retail sector. dow, not going as badly. we have different plans in hong kong. july 26, 2022. it's time to do it right now good morning, everybody. welcome to cnbc. live from the aztec market in times square, let's take a look at what's happening with the u.s. equity futures. it's roughly flat. this morning, red arrows across the board. as we mentioned, we are talking about some losses. they are down by 127 points.

most of that is coming from the climate shares from walmart. we will see more about what the company said in just a moment. nasdaq, off by 26. treasury yields have come down very quickly. today, it's back below 2.8%. 2.76%. we are talking about a week where the market is expected to raise. interest rates are hereby about 75 dates. >> according to aaa, the national average fell below four dollars. $.17 from one week ago. crude oil prices this morning are a little bit higher. we are talking about 98 54. we have natural impacts that we are seeing right now. they have pipelines to about 27% to 40%. >> we were just checking because we didn't mention it. 17 and 18, threatening to

break. general motors, there are so many cross currents rolling around. we are trying to get a feel for how things are going. general motors, just reporting. >> this is a miss on the bottom line, despite respective revenue. the company, earning $1.14 a share. as i mentioned, better than expected. 35 points, $75 billion. were expecting 3.5 billion. two things hurt gm in the second quarter. the covid lockdowns in china. let's start off with the chip shortage. they warned that they were not going to be delivering as many difficulties as expected. they did not deliver 95,000 vehicles that are built. this was from the second

quarter, but not delivered. they warned this would be happening. they didn't have a full complement of chips for these vehicles. that's in the second half of this year. profit margins in north america is as a result. they lost $87 million in china in the second quarter. first quarterly loss since quarter one of 2020. they hurt not only manufacturing's, but abilities for the chinese consumer to go out and buy vehicles. gm is reaffirming all of this. the reaffirm different guidances. one other piece of news, they have secured supplies to hit the 2025 production target. it expects to sell 1 million processes in north america from 2025. you are looking at them do what

ford did not too long ago. we do have the supplies. we will be ready to manufacture the full complement that we are planning to manufacture. we will be talking with him next hour. you don't want to miss what he has to say. we have the chip supply, as well as the overall supplies. it has to be close to a record transaction price. it probably is. i haven't had a chance to think through. it's a lot for the vehicles they are selling right now. these were built but not delivered. back to you. >> preowned prices are solid. very weird. sometimes, it makes no sense. >> the only weakness you are seeing, it's on the lower end of the consumer. that's where you are seeing it right now. it's not a broad segment overall. people are not turning their cars back in. is easier to sell your leased

car, because it's worth more than whatever the residual was. we will see whether it's towards the end of that. we don't know. walmart is doing great until it's not. >> that's what people are watching in the second half of this year. >> we have all of those gm's making batteries. >> [ laughter ] you bet. they are going to have those. >> thanks, see you later. u.p.s. is out with numbers. they are better than expected. pretty significant. $3.29 on a different adjusted basis. from what we were looking for. $3.16 revenue is better than anticipated.

$26.4 billion, it looks like the company is confirming the financial guidance. this is $3 billion in 2022. the external environment is ever-changing. this is with nearly every aspect of the business. every aspect of the business is doing better than expected. they are going to be buying back more shares than earlier. at $3 billion for 2022. this is up by to $9 million. >> walmart is cutting its normal guidance actions. global guidance from necessities to food. the spending is now with more items on the shelves. walmart is now expecting an earnings decline of 18.9%. they are calling for 1.6% growth. other retailers are falling

after walmart's announcement is seeing this across the board. to any of us do work for them in the prices for what went well? if you want lawn furniture, it may be available at a cheaper price than before. close and other things that maybe were not necessities, food and gas and all of the other things that people need, they are higher. >> they will have lower profits for the year now. it's not like that before. >> people want groceries. center profits right there. electronics were trying to get higher profits from these things. it's a different shift from what people and consumers want. we want goods at that point. people are taking what they do have, and spending it on services. it's getting pinched by the

high prices. >> trying to assign the stock, you look at the growth rate. it's going down. this company is going through it. amazon is called down. >> the quality is higher. it >> i'm not so sure. >> you are looking into what people want. they don't need it at these points. chasing demand, trying to bring in the inventory that people wanted. people shifted pretty quickly. they're going to be left holding the bag. >> they don't use the back to back quarters.

that's indicative of a sharp slowdown. the market is not down more. you are taking pressure off of it. you are trying to show it later. >> do you know that walmart is right there with it? >> i know. we are coming back to how stubborn inflation is on the wait side of things. if you have the restaurant, it's different from it. that shows the real problem of trying to deal with inflation.

>> we might need to. >> i don't want to do demand stuff. start from the ground up rate, and go from there. >> it's a vicious cycle. >> interest rates are coming down. >> we are trying to cut right this.

>> we are building similar access. >> we have another point. this is down for this. walmart, having said that, we are doing this. we have the rest of this for all the other businesses. in the land, they have held up. we will see. we don't care. the advertising, i don't use it from yesterday. you are hanging out every day. >> with mcdonald's and coca-

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looking back. today's plan, we have earnings season in. rolling in a big way. we are going to be hearing from general electric. coca-cola and mcdonald's, also over from the bed. we are hearing after the closing bell. a lot of data points for the economy really is or where it has been. we will see how the forecasts get. it's about how hard it seems to be. it's about anything right now. on today's agenda, the federal reserve is beginning its policies. they have home prices at 9:00 a.m. eastern time. they are having a lot to digest as well in terms of data. a global cohead of the investment rates, here at barclays.

good morning. covering this right now. the portfolio managing director, as well as private wealth advisers, we have different wealth management. good morning to both of you. i'm going to start with you. are you sitting at the meeting today? you probably have all the numbers. you don't have the walmart numbers. not the other ones that are coming in. what are you thinking? >> i think we have a treasury curve. we are responding to signs of growth. central banks are tightening financial conditions globally. much more coordinated way than we have ever seen before. we have half of the central banks across developing emerging markets for target rates right now. they are the latest to take that more aggressive pact. we have zero ambiguity about the direction of travel. we are looking at tomorrow's meeting. this is at the expense of the economy and the consumer. we see them moving in both

july, and again in september. 75 at tomorrow's meeting. maybe another 50 on the follow. >> you will take 75 now, 50 later, and take a breather? >> that's right. >> there aren't more in the future. >> we are going for the function of payroll data. inflation is breaking the numbers down. last month, we are taking a step down. we are trying to reinforce the 50. >> do you want equities this week? >> selectively, the most important thing we are focusing on talking to investors about, is reminding them that economic data is a confirmation of what's happening in the past. portfolio managers, it may have

opportunities to invest now. the things we have had over the last few months, the market is technically hitting the 20%. the market territory is pulling apart the components of the different sectors. we are getting into different market territories. in the last 30 days, investors are sitting through the cash. they are selectively working at the franchises. these included dollar strengths. it is affecting some of the consumer discretionary's. this is definitely looking at the nation's capitol. >> are you trying to trickle through across the economy for retail? >> i have been telling investors and clients all along, we are going to see winners and losers. a lot of that is seating rotations at the corporate

level. the consumer is slowing down. i think we are going to need to really examine and take stock at how well they stock the shelves. whether or not they are changing consumers, they have revolutions. they have remote workings. they are changing. it's part of the overstock. >> we have target, walmart, amazon, lowe's, and best buy. how do we rank them? >> without going into ranking, you want to really take a look at the balance sheets. buybacks, stock splits, it's historically rewarding the shareholders. this is all with the climates that we are investing in right now. >> one of the things we have been asking, it's part of the issue. is it possible that these earnings are not good this

week? does that taking pressure off of him? is it a different situation? >> they have spent a better part of the last two or three months, so it's part of different areas. we are looking at the q&a session tomorrow. equally, they have growing risks. it can be too aggressive on the way out. i'm personally thinking it's going to be a challenge. it's without slowing the pace of the hikes and the falls. that of itself, legs development over the few weeks and not the months. >> appreciated. we will happen to see what happens with the fed.

