good morning stock futures pointing to declines at the open as we begin a busy week for retail earnings. surprise move overnight in china. the central bank unexpectedly cut two key interest rates in response to weak consumer and factory data we'll ask dr. scott gottlieb about the covid guidelines and what it means for return to office it is august 15, 2022 and "squawk box" begins right now. good morning welcome to "squawk box" here on cnbc we are live from the nasdaq

market site in times square. i'm rebecca quick along with mike santoli and steve liesman let's say somebody wasn't paying attention the last couple weeks. what happened with the markets i want you to explain the markets and economy and where things stand first up, u.s. equities at it this hour. looking lower. largely because news from china and concerning news with the economy and rate cut we'll talk about that in a moment the dow futures down 143 points. the nasdaq down by 59 points the s&p down 20. this is a big deal these red arrows are not indicative of where we have been the last few months. >> higher four weeks in a row. s&p up 16% off the bottom. you know, last week, s&p up 3% in the hypothetical if you were not passiying attention >> asking for a friend

>> the way i boil it down, we got into a stagflation panic worried about inflation persistent and high and growth falling short and getting into recession. the last two weeks, you got new information that made you slightly less worried about the stag and flation the strong numbers and other economic numbers consumption here it is not off the table. recession story is hovering. inflation numbers came in and in most respects showing it is plausible. >> that would be amazing if that is the case. really on the down side swing. steve, explain the recession fading >> i think there is a debate going on people are clinging to the two quarters of negative growth. it was a recession along comes a jobs number.

572,000 jobs we can't have recession with those jobs numbers jobs are the leading indicator there has never been a recession with these jobs numbers. you can't say we're in a recession for two areaquarters d jobs lagging we have a couple of charts to put up by now, you would have lost 700,000 jobs it doesn't work as recession you get the better than expected inflation reports. two in a row the way mike described it. stag and flation are less concerning in case you should feel good we have lee coming up later. he will remind us in his view of the larry summers hawkish view the fed has more work to do that we will not get out of this down turn or this episode of inflation with only a modest

increase of unemployment >> it is monday. we can't let people feel good for too long. >> it went down. job market is getting tighter. >> we will dig into this all this morning let's look at treasury yields. if you have been on vacation and not paying attention 10-year treasury at 2.83 30-year treasury is 3.115. a lot of talk of inversion couple weeks that continues and bitcoin topping $25,000 over the weekend. the first time it happened since early june it is just below that. ethereum, by the way, up up 62% the month. >> we should have the relatrip van

winkle report every monday. if you don't know, china cutting key interest rates it pumped $59.3 billion in the financial system to refv up lending. that is well below the 5% that economists were expecting. industrial production fell declining from the prior month and investment in real estate falling faster in july than june the data showed youth unemployment rate rising to 20%. the highest level since china began publishing the data in 2018 >> this counter to everywhere else central banks are raising rates because of flinflation. >> eyes on china this morning. you say wait a second. in general, when you have big

events like the global inflation or down draft like 2008, central banks worked together. there is not a lot of coordination going on. that is why you see the volatility in currency if europe and u.s. got together and said here is what we will do on interest rates. you may not have the strengthening of the dollar. you look at china, second largest economy in the world, they are fighting disinflation we are fighting inflation. how does that factor in? it is not necessarily a good sign for the u.s >> is it political tensions? >> i think that is right china is a weird case. on the one hand, look to china for demand and growth. china is the world's factory the idea that they need to get

back to work for us to solve our supply problems. in one sense, whatever they do to get back to work, is good for us the market is down a little bit. look at the early morning trend. down five appoipoints if they are churning out stuff and get them on the boats and to ports -- >> fix the supply chain usissues >> there was a time when the chinese central bank cutting rates would create the influx. it is a strong swing in the markets and liquidity in the world. that's gone. they are a little bit off on their own in terms of what is driving their economy and it is not really what we are fixated on we are now in such an inflation fighting mode, i think, s psychol psychologically. >> the supply chain issue is very important that is a big deal. >> let's fthrow one other thing.

pboc cut by .10% a sense that the central bank is responding with, i don't know what you call it, a tepid response to the political leadership you know, we are reacting, but not doing a lot. i think the pboc is well regarded in all of the central banks around the world for technical expertise. .10% is the minimum to please the leadership here. >> that's an interesting point elon musk making headlines tweeting yesterday congrats giga shanghai on making 1 millionth car. tesla shanghai factory was struggling after lockdowns and parts shortages. you know, we knew they would get to the 1 millionth i guess he wants to focus attention on ramping back up on

production. >> how reliant thaesla is on china. and aramco said the net income in the quarter reached $48.4 billion. that's up from $25.5 billion that it had in the same quarter a year ago if you compare that to our big giants here. exxonmobil was $17.8 billion for the quarter. apple was $19 billion in net income you are talking $44 billion when aramco was down. it was still out pacing our biggest growers. shares started trading on the saudi stock exchange in 2019 the company ceo says the company is ready to raise production if needed look at crude oil prices this morning. one more thing to check. right now, wti is down by $4

