionary guard be taken off the state department's terrorist list can emmanuel macron get the iranians to change their bargaining position and frankly reconnect the cameras in this nuclear facility i think there's some big issues that need to resolve before we get those iranian barrels back and the issue of libya libyan production continues to fall and the french have some

influence in that situation. that might and better avenue for french influence >> and ecuador, a former opec member, small but meaningful in this market. everything's meaningful. ben, you listened to this and noted that there are many commodities. many commodities have come down in price the last few weeks. a lot of the metals have started to roll over a lot of the agricultural commodities have started to roll over that's a positive sign but as long as oil and natural gas, gas has come down, but it's still elevated, as long as they remain high, how is that going to impact the equity market? >> i think, if you think through agricultural, yes, headline cpi. that will translate to interest rate expectations moderating

over time. the fundamentals are so tight, that there's re hill scope for major sell-off there these companies are 10% to 15% compared pot s&p that's like 4% you see the major fundamental value there in those companies if you think about investment implications, agriculture may be moderating because of inflation, but these big energy companies have sold off the last few weeks. it's not really going to go down that much. >> muckal burry of the big short fame he tweets randomly and deletes the tweet. he talked about the bullwhip effect, which is everybody overreacts in certain ways overinventories, overproduces whether things slow town and

thinks we could be headed to a disinflationry period which may alter the feds' thinking sooner than believed. right one time ten years ago and made a lot of money, what do you make of that take? do you think he is right >> he talks about, you know, if you do have recession or fears of recession, some parts of the commodity market is trying to discount that scenario as much as the fundamentals are really tight, and there's more particularly on that element then yes, you could see at least a downshift i think over time. we're not there yet, though brian. i think for july 75 and

september very much in play. but that is the scenario you have that's, i think, a bull case that he's talking about. >> okay. helene, the last one to you. thursday is the opec muss meeting. are we there yet where opec makes any kind of big move or is this going to be what, the ninth consecutive meeting where they rubber tamp it, move it up a couple ticks and if so, when do we get the big shift. press conference from opec >> we'd love the press conference your royal highness, please. no, i think it's an expectation they're going to roll over the 648,000. remember last month's meeting they were essentially saying there's three months left in the agreement. cut it to two. the big question mark is president biden's going to riyadh next month. what do we get from the saudis what do we get from the rest of the gcc in terms of additional

barrels beyond september >> yeah, hard to see anything happening ahead of that meeting. great discussion and fascinating scenes from the g-7 with emmanuel macron, becky. i don't want to make too much of it, but he comes running up, mr. president. >> it felt so raw that there was a camera able to capture all that stuff that's what we imagine they're like when we're not watching it was interesting to see. i watched it a couple times, too. >> i wish i could have been there. >> i heard you got the pronunciation right wherever it is anyway, still to come this morning, counsel of economic advisors, jared bernstein will

join us. then coming up at the top of the hour, we have cathy wood of ark invest "squawk box" will be right back.

all right, welcome back to "squawk box," everybody. i am brian sullivan in for joe and andrew andrew's going to be here from the festival in half an hour .6 across the board. we were here yesterday then the sellers came in we ended lower still we're in the grown right now, so we can hope. before we head to break, we want to check this out. these are buy-rated toks from barclays that the bank expects to have steady or growing dividends through at least next year you got your pens or your icloud notes? new star energy, viper energy partners, sl green realty. medical properties trust and restaurant brands international. >> either raising or holding

steady their dividend that barclay's says could do just that "squawk box" will be right back.

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it's unbeatable internet for a more unbeatable gru. i mean, you. joining us right now to talk about the administration's fight against inflation, especially high energy prices and more, let's welcome white house economist jared bernstein, a member of the president's council of economic advisers

always good to see u let's talk about what's happening and the public's perception of it. 71% of americans are unhappy, dissatisfied with the president's handling of ininflation, what do you say to that >> the president has consistently recognized what a challenge these elevated prices are to family budgets. that's why he's doing all he can to ease inflationary pressures i think we probably talked about his three-point plan sorry, there's a bit of noise behind me, which includes, of course, the independence of the federal reserve. the first and foremost inflation fighter, and the fed is working hard and seeing some impact. then we have to work with congress to try to ease budget costs, and the president has actually done more there than i think has been reported. he recently signed the ocean shipping act that should help there's been some broadband

relief pushing for tax credits that would help on the energy side. and finally, deficit reduction also works as a kind of negative fiscal impulse complementing the montgomery policy of the feds. >> first of all, fed independence, obviously, the fed is going to be the first on the frontlines with this, but we just spoke with swrar any segall who said he is watching what's happening with inflation right now and thinks that we may be rolling over on a lot of areas you look at kind of what's been happening with the commodities index. he thinks housing is probably stabilizing more quickly than is going to be shown in some of the data out there he's actually urging caution from the fed at this point, saying you don't want to push the pendulum too far in the opposite direction and create a huge recession but he says you're going to have to live with some of the headline inflation and even with rent for a while before that

