airlines and blackstone. tesla with a 42% jump in sales from a year ago. elon musk on the call straight ahead. russia resuming gas shipments to germany overnight we go live to germany. it's thursday, july 21st, 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 and joe kernen and andrew ross sorkin let's look at equities you see red arrows for the dow and s&p.

dow off 70. s&p down by 5. the nasdaq up by 12. the nasdaq was up 1.5% yesterday. the s&p and dow notching advances the nasdaq is the winner so far this week. up nearly 4% the dow and s&p are not slouchy. up by 2% and 2.5% respectively if you look at the treasury market you see the 10-year treasury is yielding above 3%. below it for all this week the 10-year treasury at 3.045% 2-year treasury is lower of a yield than yesterday 3.23%. and on the back of tesla, tesla shares are higher. i'm not sure why, but we can discuss this adjusted earnings of $2.27 per share. that beat the estimate of $1.8

is revenue dropping from a year ago, but fell short with the margins at 27.9% down from last quarter the company said inflation and more competition for battery sales and other components that go into electric vehicles. the company converted 75% of the bitcoin into fiat currency it purchased $1.5 billion of bitcoin in early 2021. it closed last year with $2 billion in bitcoin on the books. on the call, musk explained for the liquidation. >> we are open to increasing coin holdings in the future. this should not be taken as some verdict on bitcoin it is just that we were concerned about over liquidity with the lockdowns in china. we have not sold any of our dogecoin >> musk talked about inflation

>> inflation will decline toward the end of the year. we are seeing prices of commodities trending lower take it with a grain of salt early prognostication is fraught with error >> tesla shares are up 2%. $763 i don't understand this and you look at free cash flow for the company last quarter take bitcoin out and negative free cash flow company they are burning cash. >> which is why they liquidated the bitcoin. >> i don't know the right valuation. >> put it in the 600s. they had boosted profits at one

point last year by selling 10% of bitcoin when it was higher. this is about $1 billion that bolstered the results did he call in from a greek island, do you know? >> are you asking if he was hosed down by ari? >> he's back >> i don't know. he might still be on the boat. he could do it from anywhere >> we don't know same for the show. >> if a company has negative free cash flow in a quarter. it is hard to know the valuation of tesla is to begin with. do people look and say this is a free cash flow positive company and not understand that this was a function of selling bitcoin? probably at a bad time, unless you think it will continue to go down he said when he bought bitcoin that they would hold said bitcoin.

they were not selling their bitcoin. >> he was also saying given the headwinds with supply chain, this was a pretty good result. people could say cash flow is impacted by something. it will not last forever it is down from the high of 900? how high >> over 1,000. >> okay. i don't own it i don't follow it. >> he said in the past capital allocation is a boring and hard job and one he would not like to do this tells you why i get why they sell it. >> it was 600 to 1,200 it is like figuring out if netflix moves up and down. >> and the twitter question in the background with this stuff >> right i'm making the argument that we and others and the sheep out there that seem to follow this

company write the headlines and say they beat expectation. then they have the free cash flow term. i think what are we talking about? the company sold bitcoin so the numbers could look like that if they didn't do that, we would not talk about this like that. >> right. >> i'm not necessarity t negati. it is a fabulous company. >> you were saying bad things about tesla. @an @andrewrsorkin on twitter? it is not netflix. it jumped the shark. i don't know if i'm wrerecommeng it >> after one episode >> i watched another one what is happening? they are not pit bulls they are rottweilers >> thank you the audience was waiting for the

update we are waiting for episode six. >> i'm all about accuracy. pit bull is not a rottweiler and vice versa a lot of the commands were in german it would not make sense. a pit bull would say speak english. gas flows to europe on the nord stream 1 pipeline from russia to germany. what leverage putin has. you resume, but you don't know at anytime, if do you this, you may be dead. if you do this, you may be out >> next week, he said another turbine may come down. >> maintenance sanctions on him okay how is your air conditioner working? they don't have much of that

anyway shutdown earlier this month for maintenance. data from nord stream's web site shows flowing at a similar level as before the shutdown they are still running 40% capacity as they have been since russia's invasion of ukraine yesterday, the european commission told member countries to cut gas production 15% until march in the effort to save energy more on this story from brian sullivan in germany at 6:30. 15% is a big cut if they told us that here. >> if you cut your own consumption 15%. >> it doesn't sound like much, but it is a lot. >> you would feel it the question is where do you do it with manufacturing or consumers? are there certain industries that get exempted or not this is a big question of how this plays out by the way, we have a follow-up to the story we told you about yesterday. as had been reported, china

cybersecurity found didi global was fined $1.2 billion over data security over personal information. it fined two didi executives the bad news is $1.2 billion a little bigger than we talked about yesterday. we were talking about $1 billion. the good news is the resolution clears the way for didi to repair the business and go back in hong kong after delisting in new york it is not clear when they add new years. in a statement, didi accepted the regulator's decision. coming up after break, get ready for the trading day ahead. reports say the ecb is considering a bigger rate hike at the day's meeting than expected behind the curve. we will talking vestments with mark mobius that's him right there you are watching "sqwkoxon bcua b"

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quarter. alcoa announcing a $500 million share buyback. that stock up 5.6% right now carnival shares dropping after they announced they are selling $1 billion of additional stock. carnival will use the proceeds for corporate purchases and potentially to settle debt that matures next year. the stock is higher on the week after the cdc eliminating covid requirements it is down 10% this morning. united airlines is lower and $1.43 of adjusted earnings and revenue of 1$12.1 million. the company also announced it will scale back growth plans through next year. despite the earnings miss, the report did mark united's first quarterly profit since covid began without the federal aid. stock down 6.4% this morning.

gas prices are sliding aaa says the price is down 8 cents since monday to $4.44. eight states are average aing av $5 a gallon. and microsoft is pulling back on hiring it told cnbc it will decelebrate the pace of hiring microsoft would not say which areas are affected we are seeing this across the board. coming up, mark mobius will talk about global markets and enheth t interview with robert isom of american airlines. "squawk box" is back after this.

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news from europe mario draghi resign ed early thi morning after the parliament collapsed yesterday. the president asked him to remain in place pending elections that could take place in september or october. the central bank will release the policy decision. a quarter point hike is expected, but now they will consider a bigger hike maybe 50 basis points. they are expected to announce a stimulus plan called an anti-fragmentation tool targeted to surging debt yields with nations like italy that decision is expected at 8:15 a.m. eastern. following the conference by

chri christine le garde it is not about a stable currency it is about what they are trying to deal with because it is really hard with multispeed economies. it is hard to have a central bank with different fundamentals italy should not have the same interest rates as germany. you should not be able to borrow in italy at the same rate, right? >> i think our next guest will have a view on this. >> i bet he does mark mobius. cut right to the chase, mark will the euro -- will there be issues in the eu in the next five years surrounding what we

were just talking about? >> you are timely. i'm now in venice, italy here in venice, i see american tourists spending all over the place because the dollar is so strong there is no question the euro will survive, but they have to get used to the idea of being on par with the american dollar as you know at the beginning, the euro was much stronger than the u.s. dollar. now it is 1 to 1 it should probably stay there. they have to raise interest rates otherwise the u.s. will beat them to the punch if you look at the currencies around the world and interestingly enough, the exception is mexican peso and the american dollar. all have gotten weaker against the u.s. dollar. the expectation is higher and higher interest rartes in the u.s. and the feeling it is safer. the europeans feel safer with

the u.s. dollar. >> what with iinning is the unid states in hikhiking >> i think you have to read the playbook you have to raise rates above inflation. inflation is 9%. that means interest rates have got to go higher than that assuming, of course, that inflation does not go down as it it looks now, you know, 75 is nothing it has to be 1, 2, 3% to attack the inflation in the view of the central bank not particularly enamored by that approach, but that's the point. >> when would the stock market discount the end of the hiking phase? two percentage points? obviously the market would

bottom and start rising before you got to the end of the cycle. it sounds like you are talking about, i don't know -- i don't know what you think as far as duration does that sound like a period of years to you or more than a year so you wouldn't be that bullish on the u.s. market for another year >> you must remember, the u.s. market has already tanked. if you define a 20% decline as a bear market, we're in a bear market already it can go lower. it probably will go a little lower. the market is somewhat already discounted a lot let's keep an eye on bitcoin and the cryptocurrencies as you know, all of those cryptocurrency exchanges are in trouble. i fear that a real further decline, of course, cryptocurrencies we covered a little bit if they decline substantially

more then that would be a signal for reaching the bottom of the stock market as well it is a good sentiment indicator. >> okay. we covered this part of the world. where are you really excited about the opportunities geographically for stocks? >> geographically, i would say in asia, generally the currency has declined a lot. they are very productive india is at the top of the list. india has incredible growth prospects and young population they are taking advantage of the technology and manufacturing will be moving from china to india. already they are exporting a lot of software. that's the place to be >> mark, did you ever think you would have to factor in a company's position in the energy markets to decide whether to

invest there do you think europe has a problem because putin has leverage over natural gas? india would not have a problem they don't seem to be dependent on foreign sources and they are building coal power plants like crazy. >> that's right. you must remember they are benefitting from what is happening in ukraine they are importing oil from russia and probably getting bargain prices imports from russia have increased as the russian eagerness to export. they are in better shape on that regard on the energy front, a major change in energy going to europe they cannot depend on russia as much as the past they will not give it up entirely we have to move to other sources. this is where the u.s. has an incredible opportunity to export

oil and gas provided the u.s. can increase production. >> we almost wering e going to declare an emergency where we would not export i don't know policy decisions seem more important now. you still with us, mark? we lost him. i wanted to ask him -- i wanted to ask him -- a 15% haircut cause a recession? we have our own issues with the "r" word >> trying to get him back. >> mark, are you back? oh, we're not going to get him back he's okay? >> yes, i think so >> good. >> thanks, mark mobius. when we come back, russia resumed gas shipments to europe

through the nord stream pipeline overnight. we take you live to germany where brian sullivan is and he will tell us what to expect. we talk gas prices and auto sales. all of this with the ceo of autonation michael manley. this is the first on cnbc interview. as we head to break, let's look at the s&p 500 winners and losers an ♪ ♪ this is the moment. for a treatment for moderate-to-severe eczema. cibinqo — fda approved. 100% steroid free. not an injection, cibinqo is a once-daily pill for adults who didn't respond to previous treatments. and cibinqo helps provide clearer skin and less itch. cibinqo can lower your ability to fight infections,

