criticize the company. and we bring you numbers for johnson & johnson in this hour and interview with the cfo it is tuesday, july 19th, 2022 "squawk box" begins right now. good morning welcome to "squawk box" here on cnbc we are live from the nasdaq market site in times square. i'm rebecca quick along with joe kernen and andrew ross sorkin. u.s. equity futures are indicated higher you have the dow futures up 165 points s&p futures up 25. nasdaq up by 76. as joe mentioned, this is a do-over day after stocks erased the rally yesterday. the dow ended down by 216

points s&p and nasdaq off .80%. that turn came after the bloomberg report said apple plans to slow hiring and growth in some divisions to cope with the potential economic downturn. apple finished the day lower by 2% goldman saying it would slow hiring next year and that has people concerned treasury yields here with the 30-year treasury and 5-year above 3% the 10-year treasury is at 2.99%. this comes as the average price of a gallon is below $4.50 according to aaa that is down from $5.02 as of july 15th. you still are paying high prices some places you are paying below $4

in the carolinas, below $4 however, this is coming after we saw the big run-up in crude oil prices this morning, they are down slightly you are looking at crude oil above $100 $102.26. yesterday was the biggest gain for wti in two months. and earnings season rolling on we hear from johnson & johnson the cfo will join us at 6:45 a.m. we will hear from hasbro and halliburton and lockheed martin before the bell this morning netflix, a lot of people are watching this, reporting after today's close. june housing starts are due at 8:30 a.m. eastern. joe, we have terrible earnings to talk about. and the stock price, too quickly, i was watching "jeopardy!" and they had a category on wolk i thought, joe wolk.

it was herman wolk >> i thought ibm's watson beat the "jeopardy!" player >> i know. we know about ai we are close to be totally unessential and irrelevant as a species. you know that's coming soon. we're this far away. ibm shares opening at 130. not time $131 i looked i got a chart that went back 10 or 15 years. 2013 is when the stock was over $200 i think these are 19 -- there you go these are 1999 levels. the company beat estimates, but trimmed the cash forecast. the revenue outlook pulled back. it raised the impact due to the

strong dollar. gross margins fell from a year ago and missed estimates ibm said it would take time for price adjustments to offset rising labor costs is it on its way back? buffett gave it a try. it didn't work >> it didn't the pricing pressure there the higher costs they are facing in their consulting business is catching this. it can't be a surprise they got hit because of the stronger dollar it can't be a surprise because of exiting the russian business. it is more of -- margins. >> you call it tech or investment or industrial >> the question is a long bet on ibm. do you believe in quantum computing? if you believe in that and

people have been betting on this for years. if you believe in it and you believe they have some super fairy dust that others don't -- >> why would they? >> ne >> they have been working on the hard quantum computing they he ave projects in the wor that seem to be ahead of others. it will not help with cash on cash per quarter right now >> they can already beat the best chess players watson can already do that. >> maybe in the meantime, twitter firing back at elon musk over the delay of trial twitter accused musk of using delay tactics to harm the company. twitter wants to go to trial as early as september musk asked the delaware court to deny the request for the

expedited trial and aim for next year musk's attorneys need massive amounts of discovery time to vet the platform twitter says the public dispute harms twitter over each passing day. musk is using the platform as a megaphone to disparage it. what happens in delaware andrew, will they push this forward? >> i have said the past couple days i'm in the view you will congratulate elon musk and say thank you for this you now own the company and they will do it quickly i think the quick part of it, i think -- the trial it will start relatively quickly. maybe somewhere between so you don't do september, but october or november to split that. i think ultimately you will say you own the whole thing or this

is the part i can't figure out you own the whole thing or the option is whatever the stock price today, minus or from the $44 billion, that's the price you pay. if you are going to pay $15 billion. >> the court won't say that? >> they can come back beand saye will hold you to it or you don't want it and they don't want you, you can pay the difference the question heis what is the ra difference that is the conundrum. the difference is not the stock price today or the stock price if nobody owned it nobody knows >> and she's working from home the judge. >> she is? >> switched to zoom. the judge has covid. >> i didn't realize she had covid. >> judge in the twitter lawsuit has covid.

they switched it all to zoom we have the judge working from home covi covid's still around >> of course it is if you look at the rulings that she has made recently, there's a number of cases that actually -- i don't want to say mirror this directly or specifically -- but she has voted, if you will or ruled in favor of performance. that says you own the company. she has done that before this idea that there's a breakup fee is very hard to believe. >> she's feeling pretty good do it for the week no symptoms. we'll be back next week. it's all zoom this week. are you surprised? that's our life. >> all i can think of is the cat meme with the guy on with the judge in 2020 when all of the courts were on zoom. the cat. i swear i'm not a cat, your honor. >> we have had zoom lately

you're out of time we quickly scramble back you do stuff from home things happen >> it is more complicated. >> i'm wearing my pants right now. nancy pelosi planning a lead delegation to taiwan next month. the foreign minister said the trip would have a quote grave impact on u.s. and china ties. if the u.s. insists going down the wrong path, china will take measures to safeguard sovereignty. china issued a similar warning about a visit planned for april and then canceled after pelosi contracted covid no sitting u.s. speaker has visited taiwan since newt gingrich in 1997 the big question of the chips act. you saw this op-ed we have republicans on one side

who say we shouldn't being giving corporate welfare we have bernie sanders who says this is an awful idea. >> i'm sure he would want to attach restrictions. no dividends >> i don't think he was trying to do anything. >> once we get close, i think he will have -- >> there is a question to this part that i don't know >> i think government subsidies are good >> if it is a defense question >> i also know intel and you say they are holding the u.s. hostage if you want to say >> that's what the governor of ohio says. >> they are headed to europe or other countries. >> he said that on friday. pat gelsinger. germany is offering this package. money goes where it is best treated. >> it shouldn't be best treated

by governments. >> if that is the case, that's why asia built up so many of the chip fabs. they were offering the policy. >> should there be different policies in the u.s. not necessarily as incentives, but disincentives to do these elsewhere. part of the calculus if you are a company, if you think you will not have access to chips in the future, including intel not having access to chips in the future, they he have to come up with a plan. >> i asked about this on friday. he was here and pat was making the case they would do this and made plans based on what congress told them. nothing has been done in congress until it is done. >> they know what they need to do to stay profitable. you can grease the skids a bit you usually do it at the early stage. you have everything that goes along with the deals when you

sign on with the government. you have every senator ever involved who has their stuff they want. >> what do you do with all of the companies who say i'll risk it that's what we have been doing i'll take a fly on the supply chain works and if it it works, it works if it doesn't, it doesn't. they claim to belong-term thinkers, but not. >> now a lot of the commodities stuff is made over there it is pointed out that the shortage is turning into a glut. you have seen in the past. micron has a glut, shortage. >> cars produced without the chips. they can't do what it promised to do. >> that can change we went from people paying you to take a barrel of oil to $150 pretty quick >> the question he is dodo we wt

manufacturing capability maybe there are different incentive plans or tax breaks to write off? >> the first point the journal makes is interesting if you add up what we are talking about with $76 billion double the research and development and tax credit and throw in 100% expensing to allow immediate research and development to 2025. >> that is fair. it is a lot of money you can say that my point would be if you look at this from the defense production and where they now realize they have too much in asia and not enough in other places and it is us or germany, i would like that to come here if we can incentivize some of them to be here, i would feel better >> germany should be building nuclear plants people will be huddled together

in sweaters. >> think about that. think about that for a second. it takes energy to make semi co dumt conducters this is why. >> look, these chips aren't built for a while. >> i know. there are so many now. geopolitical and economic issues we all confront. you want this stuff back here. how do you incentivize them. the fact we are this late in the game and sanders and the op-ed page are coming to the conclusion and doing it at the final hours is crazy >> you hear that ten chips for every man, woman and child on the planet. >> we're doing more than our fair share how many do you have >> all i know is i have a new iphone and battery is now 86% effective. i think they do that to me on purpose. have you checked your battery?

>> my battery health is worse. >> do you put a new battery in have you done that >> no. too cheap. >> could do you it >> you could >> could i physically do it? no >> how many sorkins does it take to replace the battery >> you know what it takes? one to take it to the geneius bar. let's look at where we stand. 229 points higher on the dow nasdaq up 101 points higher. s&p up 33 points we will talk strategy after the break and talk to congress member ro khanna for the bill for the chip companies see what he has to say about all of this. it matters to his home state you are tcwahing "squawk box" and that beautiful shot of new york city this morning we're back after this.

