earnings season. china property stocks are higher on a report that beijing could spend $44 billion to bail out the sector. and business news meets tmz. elon musk denying the report that he had an affair with the wife of google's cofounder, sergey brin. we are really going to talk about this. he did not have sex with that woman according to him. it's july, what is it? the 25th, july 2022. "squawk box" begins right now. good morning, everybody, and welcome to "squawk box." we are live from times square. if you want to know how the

u.s. equity futures are doing, let's take a look. it was a strong week last week, and you can see this morning, there's additional green arrows. the dow futures indicated up almost 140 points. s&p up about 20 points, and the nasdaq up by close to 70 points. of course, after the punishing start to the year, the s&p 500 now climbing nearly 5% for the month of july. last week was good. the weeks before that were pretty good. that does include the 2 1/2% gain from last week alone. in fact, let's look where the indexes stand from their record highs. at this point, the dow is off by about 14%. the s&p off by nearly 18%, and the nasdaq is off by nearly 27%. things are looking better after last week's strong gains across the board. the nasdaq was the best performer. if you look at treasury yields, this is interesting. they have been under pressure. a tick higher, but below 2.8%

this morning. like 2.803%. an hour ago, 2.78, and coming back down. coming back down. >> the piece has been written, gold cannot catch a break. did you see gold? 1700. 9.1% inflation, and gold -- >> crypto was stronger last week. >> down overnight. below 2200, but it came back. i was shocked at 278. we will talk to jared bernstein to find out what a recession actually is. >> that's confusioning. >> it is, and it isn't. i kind of agree with where the jobs are and where the consumer is, and we are starting to see the cracks in certain sectors, but i would not call it a recession, even if we have back- to-back quarters. >> look, i think it's problematic to have the

administration trying to change the definition. >> it is. i kind of agree. >> you agree with the administration? >> i kind of do. >> i don't think it's a smart place for the administration. >> it's not -- >> i know it does. it's good. they get criticism for that, but i kind of think they are on to something. >> it's hard for the administration -- >> is that what you think? 3.6 unemployment backing up quickly to 4 1/2. it doesn't feel like that, but probably pandemic. >> bank of america will tell you people are flush, consumers are flush, more money in their accounts, and they are able to spend more, but it's what is next that people are worried about. paying more at the pump, by the way, prices coming down last week, too. when you're paying more for gas and grocery, people feel the pinch quickly. >> do they know it will be a negative number?

gdp? >> if i had to. >> when they come out and start talking, you think, well, probably -- >> well, they don't -- they probably don't know. it's the same input. >> it makes you think, yeah, well, right. >> meantime, with what we are discussing. the first read on the second quarter gdp happening on thursday. the white house with a blog post on the r-word. it's sort of -- we previewed this or overran it now with the conversation. >> we did. >> even if the number turns out to show a second straight quarter of negative growth, the u.s. economy was almost certainly not in a recession in the first half of the year. now yesterday, treasury secretary janet yellen telling "meet the press" we are far from those levels. >> this is not an economy that is in recession. we are in a period of transition in which growth is

slowing. the recession is a broad-based contraction that affects many sectors of the economy. we just don't have that. >> yellen said the economy needs to grow at a steady and sustained pace, and the slowdown right now is necessary and appropriate. we are going to talk to the white house counsel economic adviser in the 8:00 hour. >> yeah, when we talk about things, i assume everyone has seen what we have seen. everyone is a business news. maybe people have different people they follow. >> you think there's people who didn't know janet yellen said that yesterday? >> i will wait to hear directly from us. >> the white house is now spinning that it is not going to be a recession, even with a negative quarter of gdp. i still never thought that, you know, i had my problems with

some of the stuff secretary yellen has said over the last year and a half or so, but i was sort of nodding. i think the pandemic threw everything out of whack. >> it does, but there's a lot of sectors where people are feeling the crunch. if you're suddenly seeing the slowdown from what retailers want to stock up with because of too many supply things, there's places in the economy where you're seeing a hard break, and again, they were chasing demand, and now they are shutting things down because they got burned by that. >> i thought about having arthur brooks on. i love when we have arthur brooks on. >> it's harder to find happiness right now, and all along, arthur's deal has always been, you know what brings happiness? the value of work, the value of earned success. the value of making a place for you in the world, and it doesn't matter how much money you make, and when you're going out and doing it, and getting it done and supporting yourself, and that's part of happiness. how much of that has changed

now? you don't go out and work. you stay at home to work. there's inflation. no matter what you make, you don't make enough, and it's harder and harder to be happy right now, although i'm ecstatic this morning to be with you, too. let me talk about elon musk. first of all. >> the tmz meets cnbc right here. >> making headlines this morning, out of a paper that, you know, we have to talk about what is in the paper. it's business news. ''the wall street journal" says musk engaged in a brief affair with the wife of google cofounder sergey brin. brin and his wife were separated but still living together. 11 hours after the journal piece was published, musk tweeted.

this is total bs. sergey and i are friends, and we were at a party together last night. i have only seen nicole twice with a lot of people around. that's sick. wait. the journal piece says brin ordered financial advisers to tell personal investments in musk's companies. they have been friends for many years. musk said in the past, he regularly crashed at brin's house in silicon valley. >> well? >> i don't know -- >> i know nothing. >> i want to believe that. >> right. >> i don't understand the story. the story had the details where he's getting down on his knee in front of brin to apologize for this. >> beg for forgiveness. >> to beg for forgiveness. i don't know. i -- >> i have nothing further to add here. >> i don't either. >> i think that's a good

disclaimer. >> what do we know? we don't know diddly. tesla is now bidding for a portion of billions in federal and state dollars aimed at expanding the nationwide fast charging. if granted, it would force the company to allow nontesla owners access to the current network with plug adapters. separately, tesla is scheduled for a court-ordered settlement to have talks over the 2018 tweets about musk's company going private. that adds to the busy month for musk as he face as five-day trial in october over his attempt to terminate the twitter takeover. ryanair first quarter profits beating estimates. they want to return to precovid levels, but they are not sure if it will where achieved this

year or next year saying the unpredictable prices make it impossible to forecast profits ending next march. we will talk to the company's cfo at 6:30 eastern time. good barometer of where we are headed, but maybe not a barometer. >> billionaires, when they party, are nonbillionaires invited to the party? what is the minimum you need to get invited to the party? >> just in case you thought there was something not to talk about? >> no, but have you been to a billionaire party? >> i don't know. >> do they all hang out. you know the hollywood types are always together?

they think alike. how does that happen? they go to the party, and we are having a party, and invite, jeff, elon musk, how far down do you go? >> i mean, certain types of parties in new york and the valley. >> certain people are turned away, and they are like, please, you're not in anyway coming into this place for 200 million. you can park your car. >> do you know? >> do you know these things? >> i don't know these things. >> you have not been to a billionaire party? >> you probably have. >> around here. >> we have hedge fund billionaires. >> different types. >> do they hang around together? >> i don't know. >> let's go to commercial break. >> you can. >> you keep pointing. coming up, a busy week on wall street. futures are higher ahead of the fed meeting, and the busiest week yet. you're watching "squawk box" on cnbc.

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with no line activation fees or term contracts... saving you up to $500 a year. and it's only available to comcast business internet customers. so boost your bottom line by switching today. comcast business. powering possibilities. time now for the squawk planner. wall street is bracing for a big week ahead. on the docket, the busiest earnings season, and big tech will take center stage starting tomorrow with alphabet and microsoft reporting after the closing bell. followed by facebook's parent meta. that's on wednesday. with apple and amazon set to report on thursday. before the bell, we will hear

from coca-cola and mcdonald's. other dow components include boeing, intel, proctor & gamble and chevron. we will get our first read on the second quarter gdp data, wide ranging from the contraction of 1% to a flight gain. let's talk more about the markets and the busy week ahead. joining us is alicia lavine ahead of capital and equity investments at mellon wealth management. your notes sound familiar. a lot of people are in your camp, and even though the s&p has had a good month, up 5%, you point out last week, great week, but it failed to hold above 4,020. >> that's right. >> that makes you -- where i'm

not sure you knew this article was coming, but you point out, i think you were talking about snap and other disappointing earnings, and you said there's more of that to come, and that means we may get another leg down to new lows because earnings are not well received. this at the same time, the journal writing an entire piece on how earnings have been bad, that two days before, two days after, stocks are only down .1%, and this has been different. they have not reacted negatively. do you take issue with what the journal is saying? >> well, first of all, good morning, and happy monday for one of the busiest weeks. yes, you're right about that. the interesting thing here, joe, is that if you look at what market pricing, where the economy is going, where the fed is going, the bond market is pretty much pricing at a slowdown with peak inflation

and peak inflation. the consensus at this point, the earnings are showing growth. 8% growth this year and 8% growth next year, a disconnect from the bond market pricing in. the question you have to ask is, where the market is today, more or less around 4,000, is that cheap enough to buy even if earnings and expectations come down? what we would say, what we would say is, give me the case that they are coming in and they will be flat this year, okay, give me that case. do you still buy the market here? what we think, given the consensus that we have peak fed and peak inflation, it's already baked in at this price. the risk here is that the market has gotten optimistic. it's misreading the fed because i think the fed, that was a little bit behind the curve, let's be honest, may not be so quick to be stop and go on rates going forward not to

repeat the mistake of the '70s as the wall street journal told us a few weeks ago. >> the notion that the market is not factoring in an earnings recession, and i think that was your notes as well. the market not factoring in an earnings recession, going below 3600 on the s&p. that's what i wonder about. i just hear it so much from people in the business that that point, we will have an earnings recession, and i don't know, it just seems like we know that already. >> again, we know -- we know that earnings and numbers are not believable, but because the markets have already rallied, you want to get in front of the data that is coming out, and the consensus that the fed is pivoting. the fed is not pivoting. even though expectations for september are mostly for 50 basis points over 75, that does not mean the feds are stopping.

