becky is off today three hours before it is set to open down 236 points on the dow nasdaq down 78 s&p off 30 points. we have treasury yields to talk about as well. let's show you where they stand. you are looking at the 10-year treasury sitting under 3%. we have come down again since yesterday. now at 2.917 look at the 2 and the 5. we flipped things around that usually is not a good sign. >> forecast nine of last three recessions. >> we had that conversation with steve liesman. >> nine out of the last three. it is not always accurate. forecasts. it is not great. >> not a good sign let's talk twitter

>> he's gone twitter responding to elon musk's move to kill the proposed $44 billion acquisition of the company. in a letter addressed to the musk lawyers, twitter called musk's bid to terminate the deal invalid and wrongful twitter lawyers said the company has not breached the obligations under the gragreement. the deal remains in effect shares are $32 and change. the question i asked if there wasn't an underlying notion that maybe he is really doing this to get a better deal, where would it be? i know we know a lot more about it and people are leaving in droves >> 25 or 26. half >> half. >> less than half. >> any normal person would weasel his way out especially a guy who is mercurial. >> i think he realized he made a

mistake literally within 48 hours of buying it to begin with >> he might still want to buy it for me, his intentions were honorable. the way they handled things. i don't know who is playing the man behind the curtain oz i don't know if it is a group of woke individuals it's terrible. we will talk to a legal expert from the university of delaware in the next hour we'll talk pga >> i want to talk pga. a fascinating story this morning. the wall street journal that the pga under investigation by the department of justice. half this on the screen. >> unfair trade practices. >> for preventing their players from participating in other tours. this one sponsored by the saudis phil mickelson

>> bryson. ian poulter. >> you call them a tour. >> that is critical because of the nba in china to me, jay monahan said it is no way to compete with the money. with our high minded way we approach business in this country saying we can't do this. khashoggi and bad that biden is going over >> right >> and are we happy we kowtowed to china they are on the so yoaudi side. >> they are doing it from the anti-trust perspective >> not because joe is going

over >> do you think of the pga tour as a league in the same way that the nba would be a league? well, this is interesting. i hadn't thought this through. if lebron james decided in the summers to play in another league, let's say you and i started a basketball league -- >> as management >> not as players. you could be the coach if adam silver said you can't join the kernen-sorkin league, would that be a problem? i don't know the answer. you would have a contract to be part of. >> you can't blame jay monahan they are trying to takeover golf phil mickelson is 52 he has gotten nothing but credit

sy crit criticism. they would say they just lost james caan they would say it's business, sonny. would you go i know you would >> i might i might. >> i know. >> this is not -- >> if you were not going to win another major or tournament. you don't have to win anything we'll give you $200 million. >> why is the behavior of the pga exclusionary i believe people can be exclusive. why can't you be exclusive to one tour over another? >> it is the shiny pga tour that is all these guys amazing lives and fame and fortune and add legis adulation. >> it doesn't seem that is anti-trust violation. >> right i think you do it knowing if

there was anti-trust violation, you have to play your cards and see what happens >> part of the issue is the way players are treated as part of the tour you are not a player of the tour the question is have you signed a contract exclusive to the tour i don't know enough. >> if this is challenged, you could see people saying you can't exclude them they he aare lallowed to play. >> unless you sign them to exclusive contracts. they only pay you when you are in the tour and in the particular competition and you do well. >> you get the endorsements and all of the other stuff. >> the model may have to change. >> people thought. tiger may be close already to the "b" word

obviously he's opened the door for everybody. any golfer would admit that. before tiger, b.t., the excitement and interest and purses >> in the priority list of department of justice where i would want to go and this is where they want to spend their time >> i think it is weird you are not looking -- >> should i be on the side of the players? >> no. you should be against the justice department taking the side of the khashoggi murders. >> i think i am for different reasons. i'm trying to bifurcate all of the other political issues in my mind >> is there any way we can get to your photo shoot in the saudi desert from this >> from this segment you might have just done that. i don't know if they have it on file the way they used to. apparently they don't.

>> they say moving on. >> thank god, dave. >> when was the last time -- >> dave evans, our producer, there is a present for kyou in the back. we have a booster rocket bursts into flames from spacex take a look. >> on nsa live whoa whoa >> that, as you likely can see, a major setback for elon musk's aim to launch the company's starship to orbit this year. will we listen in longer >> i don't want to jump to conclusions. >> after that, musk tweeting yeah not good team is assessing damage he tweeted 1:30 a.m. eastern, base of the vehicle seems okay

by flashlight. i was just out there about an hour ago we shutdown the pad for the night for safety we'll know more in the morning just one point of context. they have been launching rocket over there successfully. we, of course, report on the one that doesn't this is not the norm for them now. they had remarkable success. in fact, undercover success in terms of the number of rockets that launched us almost normal course almost bizarre it used to be anytime a rocket would go up and we would cover it because it was fascinating for the country. enough it is usual that we're really just reporting on the mishaps. >> right it's true.

it's true. you saw it everybody will have a run on that you heard those guys i think the color commentary you don't need to expect a lot from us tv people. >> whoa. whoa >> you say it. whoa >> whoa! >> the ceo of gap is stepping down effective immediately >> whoa. it covers a lot of bases you need a lot it is not al michaels. miracle on ice was that al? sonia syngal said she had the board support in stepping down she'll stay there for the transition syngal was the leader of the old navy gap business. it was in march of 2020. just days before covid started

spreading in the united states the board's executive chair will serve as interim ceo gap updated guidance expects sales to decline in the high single digit range. the stock now down 50% this year >> they can't get their mojo back. >> they got it back that one time and it was surprising like so many places, you get it back, but it is never permanent. i would have thought sears oh, my gosh. sears is coming back. >> no. >> is there anything left of sears? >> oh, goodness. >> sears >> k-mart. >> there's a winning combo. >> mr. lambert >> k-mart sucks. that's from "rainman." you remember that, right >> i do. you are just not ready you know what you should say

whoa >> whoa. it's 6:11 in the morning and you are quoting "rainman." let's talk about bill ackman winding down the biggest ever spac after finding a suitable company. raising $4 billion for pershing square tontine he planned for that spac to take a stake in universal music he put the deal into the hedge fund and ackman would return the funds to the shareholders. he cited adverse market and thwarted efforts to find a suitable company the appetite for spacs has plunged since the surge of interest a couple years ago. the cnbc spac 50 index >> look at that. >> can we go back to universal

music? this was an odd one. he wasn't allowed to buy universal because of the s.e.c this was one of the few, i think, that actually probably would work out in favor of the public shareholders. they benefitted from the fact the s.e.c. said you can't do this bill ackman's fund, the professional to democratize these things this is one of the few that is a decent deal. instead, he took it and put it in the hedge fund and the professional investors were the ones who have won that game. >> the music business is -- it is bottom feeding at this point. it is hard to make money with the business model and everything else. >> it is not a bad business. it is growing. everyone listens to it on spotify and amazon and apple

totally. it's continuing to be a growing business >> digital anynickels. digital pennies. >> it came from here down to here and is now slowly graduated. just saying. let's talk pepsi did you get that thing yesterday? >> i did i got a bag of lots of carbs >> yeah. lots of carbs. ketchup flavored doritos you know who would like that mark haynes. >> loved the guy >> pepsi reporting $1.86 a share. better than 1$1.74. pepsi raising the revenue forecast saying the demand for

soda, snacks is remaining strong amid rising prices we talk to hugh johnston in the next hour. we will ask if there is most contents settled during packing than before. most of my bag looks like more of the contents settled during shipping i think they have been -- that is one thing you can do instead of raising prices. fewer doritos. it is doing me a favor. coming up, steve liesman joins us about the red flag potential for a recession. and later, amazon prime day sale under way we will tell you what it means for the stock. usual lly not much. you are watching "squawk box" on cnbc >> announcer: this cnbc program is sponsored by td ameritrade.

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along with equities, the corporate debt side of the balance sheet is flashing rece rece recessionary warnings. we have inverted yield curve today, too it looks like it is here to stay senior economics reporter steve l liesman here with the signals sent by the corporate bond spreads.

>> joe, treasury yields have come down because of fevear of recession. investors price in concerns of earnings and possible rise of defaults yields on bonds nearly doubled since the beginning of the year. for ig, the concern is downgrades for high yields to rise in case of default. those are seen in spreads of corporate bond yields over treasury rates investment grade strategist saying credit spreads are signaling weakness in the credit market from the perspective of demand, but not weakness in fundamentals and the concern is fundamentals will get worse but they're not near recession levels look to the left that is the pandemic and then the great financial crisis this is close to the level of

2016 when oil prices were created fear of default in the energy industry. that is to the left. in a mild recession, it could rise to 5% to 6% strategists are seeing value with corporate issues supporting high yields with quality he has to look at those carefully. joe, it is a bet on whether there is a recession and how deep it can be obviously, earnings will play a big role in what happens to corporate bonds in the next couple months. >> what can i get right now, steve? in a high yield, you would not be worried insurance companies? >> joe, which money are you using? investment money or money you use to bet on remote college games and spreads? is that the money you are using?