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late pull back in stocks taking the steam out of the monday rally joining me to talk about the session is the senior investment stra strategist netflix after the market close today and i think people were hoping we he he would have a sht

to keep the steam coming >> andrew, it is a void until next week and earnings season. we are seeing a bit more optimism in markets. a few factors that are driving that one is the softer dollar with the s&p companies. we are seeing the earnings that have come in thus far. not nearly as bad as expected. some ceo comments from the banks as well. and inflation data is front and center and we have inflation expec expectations university of michigan sentiment. i think the fed does watch that to make sure inflation is not entrenched in the minds of the consumer some underlying positive sentiment we think could help drive stabilization in the markets in the near term >> when you think jay powell is looking at the earnings reports,

do you think he is paying attention to what jamie dimon or jpmorgan chase or citigroup which did better >> you know, generally -- >> on a relative basis which is an important piece of context to the earnings reports. >> exactly he is looking at earnings expectations overall we came into the year with 10% s&p earnings expectexpectations. those have not been ratcheted down that much the level of travel has been lower. the fed would like to see expectations come down to reality. they are on the tightening cycle. they have not gotten to restrictive territory. generally we are still in easy money territory until the next meeting. that will impact earnings growth and consumer demand. i think generally markets are expecting earnings growth to be revised downward the banks were mixed, but the

comments reported to a consumer that was healthy that was backward looking and interest rates were still benign i think we have a consumer facing challenges ahead. i think earnings have held up well >> is your sense -- it sounds like you are optimistic we are not hitting recession and the market stays at pace. >> absolutely. our view is we will face slowing economic growth. if we hit a recession, it is not one that is prolonged or deep. we think the u.s. economy started from strength. we saw that in the labor report last month you know, keep in mind, in shallow recession, the average s&p down trend is about 28%. you know, we're down 28% in the s&p. a lot of the work to the down side has been put in that being said, we think the earnings expectations and

economic fundamentals need to catch up a bit period of volatility for sure and more of a u-shaped recovery. the risk/reward is compelling in the months ahead. >> mona, thank you by the way, nice living room i like the depth >> great lighting. >> absolutely. >> thanks. when we come back, netflix subscriber numbers are in focus after today's closing bell we get you ready for that report next. as we head to break, look at shares of google paren parent alphabet. the shares close down. $110 aha sre right now after the 2 for 1 split. "squawk box" will be right back.

right now, time for the executive edge netflix is the biggest percentage loser in the s&p. the company is set to report after today's closing bell netflix suffering the first quarterly loss of subscribers in more than a decade and expects to lose 2 million global sub describe describers in the second quarter. they have a potential for recession and rampant inflation. it faces tough competition as others gain traction with con i' consumers. johnson & johnson with s seconds quarter adjusted earnings was ahead of the 2$2.5 the street expected.

the street had been looking at a number below $23.8 billion that was the consensus that stock right now is up 1.3%. if you look at the divisions, consumer health saw sales down 1.3% medtech down the numbers were hurt by stronger u.s. dollar if you look operationally, they were up 3.4% pharmaceutical numbers were up on a reported basis up 6.7%. a lot of questions for the cfo joseph wolk. he will join us in 15 minutes. that is a first on cnbc. >> eli lily had an all-time high no small feat. in 2022. health care, you can see across the board. that is the ultimate in elastic

population the only time it becomes disc disc discretionary. >> exactly what do they call it elective surgery i clipped my nails i get worried about that i can't imagine going in for something you don't need people did put off knees and things like that >> fpharmaceutical was strong. operational sales up 12% darzalex, stelara, erleda. a lot of new drugs or strengths coming down the pipeline >> every drug should have a song >> so you remember ♪ oh, oh, oh zempic ♪

>> i'm not watching "jeopardy!." it's difficult for me heto know. i'm on hulu and peacock. netflix. >> he has learned from you >> hbo, showtime >> you don't see the ads >> i don't >> each one has a really bad song ♪ i went down in a burning ♪ ♪ ring of fire ♪ >> why did you look at me? >> consumer health operational sales up 2.9%. part of that was the over-the-counter imodium >> ring of fire. asteroid >> i believe the johnny cash

estate was considering allowing -- hemorrhoids. >> asteroids >> for you coming up, congress member ro khanna pushing for march financial aid for chipmakers he wants a broader range i think that makes more sense. he joins us next as we head to break, here is a look at s&p's winners and losers from yesterday. >> announcer: executive edge is sponsored by at&t business at&t 5g is fast, reliable and secure ba oh, i can tell business is going through the “woof”. but seriously we need a reliable way to help keep everyone connected from wherever we go. well at at&t we'll help you find the right wireless plan for you. so, you can stay connected to all your drivers

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good morning welcome back to "squawk box" here on cnbc live at the nasdaq market site in times square. dow up 226 points. if we would open up now. s&p 500 up 35 points nasdaq up 4.

and the next guest is looking for improved legislation on capitol hill. we have congress member ro khanna with us i always want to agree with you. maybe it is our personal relationship half of the stuff you write, i think he has lost it with this, you might be on to something. if we just did the chip subsidy, that is favoring just chips and it's about a reaction to the pandemic we are reacting to something after it happened. probably fixing itself in the book that you wrote, which talks about high paying tech jobs all over the country, and for all kinds of people. if you approach it like that, i think you can make a better case for trying to help the entire technology industry rather than chips and reacting to the pandemic >> joe, i appreciate that.

look, the last time we had a trade surplus in the country was 1975 we made a mistake of having a lot of production go offshore. including semiconductors by the way, we invented semiconductors and had the idea of let taiwan and china manufacture that we need to make that in the united states. we need to allow for the production it is happening in ohio. we have two factories coming up it creates all of the jobs this is bipartisan it is for the high tech industrialization of america. >> you want to do the broader bill >> i would. >> you are accepting the chip legislation because you can't get the broader bill through the broader bill is one i could almost see that we need to -- if

you are going to help something, help the entire industry with the view of jobs these companies are profitable the chip companies they know how to run the businesses when you sign on to a bargain with the government, typically, it ends up with inefficiencies the government is not great at allocating capital and picking industries >> for sure. it is a broader technology bill to include artificial intelligence and manufacturing and technology to compete with china. they have a huge investment in technology and made in china the second thing, joe, you need to have the private sector when you can have the government partnering with the private sector to produce things, that's when america wins. in world war tii, we had a

victory of production because we out produced germany china has a made in china initiative through 2025. a lot of companies are state owned. we cannot be indifferent while other countries are competing to have the industrial base go there. >> down the road for the companies that sign on to this, would you foresee senator sanders saying you have to money now. no buybacks or dividend inn re increases. you can see what happens when you are a company and you enter into a partnership with the government a lot of times there's -- you get more than what you bargained for. >> i've been trying to persuade senator sanders for this legislation. this is a place we disagree. my place is opening the

factories and intel opened two factories in ohio. think about that mike dewine ran, a republican governor, bringing the intel factories in ohio. it is celebrated there as long as they are creating jobs and opening in the united states, i'm fine you don't have to put every restriction on it it you want the investment in the united states. >> do you think any company with any competitive market with china will come along and handout and say you did this for the chip guys -- look what china has done to me it would be never ending every company in the united states can find an angle where competition over being hurt or losing market share to china they can come with hat in hand

and asking for subsidy they are justified in asking for it >> fair point, joe 1975 is the surplus. we should get a trade surplus of production in the country again. if they are opening factories and evenngaged in technology and storage and semiconductors, and make a good business case, we can look at providing some assistance for the industrialization which is less than 5%. china has state-owned enter pr prises >> the other point that people make, we are not envious of china? we are not taking half measures to get to state-sponsored

business they can do just fine on their own, ro. no one is crying for the profit margin a lot of the profit margins are higher for the oil companies >> joe, they are doing perfectly fine for places in my district intel is in my district. we have $10 million of market cap. i think the district like mine has done really well new york has done well we have seen the deindustrialization of the factory towns. these jobs are going offshore. that is not sustainable. let's have the industrial capacity shipped offshore. we can do the high-end stuff here i don't think that is a good model. now, i don't think china is a terrible model we don't know where jack ma is with the state-owned enterprise.

we let the private sector lead and the government is there to make sure that there is some capital assistance for large-scale factories and things to create paying jobs. >> they are not ending up like the airline industry you can't get a an flight and canceled it doesn't always work when the government gets involved i thought you were going to get in here. >> no, no. i hated that i would have been happy when long island city was trying to bring amazon to town that's what this is more akin to you have countries all over the world and states all over the country that use tax policy to bring structure. if we could shutdown all incentives everywhere? sure until that day happens, you have to decide to use them when it is strategic and important. >> ro, that is the question. is this something important to national defense >> absolutely. we use semiconductors for every

single thing we do it is critical the arms services committee, the competition we need in space and submarines i want to make sure that is done in the united states look, i was one of the few people in the congress who oppose the defense budget because i thought it was way too much i was the dissenting vote. one question i asked the republicans and they seemed to agree with it. i want to know if the $8$837 billion is something we are buying overseas? that is critical >> all right ro for 2024. ro ro

ro-joe for 2024. i'm up there it looks to hard and too taxing. the top of the ticket. >> i think you can do it you always have something new. >> i'm going for the veep. you are a veep everyone kisses your butt. you travel around. >> i thought that is what "squawk box" job was like. don't give up the gig. >> thanks ro khanna. >> take care >> see ya'. coming up, hasbro just reporting. that stock right now let's show you down just marginally we dig through the numbers next. later, we talk to alaska senator dan sullivan on the energy policy and chips act and so much re n'gonyere.mo

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we have an earnings alert. we talk toys this morning. hasbro with adjusted earnings of $1.15 a share. above the 94 cents per share analyst expected hasbro ceo saying the company is making progress in the plan and review and identifying cost savings across the business. monopoly is a hasbro game. >> a good game >> it is a good game >> takes forever to play

>> it takes forever to play. it is squawky. >> it is greed greed is good. boardwalk and hotels you don't want a crappy purple place. >> you want to leverage up are you crazy? >> no way >> i buy every property and leverage to the moon i try to buy park place. all i care about is park place at the end what's the other one if you own those and anybody who lands on you, you can take everybody to the cleaners. >> all i buy are the utilities i always got the they pay me. >> you lie. >> i like risk >> yes >> that's why we keep calling it >> risk. is that a hasbro game?

