eye on inflation. is the one thing that could go wrong. cate is saying everything could go good. it's inflation. >> they are saying between october and december we could get another spike. >> there is a poet philosopher who said everything is beautiful in its own way. i'm just going to leave you with that. >> we will leave you with that. make sure you join us tomorrow. squawk on the street. coming up next. good tuesday morning, everybody. welcome to squawk on the street. i am david faber with jim cramer. we are live. let's take a look and get ready to trade 30 minutes from now. as you can see, slightly lower open. our road map doesn't start with the markets over all, and in particular, yeah. the return of mean stock madness. mc game stop, bed bath and beyond. have you noticed they all have

been on a tear in the last week? what is that saying? >> i don't know. i'm on it. also, with president biden about to sign the chips act into law. mike announces an investment into u.s. chip manufacturing over the next eight years or so. still waiting on the top stocks, sanjay mehrotra. and warren buffett keeps buying. occidental petroleum. it is now above 20% ownership state in that company. all right. we are going to start with these stocks. they are making a comeback. that is the best way to say it. bed bath and beyond, you may have noticed as of late, up 90% over the last week of trading. and even game stop. i want to put this in the perspective of a market that continues to be difficult, jim, and for many, at least, professionals to figure out what some would say is a very hated rally. by many. i know the hedge funds are getting crushed again.

many have been taken their exposure down to very low levels and are short. in fact, may be short some of these very names, yet again. as you know, short covering has been crazy lately in terms of what it has been adding to this market rally. >> yeah. i think it is a great place to start, jim, because the activities, let's just take that back. if you look at anything, you think -27% to our sales for the flagship. i don't know of, but there could be, any retailer that has ever come back from -27%. if you stay north of 20, it begins to become automatic. a ceo with a lot of stock, 50,000 shares. paul smith, she was the ceo. >> the interim ceo. they haven't found anybody. >> when you look at the balance

sheet, it is so suboptimal it is extraordinary. if you go over this, you and i talk about how much stock they are buying. >> they bought so much at higher levels for ever and ever. it was a slow moving obeah. >> in 2022, they settled on 1 million shares. but in 2017, they had 148 million shares. in 2014, 2012, they had 240 million shares. now they suddenly have this, and that just shows for the buyback of nothing. they do have credit lines with j.p. morgan. at the same time, they did say in the most recent q that they expect to have more double digit declines in the 20s. there was a hope that bed bath and beyond would be able to sell bye-bye baby, which has

missing declines. we know that the shareholder was very important in getting mark streit and fired because he said mark streit and was overpaid. yesterday they got rid of one of the product labels. it looks like what they did was they cut back on couponing and they added a lot of new things. david, in some case. >> you have done what i would expect, which is gone through all the fundamentals and made a very strong case that there is no reason whatsoever the stocks should be going up. >> is where they need 10 million shares today. >> during the original moves, which is use this as an opportunity to sell stock. there was one company that did that. up to three. >> amc. >> amc. it is still around. >> yes. >> the stock is doing quite well. i want to get your take on what this means right now for the

broader market in the midst of what has been a significant rally off the bottom during what some would say has been a bear market rally. we still have a lot of debate going on, at least the people i speak to, about our real rates high enough. the answer would seem to be no. and what is that going to look like? >> well -- >> are we going to get the cuts to eps that we might expect? if the earnings are posted at 200 next year, then 240, which is where they currently are, we have a lot more downside from here. and yet, nvidia yesterday, sort of a loan. it didn't bring the market down. >> today, they basically preannounced at the same time, fortunately we can find out more. sometimes when i am more subdued , in the way apps i present things, i am more concerned. i think the mean is something that is at the tail end.

of when you think that things are a ride. you need to come in at the end, and you have a january comeback, remember. a couple of years ago. that is where it all started. >> right. >> i look at this and they are trying to make these stocks go up >> okay. >> they have raised 300 billion in order to pay off 25. well, shouldn't they sell enough to be able to get some of that done? >> so they have done everything they had possibly done in terms of shares right now. wouldn't you advise that? >> well -- >> jcpenney. jcpenney went bankrupt. >> you were there. i remember when jcpenney did that gigantic offer, the seven point billion that broke. one of those stories that broke. memo to bed bath. call david and do something big here. i don't see anyone buying bye- bye baby. maybe they can offer them and

talk about harmon. anyway, if you take a look at amc, they started everything when in a very kind of cool thing, adam aron issued this preferred, which was not deluded. that was the single. that stock was in 15 when he came on. that was the clarion call to, let's party. let's party. but in the meantime, i have take two tonight. now, they are going from zero to 80%. it will be digital this year, which means you don't really need gamestop. i have implored gamestop to get together with mark zuckerberg and asked for how to get into the meta-verse because it is beyond anybody how to put the meta-verse together. but when i went to game stop, which there are way too many of, they might be able to show me how to do it and then i could play canasta with my kids. >> if you know how to.

i don't know how to play canasta. >> david, i am up loving today and you are crushing it. >> i am going to do app loving right now. i don't know. did somebody wake up and decid , today is a good day to launch an unsolicited all stock offer for a company? by the way, your shareholders are going to own more of it than our shareholders will. we have the stock, but don't worry. we will get rid of that and we will give you, in consideration, as he share that doesn't trade right now. okay. sure. well, they did. >> this is what i am talking about. this is a strange thing. >> it is a strange thing. let's go over the basics, because it does consider that. this morning, a little over a half hour ago or so, applovin came out with an unsolicited offer to require you to be in an all stock transaction. what i said, most of the consideration would be in their

a shares. the ratio would be 1.152 but they also have this thing called the sea voting, it doesn't trade. so they want to give you .314 of that. just at the .314 for now to the 1.152 and do it for the a shares. that is the only thing i can advise you to do at this point. at close, they will also get rid of their b shares, which are not a part of the consideration, but have 21 votes. you know what they say, jim? they say estimated synergy is over 700 million bucks, adjusted to 2025, a minimum of 500 million in 2024 east on accelerated revenue opportunities. what is also interesting here, and you will notice at the bottom of the screen, his iron source. remember a couple of weeks back we talked about this iron source that decided to sell out to unity? >> right. >> that deal is in jeopardy if in fact this were to ever

actually occur. now, the track record for all stock, unsolicited offers where your company shareholders are going to own more of the combined company than ours, let's just say it is not great. >> how about the ceo of the combined company? just as it was proposed. >> your ceo will be the ceo of our combined company. they do also say you can have a majority of the board. they report today or tomorrow. yeah. today. you know, there was in the background to the iron source deal, there was some reference to unity having had conversations with potential merger parties. >> here we go. >> so there is nothing in the release that indicates there have been conversations. at least, i haven't seen it. but we can assume that there was some conversation. when would also assume that unity said, get lost. they obviously went ahead to do the iron source deal. but applovin is saying, we want

a little loving. somebody woke up, maybe had a couple of drinks last night and decided, we are going to do this. >> some good counts. before we go into this too deeply, i wanted to hear me out here. on the fundamentals, both copies are great. they are both great. it is just the wrong cycle for them. people don't really want, video games, i've taken too much disappointment. nvidia, really bad for video games. these two are the best at what they do. you can tell he is the guy who you can have if you are in fantasy football. you can do iso, it is a technical term. you can iso every one of your players. i tell disney, will you please use unity? that is how good unity is. it's just that it is in the wrong sector. so i know that it sounds funny, but it is kind of like comic bravo putting together all of these companies.