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electric reporting, and the dow is down 3.5%. it reverse split is right here. about 100 problems, and whenever you do that, it's now down to 65.

too bad they had to make a forecast for the rest of the year. the report was better than expected for the results. it's really confusing when they report a loss of $.78 a share. we have different earnings of $.78 per share. this is actually what we are beating expectations of sense. revenue was also above expectations. 18.65 billion. we are improving delivery prices and cost performances. the n word, notwithstanding. this progress is still uncertain about the external pressures and companies. we are continuing to trend forward.

this is the 2022 outlook on all metrics. pre-cash flow, we have $1 billion being pushed ahead. it wasn't even .2 billion. >> we have concern about the future. that is where things stand. that's what the fed has to be dealing with. numbers coming in are good numbers. >> you wouldn't blame general electric in terms of execution. it seems to be for the operations that are focusing on the right things. orders are up 4%. >> this is what we heard from at&t. strong than expected numbers for the quarter. >> adjusted revenue is with

17.9. we have an adjusted revenue, adjusted profit margins have expanded through the basis point. pre-cash flow, .2 billion. >> that's what it does. .2 billion. this is pre-cash flow. market cap in the stock is below 75 billion right now. at one point, and the good old days, 600 billion. the stock now as you can see, it's actually up. that has to do with the company doing what it needs to do. this is what the economic backdrop. things are getting pushed out. supply chain issues, it's immediately. at $6 million, it was right there. i think it was one for eight. >> the earnings break

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that morning, and welcome back to squat box. here in times square. check the futures right now. we are in the red this morning. a lot of reports coming out as we speak to the dow right now. nasdaq, off 58 points. >> let's look into 3m. the company, coming in with an adjusted profit of $2.48. that is a lower than expected. that's a profit of six cents. a $.7 billion, versus a .5 billion dollar profit, we are

trying to originally give a guidance for this. because of the strong dollar, and because of what they call the uncertainty macroeconomic environment, it's the same thing we heard from ge. we have different reporters. a little weaker guidance. they are talking about total sales growth. -2.5 to negative half percent for the full year. they have the earlier guidance of 1.4% growth. they have organic sales growth. 3.5%, is different from the earlier spoken about 2.5%. we are looking for $2.30 to $2.80 for the full year. they have a guidance of 1075 to 1125. the street was already looking for lower numbers. $10.56, right in the middle of the adjusted earnings that they are giving. this is not a surprise. foreign currency translation is expecting it to bring it down 4% in terms of just 1%.

economic output, this is where they go through it for. the company is going to be spinning off the healthcare business. the healthcare business, it's going to be a tax-free transaction. this is right into the year 2023. this has been announced with setting off the food safety business. this is a different transaction that they are targeting. they have a closing in september of this year. the new 3m, has 28 million dollars in sales. 35.3 billion tells you how much it's splitting off. you have those coming through. the healthcare business, they say the tax that has been spent off, was completed by the year 2023. we are talking about how they had taken some actions with arrow technologies. this is the fully owned subsidiary that makes the combat arms for what they have been involved in. as a result, they have arrow

technologies into the chapter 11 proceedings. we have different trusts. we have different analysis actions. the stock is up 4% on all of this is new. this is exclusively with it. coming up in a few minutes. in the meantime, look at the reports from the other half hour or so. gm, slightly lower after some missed revenues. the stock was initially traded lower. it's higher in the premarket. we have u.p.s. the adjusted profit is coming in with $3.20 per share. this is better than expected. people are still shipping things.

u.p.s. has better numbers taking with its guidances. it's a great quarter. i'm concerned about the guidance. 3m, concerned about the guidance. we were bringing in more money and revenue for more packets that were going out. >> do me a favor. we have different packets.

>> clam flavored ice cream? have you had that? >> i have had lobster flavored ice cream. it was awful. i have had garlic flavor as well. >> do not put garlic in your ice cream. if you are getting garlic and ice cream, you get separate bags. >> everything garlic. they have the lobster ice cream. when we come back, we have an exclusive interview with the ceo, mike feldman. we have all the news for the economies. what is happening with the healthcare spinoff? later, senator todd young joins us for the push for big production in the united desat. a reminder for you folks, you can watch this live anytime on the cnbc app.

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as we mentioned, 3m, out with the numbers for the second quarter. bottom line, the company is talking about other things as well. we asked the ceo about the quarter, and what he expects for the guidance for the full year. >> we had results for the challenging environment. we did that by focusing on customers, and we were challenging the supply chains.

we have learnings for the share results that had consensus actions. we had organic growth led by the healthcare. we have the safety industrial businesses. we exclude the impact from the respirators, it was what we were talking about all year. we have the demand in 2021. the covid shutdown from china, it was a different quarter. the second half was across many of the markets. we have certain areas, and this was regarding the macro. we have different eps guidances, and the uncertainty i was updating the organic growth as well. >> you are looking for $10.80, versus the expected $11.25.

foreign translation is expected to be down 4% versus 1% before. it you have softening's in key areas. what do you think about that? >> we are seeing and markets. we have consumer electronics, particularly smart phones. we are declining for the full year. we have impact from uncertainty with a couple of other markets. we are seeing positive signs, and we have automotive rates. we have different improving actions. we are seeing the persistent impact of supply chains and instructions. it's impacting us. it's a combination that has those with us on certain about the environment. >> with inflation, you have had pricing power. you have been able to raise prices to what the higher costs

are. what can you do about inflation at this point? >> we have executed pricing for managements. we are expecting that to continue. we are seeing this for what we had at the beginning of the year. we have updated the range. we expect to have the discipline pricings. we are offsetting that as we go forward. >> i asked roman about the 3m business. >> is about creating more opportunities, and creating greater certainties. the opportunity comes from the healthcare business. resulting in two world-class companies. we have leading healthcare technologies. they are global leaders in material science. they have highly intractable and markets. both of these businesses are trying to thrive.

it's exciting for the opportunity there. we are looking to unleash and unlock value with this announcement. >> do you think because the market is not valuing you really, it's not going for the healthcare unit? what about traditional manufacturing? >> it's really a part of the portfolio management. we talked to them often about it. it's a critical strategy for us. active portfolio management, is prioritizing where we make acquisitions. we are looking at how to create the greatest value from the portfolios. do we manage the businesses differently? are we digesting businesses? we are trying to have standalone healthcare businesses. we have put a lot of healthcare businesses in the portfolio management. we have acquisitions that we

have executed for the drug delivery businesses. the separation of the food safety business, we understand this in the third quarter. it's a result of a careful consideration around that strategy. we are trying to conclude this, and the best way to have values is with businesses. it's a successful standalone company. >> 3m, also announcing that it's putting the subsidiary arrow technologies into the chapter. this follows the losses around earplugs that have been sold to the military. we asked the ceo about that as well. >> it's about taking steps to solve the litigation matters for the earplugs. it's a different equable resolution. we are trading this for uncertainty. we are focused on doing right by veterans. we are driving certainty and

clarity for them as well. the area of technologies that has been manufactured for the combat earplugs that are at the center of this litigation, will voluntarily enter into the structure to manage the process. we are trying to support that as we step forward. >> creating a trust and putting $1 billion into that, is that were you think the eventual settlement will be? >> the billion-dollar trust is based on expert analysis. we have different claims and party estimators. we believe it will be adequate to address the matters with the subsidiaries. we are standing behind it, and we support with whatever funds are required to stand with the

matter. >> we will have more this morning. this includes whether he thinks we are headed towards a recession or not. >> we are just trying to help. with the earplugs, there was a material for anything. >> they bought it in 2008. i wish they didn't. >> it didn't work? >> the claim is that the company will say that you want using them properly. it's a certain way to have them. >> we have noise from the combat. you should be protecting your ears. if not used properly, the company says there is a problem. they are not manufactured correctly. that's where it comes down to. >> we are taking it into chapter 11. we are not trying to mess around with it. people in this business, they

are disabled this day. they have all been blowing out their eardrum. still to come, we are expecting coca-cola and mcdonald's around 7:00 a.m. eastern. walmart, and the forecast, we will talk about what is next. what that says about the american consumer. it's a walmart component dealing with dow. we have 11 points, and we are dividing that. it's just normal. why isn't anyone else going down? it's what it says about the overall action. >> 360 billion-dollar company, or at least before a close yesterday. a decline of almost 10%, you are talking north of $30 billion. >> it's a 1% margin. don't know. it's the estimate. we will be right back. scriptio visit indeed.com/hire