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johnson & johnson out with quarterly results this morning joining us right now to talk more about it is the cfo 0 of j&j. looks like the strength really came inpharmaceuticals and

particularly in international, too. >> yeah, yeah, becky, we're very pleased with the second quarter. quite frankly, the start to the first half of the year, being able to deliver really on robust guidance that we provided in january, despite really the volatility and uncertainty by macro economic conditions. pharmaceutical for us continues to be a shining star, 12% growth in the quarter with some of the products you mentioned, item force crohn's disease and colitis. you look at the growth optically, and you say maybe it's a little lower than first quarter, but quite frankly, they had their toughest comps that they're going to have all year, based on how well second quarter of 2021 performed of the and then you have the dynamic rela related to covid in china.

we think we're managing through all the uncertainty. we were able to allocate our resources in a way that still carved out really solidifying our future that's a 9% growth in the r&d line >> the stock was up initially when the results came out. they've given up those gains it's flat right now. you now say you expect to earn $10 to $10.10. sales, too, looks like it's a little below what the earlier expectations had been. what happened here why are you lowering guide as soo >> it's the strengthening dollar last week when we did our estimates and finalized our

guidance, the euro and dollar were pretty much at parity an accelerated rate we haven't seen only two or three times over that 20-year span how we measure our performance remains in tact. >> the dollar had its worst day in about a month yesterday i guess as other central banks start to raise rates, too. if that trend continues, if other central banks start tightening, would that change your guidance too? >> that would change it upward if we did something where the u.s. dollar wasn't as strong versus the euro and some other major currencies, that would take the guidance up down the road but right now, right now we're looking at parity. >> what are you seeing, just in terms of pricing pressure, inflationary pressures how do those impact you and where? >> yeah, so we who about a 50-basis-point impact in terms of higher cost of gosods. we were able to manage the rest

of the p&l, raising the bar on investment opportunities we're looking at to manage that. i think that's quite frankly, as a cfo, that's healthy to look at the infrastructure and how to support a company based on two segments based on one that was traditionally three. >> when you think about issues that concern you the most, is it the dollar supply chain issues? continuing inflation which one keeps you up the most? >> i think it would be the inflationary pressures i think about those two in two . whether it's labor, materials. >> tra

transportation. we do see signs that the availability of materials as well as workers are now coming to and little alleviated to what we were experiencing six, nine months ago that's the one we continue to watch. the other thing is to continue to feed our future, and that's really investment in r&d, making sure that we're able to create great innovation, now solutions for health care patients around the world. >> thank you it's really good to see you. >> thank, becky. coming up, the biggest movers and a closer look at the bankruptcy of crypto lender celsius. customer accounts are frozen but whatbo aut employees who were paid in the company's digital currency m that story coming up you could hire a professional pit crew. go, go, go. sorry. nope. okay. fresh donuts - hot coffee! they deliver real time data and business forecasts when you need it. i think it was fine how it was.

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good morning, everybody. stock futures pointing to gains after yesterday's rally attempt fizzled midday we'll show you what's moving right now. twitter firing back at elon musk's attempt to dee lay the trial over his terminated attempt to buy the company and speaking out about a company plagued by risk taking and mismanagement. second hour of "squawk box" begins right now

good morning welcome back to "squawk box" right here on cnbc we are live at the nasdaq market site in times square take a hoolook at u.s. equity futures at this hour the dow would open up 200 points higher t the ten-year note, we keep talking about the inversion. you hlook at the five year and the two-year oil, if you want to buy it by the barrel wti's going to cost you. we've been talking about the various prices of oil at the pump but right now, wti at 100.93 i think bitcoin is abou22,000

get right over to dom chu with this morning's premarket movers it's probably based on earnings. >> yeah, shocking. the big driver in the premarket trade is still that earnings report story you've got johnson and johnson moving between gains and haass up fractionally right now. the health care giant reporting better than expected profits and revenues helped among other things, growth in its pharmaceuticals business, but it did trim its forecast citing the dollar can you watch those, up about .2 of 1%. then you have hasbro it narrowly missed on revenue forecast it was helped along in magic the gathering.

it was able to pass along price increases to help offset the cost of higher freight costs, but it, too, somebis be bing imd bit stronger dollar. you've got netflix shares up about 1.25%. results are coming out for it after the fternoon closing bel happens. right now the options markets are pricing at what could be, get this, a 15, a 1-5% move higher netflix shares have lost about 73% of their value since their record highs it's going to be interesting to see whether those subscriber numbers in the forecast can get that moving to the other side. >> i think greenfield's on. streaming is a tough business. did you see the total losses?

>> but this is what we've questioned, whether we were tracing this sort of fever dream, right sort of alice in wonderland situation. >> that eventually is reflected in the share price >> you also have to go where the customer wants to access% >> and you think they want 40 different streaming services? >> i know my kids don't watch tvs, big screen tvs that we have, because they're looking at their phone. >> keep an eye on it, too. for more perspective, let's bring in joe amato at newberger berman joe. joe, joe, joe, joe, joe, joe >> you worried inflation might be sticky? might cause the fed to over, not overshoot, but it's tough. they have a tough job in getting

it under control so we may either get close to a recession or have a full-blown recession so my question is, why isn't what we've already seen commensurate with what you see during recession? i mean, most stocks, if you just pick one, they're down about 30%, joe now i guess the question is, do they run up so much on the pandemic sort of, wow, we're always going to need chips we're always going to need zoom. we're always going to immediate these things do they run up that 30%'s not a lot? or is 30% about right about what we need to sell off for in a recession? >> joe, there's certainly been a ton of karcarnage as you descri. i don't think we're fully through this, because i don't think you've seen the leg down in earning expectations yet. that's why the second quarter of

earn b earnings are going to be an important one. the numbers are going to be okay up mid single digits it will be far more important to hear the guidance they provide for the second half of the year. whether it's j&j or other companies, their sense of what the second half and beyond is going to look like i think is going to be an important part of the mausrket given the tight financial conditions that are coming, that's going to put more pressure on companies both top line and bottom line that will end up with earnings revisions >> the type of market action we see for the next six months or so, do you see it as sort of backing and filling and churning around and responding to this tough environment you're talking about? the volatility because people already know all the things you just said, mostly, i think. maybe, what would cause it to be

so bad that we get another 10% or 15% off instead of just a turning around in building a base what would cause that next 10% or 15% low are in the s&p? >> i still think there is a widespread you know, there are some people who are calling for a recession if not a reasonably deep recession. others are saying it's going to be a soft landing and a missed recession. i think that yields some volatility in what we're likely to see but i think the question here, it's all driven by inflation if inflation stays as sticky as many are concerned about, is that going to push of course policymakers to be that much more aggressive on, you know, push being pushing theeconomy to slow down, unfortunately, constrained supply >> the consumer seems somewhat resilient, even in the face of

all these higher prices. is that a good thing or a bad thing because it means the fed has to actually be tougher to hurt demand >> i think it's a good thing you heard that from some of the financial companies reporting over the course of the last week or two that the consumer is surprisingly resilient certainly, we're seeing cracks, and there is plenty of evidence that the consumer is going to come under more pressure the labor market was surprisingly strong. so, you know, i do fear, though, that things are changing rapidly. you're seeing that, and, again, going back to the notion of the guidance that companies are going to be providing here over the course of the next number of weeks, we're siegeeing the data turn rather rapidly. there's a little bit of a false sense of security with the lagging data that we've seen over the last couple weeks, so we're real ly focussed on the forward data, whether it's leading economic indicators or

other guidance is going to be softer in the nearer term. >> do you think this sticking inflation is because of the unprecedented pandemic and supply chain issues? is that what it is or do you think m 2 and money supply growth, which is related to the pandemic, obviously, because it stayed so easy. is this a fed mistake on how accommodative, not just the fed, but central bankers have been all the way back to the financial crisis, probably, is this the final comeuppance in natio inflation that all these inflation hawks have talked about? or is it a supply chain? >> i think it's a combination of factors. certainly, the fed was accommodativ accommodative for far too long that has caused some of the problems certainly the covid disruptions and supply chain disruptions are related to it.

now we're seeing some improvement in the supply chains, if you look at shipping rates and spot rates they're starting to roll over. that's a bit of a good sign. china's been shut down a bit so we're watching that very carefully. these are complex challenges i don't envy the fed but i don't think there's one vil hain villain in this case i think it's a combination of factors that has put us in this place, as well as the persistence of inflation and forced to show the economy down. >> so you're basically recommending all crypto? no, that's not the case, joe >> that's not the case a couple of quick headlines for you as we head to the break. an average price of a gallon of gasoline is just below $4.50, according to aaa, down from the

high watermark of $5.02 on june 14th only eight states at this point are now averaging above $5 a gallon so. here we go maybe this is the down side. of course what you have to watch is oil prices, which did pick up pretty significantly yesterday the biggest gains we've seen in two months took place in yesterday's market for wti also embattled crypto lending platform celsius, lawyers for the company tell a bankruptcy court that the company was actually safeguarding customers' financial interests,ing aing t that they can be preventive. it's an interesting way of wording this we didn't let anybody take out this money so we could protect everybody's money and maybe give back as much as possible good luck.

coming up for a special cnbc investigatiofoern rm celsius employees talking about that "squawk box" will be right back.