actually calms off if that's the case, it means you could be looking at another six months or longer before the american public feels some of those things would you agree with that? to caution the fed not to go too far to overshoot or are you of the opinion that they need to be acting very, very drastically right now and continue to take some really big increases in interest rates to try to to anything they can for inflation? >> so i'm of the opinion and more importantly, president biden is, that they should have the independence to do what they need to do and, as you know, becky, history is littered with presidents intervening in federate hiking cycles like this one. >> can you go back to arthur burns. further back and you look at countries around the world, non-independence of central banks is a great way to bring your economy to its knees. so the president made sure that the team over there at the fed was top shelf, and they're

doing, they're doing what they need to be doing i think jeremy's always a really interesting person to listen to in this space, and certainly, we hope that he's right in terms of inflation pressures rolling over you certainly see some of that in core inflation, but there's been a lot of head fakes there i personally won't believe we're on the other side of a peak until we're down that side of the mountain looking back up at it with a few months' padding in between. what i will say about those comments is that we have a very strong economic backdrop against which these fed hikes, which are fiscal policy, deficit reduction, against which these pressures are taking place, and that makes a big difference for the american people. financial balance sheets are in uniquely strong shape for both families and for households. the job market is historically tight. if you look at what's called the som rule, which i've been studying pretty carefully

lately it's a look at the unemployment rate and where it is relative to recessionary signals it's actually slowing very strong, continued labor market strength so i think we're in the midst of an onrequesting expansion, going from quite fast, the more steady and stable growth. dprt number one issue for consumers right now has to be gasoline prices. that's what they feel several times a week when they fill up their cars that has not shown much improvement. in fact, the tape we've been rolling from yesterday, at the g-7 meeting shows president macron of prance coming up to president biden with cameras picking up what he was saying talking about how there may not be much more that opec can do on this front, meaning that his trip to saudi arabia next month may not yield anything additional this is a problem that's going to be sticky and as long as the economy is continuing to boom around the globe you are going to see energy prices continue to soar you're looking at wti up to is

$11 today. so on the issue that matters most today i'm not sure there's anything the president can do, and they're not going to be happy about that what do you do >> yeah, so i beg to differ about the president's scope in that space you're right, that intervening on the economy supply side is a whole lot harder than some of the things we did during the rescue plan, checks and pocket shots in arms that helped get us to the strong backdrop of the economy that i was talking about that we're looking at today. of course the price of gas is down about a dime from its peak. it's still way too elevated. your figure right there on wti crude does show a welcome decline in oil prices, and look, we know that opec has fair capacity, and i'm not going to get into any side comment readouts right now until i learn more about them. i think one of the things that's missing from this discussion is the efforts that you've heard

janet yellen, our interested secretary talk about in terms of ways to keep russian oil on the market while at the same time reducing the revenues that flow to putin obviously, the invasion of ukraine has its fingerprints all over these elevated energy prices, which are a problem, not just here, but across the globe, and i urge folks to look at some of the treasuries efforts in that regard. >> nobody has figure the out how this price limits has worked that hasn't been agreed on >> right, so we all have to pay attention to that. my point is that whether we're talking about the gas tax holiday, whether we're talking about this price cap on russian oil, whether we're talking about the president's release from the strategic reserve. his e-15 ethanol waiver, there's a lot that we're doing in that space. >> it hasn't helped meaningfully we're talking about $111

brian, real quickly? >> yeah, hey, jared, i listened to this, and i understand you guys are trying to put out the fire in the near term, and i respect that but what about policies for the last 20 years that have discouraged, i understand we have the energy transition, but if you look at history, energy transitions take a lot longer than anybody ever thinks, whether it's wood to coal, coal to wales, wales to oil, oil to electricity or whatever we're going to do. >> i agree >> thank you for agreeing with that so we're trying to put out fires we've been making for 20 years >> we are literally trying to put out fires when we have excessive heat waves and these fire seasons and storms that cost the economy hundreds of billions that are very much associated with climate change so we have to do both. now you are saying something very important and somewhat overlooked here that these transitions take time. and look, as someone whoes a

worked in government economics for a long time. when i hear transition i get nervous, because it usually means somebody's about to get smacked. what we have to do is make sure that we bring people along with us, as we make this transition to clean energy, and that's president's agenda that really describes it, i think, at large. >> we have to run. we're at the end of the hour, but we appreciate your time today. good to see you. >> my pleasure >> brian, thank you for pending time with us the last couple hours. it's been a pleasure >> absolutely my pleasure, as always, look forward to being back on set when i do the 16-hour drive home, i'm not flying, no way when we come back, ark invest ceo cathie wood and andrew, how are you? >> hey, there. what a first two great hours of squawk, though, becky. i was listening and watching with fascination it is day two here at the aspen