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. welcome back to "squawk box. t the ubs missing estimates. a net profit fell below estimates, and the ceo is calling the quarter one of the most challenging periods for investors in the last ten years, citing inflation, the war in ukraine, covid lockdowns in asia rising interest rates helped offset the fees. none of which is particularly surprising >> shares of grill maker weber, plunging 13% after the company announced its ceo is stepping down the chief technology officer for the grill company will serve as interim ceo as it searches for a permanent replacement. the company also reported

disappointing preliminary results for the recent quarter citing slowing retail traffic and inflation. the head winds are expected to persist. and it will look at layoffs and other ways to reduce expenses. it is down another 1.5% this morning and another area of the economy where you are seeing a slow down, places where you could call it recessionary >> and what might make it likely that we see a bona fide session. gazprom said exports through the nord stream would drop from 40% all the way to 20% of capacity starting tomorrow. and, as can you imagine, here's what putin's saying.

the company blaming sanctions-related problems so it's not our problem. these are sanctions that the west is putting on us. and that has caused turbines which have already reduced flows that it can't supposedly, it's impacting. >> it says only one of six turbines are able to function right now. but he warned, he threatened this last week when they put it up to 40%, they said yeah, but next week we may drop it to 20. >> gas prices had already doubled before yesterday's move. so you have no energy and what you do have costs more than what you used to v have and it's bet are ter to go to 2n zero, because he can slowly have germany twisting in the wind did you see the conjecture that they had a body double for

putin? he looked great. great, walking along looks, i mean, better than he looked in years, and i don't know you always hear that they use body doubles i don't know if you believe it or not i looked closely at his face, and i kind of think it might not be him it was a couple days ago and he was like bouncing his step and supposedly, he's not like that or hasn't been like that, that healthy >> you remember that movie "dave" >> i do. >> kevin kline was president the national football league has its own streaming service. it costs $39.99 per year and will include out of market pre preseason games.

it won't initially include regular season games we haven't tmzed it all. what do we think there was a picture of him with sergei he says no he's only seen her a couple times. in >> i'm going with him on this. >> the reason i bring this up. crazy drugs. but they had that it must have been a -- must have been a quickie. because they looked at his plane records. and he was there for four hours. so instead of saying it probably didn't happen, they said he had to get in, get out, get quickly off the plane, chopper over to the hotel and chopper, instead of just saying it's probably not true they a, wsay, wow, it must havee premeditated

>> wouldn't you say it probably didn't happen if he was only in miami for four hours? >> he's still directly denying the report but i don't know >> but the bane of society >> i'll give you the most v fascinating part you have "the wall street journal" on one side owned by rupert mur ddoch saying one thi. and another paper owned by rupert murdoch saying the opposite >> aed bod hy double i need a body double >> coca-cola, mcdonald's, after this

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135 million ounces of silver equivalent. dolly varden. good morning futures pointing to a lower open as earnings season rolls on. we'll run through this morning's reports and tell what you to watch in today's session inflation hitting walmart as inflation starts to hit the

american shopper there and the fed under the m microscope the second hour of "squawk box" begins right now good morning, and welcome back to "squawk box" right here on cnbc. we're live at the nasdaq market site at times square along with becky quick and joe kernen take a look at u.s. equity futures at this hour we've got some red on the screen lots offen earnings coming in. the dow off about 137 on the back of some of that news already. nasdaq down about 55 points, s&p off about 14 points. by the way, we have that two-day

fed reserve meeting later today. we'll show you treasury results as we speak. you're looking at the five-year, 2.8. oil right now if you want to buy it by the barrel on wti, you can buy it for 98.42, up about 2%. and let's talk a little crypto real quick you're looking at the list here. bitcoin now down under 22,000, we're at about $21,000 >> as soon as walmart hit last night, bitcoin coca-cola trading up a little bit this morning after it just posted numbers coca-cola reported 70 cents a share. one of the thing wes we'll be talking about is raising the revenue growth point

the first thing i'd ask. case volume was up 6%. latin america up 9%. comparable currency neutral earnings per share growth now seen for 2022 now seen at 14% to 15%. >> you know, their revenue growth for the current quarter was 4% growth on concentrate sales. >> just wonder if you can. >> if i can break down, look at the guidance now, too. >> food companies been able to manage the higher costs, and we mow h know how that works. maybe people on the low end aren't able to afford some of it they've been able to pass it along a lot. the unilevers, pepsi they don't have the snack

business that pepsi has. >> higher mix, too like the premium stuff, this is not a case where when you hear walmart, you wonder if consumers are stepping away from premium brands, if we're going to trade down to lower brands, it's not the case in coca-cola. >> did we see mcdonald's if you give me a second to deal with my perennial problems with the computers here i can, yeah, if you give me some time, i can eventually do that >> why don't i run through some of the other earnings we've had. this is the heaviest week of earnings gm missing expectations, reporting $1.14 a sale versus the 1.20 that the street was looking for. revenue was $35.8 billion.

they cited supply chain disruptions and russia's invasion of ukraine for some of the shutdowns and something that was wreaking havoc with the quarter. the stock down about 1.6%. we will be hearing from gm's cfo. general electric seeing about a billion dollars of free cash flow pushed into the future and it is still on track to create three independent companies. a little concern about the outlook for the future that stock up by about 5.75% dow component 3m beat expectations revenue also beating expectations at $8.7 billion but cutting its full-year guidance because of what it calls an uncertain macro environment and the strong u.s. dollar

they thought it would be a headwind of 1% right now that stock is up by about 3% the company also announcing that it's going to be spinning off its health care business we asked the ceo about his outlook for the company. >> as we look at the second half we see strong demand across many of our markets, although there is softening in some certain areas. we've updated our guidance largely due to thhe strength ofe u.s. dollar. >> we continue to get these earnings coming out. >> mcdonald's, 255 versus 247. i just want to mention that watch the stock. the stock at this point is 246 bid 247 on a 250 close so we are seeing it down and, you know, that's something

i want to mention real quickly the comps are always what's most important. 9.7% global. u.s. comp sales up 3.7%. we'll get more color on whether 3.7, how that compared to expectations but the company does go on t say the operating environment across a competitive landscape remains challenging. we are positioned to weather this environment better than others but noteworthy maybe that they mention that it is competitive >> remember, they have the sale of the business in russia. >> we talk about u.p.s. for a second they were reporting earlier this morning, and that stock this morning, let's take a look at where we sit with that stock down 1.5%. >> yeah, absolutely, andrew. u.p.s. shows lower the company announcing plans to increase its share repurchase

plan from $2 billion to $3 billion. shares briefly turning positive before negative as can you see now. a few investor and analyst concerns the u.s. domestic business, which is really the bread and butter, missed estimates supply chain and freight that is correct w was a strength for rival fedex the big thing is pricing power same number in the u.s international with more growth despite the rising dollar this quarter and recession concerns in europe. but u.p.s. is seeing a slow down in volume. overall volume down 5% u.s. volume down 4%. really kind of speaking to the shift from goods to services investors apparently digesting

the results and u.p.s.' four-year guidance both u.p.s. and fedex underperforming the s&p this quarter. >> what are you seeing there >> the comp sales and the u.s. for mcdonald's was above >> 2.8. >> global 9.7. that's above there is that sale, the business in russia. there's a $1.2 billion charge. >> i can't imagine that's a surprise >> it's down less than 1%. we'll see by the end of the day. but as they're saying, it might be positioned to weather the environment better than competitors and maybe other sectors. did you see anything that missed >> no. >> and it's always the global comps, u.s. comps. everything else. i don't see any, they're not cutting guidance >> you need food and the low end.

you do hate to say it >> is there really any competition for those fries? i don't think. do you >> no. >> we've discussed this before best strfries in the world we're going to talk about stocks and walmart shares losing nearly 9% after the cut guidant. that would be a market cap loss of about $20 billion we have much more on walmart coming up. dow futures this morning, you're okg at it right there, dow off about 130 points, "squawk box" will be right back after this