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celsius. you don't want to miss it. and the futures right now. take a look. we've got some green on the screen the nasdaq looking to power higher as well, about 110 points higher we're back after this. of

. the company celsius has gone from a multi-billion dollar platform to bankruptcy in a matter of months what was once a crypto lender froze accounts last month then going radio silence when customers would call to try to get their money back the company broke that silence last week when it filed for bankruptcy two employees in leadership roles are speaking out about what they say led to the downfall >> reporter: timothy's career had been about making sure companies follow the rules so he was alarmed by conversation at a celsius

corporate event in late 2019 >> i was a bit of an odd thing at that came up at one of our christmas parties. >> reporter: he says top executives were talking about deliberate price movements in a sell token the crypto currency created ands early 2020. >> i don't knowhatter to phrase ey win the market, velyrading and increg the e of n >> reporter: yousayihat managent wanipulating the price.ken to mipulthe g >>epor thiiggea lawsuit, saytheye actively using funds to pulahe mt toir benefit. 's one of multip iss rmer employees are now speang o craand a former tumanesources emoyeeke a what was a multlliollarpany in hobokeew jersey can be >> the biggest a fuure of yisk management.>> rter:offered s ceo proudly procla ban are not yourriends >> if yoink bank, their job o ext asuch profit t of as ible >> reportee red ou directly for comment and h not heard back celsius was e ofandf of compans tot wiawals. >> our rrces were too ted. >> repter: do think complianas sdersed >> basicly wckinout money d noinginy b in they dt wao spd on compliance >> repr: cobtained dozensinternal documents disorganizatio top executive writest he rised by a document ten by another tm ovascradle who leo funds. yeey denied it on twr.>> d it sy eporter: according tis internal document, these investments were clearly labeled as medium or high risk the state of vermont echoed this saying they deployed assets in a variety of risky and illiquid investments. >> it was a background check >> reporter: nikki goodstein says she wasn't aware of any background checks taking place when she joined in may of 2021 in fact, she says executives specifically told the chief human resources officer mnot to background check the incoming chief financial officer. he was arrested in connection with money laundering with his previous company we made an attempt to find out the status of the case but it was not public in the israeli court system >> everyone was po-ed

>> reporter: she's speaking out on behalf of customers who put their trust in celsius >> i feel really bad for people in the community who not only lost money because of market volatility but now they can't get out what they nut to begin with >> reporter: in the end, celsius may be the example of a startup that grew too fast >> it was just a bunch of mistakes ending up very tragically >> many former celsius employees were paid part of their salary in the crypto currency and they stored their personal funds on the platform in many cases they still haven't heard when or if they'll see that money again but legal experts say there's no guarantee. once someone deposits their funds, that crypto currency technically belongs to celsius >> there seem to be

discrepancies in the way celsius presented itself publicly and what was going on behind the scenes what did former employees say about that disconnect? >> that's a common theme, there was a huge disconnect. celsius seemed to be very focussed on its image, especially on twitter. it went to great lengths to nip any negative commentary in the bud. one of the big discrepancies was the user numbers it reported 1.7 million community members, but one employee told us it was probably closer to 300,000. he mentioned fake accounts, duplicate counts going back to the idea of not enough money and attention on compliance. that's something that would have shut down at a larger financial company but greater user numbers is more appealing to investors that was one of the big disconnects. then you had the ceo's public

persona. what he was saying on youtube versus what was going on behind the scenes a lot of them pointed to his activity on twitter himself and trying to shut down misinformation but ended up being true is customers not being able to withdraw their funds. so really different from the public persona that celsius was putting out >> i think there's a big distinction between a startup company making a lot of mistakes, not having processes in place, and then what is actual market manipulation don't background the cfo, because maybe they already knew something was there. that's a significant legal distinction between being idiots and not having things in place and intentionally trying to manipulate things. where did these former employees lay the blame? >> yeah, there's plenty of examples, especially in silicon valley moving quickly and failing. and like you said, there's a distinction, spoke to a former

employee yesterday about manipulation in crypto they have talked about crypto currencies and any token seen as a security, meaning it's the same thing as if you were doing it with a stock. it's likely not a great sign, but these are some of the red flags they talk about and in hindsight it felt like it was a high-growth, fast-paced. but once they heft tleft they sd they seemed like red flags, and now the company's filing for bankruptcy >> kate, thank you so much still to come, the first arguments in the case of twitter versus elon musk happening later this morning in delaware we'll talk about what to expect from the hearing and what's next in the legal battle. later we'll talk to alaska senator dan sullivan on president biden's policy and the

chips act and more you're watching "squawk box. this is cnbc [sfx: street ambience] ♪ ["fly me to the moon"] ♪ ♪ ♪ imagine a community where millions share ideas and trade stocks, crypto and beyond. to the moon? in other words... etoro.the power of social investing.

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the dow. and now we're back at 200. upward momentum that we saw yesterday as well after that big turn around on friday, unable to sustain it yesterday and we closed down about 200 points on the dow. get t getting that back so far this morning. a judge will hear evidence in the case of elon musk in delaware musk's alleged core issue, the number of spam twitter accounts is a contractually irrelevant sideshow, they say and if you had to take bets at this point, which side wh wouldu come down on >> substantively, it looks like twitter does

it really doesn't seem like musk has much of a basis to walk away from this merger >> at this point, it looks like the timing is going to be an important one. if this is something that can go to trial quickly, it would certainly benefit twitter. they want to get through this and get this moving on obviously, elon musk would like to slow this down. if you look at delaware chancery court, what is the time frame that you would expect to see this laid out? >> i think at the very least she'll probably set a schedule that's a little further out than what twitter is requesting, but much sooner than what musk wants, musk wants a trial in february that would leave a tremendous uncertainty hanging over twitter for several months, and twitter wants a trial in september that's probably a little faster than it needs to be. i think it's likely that she'll chew the date out farther than what twitter wants, but not a whole lot. and in the past, chancery can

move a lot quicker >> have you made any expectations on what will happen based on what she's decided in the past >> i don't think can you tell based on what she's decided in the past every case is different. she's definitely shown that she will and can order an unwilling buyer to close a deal if she thin thinks that's appropriate. it might give us hints about how she expects the case to unfold but at the same time, she as aware that the world is watching she may understand that tipping her hand too much can affect the stock prices in tesla. >> if you have twitter has such a strong case, do you think

there is a chance for any sort of resolution, a settlement that these two side s could reach beforehand >> it's hard to say, because it's hard to say what exactly musk is after. i don't know whether this is all a lot of noise to get the deal price a little lower, and twitter could say getting the price lower is worth it to delay the price to the shareholders. but if he wants to walk away,la is not an easy ask for twitter to accommodate they have a contract it has a very high dollar figure on it. and they can't easily give it up not while they're in a strong legal position i can't quite tell whether musk wants a small reduction this price or whether he's shooting for just out of the deal entirely it's hard to say >> hey, ann, two questions you've looked through all the different filings by both musk and twitter.

do you believe that the 5% number that twitter provided with all the caveats that they did is a material number because that, i think, is going to be the big issue. was that a material figure that was relied upon by musk or by any other investor, given how it was written and how it was described? >> yeah, i don't know if i consider whether it was material to any other investor, but i think it's definitely, musk has a strong argument that it's irrelevant to this deal price. musk is claiming that somehow that this statement was false. it was in their sec filing the actual statement wasn't our spam count is 5% the actual statement was more along the lines of, we do sampling and apply a significant amount of judgment and when we do that, we come up with a spam figure of 5%, but of course it might be higher.

that is the statement that they made repeatedly. and that would be the statement that musk would need to show to be false just to get started there's more to show, but just to even begin, he would have to show that that statement is false. and that's a hard statement to say is false they're not saying we have 5%. they're saying when we did our sampling with our judgment we got 5% also we could be wrong >> but ann, one of the things that elon has pointed to is the fact that actually three days after the transaction was first announced, that twitter actually re-filed with the sec their total mau count. >> but that's not the spam count. that's like, the spam count is the percent of their users what they restated was in a, was a very small amount of their total users, but not the spam percentage and so musk isn't even arguing that that restatement gets him out of deal. he's trying to use that as sort of evidence that they never

really had a handle on the amount of spam they had. but he's not claiming that that misstatement is really the key here >> his other claim is that they have not been managing the company the way that he would like to have it managed. is that an argument that holds any legal weight >> i don't think so. one of the things you have to notice is that he made a big deal about that at first saying i'm announcing the transaction, a whole big thing on you've instit instituted a hiring freeze without asking permission and bit tby the time we get to his papers here, that's becoming a smaller and smaller case of what he's arguing. the problem that he's got, he's got a couple problems. one of them is that the language that twitter promised to run its business in the ordinary course was simply to use commercially reasonable efforts to run its business in the ordinary course, and that just means in accord with the rest of the industry.