>> safe money. if i'm looking for yield >> safe money. >> yeah. if i want to diversify my overall portfolio and not have as much equity exposure at this point. 50, 30, 20 20, cash, 30, fixed income. >> there is 6% to 8% or 5% to 7% on some of the higher ig numbers. you can get up -- i would take that money you would bet on podunk university versus peoria college and bet on the high yield market that is what i would do. >> the latest is money line on the team, baseball i had the tampa bay rays yesterday. three guys hitting they all got hits. i said zero runs in the first

inning >> that is what you should bet on high yeields. >> $5 and i would have made $50. >> go take that money and instead of betting it, go get 16% or 15% on some of the junk bonds. that's what i would do. >> take my $300 that i have at draft kings and put into a bond. >> exactly >> all right we'll see you agagain? >> i think we're done. joe, that's it >> one time? no >> we may -- >> we have to bring you back get the band back together >> let me know i have to walk the dog >> go walk the dog. coming up, maybe he'll go to starbucks. starbucks closing stores over employee safety concerns we havehave details after the bk

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welcome back to "squawk box. starbucks is closing 16 u.s. stores after worker safety issues were raised employees said they were for drug use the stores in seattle and los angeles and portland and washington, d.c. they will troain transfer emplo other locations. they will reduce operations in response so safety concerns. starbucks will provide additional guidance in how to deal with active shooter scenarios and conflict deescalations at work. this is after the conversation i had with howard schultz in june.

>> the world is what you like and the world is the world >> it raises questions about the safety of the stores broadly as we talked about it, starbucks has thought of itself as a place to go and hang out and spend time working on a computer as a mini wework is how people used it i'm drinking my starbucks. >> you live here it is not just starbucks big cities did you see the crime tape yesterday out there? ten feet from here >> i did not. >> it was yesterday. do you know what it was from >> i did see the crime tape. >> someone got stabbed they he aare alive. the person got stabbed a lot going on >> a lot of places around the country. >> that's what i was going to say. you don't ride in. i come in from the west side

through the tunnel we come across there and i always kind of look around and see what is going on it reminds me of taxi driver he used to drive through the streets and look around. i just can't believe it. unbelievable i see that unbelievable things going on >> here. if you have driven through l.a. recently >> i was just in washington, d.c. my daughter went to school from philly to d.c out of the frying pan into the fire. >> i remember doing the show from seattle where starbucks is based. there is a tent camp there you know, a lot of things happening in that area >> describe all of the violence to those people. it is a difficult situation. coming up, we have a lot more on ""squawk box" ahead the kickoff to earnings season and all that next.

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good morning welcome back to "squawk box. live from the nasdaq market site in times square. we're down triple digits down 200 in the dow. the session yesterday saw attempts to rally and then finally succumbing to selling pressure going into the close for the start of the week after a pretty good week last week joining us now is lisa ericson at ubs bank and uma putarkani. i got it a lot -- did you see that? pattark -- >> i would have failed the test. >> that could be a lot of things i practiced. i finally got it

investment strategist at in investment square. let's start on the cusp of investment season, lisa, that stocks are discounting mechanisms there has been multiple contraction due to rising interest rates is there more to go or do you think a lot of the lower earnings expectations are reflected in the big moves we've seen down? >> well, joe, to your point, we are cautious coming into the earnings season. you have a number of headwinds that companies are facing. constrained labor and higher wages or ply constraints as well as just ongoing uncertainties from the russia and ukraine situation and covid lockdowns in china. we expect that with that difficult type of uncertainty,

that guidance may be more cautious if you see some of the earnings reports really weaker than expected, i think to your point, we could see what we call a second repricing we had the first repricing on the back of the multiples coming down there is the risk of the second repricing based on the potentially lower earnings forecast going forward >> uma, are you in the soft landing or hard landing camp right now? >> great to be here, joe at this point, recession is somewhat inevitable. i'm not sure a soft landing is in the books the question he here is whether this turns what has really been a corporate led type of slowdown or whether that impacts consumers in a bigger way. that is depending on the jobs market so far, so strong. now the fed is looking at further tightening and more aggressive policy changes here we have the labor market weaken

and the consumer is feeling worse. that is where we find a little bit more of an issue from that recession type of perspective. >> that's your forecast that the friday numbers are lagging number and eventually you will see some of the weakness in the labor picture which we haven't seen yet >> a lot of what we're looking for is the amount of job option and what we see from the jolt report is coming on a big lag. if the fed is using that and infl inflation, some of the lagging indicators and by the time the fed policy comes into play in the economy heand reality, it wl be significantly down line we are looking at rear-view mirror type of metrics to make policy decisions which impact the economy several months down the road because of the lag effect, we will find ourselves in a tough spot. >> lisa, back to you

in terms of asset allocation, we had steve liesman talking about corporate debt would you be more interested in insulating the portfolio from volatility with fixed income or pick your spots and go into equities >> we actually agree with steve that really right now that we feel more having an emphasis on investment grade makes sense the reason why is you have difficult monetary environment that will impact assets across the board, bonds historically have more buffering capabilities because they have greater income overtime as well as typically lower volatility and response to difficult economic environments. we do feel favoring bonds to some extent makes sense and we would go with the higher quality types of fixed income in the

situation only because with the indicators showing growth slowdown and being cautious and having the defensive characteristic makes sense at this point >> uma, would you just stick to different parts of the stock market that reflect maybe more fixed income qualities or just wait for the markets to come down and sell on strength and buy on weakness? where are you? >> we are real estate investors and we see in the public markets fantastic buy opportunities for reits especially as we think what is happening with earnings growth, real estate is looking at least stterm and durable cash flows in reats, we have leases that are signed through next year we have a book built up of

strong cash flow growth with the real estate sector with the area with a lot of demand those areas within the reit space are on seale. we can take advantage of the mispricing in areas where it seems like you are throwing the baby out with the bath water it is an environment where you parse through the haves and have-nots. >> not all the time. two years ago, you weren't -- your advice would have been different or are you always liking reits >> right now, reits, compared to equities and private real estate seems attractive pricing in about 15% to 20% decreases in commercial real estate that is overdone we think it is closer to 10% with the recession environment right now, we are looking at

clients and telling them it is a better buying opportunity for them in the public markets with commercial real estate you get the strong cash flow and the growth in the cash flow and strong balance sheets. you know, looking at some really steady and strong and quality earnings within the reit space today. >> uma, thanks lisa lisa, i don't have to think about your name. rolls off the tongue thank you both next story is unbelievable >> about heathrow? >> yeah. >> in the uk imposing capacity cap and asking airlines to stop selling summer tickets. >> think about that. >> details are next. you got to drive later, don't miss the first on cnbc interview with pepsi cfo hugh johnston.

he will join us to breakdown the company report that's coming up

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yeah, feel the savings. priceline. every trip is a big deal. in news just out from the uk heathrow airport imposing a capacity cap of 100,000 daily departing passengers between now and september 11th it is asking airlines to stop selling summer tickets to provide better and reliable journeys the move will help improve critical functions that are significantly under resourced which obviously is not just the problem we have here in this country. >> what do you think putting a cap. >> trying to reopen. >> what would happen in the united states if jfk and l.a.x.

was putting caps on for summer travel you know who would be happen with that? jay powell >> probably. >> you want to talk about what you do with inflation? that's one thing you can do. i don't know it curbs demand. it extends it another way. >> i'm driving typically. >> there is a question how much you think the travel is a yolo summer meaning everyone is wanting to travel, travel, travel they are out and out, but come this fall, especially as the markets have come down and worries of the economy do you think come september people go into -- in the sorkin family, we vhave to go into austerity mode overspending >> you do? >> all the time. if i see a big credit card bill? i say we have to get careful >> the 1% problems

it is a good idea. live within our means. >> you have to do it >> good to teach young children. i don't think we taught them that well. coming up, inflation in america. happening in households. new survey data of how people are worried about rising prices and we hear about a top liryutive from the grocery deve company fresh direct "squawk box" is coming back after this throughout history i've observed markets shaped by the intentional and unforeseeable. for investors who can navigate this landscape, leveraging gold, a strategic and sustainable asset... the path is gilded with the potential for rich returns.