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pivotal week for the markets. earnings, key economic reports and the fed's decision on interest rates of the joining us now, chairman and ceo of a baird company, research partner. you got partners? mostly you we've got some of your other guys on. we like them >> chris parhone >> you've been glum when you've been on recently you're not alone there's a lot of people that just feel like, i don't know, we're on the wrong track to some extent but the market itself, jason, companies that seem to be executing are kind of doing okay, whether it's an mcdonald's

or even u.p.s. what happened with walmart and what does that say about the overall stock market and the economy? >> well, joe, my own opinion is that this is a little bit, of course, could be wrong disclaimer r b disclaimer, but i think this is a rally in a bear market there is a move hayaway from go toward service that's hurting a company like walmart. the economy is still strong enough in my opinion that good companies can execute. the real issue it seems to me, though, is that there has been a very significant regime change in our monetary policy, which means that more marginal companies, companies that have been very dependent on capital markets, the private markets, they're going to be much more

under strain of these are fortress, blue chip companies that have permanent capital. there's an awful lot of companies out there still if my opinion that are quite speculative. that's where the real issues are going to come for investors >> it's fed week again seems like every week is fed week maybe that's part of the problem. do you expect the conundrum that j. powell finds himself in, the fed finds itself in, do you expect that to result in new lows in the s&p? in the next six months >> i, i actually think so. in the cycle, i think it's going to be a combination of the fed doesn't have the luxury of worrying about financial asset prices it has to focus on inflation generally speaking the fed funds

rate doesn't some moving until it's higher than the rate of inflation. so i think some of these expectations that the fed is going to start easing next year in my opinion are overly optimistic, particularly for growth investors i also think we are in the midst of a slow down and we can debate whether we're in a recession recei right now. but profits are slowing. the yield curve is inverted. a lot of things would you normally look at that would give ah ind you an indication of where we're headed would indicate we're going to slow further still. it's probably going to be 3.5 or 4. >> it's not staying at 9, and we're going to 10. you think inflation comes way down because if it did, it'd be the 70 that'd be a multi-year cycle where the fed was tightening the entire time, and you know what

larry summers talks about, with five years with an unemployment rate of 6% or above. are you forecasting that or do you think if inflation were to come down to under 5, that zs seem as lot more managel for the fed. >> it is, but that assumes, the '70s, i've studied pretty closely. there were a couple thing ts tht happened there one is you had a series of policies that were poor. you got off the gold standard. you had wind buttons, all these dopey policies then you had bad luck. two oil embargoes in the space of ten years those thing weiss we can't fore. the bad luck it doesn't appear as if we're going to make the same policy mistakes that we made min the

'70s but the biggest was the stop and go policy in the '70s, which is to say they tightened. inflation would peak, and then they would start easing, and they never really addressed the underlying problem so you made a series of higher highs in inflation 6, 10, and then 15 and i'm praying here that we don't make the same mistakes, that we, once we start to get a handle on inflation we stay tight. we don't start easing immediately, because we're worried about the fallout on financial asset prices that's not the fed's job fed's job primarily is to focus on price stability, secondly, focus on jobs and all these other things that are important and noble, social justice, climate change, the fed has no ability to change those things at all from >> what about the notion of just

making thing ms more expensive r business and keeping them expensive to lessen demand, that's not what we're supposed to be doing. what about pro-growth policies, what about making tax cuts permanent. what about deregulation, all the things that would increase the supply side, and the one thing you're able to do is strangle the economy? that's no way to run an economy. >> joe,amen. you know who you're talking to here it's just not going to happen. until there's a new administration, a new person in the white house. a new, let's say a new person, regardless of which party. i think it's more likely to come from republican party than the democratic party, but by the same token, even if the republicans win big in november, you still have the president at the white house that seems to be pretty anti-growth i would argue, in terms of our

energy policy, which is not really an energy policy. it's an environmental policy i think there's a big focus on redistributing wealth as opposed to supply. all those things, i think, would work much better than what we're doing now. but i just don't, i don't hold out much hope that they're going to happen. >> stuck with the fed, and we're stuck with, you know, the blunt force instrument that really, i think, that's why when you have inflation and slow growth, that's just a death knell. you don't have any choice other than to focus on inflation, but in dealing with it, you're trying to hurt the jobs market, and you realize that stag place is stagflatio is such a bad thing. >> top line earnings look pretty

good, right? because earnings are mom nal terms. the things i would focus on most are margins the ppi is growing much more quickly than the cpi wholesale prices are growing quicker than retail prices and people pay liess through lower margin earnings. the quality earning in my opinion are going to be more suspect unless the fed really gets ahold of inflation >> how much below 3600 do you think the s&p, where does it finally bottom i know that's putting you on the spot >> no, i'll say this we have an expected, this is a wonky answer we have an expected value table where we weight all of our

probabilities, and that spits out something like 3200, as the number our best guess is more like 3600 but you have to weigh the possibilities that you go into a recession and that earnings fall signif significantly. this a in a typical recession, earning fall 30% we have to pray that we don't go into a recession we could go much worse >> that wasn't my teeth. >> i'm wrong all the time. who knows. but that's the way i'm looking at it. >> what's a good track record in your business? in betting it's like 52% >> in our business, it would be maybe, 51% or, you know. 50.1 yeah something. >> all right, jason. >> thank you, sir. okay, coming up, we're going to talk inflation concerns

hitting the nation's largest retailer, walmart. inflation is causing its poor shoppers to spend more on essentials like food and less on clothing and electronics with more favorable wider margins we're going to break it down after the break and gm's cfo will be joining us much more. is aerk box" returningft th beep. beep. what up, barry? hey, chuck. aren't you supposed to be on the course? i was, but i need a new driver. oh. what kind? one that hits the ball better. okay... i gotcha. let's go to the hitting bay. ♪ ♪ ( golf balls and items crashing to the floor ) oops. maybe we need a new driver for the cart too. you're a funny guy. ( golf balls being hit ) oooh that's nice. that one definitely hits the ball. c'mon, get in. ehhhh, i'm good. suit yourself. oh no, no, no, no, no! ( tires screeching )

welcome back, everybody. walmart cuttingi its quarterly profits. cour cour courtney reagan joins us >> this is a pretty big deal generally for walmart. an interquarter warning is pretty rare for this retailer. it actually happened eight and a half years ago, and about six weeks after competitor target warned shares of both are lower this morning. ceo doug mcmillan saying the

increasing levels of food and fuel inflation are affecting how customers spend. walmart says food inflation is up double digits that's higher than it was at the end of that most recently reported quarter the retailer said pretty plainly. food inflation is affecting consumers' ability to spend on general merchandise categories, requiring more mark downs to move through that, particularly apparel. it's cuttingi its profit outloo and increased discounting to move what's not selling. more than half of all walmart sales do come from grocery, and only about 20% of target's mix is food. apparel is a much more significant percentage of sales for target than it is for walmart. a number of analysts, including goldman sachs, wells fargo and

mkm partners aren't turned longer term for walmart but are still lowering their price target on the shears they're more cautious on the cpg companies like general mills, smucker, conagra and clorox. the story of course, becky is bigger for walmart and the markets. are consumers finally feeling the impacts of inflation with the bulk of back to school and holiday spending in the months to come, this is a worrisome time >> is this consumers really feeling the pinch or spending their money in other places? are they traveling so they aren't buying other things like electronics? we bought all those things if you bought your patio furniture, your new couch, if you already bought all of those things you maybe don't need them

now, and maybe you're taking some of your money and doing things you hadn't been doing before, like traveling, getting out, entertainment, different things and second of all, this idea -- go ahead >> oh, no, i was just going to say yeah, that's such a good point, becky we've all seen the pictures of what's going on at the airlines. london heathrow saying please, don't schedule any more flights. we simply don't have the capacity that's all somewhat bought in the future in the immediate do we really understand and feel how consumers are feeling? because you're often planning some of those bigger purchases with a more forward-looking outlook. your point is really good about home if you already bought a couch, you're not going to buy a new one. but maybe smaller home furnishing items you are still replacing. we actually saw pretty good sales in that recent government retail sales report for the

furnishing area but less so in the home improvement we really have to drill down apparel, this is a big one we're going to be looking at today walmart called out apparel as a weak area. baugh but a couple months ago we heard that dresses and suits are selling again. they're going out. i think there are some nuances, even intracategory, that we're going to have to pay very close attention to today and going forward in the weeks ahead >> courtney, thank you it's good to see you general motors out with numbers today. stay tuned you're watching "squawk box," and this is cnbc

gm reported this morning here with more from the company's cfo is phil lebeau >> let's bring in paul jacobson joining us from the company's headquarters we've already gone over the numbers. you missed on the bottom line but had better than expected

revenue. i though you just had a conference call with reporters you were talking about the impact of inflation. am i correct, the $5 billion impact is that what you guys saw as the impact of inflation? >> good morning, phil, and thanks for having us today the $5 billion impact is what we talked about for the full year of 2022 year over year we've highlight thed that in our previous calls it came out in line with our expectations in early july after we'd seen late breaking semi conductor challenges there's timing in that, but overall we're very pleased with how the quarter went >> what's the status of chip supply are you sure that you guys are pretty much over the hump in terms of these chip issues >> as we've talked about, we