and the entire industry is having hiring freezes and so for the. mu plus, the originally the agreement said musk would get to oversee hiring and firing decisions. and they took that language out. and finally, twitter says they tried to run it by him, and he just ghosted them. he wouldn't even answer their questions. >> i posited earlier that perhaps a judge that looks unfavorably on elon musk will have two choices, one to actually demand that the deal close at $44 billion as is, or in a sort of solution suggest, look, you don't want to own it they don't want you to own it. they think you're a terrible owner. this is just philosophically a bad idea to force a transaction like this. but we will take t$44 billion, and the current stock price and

i will get nothing for that. how will you come up with a, if that were the case, how do you think the judge would come up with an unaffected stock price to decide what the difference, if you will, really would be because the current stock price for example takes into account whether, you know, what the decision of the court will actually be. >> well, okay, so there are two things i have to go back and like question that premise, because the fact is that it's not clear that the judge could award those damages, and the difficulty here is that the terms of the contract, which really seem to give her a stark choice you either 44 billion it and make him buy the company or $1 billion in damages it's not clear that she can. >> so you don't close -- that's important, ann you don't brielieve, different people have read this differently. you think the damages are truly capped at a billion dollars? >> i think that's what the contract said. what they spoke for is another

question, whether there's some way of challenging the contract is another question. but that is actually why this is such a difficult case. there are lots of reasons the court might not want to order closing of this very important company with an unwilling buyer, and she may think that's bad for the world. but at the same time, the obvious solution, make him pay some kind of high dollar figure, at least the parties did not contract for that. there's a very clear statement that the most that musk can be ordered to pay in damages is a billion dollars. >> probably meteorolneither sid going to be happy with the end result if she decides this deal has to go through, is that binding? that's it? end of the game for elon musk? or can he appeal beyond this >> cahe can appeal. he can appeal to the delaware supreme court, maybe he'll find a constitutional claim he can petition to the supreme court and see if they'll take

it but that's really it after that. >> ann, thank you. looks like we are in for at least a number of months before we know the outcome. but thank fs for your time. halliburton posting better than expected earnings on revenue on strong drilling demand about 1% higher right now. also watching shares of occidental petroleum after warren buffett announced berkshire added to its holdings. if it reaches 20% ownership, berkshire would be able to record some of occidental's earnings with its own. "squawk box" coming right back after this

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. federal prosecutors in new york and the occupational safety and health administration are inspecting a handful of amazon warehouses as part of a civil investigation into working conditions yesterday osha inspected amazon warehouses outside of new york city chicago and orlando for possible hazards. a spokesperson for u.s. attorney's office for the southern district of new york said they're investigating

possible fraudulent conduct designed to hide injuries from osha and others. representatives from amazon didn't immediately respond to a request for comment. in april, the ceo said the company's injury rates are sometimes misunderstood but said the company can do more to improve safety in its facility now to netflix which was the biggest percentage loser in the s&p in the first half of the year it is set to report its earnings after the closing of the bell. it warned that it expects to lose 2 million global subscribers in the second quarter. i believe the number was just a tenth of that in the last quarter, 200,000 subscribers the priciest streaming services, net netflix faces tough economic conditions, including recession and rampant inflation. and other streaming services

gain traction with consumers when we come back, goldman sa sachs freezing hirings as we head to a break, let's check out this morning's winners on the nasdaq, s&p and dow we'll be right back.

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many bank employees seem to be calling the shots, demanding pay raises and record bonuses. but there may be a shift happening. wall street's top ceos have announced a showdolow down and cutting may be coming. joining us to discuss this, harvard business school professor and author of "remote work revolution. hugh, we've always wondered whether the return to work or work from home was a sort of

part of a bubble market or not do we think that this is about to change? >> andrew, yes i thit nk the jig is up when it comes to remote. the revenues in a lot of these deal flow markets have collapsed. when that happens people have been actually really surprisingly successful about pushing it back against management as you know in terms of their return to office mandates goldman sachs' ceo lamented that they were something at 50% to 60% when they should be 80% occupancy. you have a situation where they were successful at pushing back against this and now with the collapse in revenues and the impending september/october time frame is when i think a lot of these investment banks will start talking about what does it look

like at the end of the year, what does the optimum staffing level have to be heading into 2023, and they will be looking at taking a head count down across these businesses that have been suffer >> it sounds like at minimum, there's going to be a reduction in hiring, but you think this is going to change the culture. we are going back to where we were before? and does this have larger implications beyond wall street? >> oh, i absolutely believe that in the recessionary environment employers always hold the power. and they have to manage increasingly scarce resources. but that does not mean that they want to go back in terms of advances in work, modernization of work. so culling jgenuine underperforming workers, you know they've had that practice

historically weed out poor performance and ensure you have quality talent will this ensure the work structures are smart, hybrid policies that have been true advances in the workplace? i don't think so will this practice around underperformers go beyond wall street absolutely we've already seen it in the tech world, with zuckerberg and others already pointing -- >> can we, can we, so the idea of a quote-unquote underperformer, and what i'm thinking about is in this new world where some people are working at home, and some people are working at the office, how much you think a quote underperformance of somebody is going to be influenced by their proximity to power how many days they're in the office >> i don't think we should confuse performance with presence you can have stellar performers who are not proximal -- >> i'm not disagreeing with you. i'm just suggesting to you that

sort of the mnatural act of the way people behave, when someone's in front of them, it's different from when they aren't. >> some call it proximity bias i think we're much more c sophisticated than that. there was a time pre-pandemic where this would have been a real issue, this proximity bias, but i think we're much more sophisticated today. we have more experienced managers and leaders, more experienced workers who can do well, who can have digital presence in ways that i've never seen and so i'm less worried of having these biases seep into these smart decisions that leaders have to make confusing performance with presence would be such a blunder. >> hugh, i want to believe tsedal, and she's at harvard hear there, and i'm worried it's an

academic thought, but when it gets to practical application the proximity piece matters. >> they want their people back wall street is still an apprenticeship business. you learn from the person to your left, the person to your right and the boss in the clear office don't hallway i've heard the desks in many wall street firms are busier now than they have been in years so that people know that if they are not physically present and their p&l doesn't justify a great year they're at risk of being on the chopping block by year end this is a wall street tradition. it's take and pause during the pandemic the last two year, and it looks like it's coming back their year >> are there certain firms that you think are quote-unquote more bloated than others right now? >> take a look at goldman sachs' history. they absolutely crushed q2 results and the revenue fell by

22%. the th they add 15%, that is like 6,000 bodies they're really investing for growth and the future, and at the same time, what does that do to your expense base it does look loaded for the current levels of revenues that they're doing. >> that's the key issue. bloating is the key issue here and wall street is also investing in technology in extraordinary ways i mean, this is the number one concern that they have so this apprenticeship model is somewhat outdated when you think about algorithmic trading and other ways of doing business so there's a lot more here that's much beyond academic but true practical work. >> when you talk to leaders of wall street firms, and you make the arguments you do, what do they tell you back >> they say, and i have spoken

to board members, and i've spoken to ceos they say they know they have no choice if they want to attract and retain topple at talent. they know that this is kind of where the world is moving, and all of it at the intersection of not just work but technology de digital. they know this to be true. because they tell me >> hugh, the other piece of this is what bonuses are going to look like. and maybe we're jumping the gun here, but given what's happening in the market place, what do you think that looks like since it's such a high proportion of people's compensation in the universe of finance? >> yeah, i think it's going to and wide dispersion. if you're in commodities, and you've been absolutely killing it and your rates, interest rates, trading inflation, you're going to do great. they're up 55% in the 2 q, at

least at goldman sachs it's clocked by 80% or 90% on some level you have some of the good businesses subsidizing some of the weak businesses. that's point of having a diversified business model but at the same time you have to make people correct for what they've done you're going to see an increasing number of people getting bagels, which is zero bonuses. and people are going to be ha p oo happy with that, saying i'm going to survive had >> everything's relative >> i think these are turbulent times, made more complicated by supply chain issues and the war in ukraine so what i think is people are going to look for the right people to retain the right people, to hire the right people

in their organization and weed out not only the low performers but also try to figure out, what are our key priorities some projects are going to go away as well so i think that everyone is going to be hypervigilant, and employees are increasingly going to feel job insecurity million things settle. >> okay. thank you guys, appreciate it. coming up, the senate expected to begin voting today on a chip-focussed competitiveness bill we'll talk to senator dan sullivan on what to expect and later, palantir co-founder, joe lonsdale check out the futures right w.no we're still up, up almost 200 points on the dow. "squawk box" will be right bac ♪ dreaming. ♪