it could turn out to be good. >> it could. again, it is rare that a deal like this doesn't succeed, at least what we are seeing right now. you have these shares you have to convert from 20 to one to one. you have a thing you're offering as consideration of the trade. it is complicated. kind of bizarre. at the same time, maybe on the fundamental basis -- by the way, kkr owes 20% to applovin and sequoia and silverlake are owned as a unity. >> yeah -- >> companies like sequoia and silverlake are going to be key here. if they somehow decide, we want to engage with you, then maybe something happens. judging from the language previously -- >> i mean, look. this area was so hot. mobile game. 3-d. use the platform. this was terrific. but if you have a larger view, it is really the right one. >> we will see what develops from here. >> she would tell you --

>> seeing some possible mna. >> jim, i am going to make an all stock offer for you, but you are going to own more with the buying company. what do you think? >> as long as i get to wear my clothes and not yours. >> when we come back. that man right there. sanjay mehrotra. >> i hope. >> and planning to ask about the c.h.i.p.s. act, which will be signed into law. let's take a look at these t'th trading, a mixed bag, les call it. les call it. it's down, generally so you can enjoy more of...this. this is the planning effect.

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president biden preparing to sign the c.h.i.p.s. and science act. ahead of that, this morning on revenue guidance, and demand. all while asking a $140 billion investment in memory manufacturer in the u.s. to create about 40,000 jobs. so there is a lot of crosscurrents here. david, i am going to tell you. this is not the day to pronounce, but this is supposed to be a very exciting announcement about c.h.i.p.s. let's find out now by bringing in president and ceo, sanjay mehrotra. let's talk about this first. it is without a doubt imperative for american industry to try to be sure that we are not captive to taiwan, given what the chinese are doing and also that we haven't

expanded our footprint here at all, other than you, in many years. tell us what can happen over the near term and longer term if the president signs this into law. >> first of all, jim, thank you for having me on the show today. i have got to tell you that today, on behalf of the 45,000+ team members at micron, i am really deeply honored to be here as president biden signs the chips and science legislation. that really solidifies american technology leadership for decades to come. and of course, the business administration and a bipartisan coalition for supporting this legislation and bringing us to this point. this is what has enabled us to announce $40 billion in investments in leading the manufacturing here in the u.s. over the course of this decade. it will mean three things. first, this is the largest manufacturing investment in

semiconductor memory in u.s. history. second, as you noted, it will bring 40,000 jobs over the course of a decade, including 5000 direct jobs here at micron. third, and extremely importantly, today, 2% of semiconductor memory chip production occurs in the u.s. there all of the investments over the course of this period, by the end of the decade, we will bring that to 10%. so think about it. today, 50 memory chips are produced here in the u.s. the are produced and one in 10 memory chips will be produced here in the u.s.. this is really an unusual announcement for micron in support of chips and science legislation, in terms of really securing economic prosperity as well as national security. of

course, really, asserting america's leadership in semiconductor technology and manufacturing. >> okay. sanjay , a couple of facts between the they were announced and when they were opened. when do you think we would actually see production out of this incredible bill? >> great question. of course, as you know, that leaves time for building this is long. the investments we are making has a growing demand for memory through the decade. memory is going to double from today to the 2030 timeframe. that requires us to build new -- and the production will be coming online during the second half of this decade in the 202 -2026 timeframe. of course, we will be managing production to manage supply in the line of industry demand. >> sanjay, it's david.

there was bipartisan support for this deal but there was also a partisan opposition. bernie sanders, saying the question we should be asking is, should american taxpayers provided the microchip industry with a blank check of over 76 billion when these companies are making tens of billions of profits? rick scott. the opposite side of the aisle for sure from mr. sanders says, multibillion dollar corporations like intel will have access to america's hard- earned tax dollars to build manufacturing plants and get tax write offs with virtually no strings attached and still be able to expand their business to china. i would love you to respond to both of those criticisms. >> what i would like to mention here is that, look. chips and science legislation, that president biden is going to be signing in less than an hour here, is really leveling the playing field. over the last couple of decades, foreign countries have invested hundreds of billions of dollars into providing incentives to bring semiconductor benefaction to their source.

this is what has been presente . and 37%, manufacturing of semiconductors at the turn of the century to now being only 12% of semiconductor manufacturing here in the u.s. this is what we have to diversify. global supply chains, we have to build the supply chain here in the u.s. and have domestic production. this is important for national security. including the military and others. you want those chips produced here. in order to produce them here, you have to have a level playing field and this legislation and the support it is going to provide to the companies to bring manufacturing to the u.s. to make a competitive in production. foreign production today, in asia, is 35 to 45% cheaper today, and another important thing i want to point out is that the semiconductor companies, like micron will actually be investing a lot lower than their profits in leading the edge and the cap that is required to bring this

production to the u.s. the vast majority -- >> sanjay. >> the vast majority -- >> sanjay, i understand that. you cut your capital expenditures, by my measure, more than $893 million today. you also said that you are probably not going to be able to make your very, very low projections. the stock will go down substantially. i am trying to understand both the short and long-term, because your short-term update frankly is extremely subpar. >> you are correct. this is about managing the business adeptly in the near term and for the long term, as well. and the business we had just talked about, really, for 2025 and beyond the timeframe, because the demand will be met. it will require us to build additional capacity here in the u.s. in the near term,

certainly, we are seeing, due to macroeconomic headwinds, as well as in certain market segments, customers not being able to secure constraints, components, non-memory components. that is impacting eventually adjustments, which have broadened since we last spoke. instead of just being focused on the consumer side, we are seeing some adjustments on the data center side. also, some adjustments in industrial. this is what is impacting as here, but what is important is that these adjustments build care and manage through the system. they bring these down for the customers. sometime in the next year, demand and supply will get in balanced. we need actions to cut them out now in order to reduce the supply growth and use them to

supply next year's demand. >> sanjay, that is what you said was an absolute. >> sanjay -- >> i'm not buying it. i completely appreciate you, sanjay. you did say what you said last time was good. i feel it applied. things must be much worse than i think. >> certainly over the course of the last month, we have seen broadening of the inventory adjustments. these are broadened to other parts of the markets, as i just noted. of course, micron has taken further actions to convert the supply growth in our cap ends for next year. i think what is important is that the long-term trends of ai, of 5g, of cloud, absolutely are intact. those are secular demand drivers. when you look at the long-term picture, we have to get near the near-term speedbump and bring those in line and then the industrial health will lead us to it. >> let's take as long term, good. short-term, sanjay.

i am choosing murky, but i thank you for coming on the show. >> thank you, jim. david, back to you. >> thank you, jim. thank you, sanjay. still to come, jim is going to give you a quick mad dash. we will squeeze in a break here. tu is another look at fures. we have a lot more squawk on the street ahead.