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operator: 2-1-1, how can i help you? vo: call 211 or visit 211.org 2-1-1 get connected. get help. good morning welcome back to "squawk box" here at nasdaq market site in times square look at futures. dow down 46 points s&p 500 off marginally nasdaq powering higher 30 points higher right now we had earnings coming in just . at&t. >> earnings better than expected adjusted earnings coming in at 65 cents a share street looking for 61 cents.

beat on the earnings revenue at $29.6 billion that is better than the street had been looking for the street company is saying the wireless revenue growth and they took market share. looking at the numbers coming in record levels of customer additions. 813,000 post paid net ads. came in with fiber growth near record levels at 316,000 net adds capex. they are now on track for $24 billion in capital expenses for the year heavy investment in fiber and 5g $12.8 million in the first half. looking at numbers fiber, gaining market share with

6.6 million. at&t 5g now covers 70 million people ahead of schedule. in terms of the adjusted free cash flow. now anticipating $14 billion that is lower than before. they had been talking $16 billion. we talk to them more about the economy and why they are adjusting the cash flow numbers. we have more on at&t earnings at 8:00 a.m. with the ceo john stankey. we will talk to him about what he is seeing with customers. it has been a strong year with stock with at&t. we will see what they see with the customers and where they are getting with the economy and some of the things, too. good news overnight. russia has resumed gas flows to europe averting fears of the halt of shipments through the

nord stream 1 pipeline joining us to breakdown the crisis is brian sullivan live in germany. brian, good news so far today. the pipe has been turned back on >> it is good news for here and the united states as well. i'll get to that in a second, becky. there is good news not terrible news. the good news is the nord stream 1 pipeline is back on. the bad news is the flow was back to pre-maintenance. 40% of capacity through the pipeline putin talks about maintenance and turbine issues there is a back-up turbine putin is continuing to play games. two other pipelines that come into germany those are off. you talk about 40% of one of the three running. germany or europe's energy crisis has not been solved, but there is flow as they race to

get to storage how is this for the united states the longer we see less flow from russia, the more impetus there is for german's government and europe as well to find alter in that sources of gas. they are looking for other alternatives much of that may come from the united states. it will take time. you talk about lng terminals and s ships. four in the world available, becky. they secured all four. this could ultimately be bullish for u.s. lng producers freeport lng which is public earlier on "worldwide exchange" we talked to jeff currie of

goldman sachs. i asked could this make prices for lng from america to europe go ballistic >> does the u.s. have the capability to add any production or prices going to go ballistic? >> it will go ballistic. the ability for the u.s. to expand anytime in the near future is constrained by capacity and you have the outage with freeport. >> becky, they already doubled prices from the u.s. at 16 to 33 they more than doubled they are paying $47 to $50 in lng here, becky. we are paying $7 electricity prices tripling. prime ministers dropping like flies and growing sovereign chris in greece and italy. all of this, i hate that say, may end up bullish for the

united states. we have to feel lucky to live there. europe will go through a long and tough winner >> we were just talking about that a little bit ago. if you have to with everything you laid out, and talk about rationing gas, natural gas by 15% as the ec put out in the statement yesterday, does that lead to recession? that is layered on the fact you pay more for energy prices >> how do you do it? think about 15%, becky it doesn't sound like a lot. >> it does. >> you need to take a 15% pay cut. it does. buy 15% fewer groceries. 15% is effectively six weeks of energy use per year they are asking people to reduce. everybody we talked to said the same thing okay, we are willing to try it, but how do we do it? does the government say you turn it off you don't? hospitals won't doing it

nursing homes. take care of them. here is an anecdote. it has been super hot. it cooled down a bit today on a hot day, you take your family to the pool the community pools in cities in germany are shutting down because they can't afford the electricity to run the water pumps. they are also talking about the heating homes in the winter for lower income elderly in the uk, joe, they have said one in three britons may face energy poverty one in three because they will pay more than 10% of their entire income for power. >> brian, over here, okay, we have a mandate for strong dollar and stable currency. we need to raise rates wait we have another mandate. we don't want unemployment to go up we need full employment. there is a mandate now whether it is spoken or not and an

anti-fragmentation mandate in europe if they raise rates, the whole thing could come apart at the seams based on the southern european countries the longer you wait, the more the bubble grows with capital is not being priced accordingly it's a mess. you throw in the energy situation and i don't know where we'll be in two or three years, do you >> no and i was thinking about addressing this topic and i thought i can't do it. it is too sensitive. it is an excellent point you are making we spoke to the office of energy minister not germany, but other country yesterday. off the record conversation. there is growing fear that putin is obviously trying to use energy as a wedge against the eu i don't think that is a surprise to anybody the question is it may not work, but how much damage will it do

boris johnson, brexit. that's a different issue mario draghi stepping down sovereign debt we have nuclear power. why are we involved in the eu woes we shouldn't have to ration. french nationalists are rumbling the dutch market with their issues they have royal dutch shell and gas field. they are not turning it on they've got it you wonder how much of this will drive that political and economic wedge you know, joe, all economic crises, every one in history, is a crisis in 2008 and 1809 that is the risk for europe and the u.s. equities. maybe not energy we just talked about that. s&p 500 companies. ge or boeing trying to sell a bunch of 787s

to france. how much hits you? i think we are at the beginning. golf analogy, joe. on the 5th hole of the first round of the major tournament. pipeline's on, but the problem is not solved. >> if le garde does go 50, they are serious. we'll know soon enough. >> i'm two kilometers from the ecb. ecb is -- oscar, the ecb is right there. i know liesman is on i will have to run over to corner european central bankers. they are raising rates in the environment where energy prices are going to triple. >> is that crappy sculpture still there? it was a perfect -- >> i lost my audio i've been cut by the german

government i couldn't hear what you said. there is a fountain here euro is about 1 to 1 i can't hear you maybe they whacked me. >> i think it was the control room brian, thank you we will check in with brian. he has been telling us everything that is happening on the ground for more on the next move and natural gas supply to europe, let's welcome helima croft. rbc's head of commodities strategy and cnbc contributor. helima, what happens next week putin has been threatening maybe next week a turbine needs maintenance and that will bring the supply down to 20% versus the 40% now? >> i think it is a temporary rep reprieve vladimir putin doesn't want sufficient storage ahead of wayne winter he wants the area in panic i cut it on to 40% now and maybe

cut it back to 20% next year he wants to remain in the front seat with the crisis he is like, no, i'll control the pace by which you get cut off from russian energy. again, i think this is temporary. i think we're going to see further cuts i think it will be hard to have european union with issues of rationing. you had greece, spain, portugal raise serious questions about 15% cuts spain is basically saying this is not our problem we were not living beyond our means. directed it to germany. >> is germany the one country that's in the biggest pressure point with all of this >> germany had an energy strategy based on renewables and cheap russian gas. angela merkel put it to biden that he had to approve nord

stream 2 germany will bare the brunt. this is going to be a real challenge for germany when they have to think about rationing. who do you cut who gets gas which industries are saved >> how do you see this playing out, helima? what could help germany in this situation? is there nothing that can be done for another year or two or three years? >> a warmer winter can certainly help the continent that would be the bail-out they need vladimir putin has every incentive to make this as painful for europe as possible gas is the perfect weapon of choice gas only comes to 15% of government revenue for russia. oil is a much bigger generator of income for the russian treasury gas is the perfect political tool to use to force the europeans to pull back support

for ukraine and force them in territory concessions and rethink the sanctions imposed on december 5th >> helima, the more you talk, the more i think that putin emboldened by germany's sort of recalcitriant to take care ever their own. that may be in their thinking. no doubt about it. >> absolutely. people should we should have known better about putin's intentions after 2014. he has been cutting off gas for years. the idea russia would be a reliable stable supplier of gas into europe was always a pipe dream. >> brilliant sick a demented mind we're talking about to plan it that way. i don't know should we be surprised look at the civilian places in

ukraine. ridiculous thank you, helima croft. >> thank you. coming up, american airlines set to report. what is cutting off natural gas when you bomb schools and maternity wards? disappointing numbers from united we will have an interview with the ceo robert isom. "squawk box" will be right back. >> announcer: currency check is sponsored by interactive brokers. the professionals gateway to the world's markets.

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welcome back to "squawk box. look at futures. a bit of a mixed picture nasdaq is higher 8 points. dow down 82 points s&p off 6.5 points after the break, we talk about the move in tesla shares after the earnings last night. the bounce in other big stocks big tech stocks this month all that and more when "squawk box" returns do. when you sponsor a job, do. you immediately get your shortlist of quality candidates, whose resumes on indeed match your job criteria. visit indeed.com/hire and get started today.