i will point out, on the inflation side, obviously, commodities have come down, and obviously we are going to have some disinflation on the good side, but that service sector will be very sticky. that's the area that is tempered to come down. so quick to pivot, and once it's a consensus, you have to ask, where do you have risks? do we go below 3600? our area has been around that, 3400 to 3600. where you want to add the risk, it's probably not at 4000. you want to add the risk lower. you have to wait. >> it's a very strange environment that we have not necessarily seen because we are talking about a slowdown, at the same time that people are able to ask for more money, if they want to work, and you know, that's not a great

description of where we are. it sounds like stagflation. it's a slowdown, but the job market is still tight at 3.6, and wages are still rising. that's good and bad at the same time. we want wages to rise, and we want unemployment low, but that makes the fed's job harder. the thing is, there's no great policy choices. what ever you do, you affect the other side worse. does it feel like a recession? i will give janet yellen that. it doesn't feel like it. you can see the activity. the bottom 40% of the income scale in america is experiencing a severe income contraction. 70% of gdp is consumption, it's going to affect at the margins, and i don't want to quibble about whether it's a recession or not.

the earnings are really an issue. the bond market is saying one thing, and the equity market is saying something else, not entirely unusual here, but i think now that the -- understanding the fed is going to pivot by august, because cpi or pc will come down, that's the wrong read here. >> alicia, thank you. we will see you later. i just want to mention one thing i was reading. i read it today in the journal. jerome powell said painful and ineffective inflation cure. i was thinking it was judy shelton. sounds like her. senator elizabeth warren. this is the period of this weird fed talk. that's about where the similarities would end because judy would say lower taxes, but it's such a blunt instrument that we are trying to use to control what is going on, and

it's -- you know slowing us down, to raise unemployment to take care of things. no one wants to raise unemployment, do we? >> you have to put on the breaks from the same instrument trying to build things up on the way out. >> i guess so. >> so it's not judy? >> no. >> apparently not. >> elizabeth warren. other news from tesla this morning, not of the tmz variety. the company saying they recorded $170 million in impairment losses resulting from the drop of the bitcoin holdings. tesla said gains of $64 million from bitcoin sales during that period. that news coming from the fcc filing. coming up, when we return, harvard university stepping up the lobbying efforts in washington in the effort to drop its tax bill. that's an unusual story next. the biggest premarket nns d se f t s&p 500.

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time now for the executive edge. this one is interesting. harvard university is stepping up its congressional lobbying campaign to lower its tax bill. robert frank is joining us with more. robert, what is going on here? >> well, andrew, harvard endowment is over $50 billion, but it is lobbying to cut the endowment taxes according to inside higher ed. they are urging other allies to get congress to change the

endowment tax. 1.4% tax on endowment income created in 2017. it only allows to the richest universities, those with $500,000 per student. right now about 50 schools pay the tax, and an e-mail from a harvard official said it's a politically motivated damaging tax on a charitable resource for a family centered policymaking college more affordable saying it limits financial aid for low-income students. harvard wants the tax eliminated or lowered for those who give a substantial part of their income in aid. now critics and republicans say the richest colleges are hoarding their tax-free cash and they need to pay their share. stanford paid over $40 million. changes to the tax were included in build back better, but now universities are

pushing for its inclusion in some kind of reconciliation bill. andrew, it's a tough one for democrats because it obviously affects universities in very liberal parts of the country, but it's also hard for the progressive wing of the party to support getting rid of a tax on the wealthiest endowment. >> robert, is this applied just to universities? to all charities that have endowments over a certain threshold? what is the threshold? >> the threshold is if you are a university with endowment of equal to over $500,000 per student, and you're a university with over 500 students. that's a small university of very wealthy, well endowed universities, only applying it those. they were very targeted in how they structured the tax. but it was not indexed for inflation. when it started in 2017, maybe a couple dozen schools it applied to, and now it's 50 to

100 because the endowments have seen such great market gains and private equity in recent years. >> robert frank, fascinating story. we will see what happens. thanks. >> we didn't get him on the elon musk party. he probably has a comment. >> he needs to do a story on whether they go to parties with each other. i was invited to a party, everyone is had $100 million. you think i'm showing up there? i'm not going. when we come back, ryanair beating problem estimates, but the company says there's uncertainty for the year. the cfo joining us rig aerhtft this. the produce of crude down significantly last week. up a bit this morning. 95.75 a barrel. stick around. we be right back. lily! welcome to our third bark-ery.

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good morning, and welcome back to "squawk box" from times square. we are back in the green, resumed rally after a brief pullback on friday. it's been a good july and good week last week. at one point the nasdaq up 5%. up 3 1/2%, and then up today. i just want to -- i looked at it, but there's what a gold chart looks like. so, i don't know if you can explain this to me. the feds tightening obviously, and i remember when ihorn decided he liked gold. it was way after the fed was way too easy for way too long. they were going the other way, and he decided to like it and lost money for the investors. in this case, may be the same thing. we know there's inflation. we know the fed has been way too profitable. the feds printed too much money, and that's why we are in this mess, and now on the other

side of it. same with bitcoin, right? bitcoin at 6500. when the fed starts tightening, maybe it's less attractive as a scarcity item. why is gold not able to get out of its own way. 40-year high. >> bitcoin maximum. >> i didn't want to talk about bitcoin. they are correlated, too, but 40-year highs for inflation, why is gold where it was three years ago? five years ago? >> no explanation for that, really. other than not a stored value. no explanation if you actually think it's supposed to go up with inflation. you would think there would be higher profits. >> or maybe it's saying some things about inflation not being, you know, really -- >> i don't know if i buy that. >> that's transitory. bringing the word back.

bringing sexy back. >> that's what you think, mr. justin timberlake and powell. >> i get the justins confused. >> who were you going to say? >> bieber. >> no, justin timberlake, bringing sexy back. president biden's physician giving an update on his condition after the covid diagnosis saying he was not experiencing shortness of breath or reduced oxygen levels. his main symptom yesterday was sore throat. the president plans to continue to isolation. we have news over the weekend, the world health organization activating the highest alert level for the growing monkeypox outbreak saying it's a public health emergency. it's viewed as a significant outbreak, enough to threaten the global health world, and that's a coordinated

international response needed to prevent the virus from spreading further, potentially escalating into a pandemic. the current outbreak is unusual because it's spreading in north america and europe where it's not usually found. dr.scott gottlieb said if we have allowed this to become an epidemic in the u.s., it's among the most unfortunate public health failures in recent times. >> everywhere? >> everywhere apparently. >> it's pretty close contact from what i can tell. >> yes, but you can pick it up in shared bedding or anything. it makes you wonder about the blanket on a plane. >> oh, like a hotel. >> a hotel. you think of that. >> every hotel changes the sheets every night. >> and the bedspread. >> they change the bedbugs every night. >> bedspreads have not been changed. >> do not go in there with one

of the fluorescent lights. do not. remember that report? >> yep. >> let's not talk about it. >> and look out for the tv remotes, too. >> a bad one, too? >> everything. >> don't eat cheetos while watching. >> one people don't think about, the glasses in the bathroom -- >> never been washed. >> don't drink from them. >> how often do they change -- >> i don't know why we are doing this. >> how often do they change the tongs in golden corral at the salad bar? >> not very frequently. >> do they wipe down the sneeze >> yes. >> you were part of this -- >> what? >> you can't act like you're above this. you were participating about the glasses in the bathroom. >> you extended it. you did. when we come back, the cfo of ryanair will join us about the company's quarter and uncertainty in the full year outlook, higher jet prices and what it means. the company is getting to the

point they are running out of hedges. we will talk about that. later jared bernstein will join us to talk about the fed, inflio aatn,nd the dreaded r word, and that's inflation. all those issues coming up. a remind, you can watch or listen live any time on the cnbc app. we will be right back. i love it when work actually works! i just booked this parking spot... this desk... and this conference room! i am filing status reports onade! i'm not even a coder! and it works!... i like your bag! when your digital solutions work, the world works. that's why the world works with servicenow.

all right, welcome back, everybody. the quarterly results are out for europe-based group ryanair. let's welcome neil sorahan, the ryanair cfo. i know you came back to a profit, but what happened with the numbers? >> the consensus of 157. came in 170, but impacted by the russian invasion of ukraine, impacting the folks with bookings and average fares down 4% precovid levels. looking beyond the capacity of the summer, bookings are strong with 95% lower for example, in june, 92% in the quarter. i would be disappointed if we were not 95% or 96% for july. we are seeing the fares

tracking ahead into the second quarter of the year, low double digits. things are coming back, and second quarter will be good. a lot of unknowns into the third and fourth quarter. >> what unknowns are you talking about? the potential shutdowns, and that's a concern in the past, not knowing what the next turn will be with the pandemic. >> i would be hopeful given the high levels of vaccinations across europe and elsewhere, we will not see the resurgence of covid. we all remember omicron out of the but. i think it's cautious to be there could be a variant this winter, equally making us cautious with what could happen. with ukraine, if it remains contained, we will see bookings strong after the remainder of the year. there's unknowns with the volatile price, and i think

it's right to be cautious, albeit, 70% for the second half of the year. >> neil, we heard about peacerow, and it's amazing these are the times we are living in. we also had a good presence at the open, and all of the networks did. i have heard horror stories of lost luggage in scotland and london, absolute mess. can you comment on that? is that fixed? >> i can comment on ryanair, we don't fly into a lot of those airports. we have been operating very well this summer. we are the only airline in europe that was fully staffed ahead of summer 2022. >> it was the other airlines talking about it? you have heard about it? >> other airlines. our passengers tend to carry their own bags on board. chance of losing it is slim. we have been operating pretty much all of the schedules,