decline of 4.4% to $88.03. you have to imagine china retail sales numbers had impact here on weakness there these numbers must be reacting to that. brent down 4.5% to $93.75. natural gas off down. >> some are talking about supply with the iran deal we will talk to helima croft later. they have been unable to break back to the highs. >> that's a big number $4. >> it is >> below 90 definitively that's good numbers for my cpi >> it was a concern. >> 92 or 93. >> by the way, inflation numbers, the reason they look so good relative to what we have seen in the past is decline in energy prices in the month of july >> pretty much so. we had air fares come down and

used car prices come down. >> rent and food both up >> rent was up food was up. that's the problem going forward. problems i call diana olick every week and say when do i get better housing data she says, steve, prices lag sales. six months down the road coming up, a big week for retail data and earnings we get you ready for events that could move the markets and dr. scott gottlieb will join us on the new cdc covid guidelines and what it means for return to fiofces. you are watching "squawk box" on cnbc >> announcer: this cnbc program is sponsored by truist wealth. so you can focus on what matters most

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welcome back time for the squawk planner. tomorrow, july housing starts. on wednesday, july retail sales and minutes from the recent fed meeting from a few weeks ago on thursday, jobless claims and existing home sales. we will hear from home depot and walmart tomorrow target and lowe's on wednesday with more than 90% of s&p companies

reported so far. s&p earnings are on pace to have grown by 9.76% year over year. >> waiting for earnings to slow down and that hasn't shown up. >> all of the softness was in advance of the reporting season. as i say, outside of energy, you have down side surprises you know, the third and fourth quarter has not come in yet. >> won relationship to the rip vanwinkle report the mixed bag of tricks from companies. some come forward and say the consumer is giving it up terrible >> the consumer switched >> no definitive story lower income consumers had a lot

of trouble digesting the higher inflation. not necessarily true when you move up. you just can't say the consumer is giving it up. decent growth in the first quarter. not great in the second quarter. an expectation better in the third. >> we will see. >> joining us now is sylvia jablonski and ross mayfield. good morning to you both ross, maybe set us up. talking about the market comeback s&p gained back more than half of what it lost in the january to june decline. reassurance on the fronts we were fighting on inflation earnings u.s. economic performance. where does that leave you with the risk/reward for stocks have we celebrated too early or is the rally going to last

>> expectations need to be set we had a really strong rally it does look sticky. it hasn't changed what the fed has to do and where inflation will be. for the end of the year and next year is not at the fed target of 2% to 2.5% likely. there will be continued volatility you have to be choosey we have a preference for high quality in the environment the worst of what it could have been may be behind us or priced out of the market. it is a challenging market very challenging for these operators of companies as you are talking about. the same advice to the fed is the same advice the investors should take now. >> sylvia, bullish advisers are pointing mostly to the behavior of the market and the message it might be sending how broad the rally has been persistence in it.

rebuilt technical moomentum. when the broad indexes gained more than half of the broad market decline, they have gone back below the prior lows. does that carry much weight? what helps you decide whether this might last? >> good morning, mike. i do think it holds a lot of weight the first positive sign is breaking through the 50-dayi moving average now s&p up from 15% from the lows we gotten back what we lost in june we have a broad recovery now broad based in what people are buying in price depreciation in stocks. you have beat on profits and more than 90% reported these are all good signs, including jobs i agree with the sentiment that the fed has a lot of work to do. cpi remains high ppi remains high

we did get the read coming down. we have a strong economy michigan data is better. consumer is stronger spending and services. you will get slower growth and it may impact it positive or negatively i don't think we will test those lows i expect us to end up on the year now. >> it is worth noting if we retest the lows, may be a routine thing, ross, it could be a 15% drop from here it could be worse. that is on one side of things. on the other side, we can still gain another 10% and still be down on the year and look back and say 2022 that was a rough year. >> yeah. it's funny how the narrative at the end of the year can shift. 2020 is a great example of that. crash in the beginning of the year with hindsight, you have 18% gain in 20 years is the story of

the year nice gain. i think earnings put a floor under the equity market. you have the great stats that throughout history have meant we will not at least consume the lows and make a new low. i think based on potentially based on the political volatility and potential for cpi to not cooperate, you know, a lot of the move is energy. that can reverse easily if something on the geopolitical front happens. i think there is still panelists out there to send the market lower into chop. we are definitely longer-term bullish. the consumer is in a good place. companies have shown resilience operating through the pandemic and bout of headwinds with inflation and the dollar we are optimistic. i think lower growth and checking the expectations at the door is important for the next 6 to 12 months once the fed pivots, we can have

a newsylvia, if you take a fresh look at what you own or might own after all of these moves, what looks relatively better or worse to you 12k3w4r i >> i still like the mega cap google and amazon and apple. i think they he have great participation in the future they fellower than they have in the past i think given the environment, what they put out is incredible. i think without semiconductors, you have no 5g or electric vehicles or you have no data processing or things like this these are major things we essentially need to move society forward in technology. we need chips for all of it. with the new deflection act.