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welcome back to "squawk box. tesla shares are higher this morning after reporting better than expecting report. shrinking gross margins, other mega cap tech stocks have enjoyed a bit of a bounce. all up between 11 and 18%. let's talk about tesla earning, and then we can get maybe into some of the other tech stocks. impressive to you? they, it was a challenging quarter to get through, and they got through it there's no question. >> yeah, i miean tesla really proved they are a manufacturing company despite all the sideshows. they had really strong deliveries and strong operating margins, despite the lockdowns

in china and the shutdown in the shanghai plant and they're a manufacturing company making a product that people really want they were asked on the call whether or not they saw any fraying in demand given the uncertain economic environment and they said no they can't keep up with demand they have a big backlog and they have more demand than they really can supply at this point, despite economic uncertainty so there is this expectation they said they'll continue to keep their 50% growth target which is really impress any of this uncertain environment >> let's talk about two pieces of this. at the same time that they have clearly an operating profit and margin on the cars at this point. i know people have tried to question that over the years, there's still this question of free cash flow that went back and forth a little bit, ping-ponging on twitter with some of the folks from tesla's investment team and others about the sale of bitcoin.

and what you think that was really about >> yeah, they blamed it on the uncertainty about how long the china plant would be shut down he they said because of that your honor uncertainty they wanted cash flow liquidity they have to invest a lot of their cash into the business just to be able to grow. and what that does is eats up cash and the inability to return e excess free cash flow to shareholders that is an odd move and blaming it on china uncertainty to get that cash liquidity. >> when you look at some of the tech stocks that we've talked about, the gains in some cases as high as 18%, how much more do you think there is to go of the

so-called faang stocks out there. >> we think some of this rally can continue because at the end of the day, when you have growth scarcity, when there's uncertainty about how much the underlying economy can grow, what ends up happening is that people go into stocks that can kind of grow regardless of underlying gdp. they have that idiosyncratic growth and there is that sense that a lot of these big tech stocks have the ability to do that. and even if there is some disruption to the earnings line, take google for example. companies are pulling back on advertising spend in order to save capital and preserve margins in an uncertain environment. you're looking at that at a 7% premium to the overall s&p back last year it traded at a 25% premium to the s&p a name like that, that's growing earnings over mid teens, you're

not having to pay up for that, there's really no question as to why you're seeing a littlebit of a relief rally. >> do you look at alphabet and think that that's a stronger business in this environment than apple or the reverse, given the exposure to advertising? by the way, apple has exposure to advertising, too, but just much smaller >> and apple has exposure to consumer discretionary demand. the one challenge that we think we are facing with a lot of these big tech names is the perception that they are completely immune in a recession. the reality is that 2020 was a really unique setup for a lot of these names. hund you had a big demand because of people staying at home companies will pull back on capex, including tech spend.

so there is the possibility that we have a little bit more earnings variability at the same time, we can't forget a lot of these companies jen generate a lot of earning the outside of the u.s the stronger dollar should put pressure on those earnings it's been all multiple driven. you've seen earnings estimates get cut slightly despite the stronger stocks. so the multiples are sensitive to things like fed policy. we do think in the near term it kind of continued because of that reach for safety. >> cameron, want to thank you. look forward to seeing you again soon have a great weekend coming up, the squawk ceo call the osce of auto nation, american airlines and at&t alphabetical or something. plus we're going to talk to sec chair gary againstler.

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good morning stocks are set for a modestly lower open after two days of gains that have lifted the dow the s&p 500 and the nasdaq to their highest levels in six weeks. we'll get you up to speed on what's moving the markets.

the ceo of auto nation will talk auto sales, the consumer and more then we leave the road and hit the skies with the ceo of american airlines. plus blackstone and how they're handling rising rates. all this as the second hour of "squawk box" begins right now. good morning, and welcome back to "squawk box" right here on cnbc, live at the nasdaq market site in times square. i'm andrew ross sorkin with becky quick and joe kernen things looking a bit mixed this fact, dow off about 82 points, worse than where we started. the nasdaq powering a lot higher is up about three points we'll see if it holds the s&p.

you're looking at the ten-year note and, again, a little bit of the inversion continues. meantime, oil, wt, if you're buying it by the barrel, you can buy it for $95.36. look at crypto for a moment. we've been focussed on bitcoin, coming down marginally just a little under $23,000. >> and we are awaiting quarterly results from american airlines weave avenue got them. phil lebeau's going to give us the results. >> reporting in line with expectations for the second quarter, bottom line of 76 cents a share. revenue coming in roughly in

line with expectations, maybe a smidge higher. 13.42 billion. by the way, that is the highest quarterly revenue ever for american airlines. some of the numbers within the numbers. revenue per seat mile, up 48%, not a surprise given the fares we're seeing cost per seat mile, this is not a surprise given jet fuel. up 25% margin at 4.5% q2 capacity was down 8.5% compared to the same quarter of two 2019 american expects its revenue per seat mile to be up 20% to 24% compared to the same quarter of 2019 it is highly unusual to have that much of an increase for a third quarter, 20% to 24%. capacity will be down 8%

mort8% coming up we have robert isom, ceo of american airlines you don't want to miss what he has to say, not only about the state of the industry but jet fuel, labor relations, that's coming up in about a half hour back to you. >> looking for to that, phil got to find out about the pilots who's going to fly all those new, hundred jets for delta? i guess we can work it out over time >> the whole industry is ramping up but it's not going to happen overnight. so many pilots left the industry during the pandemic that pilots are there, and the ones who have been added, it takes time to go through the training, to move them from different gauge aircraft, first officers to captain level. you can't do it overnight. >> nobody wants them to do it overnight. take your time take your time do it right.

it's an understatement, right? >> sure. >> you're right. >> yeah, see you later we'll be back to you thanks we also have earnings just out from dow kpoentant travelers. profit came in at $2.57 a share, well above what the street was looking for. the street was looking for $1.97 a share. this better-than-expected performance came despite real issues they were facing. they had higher catastrophic losses in the second quarter than a year ago. a drop in investment income. these are issues that the entire insurance industry are facing right now. just the idea that catastrophic losses were strong you had hail, wind, tornados that were out there. stronger than a year ago and what's happening in the insurance industry right now, if you're looking at let's say auto insurance, it's a much different deal, because all the cars are

back on the road versus a year ago and two years ago when people weren't driving because of covid so more accidents are happening, and all of those accidents cost a lot more money for them to fix because of inflation and the shortages when it comes to car parts and different things this is a really strong beat from a company that was facing headwinds on both of those issues they do talk about how they had record net written premiums out there. the three business segments, personal insurance was the one that had a little bit more of a loss, but that was made up for bit other two issue that were out there. and good returns on their investment, despite some of the things happening in the market the stock is now up by 4.3%. travelers is a dow component and all of the insurance companies are out there trying to raise, you got to go to 50 different states to raise the rates. this is inflation that's going to its hadhit the consumer down

road, too. >> they've been, what they've had to assume for, they had a lot, this is really strong report >> better driver koss could help them too >> you can get better rates with better drivers >> theiat's a problem for me. >> you don't want them monitoring what you're doing >> i'm like jim carey, how long you have been following me at&t reporting its results four cents above estimates

above the highlights, at&t add 813,000 mobile phone customers ity bes much more on at&t earnings at 8:00 a.m. eastern with john stankey. the ecb will consider a big are he bib bigger hike. the decision expected at 8:15 a.m. eastern time, followed by a news conference by kristine lagarde. we'll bring all of that to you as it comes. blackstone just out with its numbers this morning distributable earnings coming in at 1.49.

we're going have a lot more on the quarter with chief operating officer jon gray a little later this hour. he's always been a great barometer trying to understand where the world and the economy is headed. coming up when we return, autonation reporting results before we head to a break, let's get a check on the markets we are looking off about 50 points on the dow. nasdaq up about 10 point s&p off about 4.5 points back after this. millions have made the switch from the big three

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autonation out with its second quarter results minutes ago. they reported a slightness on revenue. joining us to break down the results and what he's seeing in consumer demand, michael manley, ceo of autonation. i was a little surprised at the share price, $122. i immediately looked at some of the recent news that says the

post pandemic or the pandemic profit boost is in the rear view mirror for auto retailers, and who forgot to tell autonation, or who forgot to tell the autonation shares that it's in the rear view mirror >> exactly i think there's a huge amount of speculation about what's going to happen. i don't quite think we're in the rear view mirror i still think there's quite a lot of positive for this year. >> people during the pandemic, there are so many different stories that we could tell but for cars, it was personal transportation skyrocketed and then there were some shortages, and you couldn't get cars, and prices stayed firm are any of those things moderating or receding at all that can you tell in your business right now, michael? >> no, i think on the new car side, we have continued to see supply constraints, and frankly, as you said, that's what's

keeping inventory levels low, margins high and turn rates very high on the used car side, slightly different picture to be perfectly frank. $20,000 and below we are seeing some mitigation in demand. that was incredibly hot over a year ago. so we're coming off a tough year-over-year comp. but we are seeing some mitigation in that sub $20,000 mark above that, still strong demand on used as well. >> we've seen a reversal in a lot of the pandemic plays, and i just am kind of confused or at least i don't really understand why it hasn't happened in this, in this group. >> i mean, for autos, when you think about t weit, we came inte pandemic with relatively high levels you saw a period where mile s driven drop. people are driving again, our

after sales business is up which is really good news. new vehicle business continues to be strong and that is about that balance between supply and demand and if you listen to the manufacturers, their forecast in demand still tight and on the used side we come off one of the hottest markets i've ever seen. some mitigation was expected but still opportunity to keep those. >> the product mix, people like trucks, i guess, still like suvs what about evs participating there at all >> oh, absolutely. now that you're seeing the mainstream oems start to deliver fully-electric vehicles, the demand for those vehicles from key brands is very, very strong. some of those, as you know, are sold out in the pipeline for

many, many years to come in the past when you saw gas prices at $4 we saw shifting we have seen some movement t smaller suvs, but not the dramatic shift we've seen in the past ev sales are increasing. as they hit the ground people are coming, driving them but outside of that, the mix is broadly similar. >> i remember in the financial crisis, the, i think the stock got down to, i don't know. it was almost single digits, wasn't it? you weren't there then and i used to talk to mike jackson when he had it back to about 50, and i said, god, you must be rich, is he living in a castle somewhere now is it like a gold-lined? do you know? give him our best, but $122. >> no, i will give him your best when mike left he left at 131.