operating 115% of the capacity precovid, uniquely in europe. where we have had issues this summer, air traffic control, and unfortunately air traffic controllers continue to do what they have done in the past, continuing to strike in places like france, italy, and leading to delays and disruptions for people. we are expecting to operate 100% of our schedules. there will be delays, but as i said, our customers are well trained. they are not losing bags. >> neil, you are one of europe's best hedged airlines, just in terms of being able to have the hedges and deal with the higher prices, but the high prices at this point have to be getting to even you. how do you look out because we have had such high prices for such a long time, how do you look out into next year to see how it will impact operations? >> as you say, we are the best hedged airline in europe. we are hedged over $60 a barrel for the remainder of the financial year into next march,

and we have started to put cover into place into next year, the financial year ending march 2024, and about 35% cover, just over $90 a barrel at this point in time. we believe we have a huge competitive advantage for winter. 20% unhedged fuel, it will take it from a higher fuel cost, and i think given the market share that we have, the amount of capacity of the market, i think it's inevitable we will be able to recover much of this, and performing well, generating 22.50 per passenger in auxiliary revenue. we would expect that to continue to perform strongly. that's the priority boarding, reserved seating, and onboard spend with fees, you know, the largest seller of ham and cheese paninis in europe. >> your ceo making comments on the conference call this

morning, saying he thinks management needs to be changed for boeing. doesn't think they are getting the job done. you're in tough negotiations with them. where do the issues stand right now? >> i mean, we were delighted to take another 12 aircraft in the quarter, and just 73 of the aircraft in the summer period, but that said, by taking the extra aircraft, we took pressure off of them into the winter. pleased to see boeing has gotten 31 aircraft deliveries -- sorry, 31 being produced. we are hearing rumblings out of seattle, they may have difficulty delivering this side of christmas. it defies logic. less than 10% of the aircraft they will produce, over that period of time. if they will not deliver the aircraft, that's a signal of poor management on the grounds in seattle. we are working closely with them to make sure, one, they don't miss the deadline of christmas, and two, more importantly, we get all 50

aircraft due to us this side of summer 2024, sorry, summer 2023. >> neil, thank you for your time today. we always appreciate seeing you. >> pleasure. nice to see you. bye bye. >> bye bye. after the break, get ready for a busy week of earnings. we will talk about investor sentiment. as we head to break, check out the july rebounding cryptocurrency at $1,546. that's, 3 or 4% this morning. ''squawk box" coming right back. no way! priceline. every trip is a big deal. finding the perfect project manager isn't easy. but, at upwork, we found him. he's in adelaide between his daily lunch delivery and an 8:15 call with san francisco. and you can find him, and millions of other talented pros, right now on upwork.com

welcome back to "squawk box. retail investors are still not as bullish sentiment is below 30% for the fourth straight week, and our

next guests want to participate in the paths but don't want to have to pick individual winners. are we back to sort of post-financial crisis? i don't believe it joining us now is the newly mint ed o.g what's happening here? the last time we had this kind of conversation, people said, we hate all of this we're just going to buy mutual funds. we can't be bothered with it is that what you see happening here >> no, no. i don't want to go to that extreme, andrew. what's interesting is if i look at the mix of what clients are buying, you think of what we're coming off the last two years. so many individual stock stories that were fun or exciting that people wanted to be involved with you look now, and there's not those individual names that get people excited every single day. so what's happening is people

are going to the index-based ones right away. so we're not seeing that preponderance of individual names because, again, i think there is confusion as we're in this time of, you know, we see if we get inflation confirmed here, but also with the war, et cetera, in ukraine, what's the name of even the sector that comes out as the winner because the other part of this, andrew, is we're not necessarily seeing that off in those sector eps, which you may expect it's much more full market so i think that's really the question individual investors have right now is what is the winner and it's not like they're dumping all their individual names. so i don't want to make it sound that way it's just a mix of what they are buying has changed. >> can you speak to this we were just having a debate at the table about gold the price of gold has not moved. it's not that it hasn't moved.

it's become sort of a negative scenario in an environment where it should be, right? and gold was pushed by individual investors, i would argue. >> i think that's a good point i think they've lost a generation, if you will. what i mean by that, andrew, when i was younger, you had a lot of younger people trading gold as well as those who had been gold bugs forever what's happened is so many of the younger investors have put their money toward cryptocurrencies, bitcoin, ether, whatever it may be. bitcoin was going to be an inflation hedge. so what may have happened is those who bought gold in the past have now turned toward bitcoin and just aren't as interested the amount of gold futures that we see traded is pretty low

overall from what you would expect in this type of environment. >> jj, for those individuals who don't want to by those names as you were discussing but want to, quote, unquote, play the market, when you think about etfs or an actively managed mutual fund, sort of the popularity or lack of popularity, what do you think investors should be doing? >> i do think overall, andrew, two things number one, claim the etfs they're not a bad idea if you're not sure where to turn the other thing is there are still great companies you can buy into right now rather than 400 shares of a company to buy, start with 100 see what happens from there.

professional investors almost also think impartials in things they do. i used to think, maybe that's why some of their marriages are short if they think impartials really it's about the scaling in, scaling out. that's the best piece of advice that any retailer could get at any time someone might say, what if i buy into the rallies immediately, my argument would be i don't think that was any investor's biggest problem. >> jj kinahan with some marriage ko counseling this morning. >> thank you. arthur brooks is going to be joining us to talk about the economy and the summer of discontent. plus parents of young kids take notice. r-rated movies are set to make their debut on disney streaming service. that sto a me raht ead.ryndorstig this thing, it's making me get an ice bath again.

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a decision we'll speak with counsel member jared bernstein about the fight against inflation. and a new survey shows people are taking less time off, and some companies are turning to a week-long shutdown so employees don't get burned out that story and more as the second hour of "squawk box" begins right now ♪ good morning and welcome to "squawk box" right hoer on cnbc. we're at market at times square. i'm andrew ross sorkin along with becky quick and joe kernen. >> that was my mic. >> i thought you were doing -- >> the mic gets pulled down. >> sometimes it does

u.s. equity futures not looking down right now the dow looks like it would open up 160 points higher and treasury yields, you're looking at the treasury note sitting at 2.801 and the two-year and five-year technically inverted, but not by much right now meantime, oil -- did you guys get gas this weekend anybody? >> it came down a little bit. >> what did you pay? >> i think it was -- it's now cash and credit are the same, so i've been using the credit card. i think it was $4.60. >> $4.60 i paid a little less than $4.49. >> and you used three gallons finding a place, right >> it takes a while. wti crude, $95.91. finally let's talk crypto. we've been talking about that all morning as well as the gold

bugs have disappeared. whether they've gone to crypto is unclear we're sitting at crypto at $1,545. a business survey is finding companies are undergoing a profit margin squeeze. probably not that surprising steve liesman joins us with the latest nabb survey steve? >> good morning, joe the second quarter survey finds input prices are rising faster than the prices charged. the conclusion from that, shrinking profit margin. this is the national association for business economics in case you're interested. 76% of its members are reporting higher material costs. 42% were able to increase the prices charged that's the lowest since october 2021 it's a good sign for inflation down the road but bad for profits right now. the net index or profit margins fell to negative 9.9%.

that's the lowest since july 2020 just 47% see rising sales adjusted for inflation that's the lowest again since the pandemic and yet a record net percent of firms say they're adding to employment, and a net 55% say they're paying higher wages. while down from the peak of last quarter, all of this adds to profit pressure. there aim is for smaller increases over the next three months. capital spending, over 28% see a rise in capex. it seems clear with a tight labor market, what's happening here, businesses are going to try to hold on to their workers through a slowdown as long as they can and reduce investment spendings to keep profits up profit pressures, of course, pressure valuations, joe, i think that's what we've been

seeing for several months now. >> what's your -- do you have a problem with the n new descriptn or definition of recession, steve? >> what's the new one, joe >> there isn't a new one there's controversy. every time we've talked about recession, we've never said it's a hard and fast rule there's always been a nuance now the knew a witness is kind of a white house briefing kind of statement. >> joe, do you know about the english crusade, the exact opposite >> yep. >> i agree with you, but i stopped fighting it. >> earnings going forward. that's why forecasts are so hard, especially about the future. >> or at the end of the day. >> yeah. at the end of the day. >> here's your best idea. >> i need two best ideas. >> single best idea. >> yeah. >> here's the thing about that,

joe. there is no technical definition of a recession being two quarters of a negative growth. that's what people believe i feel like personally, the senior economics reporter at cnbc, i can't turn it around and make people think otherwise. what i would tell you is a recession should be prolonged, it should be perpervasive, and should be pronounced i just don't think the first quarter negative number would qualify as being negative for the reasons we talked about. if we have a negative one in the second quarter, i would start counting your two negatives here but, joe, i stopped fighting it. there is no technical definition, no new definition. and i think the white house paper is correct in that regard. i'll talk more about those at 8:00 you can't find -- people say

gimme. not give me. gimme. >> till is an actual word. i always thought it was slang for until. >> what about alright? >> i don't know. >> you know that when you're necessarily tied to convention, i think we want to be hipper, don't we, joe? >> no. i can't. i'm stuck where i am it's hard. it's hard to move -- going forward. that's the one i still hear. >> you know what else, joe what's the difference of telling people they're in a recession or not? people think the economy is bad because prices are high. i'll talk about this at 8:00 again. the reason it matters is because of policy, and that's really the question if we're really in a recession now or inextricably headed for

one, the fed ought to be doing something, the government ought to be doing something, and businesses >> we've got jared bernstein coming on. >> not peter he's an author. >> i'm going to let him go wild. i'm not going to challenge him i really don't have a problem with questions whether that is sort of not relevant at this time after the pandemic, there's so many extenuating -- i'm not sure at this time you do the hard and fast recession rule. >> joining us right now for his take on the market is malcolm etheridge, vice president at cic wealth malcolm, this is the busiest' e earnings part of the season. what else are you going to be