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good morning we're looking at a positive open on wall street, at least if things hold for the next 90 minutes. stocks couldn't hold their swing yesterday. meanwhile, big names, johnson

and johnson out with numbers and the countdown is on for netflix earnings the company's market cap took a $50 billion hit. we'll debate whether this quarter will be any better the final hour of "squawk box" begins right now good morning, and welcome back to "squawk box" on cnbc i'm joe kernen with becky quick and andrew ross sore kikin. u.s. equity futures are in the green. the nasdaq up triple digits, 110 points and the s&p up about 31 after failing to hold some gains at this same time yesterday morning. treasury yields have been, you would say we haven't soween a l

of action. we haven't seen new highs in yields, but we just under 3% on the ten-year but inverted with the two-year, you with see at 2.16 let's get you caught up on some of the stories investors will be talking about today, first on johnson & johnson shares beating, but the company did cut its full-year guidance we spoke earlier in the show with the cfo and asked him why >> we final identiized our guid, the euro and dollar were at parity, it's all effects at this point. but our operational guidance, how we measure our performance remains in tact. >> j&j shares have held up well this year, up about 2% while the

do y dow is down more than 14%. back on april 19th, netflix reported its first loss of paid users in a decade. it expects to lose 2 million in the second quarter, shares are up by about 1.6% ahead of that number later this hour we'll be talking about what's ahead for netflix and attorneys for twitter and elon musk getting set to square off today after musk attempted to pull out of the $44 billion takeover attempt today a delaware judge will hear virtual arguments about potential start dates for a trial. twitter wants things to begin in september, but musk wants to begin next february.

yesterday twitter accused him of trying to slow walk it we want to get to dom chu. >> becky mentioned johnson and johnson earnings we'll start with shares of halliburton. higher right now by a percent or so roughly 100,000 shares of premarket volume, bucking the trend for other oil and gas companies. this oil services company reporting better than expected sales, helped with a big demand for oil and gas drilling that helped power an increase this profit margins as well. so those halliburton share gaining on that bit of news. next up, shares of lockheed-martin moving mt. opposite direction, down by 3.5% just about 26,000 to 30,000.

lockheed was impacted by production slowdowns due to the covid outbreaks earlier this spring and we're going to end on mergers and acquisitions chatter. ncr is up 10% on 185,000 shares of remarket volume, the company formerly known as national cash register it's in talks to be taken over by var toss capital. watch ncr shares that's the bit of chatter, joe, that's drive up those prices right now. i'll send things back over to you. >> a name from the past, i think. ncr. good old ncr dead money thanks it's already over for the

biggest wall street banks, leslie picker joins with us some of the key take aways now that we've looked back at what we've seen over the past week. >> yeah, joe that's benefit of being first. in just three trading days earnings season began for the big banks, the big six traded flat or higher over that period, which is not bad, considering on average their earnings plummeted 35% during q2, subtracting a combined $14 million investment banking revenue plummeted with declined spending 41% in goldman sachs to 61% in j.p. morgan. on the positive side, the same volatility was a boon to trading. and the higher rates that spurred it help boost net interest income. the profitability metrics that

banks generate from loan making, but some analyists are skeptical that even those tailwinds can continue >> i think the more sensitive you are to capital markets, i think third quarter's going to be more challenging. we're already seeing the vix kind of tail off and so i'd anticipate more of a typical summer lull in terms of trading and i think we'll get a lot more momentum in net interest income, because we'llva lot more rate hikes imbedded in the third quarter, so the nii will be the strongest, and then that will probably level off after that point >> so given all those factors, the big question mark for banks is really what happens in 2023 about six months or so from now, guys >> it's the outlook that no one, i guess knows about that keep it is interesting, leslie

star of screen and "fast money." >> i learn from you, joe >> oh, don't do that do what i say, no the what i do. okay, thanks, leslie when we come back, alaska senator dan sullivan will be with us to talk energy take aways from president biden's visit to saudi arabia. he'll also weigh in on billions of dollars in computer chip s subsidies that the senate is expected to take up as early as today. first, before we head to a break, let's look at shares of ibm. like johnson & johnson, it warned of a significant impact to earnings because of the strong u.s. dollar that impact in the case of ibm, $3.5 billion stock right now down by about 5.75%. stay tuned you're watching "squawk box," and this is cnbc '6

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take a look at futures right now. we are in the green. of course they did not hold up that way yesterday dow up about 185 points, s&p up close to 30 points the average price of a gavel g gallon of gas in the u.s. dropping down to $4.50 this news follows president biden's return from a trip to the middle east, including a visit to top oil producer, saudi arabia the president meeting with leaders there, but he didn't secure any public commitments on terms of energy. joining us to talk about all of this as well as today's potential voting in the senate in terms of semi-conductors is alaska senator dan sullivan. thank fo thanks for being here. >> good to be here >> you've been a pretty vocal

critic on the president's policies, what do you think about the trip >> there was a lot of attention on the fist bump and markets weren't impressed yesterday with the oil going up. but i think the trip in many ways highlighted the colossal strategic mistake of the biden administration's policy. the policy was to unilaterally disarm with regard to american energy production. the president showed up there from a position of weakness. you know, becky, it didn't have to be this way i mean, we're in this new era of authoritarian aggression led by

xi jinping in china and putin in russia and just like we were the arsenal of democracy during world war ii, we can be the world's reliable energy supplier, particularly to the free world right now that's something that russia and china fear, american energy dominance, and yet the president showed up from a position of weakness, and i think it certainly showed with the saudi statements particularly at the end saying hey, our decision's going to be based on what opec plus decides in terms of production levels, and as you know, opec plus includes russia, and that was a subtle way of saying we're going to listen to vladimir putin more than joe biden. so in that perspective its with a failure. >> a few years ago, the united states was the largest producer of energy. both oil and natural gas, and you add these things up, we lost

that lead, in halarge part becae of what happened with the market there have been a lot of things the administration has done since then that have maybe made it more complicated. what do you think it would take in order to get us back to that position >> i think it just takes reversing what this administration has done since day one. as you know, they've sought to limit production they've made it, in america. they've made it really hard to permit pipelines, whether it's l and g permits for terminals, whether it's peipelines to move energy like keystone. they've slow rolled that they've gone to the financial sector and strong armed them not to invest in the american energy sector, which is remarkable. and then they've almost throughout the entire financial area in terms of senior administration officials that they're appointing, they have had this goal of choking off capital to the american energy

sector so if they reverse on these key areas that i just mentioned, which have been their policy since day one, i think you'll see the energy sector move whack back to where were you talking about. it would certainly be good for our national security. our allies need american energy all over the world and right now, the image of the president going to saudi arabia and begging another dictatorship, whether it's venezuela or iran, now the saudis, for more energy, it's not the right policy, and it undermines american interests across the board, but it could be reversed, and i think they need to do that. >> senator sullivan, it used to be the solution to high prices was high prices, the higher the price got the more attractive for companies to put money in saying we're going to drill more, we're going to buy more of these things there have been a lot of things

that have happened, kruincludin esg. we want to you give more money back to the investors, and then you have this threat of okay we're going to be moving away from fossil fuel, and we're trying to do that as a global economy. if that's the case, it doesn't make sense to spend billions and billions on projects that would take many, many years to recoup the money you invested into it have we reached a point where the free market doesn't work in this industry anymore? >> no, i don't brelieve that, beck ear becky. they all unequivocally state that we're going to be needing oil and gas for decades to come. that is a fact and so if you need that, why shouldn't we produce it in america with the highest standards on the environment, highest standards on workers

and here's another thing with the administration that's so frustrating. there's a lack of seriousness when you look at some of the cabinet officials on the biden administration, when they talk about this their go-to talking point right now wlrkshether it's secretary f energy, transportation, we need to rapidly move to helectric vehicles listen to them that's not a serious talking point. that's not a serious policy prescription when you look at the challenges in the energy sector but to your point, it is a long-term, we need to be producing it in america that has the highest standards in the world across the board on some things that are important to americans like the environment >> senator, what do you make, we had tom cotton on the program last week. he made a comment effectively that he believes the blackrocks

of the world, that all sorts of ceos are doing things that he actually believes illegal. at one point he suggest thad some ceos may go to jail over their approach to esg. >> yeah, i don't see the going to jail point. as you know, andrew, i've been very focussed on the issue of the voting capacity of the big index fund, like blackrock, state street, vanguard you may have seen the senate banking committee held a hearing on my index act, which i've talked to you guys about a number of times before on your show we had a hearing it was a really good hearing, on this big issue the issue is the power that these index fubnds have amassed and whether they should be vote the shares that they don't actually own the beneficial shareholders in my view are the ones who should be able to vote those shares i think that's the best approach

with regard to dealing with esg. i think it's democratizing american corporate governorance. that's what i've been focussed on >> one of the things that's been fascinating, and larry fink has been described as a hypocrite, in his letters he pushed lots of climate-focussed issues, his agendas, and yet he gets criticize repeatedly by the climate side, if you would, for not voting the shares the same way, necessarily, as he's described under the letter so from a practical perspective, could you argue that he's actually doing what you would want >> well, look, i think the ceos of those big investment funds take it from both sides, the left and the right depending on the issue, depending how they vote. i think the broader issue, as i've raised with you guys before is not so much what the policy