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vo: call 211 or visit 211.org 2-1-1 get connected. get help. welcome back to "squawk box. a new poll finding inflation say worry for many americans and those who earn six figures and

it is impacting how they spend money. cnbc's financial correspondent sharon epperson has more on the findings sharon >> andrew, this survey took a look at the inflation impact of 1,000 adults in the u.s. with annual income of $100,000 or more nearly all of those who responded, 96%, are concerned about inflation. 65% are very concerned about one-third, 34%, say they are worse off financially this year than a year ago 46%, half, had to cut household spending due to inflation. 38% will cut if inflation gets worse. after paying higher prices on gas to food to housing over the past year, these high earners say the first expenses to go is dining out and entertainment outside the home and travel and vacations. more than half also say they

will delay big house purchases inflation has been a wake-up call for many says certified financial planner at tiaa. she says now this is the time to be realistic and ask yourself the important questions. >> how much am i going to spen spend? and how am i going to manage those expenses because we will still have inflation in the future. >> now we're going to get another important read on inflation tomorrow when the consumer price index for june comes out, andrew, and we'll get to see how much it's going to hurt going forward >> is there anything else we should be doing to navigate higher prices? >> well, one of the things that you just mentioned earlier, about looking at that credit card bill saying what happened where's the spending where are we going here in look at your financial situation, your income, your spending, your debt, to figure out where you are. and karen mcclanahan says look

at your needs and wants. figure out what's optional and what can you cut out a lot of times those are recurring expenses it may be subscriptions that you have that you are no longer using. take a look at those, see what you can add up and cut out that may help your budget. >> karen, appreciate it. i go into austerity mode a couple times a year, i know, joe, you think that's a hlittle crazy. >> what i do, i don't open anything >> you got to open them. >> no. why should i do that why should i ruin my day >> i think someone else is opening them and telling you what to do and you're listening. >> they're the ones responsible for what's happening in all the things that i'm not opening. so they can worry about it meantime, let's get the latest read on consumer prices we'll get that tomorrow at 8:30 p.m right now we're joined to

discuss the rise in food prices the dave bass, he's managing director of the company that happens to deliver groceries the sorkin family happens to be a customer i should thank you for delivering food to our home. and i should also not thank you, maybe, for the blame when you do look at the credit card bill, it's much higher >> appreciate the invite, appreciate being here. and we've been in business 20 years. this week is our 20th anniversary. i don't know if you've been shopping with us that long, but i do appreciate the business you've had we focus on being an advocate for our consumers. they have great ability to choose with us you know, we focus on a couple of key things here one that you noted is really high-quality delivery focus on fresh and -- in

>> could we just talk about the costs, though? we want to talk about how much of that is being passed on, how much of that cost you think you're absorbing as costs are going up, what are you seeing? >> we certainly have seen the same cost pressure that all of your earlier guests have seen as well, and we do a couple things here one is we'll try to negotiate as hard as we can on behalf of the consumer to mitigate those cost increases. that's number one. number two, we make sure we focus on pricing and creating sale items, promotions on items that customers really care about. we've seen a shift with customers with more sensitivity to produce and dairy >> just so we understand in terms of food, where are you seeing the prices going up, is there any category that's going down >> right now, we're not seeing a lot of that. we're seeing more cost pressure. we're opt mesimistic as everyboy

we'll see that flow through, but typically there's a little bit of a lag before we see that on our side >> and in terms of the underlying cost going up, how much of that is something that you're absorbing is there any product where you say you know what, we're just going to take it on the chin here because we're trying to stay competitive with others, and you have wages going up and the cost of fuel because you guys from doing the full transportation to people's homes. >> yeah, one area we were technt particularly sensitive to is we have a great whole-meal offering for customers. and for those who want to trade-off of restaurants we've been focussed on keeping our price points in the right place for those meals. we have great high-quality meals. the customers feel good about having frankly a really high-quality, innovative meal

that they can have at home at a much better price point than they can get elsewhere >> we're struggling to get to the bottom line here let's go to the margin issue i keep asking you how much you're taking on the chin, and i have to admit i don't think we've got an answer. i'm going to ask you straight up what's happening to your margins? >> our margins are the same as they were a year ago we'll do the best we can to focus on efficiency. we try to control as much as we can on our side to only pass through the bare minimum of what we need to, to the consumer. >> and in terms of where you're seeing it, though, it's where? in the produce category? what are we looking at here in here >> we're seeing it across the board, with fresh and packaged items as well. that, supply chain is really

across the board >> and dave, what's happened to wages for those who are transporting food to people's homes and the like >> yeah, there certainly has been upward pressure on wages, andrew, and we're seeing that as well we've made adjustments -- >> what are you paying per hour in. >> it varies we have folks in our warehouse and corporate roles, too we'll start in the high teens all the way up into the high income levels as well. >> news you can use. do you expect folks to tip the folks who are delivering the food >> yeah, so we actually give consumers the option to do that when they place the order. to be honest, that's actually helped us when it comes to attracting our employees, because they're able to take part in that tip grants that d customers offer. >> i'm asking a different question let me ask it in two ways. is the customer expected to tip,

meaning when you do the modeling for what the employee is taking home, and then somehow that tip distributed? >> great question. those who are in the field -- i'll start with the latter part of that. those in the field, nose who end up touching the order. we make sure we pay a fair wage that supports our employees, and that really is extra on top for them, because it peace's a great wen win-win for them coming up, pepsi shares rising after earnings. we talk to hugh hnn.joso "squawk box" coming right back

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good morning futures pointing to another down day. we'll show you what you need to watch in the trading day ahead and quarterly results from pepsi. we'll talk inflation, supply chain and more with the company's cfo. and twitter's lawyers responding we'll talk about the legal battle that is brewing as the second hour of "squawk box" begins right now

good morning, and welcome back to "squawk box" here on cnbc, live from the nasdaq market site at times square. i'm joe kernen along with andrew ross sorkin. becky is off today, just like the mail i get, the credit card mail, let's just not open the futures. >> you don't want to look? don't look it's in the red! >> i don't know, but you can see it on the lower right-hand side anyway let's go ahead and look. we're now down 280 points. we started a little over 100 down and as the premarket session is proceeding we got down near 300 at one point we had a pretty good week last week, but at least so far, monday and tuesday this week the selling has begun again. we'll get some inflation data this week, and we're also

getting quite a few reports, corporate reports, big banks and others, we've actually got pepsi, which is pretty good. it will be pretty interesting to talk to hugh the ten-year notore, right now,s three and change, no, i'm sorry t it's below three and the two year and five-year are above where the ten-year so we do have an inversion now in the yield curve so 2.91. check out the dollar, and then we'll check out oil and get some individual names the dollar continues to do well. maybe that is a little bit of breathing room for the fed the dollar has been so strong. and it's not a great neighborhood right now globally, it nerm terms of inflation

>> best house in a bad neighborhood least dirty shirt in the -- >> i would never repeat a shirt, would you? >> no, you know why? i get makeup on the collar >> even on the undershirt at times. my spanx yeah >> let's get to dom chu. >> spanx and propecia, you'll be there someday. you'll be there someday. >> he's ready to help us he doesn't know what to do >> i laugh, because pre-covid, maybe a few years back in our newsroom in inglewood cliffs, new jersey we had a big debate in the newsroom about whether men should or want to wear undershirts under their shirts, now i moknow, joe, you and andr do wear undershirts, i do not because it adds bulk >> i have an answer to that.

i used to have them on >> tommy johns >> tommy johns i get no commission. >> i thought they just made underwear. >> it's the thinnest undershirt in the hessistory of undershirt. >> i will look into it >> criminally expensive. >> i don't want to wear layers and layers >> tell the them you need spanx. you can get the built-in six pack instead of the built-in keg. >> i have a stunning visual in my head. >> tell us about the markets, please >> i'm going to peick up where joe left off many of the commodity prices are priced in dollars. as dollars go up in value it makes it more expensive to buy things gold is about flat on the session. it hit about a 172160 level.

you'd have to go all the way back to september of last year that's a meannine-month low forl futures. all of that is coming ahead of consumer price index here in america. but when you see a gold chart, which has historically been one of those hedges against high are inflation, and you see a 17% drop over the course of the last several months you wonder whether or not there is a conversation over whether inflation has peaked or not. one indicator has said so. some specific names to watch in the premarket trade right now. we're seeing a bit of a pickup in activity for certain stocks peloton is one of them down about .75 of 1% the company that makes the training for fitness, they're

going to outsource the bicycle and tread process to a manufacturer based in taiwan peloto peloton shares, watch peloton shares on that bit of news that they are going to get out of the making of exercise bikes and outsource that process and then a smaller cap libertarian vehicle maker. this is a $600 million market cap ticker it's c noo. walmart just inked a deal for delivery vehicles. that is why you see canoo's shares up. a company that's going to be worth a lot more if these gains hold but a lot driven on that big deal with walmart, because walmart wants to go carbon free

by the year 2040 >> looking at these canoo trucks they're not riffian. riffian has that deal with amazon >> i've seen riffian. those are nice-looking cars. >> i've seen some of those on my streets in my town. >> they look like gordon >> you don't think that's a cool-looking truck >> no, they make me laugh when i see them they look like they have a face. they look like thomas the tank engine >> not flash gordon, the other gordon >> no, not flash gordon, gordon, i think gordon was in a good news some of those guys were cranky >> looks like the mouth with the two eyes >> i'd like a tesla truck. you know what i was think, though telecons, just trying to figure out how we all bought into that. you know what i mean

they made, they made -- >> who bought into it? >> they made exercise bikes. >> it's less than $3 billion >> who bought into that, you're talking about the people who bought the stock >> when we talked about it at a $40 billion market cap >> it was ridiculous >> a $3 billion market cap there was a certain notion that they really had something. the way that they it did it. there were all of these opportunities that opened up in terms of synergy, no one was ever going to go back -- >> people weren't going to go back to a gym, that was ridiculous >> the wood wings. >> the peloton tread plus is like a wood way. like a wood way and cheaper. >> it is worth every penny. coming up, pepsi ceo hugh

johnston snacks we got to ask him, how you do that and marvin's went up we talk about the latest quarter. you know how i think i think these get less now we talk about all this in the state of the economy and later, twitter's lawyers not mincing words when it comes to elon musk's attempt to scrap his deal for the social media company. all that as the stock continues to fall and we discuss the legal battle that's brewing. "squawk box's" coming right whack. hack ack. back ♪ ♪ we all need a rock we can rely on. to be strong. to overcome anything. ♪ ♪