so i still have some way to go that's my key focus. >> it took from 10 to 131. man. i know some guy up in smiling down, named wayne, smiling down from from there >> as far as supply chain goes, do you see light at the end of the tunnel that's not a train heading right at you are things starting to improve in your view >> i think i'm seeing more stability, which has been a big issue in the past. because you did see big swings as the supply chain got hit by different things happening around the world so now i think we're beginning to see more stability, which is important, and we're getting better forecasts from our oems for example when they think chips will be much more regularly delivered so they can begin to increase production the key as we come out of this, really, is to keep a very good

balance between supply and demand, something that the industry has not been that good at in the past >> mark cannon still around? >> of course mark's around, yeah. i mean, mark's been in this business for 20 years. he's seen many, many things, so he's around. i'll also give him your regards >> they're all old friends of "squawk box," going on 20, 25 year now all right, mike manley, appreciate it. thanks good to have you on this morning. isn't it weird that was pandemic play, and it hasn't backed off at all like all the, the other ones immediately it stopped like it's like the music ended and nobody had a chair, all those other ones why? >> isn't there so much more demand than there is supply. >> this is a supply problem. the question is what happens -- >> cars are old. >> and more people modulate, i mean, this goes to we have too many cars in a couple years.

>> i don't know. it will take them a while to catch up >> and the fleet is so old remember during the pandemic, mike jackson used to talk about how the fleet was really old the average age was like 11 years or something it's even older now, because you can't get a replacement car. >> you don't think it has to do with -- you ride the subway anymore? >> i do, not at much as i used to bigger demand, less supply >> chip shortage, too. >> then you're going to get into the ev story are people going to -- and that's the other supply problem. >> lithium >> evs are more expensive and more expensive to insure coming up, we have jon gray, he's going to talk m&a deals up next, jon fortt is going to join us for a closer look at netflix, jon what are you going to tell us?

are bu are you going to give us one side or both sides >> we'll break down whether or not the company can win back investors and change its model when "squawk box" returns. time now for today's aflac trivia question. what year was tiktok released outside of mainland china? the answer when cnbc "squawk box" continues maybe you could use the money to buy a step stool. i have a step stool. so why are you climbing a shelf? the stool's on top of the shelf, isn't it paul... (shelf crashing) yeah... ♪ ♪ aflac! medium latte, half-caff, no foam.

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now the answer to today's aflac trivia question. what year was tiktok released outside of mainland china? the answer 2017 netflix this week report thad reported that it lost about a million subscribers. with competitors catching up and the stock trading at less than half of where it was, can the streaming pioneer reinvent itself jon fortt is here. what do you think? >> no. netflix netflix can't just reinvent itself a one-year chart of the company

looks like a hill. here's the problem with netflix. it was built for the a la carte dream. when the broadband connected tv would be the ultimate entertainment device and their fw algorithm would make movie theaters obsolete. tv shows would be so brilliant we would pay to see them commercial free. the a la carte failed. going to a theater to see "top gun" is pretty great sometimes they'd rather watch ads than pay the full fee but netflix can just stick atds in the show then, right? no, they can't they didn't get permission they're trying to amend deals. the studios are wiser and aren't going to give up the deals

easily it's going to be expensive for netflix to make itself cheaper the model doesn't work >> netflix still has a nearly $100 billion capitalization and has a reputation in hollywood. >> this was the company that was merely ddvds before it introduce streaming services it has the biggest subscriber base at more than 220 million. it has access to the top talent. grandstands at the intersection of media and software. it's more likely than its competitors to innovate its way out of a slump netflix was late to realize it was overreliant on the subscription model they're working with microsoft because they want to build something new.

if they get theis right, advertising won't be in just the cheapest plans but in most plans, users will have to pay more than they do now to eliminate ads. netflix execs said they could launch a good ad-backed service today without renegotiating anything and they're not going to overpay for rights rough as the stock action is, netflix's biggest hit seasons ever have all come out in the last 12 months and that's the best position to stage a reinvention. >> how different can you make ads look >> i think you can do things pretty differently with interactivity on a platform that you completely control and with the scale of accounts that netflix has, and with all of the back history and data and what people have watched and are interested in watching, that's pretty rich. i expect -- >> what do you mean?

it's going to look like ads on instagram and some of the things you try to get me to click through? that's assuming i'm going to want to engage >> it's assuming you want toen ga to engage. how much would spotify pay to having a link from a song to going to spotify >> it's got to be stuff i really want to see and make the assumption i will engage sometimes i will go ahead and click through some of these things, maybe. >> there's a lot of data on what you've enjoyed watching. >> unfortunately, we mix up all our accounts >> you only need one account >> yeah, but you can have different accounts >> all of us only need one account. >> password sharing. that's a problem if you're password sharing >> you want in, jon?

>> we'll talk after the show i think reed hastings is listening. still to come, our interview with bob isom. and john stanky joins us in an interview you won't want to miss you're watching "squawk box" and this is cnbc (vo) get verizon business unlimited from the network businesses rely on. like manny. event planning with our best plan ever. (manny) yeah, that's what i do. (vo) with 5g ultra wideband in many more cities, you get up to 10 times the speed at no extra cost. get verizon business unlimited from the network businesses rely on. i was having relationship issues with my old bank. next to no interest, the fees

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american airlines reporting earlier this morning want to get over to phil lebeau who joins us with a special interview. phil, good morning >> good morning, andrew. robert isom. you guys swing to your first quarterly profit without payroll spo support. and all we hear from people is it's a terrible time to be flying how do you match the two up? >> a quarter ago we said we'll be here talking to you about profitability, reliability i'm so pleased with our team that we're here with a net income of $533 million it's a important day for

american airlines. >> how much are you going to be adjusting it or limiting it in the third and fourth quarter relative to the second quarter most people look at the airlines and say look, you guys can't fly the schedules that you've put out there, why put them out there? >> we're terrorismrimmingoff a n the third and fourth quarter we think if we do that we're bark on track. >> how long does this last the bumpiness. is this here at least for the next eight months, 12 months? >> we have some time to work this through look, we're coming back from a global pandemic. there's so much to do to get back to where we were. i feel really confident about the steps that we're making, and i know we're going to get back on track >> what do you say to the person at home, what about the corporate traveler who's saying what confidence do i have if i'm

flying over to europe in terms of ply my flight being on time r not canceled is it book earlier and keeping your fingers crossed >> we had a solid memorial day fourth of july kicked back where we want to we're running a decent operation in july. as we take a look going forward, the adjustments we've made to our schedule i know will give confidence to our team peoples and customers as well. >> let's talk about the pilots' contracts. they say you're not doing as much as you can to lock that in. what's your perspective on that? >> on that front, we are intent on making sure our pilots are paid well and paid competitively. throughout the pandemic we had the best contract offer on the table. and you know what? we plan to make sure our pilots are compensated very well, no matter what happens. >> corporate travel, it's not all of the way back, 70%, 75%

back, maybe 80% back when does that start to change when do you expect more of the business travel that is so lucrative and important to you guys? >> overall business is back well over 100%. >> but that's leisure. >> a little bit leisure but small and medium-sized businesses where small and medium-sized businesses go, large corporations are sure to go. there's bounce back, that's what we hear from our corporate buyers >> robert, becky has a question for you. >> good morning, good to see you. just wondering about the pilot shortage we've seen it be such an issue scott kirby over at united thinks we're not going to have enough pilots for the next five years. as a result, united and some of the others are lowering requirements for people to get into the pilot training school, are you guys considering doing the same >> first thing is we're trying to do everything we can to

encourage pilots to come in to the business you've seen us take steps to make sure our regional pilots have the compensation and quality of life that will really attract people to the business i think that's an incredibly important first step then from there we do need to make it easier for pilots to afford the training. we're working with the government, doing things on our own to make sure we subsidize and get people into the business it takes a couple years for a pilot to get proficiency to come to the business. it's going to impact regional airlines i think for a while but ultimately, at american airline, we're going to do the things to make sure we have the regional pilots and main line po pilots to fly the network that our customers demand >> do you think it's going to be five years before we can really get back up to the number of pilots that we need to or is there anything that would change that? maybe even a drop in demand? >> no, becky, i don't think it's

going to be five years i think it's going to take a couple years to work our way through this but we're going to do everythingqeverything we can to attract pilots to the business skbri >> i was just in the uk. heathrow's an absolute mess. it's the same way when you look at some of the major hubs over there. how do you convince people that this is the time to take that trip to europe expecting this rebound in traffic and the airports in europe were not prepared for this >> you know what, they weren't we're working very hard to get back on track. >> what do you say if you are a family or husband and wife thinking about going over there, that's a big commitment, a lot of money, and if you're not sure you're going to be able to get back, why do it >> we're doing everything possible and for us, and london heathrow.