expect our production to be up 30% to 35% this year we had a lot of challenges this the third quarter last year that we'll be lapping but through it all, the team's done a remarkable job of going through this while we're dealing with all the short-t short-term tactical challenges, to secure all our battery raw materials to hit our production goal in evs is a great part of that >> you talk about building 1 million evs in '25 and sell 1 million in '25 is this the beginning of what we're going to see more of over the next couple years? >> we've done that with the chips and a good pcomponent of

our battery materials to make sure we have a little more control over some of these items that might be challenged over the future so the agreements you saw today i think are a demonstration of the flexibility that we can bring to these raw material processors and producers and we see long-term valuable partnerships as we compete this journey. >> paul, you talked about the impact of frainflation. how much of what you're seeing on the cost side sticks? once begin again, do you expect the high prices to stay here? >> demand for our vehicles remains very, very strong. inventory levels are staying down we think there's a lot of demand tra that was unmet over the last couple years as we've gone

through covid apartmend the chi issues as well make sure that there's a consumer there for it. all the indicators that we've seen are that depend for our products remain quite strong in this environment >> give my e your sense of the economy right now, paul? we are getting mixed messages with walmart and its warning other companies are much more cautious you guys have said that your hiring is going to slow down you're not contemplating layoffs at this point, but what's your sense of the economy right now >> right now all the day that wedata that we're looking at haven't shown signs of weakness. we have a good credit rating in our customer portfolio, that has held up. new car prices as we've seen have held up

inventories remain low so we're still seeing strong demand for our products, and we hope to continue to do that. that means obviously, we're preparing for a lot of different scenarios. we don't want to get into the pr prediction game, but of all the data sets that we are seeing it seems pretty good among our consumer set >> quickly, you guys post a loss in china for the first time since q1 of 2020 what's your outlook in terms of the second half of this year >> we've already seen the chinese consumer improve a little bit since it's been reopening, and we see some momentum there i think the team is focussed on recovering as much as we can from the second quarter. we're launching the cadillac lyric there. and we know from customer survey data that that vehicle's going to be really well received

we have high hopes for china and hope to get that momentum back >> paul, thank you for joining us today a very busy tay. i day. paul jacobson joining us on a day when they missed on the bottom line. and 50,000 vehicles on average for the vehicles being sold at gm in q2 coming up, more on mcdonald's quarter and what they're saying about business conditions p plus we're going to talk about the fed's xtne move on rates all that coming up when "squawk box" returns.

mcdonald's reporting results earlier this hour. kate rogers joins us now with more hi, kate >> hey, good "morning joe. $2.55 adjusted there is a five cent charge due to an audit and the sale of its russia business.

same-store sales performance up 9.7% overall climbing 3.7% here in the u.s. over estimates of 2.8% the company saying this was due to price hikes and its value offerings across its menu and also digital the company adding that the quarter was driven by franchise-operated margins accounting for about 95% of operations in the u.s. its company-operated margins were negatively affected by the closure of business in russia and ukraine. things are very challenging and-thonand nonetheless it remains challenging. i'm confident that our plans and people position mcdonald's to weather this environment better than others. remember, grocery nainflation is going up more than restaurants

and the stocks compared to others in this space obviously reflect that >> it's interesting globally, kate, because they break it down across all geographies u.s. looked pretty good. i wonder what finally happens in europe and germany and then you've got the whole pr putin problem in russia. i guess we don't have to worry about it >> that was about 9% of revenues so it wasn't a huge, huge part of business. and those were company-operated stores they did call out strength you mentioned internationally in france and germany two markets that are doing well for them but souther much focus as you ks on the u.s people are still opting for delivery, which is more expensive for fast food

operators. >> they still trying to get to you eat fruit and yogurt and stuff? you go to the eventconvenience , and there's a place where they sell non-alcoholic beer. they still sell those apples and yogurt >> french pfries. >> the bulk of the pemenu is vey fast food oriented >> i like it >> you're a fan. >> yeah. when we come back we'll talk about the earning. let's look at the dow components 3m is up by 6% after not just beating earning but announcing the spinoff of its health care unit dow futures right now down by 110 points s&p off by 12.

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recession. some continue to hold out hope for a soft rapilanding. 100% think it will be a hike 99% think it will be 75 basis points o points and then the fed starts reducing rates but is there's the sproblt of probability of recession 350 call it by the end of this year still considerable work to do of then the terminal rate, 380, and then the fed starts to cut rates down to 313 and 285. we see that also in the fed funds futures market man

do they get it just right? 31% think that i guess the good news most think the fed does get inflation under control. a path to a soft landing certainly exists, but it's narrow, hidden and very hard to find some indicators suggest the u.s. economy pmay her be in recessio or close to it 72% said policy seems to be based on the latest economic data 13% saying it's part of a long-term strategy attention turning to how the fed is going to react in the face of weakening economic data. some think the fed could be about to dial back after the pace hike of this initial

meeting. with initial job russ claims contit may be that fed chair provides less detail saving a speech for jackson hole in august when he'll have more data about fra inflation. >> joining us with her take on inflation, recession fears is sheila bair. a founding member of the roll k volke alliance you want to explain? >> fed is managing short-term rates. volker focussed on money spuppl.

and that's really how he ultimately defeated inflation and strongly signaled an end to stop-go. that was like the policies that were pursued by the fed in the '70s where basically you would tighten when unemployment was declining and loosen when unemployment starred ted going p volker also stood very firm. had to hold things very tight. but i don't think the markets are assuming that j. powell has that same level. the stress test assumes that rate will drop near zero if we get into recession again that's not how it works. that's not thohow it worked in e '80s. >> when people start talking

about the money psupply, they didn't start doing that, they didn't astart tightening until after they started raising rates. >> the pace has been pretty tepid. they need to accelerate that they heeneed to sell mortgage-backed securities i would stand down on the big interest rate hikes and focus on money supply, by draining money out of the session, strength bestre strengthenning it hits longer term rates which is really where it's going to be most effective you've got an inverted yield curve now because they're hitting short-term rates, but the long-term rates the markets are keeping low, and the yield conversion is a very strong

predictor of recession i think they could ease pressure of a yield curve, if they started shrinking the portfolio. >> that seems like you're throwing out the mandates, the full employment mandate to totally focus on the dollar's ability. if you're not data dependent if you just go in and say look, inflation's too high we messed up no matter what we're going to continue with this rate hiking, and then you see the economy fall off -- you see the conundrum. >> yeah. >> no, well, i actually think that by stop micro managing short-testimony rates. focus on shrinking money supply, that's going to increase our chances of a soft landing more than what they're doing right now and certainly doing both at the same time. i would not do both at the same time that's really, that would

really, i think, send us into severe recession had i this is going to take some time. when a car gets into a skid you don't slam down the brakes more. i think sdtand down on these shock and awe rates. give that a chance to work and stand down on theis se huge interest rate increases. i don't want us to go into recession. but inflation hits everybody unemployment hits a segment of the population, a vulnerable segment. we have safety inevnet programs

i don't want to go there >> were you very critical of the bailouts this is now back in 2008 i think. >> yeah. >> were you critical of the bailouts that took place during this pandemic? >> no, well, i thought they were, as always the fed goes, they were a little over the top. but no, i'm clearly an intervention was necessary then. the pandemic was caused by a terrible disease it wasn't caused by a hlot of financial institutions so you weren't really rewarding bad behavior or trying to save the whole country. i wrote a piece for cnbc again, i think they went a little over the top, especially with corporate debt side, but overall, no, that intervention was needed but it lasted too long as we all agree, it lasted too

long, and that's why we have inflation. >> very quickly. in all fairness, volker did both, the shock and awe with the rates and -- >> not really. look, you, you constrain the growth of money supply interest rates are going up. it's just about were the fed dictates, whether you shrink money supply and let the markets to the work. absolutely, rates went up during volker >> sheila, great to see you. >> thank you nice to see you. thank you for having me. coming up, senator todd jung young on the chips act down 116 points on the dow stay tuned "squawk box" will be right back. school is back. and dick's sporting goods

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good morning stock futures pointing to a lower open on wall street. major averages all in the red

premarket. but the dow and s&p 500 are up four out of the last five days earning really rammping up toda. we're going to bring ah you an exclusive from the ceo of 3m and the fed kicks off its latest meeting today. everybody agrees that a hike is a given. the final hour of "squawk box" begins right now good morning and welcome to "squawk box" here on cnbc, live from the nasdaq market site in times square. u.s. equity futures at this hour, after you throw in a lot of different things into the

mix, about where they were before we threw anything into the mix. that's really where we've been since last night when walmart came out with that kind of shocking news. there's a lot of caveats for why walmart isn't reflective of all companies or even the u.s. economy. so even with the big, what was, what's the loss, 9% and change even with that major haircut to the biggest retailer, guess amazon's close, but i think walmart's still got it of an al after all is said and done. >> we should tell you about a lot of these corporate earning out this morning we're going to start with g general motors gm said it was preparing for an economic slow down and hiring fewer people we heard from the company's cfo.