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get a great offer on internet and security, now with more speed and more bandwidth. plus find out how to get up to a $650 prepaid card with a qualifying bundle. . global food and beverage giant, pepsico, out with quarterly results. $1.86 a share was better than the $1.74 the street had expected 13% organic revenue growth in core operating margin expanded by 36 basis points joining us for more and a first on cnbc interview, hugh johnston, also a member of the c cnbc cfo council glad to have you on.

is this not surprising is it market share is it higher prices? how did that happen? wasn't the street looking for 7% you did 13 >> yeah, good morning, joe not surprising to us, certainly. we obviously have done a lot of work in order to get to these teams of growth numbers. from a market share perspective we're doing well we certainly feel very, very good about that. in addition to that, we're growing volume it's not a matter of sacrificing volume and taking too much pricing in the market place. obviously, we're facing inflation like everyone else, and we think that's going to perspe z cyst for a while, our focus is how do we drive cost out of the business so we can translate what's a good top line ninto a good bottom line as well

obviously that worked well this quarter. >> it just seems weird that you're able to navigate through sharply higher costs and still have revenue up that much and you're not real lely hurting in terms of margin. there's more to squeeze-out of the business >> when we're faced with inflation we focus on the rest of the cost structure and try to figure out, hey, how can we do things more efficiently? how can we leverage automation, digital technology to make ourselves more and more efficient. and we've been more and more successful i've been on of and talked about how we've reinvested back into the business what you're seeing now is the fruits of that we're seeing costs get managed better, despite the fact that we're facing a tough, tough inflationary environment as is everyone else. >> hugh, on average, you know,

and i've been kidding all morning long about how, you always tell us, content, contents may have settled during packaging. and i'm not complaining. you give me fewer doritos. it's good for you. good for everybody i don't need as many what's the average, either tell me how much you've raised prices on these things to keep up with inflation or how much you've cut down on what's in the, what the average packaging in terms of whether it's less than it was a year ago >> yeah, honestly, joe, we take a consumer-sencentric approach our packaging. >> what the hell does that mean? you what are you giving me -- wow, you talk to mckenzie before you come on here? what was that again? >> consumer centric. >> consumer scentric approach t

our packaging? i've told you it's okay if you are. >> there are times we'll take chips out of the bag instead of pricing up, there's no tdoubt about that there are times we increase the chips in the bag but we say how are consumers actually using that package, and we study this stuff and try to figure out, based on that, what's the right size of the bag? we move them around all the time for the most part, consumers seem to be very happy with it. we still see volumes going up. we see the number of occasions going up so people want to buy our product more and more. i mow thknow there was a news a out about doritos recently, and frankly that was inaccurate. >> what did it say, and what are the actual facts >> it said there were less

doritos in the bag, and in fact, that are were not less doritos >> they were smaller in size >> no, no. >> how do you decide which ones are doing that >> over the year we've probably done it in avevery single packae it's something that's been going on for decades consumers seem perfectly fine for it it's just that it was a news story for some strange reason. >> we're trying to figure out with how, we're going to get a cpi number it's a real thing. for a lot of consumers and it's got to be real for you and consumer brands and everybody. we're a just wondering how you deal with it and still do 13%

growth and increase your margins. it's magic >> we start with how do we take cost out of the business after that, the next ten is how step is ho do we take pricing >> how do you take pricing >> if you look at the warquarte, we're up about 12%. >> how much of that is a wages story for you, how much of that is underlying additional cost in terms of packaging, the pt for plastic and the like which component parts are playing a role in this for you >> yeah, that's a great question, andrew, and the reality of it is all of the above. certainly the two air reas in

commodities, number one, vegetable oil and number two is the grains and corn and the like most of our packaging attcorrels really well with the barrel of oil. we can mitigate the impact and take pricing in a thoughtful way along with our customers so that we actually put them in a position where they can plan effectively as well. as i said, our focus first and foremost is how do we avoid taking pricing by drive cost out and the like, and how do we drive growth for our customers if we do those things, generally, we're going to be okay in doing the pricing that we need to >> supply chain compared to six months ago, what are you seeing? >> yeah, better, but not all the way there yet, to be candid. if we were a six or a seven

before, we're probably an eight or eight and a half now. we'd like to get to ten, which is where we were prior to 2020, but it's still taking some >> are you fearful about the future or are you sanguine? what would you tell j. powell? >> no, honestly, it's not for me to give the fed chair advice i think we're going to be -- >> he might be able to use some. >> i think we'll be in an inflationary environment for a period of time maybe a couple years i think it's going to be hard to drive inflation out. and i think from the perspective of our company, because we tend to be a pretty good defensive stock and our brands are strong, we tend to be better protected against inflation than other people are but no, i don't think inflation's going to go away

quickly, faand if it does, it's probably because we have a very deep recession, which would be more concerning. >> in what area of the world do you have the most possibility for gains? who's not eating enough snacks we have to be the leaders, specifically in short hills, new jersey who's the leader in snacks >> the united states is clearly the leader, but if you look around the world, latin america, where we have great businesses with high market shares, their consumption is much below the u.s. western europe, the middle east and asia >> you didn't -- >> a world of opportunity. >> no cauliflower stuff which tastes like somebody's rear end. >> i know he's got bubbly. when it says zero calories, but it has a taste are you rounding down -- i think

it's a rounding down thing from like the yogurt on seinfeld everybody got fat. >> i'm not a food chemist. but my understand something zero means zero. >> zero means zero my son says smells like something, tastes like nothing >> what's the something? >> no, it has that effervescence of a thing >> just shove all that cauliflower stuff, hugh. you tried it tried to give me something that wasn't corn-based. it's just, it doesn't work don't do it. >> i hope you tried the evolve protein shake, because it's a plant-based shake, it's designed for you, and for you, andrew >> designed just for you, joe. >> that's what he said very consumer centric. >> it's always fun to have you on, hugh thanks for the catsup-flavored

doritos. i haven't tried that yet i'll try anything. >> they love them up in canada try them, they're great. >> i like the clam ice crime >> thanks for joining us when we come back, it is back, the top states for business how the numbers are compiled and enthe cthen the challenges f getting people back into offices. we'll hear from the ceo of the partnership for new york, a non-profit made up of ceos and executives from top corporations "squawk box" coming right back to adapt in the changing world, you could hire a professor of theoretical mathematics. we all know this equation, right? he'd crunched numbers day and night. that's it. to maximize profitability. morning. i have quarterly numbers that are beautiful. and forecast revenue from every corner of your organization.

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uh, how long are you... i'm done. i'm okay. what if you were a gigantic snack food maker? and you had to wrestle a massively complex supply chain to satisfy cravings from tokyo to toledo? so you partner with ibm consulting to bring together data and workflows so that every driver and merchandiser can serve up jalapeño, sesame, and chocolate-covered goodness

with real-time, data-driven precision. let's create supply chains that have an appetite for performance. ibm. let's create. welcome back to "squawk box. the supply chain is broken workers are in short supply, inflation is raging. which states are part of the solution we're getting set to reveal the top states for business. scott cohen is in the mystery

top state to explain how we choose scott, help us with the mystery. i'm trying to, i'm already starting to look at the background here. but you're not really there. or maybe you are >> we're inside. we're inside, because it might be pitch-black still outside this time of the morning, or it might be bright sunshine, or it might be raining anyway, we try and keep this a mystery. that's one of the things that we do every year, and this formula that we use, which we've been using every year since 2007 is built for change, which is good, because so much is changing right now. but it also lets us help, lets us hold the states to a consistent set of standards. our ten categories of competitiveness. here's how it works. we start by analyzing every state's economic development picture. the more they mention a particular selling poirngts the more weight it carries in our study. this year, pretty much every state is togetherity workforce

no great surprise. so this year, workforce care ease the most weight we look at migration and industry-recognized skills, next, infrastructure, roads, br bridges, the power grid and sustainability the cost of doing business, the economy, life, health and inclusion, including crime, the environment, health care, protections against discrimination and new this year, child care technology and innovation. business friendliness. education, access to capital and the cost of living also this year, we're paying special attention to two emerging industries, cryptocurrencies and cannabis. you can read more about this

m methodology. you can read more at top states.cnbc.com. you can see where your state reveals tomorrow morning on "squawk box. and the other thing we do every year, our patented, diabolical hints. here is your first one where am i caffeine fix read more about all this at top states.cnbc.com. figure out who, who is the top state for business >> so what do you think, joe i don't want to ruin it. and i don't know we don't know. we generally don't know. caffeine fix >> columbia, south america oh, no, no, no, that's not a state. >> caffeine fix. and then he's got some wildlife behind him >> you know what, previous years, i know how diabolical he is, and i've given up. he's not going to drag me into

this you're not going to drag me into it, cohen. >> would caffeine fix have anything to do with. >> seattle >> i'm thinking starbucks. >> except washington's probably dead last. might be struggling. >> you have to consider that that's the worse state in the world >> it's not the worst state. it's a beautiful say the >> for capitalists >> every state is great, you know they all have their own qualities. >> the state of denial >> i won't be able to sleep tonight, obviously, because tomorrow we've got the big reveal so you're going to have to tune in i'm going to be thinking about this from now on until then and guessing what do you think about, you had his little finger puppet did you see that >> yeah. >> what does that tell you. >> i told you, i've given up, i've given up. >> nothing

you've got nothing for me? >> i know what, see for me, i know what the last three say thest state or four states, they're going to be re-jiggered you can't just change the al go just to get a new one avenue year y every year, when was georgia >> i want to say 2013. >> texas has done it a lot washington state has been a top state in the past. >> washington state has. >> you know, that was before jay innsly >> i think so. states you just mentioned might be part of this. >> maybe -- >> oh, that's because the esg thing he puts in at the end.