watching for in these earnings reports? >> interestingly enough, i think the real action will be the revisions that come following q2 earnings or the lack thereof i think that will be really telling. if you think about q1, we got significant revisions immediately after q1 earnings after microsoft and best buy as an example, that kind of told us what we were in for the preceding time for the q2 earnings i really think that's what we're looking at now if we see a lack of revisions coming out after q2 with sort of downbeat earnings projections today, i think that will tell us maybe we're at the peak of this bad news cycle, and maybe that's a good indication to investors that you can start to work your way back into the markets and see a little bit smoother sailing toward the end of the year. >> that would be the all clear sign for you >> at least for, you know, more aggressive investors, i would

think that does spell -- this is a good time to be in the market. >> the other issue we've been talking about is whether or not we're in a recession joe made the point earlier this morning it's hard to say you're in a recession when we have such a strong jobs market, but we will be getting hints. you heard big companies like microsoft and others that they're going to slow hire. >> yeah. so i heard you guys initially talking about fuel costs coming down as sort of a good sign, right? layoffs and slowing down hiring is a good indication, but i think with housing being such a big portion of the cpi figure and all of this being tied to cpi, all of this fed action being tied to cpi, housing is attached to one-third. it's risen significantly since the start of the year. i'm afraid we haven't seen anything at the peak just yet. so the focus for me really has to be on housing

it's a significant enough portion of those currently renting and want to purchase or are finally able to. that would calm the housing supplies in a meaningful way i'm concerned by the latest home builderiment numbers one of the reasons is it was so low coming out of the great recession. i think it was six years immediately following the great recession. to me that's where we really have to focus our attention on, telling us whether we're headed into a recession how much more prolonged this authentic is going to be to me, housing is where the action really is. >> meaning if we don't see better numbers, better supply, better starts, you're not going to be ready to jump back into the market what's the all-clear sign that

says "never mind?" >> the all-clear sign is more for traders, right if i'm a person looking for an opportunity to jump in and, you know, get a couple percentage points here to the upside in this cycle, that's probably the place for you. if i'm thank youingtalking long getting out of the range of the s&p, i think it's tied to cpi obviously, right, because that's where the fed stopped intervening, and the place that tells the fed they can stop intervening because it brought down the cpi is going to be the housing sector it's going to be based on housing starts, and if we let the number slip a million like we did coming out of the '08 recession f we had continued to build up to the million number, we would have something like a million and a half homes in

supply that would help take away the 5 million deficit i'm referring to that would be a meaningful start to helping to turn around, you know, know, is the supply shortage, rent, all those things. >> malcolm, thanks for your time. coming up, rethinking vacation time. a new survey shows professionals are taking less time off according to the data. we'll tell you why some companies are shutting down for a week to give workers a break. and former economics adviser chair kevin hassett will be joining us we'll be right back. >> announcer: "squawk box" is sponsored by bitwise, the world's leader in crypto index funds.

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i mean, can i have a bite? only from xfinity. nah. unbeatable internet. made to do anything so you can do anything. welcome back to "squawk box. t-mobile is set to pay $350 million for a data breach. the wireless carrier will also spend $150 million on additional security technology. a court still needs to sign off, but lawyers for the victims have already given their approval. apple is considered the favorite to win the right to the nfl sunday ticket package.

amazon and google's youtube are also among the bidders and disney plus has finally begun streaming r-rating movies. among the first r-rating offerings are three superhero movies, "deadpool," "deadpool 2," and "logan." it's hard imagining trying to program to adults. >> here's the biggest strategic question, which is if disney plus is going to start pursuing r-rated movies, they had disney plus over here and hulu over here hulu was going to be the brand for the adult-oriented content for older people to watch, right? if they start to move toward r-rating movies and things like that, could they take all the content that lives on hulu, move that into the disney plus package, and then effectively

sell the hulu franchise elsewhere? this has always been a question mark whether disney will ultimately keep hulu or sell it. >> or is it part of the negotiation with comcast. >> you know, it's always been seem as a possible buyer of hulu if, in fact, they'd ever sell hulu or not. >> it has to factor in. >> but once you move content like this into the disney plus realm, which, by the way, might be the easier path, the idea of having -- right now they have disney plus here, espn plus, and hulu, and they're trying to do all three in one shot. if you start to move some of that kind of content over here, does that give you the opportunity to create more cash value, or strategically do you want to own hulu because you don't want anyone else to move it >> the biggest problem is what do you charge for the service because right now you have three different pay streams. if you're going to merge them into one, that's great, and that

makes sense, but are you going to charge three times as much? >> this has always been a problem for cnbc and paramount plus they have pair munramount plus here and showtime over here. >> if you're doubling your prices -- >> if you grow that platform, it would actually -- >> maybe you're cable boxing. >> we're going to go for the trv ya aspect of this, the d"deadpool," long before this, it was the fifth and final installment of the dirty harry series known as "deadpool. it was jim carrey. it wasn't until "ace ventura" he became a megastar. that's what i got out of this story. >> value-add

that's a real value-add. >> liam neeson was in it too he wasn't a megastar he did it with a lot of setbacks he's like 6'3" they're like, you can't be an actor. we have to raise all the doorways to make our 5'4" actors look tall. coming up, take a vacation professionals are taking less time off some companies are making moves to prevent work burnout by closing down for some time that story is next take a look at the futures right now. dow up about 165 points. s&p up by 20 we're back after this. ncial pla. bill, mary? hey... it's our former broker carl. carl, say hi to nina, our schwab financial consultant. hm... i know how difficult these calls can be. not with schwab. nina made it easier to set up our financial plan.

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research shows taking time off can prevent workout, but a new study shows that a majority of professionals plan to take shorter vacations this year. sharon epperson spoke with them, and, sharon, what did you find >> well, becky, i found that sometimes vacation seasonal all that restful

when the emails and the messages keep coming in employers are looking for a real way to give employees a break from work. this woman is back from a companywide week-long holiday at bumble, but like many professionals, she didn't completely disconnect. >> i also very tactically think about doing a few things when i'm on vacation to kind of help me unplug and also kind of stay plugged in at the same time. >> reporter: a vice president for the dating app platform, she spent that time off with her husband and new baby. >> when i'm away, i feel like not only arefilling my proverbial glass, i'm kind of able to get re-energized and feel ready to tackle whatever problem, question, challenge we may be facing that week. >> reporter: the idea of a companywide vacation is slowly starting to catch on

tim ryan leads pwc's 60,000 employees. they have two weeklong breaks each year. >> do you see a difference in productivity when they come back >> it's hard to measure, but qualitatively, sharon, the energy in the place is just incredible the energy and enthusiasm is amazing, and that translates to my mind productivity. >> reporter: their employees are stressed out and burned out, and they're taking less time off a recent korn ferry survey found 63% of professionals say they will be taking a shorter vacation this year 58% say being away from the office stresses them out more now than in the past disabling notifications and checking in while she's off helps her manage her stress. >> for five or ten minutes in the morning every day wheen my

daughter's napping, for example, i'll do a quick scan of my email. it's important for me from a recharge and restorative standpoint to just know what's going on in the background. >> many companies understand the importance of time away, but not everyone gets a break. workers in the european union are guaranteed at least 20 paid vacation day as year, yet nearly a quarter of americans, 23%, don't have any paid vacation time at all, becky. >> wow so when companies actually shut down for a week and give employees paid time off, who's minding the store? who's taking care of business? >> well, the executives say they may check in a little bit. there may be a few people there to monitor the situation but in the case of pwc, many of their clients are off at the same time they're giving their employees that time off, and they also prep the teams and prep clients letting them know

this is going to be a shutdown, these are things we need to take care of ahead of time. and one of the things the woman i interviewed said it's important for the team to be aware she's going on vacation, she's going to be taking time, and she does these little check-ins once a day to make sure everything is running smoothly, but not every team member need os to do that. as long as the work gets done, that's all they care about. >> sharon, thank you. still to come, chair kevin hassett joins us. plus, arthur brooks on the state of the economy and the risk of recession. stay tuned "squawk box" will be right back.

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welcome back to "squawk box. a fed meeting later this week where another big rate hike is expected joining us now is kevin hassett. he's the chairman under president trump. good morning if you could advise jay powell as to what he should do and what you think he will do

>> i think what they're going to do is give us three-quarters of a rate hike. i would advise him to do more than that. if you look, it's a rolling average over the last few months that's the highest inflation i i've ever seen we've never been at a time where we've had inflation like this, and we're in a recession they're going to give us three-quarters of a point. they've shown that and talked about that the last couple of weeks, but i think they need to do more because inflation is so high. >> kevin, if, in fact, they went as high as you want them to go, what do you think the stockmarket should do, and should it matter >> you know, i think the stockmarket wants to know that the fed is serious about inflation, and i think three-quarters of a point is just about there if you went more, the stockmarket might actually celebrate because inflation has to be under control.

the reason is when you have inflation this high, it's hard for the output and all the other stuff to keep up with it income year over year is down about 4% the real product has do be down about 4% product catches up with income if inflation doesn't come down, then you're looking at negative gdp until inflation is down. you know, that could be another, you know, two, three, four quarters if they were to hit us as hard, it might be something the market is celebrating. >> i want to play a soundbike from over the weekend. this is janet yelling speaking the "r" word, recession, yesterday, on "meet the press." >> this is not an economy that's in recession, but we're in a period of transition in which growth is slowing. a recession is a broad-based contraction that affects many sectors of the economy we just don't have that.