>> as we look at the quarter, it came in line with our expectations that we put out in early july after we had seen some late-breaking semi-conductor challenges hit us we built some vehicles without those components we expect to clear them out in the second half of the year. there's some timing in that, but overall we're very pleased with how the quarter went >> also announcing that it would spin off its health care business it will be doing this as a tax-free transaction that stock right thousnow up by% the krfgs conversation with the coming up in just a bit. ge's results got a lift from a strong recovery in its jet engine business, and that stock up right now by 4.25%.

>> let's talk about the earnings, coca-cola, u.p.s. and more joining us, a cnbc contributor, nice to see you. not a lot of space between you and the wall behind you. in is it just you today, carrie? >> absolutely. i'm all alone. >> let's talk about the dog. rover. >> he's in a crate, in a crate >> we've got, it's a little bit of a mixed picture the walmart piece is the one that everybody's focussed on but we've also had better earnings or decent earnings on mcdonald's and u.p.s. is looking up how do you make sense of this? >> well, i think the market is feeling it as if it has a yoke around its

neck that's tightening it either goes the way of netflix and it's not as it expected and it zooms or a name like snapp snap. investors are incredibly nervous. yes, you're going to have better than expected. even what we saw with coke extremely good numbers i think the ge number's better than expected, but they've had plenty of quarters to be preparing for a time when things start to improve walmart, yes, the middle class, many shoppers don't have the available funds that they had. so it's not surprising that this was a weak quarter, but if the stock's done less than 10, i don't think that's a disaster. we're walking this very thin line, carefully, carefully, hoping that if the weak economy, and we know it's weak, is not

taking things down more than worst case scenario. we can live with that and maybe not touch the lows again >> here's this perverse relationship between the earnings story and what we may here or not come wednesday, probably less about the 75 basis point number which everybody agrees is upon us, but really what comes next and what kind of forecast the fed gives us. the worse these numbers are the also they may have to do, right? >> right correct. and i feel that what we're getting so far confirms 75 basis points, unlikely that 100 basis points comes up as something realistic. you know, we're nain a meddling along. we have an economy that's weak, but not incredibly weak. inflation may be peaking we're going to hear more about inflation from the fed, and i don't think they're going to be incredibly hawkish on the upside of rates because we've seen gas

prices come down real estate seems to have stopped moving higher and a few other categories that would be able to calm down the fears of we get 100, maybe several of those, i mean that seems extremely unlikely and this could be the worst. and we could start to see something in the second half of the year that calms markets down and feels as if it's beginning a recovery begin, whether or not we call this a recession >> what are you expecting to hear from some of the big tech companies that we're going to be hearing from later this week, microsoft, amazon and the like >> well, remember, if we can remember back to a quarter ago the market was moving along very nicely pa peaked in january and investors were nervous about what the big tech companies would say what they said was not comforting the market dropped incredibly fast from the beginning of earnings, mid to late april,

may, first half of june. and i believe that was precipitated by a lot of the tech names and concern about where they were going. the resilience of a name like microsoft, the multiple has dropped down i mean, it's in the 24 range it sells at about the same level as pepsi can you make a case that the tech stocks, google, you strip out other business and cash and that 16 times earnings, so we're below a market multiple and these names have resilient over the long term. they should have earnings that we can feel are comfortable over a five-year period of time we believe they're attractive right now. if they turn out to be less, i would say, resilient and stable than forecast and investors are believing, i think that's going to be a problem this quarter because they will lead the market down as they did before

that's not our belief. down 20% is sufficient damage. >> there are two different situations here. micr microsoft still is a b-to-b play you have the aws business, i don't know how you think about alphabet sort of in the middle, because so much of that is an advertising business >> yeah. well, alphabet is the cheapest of the stock and so it's been hurt because of advertising. it's possibly not going to show great strength, but it's a much stronger base than snap. amazon should be strong. and amazon has been the worst performing of all of those stocks since, you know, halfway through covid. it begins to underperform. we think visa's going to have a good number. we think, yeah we think that the numbers will be henough to holiday td the mat together and not see a major

drop >> nice to see you >> nice to see you, too. >> the dog was in the crate. >> yes >> okay. coming up, we're going to talk walmart and the cut to the profit guidance. what does the move say about the health of the economy? plus we're going to head to d.c. to talk crypto and chips and specifically a new idea to ease the tax burden when buying things with bitcoin. the other big tip still to the finish line. senator todd young of indiana. check out the shares of paramount. goldman sachs cutting iterating on the stock from buy to sell. growing macro headwinds put pressure on the company's ability to fulfill its streaming agenda

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to register with the government as an exchange the chief legal officer said i'm happy to say it again and again. we confident that our rigorous due diligence process keeps securities off our platform. and we look forward to engaging with the sec on the matter he also included a link to a blog post to a few days ago. stock right now off by four and a third percent. a bipartisan group of senators on bitcoin. >> the bill is being introduced today and would allow consumers to buy things with bitcoin without having to pay a capital gains tax. this comes from pat toomey and

kie kierst kyrsten sinema right now if you buy something with bitcoin you could owe the government capital gains tax it would exempt transactions of less than $50 from that requirement. senator toomey said while digital currencies have the potential to become an ordinary part of americans' every day lives our current tax code stands in the way. several key industry groups support this idea, including the blockchain association, the aso association for digital assets congress has been discussing a slough of crypto legislation but so far none of them have gone very far. a bill to regulate stable coins that the house had hoped to

formally debate has been punted until after summer recess. it's clear that congress is watching this industry closely >> when you think about just current circumstance the dollar or if you were to buy, you know, the euro, what's the tax structure in terms of or the policy around if those currencies were to, you know, rise immensely in value. would you pay taxes on them? i think you would, right >> it's not an ignorant question, i didn't know the answer to it either, no, foreign currencies are exempted from this capital gains tax if you have an increase in value on the currency that you use. the idea is to treat crypto currency as a currency as you would any type of foreign

denomination >> so foreign investors don't pay taxes? >> there's a certain, there's a size of transaction, there's a threshold limit. i don't know what it is for foreign currencies, but there would be a threshold as well so investors who are looking at crypto as an asset don't try to game the system. >> i think if someone uses bitcoin to buy a cup of coffee, they'd have to pay capital gains, have you found a person that has done that >> i don't know why you would use bitcoin to boy uy a cup of coffee >> it would be a loss, unless you bought it early, you don't want a capital gain on your cup of coffee. offset your scone.

that you buy all right, thanks. a key vote to support u.s. manufacturing is expected to take place in the senate backers are hoping congress can get the bill to president biden's desk before lawmakers go on recess next month joining us, senator todd young of indiana do you have any second thoughts about what the normal sort of republican or maybe even libertarian viewpoint would be on a public/private partnership essentially on what this is, senator? in other words, the federal government historically, is not great at picking winners and lose ares in the economy and not great at implementing strategies where they do things like that