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all right, jim. let's squeeze in a mad dash. we have two minutes. >> yes. i am going to talk about upstarts for a second. artificial intelligence loan. frankly, they reported a very good number last night. just terrible, and you've got a bunch of brokerage houses that said negative things. the stock looks like it is at 20 come up between 20 and 32. they did buy back a lot of stock. that was ill advised.

the most important thing, david, is that the loans, which they have been syndicating, back on their balance sheet. when you do that, and you don't have a lot of capital, if you really question to have tremendous stress on your balance sheet. if you go over what the ceo and the cfo said last night, you are not really sure. >> did they secure loans? they are not finding the demand for them? >> i have to be very careful here, because they could tell you, listen. we have experimented. >> on the balance sheet. they have a lot of capital. >> exactly. thank you. they don't have a lot of capital. the bad loans stated are kind of staggering. now, one of the things that we absolutely, i am furious about, is that they came on that money. i predicted that this would happen. and i said that when it goes back, it is only because your

loans are bad. a huge percentage are bad. >> what is the api? i thought it was supposed to be different. >> it is not perfect. the average 2021 delinquency is supposed to be .67. these people are .48% over the last four months. i don't want to get too tired here, but you can't have that. you can't sustain it. 0.48% delinquencies is way too high. they can't hold that money. except for one nfl coach who said, thank heavens. you were brazen not to tell the truth. i was very worried. i didn't want people to stop. i was right. >> let's look at the market. that was the opening bell. the time exchange, as well. it will probably have more read on. a big digital loan originator.

meridian linked digital loan. celebrating its one year listing anniversary. every equipment manufacturing has that. dow is up. we are not talking about much here. we will get to that. nasdaq is the biggest loser here at the opening bell. >> chips, under this pressure. >> let's come back to micron for a s.e.c. yesterday at this time we were talking about nvidia and there were those words, macroeconomic headwinds. this time, we just had sanjay mehrotra on talking about the benefit of the chips act . this will be live with president biden, probably about a half hour from now. but what he also said is, things have gotten worse in the last month. >> right. >> we are cutting cap ex. we are getting ready for all of these great -- well there's -- right. what he is trying to do is get inventory back, which is starting the bottom.

the stock is up 10 points from last time because, david, we believed him. i think sanjay mehrotra is an excellent executive and has done a fantastic job of forecasting right here has just gone out the window. rather zales or jensen wong or the sanjay mehrotra of the intel. do not forget intel completely forecasted wrong. so i think a lot of the problems stem from the fact that people don't know how uncertain things are, short- term. longer-term, we do need this very badly because we put a ban on solar panels. what happens if the chinese decide to put a ban on chips? semi chips here. >> it could be an issue. >> put it on your sheet. some of those who are in opposition of the c.h.i.p.s. acts talked about how there were opportunities to manufacture tips for u.s. companies in china. legacy chips, so called. >> legacy chips. to apply materials, they had a

summit. ford was there. ford is deep in this because they are involved in chips. and global found use was there. i feel that this issue we talk about is the handouts, because he is coming off as very wealthy. why don't they do it themselves? it is an answer to discuss. it is way too expensive to make chips in our country. that is the reason. no one will talk about it. you don't make chips in this country because our labor costs are ridiculous. it is so much cheaper to do in taiwan. nobody says it because it denigrates the american working person. that is what is going on. when you go into a foundry, david, it is just a labor search. it is applied materials. it is so much easier to put those machines in countries where there is cheap labor then in the united states. now it does have inexpensive labor, but let's just call a spade a spade. okay. there is not a desire to make things here because we are way

too expensive. >> so the government is putting a lot of money towards making it happen. >> right. for intel -- >> with wages? i think the wage is may be higher. >> because no one ever thought, what is the problem with thailand? what a great thing to make things. close to china. >> the difference is, it is not like taiwan -- i spent a huge amount of time in taiwan. >> you have? >> i was hoping that would not be the case. if you do not have asmlf to ban china, not to mention kla, and the open fellowship search, the new don't have anything because you don't have buildings. remember, the ip is all u.s. which of these companies. but, if we sent them over there, it makes our country week. >> we spent a lot of money to potentially keep it here. while we are on, nvidia day

two . >> i said, that is just wrong. >> up 2% this morning. it is still well off its 52 low of about 140 bucks. >> gaming. once again, gaming has become the black hole, not unlike docusign, not unlike peleton. >> right. >> you just gain less. to his great credit, he said he would never tell you that it was written recession resistant but a lot of people feel that our country is hooked on gaming. >> let's talk about take two. >> is a hurdle. and like 30 seconds -- >> it is down 2%. it is fiscal first quarter numbers, jim, you are going to have strauss as a guest.

>> yes. >> you guys will be doing some pull ups in the middle of -- >> we talked about meeting ostriches. >> -- of the interview. never a bad opportunity to look at strauss's -- >> with this synchrony whirlpool, i was hoping it wouldn't come up with a good number. but yesterday was estimated 5.1. it is suboptimal, and that is a shame. that is a great american manufacturing company that is brought. >> i don't want to take two. >> yeah. i am just trying to get the full panel here. emerson is a great industrial company and i was hoping to figure things out. what did you think of mark pitzer when i spoke with him? >> i thought it was fine. i thought he was good yesterday as a guest. i can't say that i learned anything of great note. >> when you insult the european business -- >> by the way, they are so early in the process of the

european interest. when you say we will get an update in the third quarter. they are deciding whether or not to sell it yet. >> no. they are going to own the home. i am just creating a code for industrial gaming. industrial has been one of the bright lights of this moment. >> but it is not right now. you just mentioned emerson. we got a warning from nvidia yesterday. take two numbers, but certainly nothing great. we have got issues. >> we have devin moncrief. there is a fantastic buyer property in stock that is soaring. and that is a sign that maybe oil is going to come back. oil has been a complete disaster. now there is this other one that is bold in acquisition. >> we move too fast for them to follow you in the control room. you have to look at what is up on the screen. >> this is very convoluted --