ideas festival and we have two interviews that we will be bringing you. jim coulter's going to join us to talk about the firm's climate investing strategy, and then former google chairman, ceo eric schmit will be here on his conversation with members of congress on how america can better compete with incha. the state of the tech sector and so much more "squawk box" coming right back le mons. look how nice they are. the moment you become an expedia member, you can instantly start saving on your travels. so you can go and see all those, lovely, lemony, lemons. ♪ and never wonder if you got a good deal. because you did. ♪

morning. futures pointing to a positive tuesday start for the market when the opening bell rings this morning. that's thousand just 90 minutes away before then, we've got an all-tar lineup this hour four exclusive interviews you do not want to miss starting with ark invest cathie wood of the and former google ceo eric schmit. stick around the final hour of "squawk box" begins right now '6. good morning, everybody. welcome back to "squawk box" here on cnbc

we are live from the nasdaq market site in times square. i'm becky quick. ann drew ross sorkin is also here, not physically, but here in spirit. he's in the aspen ideas festival in colorado. we've been watching what the future's market. the dow futures indicated up by about 200 points, the sapp up by 23 we saw big gains yesterday that dissipated through the course of the morning. we'll cross our fingers and see where things go. right now we want to jump right into the markets with the first big guest of the hour, cathie wood big drops in tesla and coinbase have dragged her flagship down by more than half this year. it's below where it was at the beginning of the pandemic, but she has seen big strong inflows. cathie, thanks for being here. let's talk about what you've seen, first of all in terms of

inflows. what have you seen, and why do you think it's come again in. >> i think the inflows are happening because our clients, we give away our research, and our clients have been averaging down and i think they've been diversifying away from broad-based benchmarks like the nasdaq, particular lit nasdaq 100, because if you hook inside of the nasdaq 100 and you overlay our portfolios with them, you'll see only a 25% overlap which from our point of view means that the nasdaq 100 is focussed on tis runtive innovation only to the tune of 25%. then you have the rest of it that looks a lot like the s&p 500. there are stocks in there like truckers and rails, and u fits that you won't find in our portfolio, we dedicated completely to disruptive innovation, transformational innovation

and i think the other thing is, and we keep beating the drum here innovation solves problemsing and we have a lot of problems. we had a great rebound out of covid. it was significant, because, yes, innovation solved a lot of problems the jen onlyic revolution, the digitalization of everything and those aren't stopping. they've been accelerated and here we are with supply chain issues, russia's kraex of ukraine. putin's energy innovation solves problems >> you say you keep beating the drum, but have there been moments this year where you've lost faith in the market returns for some of those stocks >> no, what we've done since february of '21 when we peaked is we've consolidated or

concentrated our portfolios towards our highest conviction names. so we've gone from about 58 names in february of 2021 to about 34 right now so what you might say is that those names which didn't score as high in our scoring system all focussed on innovation, we've moved aside, at least for now and moved toward our highest conviction names, and we've mentioned some of them, zoom, tesla, roku. >> let's focus on those three, those are the three top holdings for the ark innovation fund. if you look at some of those stocks, because i've been digging through, seeing what's happening with some of them. for zoom, it went from $75 before the pandemic to 550 it came down but still 29 times above earnings tesla is still at 99 times earnings roku 94 times above earnings you could be 100% right about

the future for all of these companies, what they are doing, but it doesn't necessarily mean that we get back to those elevated multiples that the stock market was awarding these companies for such a long time because there was so much excess liquidity. the federal reserve had a lot of money out there and pushed into risky remember assets. you may not see money supply out there like that for year so it may take years for the companies to grow into the stock levels that they had seen at earlier times. what do you think p that thesis? what makes you think we'll get back to those higher multiples >> we don't need the higher multiples. for a flagship portfolio, our enterprise value, that's equity market cap and debt, enterprise market value to ebita, effectively cash flow, is around 69 times so i know a lot of people say

profitless tech. we are not profitless on balance. we make the assumption that in five years that number will be close to the market multiple on that basis, which is roughly 16 times. so in our modelsing and we're starting to publish our models, because we really want people to understand this. we just published zoom, we published tesla. you can find them on get hub experiment, change the variables. we think you'll move the immediatele, and you can see how your assumptions might work into our five-year investment timeline so we assume a 20% annualized headwind from dee cliepg valuations so our return expectation, which is quite substantial right now is based solely on revenue growth and rising profitability. now the narrative you just, you just gave, many people cite, when they're talking about the

tech and telecom bubble and bust, and we've analyzed our portfolio relative to that as well, pause there memes around that it's astonishing to us that zoom's revenue pre- since the coronavirus is up roughly six fold, and the stock is almost down to where it was pre-covid same with teledoc. up fourfold. tesla, up three fold, although tesla has, now that it's in the indeces, it has held up better than the rest of our portfolios. but that narrative in 2000, if i could just say, would suggest that by now we would be seeing negative revenue growth in our expectations for the next year and declining gross margins. we are seeing the opposite we're seeing north of 25% revenue growth if you're just using consensus estimates of 25, and our estimates are much higher, because we're focussed on exponential growth trajectories.