of the day is. it's the market dominance that they have. corporate voting was never meant to consolidate so much power in so few hands, and i think even the leadership in those investment funds have recognized that this is not an area they want to be in, managing $21 trillion in assets, voting on 25% of all public shares in america. that's not a healthy corporate governorance market for our country. and what it does, it leads to distortions, to where different groups, a lot of times far-left, woke groups in my view, go to these firms and say hey, we want to get policies passed through you guys that we can't get pass the here in passed in the congress i don't think anyone thinks that's healthy that's why we're gaining a lot

of interest in corporate america. >> what's a good republican supposed to think of the chips act? is it a, is it corporatist subsidies for a favored industry that will end up, you know, taking on the attributes of the federal government, being inefficient and using capital poorly or is it a partnership between the public sector and private sector that will work for the good of everyone where are you on that? and what should republicans do is it going to pass? bipartisan >> well, joe, here's what i think of that. there was a "wall street journal" editorial that was critical today there are certain key industries, energy is one of them chip manufacturing is one of them but this is an outgrowth of the awakening that we've had here in the congress on the problems and challenges that have been going on for decades with regard to trading with and having a

behemoth economy like the china economy that is not open, that is not free. i'm all for free market competition, open and free trade, except with regard to one country. and it's china and they cheat, and they subsidize, and they coerce, and they steal, and having a country of that size in the global economy, in my view, you can't undertake business as usual. so that is what this chips act is an outgrowth of how do we compete and outcompete the chinese, whetn they don't play fair, and they don't play by market competition rules. that is where that s i've been working on this bill we may move it this evening. that's what's happening. from the republican perspective,

i brieelieve in open trade, free trade, market capitalism with the exception of china that's what's happening here, and it's quite bipartisan. >> the s&p 500 needs subsidies china competes unfairly across the board with all our companies. so does everyone need help >> look, you're raise ing a good point. china does compete unfairly on a whole host of industries i would say it's looking at very strategic industries, the chip manufacturing is one but these aren't easy answers. i'm not saying there's an easy answer to this but what you're seeing right now is the reaction, and i think a healthy awakening to just how unfair and non-reciprocal our relationship, economically, has been with regard to china. and i think there's policy reasons that we need to undertake to address that. and in my view, this is one

that's important. >> we'll see what the final contours of the bill are later today, and then i'll decide whether or not i want to vote for it or not. >> okay. senator, want to thank you very much for being with us today it's good to see you >> becky, always a pleasure. thanks >> got the advantage of being close to china >> can see it? >> see what they're doing over there. messing around >> russia. >> still over that way coming up, going to be in congress they'd love her there. coming up, breaking housing data at 8:30 eastern time then, prepare for more shocks. venture capitalist and palantir co-founder joe lonsdale explains his economic warning, and a reminder you can always watch us or listen to us on the cnbc app. please don't go anywhere u n take a bathroom break,

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lon . welcome back to "squawk box," everybody. we've been watching the futures. it's come off the big gains from earlier their morning. dow futures up by 143. the nasdaq up by about 85. when we come back, some breaking

economic data. june housing starts out in just minutes. these are numbers that the fed will be watching before it decides how much to hike interest rates by next time around "squawk box" will be right back with those numbers this... is the planning effect. this is how it feels to know you have a wealth plan that covers everything that's important to you. this is what it's like to have a dedicated fidelity advisor looking at your full financial picture. making sure you have the right balance of risk and reward. and helping you plan for future generations. this is "the planning effect" from fidelity.

welcome back to "squawk box." rick santelli here, our june rai read on housing starts and permits. on the start side, it's a bit light. we expect a number closer to 1,580,000. it was the weakest since february of last year. if we look at what's going on with permits, 1,685,000 seasonally adjusted units, a little bit better than expected. it is still the lightest read since september of last year we are starting to see some revisions last month, getting

upgraded a bit from 1,549,000 to 1,591,000, which makes this month's read the lightest read since february of last year. now there's a variety of issues going on with housing. there's a whole segment that does cash decemals, that's look at the price as a positive because they want to get deals done there are a lot dropping out of deals. and we know that of course interest rate, supply issues are all playing havoc with what's going on with regard to housing, but maybe the one bright spot, if you wanted to call it a bright spot. slowing housing might help the fed accomplish its mission, because it looks like it's going to have to strangle the economy a bit to get inflation where it deem it to be versus where it's ultimately ended up due to a variety of policy issues joe, back to you

>> do you think the number is mine when we saw -- who was it that raised them by 12? pepsi went up by 12 just on prices is it really just nine all in, do you think is it double digit already >> you know, i think that we are close, but i think we could still see a few months with are we pop into double digits. i still once again think that the real issue is there's going to be reversals here the issue is how far they move back down and how far, based on history, in other words, are they going to go back to where they were 2018, 2019, or stay at elevated levels and mott not ate highest elevated levels. >> i wonder if it's like any other commodity. if compensation goes up, does the participation rate rise? do the higher --

>> it's a complicated issue. higher wages what are we competing against? what is the actual defining number to get someone who is able to work who chooses not to work, what is that number? what benefits is he looking at, maybe that the government's giving him or what does he want to do versus working it's gotten a lot more complicated post covid i don't flow that know that i cr that question. one thing i can answer is we've had a really good run on jobs which makes sense. we shut down the economy you reopen, a lot of things are going to happen automatically. but those jobs that we've been creating are going to run into a brick wall soon. because demand is starting to slack off. it's going to make the ultimate difference i still say it's all about jobs, jobs, jobs, once that turns it's going to turn fast

>> let's get to diana olic are we in a great retrenchment >> i think we're moving toward retrenchment 8% in the permits, month to month down 11% year-over-year the starts in single family down year-over-year and this is when we talk about the big builders, d.r. horton. they are all warning that things are really slowing down. you saw it in the builder sentiment numbers yesterday, an epic drop of 12 points, the largest really this the history of that survey on builder sentiment. builders did note that they are seeing price cuts, more and more builders drop prices we had someone on yesterday saying we are just in the first innings of what you call that

retrenchment i would note that the big gains we are seeing are in multi-family that's a good sign we do need more multi-family rental housing granted it takes a lot more time to plan, to prepare for this it's not reacting to the markets the way single family is these numbers are for june june is where we saw them start at 5.436%. builders saw that, and obviously you're seeing that in the single family numbers it made buyers pull back buyer traffic was coming down, i think going forward, we're about to get some build builder earnings soon. we are going to see a significant pull back in housing going forward, and that could mean lower prices, but, again, prices are so high right now, up 20% year over year, that even if prices are pulling back, perhaps even to 4% gains, 2% gains

year-over-year, that's still a more historic level. i think people have gotten used to this crazy home price appreciation, and they don't remember what normal is. will we see prices really lower year-over-year in some spots? perhaps in some of those hottest pandemic markets, but i don't think you're going to see a national home price decline anytime soon, just a major slow down the onlyproblem with this is w do need more supply and we're certainly m certainly not going to get it this summer. i want to pivot to talk about the broader economy. the next guest recently tweeted this with no slack in the system, much like the 1970s, it's easy to blame everything on one-off issue or spupply shocks, prepar for more shocks. what were you thinking about when you wrote that tweet? >> well, you know, andrew, there's all these people making excuses, one-off for everything going on

and it's clear we've pushed aggregate demand past the breaking point you're going to have a lot more shortages. >> and are you of the view that we are in the 1970s? or are you in the view that we're m 2001 some people have said we're in 2008 i hope that's not the case >> i think it's a lot more like the 1970s. obviously you had all issues with the russian grain shortages, different set of related problems, but in both cases you push aggregate demand past the breaking point. you had stupid policy. stupid policy is more the esg stuff, we're causing foot shortages, stopping pipelines, stopping refineries, sfoforcing organic farming in sri lanka and when things are not

regulated, the price is going up the biggest difference between us and the 1970s is we've taught everyone not to expect inflation. what you're seeing is inflation much lower than it would be because they're not used to adjusting prices as much as they used to. it's going to take a while to teach people to do that. as they start to hearn, this th this thing gets a lot bigger >> i know you've been critical of some of the policies around fossil fuels i think of you as a libertarian. weigh in on this chips act there's been theis move to innocent advise chip manufacture in the u.s and we have the wall street editorial on one side saying this is a corporate welfare give out and they're agreeing with bernie sanders what about you >> you know, i think there's a lot of little things in this chips act that are kind of

cronie wish list things. that said overall, i think it's a good idea on the chips side. i do a lot of work in defense, as you know, and i think it's very important that we have some of this stuff on shore that we're not reliant on adversaries like china and the way it works right now, we've put in so many environmental rules, and h therefore we do things in a messier way. we help the environment by doing things here. so i think given where we were, nominally, we're for lithium refining, all types of refining. we should help bring some of that here. >> here's a question i would ask you as a free marketeer. where's the line when should it be a national policy in which case you agree for example with lithium or chip manufacturing in the u.s., and when shouldn't it be, whether it comes to for example fossil

fuels. you're on the other side of that debate >> i think fossil fuels should be done more in the u.s. and abroad we should stop blocking pipelines and refining in the u.s. that's really important. i think you have to look toward defense, what we need for our national defense complex it definitely needs more of these chips to be available and not to be blocked. we live in a very weird world where we've forced all the offshore through what is not a f free market, through misguided regulations. none of us want a nasty environment. none of us want things to be really dirty, but if you push things to the point where you're going to get sued for ten years here, and we move it offshore, we've made the world dirtier and messier by pushing it offshore to places it's going to be messier anywhere now that we've already done that, the realist says let's fix

it >> you're a deal maker and prolific user of twitter do you have a take on what you think is going to happen >> oh, with twitter, i think the take is really important andrew, we have to realize that entrepreneurs are not people who good at everything they're a plus, plus, plus in some areas q elon's the best. but that doesn't mean he's the best at everything >> you think it's a mistake that he'll be forced to carry through? >> i think it could have been done in an a plus way, and it wasn't so i think it's very unclear what's going to happen next. but i think it's messier than what it should have been we should cut people who are the best in the world at some things some slack >> always fascinating. we look forward to having you on again very, very soon.