>> think about the way that we choose these are the things that states are talking about, that's the categories that carry the most weight what state has a great workforce. >> people, depending on where you are, they would be, that's a horrible state once again, it's a country that's deeply divided on a lot of issues. still to come, twitter's lawyers saying elon musk's decision to terminate the deal is uplawful . l l

welcome back to "squawk box. company t companies in big cities facing difficulty getting workers back to the office. we're all challenged you look out the window.

there's people in sometimes squ but not at the levels we used to see. what do we need to do to get them back? >> we need to quit thinking that we're going to return to what new york city was in 2019. the world is different we're in the third year of a global pandemic. a plague, which has created an existential crisis, similar to what was written about in "the plague" years ago. and this has had a huge impact on society it's going to change, and woof' gwe've got to get used to that. >> if you do think that we are shifting the way people work, demonstrably shifting, whether it's hybrid or a three-day

workweek or what have you, it changes the ecosystem around restaurants, the cleaners, all the different component parts that make a city a city. and even to the extent that we talk about safety in cities and crime rates in cities. we've always thought the more people in the city the less there will be crime and the like so how do you shift those dynamics? >> number one, you make the city safe and improve the quality of life conditions that have deteriorated during the pandemic i was talking to the people who manage central park, and they say trash in the park has tripled during the pandemic. that they're having to clean up after their guests, and this is symptomatic of a change of a deterioration that happened again because we've all gone through, i think, a very difficult period and you mentioned inflation and the other contributing factors

now, the racial reckoning that we've gone through in the last couple years, everything is in flux and the danger now is to try and make permanent policies, to not stay fluid in terms of what we're thinking about, both with the workforce and with the population in general. so i think that we're in a profound era of uncertainty. but the opportunities that that creates are also enormous. >> give me a grade for mayor adams, mayor of new york city. i know you have to work with him, but to the extent can you give me an honest grade on how you think his progress has been so far >> as the mayor likes to say, he is perfectly imperfect he is commabsolutely the right r at the right time. i geofive him an a on his messa.

he is a person who has overcome tremendous adversity in his own life by sheer force of will. for all those reasons i think he's the right mayor at this moment in history. the work he's doing, he's not allowing homeless encampments in the city, which we've seen in other cities have become a tremendous threat. he's cleaning that up. he's gone after guns and had over in the month of june, they had 355 gun arrests. shootings are down general crime is up, and that includes everything from robberies, burglaries, et cetera that's not a good thing. assaults, but he's on the case he's focussed. he's a former police captain i think that he's the right person for the job >> catherine, final but very philosophical question the ceos have been more aggressive for the most part in trying to get their people back.

the financial industry as you know has said we want our people back in the office they have not really wedded themselves to, they've wed themselves to maybe a hybrid approach at best, but there are lots of companies around the country that have said we're going fully remote and changing the paradigm is there any possibility that new york is making a mistake in trying to actually pull people back into the office >> i don't think that most employers are pulling people back into the office pre-pandemic only 6% of the jobs in the city, the office jobs, were considered to be functioning partly remote. today, 70% of employers tell us they are offering a hybrid work model. so employers have moved with their workforce toward much more flexibility in their hours and what they're concerned abou is not to lose the value of in-person relationship building,

of team building, et cetera. they're going to continue to push that. and we think that as the city recovers, as we get public safety under control, whether people feel good about commuting, et cetera, safe on commuting, i think that we will see that the office model comes back again in a hybrid fashion we are not going back to 2019. >> catherine, it's always good to see you, we appreciate your perspective on everything going on in new york city. and i think this is representative of a lot of cities around the country. thanks >> thank you and coming up, the elon musk-twitter deal. twitter firing back at the tesla ceo. and later, amazon prime day is now under way. what does it mn r eafothe company in the state of retail "squawk box" will be right back.

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what if i told you... you'll leave here different? are you ready?! - hell no. - no. welcome back to "squawk box. the ceo of retailer gap stepping down immediate limit sonia synga

lsaid syngal said she is stepping down the executive chair bob martin will be serving in the interim the stock is down more than 50% year to day. starbucks says it's closing 16 stores. they reported incidents related to drug use, they are in portland, philadelphia and washington starbucks said it would transfer employees to other locations it had give store managers leeway to close restrooms in response to safety concerns. starbucks also going to provide additional guidance to baristas

in how to deal with active shooter scenarios and conflict deescalation >> a microcosm of the problems all over meantime, when we come back, we're going to talk about it twitter's responding to elon musks proposal to kill the acquisition of the company the saga, the soap opera that doesn't change as the world turns the dow off 211 points, nasdaq with an enop down about 2.5 points, we're coming root back i need indeed. indeed you do. indeed instant match instantly delivers quality candidates matching your job description. visit indeed.com/hire

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comcast business. powering possibilities. welcome back to "squawk box. elon musk terminating his deal to buy twitter joining us to talk about the legal battle is charles ellison. let's just jump straight into it, charles. i'm making you the judge and the jury, chancery court of delaware how would you decide, sir? >> boy, it's a tough one you know, i think that ultimately, the question's going to be was material that mr. musk requested misrepresented to him one way or the other and i think that, but, you know, in delaware, it's a pretty tough road to go down to demonstrate that you were, you were confused

when you bought it, and the other ideside didn't tell you things it rarely happens that a court would allow you out of a deal. either he's going to have to basically pay the billion dollars or buy the company the question is, ultimately, a, will a court let him out of it, or b, does he ultimately buy the company for a lower price. >> but here's, there's a big difference between paying a billion dollars on one side, which would be the termination fee, and it's unclear whether you believe the damages are capped at a billion dollars on one end. and the other is the specific performance clause, which effectively says you would have, you know, the judge would say, congratulations, you've just bought twitter, and you're going to pay $44 billion for it. there's a gulf there >> exactly that could happen. that could happen.

but you know, typically in these things, if someone really wants out, you can't put a gun to their head they're going to pay something to leave again, it depends on what comes out of the proceeding >> what are we talking about here i know people who think he's going to walk away paying less than $100 million. others think he's going to pay $10 billion to $15 billion, get nothing, and others think he's going to have to pay $44 billion, and others say he's going to be forced to pay $44 billion, he's going to say no, and the credibility of the court in delaware will be put into question in terms of how to enforce it >> that's yu why you have, whenu think about it, the breakup fee. >> hmy understanding, you tell me, i don't think you can just walk for a billion dollars it's effectively saying you need to close the transaction

>> unless certain conditions aren't met, and what he's argue something certain conditions haven't been met >> the two biggies are whether twitter has provided him reasonable information about the bot issue, and then there's the secondary issue, i don't know if it's secondary in terms of you flip the priority of whether they have defrauded investors, and at least by my reading, he has not provided real evidence as much as to say he has a suspicion. >> that's why you go to court. you look at e-mails and make the determination. >> i wobd wnder whether the judi actually going to take that on he said i think there's a problem here the reason i'm buying this company, i think there are bots all over the place he knew this on day one. he had suspicions about the bots nobody has come forward so far

as i know, that has actually shown that there is a fraud on the hshareholder, and maybe thee is, i don't know i raise, this because a judge may very well be skeptical of this buyers remorse scenario and say we're not going down this discovery road that's not how this works. you buy a company, it's not just you make an offer for the company. you bought the company, and that's what's happening here >> every time i try to predict a judge, i usually get it wrong. one, if you remember, the solar city case, and a lot of people didn't think that would happen either that was a case involving the conflict of interest, and he was successful you just don't know how a judge is going to retoobt it to put a gun to somebody's head and say you have to buy something, even though you have remorse wouldn't be delaware

style. >> it's funny you say that because we've had other lawyers come on the air and say it is delaware style delaware desperately wants to maintain its reputation and not just its reputation as a place for business but a reputation as a place where contracts are enforced >> absolutely. but again n a contract you have liquid damages, which is in this case you have the billion dollar breakup fee. a billion dollars isn't a tiny breakup fee. he'd have to come up with the cash, that's a lot of money even to him how far would delaware go? he's making allegations, they're denying them you sort it out and either you say you have to buy this thing, which i kind of doubt they do, or you're going to have to pay, or i think the ultimate scenario is he buy it is for a little bit less they factor whatever his complaints are into the share price. that's my guess.

but, again >> let's say there's a specific performance piece of this and the judge says, congratulations, it's yours, you got to buy it, man. and he says, i'm notdoing that maybe by the way he goes to the state of new york where he can maybe have the people financing it go to a different court to see if they can work it out. but there is a question of the enforcement piece and the last possible way to enforce something like this effectively would be either to take all his shares in stock in tesla and spacex and make him pay for it or send him to jail. do you think that's in the cards? >> no. >> you've seen that speculation. >> all kinds of speculation. there are all kinds of speculation. but i don't see that i think ultimately, he's forced to buy and he negotiates a lower price or he pays some damages. >> you're twitter's board.