>> when you think about the last year, and you think about your approach, what is the lesson in it meaning, i know you have a north star about specifically these stocks that you're talking about, but at some level, you have to look around, and i think your investors would want you to look around and say, okay, i was wrong. >> what was i wrong about? and if i was wrong, how am i going to change my approach in the future >> so if, we were wrong on one, one thing, and that was inflation being as sustained as it has been. supply chain, can't brief it's taken more than two years, and russia's invasion of ukraine, of cour couldn't have seen that. it has set us up for deflation i've been listening to your

program, jeremy siegel saying we think we're in a recession and a really big problem out there is inventories, the increase of which i've never seen this large in my career, and i've been around for 45 years. and we're talking about the best-managed companies in the world if you're talking about walmart and target this he know how to manage supply chain so they have problems. and then the other thing that's going on is the consumer is railing against these price increases. consumer sentiment as measured bit university of michigan, which we think is the best measure out there is down to record low levels, below '08-'09. below '80s and '81 i had just started my career and inflation rates were in the double digits, 15%, 20%. and consumer sentiment is lower than it was back tleb. and most interestingly, in the last report, many people think oh, that heavy spenders will

keep this thing going. consumer sentiment in the highest income froups is lower than in the lowest income groups, and those, the latter group is being, you know, tormented by food and energy prices, which are really a regressive tax increase here to them j fascinating. i want to ask you about robinhood. the speculation around robinhood and ftx wanting to buy robinhood. i know robinhood is one of the top ten in your base if ftx were to buy robinhood, essentially putting pressure on coinbase, how do you think about the three of them together >> well, okay, robinhood is not in our top ten in the flagship, it's a little more than 2% position now. coinbase is in the top ten, because we really do believe,

while we are in a massive slump right now, we do brief that the three revolutions around crypto that we set for the in our wig ideas 2022, and you can find that in our website, that they are under way, and they will not be stopped the money ref rugs, that's bitcoin, first global digital, private, rules-based monetary system defy really came of age in '20 and '21, and while the -- yield -- and the leverage in some protocols way too far. and algorithmic stablecoins, as an economist myself, i didn't understand them. it makes sense that they're not going to exist but defy itself is, has taken off, and we're impressed at how robust the ecosystem has been. a lot of people expected the terra luma meltdown to cause a

systemic chain reaction. and we're seeing a little bit of that, but so far the ethereum has held up very well. apartment third revolution, which is most in its infancy is probably where the token revolution was in 2017, and that's nfts, but we do believe that digital property rights, which is what nfts represent digital property rights are going to become incredibly important. i know again from my economic background that property rights lift people and countries out of poverty. and we think that the opportunities that the digital property rights will, will allow creators is, creators apple others we're going to find all kinds of

utility, and we can't even think of it right now, just hike we couldn't understand quite what defy was going to be when tokens first came around. so we're believers, and we think the ecosystem, if it consolidates, that's not a bad thing. we do think that digital wallets are going to be one of the most important outcomes here. the effectively bank branchs in our pockets. and we are trying to figure out who's going to be the digital wallet it's going to be winner take most or there will be two or three of them. so is it cash apps so block is in our top ten is it cone base? coinbase is in our top ten these are going to be huge opportunities. again, you can find them in big ideas 2022 is it going ton robinhood. ftx? we don't know. all we know is the opportunity is huge. >> when you talk about digital property rights, it kind of takes me back to the potential problem for all the crypto customers in the event of a

coinbase bankruptcy. in the idea that they would lose their funds with that liquidation, too what i was most surprised by, by watching all of the bitcoin collapse in recent weeks was the idea of how many of these companies were levered up. how many of these big investors were levered one that. didn't that come as a surprise to you >> no, it didn't it didn't come as a surprise this, there's a cleansing process. we're going to see it regularly. this is very early on in these technologies, and, you know, we looking, you can see in the traditional asset management world, the reach for yield there. you know, we're wondering, if you're looking at spreads gapping out in the high yield market, you're looking at credit default swaps in the market, if you use the m-a-r-k-i-t metric we are where we were in 2018, which was a terrible time for

the stock market, moving into covid territory, and this is true for money-centric bank as well we wondered just as much, what did the reach for yield do in the traditional markets that is now being flagged by credit default swaps. and it's associated with, you know, leveraged collateralized loan obligations associated with private equity and real estate >> can you point to it in traditional markets and here, when you're down more than 50% you have to start thinking about risk management. maybe you're in this for five years, maybe you're in this as a long-term investor, but even so, if you invested at pre-pandemic levels, you're still under water three year later you're making nothing. >> so your comments suggest that we are a generalist portfolio manager, making asset allocation decisions. the host important thing we immediate to do is stick to our