when we come back, we've got jim cramer, his first take on the trading day ahead. you're watching squawk, not "squawk on the street," he's on "squawk on the street. we'll see him in just a moment r? hey... it's our former broker carl. carl, say hi to nina, our schwab financial consultant. hm... i know how difficult these calls can be. not with schwab. nina made it easier to set up our financial plan. we can check in on it anytime. it changes when our goals change. planning can't be that easy. actually, it can be, carl. look forward to planning with schwab. schwab! ♪♪

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let's get down to the new york stock exchange. that's the new home for mad money. it's also where we find our jim cramer this morning.

jim, congratulations last night on the relaunch of "mad money" down at the new york stock exchange how's it feeling >> it feels so great i really feel it was time, 17 years. i just love the action here. and it's the adrenaline. it's the guests. it really is, it's also returning to home. i just love it it makes me feel fantastic >> i hear what you say about the guests saw last night, very impressive. >> thank you, becky. >> you look like you're at home. >> oh, i just love it. look, my daughter, who is usually not a, she knows fashion business, called me last night, has a great eye and said the blue is so contrast to the old yellow and red that it's just basically modern and what she was saying to me was interesting, she's 27. younger people who dial around will spot that and like it remember when we do these things

obviously when we're viewers, this place is just an extraordinary backdrop as will as being the heartbeat of capitalism i love it. you should get down here it really is it's that great. i like to tell people, you've got to spend some time right here in the evening. it is terrific >> energy matters, and you've got t hey, jim, what do you think about the markets today? why don't we talk johnson & johnson and the numbers that came out, because the strong dollar is impacting them just like we heard yesterday from ibm. it's going to be an issue for some of these big multi-nationals. >> i look to pharma. pharma was great when you look at medical devices it went down from last quarter, but still going to be up i think end of the second half consumer seems stalled when i asked about skin care, they suggested they had bad supply chain problems, it was not demand could you say everything's got an excuse for it but it is j&j. it is an amazing company, and it

should not go on tdown ahead of its quarter. >> any other things in terms of the selloff, what we watched yesterday? >> we just seem to be addicted to the idea if someone issues a report where they say they're not going to hire like mad in business it's great, banks it's great, silicon valley is a disaster, we've got to get at that mind changed. only a company that is tone-deaf would continue to hire at the same pace. when the fed is tightening and the world is falling apart, you should not continue to be hiring that would be something we would be critical of once they report. >> jim, thank you. congratulations again. and we're going to be watching again tonight, because folks,ist willen up. jim has some big guests coming up the ceos of ibm and halliburton tonight from the new york stock exchange srttaing at 6:00 p.m.

eastern time "squawk box" will be right back. . you need to hire. i need indeed. indeed you do. indeed instant match instantly delivers quality candidates matching your job description. visit indeed.com/hire

welcome back. sky bridge

capital founder anthony's government to. we wanted to have anthony on the program because there were reports of issues at sky bridge as well as a fund performance given big stakes in the world of crypto. anthony, thank you for joining us. >> andrew, good morning., for having me on. where would you like to start? >> i would like to start with the headlines and her to understand the perspective what's happening. scrimmage he holds withdrawals and a fund of the stock and crypto swoon. it seems to suggest that investors are concerned about you gating their ability to withdraw from the fund. >> that is our legion fund which is an offshore fund. it's about $250 million in a. the decision was made to suspend the redemption.

those are temporary suspensions. we do not alongside an independent board. fund is 27 years old. it started in 1994. this is the first time we had a suspension. number that is the sky bridge necessarily wanted to suspended. we had to take into account the balance of different factors we have private investors in their. we don't want to change to to redemptions. our board made a decision to temporarily suspend until we can raise capital in the fund i make sure when people get out, they get orderly and we keep the funds portfolio composition more or less in sync, so not to damage investors. the fund is down 30% year-to date it is up 5% this month. the fund is on the road so there is no fear of any liquidation whatsoever. and about 18 percent of the

fund is what we will call crypto exposure. some of that is in things like coin also private investments and things like sam banquet freeze company sts. we made the decision alongside our independent word. as things get better, we will release that suspension. i think you noticed in 2008 in the book that he wrote, a lot of times when these funds are suspended, clients do better. the last point i would like to make is that everybody signed in an investor agreement this type of flexibility. i don't think there are any surprises, given what is going on in the overall market. we are catching get bounced now and things will get better. >> as you know, when a fund suspends redemptions, it is inside of folk there is trouble. what are investors telling you and what are you telling them? >> you have heard me say this

before, everybody is a long- term investor until they have short-term losses. they start to change their investment idea when they start seeing near-term negative performance. some investors are upset. there are a lot of investors. that fund has been open since 1994. that is a lot of investors that have long-term and data capital gains and like the idea because what they don't want to have happen is a mismatch or a mixed change between our privates and publics. there are a few people upset. there are more people in that fund that are happy with the decision. >> okay. anthony, we appreciate you dialing in, especially given the headlines in the news. we look forward to talking with you again soon. netflix will report after the doll rich greenfield of lightship partners joins us.

stranger things will help a little, but still expecting fewer subscribers. what is your number from what they tell us tonight? >> i think everyone is expecting to lose subscribers. the bigger issue is what is the second half of this year look like? they are clamping down on password sharing. they are ramping up advertising. it made a very big deal with microsoft. i think investors probably aren't paying attention to my microsoft. microsoft is not an obvious choice for a connected tv advertisement partner. comcast your parent company would have been google with her been microsoft is not an obvious choice. we suspect microsoft made a multibillion-dollar guarantee to win this business. is probably not being appreciated enough by investors. >> what is the number that you think is the over and under for subscriber losses that would just shock people or please people?

>> i think anything that comes in 1 million or less this quarter. i don't even think this quarter is -- it could be 2 million. again, losing subs has always been a weaker quarter. the bigger issue is, is the train going to reverse it? is this company adding subscribers for the full year or not? that is the key swing factor. the market is saying they don't believe it. investors have been just given up on netflix they have given up on the entire streaming sector. they just don't like this category. look where disney is trading. >> inflation makes things different. if i have to sit through a couple of ads people are not going to continue to use at least is going to change a little for how much disposable income people have for how many streaming services across many. that is why netflix needs advertiser revenue now.

>> the cable bundle is still $100 and people are watching less and less every day. >> do not minimize that. >> i making the point that all of these services are a heck of a lot cheaper and easier to cancel every sign up for and traditional linear television. one of the things that gets lost in the advertising world the only thing that matters is time spent, you don't get paid for having a subscriber in the advertising world. the leader and connected tv advertising is actually youtube. youtube is the juggernaut. almost 50% of all connected tv advertising today flows to youtube. hulu is about 20%. everyone else's tiny. that is really why when investors are looking at netflix, the opportunity is huge because netflix is the only company on planet earth

that has more time spent on connected tvs than youtube. some of it will be not as supportive. as you think of the advertising opportunity netflix is the one that has the time spent. people are spending over two hours a day watching netflix. created big opportunity. doesn't mean they will execute well, doesn't mean it will be successful. but the opportunity is met. >> my two hours are spent trying to find something. i never do. were things that much stranger and stranger things this time around? did you watch her? were they totally strange this time was just a strange? >> it really set up the finale season. the realities they also, stranger things and of itself is not going to save netflix. they need more franchise content. i would also say the competitive dynamics really hasn't been there. have been great shows on apple tv plus. if you're not watching severance or blackbird you

should be. the competitive dynamic outfit of faculty duplicity luke seems like it has slowed over the last 8 to 12 weeks. it will be interesting to see whether that position and netflix for a better q3. >> we are able to squeeze you in. we have moved come on as well. good to have you on. this will be an interesting report tonight. will be watching that. maybe take a pause from the old man. been watching that? >> no, i need to. >> make sure you join us tomorrow. squawk on the street. squawk on the street is next. a tuesday morning, welcome to squawk on the street. live at the new york stock exchange, looking for a gain at the open even as ibm and lockheed will open lower. gas prices helping sentiment a bit and now falling for 34 consecutive days.