>> i will say thef federal government has been active at least since the civil war. it also has a really important role to play with respect to national security. this is a national security bill, which is why we have so much support from the generals, the admirals, trump national security officials and why we have a lot of bipartisan support to get theiris done quickly. >> do you think frankly speaking, we're seeing all the controversy about speaker pelosi and taiwan, et cetera. in the back of everyone's mind, do you think that the frailty of our chip supply because of a dangerous world, is that what's behind it? or is it jobs sf because i can see where you'd want to bring silicon valley to the rest of the country and

through the technology there, but in the back of our mind, is it really about taiwan eventually goes to china >> i mean, it's actually about both so, you know, we source all of our high-end computer chips, mostly from taiwan some from south korea. and we just can't be that dependent on a country so far away from the continental u.s. for our missile system chips, the components that go into our radars and aircraft and so forth. so this is an effort to do exactly when all other large economy countries are doing, which isto innocent adivize. they should also understand that

there's a national security imparetive for this, so that we can be more resilient the next time a pandemic or any sort of natural disaster occurs. and also if there's a geopolitical event, whether that's the intentional distortion of markets by a state communist entity like the chinese. we need to be resilient against that sort of thing that's why this is a national security investment. >> senator, it's a real, there is a real price tag for it it's a fair amount of money, and other critics maybe from the right have said could you go across the board with all companies and do a research and development tax credit you could make it easier to write things off you could not raise corporate taxes. there are so many other ways to do it and spend that money where you're not saying okay we're just doing this to the

semi-conductor industry. then the other critic would say now you're going to have every company that competes to china coming to you hat in hand saying you helped the chip makers they're doing this, they're non-competitives here. we need a subsidy too. where's our subsidy? and both of those things are slippery slopes. >> well,i listen, our job is to m navigate these slopes. i can provide a real distinction between a high-end computer chip which is needed to run a modern economy, anything with an on/off switch frankly require as compute computer chip. this is not only the petroleum of the 21st century, but i would also say that, to the extent that others come hat in hand to us, i will push them back. those who argue for broader r&d

incentives to this level of generosity won't be well received in congressdo favor, is on it. i introduced an extension of the existing r&d deduction we want to make it a credit for high-growth companies.i've triet idea and see if we might get that passed. we have the most innovative people, the most creative businesses in the world. before year's end we may meet with success with respect to that r&d provision in the tax code >> we still do lead the world in technology and chip-making equipment. a lot of what we're import ing are just commodity-type chips that make more sense in some respect for labor and or issues maybe not to make all of them here once again you're, the

government's getting involved with capital allocation, which there's a few instances, i guess, where they're not public/private partnerships, but a lot of times it's not a good outcome, wasteful. >> if you'll allow just briefly, sir. i think it's an important point that you brought up. the differential this price between a chip made in asia and a chip made in the united states, very little of it has to do with labor or environmental standards. the things we typically think about as we analyze comparative advantage. instead, they're related to incentives when you have japan, south korea, communist china, european companies offering incentives to locate there, you know as well as i do the companies look to the next marginal investment return where can i get the highest roi for my owners for the next dollar invested. if we don't have these sorts of incentives that other countries do we're not going to be able to

attract the capacity here and frankly, we won't be resilient we aren't ahead in some technologies hypersonic technology, which is used to carry nuclear weapons. the chinese are ahead of us. a national security investment arti artificial intelligence. eric schmit and his committee have indicate thad within a co couple years china could surpass us it's really important that we make these investments now, lay the seed corn for future growth and resiliency in the future >> speaker pelosi, i haven't seen today's, is that trip still on do you know? >> gosh, i hope she doesn't pull any punches thayere. we need to send a message that we will defend those we will defend our taiwanese friends if necessary

>> thanks, good to have you on >> thank you still to come this morning is the federal reserve lock thlocked into a 75-point hike you're watching "squawk box. and this is cnbc

after posting quarterly results, mcdonald's posting better than expected higher prices and french fries coca-cola coca-cola beating the street u.p.s. topped estimate >> 3m reporting second quarter results. revenue and adjusted profit coming in above what the street was expecting. and the company is spinning off its health care business as well the stock up by about 3.6% in an exclusive interview, we asked chairman and ceo mike roman his outlook about whether a recession is coming. >> we've seen the outlook for

the global macro moderating as we've come through the year, and as i said earlier, even in q2 and as we look through the rest of the year, we see demand, strong demand in many of our own markets. strong demand in our automotive builds as we look in the second half, strength in parts of electronics, datacenters all of that helping to, you know, give us a positive outlook as we look ahead we are seeing some challenges as we look at areas like consumer electronics. this is important to look at each market segment to get a total view it does give us i think a strong demand across many markets but a little uncertainty about the macro as we get into the second half >> if you were asked if you think we're in a recession today, what would you say?

in the united states m. >> we're managing the ongoing challenges of the supply chain, whether it's inflation or supply chain and logistics, but we continue to execute well, and i think we see opportunity to be successful in those markets where we do see that growth as we look ahead. >> what's the job picture look for you, mike? is this a situation where you're having trouble finding people to hire or a situation where you don't need any more and you think about letting go or slowing hiring >> well, we're always going to take action that ises they in t necessary but we've been successful as we've come through the year, and we do see ourselves in good position to manage and execute as we move ahead so it's something that we will, we will as always manage every step of the way. >> you know, this is awful similar to what we heard from a

lot of big multi-nationals, including general electric this morning about how they beat expectations for the second quarter but are concerned about what they see this the future. we also asked mike roman about 3m spinning off the health care business >> it's about creating more opportunity and greater certainty. and the opportunity comes from the announcement of our planned spin of our health care business, resulting in two world class companies. leading health care technology company globally, a global leader in material science mosscience. both businesses now positioned to grow and thrive we are looking to unleash and rea really unlock value with this announcement >> is that boughecause you don't thit m

think that the market is valuing you properly >> we actively manage our portfolio, something i talk to managers about we use active portfolio management to prioritize where we invest organically and decide where we make acquisitions and we look continually about how to create the betst value we have taken as to divest business and now we look at as really an opportunity to create value by standing up a stand alone health care business. we have put a lot of focus on the health care business in our portfolio management in the acquisitions. and also in the divestiture of our drug delivery business and the separation of our food safety business we expect to complete in the third quarter. it's been the result of a careful consideration around that strategy. the leadership team together

with the board really coming to the conclusion that the best way to create value is to spin our health care business it's ready to be a successful stand-alone company. >> they don'tva have a new name for that company yet, they don't have a ceo yet but they do expect the transaction to take place by the end of next year >> but this is going to be 2m? >> there is a name you could suggest. they're still sticking with the manufacturing. >> coming up, did walmart just fundamentally change the entire retail outlook for the rest of the year that is the question we'll go inside the consumer giant's profit warning stay tuned "squawk box" coming right back.

welcome back to "squawk box" on cnbc. suddenly the dow's not even down a hundred. this is after walmart last night, a big disappointment, but m not bad. general electric's up sharply, not a dow component, and also 3m, which i think is unchanged oh, it's still up. they're doing a lot of things besides reporting results. a lot of, as you said, portfolio management, the ceo told becky

crude oil, natural gas really jumping this morning, up more than 7% on, on the putin price hike a new one. >> that's right. got some breaking news out of europe european union countries re reaching a deal to cut marl gas use as putin tightening the spigot once again. brian sullivan joins us with more we were saying it was a good day, they've opened up the natural gas pipeline, this morning that's not the case. >> no, it's not. we hedged it pretty well back then saying this happened tan may get turned back down the european union make ing a dl to cut natural gas use by 15%. this deal is very watered down, voluntary for now what the eu is looking to do is make sure that countries have

enough gas if storage to heat homes and hospitals in the winter the deal coming with a lot of carve outs andexemptions it's yet to be seen whether france and spain had go ahead with this. cutting your air conditioning, will those countries really cut back on their economy really to help germany because this is all about germany. all of this coming as fgazprom signals it's going to cut flows to germany, by half, taking it down to 20% capacity from the 40% we started out at on thursday gazprom as they do, blaming it on that pipeline engine turbine.

germany now in dire straits, getting almost no gas after all from russia because the other two pipelines moo ginto germany been shut off for months because one goes through ukraine and the other through poland you just showed natural gas. you think we're talking about cutting use, why is natural gas rising i'll show you two contracts. number one, this is the ineurosn mega watt-hour it's about 53 u.s. dollars per contract now let's bring up the u.s. contract yeah, we're an up 8% but we're over 9 bucks they're paying 53, guys. and maybe the idea here is that europe is going to need a lot more american natural gas if they're going to wean off natural gas. could be big for names like s

sempra, et cetera. but we should feel very lucky that we live here right now and not in europe right now. >> the country that's in the biggest trouble right thonow is probably germany because they are so reliant all the countries say they are going to try and ration to help germany out. but you have to wonder how much stress this is going to put on the european union itself especially when the countries that germany gave the stiff arm to, italy, greece, those countries that were in trouble in 2009, 2010, germany was a little reluctant to offer them more help at that point. now they're going to turn around and say we will cut our use by 15% to make sure can you get enough >> you've put it, as you do, becky, in such an elegant way, because when i was in greece in