some hydrogen stocks plug power it will have interesting performance. it will need funding from washington those are the names. >> deflation act if they thought to name it that. >> we will see if it does that >> sylvia and ross, thank you. becky, did you hear what ross just said once the fed pivots -- while you were gone, the fed decided to pivot. coming up, a new report says apple could bring more ads to your iphone. details after the break. we talk to bill dudley about the rate hikes "squawk box" is coming right back

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welcome back

a b a bloomberg report says the company apple could place ads in the stock apps, but the search ads could appear in the future in the maps apps and digital store front like books and podcasts apple explored the addition of ads to apple maps. what do you think? >> i don't know if i would notice i see so many ads on the other apps i'm on. >> what i think is google has done the best job -- >> of keeping clean? >> of capturing you in the environment and owning the ads you see. apple, for the ownership it has of your space, doesn't really seem to capitalize or monetize it that way. >> it is tricky. >> the privacy >> exactly >> that's their brand in part. we're not going to track you also keep in mind, google and

apple are frenemies. they mpay for the privilege for the back end to the apps presumably there is some border crossing if you are apple and do that on your own google is conditioned us to expect it. amazon for that matter >> you are right ads targeted to you. wait a machinute. you were listening >> if you plug in an address to maps, you don't mind >> i see it when i use waze. when we come back, we could see a ramp up to return to office thanks to the guidelines from the cdc last week dr. scott gottlieb will gjoin u next to tell us withhat it mean

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good morning welcome back to "squawk box. live from the nasdaq market site in times square. checking the weakness. the fourth straight week of gains. giving back .50% on the s&p and dow. oil prices also quite weak this morning. they he have been in a little bit of a down trend since the highs in the spring. wti crude down similar loss in brent. smaller decline in natural gas of less than 2%. move in oil before the exe commercial break

all energy or commodity. >> this is china weakened economic news? maybe that and other news? >> it is unclear if it is a demand story it has been a dip in u.s. gasoline demand. we had a decent dip in the demand i don't know if this loss is trading dynamics with oil acting like a risk asset and we are giving back. >> i would say reading the tea leaves, it is covering the fed and opec the statement we read from saudi aramco we are ready to raise production if needed. i don't know what that means somebody call sully. is that a meaningful statement or a pro forma >> the idea is the regime says do it, do it >> i don't know if it was they will come forward with more

production i don't know >> we should call sullivan the cdc easing covid guidelines last week the move acknowledging covid is here to stay those were the words they used among the changes, the agency no longer recommending six feet of distance or quarantine exposed to the virus regardless of vaccination status joining us now is dr. scott gottlieb the former fda commissioner and now serves on the boards of pfizer and illumina we have to get used to this. this is more normalized? >> that's right. also recognition more population of immunity. most people have had the virus or vaccinated. many have had both you have the population that is less naive

there is emphasis in the guidelines on treatment and treat high risk populations instead of population measures to try to control. the note worth y change in the guidance is no longer recommending test to stay at school those are hard measures for schools to implement particularly schools that were not well resourced it is easier for schools to bring children back in the classroom this fall. if we do see a surge of infection in the fall and winter, which we are likely to see. the risk is we have a normalized covid season, whatever that looks like, but also a bad flu season if you look at the southern hemisphere, they are experiencing a worse than normal flu season the twin risk of bad covid or moderate covid and bad flu put pressure on health care systems. >> scott, it sounds like these are the right moves to relax

things, but it creates confusion in the workplace and schools people not entirely sure what the rules are at this point. >> look, this gives more flexibility to schools apparent bus and businesses to make up the ru rules. the general recommendation of exposure, wear a mask and test fda says test every 48 hours or six days post exposure you will see that in the guidance that schools and businesses issue i think that it will be more up to local districts and businesses to make decisions the emphasis that will shiftinf. if you don't feel well, stay home get tested if you do have the infection, notify the workplace or school so people who were in close contact can remain on guard and test that's where you will see a lot of emphasis shift. good citizenship this winter and

not coming to work sick. >> dr. gottlieb, every month we turn to the employment numbers and try to figure out where are the workers. i wonder, do you have any data that you can share with us about the extent to which covid kept some cohort of people out of the work force >> i haven't seen any data on how many people are staying home because they are concerned about covid. what you would be looking for are people worried about catching covid in the workplace who can't work from home and be in an environment where they can't expose and be in the environment with underlining health issues or people at home vulnerable there are a cohort of people which is true. some people need to avoid the infection and not going back into the settings. >> not just worried, but have it we are running a constant flu?

we always have a certain spike of sickness and people dropping out of the work force in january and february because of the flu. now 100,000 cases of covid every day. that has to have a meaningful impact of people showing up to work >> look, we are probably turning over 1 in 10 infections. that 100,000 infections is more like 1 million infections. it is a sense of the rolling number of the people out of the workplace. that is to look at the number of infections turned over 100,000 you are talking about is another 100,000 to 200,000 people testing at home and getting positive tests and those are getting turned over. 200,000 to 300,000 turnover every day and those that are reported and what are not reported what percentage of those are people staying home?