>> do you buy that >> no. i the think that's kind of unfortunate. i am a friend of janet yellien and have high regards for her. the second quarter and other real-time forecasts is going to be negative. we get that, you know, basically this week. then you have two negative quarters if you go back to world war ii, we've had two negative quarters. every time we've been in a recession. it's ten for ten for the white house, they're in denial if i was in the white house and advising president biden, what i would say is, you know, hey, we're getting really bad economic data, and we need to basically get out in front of it, let people know that we've got the bad economic data, that probably it's a recession, but then we need a plan to fix it. i think that one of the reasons

they're in denial is they don't have a plan to fix it, so they're just in denial they were in denial about inflation and now recession. it's not a good look i think americans expect politicians, democrats, republicans to be square with them. >> what do you make of the argument -- even our friend joe kernen here was defending the administration to some degree in the last hour, saying, look -- and i don't want to put words in joe's mouth. but the idea of where we are in terms of unemployment in the country maybe gives you wiggle room, a lot more wiggle room than you think. >> you know, i think people are pointing at the jobs numbers and the low unemployment rate, but if you go back and look at the history of recessions, it's pretty common for those things to move a little later the reason is there's a big fixed cost to hiring people. it takes a while for people to start to have layoffs, but one of the things you see is usually about the second quarter of a

recession, initial claims for unemployment start to go way, way up when they hit 250, it's kind of hebertier we notice. we hit 250 last week in the labor market, we're basically in a normal recession. the idea that the labor market is tight but the rest of the economy is strong, that's not really an argument that's an argument that disregards history history is that it moves slowly. >> are you of the view that this is some kind of very long, prolonged recession or malaise, or are you of the view that there's some kind of snap back on the other side of this? >> i think eventually there will be a snapback. the question is how long will it take what happened is because there were so many checks mailed to people that demand got way ahead of supply and there were supply disruptions. so with demand, prices go up what's going on now is the fed

is tightening, and that's reducing demand, but it also reduces supply because when the fed raises interest rates, that makes it more expensive to buy a new machine or build a factory supply moves slower, but if fiscal policy came out to stimulate supply, you could get them to move toward each other and get out of it faster i don't see anything like that go ahead. >> there are some numbers that would suggest -- we were actually debating this last week there are some elements of inflation that appear to be, dare i say, transitory i'm not defending the administration in any way, but you're starting to see some of that cool off. you've had a number of ceos say maybe things cool come this fall do you think maybe that's not the case >> no, you're right. what happens is when you get in a recession, which you're in, despite what janet said yesterday, then commodity prices

start to go down the oil price per barrel can go down as far as like 60 buck as barrel all that stuff heads south because global demand is down, and we're starting to see that with commodity prices, copper, oil, so on so then those commodity prices feed through but i don't see core going below 5 or 6 any time soon because wages have been going up a lot to try to catch up with inflation. so we're in a wage price spiral a little bit so i think inflation is increasing and it's not going to go down any time soon. >> when you think about how jay pow sl going to think about unemployment, you know, preversely in some ways he's going to try to increase unemployment, at least marginally what do you think the politically palatable number is for the fed? >> you know, when i started at the fed a long time ago, you

guys remember i was a junior staff there. they said the natural rate of unemp unemp unemployment, like the target, was 6% subsequently they kept lowering it, lowering it, lowering it i don't know exactly where it is bottom line, wherever unemployment is, inflation has to get close to target what's going to happen over the next year is the fed's going to tighten. we're going to see the inflation data is going to be starting to head down, and then the question is that will it get down close enough they're willing to stop i think the thing to look for, if you look at five-year inflation expectations, the interest rate has to be higher than that. and if the interest rate is higher than that, we could expect inflation to get under control. so there's a lot of room to grow still for the interest rate sadly, but i don't think they're necessarily going to be looking at the unemployment rate if i had to guess, i would guess it would go to o about five.

>> kevin hassett, great to see you. beautiful shot with washington behind you and the trees. >> you guys are still so anxious about covid, i'm still outside the studio. >> we're just happy to see you i think you. >> good to see you too bye-bye. coming up, decades-high inflation and an energy crunch making this the summer of our discontent we're going to speak to arthur brooks about that. there's much more in a few minutes. as we head to break, a quick look at the winners and losers of the s&p 500 "squawk box" will be right back.

welcome back to "squawk box," everybody. we've been watching the futures. after a strong month in july, you're looking at green arrows once again on this monday morning. dow futures up by 1672 points. the s&p 500 is up by 22, the nasdaq up by 68. we'll see where we stand as we get closer to the opening bell. coming up, we've got

professor, investor, and "squawk box" favorite, arthur brooks is going to talk about your happiness in the summer of discontent he's going to find a way to sell summer discontent as a good thing. ea> and later, we're going to spk to counsel member jared bernstein in just a moment it's an entire trading experience. with innovation that lets you customize interfaces, charts and orders to your style of trading. personalized education to expand your perspective. and a dedicated trade desk of expert-level support. that will push you to be even better. and just might change how you trade—forever. because once you experience thinkorswim® by td ameritrade ♪♪♪ there's no going back.

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you probably know this if you filled up your car recently. the gasoline prices continue to tick lower according to aaa, the national average fell just below $4.36. that's down 16 cents from a week ago, and, of course, it's been following the price of crude oil. last week crude oil prices were down significantly this morning we're seeing a little bit of a bounce, but only to $95.86. unless you're looking at brent, $104.24 right now. another rate hike expected at this week's fed meeting imagine if you were going to go a meeting and you asked, how long is it going to be two days

what are you going to talk about? >> is it in zoom or person >> two-day meeting okay, i quit. cnbc's recent all-american economic survey paint as grim economic picture with a record number of respondents saying the economy will decline cnbc's recorded the worst in 15 years. who's counting let's bring in arthur books, president emeritus and a fellow who's recently penned his 100th column for the "atlantic." thanks for joining us. i'm surprised "the atlantic" lets you publish anything. that's a heavy load for you. >> there's a few of us free

market thinkers. >> they say, let's get one of them for the "atlantic." what's happened to david walker? >> comecontrolle ercomecontrol the united states. >> i said, you suck at your job. your job is to instill happiness in the general population. you're not getting anywhere. this is the unhappyiest population in the history of the world and it coincides with you trying to make people happy, brooks. >> it's your fault. >> all my fault. >> it's a tough time, seriously. now let's get into the inflation thing because it is very difficult right now. >> i'm happy. >> but we're lucky. >> this is the key thing one of the things i see again and again in the press is economists like me are amazed

people don't see the changes in gasoline prices are starting to fall, food prices are starting to fall, and we're still bummed out as a nation that we're starting to go into a recession. most americans don't have the information like economists do thank god. we couldn't have a country like that what people know is something's not right, and the reason is something's not right. look, we're not fools. we know ten years of money printing and two years of throwing it out of the helicopter, that's going to have costs to it. these old horror films where people say, it's quiet, too quiet, that's how we feel. we feel as americans we are going into a recession because point of fact we are going into a recession, and that makes people unhappy losing assets is much harder emotionally for people, and we have the thank that on and acknowledge it and just spinning the american public that we're just ignorant. >> we're trying to figure out, too -- i saw -- i'm not seeing

any of much value, but they're talking civil war in states that want to secede, and we're so divided right now, arthur. i'm trying to figure out when it started and what that's from because it doesn't really seem to be getting any better at this point. then i started thinking, do you remember for years you wrote about earned success >> right. >> your basic thesis was the country was still center right and the best way to run things is people had to earn their own success and the value of making a place for yourself in the world. it didn't matter whether you make $1 million or make whatever the value of just participating society, that's what would make people happy has something changed with the pandemic, not going back to work, i don't know, hating your co-workers if they differ from

you politically? what happened? >> well, basically what's happened is we've gone into a fear-based polarity in american politics and culture it happens from time to time there's nothing new about it what happens is polarization occurs with opposites. usually about 5% of the political left and 5% of the political right come weirdly together on certain things to frighten the public. what do you find the populous right and the left, they both don't believe in capitalism, they both don't bleed in a sew sate. they both believe they're being constantly attacked by forces. people are highly motivated when they're afraid the problem with that, of course, is we're being manipulated by 10%, 15% of the population. >> and then you throw in social media. we never had that before

people with zero followers, you used to spray paint overpasses that used to be you. now you text me on twitter. >> and we can get to you the most amazing thing that people are starting to realize is a guy with zero followers or twitter who's trying to frighten and fire people up, he can send a tweet to joe kernen on the best show on tv, on "squawk box," and he might get it on the set. it's amazing. >> andrew, do you -- >> what i want to know, arthur, is -- so i agree you're seeing it on the right and the left my view is it's not equal, but we can debate that. >> i agree i absolutely agree it's not even close. >> you think it's not even close. >> not even close. >> when they talk about arresting fauci? >> defunding the police -- >> let's go back to where we

agree and move on. >> i don't think it's close. arthur >> i don't think it's close, but i don't think we can debate that because you look like marjorie taylor greene. >> i'll match you a marjorie taylor greene, raise you an aoc, take your pick. >> why, arthur, the affiliates who lead a party or who are more centrist are not speaking out against those on the far right orth or the far left because they're worried, frankly,ing canceling themselves the stuff on both sides is so crazy, we can't have it, you're never going to get to the promised land, i don't think. >> that's exactly right. that happens with leadership somebody will stand up to somebody who represents us we are 85% of the population that are not following lies. these are lies, that capital

sigs has failed, that's a lie. that america is not a gift to the world, that's a lie. that your nabors are not your friend because they don't vote like you that's a big colossal lie. here's the mistake the moral courage is not standing up to the people with whom you disagree. it's standing up to the people with whom you agree on behalf of those with whom you disagree when leaders start doing that punch in the knows, the populist on your side, the cultural left leader, that out-of-control tv show host, the politician who's trying to make everybody afraid on your side, if those are the people who are more or less on your team that you stand up to and say, no, i will not put up with this, you will not frighten me and people who think like me anymore, it will be a new day. >> then we came through the financial crisis, we came through the pan dem iks. now we're in a period where we

may be entering -- i don't know what we're arguing about -- recessions but we know we have multi-decade-high inflations people go to the grocery store and gas stations that's why we're at 15% headed in the right direction when they ask people i don't think an economic improvement solves all the other problems. >> an economic problem that's actually healthy might do it one of the things we've seen, both experts and the american public knew coming out of a financial crisis and going through and coming out of a pandemic, a lot of the economy was induced by artificial means. once we get on the basis of productivity and economy and we actually have people investing in a way that's healthy, we have people working across policies that are not destroying our economy with a deficit, et cetera you know, that's when we're going to get the kind of growth

that can give the people the optimism they really deserve look, we're going into a recession. we know that we're probably going to find out we are in a recession, okay, but we're going to come out of it. there have been 14 recessions. it's been about a year and a half till we come back to where we were. this is what the promised land can be we need political leadership that can be unified in more than a decade if you're on the right, you have to stand up to the populous right. if you're left, you have to stand up to the populous left. if you can do that, i'm telling you, it's a new day. >> is it possible if the twitter -- with twitter? is it possible with social media? gra graffiti, profane graffiti that's sent anonymously and gets

picked up? it's no different than what you would see on overpasses. >> we talk about it in the show. the social media companies are starting to suffer a little bit. you're finding the growth in users is starting to decline people are getting bored people are starting to get bored with yelling, with the frightening messages and all the nonsense that's going on it's just a side show. what we need to do is to stimulate more of that attitude of standing up to this and saying, this is stupid this is not what we like it's not what we want. we demand to actually have a better country that's stronger and happier. by the way, somebody who disagrees with me is not my enemy. it's my friend who's going to make me better that's actually possible. >> we'll see when it's trump against hillary again in 2024 -- maybe everything will just stop. maybe the whole world will just explode if that happens again.