you can book american with confidence we're getting passengers through and working with all of our partners and adjusting our schedules to get to the point where really the system can handle the kind of capacity that we have. >> andrew, go ahead. >> hey, it's great to see you. i want to go back to the bailout. i hate to raise the issue, but your formerc ceo was one of the leading proponents what do you tell the taxpayer today who looks at the situation, we bailed you out, you're not paying the money back like the banks did in 2008 and the service is lousy, almost impossible to say it's not >> hey, andrew, look american airlines has made really good use of the payroll support program. we're so glad to have had it it saved the industry. the industry would be a fraction of the size it is today. so we're enabling commerce we're enabling travel.

now there's a startup to all this and all that payroll support was basically a pass through to our team members to keep them employed we have made good use. american airlines have flown more customers than any other airline, half a million this first quarter. 50 million passengers. if you take a look at the statistics we had a tough june i realize that we've gotten things back on track. we're not that far off from where we've been so for us, i look at this as something that not only was beneficial to the airline but it was incredibly important to our country as well. >> one last question, robert airfares heading into the fall and into the holiday season. they're going to stay elevated, correct? >> with all these constraints out there, phil, this is a supply and demand environment. the best time to get a ticket is book now >> book now and expect to pay higher fare. >> as time goes on, i think it's going to be a limited supply

i would encourage customers to get out there and book now we'll be in position to deliver for our customers as we go throughout the fall. we're trimming our schedule a little bit but i couldn't be more proud of the work that we've done to get back on track. we've achieved profitability reliability we've got work to do but i'm confident we're going to get there. >> on a day they swing back to their first profitable quarter since the pandemic without payroll support. guys, i'll send it back to you >> thank you very much our thanks to robert, too. when we come back, we'll take a check of the markets, and jon gray will join us. then we have john stankey, our special guest at the top of the hour "squawk box" will be right back.

welcome back to "squawk box," everybody. we are watching the futures this morning. and it's a little bit of a rough he day rougher day for the markets. dow futures right now indicated off by about 128 points

let's get a start with dom chu he's been taking a look at what's been moving in the premarket. >> let's start off with shares of travelers which are higher. this s well, now it's switched now it's down negative this is the property casualty insurance giant. it reported quarterly profits that beat estimates, even though profits were lower than the same time last year, due to the rise and amount of catastrophic claims you can see they've lost about 16% of their value since the recent high. we did see a bounce earlier on that has now switched to losses. we're down by about 1% now next you have danaher. it was up 4%, 5.5% now roughly 4,000 to 5,000 shares of trading volume

it expects bert tter than expecd revenues it did see negative currency effects shave around 3% from total firm sales year-over-year. another one of those companies affected by the strong dollar. let's end with a check on some of the worst performers fo entire s&p that's the cruise line operators. notable, carnival, norwegian's down 5 carnival said after yesterday's close it's going to file to raise $1 billion in a secondary stock offering the proceeds are going to go toward general purposes, which may include settling some of its debt that come due next year c all so biggest losers in trading in the free market. >> be interesting to know exactly where business is. you hear it's coming back. you give the right price and

people are like, i don't care if the whole crew has monkeypox that deal is too good to pass up people will still go on a cruise >> i would go on a cruise. >> you would go on a cruise? >> i grew up going on cruises with my family >> i did, too. >> and my wife right now i will tell you has no interest whatsoever >> becky and i are in the non-cruise category. >> coy i could find a cruise. i've seen them, the sails, three crew members for every one person, i've seen those for you. going from greek isle to greek isle >> that's not a cruise that's your own yacht. >> down a river, like the d danube >> budapest. we don't have joe gray on today? >> who's joe gray? >> jennifer gray's father?

i don't know he may be dead joining us to talk about the rising rates on equity and much more at&t ceo john stankey on the company's latest quarter and sec chair gary gensler will be our guest. if he's not, i'll update you

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welcome back to "squawk box. private equity from blackstone the company reporting distributable earnings for more on the quarterly numbers, want to bring in blackstone's jon gray and a board member of blackstone good morning to you, jon nice to see you. want to talk about the earnings this quarter and your outlook on where we really are on the economy. it looks like there was actually a net loss compared with the profit of last year, in terms of the same quarter, and then in terms of the value of the portfolio it looks like it fell by 6.7% on a relative basis to the s&p in a wider market, doing better, but where are we really? >> well, andrew, it's great to be here. we actually had an outstanding quarter. when you look at our performance across the board, we beat public market indeces

it was led by our hedge fund area we also had great responses from our investors to our performance. we had $88 billion of inflows, which was the second most in our history. reallyremarkable there, led by our real estate group, which raised more than $30 billion in the quarter for the largest private equity or real estate, private equity fund ever raised. and today we've got $170 billion to deploy in a very dislocated environment. so we feel very good about our performance. and we recognize we're obviously in a challenging environment i would just say for our shareholders, it was our second highest quarter for distributebling earnings as you noted. so we're very pleased. >> speak to this, though there is this big "wall street journal" article that describes how much you've raised in terms of that real estate fund when you start to talk about how to deploy this money in what you

call a dislocated market, what are you thinking about >> what we're thinking about today is in the economy that is going through a transition today it has a fair amount of strength, but it's de-sceleratig so we're seeing slowdowns, shipping in ports, online advertising, furniture we're seeing a range of areas where there's a deceleration, but also at the same time we're seeing a lot of private strength our private equity portfolio had 17% growth in revenue in the quarter. we also have seen strength in particular leisure and travel, so it's a mixed picture. but we're expecting further deceleration as a result of the fed actions. and that's because we're seeing inflation out there. it's moderated, given commodities and shipping costs,

but still labor markets are very tight. we're also seeing rental housing very strong. i would say rental rates and apartments are growing three times the shelter number that's reported by the government today. so our expectation is the economy will continue to slow, but it is today stronger than most people realize, and i'd also say inflation is higher than most people sort of expect. they're expecting it to come down we think it will be stickier it's like a train that's got a lot of momentum, the feds pulling on the brakes. >> when you say flaiinflation's going to be stickier, elon musk thought it would start to modulate when you tarklk on your famous monday morning meeting how sticky do you think it is and how long do you think is prolonged for? >> some of the areas are turning

over, and there is going to be excess capacity. but as i noted in labor markets, housing markets, there are shortages. energy markets also. so i think there's some element of this that will burn off some of the highest numbers will start to come down but then we'll hit a level that i think is above the fed's target, and it will take a while, which means i think the fed at some point will raise rates to a level, and they'll stay the market's anticipating the fed to cut rates pretty quickly. but i think the inflation sticks with us a little longer, and that obviously has a big impact in how you think about investing. >> and when you think about what the fed does about it, are you thinking it's just 75 basis points, 75 basis points, 57

ba basis points, or do you think they need to raise to 100? >> maybe it gets to the low fours, but i would expect to hold at that level in order to see this inflation start to turn down and, as we deploy capital, it's really important that we focus on sectors that benefit this this kind of environment so we've been really focussed on hard asset businesses, on short duration real estate assets rental housing, logistics, infrastructure assets. travel assets where there's a lot of growth. so i think you've got to be mindful that this environment stays with us. i think markets would like to see this all go away quickly but, again, both the economic growth and inflation have a fair amount of momentum >> hey, john, there was a period 18 months ago where you started to look at the digital high growth businesses in a way that others hadn't before do you look at those as either,

were those good investments, first of all, and two, do you look and say look at where the values of these things are now, we should be trying to pile more into at that space >> i would say both. we're really proud of what we did in some of the faster-growing segments. if you look at companies like bumble or ancestry, we made terrific investments that are going to work out very well. i think we coming from a private equity, cash flow background were fortunate we didn't do a lot of speculative tech. a h lot of companies losing money. we focussed on businesses generally that are profitable. that has made a big difference and to your second point, yes, the market has now created a lot of value a bunch of tech companies have traded down. sometimes the market throws the baby out with the bathwater, and that creates opportunity so i think you'll see us invest there, invest in green energy, life sciences.

travel sectors where we have really high conviction. we like being high conviction investors in some of these great neighborhoods. >> and the last question i was going to ask, your hedge fund's doing quite well in what has been a very challenging environment. why? what are you doing >> what's happening in the hedge fund market, some of these strategies that are non-directional. you think about macro and quant. they benefit from volatility they are trades that can be interday and m in this market can you generate returns without a lot of down side risk. customers are going to discover the benefit of down side protection and our hedge fund should benefit >> fascinating perspective on where we are >> joel gray the icon, still alive.