would they have gone into the office orego gone to the job to interact with people some are them are homew workers some are not. >> scott, can we talk about polio? a few weeks after the first case found, it is identified in the wastewater in noeew york city it is stunning to think polio, which is something we thought we defeated and thought would be gone and could be showing up in the areas. it leads to something you warned about years ago during covid with concern about vaccinations and how it could bleed over into other areas. diseases we thought we conquered may show up if people are reluctant to take vaccines >> that's what is happening. vaccination rates are falling. low in new york city and new york state lower than they should be. if you look at the percentage of

people who completed the course of vaccines, including all three doses of polio vaccine, the rate hovers in the 70s. a lot of children have not received the full course of polio vaccines or pediatric vaccines these will be reintroduced new york state has a couple of counties, rockland county, with low polio vaccination rates. some people made decisions to not vaccinate their kids that is where it was introduced or the first case identified as you know, 1 in maybe 400 people will actually get the paralytic disease. we identified one case of the paralytic disease. it doesn't rule out the possibility of hundreds of cases of polio spreading quietly in the community within new york state. we just haven't identified it yet because people have not

presented with severe symptoms we have one case of paralytic disease and you identified it in the wastewater. >> what do we do how do we fix it >> we need to get children vacc vaccinated these are safe vaccines. this vaccine has been used for decades. we need to double down and getting children vaccinated. i think you are right. you know we have talked about this many times. aversion to covid vaccine was not just covid vaccine a lot of people were critical of people going out and getting vaccinated for covid, that messaging would be hard to narrow to the covid setting. it would bleed over into people's perceptions of other vac vaccines we see that happening with the decline in willingness to get vaccinated in general. when the politicians are saying get vaccinated, you should ain

get n't get any. >> dr. scott gottlieb. thank you. good to see you again. >> thanks a lot. coming up, congressional delegation arrived in taiwan this month the second in a month. we take you live to beijing for the china reaction next. and congress member jeffries talks about the inflation reduction act. mier, rendyou can watch us anytime on the cnbc app. with the widest selection from the hottest brands. like nike, jordan, hoka, the north face, and more. the looks you want. the backpacks you need. all under one roof. when you're running short on time, one-hour pick-up is always an option. and, with our best price guarantee, if you find a lower price, we'll match it. with looks this good, it's never been easier to sport your style.

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welcome back to "squawk box. a number of u.s.congress members are visiting tieaiwan. we have eunice yoon with more. from beijing >> reporter: good morning, steve. taiwan strait tensions are flaring up as it appeared that they he were easing after speaker pelosi's visit cons congressional delegation led by ed markey started today. they met with the foreign minister as well as other political and business leaders on a two-day trip. beijing's response is very angry. the foreign ministry threatened unspecified counter measures

the military is staging more drills near taiwan this as the defense ministry accused the u.s. of stirring up opportunities for more confrontation. the chinese appear to be breaking with tradition. congressional visits have been a relatively routine part of the u.s. and china and taiwan visit. pelosi's trip was not standard because she is in line with the presidency this looks more typical which seems to suggest that beijing is concerned and looking for ways to cut off more connections between taiwan and the rest of the world diplomatically guys >> eunice, does china feel it made its point the last time around can we expect another round of military exercises and missiles flying as a result >> reporter: i think that would be wise to expect it

i think from beijing's perspective, they were hoping to make the point if anything, this next visit by u.s. delegation has just enraged beijing. we are already seeing the exercises being announced for today. an thexpectation that beijing wl have all sorts of exercises. they did over the weekend. taiwan spotted several chinese planes crossing over the unofficial dividing line between taiwan and the mainland. because u.s. delegations continue to go as well as delegations from all over the world, china is likely going to just continue to become much more concerned about this and then the reaction we see and in the modus operandi is get tougher. >> eunice, thank you very much see you in the next hour.

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on this week's agenda, a flood of earnings from the retail sector with home depot, target, walmart, and more all set to report. joining us now, dana tulsi dana, good morning in terms of retail, it's been about the struggles with too much inventory and mixed signals about overall consumer health on things to spend. what are you most focused about? >> i want to see us in the reports as look to the future. i'm all about inventory levels on the company side. the supply chain disruption caused goods to come in at an

inopportune times. one of the surprising things, in my checks over the past two weeks, i've seen an improvement. that's a surprising thing to me. i think the inventory levels are hard to imagine in the demand term it's the supply that's the miss mach, so what is the supply going to look like how are we set up for the fourth quarter? that's what i'm watching a lot of these stocks, they're down in the multiple range by 25% to 50%, yet if the consumer is stabilizing, that's a good thing going forward for these names. >> yeah. i guess the question, if you see some improvement happening, is