>> you mumble some of your words so they don't even know what you are talking about. >> there is a lot to cover. we can be jokers and talk about how hot it is outside, or we can cover everything. >> just move along. >> in a different clip. okay. i will go on a prelude. >> i will give you a chance to reset. talking about nielsen, if i can. because that stock is up. that was an interesting deal. elliott and evergreen, sometime back, decided to buy nielsen for 28. >> they have this strange -- >> strange is unfair. you have this unexpected, very large shareholder say, we don't like it. in fact, we are now going to own 27% of the stock and we can stop you from doing a scheme of arrangement by which you need at least 75% of the shares to do that. because this is a european company.

and so it looked like this deal, which was supposed to be voted on today, was going to be potentially stopped unless they were able to pivot to attend or were they only needed over 50%. although frankly, we never got an answer as to whether the financing would stay in place if they went to attend her. none of that matters because they have actually reached a settlement. exactly what the specifics are of that settlement, i don't know. did something get conveyed to whitaker that was beyond maybe, they got a larger percentage of ownership if they rolled in. but roll in is what they are going to do. they are also going to get paid out of their 28 bucks of a portion of the shares. the reason that the stock is up is because it makes it far more likely your $28, your deal gets done. either way, there was an opportunity for elliott and evergreen, sometime back when the world was somewhat different, to potentially put it to a vote.

the vote went down some. they could have walked away. they clearly still want to own this asset. >> can you try to explain to me why there can be such fervor for a beaten up, kicked around property when at the same time we have so many companies that are clearly not having a strong and to the previous quarter? why? >> no. i can't. >> don't you think if they all walked away, this thing would trade substantially lower? >> i do. and it is an interesting question to be raised. >> well, it looks like signet bought, to jump around entirely, the way you don't want me to. it looks like they bought one that was almost twice the rate of what they bring it. >> you have followed signet pretty closely. >> because they have save this company. just saved it. i think people continue to short her stock. a memo to the memes. you want to own a stock that is actually worthwhile? she has done a great job. >> with the deal they announced

-- >> i think she did a great job. they have this accessible luxury here. i think at one point it was a very hot stock. did you happen to catch that? >> that's okay. allbirds? i did not. tell me about that. let's do allbirds and then i also want to do ralph lauren. quarterly reports, if you can. >> allbirds is trying to be more things to many people and frankly, the course will make people feel like, why don't you just say it. why don't you up front say that things are bad. when you bury it at the end? the answer is because that is not the way to do it. not the way to do it. >> but it shouldn't be public. >> no, it shouldn't. but all of these companies, they use the brand -- >> i know. >> and --

>> for anybody to cash out on this thing? >> that's a good question. >> i don't even know, jim. >> that's powerful. >> you used the term. i was going to be a little more statesmanlike. >> no. no statesmanlike. >> ralph lauren. >> tell me about it. >> ralph lauren had a very good quarter. look at the numbers versus what expectations are. we are in a very hard market for apparel, and the stocks coming in. it was not about quarter. they had fabulous numbers. >> right. >> they did much better than almost every apparel company i follow. stock was up. but it has given out the gate to the other sides. >> let me come to some other things on my list here. quickly, fedex. i was covering this closely. the activists. de shaw. last night company the company added two new directors. one was de shaw, steve foreman.

they also added another director. they now have 15 directors, three having been essentially agreed to or appointed by, so to speak, d.e. shaw as part of the settlement. but they are on notice there at fedex. we will see what happens over this next pitcher of time. obviously, in terms of what d.e. shaw would like to see, for changes in the business. if it does not happen, it will only take five more directors for them to get in control, so to speak, or at least for them to be a control slate. >> that is for the new ceo? the second in history? >> the ceo is obviously still very much engaged but not ceo anymore. >> he is doing a good job. the fluctuations in the amount of this being done, the logistics which is less than trumps company was amazing last week. we never know how fedex is really doing. what bothers me here is just that you know that it bursts

the profitability. you always refer to that. u.p.s. makes a lot for the size of it. david, it is very interesting. a little thing that i like. fedex, same-day city, very small. they are using a for each transit delivery. they also had a big deal with gm, so i don't want to know. ev is driving up the cost of everything. >> jim, i would love to get back to applovin for a second, but let's take a know of access as well. a lot fewer covid vaccines for novavax that had been anticipated. >> that has been a disaster. >> a quarter of its market value has been taken away. >> did you read that release last night? i am going to talk about the release. he made this thing and it came out too late. sorry. sorry. we tried. we did our best. as the great bill parcells once

said, guys, there is no medals for trying. novavax tried. i directly said on the show that this would not be a factor people bid it up. and, well. >> here you go. not a factor in the 5%. real quick, i know we have to go to bob. let's take a look at the plumbing in stock price and unity. if you are just joining us, interesting unsolicited bid from applovin to acquire unity. all stock. some of it , actually stock because of an even trade at this point but will eventually. there is a runway synergy number. jim pointed out that the fundamentals, well, actually -- >> but longer term, you think they are. >> is an incredible company if you believe in the meta-verse, and fantastic presentations, you have to move it. >> right. by the way, unity is not terminating that bid.

that is what applovin wants them to do for iron source, which they just agreed to buy. remember, this sold well below the stock price when it went public. we know that at the time. there is a look at all of the players. iron source is getting significantly pressured as a result of the possibility, if this were to absolutely go forward, that the deal would therefore not go forward. we will have more on this later. let's get to bob dasani to look at what we probably miss. bob. >> good morning, there are some very interesting movements under the market. let's take a look at where we are today. with the energy moving up, which is been a laggard recently. we have the name of devon, a 2% are. industrials have been very strong, but particularly transport. art has been on a real tear. down about 2%, so a little bit of a reversal. no surprise with nvidia followed by the micron announcement, so even here,

down 3%, we also have with jim and david a few moments ago talking about the broadening of inventory adjustments. here, considering that announcement, down 3%. not bad. micron is down 35% last year. a lot of, the boys have a point. a lot of bad news is already priced into some of the semiconductor equipment names with research supply materials like asm l a little bit worth. but considering these companies, where are we right now? it is august, but there is some momentum in cyclical groups. for example, transports are very strong recently. industrials strong. the russell 2000 had the highest level since early april yesterday, not today. momentum in small caps is very noticeable. the good news here, overall, is overall here, the market is pricing out severe recession worries, not necessarily no recession, but at the same

time, the inflation worries are still very, very high. this is the tension in the market right now. let me show you some of the transports this quarter, with this up about a percent on the quarter. airlines have been doing very well. american, alaska, delta, the usual names of some of the transport companies overall, like jb hunt, has been strong, on top of that. the name i love. i love general electric, eaton, johnson controls, illinois tool works. they make all the equipment behind all of the walls in the railroad businesses around the world and they are global. and they have been on a tear recently. momentum very strong. the snp's are about about 8% this quarter. cars and housing have been doing very well. not just tesla, of 29% on the quarter. look at ford and gm and the housing companies, which went straight down for six months. they have all bought them since the end of june. dr horton, just two examples of

those doing a little bit better. this goes through the global economy here, slightly weaker, but nothing is being priced in for a recession for sure in the names have been showing you. at the same time, speculative technology has been having a big moment last month. we keep talking about cathie wood, who has been very delayed. these are core holdings for her core based roadblocks, lock unity software, robin hood, all coming well off the lows and just a horrible start to the year. i guess my point here, david, is the market is not pricing any notable recession right now. it just has a lot of over the direction of inflation. david, back to you. >> good question. bob, thank you. let's get a model here before we go into break. let's take a look at how things are faring this morning, talking about inflation. earlier, we talked on the show about the course of real rates, whether or not we are at the high as well.