knitting the worst thing that could happen is style drift. when people invest in ark, they flow they're getting truly disruptive, transformative innovation that's what we offer and we don't pretend to offer anything else. so when you say risk management, what we do, as i mentioned earlier, is we concentrate our portfolio towards our highest conviction names that means we are, with the weight of evidence moving us, we are in some measure, from our point of view exercising risk control. >> cathie, thank you very much >> thanks, becky thanks, andrew, always, thank you, bye coming up on the other side of this break, jik coulter

we're coming right back after this

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and after that, john williams and rounding out the hour, a special conversation with former google ceo, eric schmit. don't go anywhere. "squawk box" returning from aspen, colorado in just a moment

welcome bang to "squawk box" right here on cnbc want to bring in our first guest from the aspen ideas festival here in aspen, colorado.

want to at that uk about investing in climate, sustainability partner and executive chairman, jim coulter is here. nbc universal news group is a partner of the aspen ideas festival we'll be doing a panel later today. let's talk about the markets and the broader landscape with which you see things you have lots of portfolio companies around the world what do you see inside these companies? >> not my first rodeo. this is the seventh or eighth major reset we've been through this one is projected to play out in three chapters. first chapter we're quite a ways through, which is the multiple reset, driven by the fed, driven by the realization what is odd is not today but last year g did everyone know it was alice in wonder land last year?

>> we were underwriting for multiple discounts we didn't know if it was going to happen in six years or six month, but it was clear that multiples were at highs. we're still 60%, 70% tile averages so maybe it's not quite over but in the later innings we're now going into the second chapter. >> to be clare, you believe there's more multiple compression. >> people tend to shoot throughout average in a moment like this, so we're certainly prepared for that. the second chapter is an earnings chapter so far our portfolio is performing well in terms of earnings if you look as kro the markets, earnings have not turned over. most s&p projections are showing up ten, up nine. so the question is when does supply chain >> where do you land there >> it depends very much on what

industry you are in. >> okay. >> very much incha industry. we've set ourselves up in health care and high-value-added areas where you have pricing power third chapter, which is sometime next year, is the landing. and that's the question that's interesting for all of us as investors, and will it be soft will it be hard in personally, i hope it's hard and fast. >> you want it to be hard and fast that's what you expect or that's what you want. >> that's what i'd like. because when hard and fast happens the market then begins to look forward. and if you look at what happens when they turn, it continues to be after the recess has hit, if it's going to hit or after the fed changes its policy the fed is still chasing the stock market won't react positively in some ways, it's playing through a cycle. if private equity we're half uncalled >> you've got a lot of, that was

my question. you've got a lot of cash on the side line. >> yes >> are you putting it to work now? or are you sitting around waiting thinking, you know what? let's keep our powder dry, because as you said, 2023, maybe, if you think that, if you think there's more multiple compression, all the things you're talking about, and if it's hard and fast, that's going to be your opportunity >> we're putting it to work in certain areas. this is a long-term play, we're getting a price that makes sense, and essentially when you get in doesn't make as big a difference as in certain areas what's happening general shri a slow down in deals, and you've seen this before whether buyers and sellers don't know where to meet the market slows down we're right in the middle of that slow down deals will happen. but until that meeting of the minds comes, we're likely to see deal activity lag. >> are the marks in the private space, meaning the valuations that companies, private equity

companies, venture capital cooperates hold their business at, you think appropriate, meaning, are they matched to what's happening in the public markets? because if they aren't, there's another view, which is there's a second leg to go down in the public markets once the private guys come down as well >> private marks, and that's true in private real estate, private, it tends to move up more slowly, down more slowly, because those assets are not marked on a daily basis. they tend doing marked on dcfs, et cetera. i think discounted cash flow so that sort of arc has happened every time that arc will work itself over last year. last year if you look at where private moved it was behind the market and this year those two are coming whack into launch >> you have pivoted your entire career around climate investing. and we're requesting to talk about that here in aspen at this

panel. but there's a much larger question happening around our kuntz and around the world around energy prices and around what has led to these remarkably skyrocketing energy prices and one are the views is that too much money has moved too quickly into climate, away from fossil fuels, and that has what led us to the conundrum we are living in today. do you boy that? >> i do not buy that necessarily. i believe if the ukraine situation hadn't happened you wouldn't have oil spikes going on in any case stlees been volatile markets for a long time. we've been doling with volatile petro markets for a long, long time i think one of the most interesting chessboards in investing in global policy is is the energy transition. and there sends to be this false choice in the interim, that chessboard has become a lot more interesting. but there's a pretty good argument that what's happening