the warnings from walmart and target that have been absorbed by some degree, does it seem like they were sufficiently conservative in their outlooks that people might have been looking at >> i think what we're seeing out there is the fact that another downtic in terms of guidance for the year is built into these stock prices these stocks are down in double digits, so the expectation, the stocks went up on even lower guidance because the street is ahead of where the guidance is what is '23 and '24 going to look like? numbers are expected to be bad inventory is expected to be high what happens today is what the world is looking at. >> dana, what we need to know for the broader inflation numbers is whether or not we have seen the discounting we're going to get because the

inventory overbilled or is there more discounting in the sector to come in your opinion? >> i think there's more discounting to come in the sector i think that back to school, for example, while numbers are expected to be up 7.5%, 8.5%, if you include inflation, it's really flat. we're beginning to see the level of promotions. that's the concern for the third quarter guidance and the concern for the year in conversations and what we're seeing, i think that's built into some of the stock prices, but you're going to have some surprises. guidance will be to the downside, not to the upside. >> and, dana, what's your read of the consumer from all of these reports? we're getting a very mixed read. hard to say there's any one story going on out there. >> i totally agree it's about income levels, upper income and lower income. the middle to upper income seems to still be spending whether it's on travel or even

on clothing and cosmetics, will the value lower end is pulling back because the rising prices like when you're going from meat to chicken or deciding what they're going to spend their dollars on, the level of income determines the spend. >> in terms of the home improvement retailers, home depot and lowe's, we're going to hear from them there's a line of thinking that say as little bit less housing turnover a lot of folks are not really in that -- they're essentially priced out of new homes means like there will be some resilience in terms of renovation. >> we're hearing more about m remodeling activity and home renovations. i'll be anxious what that looks like that show as level of consumer demand, but like what we were talking about before, steve. it's the income levels

who has the ability to spend. >> for sure, dana. thank you very much. we'll catch up with you after the reports. >> thank you, mike. when we come back, the irs stepping up enforcement activity, focusing on three types of income. will you be targeted robert frank has a special report straight ahead. plus, we'll talk to former new york fed president bill flioan about the pace of inatn d what he thinks right now. "squawk box" will be right back.

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good morning stock futures climb as we begin a busy week of earnings. we have what to watch in a new week of trading. >> threading the needle of inflation, what the fed needs to do to ensure a soft landing. former fed president bill dudley on the next move. and why the tax man could be coming for you even if you're not rich the irs is about to crack down on three types of people we're going to tell you all about it the second hour of "squawk box" begins right now ♪ good morning and welcome back to "squawk box" here on cnbc live from the nasdaq market site in times square

i'm steve liesman along with becky quick and mike santoli joe and aaron are off today. the energy companies are down as a result of oil prices being down $4. looking at the treasury complex, we see yields are where? i don't remember where they were. >> 2.83. >> 2.83. i guess that's where they've been, down a little bit this morning. there's the big story, the oil price being down $4 and change across the spectrum there. brent is down. natural gas as well. looking at crypto, they had made a bit of a rebound and now they're off a little bit this morning. >> just slightly, yeah a big run along with the nasdaq as has been the pattern recently the country's central bank unexpectingly cut key interest

rates. it cut the equivalent of $59.3 billion to rev up spending and spark economic growth. it came after retail sales grew by 2.7% year over year in july industrial production also fell short of expectations and decline from the prior month, and investment in real estate fell at a faster pace in july than in june and china's youth unemployment rate rose 20%. that's the highest numbers since published in 2018. >> this is pretty interesting. the central bank of china moving the opposite direction of every other central bank there's a global inflation problem. this is kind of swimming upstream and maybe they're in a different perspective. they've had the lockdowns from

covid, but what are some of the broader implications of this >> they were in a different place from where we are. they're in a different place we're dealing with the inflation process. they're trying to rekindle their economy and their huge political implications internally when they don't hit their goals some of that's a big deal i think that doesn't help the rest of the major developed countries when china is stimulating and everyone is trying to reduce inflation china is getting past the lockdowns and restarting could help the supply chain issue. >> that to me is probably the biggest input for the inflation market outlook is whether they get back fully online. arguably, one of the reasons that the u.s. fed is in this spot is because they didn't anticipate the u.s. was going to reopen as aggressively as it

did. you had to sort of build in that reserve of maybe we're going to have to stimulate for longer clearly the opposite issue. >> let's get down to dom chu he's got a look at the plea marke -- premarket movers we've been surprised, drops of 4.5% for wti and brent and, again, this is just what we're talking about. if you're looking at weaker demand, you would expect to see oil prices drop too. >> from the conversation you were having just now with mike and steve and the last hour with regard to the chinese data and the production and everything else, at a time the chinese wanted it and the economy's weak abouting a little more, there might have been jawboning in the past about unfair trade, whether deficits would expand, things like that. but you don't have that because

the chinese economy is so far behind but to your point, becky, yes, it's the oil and gas companies in the premarket trade right now that are the most active, names like marathon oil and devon energy, it's down 3%, 3.5% some of the majors sharing their hurt down 2.5% for chevron and exxon. you have freeport-mcmoran. it's down 3.5% as well keep an eye on the stock complex overall. many of it is tied to the growth of china we'll keep an eye on those also watching what's happening with shares of tesla, they're down drastically, but this is after tesla says it's made 3.5 million vehicles with a third of them being made in

shanghai tesla in the newsful right now bucking what's going on up 3%, 3.5% in trade then another thing we talked about is earnings from last week and the reselling platform posh m mark they took a hit. this morning analysts at barclays are upgrading poshmark. they're up they like amongstover things some of the macro tailwinds especially on the luxury side of things they think the stigma has been taken away from buying used items and you'll have more traction because they make it accessible for people who are aspirational but cannot pay full price for louis vuitton and elsewhere.