let's look at where we are at the 30 year. the two-year note still well above, at 3.259 versus .02. or 2.799 for the 10 year note. we are back after this

there are laggards led by norwegian cruise, but then a lot of chip names. >> they are also micron companies. >> we heard from sanjay , but things continue to slow. we're back after this.

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i wish we had covered it more a company called treehouse, ths. this always happens, one of the reasons that people get cocky, treehouse allows you to cut prices at your supermarket look out i've been waiting for this to happen

they had a good quarter. follow the trade down. at this point in the cycle when people feel strapped, they start buying private label i happen to like treehouse, but things broadband so buoyant, there's been no reason to buy their stock. be careful, david. >> i will. you too, my friend we'll talk about warner bros. discovery tomorrow we have another hour of "squawk on the street" ahead, so don't go anywhere.

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invest with confidence. good tuesday morning welcome to another hour of "squawk on the street. i'm david faber with melissa lee. carl and morgan both have the morning off. we are down generally speaking, the nasdaq by far in most negative territory a half hour into trading. >> here are the three movers, unity and applovin moving in

opposite directions. we have a mixed picture this morning, and finally chip names on the move as we await president biden to sign the law into law here's what sanjay mehrotra told jim and david this morning. >> this is important for national security, critical military and other critical infrastructure you want those chips produced here in order to produce them here, you have to have a level playing field, and this legislation, the support it will provide. >> obviously the focus on what is going to be in, and not so much on the warning. >> you know, it was only a month ago that micron and sanjay, thankfully, joined us to discuss

what they saw in terms of weakness, building inventories, the steps of company was taking to reduce inventory, cut cap ex, and he always talk about the long term being very strong. but he did admit, melissa, the last month things have gotten worse. >> i think the concerns for investors from a broader perspective, we have heard so many times companies come out a week, months after they cut guidance, and we hear them cutting guidance again so you wonder what kind of ability does a company have to forecast even a month or two months out at this point i think that's a huge question mark hanging over a lot of forecasts that are given these days >> clearly the answer is not much >> not much. we saw that from intel as well just don't seem to have a great sense for exactly where the business is now. >> and, of course, then you think the estimates on the s&p

500, they were the forecast for the s&p 500, so there's a chain reaction, if you throw a question mark over forecasts, a lot of things come into question >> we'll get to the guy necessary ex to me first let's get over to kristina partsinevelos to talk about this bill and what it meanssh. >> signing this act seems ever more pressing, as you guys talked about, chip makers have fallen across the board on weaker outlooks. they also have the over-reliance on countries like china and taiwan china imports more chips per year than crude oil. this year that is going to be siphon today is to subsidize chips manufacturing, over $10 billion is solely for research, as well as tax credits for chip plants the u.s. commerce department

will determine which companies get the money, but a large chunk is expected to several companies that already have announced plans to build micron, the latest company as well, and you know this because you spoke about an hour ago, today committed $40 billion in what is called the largest memory manufacturing in u.s. history, which they believe will create 40,000 new jobs listen in. >> it's going to double from today to the 2030 time frame that requires us to build new fab for d-ram and it is production will be coming online in the second half of this decade in the 2025, to 2026 time frame. >> it's important to note that a lot of thinks chip manufacturers

have made promises, but there's no start date for these big manufactures hubs. micron's share is dropping after it lowered the guidance a weaker memory sales, but changes. changes won't happen overnight it's important to remember chip factories take years to built, and they also need qualified technicians and computer science experts, another hurdle to overcome guys >> kristina, thank you. let's look at the broader market, as you saw a mixed bad strong second quarter earnings, though, are leading goldman sachs to at least maintain its 2022 s&p forecast. 2023 growth, that would be 3%. joining us now is more is strategist david kostin. '23 is what we care about, isn't it we're in the second half of '22.

and that's what i'm getting questions about, is it 240 s&p earnings or 200 that's a big difference. >> absolutely. managers are focused on the outlook. the concern is you have a 1% gdp growth in the next year, and that would be a headwind, but the higher inflation -- that's why, david, the level of forecasts for the consensus is probably too high. our forecast is something of the vicinity around 3%, as you indicated, about 3% earnings growth that's pretty modest that's the idea that the s&p 500, therefore, at they levels offers maybe 4%, relatively modest however, as you indicated, if we had a recession, that would put the earnings down around 11% that's a little less of an earnest decline, because if you had a scenario with recession, it's not our baseline, but the idea would be a relatively more

modest recession you don't have some of the exacerbations or uncertainties around higher leveraged balance sheets, some of the unusual aspects of the last couple downturns. if one had that, you could see earnings come down to a decline of around 11%. that would lead the s&p 500 down to about $3,150, a much lower level. the baseline is $4,300, driven basically by modest earnings growth for next year. >> though one would expect, and this goes back to the conversation we were just having, it's not the easiest time to project what earnings are going to be. companies are having a difficult time, given limited visibility and the so-called macroeconomic headwinds we keep hearing about. >> the general view is oil prices went higher, you had the inflation pressures, all these uncertainties. in fact, as we went through the transcripts, we just finished

basically the second quarter earnings season, companies across the board were highlighting your owns that there was a lack of clarity, a lot of cloudiness in terms of the prospects of the supply chain issues there's a lot of sort of murkiness, is the best way to describe it. our general view is you want to be biased toward higher quality, not a and then that's the critical issue i think 2023 is where you're likely to get the greatest negative revisions. >> we've seen revenues grow modestly, and that's consumers will baulk at the higher prices.