will long term provide tail winds. >> long term, yes. we ask this question yesterday if you were president biden and thinking about this or jennifer granholm or anybody else thinking about energy today and you wanted to actually get prices down, is there anything you can do in the sort of climate friendly space in. >> the fastest way to get new energy online right now is solar. if you try to build big ln the g, you know how long that takes. sew rar can be put in, in months long-term higher energy prices if you're worried about energy security, do you want to rebuild into a petro world probably not >> i'll just ask you broadly about esg. there's been a lot of esg criticism. a lot of it is around energy prices you've seen people like elon

musk call esg a scam, what do you make of that and people who just believe that all of this is as mike pence wrote in "the wall street journal," this is the woke left that is poised to conquer corporate america. >> i've learned not to overreact to too many things elon says, and i won't overreact to this one. i believe esg is here to stay, and it needs to be a movement wp the investment area. go back to railroad bonds, commodities, the information, we need, we need good steady, nomable regulation we need to understand what the rules are. i think the people in the esg market certainly want to play bit rules, and if those rules were developed the closures will be specified >> you think this is driven by the private markets. that's the interesting thing about whether the private markets are doing this or whether this is a harmer, as we said, we have people like mike pence who say this is wokism

gone awry. this is pension funds in europe that have really influenced what's happening here. >> we're in a different era of business ethos it's not that you don't have to perform, you have to perform and you have to do it in a responsible way. that's happening for ceos everywhere for investors, that idea of performing responsibly, esg. and i don't think this ethos is going away it has to be done the right way. it's not woke. it's basically just good business, to take care of your people, to respond to questions like the environment i think, like many new areas, there will be abuses in some areas, but just because something can be done wrong doesn't mean it can't be done right. and we're in the business to try to do it right >> fair enough thank you. bengy? back to you. >> andrew, thank you very much see you again in just a few minutes with another big guest right now as we head to a break,

check out shares of walgreen's they're lower after the company decided not to sell its foods unit after considering the uk-based health and beauty retailer when we come bang, is the federal reserve up to the challenge of taming mpraant inflation. john williams will weigh in live stay tuned you're watching "squawk box," you're watching "squawk box," and this is cnbcn invesco qqq, a fund that gives me access to the nasdaq-100 innovations, like real time cgi. okay... yeah... oh. don't worry i got it! become an agent of innovation with invesco qqq

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welcome back to "squawk box," everybody. we've got another big interview lined up for you right now steve liesman joins us with a very special guest steve, good morning again. >> good morning, becky yeah, and i am live at the new york fed for the first time since 2019 with john williams. thanks for joining us. >> welcome back. >> it's been a couple years. we've done it remotely let me start off with the question i think is really, has wall street's focus right now, which is the question of recession. is recession a base case of yours? is it a probable case? where do you put the probability of recession right now

and how does the fed avoid it? >> first of all, recession is not my base case right now i think the economy is strong. clearly, financial conditions have treatened, and i'm expecting growth to slow this year quite a bit relative to what we had last year, and slow to 1%, 1.5%. it's not a recession it's a slow down we need to see in the economy to reduce the nationry pressures and bring inflation down in terms of probabilities? of course it's very hard to predict a recession. they occur for lots of different reasons. and from my point of view, i do think we have a path forward to bring inflation down as we immediate to to and keep the economy growing. but there ask be shocks and events that can happen that would knock us off track we have to be on the lookout for that right now, we're going to have lower growth until growth is here >> is it possible the shock has already happened to push us into recession, ie, for example, the

combination of the covid crisis coming out of it as well as what happened with ukraine and the invasion there >> we watch all the indicators very carefully, financial conditions, commodity prices and global growth. i do think some of the down side are coming from abroad partly due to the invasion of ukraine. so i feel watching that data carefully, watching the effects of the tightening of financial conditions and higher oil prices, right now consumer spending looks to be on the positive track we are seeing slowing in some sectors. like housing and business investment that's kind of a, that comes with the territory of somewhat tighter finances >> this is a difficult question to ask, but i'm just wondering would you say if hundred recession as your best case? in a sense, the fed is drive the car. it's like asking the driver of the car, are you going to have an accident? of course they'd say no.