90 years old, won an academy award, golden globe and tony, and i didn't realize it, but he's in a show that we've been talking about in the second episode. still acting at 90 "the old man." i immediately remembered that's joel gray but i didn't initially when i saw him he's awesome just celebrated a birthday amazing, an icon at&t out with earn ngsings this morning. maybe we will get him on we will have john stankey. the nasdaq is in the green stay with us "squawk box" will be right back.

good morning earnings coming in fast. new results this morning from at&t, american airlines and more of america's biggest companies we'll have to get you caught up on the numbers and speak live with at&t ceo john stankey on wireless, 5g and more. we'll dig in to this season's crypto selloff and gary gensler.

final hour of "squawk box" begins right now good morning, and welcome back to "squawk box" here on cnbc we are live from the nasdaq market site in times square. i'm joe kernen along with becky quick and andrew ross sorkin the futures yesterday managed to eke out a small gain they were indicated lower after the big day we had on tuesday following the big day we had friday they're down today as you can see. been over a hundred for most of the morning session. but the nasdaq was up more earlier and it continues to be up today i think tesla shares have been given a firmer tone to the

nasdaq overall this morning treasury yields, that has not been the main thing we've been talking about for the past week or so. 3.05 still ahead. an inversion between the two and the ten. >> at&t out with its earn ngs a short time ago this morning. the company beating street expectations both on the top and bottom line. street was looking for adjusted numbers of 61 cents per share, the company came in with 65. they had more than 800,000 additions made for the quarter, that would make it the best quarter in more than a decade for the company. at&t shares if you want to take a look at this point are trading down slightly. down by 2.5% a decline of 51 cents. joining me to talk more about it is at&t ceo john stankey good to see you. >> good to be with you, becky,

how you doing? >> good. every number i saw looked like it was better than expected or in line with expectations with the exception of the full-year cash flow numbers that you're expecting for the full year. i know you adjusted those numbers to $14 billion st stocks trading down why don't we start with that why are you lowering the cash flow estimates for the year? >> it's a good question. i think that's a pretty accurate read, becky. i would tell you first of all, we've had great success in the market and i think if i went back to the january and late last year as we were talking about our expectations for growth in the market, they were far mortem pe more tempered. we don't know what the rest of the industry did, but i expect it's going to be pretty strong relative to the industry it takes a little bit of cash to

do that, and it wasn't our expectation going into the year. as you heard we hit our end-of-year target on mid band 5g spectrum deployment early, and we've got 70 million potential population covered right now. that's a big change. we did over 2 million new connected locations in our fiber bill which took a lot of capital to do that the machine's running pretty well my decision was to kind of let it run, because these are growth foundational issues for the business moving forward. we did lhard things. we did restructure the business last year to give us the flexibility to do these types of thing, and we've seen a little bit of working capital issues. there's clearly dynamics going on in the economy where customers are stretching out their payments a bit we expect they will continue to

pay their bills, but they're taking longer to do it that's not atypical. and maybe the bottom line they're making decisions, am i paying this bill this month or that bill this month given the pressures at home. >> that sounds like a tale of two cities at this point what you're seeing is you were spending more to lay the fiber more quickly than anticipated. you got where you wanted to be with 5g six months ahead of time so you were spending more on that end of things you also had very strong demand for things like ipad and cell phones so you were spending more money to load up on those things, am i hearing that correctly >> that's correct. i expect we're probably going to be in a more tepid economic environment moving forward, but these investments we're making are long-lived assets. they will build the franchise for decades to come. when you talk about our speed to market, what we want to do to

make sure we have the best infrastructure out there to support what we want to do in the market, i don't think barking off a long-lived asset and the restructuring of our balance sheet is the right decision in an inflationary environment, getting more of it built when it's cheaper and allowing it to get in service and inflate at economy inflates is a long-term better call for us >> what you said in the other thing is the thing that the street is going to be on the lookout for, not just with at&t but with every company we're trying to figure out where the economy stands, and if you are starting to see customers take a few days longer to make payments or make decisions about what to pay, the lower strata is feeling the pressure maybe that's what you're seeing, signs of a potential economic downturn >> i think that's true we don't see everything in the economy. we see a segment of the customer

base clearly in the low end of the market, i think there's a dynamic that the consumer is experiencing a bit of stress i see a lot of the same numbers you see. and we know there are tradeoffs occurring right now. and decisions on dining and travel and a variety of other things it's mostly hitting those in lower socioeconomic tiers. gasoline's expensive and cooling and heating homes is expensive right now. and those tradeoffs are starting to manifest themselves i don't worry about our particular place in the economy as much, while we tend to see these payments stretch out, and that's clearly what's hitting our working capital dynamic right now. they do ultimately make payments on their cell phone. we've got history on that from previous economic cycles, and i feel relatively confident that we're going to be able to manage through that but i do brelieve we're seeing signs that we have people making

choices and they're starting to emerge in that fashion >> the boss is the hard job, i think sometimes for a ceo. with great power comes great responsibility someone very wise once said. you made some decisions that had to be agonizing for you in terms of changing the entire business focus of at&t, and now that's behind you it's a simpler company things seem to be going well you had debt you had to deal with did you know streaming was going to become such a tough business in six months after, i looked at warner bros. discovery stock i think the high's 31. i think it's trading about 14 right now. did you have an idea that business was going to get much tougher? or you just wanted to refocus at&t on something much simpler >> we wanted to make sure we could focus the business and execute well and i think we're starting to

see early signs that we're able to do that i don't know that i view that the streaming business has gotten quote-unquote much tougher. i would argue, and i think i've said on this program before, that there was a little bit of a tale of two cities in valuation of streaming assets. maybe there were some assets valued a little bit too robustry and other assets not valued strong enough. i still believe, frankly, that's probably the place the market is in right now i believe that over time-warner brothers discovery, as you referenced, will have a bright future and be able to close some of that valuation gap and move up to places that others were able to occupy, while some of those at the top may be moderating a bit but i think streaming can still be a really, really good business i think it's thebusiness of th future i don't think if you're not investing in it and trying to make sure that you have a relevant place then you're mortgaging your future, and i would tell you i think what's really exciting is the game is

coming to approaches like what warner bros. discovery did i think having a two-sided business mod uel in streaming in streaming and subscription was important. can you have the marquee events that consumers want to see like sports, and the scaled str streaming -- >> i know you're pulling for them >> hey, john a question to you about the consumer i know becky was asking about the consumer before. but specifically about the refresh cycle. the am apple refresh cycle has been typically important. what do you see that looking like come september and october of this fall >> i expect it will be a bit more moderated than last year's

refresh cycle. as you know, last year's refresh cycle was first time the iphone came out with broad support for 5g and, as a result of that, there was a lot of demand that went into that. frankly, a lot of the strong demand we're seeing moving into this year are customers choosing to go more aggressively into that upgrade cycle to get the latest equipment i don't think we're going to see quite the rush in the latter part of this year. we're expecting it will be a bit more tempered. i don't know what the cycle will be whetn there are new devices. demand numbers so far have been pretty strong this year. but forecasting out, i think it will and bit more tempered that's our expectations right now. >> do you think the whole 5g push, there was an expectation that 5g was going to change the

world. and i'm not sure it won't, but that it hasn't yet >> look, i think that anytime a new technology comes out, not even just unique to 5g or the wireless industry, there's always expectations that it's going to be a world beat are and chbeater and change things overnight. it takes a couple years. and then three, four years down the road people look back and say how did we do without that the promise of 5g is literally giving a wire line or connected-like experience no matter where you are whether you're in a car and moving or in the middle of a town square. and the reality is, getting that infrastructure that robust taking a little bit of time and a little bit of money, as can you see from our investment cycle this past quarter. and when that starts to happen,

i think the innovation come the behind it, and i think we're going to be just like we did with the questions at the front end of 4g lte, is this going to matter is the consumer going to want this it opened up the explosion of on the go entertainment wherever you went we will be looking back saying how did we do without to >> let's talk about inflation. one of the ways you all have tried to responded and protect your margins is to take a look at pricing plans for some of the legacy subscribers that you have you raised prices. what's been the reaction so far? >> look, nobody likes to just go in and raise prices. and we tried to do this in a way where we felt it was the right thing for our customers, and frankly after several years of price cuts and offering more for less, inflation has created a circumstance, not only for our company and our industry, but everybody broadly across the

economy, and we took a look at this and said how do we do this in a way where it's good for the customer and we went after some parts of our business, legacy plans that customers hadn't touched in a long time and said look, we've got better plans out there that allow you to do more and give you more flexibility like use your phone as a hot spot or roam internationally. so as we went in there and said we're going to have to raise prices on some of these longstanding plans, there are places you can go and get more out of money you're spending with us. number one, giving the customer choice, giving them more for what they're paying for, and it's gone well we never like to go through this cycle. it's always hard to message it and communicate it, but we're nae an ein an environment now where all good companies are going to have to deal with input costs, and we're going to have to react to it i would say it's playing out exactly as we expected it would

play out i think we're going to see some acceleration because of that, that will help offset some of these input cost issues that we're dealing with you certainly saw the fact that our business grew in the post-paid voice space as we promised it would. you're seeing the growth in ebita occur in the wireless business we're doing what we expected to do and we're pleased with it >> we want to thank you for being with us this morning appreciate your time we know it's a busy morning, but it's good to see you, and we'll talk to you again soon that stock is up by more than 7% for the year-to-date, and that's impressive when you consider what's happened with the nasdaq, the dow and the s&p 500. again, john stankey from at&t. the european central bank out with its latest decision steve liesman joins us what's up?