how do you think about the consumer and when the consumer feels the full impact of inflation? i feel like we're just starting to see that now, a delayed impact, even though it looks like inflation has come down a bit. >>ed idea of higher inflation is generally a good thing from revenue perspective. the consumer sentiment is around the lower in almost 60 years that's certainly one indication that it's not great. when you look at the disposable income across the economy, most of those areas, most of those cohorts are shows a headwind, and that's generally some pressure when you see it on the end gasoline prices are basically

headwinds that sort of go across the economic spectrum. >> so when you think about sectors, then, david, which ones have yet to see the biggest headwinds, assuming the -- >> we have the view ultimately that earnings drive stocks over time the energy earnings revisions have been significantly increased, increased as a result of the second quarter results, but also into calendar year 2023 they're coming up. that's an area to continue to focus on in our view, oil prices are likely to go higher. therefore, likely to have capacity to buy back more stocks, pay more dividends, so energy would be one area a second area to think about would be technology. we think about that. that's a broad sector, of course some of the balance sheet, stronger balance sheet companies are there. that's generally where we would prefer to see companies, where there's more resilience, ability to basically manage through the

potential for recessions so we want to think about it as a portfolio. on some technology, and health care health care remain statistically, extremely, extremely undervalued. there's been some legislation that's been passed or soon passed about limiting drug prices, but broadly speaking, the valuation of the sector is still pretty attractive. >> to the current market environment, i'm just curious what your conversations are like mine range from, well, this is a big rally, but it's not going to sustain itself it's a bear market rally, essentially. we still don't know where real rates will stop out, and we don't know what earnings will look like. and we're no where are near done. >> so you hit the key point, david. it's real rates. real rates, we think about the rally, if you will, in the last six to eight weeks has been a

function, in our view of the pullback in real rates as they have come down pretty significantly. now they're moving back up it's been the defining story of calendar year 2022 so far this year, a derating of equity valuations from deeply negative 1%, and moving much higher, plus 30 basis points or so that's not yet been about the degradation of profits the second quarter results expectations were plus 5%, companies reported 10% so the second quarter actually was a pretty good set of numbers across the board, however, as we, you know, discussed the idea of outlook for 2023, not so optimistic and you have a basically 3% earnings growth >> david, always appreciate

you're taking time with us thank you. >> nice to see you. >> chris, i'm looking here at the screening seeing that's majority leader chuck schumer. president biden, we expect they'll get started very soon with potential chinaing the chips act, i would think we're going to take a quick break -- or so i think okay we'll give you a look at our road ma'am more on meme stocks, bed bath and beyond it's been up -- >> nine, ten days in august so far? wow. plus the impact of inflation on the consumer and as i just mentioned, president biden is preparing to sign the chips act we'll take youhe tre live when that happens don't go anywhere. a lot more ahead

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let's check in on the meme stock trades, showing signs of life this week, as gamestop, bed bath & beyond and more. >> if you look at the action so far today, we are seeing a bit of a continuation in some parts of that meme stock trade over the course of the last several days, though now maybe a bit of a pullback given the massive moves, as melissa just showed you, over the course of the past week, we've seen some steam come out of that market, but if you look

like some traders are looking more closely, they do tend to drive some of trading activity over certain etfs. now, granted many of the etfs that have names like gamestop, like amc, like what's happening at bed bath & beyond are small ner nature that don't trend a lot, so they're not as liquid. smaller etfs tend to move around, especially in volatility one of the etfs that has a decent size under -- and trades relatively more is the invesco s&p 500 small-cap 600 revenue etf that look at the revenue factor as it contributes to the overall small-cap index. it's an outperformer versus the s&p 500 and the ishares russell 2,000, so that has more

exposure, but if you look at the ways the stocks have performed, certainly in the year 2022, there's probably a reason why some of those contributions are influencing the etf trade. gamestop is still the original meme stock out there, outperforming, but amc entertainment down 15%, bed bath & beyond is down 26%, it's the last spike green here that's driving some of that outperformance, but certainly ones to watch when it comes to etf exposure again, not a lot of them with bigger exposures, but some of the smaller etfs could be very influenced by some of these meme stock trades back over to you, melissa. taketwo results, and more. martin yang, great to have you with us. >> thank you. first of all, let's start off with -- there's lots of news

this morning, martin, but what do you think of the proposed takeover of unity? >> i think the deal makes sense for unity shareholders to the continue the business for that to become a scaled software product in the longer term, but for applovin, i don't think the deal is as attractive. the company is on track to become a very strong high-profit software company with the addition of unity, i think that goal and that purity is getting a bit murky >> so, you prefer that applovin remain independent at this point. >> that's right. >> what other companies might be in play now that we know it's looking for a deal, unity might be out there usually there's speculation that

follows about potential other targets. >> i think when you like at the tier 2 players, i think the only one with scale are unity and applovin those can be in play, but not as attractive as the scared tier 2 players. let's switch gears t take-two, i wonder if -- there was talk on the conference call that the ceo doesn't believe it's recession-proof how does a company like a take-two fare in a recessionary environment, especially as we're seeing signs that the consumer is feeling pinched by the inflation, not as much in-game

purchases. >> i think take-two is one of the few companies that will do really well, because the -- overall, all gaming companies, their video game spending is part of discretionary spending, but gamers will always even their wall either for a the strong content, and take-two has that kevin that no one else can make and we have very strong franchises that are up for renewal coming from take-two so, you know, players will always go to the strongest content, whether there's a recession or not >> martin, great to speak with you, thank you. >> thank you.

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our next guest is the owner of outdoor shopping centers, saying inflation favors the outlet channel, and that individual stores have actually seen an increase in sales. joining us now exclusively is tanger's ceo rain otherr shine, you guys see do okay. >> david, value never goes out of fashion. >> exactly i guess value is now what people

are looking for more than they might have been even six months ago? >> well, if you look back six months ago, it was really not a lot of promotional activity in the outlet channel even though all the of the famous brands we sell are -- were available at everyday value pricing, right now, if you go into the shopping centers, the name of the game is promotion, promotion. there's excess inventory from the easing of the supply chain, a lot of product is coming through the stores, and the customer gets the benefit. what they spend perhaps last year for the same investment can buy many more units. average unit of retail is going down in this inflationary environment in our outlet centers. >> yeah, i've been noting the nevin theory glut in certain sectors. anything in particular, steven, i might want to look out for, given that i can't buy lunch for

lets than $20 now? >> i would say athletic -- back to school is an extended holiday because of the cadence of schools opening across the country. that's a good time for people to rush back to the shopping centers. it's the middle of the summer, easy for people to get there we're finding the back-to-school promotions are second to none. >> i love that he gets shopping tips from the tanger ceo i love shopping maybe more than david. i do want to ask you, though, about when you start feeling a pinch, or when do retailers who own their outlet stores, when do they start rethinking their footprints if you hear about a retailer cutting down their footprint in their norm at bricks-and-mortar

stores, do you think they start cutting back their footprint >> we haven't heard that yet i think as far back as q4, the big retailers have had big opens to buy, perhaps people in our portfolio expanding stores in our portfolio where they're successful converting short-term leases into long-term leases. there's been velocity in that regard unfortunately for us, we're not seeing a lot of fallout, supply chain probably has more of an impact on the restaurant business, where a lot of the restaurants are probably finding it harder to get some of the fixtures, so maybe there will be a delay getting stores open, but again not a lot of fallout add a lo local of velocity what about stores that are just regular stores that exist in

outlets? has there been any sort of shift in recent years? >> you know, i think, depending on the market, our shopping centers can definitely accommodate retail price point folks who shop outlets are calling for the value, the nike, the underarmour, levi's, ralph lauren, don't forgets. when there's value pricing in great brands, it's a great entry point for a lot of consumers there are some stores that sell more current merchandise and will sell full-price merchandise in some of the stores across our portfolio, but those tend to be promotional, because the customers are looking for value and they don't want to disappoint the customer when they get there. >> thank you for the advice. i'm looking for outdoor patio furniture as well.