>> i think transparency is really important you've seen a significant shift in the fomc's projection and growth and now we're seeing in our projections that unemployment, the unemployment rate's requesting to be moving up over the next few years that's not a recession that's high base case, the unemployment slows to see the rate get a little over 4% over the next couple years. that is how i see it of course there is a great deefl uncertainty around that outlook, and when that changes i'm going to change my prediction. >> we normally talk in december, but i thought now is a really important time to talk you're an expert on the idea of the neutral rate of monetary policy higher inflation now mean the neutral rate is higher, and you need to aim higher because of that >> there's lots of ideas about the neutral rate and how to think about it i tend to focus on the longer run neutral rate, which is affected by demographics and

things like that i don't think that longer run has changed in the last couple years. i still think it's quite loi but to get into your point, the neutral rate is really about a real interest rate, the nominal interest rate versus inflation given nation, expectations are higher than they were. of course the nominal interest rate or the interest rate that we need to have to bring equilibrium to the economy is higher while inflation is higher that's an important grooent in why we need to raise interest rates quite a bit this year and into next year we not only need to get nominal interest rates high are but we need to make sure the real interest rate is adjusted for inflation or above zero and really achieving our goal. >> does the fed need to be restrictive to go above the neutral rate in. >> i think that depends on how the economy evolves. right now we're still in june. we'll have to watch the data carefully over the next year or so my open baseline projection is

that we need to be in restrictive territory next year to bring inflation down and achieve our goals, but that's a projection about a year from now. we need to be data dependent the data may tell us we need to do something different and adjust it. right now that is my base case >> john, you know i'm really good at very simple math if i do some simple math i get to a 1% restrictive rate, and i want to add a 2% or 3% real rate on top, sorry, is% real rate on top of that. i want to be positive, and then i want to add inflation on top of that, i can get to 4% or 5% when it comes to a funds rate pretty easily using that simple math >> well, if you look at the projections, the median projection for inflation next year is a touch above 2.5% so if you added o, you know, like a 1% real rate on top of that, it gets to you something like 3.5% to 4%. which is really where a nominal

rate comes, it's where the center of the. >> that's where the market is. you think that's a reasonable projection >> i think it's a perfectly reasonableal projection right now. next year exactly where we need to be is going to depend on the data, but yes, 3.5% to 4% is a really food starting point >> i've got two more things to do i got to ask you, 50 or 75, and why one makes a difference as opposed to the other >> i think to me what matters is the path of policy like i said, from my perspective, we need to get the fed funds rate higher. right now it's at 1.6%, way low where it needs to be the 75 basis point we made last time was exactly right and we're far from where we need to be and we need to get moving. from get there more quickly. >> in terms of the next meeting,

50 or 75 watch the data carefully my view is we have to get interest rates, you know, higher, and we need to do that quickly. >> i need to apologize very to ask through one last question you, as part of your other duties here. you're in charge of the fed doing quantitative tightening, you also have this market desk where you watch what's happening in markets what is your sense right now i know it's early days of quantitative tightening. is the market adjusting this do you worry about a temper tantrum, a seedure like 2019 when it comes to digesting the fed and its balance sheet? >> this is something we're following very closely i'm not seeing any signs of a temper tantrum or anything the markets are functioning well and we're watching that carefully. i think this is going exactly as planned. one of the key reasons i think it's going well is we've communicated that very

effectively. we've been transparent about that and i think people understand why we're doing it and how we're doing it >> john, thank you so much for joining us and a real pleasure to be here in person guys, i apologize, i went over two minutes or three minutes, take it out of my paycheck over to andrew >> coming up from peasn, another news making interview with the former ceo of google, eric schmit you don't want to miss this. jaux is right back after this.

let's get down to the new york stock exchange and check in with jim cramer. jim, there's been a lot of news that we've heard last night and this morning why don't we start with what john williams had to say to stieff, the fact that he thinks rates need to get a lot higher from here. what's your take what do you think? >> i'd like 100, and then walk away i thought that jeremy siegel, though, raised some very good points that perhaps we shouldn't be so hasty. you know, segall is very interesting. a lot of people thought i was one trick, always bullish. that turned to be completely wrong in 2000. so i was very heartened about what he had to say and i think he is underrated as a person who knows what to do here but at the same time, we have a lot of inflation system, we're going to see oil run again today. and there is always a potential

now that china's opening up that we will see inflation fen roar if china reallies to go for it >> what he said today made me sit back and think, this situation of overcorrecting t worries you. the fed is almost always slow to act, almost always slow to stop acting apartment things that he's watching, the idea that rent and housing isn't being measured accurately, that that stuff is coming down more quickly, too. that doesn't seem to be what the fed is thinking at all theis days, but it did stop and give my pause >> yeah, larry sum irs, who had presented himself as the, you know, i like larry, but on the humility side, not that strong with the 555, 5% unemployment, and whenever you say this, they're going to say you misinterpret it.

if you're data driven then jeremy siegel's approach is going to be the best and it wouldn't shock me, because jeremy siegel is unbelievably good when it comes to speck haitian i thought today he was very spell binding. >> thank you we are going to check in with you in just a few minutes. we'll see you at the top of the hour "squawk box" will be right back. we have eric schmit live from aspen right after this