>> cats and dogs living together. >> summer of our discontent. >> he's right. people have to stand up and say what they actually think i'm very happy, as you know, to -- >> as i know. >> -- talk about capitalism. i think aoc has been very difficult on a lot of these issues but i'm saying you've got to do it on both sides, my friend. >> we've got to run. when we come back, we have counsel adviser jared bernstine talking about the latest from the white house on inflation stick around

good morning 90 minutes to the opening bell on wall street and futures are pointing higher. major averages are coming off their second positive this week. on tap, a big-timede dec decisions. and earnings, earnings, earnings. and we're going to talk with adviser jared bernstein.

the final hour of "squawk box" coming up right now. ♪ good morning and welcome to "squawk box" here on cnbc. live from the nasdaq market site in times square, i'm joer kernen along with becky quick and andrew ross sorkin the earnings are up. last friday we saw a little bit of giveback. july, so far, 5% on the s&p. that doesn't include the day let's move up almost 20 points on the s&p the nasdaq had a great week going last week until friday it was 5% and ended up with 3% and change for the week. jury's out where are we are we in the short-lived sort of summer rally that resolves itself, or did we already -- or

have we already made bottom and forecast prices are coming down? >> it's hard to make forecasts about the future let's get you caught up on today's top business stories first up, a final vote is expecting the week, possibly even tomorrow, on a bill to provide billions of dollars to the energy industry. the white house says the bill needs to pass by the end of july because computer chip companies are making decisions right now about where to build their factories. we've done a lot of coverage on. this we'll see what happens with the vote. also, some news on tesla's crypto holdings. they recovered $170 million in impairment losses since the first of the year. tesla also said it had gains

from the sale of bitcoins during the period that comes from an s.e.c. filing this morning. and china's regulator telling cnbc it's not come up with a plan to resist listings the "financial times" has a front page story on this on what they said was a plan to separate u.s.-chinese companies into three groups, which would have to delist. the regulator's statement to cnbc says the firm should comply with the listing rules regardless of where they go public. meantime, five tech mega cap companies, we're going to hear from microsoft, apple, meta, amazon, and alphabet if you could only own one of

those names, what would it be? >> all eyes are on these big tech names this week because of what we heard from snap and twitter last week. so that will, of course, be the thing to watch within alphabet as well as meta, and to see if there's any trends to any upgauging in aspen where companies say, look, we're going to tighten our belts and reduce advertising but ontario where we have a high return on investments. so you may choose to advertise on instagram we'll have to watch for any deceleration in the cloud business from names like microsoft and amazon to see if there's any share shift or signs that companies are starting to slow down this movement to cloud after such a pull forward. so when we think about the broad tech names overall, we do like these big tech names as long-term core positions in our

portfolios because of this ability to return to shareholders, because they're impervious to the liquidity cycle. they don't need money to grow the business, so names like alphabet, names like microsoft, are continuing be core parts of our portfolio, even if we have to weather a little bit of the storm in the near term because of the earnings uncertainty. >> let's talk about sort of the distinctions among them. by the way, all of them have an adve ing component. all of them have some advertising exposure you talk about apple and others. microsoft, you to think of that more as a b to b business. what do you think? >> i think the interesting thing from apple this morning is that

apple is actually cutting prices in china in order to spur demand it was as much as $89 a phone. the read-through is this just contained in china because of lockdowns or will we see apple have to reach down in pricing a little bit in order to spur demand we also heard that from verizon. they're talking about how they have to offer more incentives to get people to sign up because of high phone prices. that will be a question on the consumer i think you're right on microsoft. it really is all about b and b, and it gets back to the idea of share shift, to see if they're gaining any shares of growth like amazon. we'll be watching u.p.s. because u.p.s. was a big beneficiary of amazon and a surge in e-commerce spend. are there any signs you're starting to see a downshint from that consumer spending from goods to services?

servicely american express talked about that. they talked about absolutely ravenous demand for travel and leisure, and is that coming at the expense of expen dechurves with amazon. we'll see. >> microsoft, you said it's a b and b business you add in activision as that transaction closes it becomes more of a b to c business or that kind of consumer end they just had this partnership with netflix do you -- as an investor in a company like microsoft, do you like them narrowly as a b to b franchise in the enterprise space, or do you want them to be more diversified >> well, microsoft, i think, deserves the benefit of the doubt on their investments because they've made really good calls on their -- on purchases and acquisitions that they've made recently. so i think that microsoft, you

know, certainly will be able to judge those kinds of acquisitions as they come. of course, something like activision blizzard is certainly a positive we think microsoft has been a good steward of capital. we're not necessarily going to ding them immediately. >> we touched on microsoft, apple, amazon. what do you think about meta >> it gets back to spend and deceleration rchl you starting to see companies start to dial back when we see instagram, it's been a big beneficiary t capital boon of paying to have an acquisition, and a lot of that has happened on instagram. so the question is do we see as we start to see that kind of source and liquidity dry up

within silicone valley, do we see that hit instagram and their core business? of course, it's fallen quite significantly. they're still generating a lot of cash, but it really is a point of earnings, revision cycles being lower and the question about ads spent. >> i want to thank you of course, we'll be watching those numbers throughout the weekend. you know, we just mentioned it check out activision blizzard. they're saying while it would push back on the idea that microsoft's deal for the game maker would be closing any day, there's a question why it should with it being 20% below, saying it presented unfair corporate market abilities they're arguing this is maybe the one to play. >> all right coming up, it's a critical week. just ahead, with gear doing

speak with white house council of economic advisers jared bernstein about the upcoming fed meeting, gdp, and what exactly a recession is but first as we head to break, a few of this morning's earnings movers mining company newmont sliding profit fell more than 40% from a year ago and e-commerce platform provider squarespace tumbling its revenue guidance fell short. the sales are taking a hit stay tuned you're watching "squawk box" on cnbc >> announcer: squawk picks is sponsored by wisdomtree, the modern alpha pioneer - common percy! - yeah let's go! on a trip. book with priceline. you save more, so you can “woooo” more.

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welcome back to "squawk box," everybody. we've been in the green. this comes after big gains not only last week but the month of july this morning we're looking at dow jones up by 150, s&p 500 by 18, nasdaq by 55 how do economists determine whether the economy is in a

recession? is that a coincidence or not so much steve liesman joins us now with more what do you think, steve >> you know, i think it's probably laying the groundwork for a discussion we maybe have to have on wednesday, but, becky, it's a big week for those on recession watch we have to determine if we're in one and policy from the fed that, who knows, may be pushing into one this is a heck of a week tuesday we get new home sales. that's expected to decline durn durn'table goods has a fed decision in it gdp should eke out a very modest 0.3% increase. then income, spending, pce on friday with the employment cost index. all of that comes from the white pape eric arguing we're not in a

recession. janet yellen was on "meet the press" yesterday to make the point. >> recession is a broad-based contraction that affects many sectors of the economy we just don't have that. consumer spending remains solid. continuing to grow output industrial output has grown in five of the six most recent months. credit quality remains very strong household balance sheets are in good shape, but inflation is way too high. >> they point to key factors to determine whether we're in a recession and notes they continue to grow even when adjusted for inflation q1 private domestic demand, that's consumer and business spending up 3% q2 payroll growth up if you use the common recession definition of 2 points of negative growth, it's probably

not right to count that. they expect to show weakness in the gdp report on thursday as consumers look to be easing back in response to high prices maybe you start counting in the second quarter the key to the recession call and what it means for the policy, the fed will ease back operate hikes. they could extend unemployment benefits so from a policy standpoint, it doesn't feel like we're in a see roo e session in terms of a debate, becky, right here. >> although it seems like a weird time for the white house to engage in a question about semantics at this point, right >> no. i -- yes, it's a weird time to be doing it. i don't think it's a semantic argument i think it's important to figure out if we are in a recession you know, we had two esteemed speakers, arthur brooks, kevin hassett. both say we're definitely in a

recession. i'm just not that sure, right? we have a shift going on from goods purchased to services. as i said for 50 years on this show, over the last 20 years, we have really lousy indicators of the service sector if there is this shift, we may not be picking it up plus, a lot of the companies that we follow are less involved in the service business, and so they can report to consumer goods. the last service data we have is really strong. you hear what's happening to american suppress on that score. and then you have this other thing that's going on. sorry in. >> go ahead. sorry. >> you have this other thing going on, which joe has pointed out. the transition in the economy. when i hear that fedex is easing back on the drivers of some of the deliveries, i think that's a good thing happening with the transition from an extreme goods amazon ordering economy into a