>> first time in 11 year, joe, the european central bank raising its interest rate. on marginal lending will be increased to 0.5 it looks like they did a 50 here, joe. that's my, that's my initial take on this and i don't know here, raise three interest rates by 50 basis points and the instrument that is designed to make it so that there is not such huge gaps between the bond yields in different countries. italy, for example, was trading at like 240 or 230 over the german spread. i'm trying to see if there's any change it came down a little bit. it looks to me if i have it right, and somebody in the control room whisper in my ear if i have it wrong this is the more aggressive take that was signaled very much like

the fed. just a couple days ago a piece came out suggesting that instead of 25 they would go 50, and that looks to be what they did here, joe. so just a couple days before they had done a lot of signaling that it would be 25. then they got a hoerttter than expected inflation number. it is 50 thank you for that in the back there they are going 50 and getting aggressive of course they're way behind the federal reserve. it will be interesting i can actually look at this. to call up the euro and see if that's gotten any, yeah, it has strengthened a little bit. it was 101.7, now it's 102 so the currency market was a little bit surprised there's euro spiking a little bit. now we await two things. one is how they'll implement their program to even out

interest rates across the euro area, and the second thing is what kind of guidance we get for sure you have to think about a more aggressive european central bank joining others like canada, great britain. >> they see further normalization of interest rates. so thougis is not the end of the rate hike. >> no. >> tough choices over there, the same kind of choice sometimes that central bankers everywhere face they wanted to keep them low obviously. they've got energy issues that are going to impact global growth this is just adding to the slowdown you would think >> and the stress on the consumer >> on the consumer >> yeah. >> and the anti-fragmentation mandate is taking a back seat, obviously, at this point to what needs to be done just like we're doing things over here that need to be done at the expense of maybe employment and everything else tough choices when you've stayed

easy for too long, for the wrong reasons. >> well, no doubt about that i mean the european central bank is a single inflation mandate central bank that's all they're supposed to deal with. and so they don't really have to worry so much about it, but it still is true. they have problems over there we don't necessarily have they have a huge potential natural gas problem, given what, the russian supply over there. and the impact of that natural gas issue, or the broader energy issue, in europe is one that will definitively raise prices but also could mean a massive down turn in european industrial production, especially in germany if they don't have the energy or have to pay huge amounts to pay for that energy so they have issues there that we don't have right here we have our own energy sources and then they have this fragmentation. i'm glad you 15said that, joe

i was trying to write around that phrase. what that means is these huge disparities out there. i'll give ah quiyou a quick look the italian ten year trades at 235, 2.35 percentage points higher than germany. the greek two-year is a full percentage point over the german two-year so that would be like if people in montana were paying a percentage point more than people in pennsylvania for their bond yields. we don't have that problem here in the united states, joe. >> the whole kick the can down the road that some of the sovereign debt of southern european countries never did get totally fixed. >> what do you mean totally? they didn't do anything, joe they left it all the same problems we had during the financial crisis they're here again now they ignored it, didn't do it, and now they have to deal with

this fragmentation problem again while they're trying to raise interest rates >> yeah, we say we don't have that problem here. sometimes you wonder i hope we don't start talking about fragmentation here i hoech mpe montana doesn't deco secede or texas. coming up on the other side of this, we are gointog have another news-making interview. sec chair gary gensler's going to join us on his regula tor eye push you're watching squawk

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welcome back to "squawk box" this morning want to get right to our next big guest of the hour to talk crypto volatility, esg, we're going to go broad. we've got a lot of questions to talk about we're joined theis morning by se chair gary gensler because we have been talking about esg all week, and we had your former, your former person in this same role, jake clayton on actually talking about esg

issue and the tis closdisclosurs that you're talking about, but some of the rules of the road that we've been going down that you're promulgating may be leading us away from some of the national security issues that we should be pursuing or not thinking about them in a balanced way, what do you think of that? >> andrew, so good to be with you. it's the long tradition of the secur securities and exchange commission to help investors get their disclosure what we've proposed, and we have thousands of public comments on this, is a rule that brings consistency, comparablity to what's happening companies are disclosing things about climate risk, how they manage it and their greenhouse gas emissions, but it's

fragmented so it's bringing consistency to that so with all respect to my predecessor, we're not a merit-based regulator. he might be suggesting something other than we are. we are a disclosure-based authority and trying to bring some consistency to disclosure, and then investor. >> related to that, though, is another issue that a number of republicans have been pushing, this including tom cotton who came on our air last week. a lot of pokesfolks upset at wh they see at power of the biggest investors in the world or at least those who share lots of shares, like blackrock and the like, saying they are too woke, pushing an agenda and have too much power what do you think about that >> investors get to decide whether they're small or large

investors, what matters to them and how they're managing under their various fiduciary decisions and the like to get returns pour their clients but i would say this we have seen increased concentration in the asset we see greater concentration in market making in a way that the equity markets work. and this is the nature of our modern economy, and at the securities and exchange commission we constantly think how we can help protect and promote competition, because that's good for investors. >> but do you believe that the largest asset managers, despite those who otherwise control passive shares should be using their influence to the extent they have influence to vote those shares differently than active managers might? >> well, again, it's up to them how they do the work for their

ultimate clients, the investors, and so i'm sorry, because it really s it's part of their fiduciary roles as i understand those responsibilities that voting on a stock merger or board of directors on a proxy vote is part of that duty if that helps maximize their -- >> so you, just to be clear, then you briefelieve they have duty some people say these passive shares shouldn't be voted or actually should be voted to mimic, effectively what active managers are doing because they're passive to begin with you're saying that's not the case >> andrew, it's not just me. it's various pronouncements that predate me from both lawyers in the courts and so forth that an ability to vote is part of the value proposition. and it was true in the 1930s,

it's true now. congress embedded something about proxy voting and whether you're voting on a merger, the board of directors or on other issues it's part of the mix of what an investment adviser does. >> you did just mention congress, and maybe that's a nice way to segue into this topic. we keep talking about congress and stock trading, nancy pelosi of course or her husband i should say, trading in nvidia, recently you caredeeply, and part of your mandate is to deal with the credibility of the markets clearly this undermines the credibility of the markets to see folks in congress trading back and forth, we're talking about it, people are raising questions. is there something that you could be doing >> i leave those decisions to congress, but we, i agree with you that markets are based on trust. financed broadly is based on

trust. and whether they have similar opportunities to the largest investors, we do have a role in terms of something congress passed many years ago, called this stock act, and we do play a role along with the department of justice, and had is about how members trade in the markets >> but you don't have a lead you just said you're going to leave it to congress you must have a personal view and a view as the ultimate regulator of this, over the exchanges. >> andrew, i know you've got a role to play, but i've also got a role to play to help lead and guide theis remarkable agency overseeing $100 trillion markets. it's about trust and finance over decades we have insider trading laws to ensure that insiders not be able to trade on material, non-public

information. we also help receive loss that congress passes about their own members. i leave it to congress to change those laws >> in fairness, your budget is controlled by congress, is that a fairway to describe why you don't have a view? >> no, andrew. it's just that i have a respect for congress we're going to enforce the laws that are in place. there's really important laws about not trading on material, non-public information, and that's in place. and we do our best with regard to our limited resources that we're appropriated, and we also do what we're supposed to do in enforcing the laws around something called the stock act >> separately want to talk about crypto, because we've seen crypto carnage across the board. s celsius is an example, being sued now, inflating its price

you had a case with blockfy. are we going to see a litany of these types of deals? >> you're focussing on crypto lending. when the public is lending their assets to a financial institution, and that financial institution is trying to make some spreads and so for the. and we have focussed on this area, like blockfy that settled, may well be investment companies taking hundreds of,00 thousands millions of funds and re-haven reinvesting it some are offering pretty high returns. 4%, 8%, 10% returns, and how are they doing that? what stands behind those promises so we're going to continue to work with the industry, get these firms properly registered under the securities laws and protect the public >> talking about protecting the public, as you know, fidelity

plans to offer bitcoin as a option for corporate sponsors effectively so their employees can get access to it do you think that's a good idea? >> again, it's up to them. it would and good idea to make sure any large institution works with the securities and exchange commission, works with their sister agency. i was proud to chair that agency once as well our two market regulators have a lot of tools to protect the public that's what's most important we have time-tested tools and laws about trading securities in the market place, many of these underlying tokens have the attributes of securities and so the only question is how to get them inside of this investor prot investor remit and then the

public has more confidence >> as a former professor and teacher, do you think crypto should be part of 401(k) plans, part of everybody's portfolio? >> thank you for mentioning. i was proud to teach at m.i.t. and do what i did. i'm neutral about the technology, but i'm not neutral about the investor protection. these are highly speculative asset class. there's thousands of tokens. most of which have attributes of securities, meaning there's a group of sponsors and entrepreneurs raising money from the public and i would say this, that just like any field of venture kap cap capital, most new ventures fail, and it's important that the public get the disclosure, understand the risks that are's very significant risk in this field. >> and chair gensler, before but

it, as you know, probably one of the hottest topics in the business world among the business press following the twitter fight with elon musk, which has now gone to court in delaware of course one of the things elon musk has done on twitter and elsewhere is call for an investigation into twitter's description of how much spam and how many bots are on the system. are you looking at that? can you tell us about that and do you think that twitter shareholders should know where the sec stands on that >> so i'm going to speak directly to your viewers and say as chair of a civil law enforcement agency, maybe the nation's largest, we bring around 700 enforcement actions a year you hopefully understand why i would not speak about any one matter that really a talented journalist like andrew might ask me about, so andrew, i'm going to pass on that matter. >> is there a point at which you

investigated it and you felt comfortable that the rlanguage was okay that you would say it's okay or you would say it's not okay, and where would we be in that process if there was a process. >> i like your hypothetical, but i'm going to shy away from the hypothetical we follow the facts where they take us and without fear or favor, bring cases where we think appropriate. where we don't think appropriate we don't reveal to the public if we've looked at something. that's not what you would expect from the department of justice it's not what you have from the sec. we only speak publicly when we actually, the facts and the law present itself in a way that we take somebody to court or we settle something >> chair gensler, a lot of people are going to take a lot interest that maybe on both sides, depending on which side they support we appreciate seeing you of

course, and your perspective on all of this is hugely helpful to the conversation >> thank you very much and you be well. >> thank you when we come back, we will go inside tesla's second quarter results with former company president john macneill. stay tuned you're watching "squawk box," this is cnbc, and we'll be right back me cgi. okay... yeah... oh. don't worry i got it! become an agent of innovation with invesco qqq