he comes to you and says look, i'll pay you $20 billion he th they say it's $44 billion. what do you think is the lowest they can take -- they're going to get sued by shareholders, too. >> getting sued is different from being successful in the suit if in fact the thing is worth less, this happens, i don't want to say all the time, but it happens a lot litigation is a bargaining chip in a bigger story, and that's what you've got to remember. it's not the judge it's not delaware. it's a bargaining chip >> the final question, you get to choose. could you either work at lipton today, working for twitter's board or work at scadden on behalf of elon musk, which one do you want to work for? >> i like both those place i think twitter probably has the

better story at this point in my view wachtel has better offices, i'll say wachtel today. how about that coming up, when we come back, prime time for amazon. what it means for the company and shareholders rs mus, plus a outlook. we're going to open down, dow off 220 points s&p looking to open down about points. we're coming back with a big hour ahead

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good morning futures pointing to more losses for the major averages treasury yields dropping, and the ineuro hitting parity with e dollar we'll bring you pepsi's results as we get set for airlines, and banks. it's also prime day. amazon's shopping extravaganza with other retailers following the sales story line is a bit different, it all has to do with the chaos caused by the

pandemic the final hour of "squawk box" begins right now good morning welcome back to "squawk box" right here on cnbc we're live from the nasdaq market site in times square. i'm andrew ross sorkin along with joe kernen, it is just the boys this morning. becky is off we're set to open down the s&p looking to open down about 18 points. nasdaq which was in the red has now turned green about two points up. well, actually about one point up take a look at treasury yields we were inverted earlier the ten-year at 2.926. and yes, the two-year is sitting at 3.0 not a great sign if you're an economist about where things are

headed meantime, the euro hitting parity with the dollar it hasn't done that in 20 year we've got a couple big stories to tell you about. the big one, twitter calling elon musk's attempts to back out of buying the social media company wrongful they said they had not breached any of their obligations twitter shares falling 11% yesterday. they're now 40% below the 54.20 level where musk said he'd buy that company meantime, pepsi, the big mover of the morning, beating street forecasts for revenue and raising its full year forecast consumer demand holding up, and the pepsi cfo joined us on squawk last hour to talk about where the company's pressures are coppingming from. >> number one is vegetable oil

and number two is the whole area of corn and grains and the like. those are up, labor is up as well most of our packaging tends to correlate with a barrel of oil obviously we're facing packaging as well. >> and he's raised prices. >> which may mean that other companies are doing the same >> he said they raised them 12% which did not come close -- >> to covering everything, their cost over 12. >> it didn't cover >> meantime, peloton is going to be fully switching out of third party manufacturing. the fitness maker says it is fixing its cost structure. >> get to dom chu over individual names, look at so

premarket movers some up, dom >> some are up like you said, but generally speaking, it's a pretty down day. the whole tape is kind of in the red right now. as many viewers have said in the bottom of their screens and listeners on sirius xm are hearing, oil falling there was a point at which the top ten biggest decliners in the s&p 500 on a premarket basis were all oil and gas stocks. and among those, i'll just point out, apa corporation, down 3.5%. devon energy among some of the names. no surprise with oil prices falling, but still, worthy of note that energy will likely be another one of those epicenter

stocks also watching what's happening on the consumer front. a couple names getting attention. red also we're talking american express and capital one. down roughly 2.5% for each of them this is due in large part to morgan stanley analysts cutting both of those stocks from an overweight rating to an equal weight rating. they are taking so-called consumer chips off the table they think rising inflation fi fears may hit american express for those reasons and others, those stocks are under pressure this morning if you want to read more about that story, head over to cnbc.com/pro pro subscribers get a look at that and we look at bitcoin price just generally speaking. cryptocurrencies in general, they're below the 20,000 mark, 19,801 the last trade, ether

down 1,066 and change keep an eye on coin base, microstrategy. crypto trying to hover around that level we've kind of set a range being that 19,000 on the floor and 22,000 on the top end. we'll see if that stick this is time around. we'll send things back over to you. >> technical analysts, katie stockton, dom, said so far, 19,5 for support. she says it's been below that is correct bitcoin, but basically, it's held. >> roughly 18,700. >> it doesn't hold, you talk about 13,900 i think but my point was, i wonder where the s&p would be, given, because they are so correlated i just wonder where the nasdaq and s&p would be with a 13, 5 or 13,9 bitcoin

>> i don't, the number would be quite a big percentage move from here down. thanks, dom. for a deeper look at the markets, as earnings season begins, let's bring in chairman and ceo, cnbc contributor. just quoting you and your viewpoint, incredibly challenging season coming up for earnings in terms of what they report, in terms of guidance and in terms of what the tok market reaction has been. so probably a good week to watch cnbc, but you might not see things that make you real happy. >> well, joe, we knew that this was going to be a tough quarter. the fed has raised rates it's having an effect on the market, housing prices it's having an effect on employment and the way the companies are viewing their future year plus so we have to be watching very

carefully who is able to maintain guidance. what's going to happen this quarter with sales growth. we've already seen it on the retailside but there are types of companies that will be able to persevere through this and we're going to be able to separate, by listening and asking questions some of the strengths in the business world and where there are weaknesses we know the dollar's going to be hurting because it's so strong, on multi-national companies. we know that certain sectors like retail have already talked about what's going on with the consumer and how the consumer's spending and so this is what consumers are nervous about. plus, when you shut down casinos in macao, we worry about china and another possible lockdown because of a covid variant so of course this is going to be challenging, but we're down 20% already roughly on the s&p this year it's not as if investors have not noticed that there was trouble coming

investors are well aware that there's going to be weakness, which is why we've taken the market to this level and if we could hold around this 3800 as support, i think that would be a reassuring sign it's not vlasias if there are no positives to consider. definitely challenges this quarter. >> so you think that in the last month we've seen signs that the economy has slowed what about the jobs number the rear view mirror >> you know, it's very interesting, because the unemployment rate has held in at around 3.6%. very low for a recession i mean, lower than one would expect one of the things that we have looked into is the whole idea that there was some overhiring in places, that we in fact began to think about employees and hiring a bit the way companies just really had to overorder and develop large inventories, not

that people can be compared to inventories, of course, but during covid we really didn't have a sense for what was coming, and so there was a scramble to get employees. there are many people who have taken jobs, moved to different locations. there's been an entire disruption of employment so that 3.6%, i think, is a little bit of a challenging number to think about reelistically. it may be that some of that is fragile. some of that employment on the margin is fragile and we'll start to see those numbers go up on the unemployment scale over the next couple of quarters. >> we had hugh johnston, the ceo of pepsico and we're going to get the cpi and ppi later this week. and we're seeing numbers like, bad enough, 8% plus is what we've seen, we're hoping that moderate as little bit but hugh johnston says the pepsi rate price is 12% and it did not

keep up with the increase in this costs so that number that we get for c. p cpi probably understates >> i heard that interview. it's amazing how they've been able to hold this price increases, but he also made one comment which i thought was very noteworthy, which was on the packaging side pepsi is a huge packaging company, that its energy prices have had the biggest effect. and as we've observed and you and andrew noted earlier, the price of oil has been coming down i mean, it's gone from 120 plus to under 100 that's going to have an effect on the inflation numbers and of course that cost component of all of the packaged good companies and many other types of companies, anything that has to do with fueling, including airlines, auto-related and travel so we'll see what happens there. >> he mentioned labor, too, issues >> of course

>> in a nut helshell. maybe we get relief on the commodity side and the strong number on friday it's all, i guess, pandemic. >> correct >> related all these anomalies. all right. >> we would say that, and that's why we look at some u.s.-based companies like o'reilly auto, united health, american waterworks, those should be able to maintain this numbers over the next few quarters. when we return, the chair of the house democratic caucus. congressman hakeem jeffries will join us to talk about inflation ahead of this week's critical cpi number and a reminder not to miss our post-earnings interview tomorrow morning with delta airlines' ed bastian. that comes your way at about 7:00 a.m. eastern time you don't want to miss it. slalso have a big reveal with