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welcome back to "squawk box" on cnbc right here in aspen this morning. tech industry veteran, we have them here this morning to talk about so much. eric schmidt is here. former ceo of google, of course. doing so much in so many other spaces. and the founder of schmidt futures. it is great to have you here. we've been talking about markets all morning. you heard what jim just had to say and before that, we had the president of the new york fed. you've been through a lot of rodeos, especially in the valley in terms of valuations of what is happening.

what you think is happening? we think we are? >> we make our own weather. we made too much of a storm and we have our own logic. if our products were, we boom and the next generation of products will work. we will define. the big issue is the employees who have stock options that are now worthless. >> is this going to be carnage? is this 2001? >> there is immense capital and lots of startups getting started. have been funding them along with other people. these cycles go on and on and on and the problem is a lot of these people are young and have never been through a cycle. so welcome, you get another shot in a couple years at all your greatness. >> is this one of the moments we say, things are on sale? >> this is going to be a good

year. >> a good year for things on sale. a terrible year if you had to sell at this price. >> tech trades like options. the volatility is higher but the options us greater. >> you spent a lot of time thinking about china and thinking about china and what they should be saying to china about nonmarket practices. >> about the things that china does that we don't like. the way they run the business, the way they treat their people, it is all terrible. we need to figure out a way to win against product competitiveness with china. i mean platforms. i don't want to be using chinese platform technologies. chinese chips, chinese networks. what american or western stuff in that. i don't want our communications, our society which brings us to the chips act. >> which everyone says we want and we passed and yet we don't have. >> the biggest challenge facing

america in the long term is a question of competitiveness with china. they want to dominate all of the key industries and the economic growth of america. they want to do all of that. we pass a law more than a year and a half ago and it is through the house and i we can't get it through the necessary steps to get it passed. it is crazy. >> i think it is sclerosis in the government. compared all the other crazy thing the government does, this is bipartisan, it is important for american competitiveness and let me tell you why. all of us and we are having a good thing that the trump administration did is that they got samsung to build tips in u.s. it's more expensive to build chips in the u.s. the last 30 years, 36 factors are built in china. zero in america. the cost of construction is too high. you are going to have to subsidize that. that is straightforward

economics. we need a little extra to have control over this essential part. >> are you a believer that ultimately, don't know what you think the timeline is if china takes over taiwan and that is a pressure point here? >> i'm not an expert in this. i think it's going to be a while and my own opinion because the issues of the immigration of china, they cannot risk a divorce from the u.s. under the u.s. dollar. the untold story of the relationship but nevertheless, it is important that america has western access to the key technologies of the technology revolution. we made a decision to get out of the businesses even though we invented everyone of them. >> i have a personal question. you are a financial backer with the american frontier's fund. there were a couple recent pieces about that fund which aims to help the government and the u.s. become more competitive. you been involved in a lot of different not-for-profit projects similar to this. there is always a criticism or

a critique around billionaires and power and what the philanthropy is about. whether it is to advance their own agenda or goods. how close people are to the white house. how do you think about that? >> it's easy to criticize everything because everyone is in a bad mood these days. i blame social media. the fact of the matter is there is a long tradition of philanthropic wealth. it is true for human rights and it is there the side. we invented all the stuff and i want us to keep meeting and the way to do that is to take philanthropic money and government policy and the great work that we are doing in the greatest universities in the world and put it together. that's what i want to do.

>> what do you make of the idea that people like you or others are too close to the white house? >> i'm not been to the biden white house at all. i spend the time at the trump white house which shows how influential i am. the important point is that you have to work with the government and you have to do the right thing. they're not allowed to commingle . >> the social leadership question that i'm curious about. a lot of businesses are trying to grapple with big social issues in the wake of this roe decision. google was one of the early companies at a more a gala terrien approach. how do you think leaders should deal with this and how should they deal with it online? you have people like elon musk in the world that is very vocal and media. >> he is a different animal than anyone else in this space and uniquely skilled. >> doing it right or doing it wrong? >> i would never bet against

elon, but he is a special case. the companies that become far more conservative, i was really proud to be up front with the issues when i was ceo. my guess is the next generation of companies are going to be a little less upfront because of the combination of abuse from employees, the press, and society. >> you wanted to get your mind around crypto and web3 is special because the prices have come down. i know that web3 might be a different thing than crypto. these are marketing terms but if you assume that web3 was 10 times overhyped and corrected five times, it has some more to go. >> therefore, the vision is correct. here is the example.

it needs to get big results. >> thank you for being with us. it is great to see you. we hope to see you very soon. were going to take a quick title check on the markets right now. the head of the open this morning, we're going to show you the screen. it is green across the screen. we will see you tomorrow. "squawk on the street" begins right now. good tuesday morning. welcome to "squawk on the street". global stock markets, u.s. futures, commodities, yields are ticking higher on the news that china continues listen covid restrictions and quarantine rules for foreign visitors. sheathing's the u.s. is already in recession. and the ride begins with nike running low and despite being in the top the