more normal economy. what you have is this transition where people who are in this pandemic economy, they may spend a moment of time in unemployment as they leave those jobs and go to other jobs which are hurting for workers. the service sector's not firing on all cylinders, as you know, becky, over lack of workers. >> the question is will those workers be able to make those transitions before consumers get affected and stop spending as much it it's not just the amazons of the world. all the inventories that were so overdone are now saying the retailers along the way are saying, no more, we're not taking any of that stuff you're going to see it trickling down to the factors where they will no longer producing it's not an easy transition to make the question is what happens in the second half as consumers

rein in their spending you see layoffs not only at places like that, but technology places where there's not the free cash flow flowing around with liquidly slashing through the system any of those tech companies, that's the question, do you make that transition or does it become a self-fulfilling prophesy and the slowdown comes. it's never as easy as we like to make it sound. >> no, it's not. it's not on a personal level it's not on an economic level broadly. you're right there are difficult transitions to be made here. we talk about a person who loses his job at fedex and then has to go find another job, that's just a bad thing to happen in your life but ultimately the economy has to normalize, and the way we do it in this country is in a way that's a much more laze affair than, for example, in europe where they took steps to make sure people stayed in their jobs

before we let things happen a bit more than they do over in europe and so you're right. all of those things could lead to recessions, but my point is none of that is a foregone conclusion, and i just don't think when we're printing these jobs numbers we have and having the sectors, right now is not a recession. i do fear one in the months ahead as the huge increases by the fed do have a big effect >> steve, thanks it's a question we're going to have all week. iechl sure we'll have this discussion again. joining us now, jared bernstein, a member of the white house council of economic advisers i don't know, jared. i don't feel like having a semantic discussion. we know justice potter stewart a big debt of gratitude, don't we. >> we know it when we see it >> we know it when we see it it's kind of like that with the recession.

we know how americans are feeling. gas prices are down. that's great $4.50. so you save 60 cents, 70 cents from the highs, but it's still double what it was, so americans are still hurting. i want to read from senator warren's op-ed because it speaks to me. mr. powell should remember that the one medicine in the kit that he has doesn't treat the economic illness that we have, low unemployment and high inflation are painful, but manufacturing a recession that puts millions of americans out of work may not even work on high prices, so it seems weird that that's what we're orche orchestrating, and it's not a good way to do business. >> a lot to unpack there as well as the conversation becky just had with steve i guess i would really object to this kind of semantic claim. the two of them just had a very

substantive economic discussion. it wasn't about semantics. it was about key economic variables. the idea that two-quarters of growth is a technical point is wrong. one of the things we tried to point out in the blog is the folks who point that out, they look at a set of variables, some of which as steve underscored remain quite strong. now, when you talk about gas prices, that's right they're down 66 cents off their peaks, about 13% and, you know, that's a saving and aggregate of well over $200 million a day. oh, i'm glad you're showing that map. in eight of those states there in the south, gas is actually below $4 a gallon. i think it's around 30,000 gas stations, about a fifth of all stations so, yes, prices are too elevated by the way, they're not twice what they were before putin's war. they were about $3.20.

around $3.40 whatever. it's $4.36 so not twice, but definitely uncomfortably elevated still we very much have more work to do in that spacing, but the trend is moving in the right direction. >> jared, it's just the catch-22 we find ourselves in i was listening to secretary yelin talking about how great the jobs market is right now, how low unemployment is right n now, consumers seem to be doing okay if you try to orchestrate a slowdown, all of that makes the fed's job even harder and maybe they have to go even further i struggle with this is the economy in such a good place right now that we can withstand a series of interest rate hikes or is the economy in such good shape right now it means we've got to go much further to bring down the pricing pressure

>> well, that's exactly the right question, and i think the point out of the conversation that becky and steve have, it's very much the way we think about this if you look at the first half of the year, it's very hard to make a recessionary call. the data aren't consistent with a recession in the first half, including where we are right now. but what kind of visit don't we have looking forward to the next quarter, to answer your very well framed question i mean those data come in with a lag, which is why the business cycle committee says you're in it well after it's started but i do want to read you one thing, joe, because this is very timely from the earnings call it speaks directly to the question it's from an earnings call by jpmorgan last week, so very up to date, quote, consumers are in good shape, they're spending money, they have more income, jobs are plentiful, they're spending 10% more than last year, almost 30% more than precovid businessesing you talk to them

they're in good shape, they're doing fine we have never seen business credit better ever in our lifetime that doesn't mean all bets are off regarding recession probabilities, but it means a strong backdrop of the labor market, solid balance sheets and spending puts us in a good place relative to where we've often been in times of pressures like those we face right now. >> i guess we're back to the original question. if the blunt incenter ument the fed uses to slow things down, the stronger we are, the harder it is. >> how high do we need to go do we need to go to 8% on interest rates because that would be a much longer cycle than people are thinking. >> let me address that question that you keep raising. obviously the fed has to do what we're going to do. we're going to stay out of their

knitting this president has very much leaned into the importance of fed independence even in the midst of this aggressive hiking psyching what we can do to help, and we here includes congress very much so, is everything that can help on the supply side of the equation so that means the work that the president has done releasing millions of barrels of oil from the reserve, secretary yelin's work she talked about yesterday on capping the russian price to try to keep substantial supplies on the market while keeping revenues back from putin congress can help family budgets ton tomorrow by reducing the cost of health care drugs and prescription coverage and securing the supply chain in a key em nomic and innovative item by passing the chips pressure. it's a bipartisan favorite measure, get it to the

president's desk i'm not saying to be clear that it helps tomorrow. the family budget stuff and prescription health coverage, that would but for the median turn, absolutely we have to do everything on the supply side with the fed doing the work on the demand side. >> you want to increase supply you mentioned drugs and things there are both sides talking past each other on our energy policy here, jared, and i'll give you a chance, again, to make your case, and you're going to say there's absolutely nothing more that this administration can do in terms of making it easier to get reserves, pipelines -- i mean go down the list. you hear it again and against it's true there are labor issues and supply chain issues that hold back the energy, but there's got to be some truth coming from both sides on this

and the president last week when he was thinking about the climate emergency, no offshore drilling would have been part of that edict of executive orders that doesn't sound like we're doing everything we can to try to open things up. >> so i don't disagree that this is very much a walk-and-chew-gum moment, and that can be confusing because we have to do everything we can to ease price pressures at the pump today while we're making an absolutely aggressive play toward cleaner energy and renewables in the future this means we need an ample supply of energy today, to make sure the competition of that supply shifts toward renewables while we make this transition, which will be years in the making, and we also have to be prudent stewards and architects of this policy, and what that means is doing two things at one, everything we can to promote production look, this kind of gets to the core of your argument. our oil producers are extremely

productive and extremely profitable we're going to get q2 earnings reporting that will be very strong we know q1, the companies paid more than $35 million in profits. good for them. they've also seen losses in recent years, but that shows they are now producing -- they're producing over 12 million barrels a day. that's close to a historical high the market signals are telling them to do more so in the near term, and this president is trying as we forge a path toward renewables as you look around the world today, it's such an obvious necessity. >> i don't know if you heard the conversation we had with arthur brooks before you came on. he was talking about the fact that the folks in the middle are never really willing to call out the folks on either end of the petrs that might be the most aggressive folks in the democratic party, the most conservative in the republican

party, and i mentioned marjorie taylor greene who says things that make absolutely no sense sometimes and aoc who sometimes makes -- >> i mentioned her. >> maybe joe mentioned her i mentioned her as well, by the way. somebody who's standing in front of the white house right now, why do you think folks in your position actually struggle -- i don't mean to project on you, struggle to call out people in your party that are too far n this case, left while folks in the republican party are seemingly never willing -- and it baffles me as well -- to call out folks who are on the far, far right? >> look, i'm an economist, not a political pundit there might be others who can give you a more fulsome answer the way we look at it or i look at it, if you look at president biden's campaign, all right, 81

million people voted for this president and agreed that his path, which i think takes good ideas from all parts of the caucus, is the right one, and i think that's the right way to think of it. when someone interest the left wing of the party has a good idea, we're going to go with them when someone with a more centrist view is going to come up with something, we'll go with it this is something the president has stood up for i'm an economist we've argued we've been absolutely obsessed with deficit reduction at all the wrong times. here i am to tell you the fact that the deficit has come down $1.7 trillion this year alone, 77% tin this year, i should say is good for the government that's a good idea from the center if you look at prescription drugs, that's a critical idea to help household budgets

that comes more from the left side of the party and something the president is working to get over the goal line, and you know what i think he's going to succeed. we've got to take good ideas wherever they come from, andrew. >> okay. jared, we're going to leave the conversation there a lot more coming up on "squawk box. we're going to talk about the falling gas prices are things lining up jeff currie is going to talk with us from goldman sachs to talk about that next the highest price, $5.73 in california my apologies to california the lowest prices, almost $2 cheaper, $3.86 in texas. stay tuned you're watching "squawk box.

big tech is making an even bigger play. they're all fighting for the rights to the nfl sunday ticket, replacing directv. "the new york times" reporting that apple is considered the favored to win the nfl is said to want to sell the rights to the package for more than $2.5 billion, which would be about a billion dollars more than they currently got it for. when we come back as we make our way toward the opening bell, a fed meeting, gdp, and tech corporate earnings are on deck all this week.