>> dom, so many charts look like that all the trending consumer charts, a lot of the tech stocks that were so high in 2021, a rapid plunge and now the slow base and maybe they're perking up with a recovery move. >> you've got it. >> i want to point out real quick, the gasoline prices were down. >> we were away, but don't worry about it we're back under $3 yesterday when i was driving on long island, i saw a price below $4 i wanted to have an empty tank to be able to pull over and fill up, but unfortunately i had a tank full of gas. meanwhile homeland security warning of threats to law

enforcement. eamon javers joins us now. >> it's the ferocious act by the search of the fbi to the former president's home that sparked the uptick in threats. over the weekend we saw a new notice being posted by the fbi the fbi and dhs issued intelligence bulletin warnings of a spike in threats. it's particularly in high-profile locations such as the white house. we also saw this reaction over the wechlktd cincinnati fbi attacker ricky shiver, he appears to have row recently posted online about his desire to kill fbi agents we saw the political fallout

with amy klobuchar on "meet the press" over the weekend, a democrat saying it's tough to react to this because you don't know what's in the documents that the fbi found in former president trump's home, but some things are clear here's what she said. >> what we do know is it rose to the level of a search warrant that a federal judge approved, and we do know that they were searching for classified material, things that fell under one of the statutes they used in the search warrant was the espionage act. >> now, senator mike rounds of south dakota, a republican reacting to this hi said his instinct is not to necessarily criticize the fbi, but he does have some questions. take a listen. >> i think it's very important, long term, for the justice department, now that they've done this, this was not just a fishing expedition, that they

had due cause go firsthand do this, that they did exhaust all other means, and if they can't do that, then we've got a serious problem on our hands. >> what we know at this point is the department of just is investigating here they're using espionage statutes to justify what they're going after here but what we don't know is what's in these documents so that's going to be the central question in all of this, and it might be some time before we get the answers because ultimately the normal course of action, the justice department skplains this. if they charge, if they indict the former president, then you get an indictment that spells out all the details. if you don't, then you get nothing because there's the presumption of innocence, and they move on back to you. >> we have that vacuum and a lot

of talk that fills it. thank you very much. coming up, the tax man cometh how they plan to hire more people to crack down on taxes. we will talk with bill dudley. we'll talk inflation and the fed. "squawk box" will be right back. >> announcer: "squawk box" is sponsored by bit wise, the world's leader in crypto index funds.

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welcome back, everybody. the irs plans to use about half of its new $80 billion in funding to hire more agents and crack down on tax cheats here to break down who they are looking for and who could be the top targets, robert frank. he's been digging into all of. this robert, what have you found? >> becky, as you mentioned, the irs is hoping to raise $200 billion in added revenue from increased enforcement with that new money. for high-paying taxpayers, most of the audits will focus on three types of income. the biggest is pass-throughs about 40% of the tax gaps t total unpaid taxes, comes from pass threw underreporting their income

those include partnerships, s-corpss, foundations, and sole proprietorships. last year it was listed greater scrutiny of pass-throughs as his first priority if they got added funds. the second is offshore transactions secret offshore income account for $15 billion a year in unpaid taxes. the irs says lit hire specialists in offshoring to target those accounts. capital gains is the third one three quart is of capital gains is earned by those with $1 million or more in income. stock sales are automatically reported to the irs, but sales of private businesses, property, crypto, all of that are not reported, so that's where they're going to go after. now, over the past decade t

ought iterate for those earning more than $1 million a year has fallen by 8 07 with tens of thousands of agents they're going to hire, that money rate at the top will start to rise again. >> bet it will thank you. for more on the impact, let's bring in carlos kubel lowe, former congressman of florida, now a principal for public affairs with de-cerro and donna edwards is here as well. car lease, i know you have some issues with this even though it's not going to hit people who make less than $400,000, inevitably that will be the case. >> of course you said it right there. pass-throughs are going to be a main target of the irs we know they're small businesses these are the businesses that employ people in local communities. they're small business owners that aren't as sophisticated to

have c-corps with big accounting departments. they're going to knock on their doors. it's going to occupy their business and ability to grow it's shame i support the climate provisions i think there's good climate and energy policy in this so-called inflation reduction act, but to combine this with the army of irs agents that the government is going to hire to harass a lot of small business owners and middle class families, i think that's insane. >> can i ask you, carlos, i'd like to get robert frank back if he hasn't gone away t number of pass-throughs have skyrocketed a lot of times it it's not just small businesses it's individuals claiming to be so some of business themselves