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the s&p off by about 22 points right about now. and right about now tomorrow, or a little bit later, we'll be getting june inflation it's expected to see an 8.8% year over year gain. gas prices have come down. the national average is $4.66 a gallon, still up more than $1.50 compared to a year ago joining us to talk about the elevated prices at the pump, grocery store and elsewhere and what congress can do, new york congressman hakeem jeffries, chair of the house democratic caucus and responsible for setting the agenda for house democrats. good to see you this morning, congressman. is this really on your shoulders? do you really feel like congress can do much? we hear about so many things, the reopening after the pandemic, the invasion of ukraine. it seems like to take it upon

yourself in congress, i wouldn't feel too badly if you don't come up with any panaceas >> good morning. it's good to be with you these are certainly challenging times for every day americans, and we feel like we do have the responsibility to address the challenges that the american people are confronting, particularly, as it relates to kitchen table pocket book issues of tissues clearly there's fiscal policy and muonetary policy i believe 9 million jobs have been created under the presidency of joe biden. that's a record in american history, but issues remain as it relates to increased costs, and

that is top of mind for all of us >> the, i guess in terms of maunts maunt policy, we can't help ourselves whether it's the executive branch or congress or whatever to say go easy, i haven't seen that really it's almost as if the government realizes we have a problem and the fed has to do what the fed has to do independently. but on the fiscal side you are fourth in charge or charge of the caucus, you can make decisions. do you think it's a good idea to keep pushing for more spending in terms of some kind of build back better 2.0, and do you think that some of the inflation that we're seeing is because we overdid it last year >> i think the inflation that we're seeing is a direct result of the fact that we had a once-in-a-century pandemic that resulted in the economy shutting down demand came roaring back as the

economy was reopened, and that's a good thing in terms of americans being able to get back to work. however, the supply wasn't able to keep up with that increased demand one of the things that we're working on right now in congress is to make sure that we can come to an agreement around the america competes act, the effort to increase the domestic production for semi-conductors, and to do it in a way that will allow america to be more competitive, to create good-paying, high-tech manufacturing jobs here in the country. and ease the supply chain issues, and so i think there are areas for us to find common ground with the senate on the other side of the aisle in terms of build back better 2.0 or whatever the legislation is ultimately caused. my focus is on lowering costs,

lowering health care costs, housing costs, the prescription drugs would be the sweet spot on the focus of the american people >> i'll talk energy and approach it this way. one of your members of your caucus and a friend of mine and, you know, we disagree on a lot but ro khanna, i don't know if he broke ranks, but he's at least acknowledging that maybe our domestic menergy policy coul use some tweaking. i can't get democrats to cop to that, that maybe there's an issue with how quickly we're transitioning, but do you think europe screwed that up there may be rationing in europe would you concede that germany probably shouldn't have thrown their whole future into putin controlling so much of their lives in terms of energy and maybe the transition to the green renewable. obviously, that's something down the road that people want, but

did they rush that, would you say? or would you even atsay that europe screw ted that up >> we have had the most significant global conflict to hit europe and the rest of the world since world war ii in terms of vladimir putin's invasion of ukraine, and obviously the fact that russia and germany are so intimately tied together in terms of energy supply has created a lot of complications, geopolitically and from an energy standpoint m terms of germany i do think we have a climate crisis that is serious, and we need meaningful climate solutions, and that's going to involve a transition into a clean energy economy it will also allow us to create some good-paying energy jobs, but if st should be done in a thoughtful way given the reality

that we confront in the world today. >> there's climate there's weather i guess. if there's bad weather in europe, we're going to get a very dire look at what may have been too quick of a tran, of a transition in this country we're still down from peak production you don't think there's anything that you can do in congress or to convince the biden administration, you don't think there's any regulations that need to be eased you don't think there's any offshore activity, anwar, keystone, trying to get rid of some of the red tape for refineries you don't think there's anything, you don't take any responsibility it's all a putin p hike. that's what i meant about breaking ranks i think ro khanna finally did say you're heading to saudi arabia and domestically we're not producing as much as we could here >> part of the challenge is that the oil and gas companies have refused to actually act on the permits to drill that

they've -- >> that's kind of a red herring, congressman. there's leases you know, there's also just the overall pressure from esg and the green lobby about whether an oil company is going to make plans five or ten years down the road when, you know, a large part of the population wants to put them out of business completely would you invest hard-earned capital on a five-year project or ten-year project now if you were a fossil fuel company >> it's not clear to me that the oil and gas companies care that much about the so-called green lobby. they have made clear in their earnings calls and representations to shareholders about the record profits they have been making on the backs of increased gas prices for the american people. >> they're not making what they made ten years ago their records based on the last two, three, four, five years, but no one, i don't remember you feeling bad for them when they lost $20 billion in 2020 either.

so i mean t, it is a very volatl business that they're in unfortunately, that's the way capitalism works some year you do well, other years you don't do as well >> record gas prices are problematic for every day americans. i don't think that's a partisan issue. that's an issue for all of us to try to work to address and it's a good thing that gas prices have bee ggun to come don for my constituents and the american people. >> you sleep all right thinking about november what do you think's going to happen in november you think you can keep the house? the senate is at play at this point? there's some numbers, typically if the incumbent president has approval numbers like these, there's a reckoning in the midterms. are you keeping any -- i don't know, are you keeping your chin up at this point or do you acknowledge it might

ago toug be a tough election coming up? >> i think what's in front of us is to continue to try to do the work of the american people. there are some significant legisla legislative accomplishments that president biden can point to, the american investment plan gun safety legislation that's going to save lives for the first time there's been meaningful change in 30 year, but there's more work to be done, and we're going to have to articulate a forward-looking vision for the american people, focussed on making their lives more affordable >> always great to be a democrat in new york, right you can always, i think, be optimistic about the future. politics are local, right, congressman in. >> is that right great to be on >> great to have you on this morning. hope to he sao you again soon. thank you.

>> thank you okay, coming up, amazon might call today and tomorrow prime day, but after the year retailers have had it might as well be known as inventory clearout day as we head to break, here's a look at the amazon ewr fulfillment center in robinsville, new jersey. that's what you're looking at. i don't see frances mcdormand anywhere don't go anywhere. "squawk box" will be right back. our best deals on every iphone - including the iphone 13 pro with 5g. that's the one with the amazing camera? yep! every business deserves it... like one's that re-opened! hi, we have an appointment. and every new business that just opened! like aromatherapy rugs! i'll take one in blue please! it's not complicated. at&t is giving new and existing business customers our best deals on every iphone. ♪ ♪

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coming up, retailers motivated to move product. we'll talk about why this amazo prime day is a little different than those in the past in the meantime, check out where bitcoin is trading this morning. a reminder, you don't want to miss the ceo of blockfi tomorrow at fidelity, your dedicated advisor will help you create a comprehensive wealth plan for your full financial picture. with the right balance of risk and reward. so you can enjoy more of...this. this is the planning effect. (torstein vo) when you really philosophize about it, there's only one thing you don't have enough of. time is the only truly scarce commodity. when you come to that realization,

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this is just out googles, idea founder, jared cohen is joining goldman sachs reporting to david solomon the new group will be called the office of applied innovation and focus on new technology, including crypto it will be led by cohen. he is a long-time protégé of eric schmit and member of the secretary of state's policy planning staff under condoleezza

rice and hillary clinton he will hold the title of president of global affairs for goldman. >> big move for goldman. i knew when he was at the state department but you see david solomon trying to get more involved with technology inside the pirm thi also a big move for google >>it's not innovation for like, what is it >> my understanding of it is that they're effectively going to create this division to look at the geopolitical issues and technology issues. >> blockchain? >> and work with potentially blockchain and the like. >> is that mainly crypto >> i think it's larger than that it's all sorts of different technologies and geopolitics that leads kyou into the

blockchain and other things. it could be a google ideasish think tank inside of goldman >> everybody stays home and, you know, goes to prague with goggles on and isn't even there. it's not something like that, is it with your avatar? >> goldman's not turning into meta >> that's what i'm asking, what other innovation, if it's not crypto everything else has already been invented >> lots of, jared's one of those guys who knows every president in the world, in all these different countries, and they're all trying to figure out different technologies >> i think it's mostly crypto. that's where the innovation's going to be for something like goldman. they don't want to get into sill o y goggles. are you going to splash me if i'm near the ocean in the meta verse? am i going to smell the ocean surf is there anything good about, i don't want to travel -- >> i don't think goldman's going

in the meta verse. >> no i'm , i'm asking you abouu predictions. wearing expensive clothes even though we don't own them >> if you spend a couple hours on zoom right now, i would say a decade from now, you'll spend a couple hours in the meta verse doing the same thing >> all right, you kind of say yeah, it's going to be a big deal, and then you qualify it. >> you're still going to live. you're still going to live, man. >> amazon prime day is officially under way eight years ago they said the sale was set to mark its 20th anniversary. but it's become an annual event and other retailers get in on it like best buy, macy's, kohl's. everybody getting into the act >> everybody wants a piece of this action, joe

they can call it what they want, but the july sale's really their inventory clearout this is year. look for the biggest promotions to be on the items retailers have too much of at the wrong time covid demand swelled in items like bikes and patio furniture and retailers responded and ordered more, but the change in consumer demand means many retailers are stuck with the goods and the costs of storing them gap inc.'s sonia syngal is stepping down. she said merchandise is out of synch with what consumers want gap has merchandise 50% to 60% off today. target's been slashing prices, clothing up to 70% off at eagle. walmart isn't marketing a specific event but has thousands of roll backs right now anyway ceo doug mcmillan said he'd like to quote wash away about 30% of

their current inventory. higher store traffic at off-price retailers like ross in recent weeks is up though overall, visits to apparel stores is down year-over-year as inflation rages on so whatever doesn't sell during these shopping events. tipi typically, prime day doesn't lift amazon's stock. it's down an average of 0.14%. it doesn't move the needle so much at least for investors immediately. >> just thinking about what target said a couple weeks ago is interesting and also it sounds like walmart, which didn't say exactly what target said, but a lot of issues, right, with not having, having one thing during the pandemic stocked in and then having something else after the