2009, covering the financial crisis, i can assure you i heard commentary about germany from greeks that was not quite as polite when germany was saying why should we rescue the lazy greeks now germany's going to effectively need greece and spain and a little bit more to italy to cut back their usage. it's a lot hotter in greece than germany because they're basically trying to rescue germany. great job to the team making that graphic can we bring that graphic back up, the onewith storage levels it's a little complicated. yeah, great, thank you this is from a european think tank and once it goes into orange or orangish red, burnt sienna, that's where they go negative. this is the scenario that germany is looking at.

hey, hey, france, cut back on some of your usage so germany can have enough in the winter i don't know if spain, france, greece, portugal, is going to rise to germany's rescue, what do you think >> i don't know. i think the eu's going to be under an incredible amount of strain again, and they didn't have gracious partners the last time around. it's going to get interesting to see how they manage all of this. brian, thank you, i'm sure we'll be talking about this a lot in the weeks and months to come the fed kicking off a two-day policy meeting today it seems like just yesterday the street was certain we'd be getting a full firstapercentage. joining us, roger ferguson, former ceo and former vice chair of the federal reserve and cnbc

contributor. what's your personal expectation of what we're going to see >> i join the market consensus i expect 75 basis points that was some good news that came in a little while ago on inflation expectations and a conversation that took place publicly between one of the governors and raphael bostic where bostic rlaid it out clev cleverly >> we're going to get comments about all this on wednesday. which will set the market directionally one way or the other. what is your sincense of what cs after this >> a couple things first we have to see if there's any dissent.

so i think that's the first question when we'll see tight consensus around this or a few outliers that may be the precursor to something new. secondly, i think the story is, i think chairman powell's going to be a little careful about putting too many numbers out there as that has proven in the past to not be very accurate they do not want to signal at this stage that they think the job is done, because think know it's not so i think think want to keep expectation in the market up 50-75 basis points for the next meeting. let the data come in and then decide >> we're really grappling with two extremes one is the stop and go policies that got us into trouble back in the '70s it seemed like being data dependent. and we hear most of us probably think that's the way to go with the fed, if things, if it's

biting, it seem the like things are showing and unemployment's rising and maybe you're able to stop next year or cut. then there's others that say that we've seen that the genie's out of the bottle and you need to make a plan and follow through on it, regardless of whether circumstances are seeing a change what's right for the fed >> look, i think what's right for the fed is to try to be as nimble as they can, but very importantly importantly keep their eye on their primary target,which is inflation. i think they may be a little more hawkish than the market currently expects. i wouldn't be surprised to see them get the fed funds rate up to something like a 4 handle as yoipt yo opposed to the 3.75. there's a real risk from doing stop and go. they've learned from the '70s

that that is folly they're going to lean more that inflation is under control and holding onto the hard-earned but fragile credibility that they need >> appreciate it great to see you i'm sure we will be talking to you a lot more about all of it when we come back, jim cramer's first take on the trading day ahead. you're watching skauk on cnbc. because you've got the next generation in global secure networking with fully integrated f secuson cnbcall qon cnbc. on-premise and in the cloud. you can run things the way you want - your team, ours or a mix of both. with the nation's largest ip converged network. from the most innovative company. bring on today with comcast business. powering possibilities.

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let's get down to the new york stock exchange. jim cramer joins us. we've got walmart and some others jim what can you deduce about the

economic situation in the country based on these big companies that we've seen? >> i think there's travel, the concerted move to not buy more clothes. i think there are so much more clothe in the inventory channel. i know target told me they were going to try to dump everything. but i think that in the end, there has been so many changes in the way that the consumer acts since the pandemic that a lot of people just keep getting it wrong. and just a moment ago shoppify said that they did not think that this was going to last. the amazon was a little harsh with the read-through, because so much of it is third-party, and one thing that people are not talking about is why didn't some of these companies hedge the dollar. and almost like so many of these companies knew that dollar was getting stronger and why did they not pick up the phone, and lot of the dollars were offering very good protection, because

everyone, and all tof the ceos and the cfos were offering protection, and they did not take them up on it, and there was a lack of creativity and we will take a blasting on the dollar, and it is okay, but it is not proving to be the case, and people are saying, hey, why didn't you hedge >> and is it too simplistic to say that the low end issues like with the walmart with who their clientele is, so that medium and the high end can absorb the price hikes from mcdonald's and unilever and so those companies will join walmart? >> no, there was going up against the child credit, and the clothes are with the exception of the younger, and i would say the kids as they get bigger, you can skimp on the clothes and food costs a lot, and albertson's had a good number, and almost pure food. so i would think that i am

really going out there on the limb, and saying that walmart executed poorly. they executed poorly on the dot-com, and they executed poorly on the buy and pick up opus. they have really disdained themselves with sam's club as a not great merchandiser during this period. no one just said it, but i would just say it. i know that apparel is bad, but why take a beating why are all of the companies taking a beating and if they know that things are weak like you and i do, why not take action and, name me an nfl team that says, we are happy with 16 losses, because we know it is going to happen? no, the companies do things. >> and any idea about alphabet, and what to expect >> look. alphabet has been weak month

after month after month, and they do have a targeted advertising campaign that is not stopped by apple, and i do think that alphabet should make the quarter, but alphabet has been so conservative that it does not matter, but no matter, and you will get the negative guidance and it is horrendous, and there have to stop it, and say, hey, listen, things are fine, and all they have to say is that things are fine, and by the way, coin base, not all things are fine. >> thank you, jim. ♪ ♪ 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,

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walmart shares are tanking after the company prepared the outlook and leading customers to scale back, and they have had to lower prices to move out excess inventory, and that stock is off by 8.5%, and here to talk more about it is jay niffin, and what is happening here? >> i have never seen them raising the earnings line and lower the earnings line at the same time. and this is exactly what walmart said. a lot more people are coming to buy the groceries and our sales are better, but it is low-margin business, and while they are buying the groceries and the gasoline, they cannot afford to

buy the general merchandise, and walmart is the largest general merchandise seller in the country, and just like target they had to take the numbers down. i am surprised they had to take it down again, and i was surprised how tough it was for the bottom 40% of the consumers and that bottom part of the consuming group is saying is all i can buy from you right now is the groceries and the gas, and the apparel is sitting on the shelf. apparel is selling well to the top 60% of the consumers. macy's is doing well with apparel right now, and so is nordstrom's and dillard's and capri and tapestry, and they are doing well, and that customer is buying and going out to do the experiences, and they can still afford it, but the walmart customer, a lot of them right now, they still cannot afford it and concentrating on the food and gas, and as long as that is happening, walmart has to change the mix, and reflect it in the earning numbers, and that is what is happening, and that

takes a while when you are the biggest player, and jim was a little tough when he said that they need to do a better job of that, but it is going to take a little bit of time with that supply chain when it is all coming through the door. >> and so, jim, when you are coming down the economic scale, and how much you are bringing home, and what is that telling us not only in the broader economy, but in terms of other retailers? >> well, across that scale, if you are a kohl's, you have to think hard about it, and if you are a target, that is a problem, and the dollar stores, that is a problem, and that consumer is taking more money to walmart and buying groceries with it, and more money to the gas station until that changes. so they are not going to be spending much going out. the other customers at the higher end can go out, and do things and buy apparel. we will see that dichotomy until something happens, and so far that upper end consumer is fine,

and this is a so-far statement, but lower end consumer is hit hard by inflation. >> so where would that put you in terms of the debate that we keep having about whether a recession is coming, whether we are in one right now or whether we can avoid it at this point, if this is happening to the walmart shopper what does that tell us the, and then by the way, hurting a lot of the big retailers and hurting their margins, and what does that tell us about overall about the economy? >> well, recession is always coming, and the question is how far out is the recession. right now, unemployment is so low and so good, and the wages are so good, that it does not look like it is going to be a recession, but that can change prettyfast, and the consumers can change on a dime, and right now i think two quarters of gdp growth, but it is not going to feel like a recession to most of the people in economy, but it

feel like to most people in the bottom part of the economy that the inflation is killing me, and most, my assets are falling off, but things are pretty good as far as the income level, but it is not feeling recessionary, but inflationary. >> jan, good to see you, and we are out of time this morning and that is going to do it for us right now, and join us tomorrow. right now, it is time for "squawk on the street. good tuesday morning and welcome to "squawk on the street." i'm carl quintanilla with jim cramer, and we are coming to you on words that shopify is down, and now walmart profit is sending shares lower, and drag the other retailers with it.