>> come visit us. >> thank you >> you're welcome. we are moments away from president biden set to sign the chips act. we'll take you there live when that happens don't go anywhere. do you have a life insurance policy you no longer need? now you can sell your policy - even a term policy - for an immediate cash payment. we thought we had planned carefully for our retirement. but we quickly realized we needed a way to supplement our income. if you have $100,000 or more of life insurance, you may qualify to sell your policy. don't cancel

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we're getting dramatic political action here to this raid, the likes of which we have never seen before, the fbi going into a former president's home against his wishes and collecting documents what those documents were? we don't exactly know, but we know about the political action here in washington, d.c. speaker of the house nancy pelosi was asked about all this today. here's how she framed this moment in american history >> we believe in the rules of law, that's what our country is

about and no person is above the law, not even the president of the united states, not even a former president of the united states >> meanwhile, republicans defending the president, kevin mccarthy on twitter, suggesting that republicans will investigators merrick garland, so secure your documents and clear your calendar. we'll see what the rest of the day brings, but guys, it could be some time before we learn exactly what this raid was all about. in the normal course of business, what would happen now is the fbi would turn the documents over and any evidence gathered over to prosecutors prosecutors would sift through it all for some period of time, and then make a decision, in this case would be enormously fright, which is whether or not to indict the former president of the united states for any crimes they believe he has committed. it wouldn't be until we see that

indictment that we get any more information about what it was about what they're doing in mar-a-lago yesterday they were clearly looking for something. we may not know for some time if they found it. we may not ever know >> eamon, thank you. >> you bet. no consumer slowdown for the parent company of applebee's and ihop we'll have the ceo of dine brands don't go anywhere. - in the last two years, we quadrupled our team and the pace we're growing, i couldn't keep up without ziprecruiter. they do the legwork and they get my job posting in front of the right candidates. i love invite to apply. i instantly see great candidates and i can invite them to apply. we have hired across all departments, engineering, marketing, hardware, field techs. you can basically tell ziprecruiter who you need, when you need it, and they deliver. - [narrator] ziprecruiter.

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all right. we are awaiting president biden, of course, going to be signing the chips bill there he is.

>> please join me in welcoming president joe biden. [ applause ] >> thank you. >> i tell you what, they're making extraordinarily hot vehicles they have a hummer that can go 41 in 60 that's faster than my corvette, which is almost older than i am. they got it -- and they tell me there's a lot of money, but i know if i ever sell, a bolt would come down from heaven and strike me down the nucor vet, this electric corvette, i got a commitment,

but i don't think i'm going to be able to enforce, that i get to buy the first one it will be out before i'm out of office, but at any rate. look, folks, chuck, you've done a held of a job. you really have. you really have. and speaker pelosi, you always get it done. you always get it done come hell or high water, you get it done. i want to thank secretary raimondo josh, thank you for the introduction josh loves electric cars he's my kind of guy. syracuse and electric cars, what more do you need this bills represents what i've always believed -- america is the only nation in the world that can be defined, as i told xi jinping several years ago, by a single word. he asked me to define america --

i said possibilities in america, everything is possible we believe everything and anybody is possible. as part of the soul of this country, it really is. we can channel all our resources. most of all, we can challenge full talents of all our people into a greater measure of hope and opportunity for the nation in the world not just for the wealthy, but to change the course of human health and disease, to tackle climate crisis, to lead the world, not just high perfectly -- lead the world in future industries, protect our national security. we haven't always gotten it right, but we never walked away from that sense of possibility that driving this country. never. now, it matters today, i think

more than anything in a long, long time. we face an inflection point in our nation and around the world. fundamental change is taking place today, politically, economically and technologically. change that can either strengthen our sent of control and security, of dignity, pride, of our nation, or, or change that weakens us, so that people are left behind, causing the question whether or not the very institutions, or economy, our democracy itself, can still deliver for them, for everybody. this is the moment we face i really mean this i believe with every fiber of my being, we hear all the noise out there. we know there are those who focus more on seeking power than securing the future. excuse me. in secures the future. those who seek division, instead

of strength and unity, who tear down rather than build up. today is the day for builders. today america is delivering. i honestly believe, from people who will look back on this week, they'll know that we met this moment today i'm signing into law the chips and science act, a once in a generation investment in america itself a law that the american people can be proud of. i called for elements of this law when i first came into office i want to thank everyone, everyone here who helped make it possible the white house team, members of both parties, the lead ers -- i

don't like to see you in trouble, but you did a hell after job. byrne, he's a good man that probably cost him i apologize. all kidding aside, thank you, thank you. and all those who helped to keep this bill on track from beginning to end in the house, i thank speaker pelosi and steny hoyer -- and better need, god love you, you did it all frank pallone. frank is from new jersey, but delaware owns the high watermark on the shore of north carolina we had a court case about that i just want you to know that mike mccal doris -- and chris coone. while a bipartisanship is cry

occasion, look at the people here today you couple times from all different backgrounds to support this bill. governors, legislators, mayors, statements, entrepreneurs, big people, labor. they're the reason why we're here, and they're the reason we got this far scientists, technologists, engineers, presidents of colleges, civil rights leaders, government officials i met with many of you through this process so many have spent years and years calling for key investments made for this big. you helped make it happen. you represent why we are better than any other nation in the world to win the complicate competition of the 21st century. you're the reason why i'm so optimistic about the future of our country.