it's a high end individual. >> becky, i want to concede two things we want everyone to pay their taxes. we can't have people evading taxes and cheat, right no one is for that at the same time t more companies that get audited, the higher the burden is on small business if you're proper at filing your taxes, if you get audited, that's a commitment of time and resources you have to make i agree they were underfunded and were punished for a decade for going after conservative groups their agency became underfunded, unattached, but this is an is exaggerated expansion of the agency. >> donna, how do you make sure people are paying the taxes they should be paying, which i think is a great thing, rather than

raise the tacks on everyone, go after the people who are cheating without harassing legitimate businesses and spending way too much time with audits >> i think the one thing is the vast majority do pay their taxes. there are different ways to evade them we also have to acknowledge the irs has essentially been hollowed out since about 2008. this really dates back they've lost thousands and thousands of agents, of auditors, and so what that means is that the people who are at the higher end have really sort of gotten away with not paying their taxes and not being audited. you saw the numbers being put on the screen earlier about the people making over a million

dollars. on the low end, the irs because it has such a small number of aud tors have been going after people who claim the earned knicks tax credit. that means taxpayers who make under $20,000. so i think that this focus on the higher end, on people who are evading their tax obligations by creating so-called business operations that really are not a business at all but are pass-through income to evade taxes, that's a great focus for the irs. keep in mind it's $80 billion, but it's $10 billion doeach yea, and that will allow the irs to get back to the place it was with a larger number of auditors who are then able to focus their

audit activities on the very sort of narrow slice of americans and foreign corporations that do business in the united states that focus them to pay their fair share, and i think that's an important focus for the irs, and it is a way for us to reclaim taxes without raising taxes on all the rest of us who are paying our taxes legitimately >> you know, carlos, everybody feels like they're paying their taxes and nobody else is, but it is pretty clear if you're a w-2 wage earner, you're not going to to have ways to work around it passion-throughs would be one of them if you're not a w-2 earns, shouldn't there be access? >> again, i'm not talk about the

middle class earning some of these things, but it does feel like there are ways to get around it, and if you're not a w-2 wage earner, there are all sorts of incentives to cheat. >> i think we all agree everybody should pay whatever their tax bill is, and they should pay it on a timely manner, athey shouldn't be able to cheat at the end of the day, a lot of these companies are very small businesses you have a person who has a ceramics business working at home, these people are going to be targeted just because they've decided to incorporate as an s-corp, a pass-through. >> what will the work-around be? >> it's not just a burden for the individuals and their businesses, but these costs get.

i think we can all agree the irs needed more funding, needed more resources, but this is a massive plan. >> hoaere's my only argument there are people who will always pay their taxes and do the right thing and people who won't if there's nobody watching, if there's no cops on dune. is there any way of having additional officering without necessarily harassing people is there a way to find a happy medium here? >> i think there is. the problem with the legislation, it goes too far again, we all agree. no one is for lawlessness when

it comes to taxes because it hurts all of us. i do think democrats have gone too far and when agents start knocking on people's door, a lot of people are going to look back and say why is this happening. >> donna, very quickly, last word. >> no, but, becky, what karlos described, these are allegedly mat businesses that's not going to be the focus of the irs they show up with a so-called operation to run their system through so they can get some kind of benefit without legitimately paying their taxes. i don't see the mom and pop shop in that category they're legitimate businesses. that's not going to be a problem for the irs. >> donna, carlos, thank you both for your time this morning >> coming up, former new york

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still to come, former fed president bill dudley on the fed rate hike tax. plus school almost back in session, but many districts are scrambling to find teachers. we've got more on that story purdue university has remo stay tuned you're watching "squawk box" and this is cnbc

the fed's inflation fight front and center joining us to talk the fed's next move is former fed president bill dudley. it's great to have you back. >> great to be here, steve. >> let me ask you this has the fed lost the thread here in that we had people coming on and saying, well, now, after the fed's pivot, inflation is still 8.5% and the market is pricing in cuts. have one fed official after another coming on and saying we're going to stay stiet for a while here has the fed lost the narrative, bill >> i think the market's misunderstanding what fed's up to, markets taking the notion they're going to slow down the rate of tightening to imply peaks and rates are going to be

lower. i think the fed's going to be higher than what they understand that point i think basically people misrad the press conference they might imply the federal reserve is almost done i don't think they're almost done they know they have to do a bit more to push the unemployment rate up to deal with the additional slack in the economy. if you look at underlying inflation measures, trimmed cpi, trimmed inflation deflator, those underlying methods are running in the 4% to 6% range. the feds have a lot more to do. >> bill, why don't you give us your idea of how much more the federal reserve has to do. we have fed officials. i think jim has talked about going to 4.4 even charlie evans, these are people you have worked with for

many years, they're talking 3 3/4 to 4.5%. do you think that's where the fed needs to go or do they need to go higher >> i think it depends how they react. it kindly runs on financial situations some of if the markets are buoyant, i think 4% plus is the minimum i'm expecting. the other thing that's important to recognize, the fed's not going to ease off any time soon because they need to be confident they're getting inflation back down to 2.5%. the inflation was not that chairman burns didn't tighten monetary policy. he generated a couple of recessions, but he didn't stay tight enough for long enough inflation got embedded inflation rose, and that's what required paul volcker to come in and put the economy through the wringer. they want to be confident they can solve inflation. >> but, bill, the fed is not winning that argument.