pandemic i don't envy the job of a ceo of any of those, and then gap, just forget it. i wouldn't even -- can you imagine trying to figure out what to stock the stores with in. i no it's a really hard job it makes things in some ways being more complicated being interconnected >> think about the supply chain issues and the cost issues with inflation and very, very difficult. okay thanks, courtney g glad you help us with that >> what are you buying today >> could you stock a retail store for teenagers? do you have any idea >> of what to buy? >> yeah. yeah you go out and look at suppliers, okay, i want a lot of that i think this is going to be big. i'd last a tenth as long as the

gap person do you have any idea >> i would hire some of the tiktok influencers, find out what -- >> the libs of tiktok? have you seen that >> i've seen that, too i don't fknow if i'd hire them. joining us is jan kniffen. good morning how do you handicap it, jan, in terms of thinking about how successful and how we should measure this prime day versus other prime days >> well, there is no normal anymore as you know. but i don't expect a whole lot out of this prime day, because i don't think that's where the customer is right now. the top two two percentiles art

on vacation, thinking about vacation or paying for vacation. so if they get five or seven percent g.o.rowth they should be pretty happy what will sell for them when it does sell will be apparel. that will be their number one market share theme for this prime day. it won't be back to school like it was last year their number one interest item will be back to school but the dollar volume had all cwill all come to apparel. that's just putting them up against everybody else everybody else isn't following they're already promoting. people didn't plan around prime day like they have for the last five, seven years. it's just become more normalized when things become more

normalized, they're not as exciting i'm not expecting a big excitement for prime day >> sarah, do you think it's a mistake to run prime day in july the way they're doing it right ? >> it create as new shopping time people are leaving for vacations, but prime ships fast, right? so if can you get something in a day or two, especially the kinds of things where, you know, they have these super high discounts on things like kindl it gets there the same day or the next day and you're still on the road by thursday the thing to remember is that there's quick kfulfillment here you have to be a member of

prime. the subscription product that works really well for amazon once you're a member you're getting more subscriptions, more purchases from amazon than from the walmarts and targets i think prime day is likely to drive those sticky purchases the fire tvs and amazon kindles. >> they clearly invested in so much in terms of infrastructure warehousing and the like there's an argument to be made they overinvested because the growth has not continued a pace, if you will. how long do you think it takes to pay off those investments? >> the next ten years. of course they overinvested. but that was the trend we overinventoried we over a lot of things during

covid. now we're seeing the snap back amazon's going to continue to grow they're just not going to grow at the pace they have in the past because everyone's playing the game now everybody's doing a huge online business now a lot of these retailers are half online now. macy's is pushing to be half online do i think it over invested? yes. doi do i think they'll still grow into it eventually yes. does the market care maybe not. >> this will put them in prime position, dare i use the prime word, so it makes it harder for competitors to catch up later. >> there's no doubt that that's true amazon did lose money for 20 year and the stock went up every year it's hard to argue with strategy debuts, which is growth gets paid for and so far they've been right. i think that's coming to an end, but it hasn't been coming to an end yet.

do i think they overinvested yes. do i think it will take a while to grow into it, yes will they have more competition in the online space than they've ever had yes. but they're still the biggest may player online. >> hey, sara, would you brprefer to own that business, walmart or target >> they don't have a lot of brick and mortar, amazon, compared to their older peers in the walmarts and targets of th world. they've proven incredibly resilient. right now they're down, but it's in line with the market. i would not bet against amazon >> jan, sarah. thank you. i don't know what i'm going to buy. you know me, i like a discount i do i do >> make up your mind i thought you were tightening the belt >> tightening the belt >> not buying anything >> we're still in yolo july.

i think it's august. >> august you have to get entrenched >> maybe september it's a little summer weather wise >> all the expenses. pencils. notebooks. coming up, jim cramer's first day, first day, it's not his first day or his first rodeo. >> first rodeo, no >> but we'll get his take on the first day of trading ahead and this programming note. various head winds, ceos today need to incorporate solid leadership join us for the evolve global summit tomorrow. we'll take a look at companies making active steps. you can check it out at cnbc events.com to register and get more information i will be interviewing the ceo of amalgamated bank.

and i know there's a lot of others on that list as well. you don't want to miss it. we'll be right back after this (shelf falling) the aflac pre-pain show. aflac! paul is about to suffer a shelf-inflicted injury. luckily, aflac will help cover his unexpected medical bills. aflac! maybe you could use the money to buy a step stool. i have a step stool. so why are you climbing a shelf? the stool's on top of the shelf, isn't it paul... (shelf crashing) yeah... ♪ ♪ aflac!

want to get down to the new york stock exchange where jim cramer joins us now. good to hesee you. we're all looking at these pepsi numbers and thinking, hmm, pretty good, given what's going on in the universe >> i got to tell you, i sit here

and listen to the numbers of the analyst. andrew, for every jupgrade, there's got to be ten price target cuts. i thought the quarter was immensely great. but the negativity here is going to, negativity's going to say listen, don't buy it, because he didn't raise i took it as a raise, but there's some contufusion there because the dollar is so strong. >> how much of that can you extrapolate out and say other store c companies are going to see similar stories? >> we would be down 40,000 no, i think most companies are going to get hurt by the dollar. we're going to excuse it, we're going to say it's not real pepsi's not losing share to a chinese soft drink or potato chip

they're losing share because a lot of countries are debasing their currency to get it so we get hurt and their companies win. >> okay. let's move to our favorite topic, elon musk do you buy twitter at this price and arbitrage it and think there's money to be made or. doy twitter at this price and arbitrage it and think there is money to be made or not? >> listen you knuckleheads, come off the price and elon musk, get out of my court room unless you are willing o pay. it is go to chambers and i think the judge will say that you are out of your minds and this is a binding contract. this is the price at 50 and you don't say it's going to be 45. >> and you don't think that he will fight it?

i'm not sure he's looking for a discounted this point. >> well it is not like other states and they protect their state with all the corporations there. it is very tough and very tough on the defense and tough on the companies located there. they could find him in contempt of court but i think it's going to be very hard to get out of this deal. >> let's say that delaware rules in favor, effectively, of twitter, then i would imagine some of those transactions go to new york. even if delaware moves against elon musk, there are all sorts of escape routes and other things that could happen that would at least take a lot of time before you get 20 ending here. >> you are right. typically these situations have more

ironclad funding. just what the chancellery does in the state, it is binding. they are going to try to force mosques to do something. >> maybe they can do something and he can walk away and pay twitter. but it's going to be tough on this one. you can sign up and check it out on your phone app screen. you can see him at squawk on the street. we will be right back. and orders to your style of trading. personalized education to expand your perspective. and a dedicated trade desk of expert-level support. that will push you to be even better. and just might change how you trade—forever.

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little more to half-an-hour to the opening bell. with global advisor and chief investment officer, i guess we sort of saw it coming, brenda. that is the conversations we have had with people like you who do this for a living and decide on things. we are talking a stagflation

environment . how much is the stag and how much is the inflation? do we go into a full-blown recession or have a soft landing? how much is that going to art orchestrate what could be a recession? we are rights dab in the middle of the discussion with everyone we talked to, what do you think? >> you are exactly right. we are in and interesting time in history when demand is strong which is a big part of the inflation problem. prices are rising and there is still demand for the goods and services. one thing we are thinking is the basic case is not that we will end up with a recession on our hands. however, we are seeing some

economic slowing. we have gotten more defensive in positioning our portfolios. we added long-term treasury which we have not owned in more than a decade. we think there is damage done at the wrong end of the curve and we expect we may have more inversion. we really like the protections that treasury provides. particularly in the slick roads environment or treasury environment. we think there is and opportunity there and we funded that by trimming some of our commodities position. there is still good reason to own commodities but recognize in a global economic slowdown that we will see some of the frost come out of those prices. we saw that a little last month. it's also a part of bringing inflation down. >> does the credit worthiness risk offset the high alert

higher yields? it sounds like maybe fixed income is the place to go. it feels like that because of the business slowdown and then you have to worry about high yield. >> obviously in the recession scenario, we don't want to own high yield where there is more credit risk. that is the reason for adding the treasury position given the safety those provide. for the first time in years, bonds are looking more interesting. certainly more interesting than they were a year and a half ago or so. we think that bodes well for a more diversified portfolio. brenda, did the jobs number make you bullies bullish or less bullish? maybe high inflation,

how did you take it? >> in our view, we don't think we will have a recession when we have a job market as strong as it is and consumer balance sheets as strong as they are. you are correct that the job market is just too strong and that adds to the inflationary pressure. it needs to soften and we have not seen that happen yet. for that reason, we don't think we will see a recession in the near-term given the strength of the market. that is key and if there is a significant slowdown, that may change our minds. it's not what we want, but we need to help facilitate the federal reserve's agenda of slowing the economy a bit and taking the inflationary pressure off the wage side.

>> i want to leave 30 seconds because there is a green number on our screen for the nasdaq. >> a try to rally a couple of times yesterday and finally succumbed. yields are down a little bit maybe. we will get a lot of earnings and inflation data this year. we have all of the banks on thursday and friday. >> you love thanks. >> i do. >> it's like painting grass. make sure you join us tomorrow. good tuesday morning, it is time for squawk on the street. the dollar is paired with the euro. germany got the tenure close to 9 and the nasdaq may perform below 100.