you know, the chips and science act supercharged our effort to make semiconductors here in america, the tiny computer chips, smaller than a fingertip are the building blocks for a modern economy, smartphones, dish washers, automobiles. in fact, there's as many as 3,000 semiconductors per vehicle made today 3,000 per vehicle. america invented the semiconductor. it powered nasa's mission to the moon and built a market of an entire industry as a result, over 30 years ago, 40% of the global production of chips was american, and then something happened the manufacturing was hallowed out and led to overseas. as a result, today we barely

produce 10% of the semiconductors -- excuse me -- despite being the leader in chip design as well as research as we saw during the pandemic, the factories who make these chips shut down and the global economic comes to a screeching halt, driving up costs for our families and everyone, not just here about around the world. one third of the core inflation last year was due to higher price of automobiles folks, we need to make these chips here in america to bring down everyday costs and create jobs don't take my word for it. listen to some of the business leaders here today and across the country. we're making decisions right now about where to invest and ramp up production. many are foreigners making

investments, companies deciding where in the world to go, and they have chosen the united states of america. they look at china, japan, south korea, the european union, all making his turkey investments to bring us these things. these industry leaders also see that america is back, and leading the way. during my state of the union, i described the field of dreams of 1,000 acres in ohio where america's future will be built intel, the ceo is here today, pat gelsinger, he will break ground early this fall american company micron is announcing today that, because of this law, it's going to invest $40 billion over ten years to built factories, memory

chips that store information on your masmart phone. investment, this investment alone will create 40,000 jobs -- execu excuse me, i'm sorry -- two more american companies -- i'll take another sip of water two other companies, global fine foundries and qualcomm introduced a partnership to produce chips in the u.s. that would have gone overseas qualcomm is one of the largest supplier of chips, plan to go increase production up to 50% over the next five years these companies see what i see, that the future of the chip industry is going to be made in america. [ applause ] for folks at home, there's a

broader supply chain that makes these semiconductors this law funds the entire semiconductor supply chain for research and development, to key inputs like polysilicon manufactured by a fact tore in hemlock, new york. imagine if we had more of these factories across the country this law will make that a reality. there's analysis that says investment in the chips and science act will create more than 1 million construction jobs alone over the next six years, building semiconductor factories in america america invented the semiconductor, and this law brings it back home. it's in our economic interest and national security interest to do so

earlier this year, i went down to lockheed's affect torrie in alabama, where they're making the javelin missiles it's crystal clear we need they semiconductors, not only for those also for weapons systems in the future that are going to be even more reliant -- >> you've been listening to president biden of course discussing prior to the official signing of the chips act, mr. president recently emerging after two different bouts of covid, something will also take away from the speech given the good amount of coughing. but, melissa, obviously the chips act itself very significant. we've been talking about it through much of the morning. he is citing many of the ceos in attendance not to mention the other political leaders from both sides of the aisle that stood behind this legislation to get it to passage. >> ceos of amd, micron, intel,

lockheed martin, just to name a few and touting the benefits of bringing chips back to the u.s. in terms of manufacturing for national security reasons as well as job creation reasons ironically, chips today really pressuring the nasdaq with the warnings from micron as well as nvidia we are seeing the nasdaq with the sharpest decline here as we get under way down by 1% dow is basically flat. rear500 down by 0.25%. mo mket action right after this break back in two.

applebee's owner dine brands tops expectations as the traffic and dine-in recovery shares this morning are down by about 0.9% they did affirm the 2022 forecast joining us to discuss consumer behavior and inflation is the global ceo, great to have you with us. >> thanks for having me. >> sustained out of store purchases, so the take out remain high even after the pandemic is that surprising what do you attribute that to? >> let me give you some context to answer the question before the pandemic up to 2019 applebee's and ihop both had less than 10% of their business

off prem and since the pandemic 20% to 25% that has been holding steady for three, four, five, six quarters so the brand in a way they weren't before, 70% of the business is incremental. we literally didn't have it before it became a new behavior for consumers. one of the insights, the question used to be first what do i want for dinner, pizza, hamburger, chicken now the question is how do i want to get my dinner, take out, delivery, cook it myself then you say chicken burgers we've become relevant across multiple channels. >> is it a higher margin dollar earned because it is off premise and you don't have wait staff, you don't have the cleanup, in restaurant costs associated with that dollar? >> it is about the same because of the faees for the third part

delivery companies >> how do you deal with food prices i can go to lunch here to the extent there is any restaurant still open and pay a lot more than i did a year or two years ago. what are you doing to manage your costs to the consumer how much has it gone up over the last year? >> our cost of goods into the restaurant have increased 22% in q2 driven by poultry, eggs, oils, many of the things that you've been talking about with your viewers we benefit from a $2 billion purchasing co-op on behalf of applebee's and ihop we purchased $2 billion worth of goods which enables us to lock in contracts and procure hard-to-get items. our franchisees raised prices in the last quarter 7% to 10% depending on the brand our brands are all about value and delivering great value to our customers, great food, generous portions, wonderful

environment. they took a very prudent approach they raised prices 7 to 10% because they have to balance our margins and stay in the customers' sweet spot. >> what is your sense of that based on historical comparisons where you would go too far and diminish demand? >> our average check has been steady for six months. we haven't priced ourselves out of their sweet spot. so we focus on delivering sort of value add at a time like this applebee's is doing all you can eat shrimp with a dollar with any purchase of steak. ihop with our minions menu kids eat free at certain times. >> if you increased price by 7% to 10%, customers are ordering

less >> a little remixing our interpretation of that is because average check is the same and we raised prices exactly. there is a little bit of water instead of soda. one app instead of two to manage the average check. >> is there also five wings instead of seven going on? >> no. that is something we'll never move away from one of our core values is the brand and consumers know that is what you come to applebee's and ihop for the portions will stay the same. >> in this difficult economic environment for many americans in terms of inflation you're not seeing a diminishment in traffic? >> there is some nuance there. i'll tell you two things april and may in the quarter were very strong and we saw a slight decline in june but we reaffirmed our guidance for the year based upon what we're seeing we're encouraged by for example 50 days of declines in gas

prices which correlate to traffic into our restaurants we look at consumers in three buckets of household income 50,000 and below 50 to 75,000 and 75,000 and above. for the 50,000 and below household and consumer we saw a slight decline in their visits to us. the 50,000 to 75,000 range was flat to up and the $75,000 and up was plus 6% to 8% which tells us people that were dining at perhaps more time like this whi is why our brands are so resilient during tough times. >> real quick i notice you bought back 913,000 shares there is going to be a 1% tax on buybacks as a ceo will that impact your decision making when it comes to buybacks >> no. i think that is a cost of doing business for us it is about if we think our stock is a good value and good use of capital we'll c continue to buy it back

aggressively we are bullish about our future. >> thanks for coming by. next time bring pancakes for david. >> where are the pancakes? >> i will have them next time. >> really? you promise? >> yes. >> you're invited back. >> what is your favorite pancake? >> straight up good maple syrup though. thanks that's it for us here on "squawk on the street. "tech check" starts now. >> happy tuesday welcome to "tech check." today more m & a bigger in software applovin, a public deal for unity throwing a wrench in unity's plan to buy iron source perhaps. sharp moves in the stocks and what it means. speaking of valuations micron warns of weakness ahead. more demand problems just a day after nvidia revenue would fall short. volatility returns to th