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welcome back to "squawk box," everybody. let's get right back over to steve liesman. he has economic data that just hit the wires. what are you seeing? >> jobless claims coming in more than expected. topping that 250 mark which raises the question to the extent of which we have real weakness in the job market this is going to be a test of the idea of all of these job openings you can imagine given what's happening in the economy right now that there are layoffs this one sector, and this idea that there are all these unfilled jobs out there might suggest that over a relatively quick period of time these workers would be picked up and find jobs elsewhere. we don't know that, but you can imagine there would be a spike, and it wouldn't necessarily portend things going particularly bad in the job market given the number of job openings and how tight it's been it was expected to be minus just

a little bit there i'm sorry, plus a little bit six on the estimate. and then of course the european central bank doing more than expected, coming in at 50 basis points rate hike, the first time in 11 years they have increased rates that sent the ineuro over 100 ia praise it place it hasn't been in a little bit. italian bond yields rose a little bit less. we talked about free market or lack thayeereof. current political italien tumult is unclear this is a snapshot of a couple minutes ago. the rate differentials the french ten-year trades 60 basis points over italy.

greece, 220 and spain 123. that reflects, i think, some market ideas about the differences in the finances of those countries. that's what lagarde has to deal with and we'll have a press conference in just a cummins >> we're positive now, stieff. t steve do we really care if the dollar gets too strong because of currency translations? are we really happy that we are seeing a little pullback in the dollar then? what do you attribute to that? >> most people would argue that the public companies, most people argue the public companies in this country do better with a weaker or stable dollar, not a stronger dollar. i personally don't believe that's true for the united states as a whole for the economy. i think the economy's pretty dynamic. we cover the public companies and public markets that ultimately the stronger dollar

is not as good for them as the weaker dollar. >> who's that guy that calls the king the dollar. >> we do love the guy. >> he may be somewhere else now. meantime, we have breaking news to tell you about airbnb's co-founder is stepping down from his full-time role at the company in an e-mail sent to airbnb employees the primary reason for this transition is this is the only company i've ever helped build and brian, and my brain is bursting with more ideas to bring to the world i was thinking of brian because brian chesky runs that company he will continue serving on the board. in a statement, brian chesky saying what i'm most thankful for is that the three of us, joe, nathan i are still together, still meeting every sunday we built a dream together, and now even after all these years

we still continue to dream and of course joe was the one, i think, back in 2007, who helped build this thing do you remember? they were literally putting air mattresses that's why it's called airbnb, in the floor of the rental in san francisco. >> advertising a lot now i know you don't watch tv as much i see a lot. and they're very innovative. showing places to camp and a lot of cuts and videos pretty cool. and a lot of them are saying, what is this i'm watching at the end, and it's airbnb. >> that's interesting that he has a lot more ideas >> he's been getting involved in philanthropist and film making and other things i think you'll see more of joe, but doesn't seem to be going that far from the company. meantime we want to get down to the new york stock exchange where our friend jim cramer joins us now jim, should we talk? we had that conversation with

mr. stankey, how do you file about at&t's earnings. >> i like t-mobile i think they're going to continue to be good. did you ask about another company? >> i think there's a guy, john stankey, we had on in the last hour >> you never want your phone to be turned off. so the idea that are the customers may be slow paying i have to choose the word sub optimal. did you sigh tee the cash flow there? >> they brought down their numbers for the year >> i found the cash flow disappointment even more disappointing when you tried to trap gensler on 42 different topics >> when he talked about the cash know miss, he said part of it is they spent so much more than they had anticipated, they spent

more in the capex on fiber, buying additional phones and ipads because there's so much demand i will tell you, i was out in idaho two weeks ago, trying to buy an ipad, and i ended up having to go to three different stores, bought nobody had them there is demand, and the question is, do you want to meet that demand or not when it comes in >> these are cash flow businesses that's all we care about >> but if you're investing for a good reason, do you give them any room for down the road or are you just saying no, got to lithit the numbers now. >> no. i don't think verizon's going to be that good either. but they've got t-mobile going, it's like a real business doing really well, and these other two, i'm sorry, this stock is basically unchanged for, well, except not as good a dividend. it was not a great quarter, that's okay. not everybody has a great quarter.

let me see, who else had a bad quarter? in vitae >> let's talk about a guy who doesn't get enough press elon musk and tesla >> i loved the quarter i thought i was to twitter. it was a great quarter people lower the price target, raise it, but this guy sold a lot of -- the demand here is interesting. at what point, tony is such a negative guy, but a sweet guy and he says is there a demand issue. musk says what the hell are you talking about? demand issue you can't get a tesla. it was a little combative. it was my favorite moment on the call one of the best calls of the quarter so far i really liked it. >> look, they have held up remarkably strongly during what has been a very challenging period to their credit lots of people, though, looking at that sale of bitcoin,

scratching their heads saying, what's going on, why were they doing that there have been questions about that, whether that was to make the free cash flow look higher than they otherwise have been. yeah, the folks at tesla trying to say that's not the case what do you think? >> i think it was just a gaffe it was a twitter bid, obviously something he shouldn't have done the guy has fun, okay. and he bought this stuff and i think he rolled the dice and he just needed the money for the cash flow. but it was obviously i think a mistake and didn't make sense. i watched the jonathan gray interview. let me talk about that he reported amazing stuff and that stock is down why? he told a great story. >> he told a great story and i don't understand it in truth because if you think about it, the money they just raised and how much they'll put into the

market -- >> gray's story was the best i loved what he says about at&t. your questions to gensler, i was going to ask him about a bunch of stocks. it was fun but the best question we asked is what the heck was fidelity doing? i was surprised he punted on that it would have been a great thing to say, you know what, that might have been unwitz that's what i would have said. he wouldn't do it. were you disappointed like i was? >> you know, i think when you're in that role it's sometimes hard you know me. the more kid, the better >> i think your question was more important than his answer yeah, that's a head scratcher. but we said musk was going to buy it >> we're going to see you and get your perspective on so much more in just a couple minutes. stay tuned

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tesla shares up almost 3%, back to 762. the company beat profit expectations in the second quarter but missed on the top line for the first time since

2019 also missed automotive gross margin estimates joining us for more on tesla's second quarter is john mcneil, dvx ceo and former president of sales with tesla does anything indicate at this point the cracks in demand or is it all supply chain sort of -- i mean, they're in demand, they can't build them fast enough, can't get the components to build them fast enough they did pretty well navigating that landscape >> i think that's right. if you're a short-term investor i think the main story of the quarter is china that's a supply chain issue, but it's their own -- it's the ability of them to open their own factories. but demand is still strong they're defying the economic head winds even after raising prices 20% or 30%. they've gotten more competition than ever. the competitive models in

electric vehicles went from 18 to 32 in the first half, yet they grew thap market share from 71% to 75% they're beating out all the established names in the field demand is still strong and they're delivering even in the face of competition supply chain problems >> elon, i've heard him called the greatest engineer in the world, maybe not so great at -- you can't give him an "a" on everything, maybe, but the technological lead, do you see any sign that anyone is going to eventually be nipping at tesla's heels in terms of just customer -- just jonesing for a tesla? i just don't see it. i like one there's an audi that looks nice. but tesla is head and shoulders above everyone else still. is that starting to change will it? >> you know, the tican, when

porsche was designing that, we were concerned because they had five years to study the model s and to best i would. when that car came out, it had less range, less speed, less features, less automation. so one of the things that surprised me in the call last night, joe, was i've been questioning as a lot of people have is elon distracted with this whole twitter thing he countered that. he seems to be all over the details. he took an esoteric question explained the c-plus-plus issue and turned to detailed battery questions from analysts. he's on top of the details it's hard to point to another automotive crowe cottage grove that is that dialled into their business >> we use 10% of our brand maybe he uses 11% of his >> could be. >> any comments on crypto, bit coin would they buy bit coin again? would tesla go back into bitcoin? was there more to that than

meets the eye? would it help? did it help the bottom line? or whatever you want to call the bottom line? >> the street was expecting a $600 million loss on bitcoin, but tesla surprised everybody last night, sold bitcoin early they're not done they did the math. they lost around $100 million. they defended that move as a hedge to bolster the balance sheet given uncertainty in the china factory shutdown i kind of agree with jim cramer's take, probably a mistake they won't repeat. >> john, good to have you on this morning >> thank you >> a 1-year-old, sophia, happy birthday she watches "squawk. >> did she have a favorite favorite anchor? >> probably becky. >> she likes you guys too. >> final check -- they're fickle at a year old. final check on the markets

you can see green now. i don't know whether dollar weakness weak weakness helped but not much >> ecb, economic numbers >> call sophia and find out what she thinks. >> join us tomorrow. positive today a little mini rally here "squawk on the street" is next good thursday morning. welcome to "squawk on the street." i'm david faber. they always tell me over there that's jim cramer. carl is not here he's got the morning off well deserved. let's look at futures. one half an hour from now to the opening bell what we heard from the ecb seemed to be the turning point >> absolutely. you nailed that one nine ways from sunday. >> 50 basis points in terms of