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the oil prices have trance l latest to americans, but can they keep coming jeff currie is with us

jeff, the lower prices a that point are probably because of lower demand what happens if we do go into a recession? do you think that that could keep those higher prices at bay for quite some time? >> well, the lower prices are more a function of significant selling by investors, backed by financial markets and physical markets are telling you two very different stories. the financial markets, hey, energy prices, food prices, done and finished and then investors are giving policy makers credit for things they haven't even done yet you can see this by looking at the shape of the oil curve you look at the spot price a $104 a barrel, something like that right now you go up to the cash, it's trading at 112, 113. so it really hasn't done much in temps of the selloff you go out one more, it's $5

off. it's somewhere around $95, $98 a barrel the curve is like a ski slope. inflation expectations, the five year/five year is at 2%. the cash is at 9.1%. i want to be careful that what you're saying, the big selloff, has been really concentrated in the financial markets and far less apparent in the physical markets. yes, there's been some relief at the pump i want to point out, there's a lot of technical factors such as you get more ethanol in the gasoline pool this summer, but you look at other measures like mobility and other things, they tell you gasoline is fine. it doesn't matter if it's european gas who's come off as well or oil, we still have very tight energy markets. >> when will this show up in the financial markets? if the market that we watch so

closely every day? >> here's what's amazing whashlgsd i'm going to say applies to the equity markets and the commodity equities and credit the arbitrage yield here is massive. right now if you think about this, if crash brent is trading at 104 and you go out on the curve it's 98, 99, that's open that's the arbitrage that's being opened up here the f the investor can buy this and run it up, it can't sit here look this for a very long time, particularly when the cash is trade ing $10 higher. >> you're talking a month? >> it's 60% annualized return to be on the front end and nothing happens with the oil price another way to cesay it t oil

price needs to drop to break even just this one month it would need to drop 60% over the course of the year you look at the same thing with the equities they're trading it with multiples against their earnings, and they're similar to the lows of the '08/'09 recession. you look at the 30-plus percent range. so all of these instruments are severely depressed relative to the fundamental picture. >> we had a lon conversation with jared bernstein from the white house about whether or not we're in a recession or about to be in a recession if you get two quarters in a row of negative gdp print. we can argue back and forth about that, but the reality is if we do go into a recession, you could see a downturn in de demand, and that could last for a while. if that's the case, would that change your scenario >> absolutely, yes commodities are the most procyclical of all assets.

but the telltale sign, and you go back under every one of these cycles and commodities is that you're beginning to see the demand weakness, the front end of the curve weakens first and the spot price dips below the forward price. it means the physical market is getting weaker than the financial market and they tip over the fact that it's like a ski slope, it's telling you the physical market is still relatively robust and this the recession concerns and the weakness is being primarily priced into the financial market so what am i watching? the number one telltale sign throughout all of the cycles in the last three decades of these markets, you always watch that front end, and when that front end dips down below the forward price, that's when you start to get worried. but all of these commodity markets have very strong front end gas prices, which is telling you, this is the market still in relatively good shape. >> where do you think wti will be at the end of the year?

has your target changed at all >> no. we still see, you know, most upside in the late summer, early autumn, and then on a bret basis going back to somewhere around 125, sometime at the end of this year but i do want to emphasize that's a long ways away from here, but the amount of liquidation in this market over the last three weeks is unprecedented. you know, the total amount of investor money in all of these commodities at the end of last week was $62 billion that's like the size of a small company's cap. they liquidate everything they can get their hands on, and in many of the cases they're outride short, anticipating the recession that has yet to happen. >> i guess if you were looking over the long haul, have you seen an increase in production have you seen an increase in anything that makes you say, okay, not just from the demand of things but the supply side could get a little better.

>> whether it fits into the weekly u.s. production oil numbers or the rig counts that have been stagnant, capex flows, fiv around the world, you look at any measure of capex in any of these markets, and i'm not just talking oil and gas, it's been essentially non-existent. then you look at the food market the weather situation in europe is nothing short of disastrous given the heatwave and when you look at what's going on in the u.s., yes, we've had some reprieve in the weather more recently, but let's look at where the drought conditions exist, and we're not even in the thick of the soy season. the demand is still there. that's why markets are in deficits, spot prices are sitting above forward prices, which is an indication of physical strength. it means, you know, you've got upside risk until you finally start to see more supply, less demand, which would appear to be

weakening in that forward curve, and we're just not seeing it. >> jeff, thanks. we will talk to you again soon. >> thanks for having me. coming up, jim cramer's first take on the week ahead "squawk box" will be right back. . aflac! paul is about to suffer a shelf-inflicted injury. luckily, aflac will help cover his unexpected medical bills. aflac! maybe you could use the money to buy a step stool. i have a step stool. so why are you climbing a shelf? the stool's on top of the shelf, isn't it paul... (shelf crashing) yeah... ♪ ♪ aflac! ♪ ♪ wow, we're crunching tons of polygons here! what's going on? where's regina? hi, i'm ladonna. i invest in invesco qqq, a fund that gives me access to the nasdaq-100 innovations, like real time cgi. okay...

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welcome back to squuks j jim, curiious what we're going to see is there anything you like ahead of it and anyone you own on the side of it >> i still want alphabet i think they're not levered to the kind of advertising that

snap had, snap being the disaster of the month. meta guides down, which is kind of a bummer. look, i think i'm scared of intel. intel announced a deal with media tech. it's not the place to be because these companies are so international. >> you want to own alphabet, but what about meta. >> i think meta is going to guide down i think that have to worry about expense control. they have a lot of branding. we saw from snap that branding is not that good what you really want is query advertising, and that's alphabet look, i think meta is an inexpensive stock, but any stock that guides down can still go down i remember when it was in the low double digits. i'm not telling people they should buy it ahead. >> what do you think we're going

to be hearing from the fed this week we've been discussing it all day. >> look, we need three-quarters and wait and see if we get three-quarters and say we can't wait to get back to september to do it, then i think the market goes down but i think they just do three-quarters and say, we'l they went for 100? >> that is what i want. >> what what happened? what would the stock market do? >> i think the stock market would be go down. that would mean therefore more worried about it than we know. that would be negative. i think the recent diehards would come in and say, that is what we really wanted, but that is not what people want. people like exactly what they are looking for. that's all. they want three quarters. they want the 75 because that is what they already figured out. they get worried either way. >> do you want to weigh in on

elon musk? >> no. a hard pass on that. >> jim cramer, we look for to seeing you later. you can check out his investing club online right now. >> indeed you do. indeed instant match instantly delivers quality candidates matching your job description. visit indeed.com/hire

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try steak or chicken, too. now at togo's we have tell you all day it is a big week for the markets with earnings. also, a fed decision, gdp, and much more. the opening bell set to bring in a little over half hour. joining us is cnbc contributor. there things the market already kind of knows or sniffs out, and there are things that are total surprises. your view is that it will be a tough week. but tougher than expectations? >> tougher than expectations.

when you talk about the things i think will surprise on the downside, some of this data from the housing market will be rather surprising in terms of broad-based consensus from where we get the national home price index. the individual homes sale data, that will mean more deterioration than expected. remember, this is a key contributor to the economy. two thirds is consumer spending. rising home prices and the ability to access that equity cheaply has been a source of funds over the last two years. that will turn. the other surprise will be the 100 basis points we will get on wednesday. the market is fairly pricing in 75. lastly, i think when we get the gdp numbers, that will be a surprise as well. consensus has been at about 1.6% growth. i am forecasting 2% contraction. that would mark the second quarter in a robust contraction. by some measures, that means we are firmly in the beginning of a recession. >> why would that give the fed some leeway to consider waiting on the next one if we already have two negative quarters?

you know how warped how a lot of participants are in the market. if that gives us cover to maybe not go as far as we were thinking, that could maybe be taken positively. >> i don't think it does that. i think the fed probably has a longer-term view than we do. the slowing of the economy is a thing that is unavoidable if we want to have pricing correct. at this point, the fed foresees that, you know, having not started this program last year, as many of us had asked, they are so far behind the curve that at this point something of that magnitude is necessary. i do not think the economic data is weak enough yet to let the foot off the gas. quite frankly, i don't know if

it is all that herculean. they have done it 38 times since 1970. we act like it is catastrophic. but but in broader context, this will not be the first time. >> in your view, this nice start we have had to july, given this horrific year we are in, will this eventually roll over? below 3650 on the s&p? i won't ask you for duration, but even direction is tough enough. what do you think? >> i think we, at the end of the day, what we need to happen is to have a shared view of reality. at this point, we still have analysts projecting double-digit gdp growth in the back of the year. those of us on the other side

who don't for see that as a realistic scenario, you will recall, back in january when i said fair value was 3800, we don't have a common view of the neighborhood we are in. more that needs to happen. we are in the midst of a pretty aggressive earnings revision to the downside cycle, but there's still more to come. as you were talking about, we're still getting surprises. surprises in technology, and spend, even large-scale technology. the strong dollar is having an impact. until we stop getting the surprises, until estimates get to where they need to be, until we know where interest rates need to be, and 100 basis points is no longer a great surprise, until we are in that environment, we can't talk about valuation because we don't have common expectations for the future. i do expect we will test new lows and exit this year probably with inflation still more than 5%, which implies aggressive fed action

throughout the year. i don't think the market is pricing that in. >> 5% sounds pretty good. so 3800 with her fair value. that sounds good. why are you talking below 3600? the things get even worse? >> that forecast was prior to the russian invasion. i needed to account for higher energy prices for longer, i needed to account for disruptions in your. the other thing, the consumer has weekend more than anticipated. you are seeing double digit loan growth even a private wealth management shops. across all socioeconomic groups we're leavening up where it is historically expensive to do so. i wonder what that means for spending in the back half. >> great having you want. you join the list of those looking for more new lows. i don't know.

i don't want to go to new lows. >> you owe me a shirt. remember? i have problems? a year and a half ago you saw it in the gym. i still haven't gotten it. >> i will get you the shirt. we have to talk about this next time. i can't remember. i have some spanks. >> we are conveniently out of time. >> make sure to join us tomorrow. squawk on the street is coming up right now. good monday morning. welcome to squawk on the street. free market is green. what a week heading our way. a fed meeting, half of s&p market cap reporting, gdp, and a lot more. we begin with a downturn, at