when you look at the rate outlook as priced in the futures market -- guys, i don't know if you got it done, but the end of next year, the market is pricing in rate cuts, which tells you -- and i started thinking about this the fed's message is not symmetric. it said, we're not even thinking about tightening, but it hasn't said we're not thinking about thinking about loosening the fed has been strong on easing policy but not that strong about staying tight and i also think, bill, when the market has it wrong, it's sort the fed's fault. the fed has to be responsible for that what's your view on that >> i think the problem here is that the market doesn't believe powell when he says he wants to get inflation back down to 2%. they think if inflation is 3% to the middle of next year, lit

soften i believe powell, but it's going to take time for people to understand that. >> one of the problems with trying to convey this message, if we go back one year and see what fed officials were sincerely saying, how rates were likely to stay higher, conditions change. and they might have changed in terms of what inflation might do, or inflation could come down the hard way orress way through statistical good luck and the fed's actions already in place i wonder how you would navigate it in that role right now, aside from what's happening already, which is fed officials saying that nothing much has changed about their current framework. >> i think the important thing here is if you were willing to ignore transitory inflation on the way up, you need to mark transitory inflation on the way down so if the headline inflation rate comes down sharply because of a decline in energy prices,

we really want to look through that in terms of it. look at wages for example. the wage trend seems to be about 5%, 6% that is not consist talent i 2% inflation. why are rates rising so fast because the inflation is high. the key focus is the labor market it's tighter than they wanted it to be, expected it to be the ratio was 1.1 to 8.1 the labor market was also very tight. so the labor market is much tighter than the fed wants the rate of inflation rate not too high that's why the federal reserve has to navigate this, navigate a slowdown. >> can i just ask you t reason that you're talking about your concerns with this, the reason you think the market's getting it wrong is because you're looking at the equity market and the gains it's made over the last month and it shouldn't be coming back like this, or you're

watching moves taking place in the treasury market? >> if you look at the federal funds futures market, rate cuts in 2023. that's premature the stockmarket's also a problem because when the stockmarket rallies, that means easier financial conditions goes against what the federal reserve is trying to accomplish here. >> just to point on that, your concern because you think the equity market rising itself means the fed will have more work to do that's why you think this is such a problem. >> the easier financial conditions are, the more optimistic t more the fed market has to do. t the fed is not unhappy to see a weaker stockmarket that's what they want to occur the fact that they're looking beyond the peak and short-term

interest rates to the easing that follows and that causes the equity market to rise, that's going to cause them to do more. >> becky's been on vacation, so i'm relying on you to fill her in on the debate are we in a recession now, which we've been going back and forth on give us your summary on that and whether the fed, whether we're going to be in one down the road. >> i don't think we're in a recession yet. the shorthand is two negative quarters, but that's not the real definition. the third quarter looks like a positive growth quarter, so that tells you a recession hasn't happened yet i do think a recession is highly likely because they need to look at more slack in the labor market that means they have to push the unemployment rate up

whenever it has risen by half a percentage point or more t result has been a full blown recession. i believe the unemployment rate has to rise by more than half a pattern rate to get the fed rate under control. it's 0.6 where we are above today. if you believe it has to go up by half a percent or more, you're looking at a full-blown recession. the fed has to be certain that they've actually accomplished their mission. that means just like they were slow to tighten. they got it back down. >> i want to throw you a curveball, which is the following. what about the idea that putting people back to work is really what the economy needs, that we have these supply problems and that the supply problems are rooted in the idea that we have been reaising the rates

i guess it's a different recovery and expansion we've had in the past that we ought to think about it differently when it comes to monetary policy as well. >> i completely agree with that using the template from the last expansion, that was not a good template. that's why we got to the extraordinary labor market very, very quickly the labor market is tighter than it was back in 2020. the inflation rate's much higher, and that's why the federal reserve has a lot more to do this time around. >> bill, thank you so much for joining us we hope to see you again soon. >> thank you, steve. >> bill dudley, former fed president. >> that was interesting. >> still to come, the nation is facing a shortage of teachers as kids are preparing to head back to school. we'll speak to purdue university

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welcome back to "squawk box. theequity index futures right now are backing off a little bit after last week's 3% gains or so the s&p 500 down roughly half a percent, similar on the dow. nasdaq down 50 points. check out oil. it is down, close to 5% right now. there's some concern across global markets about the growth outlook, bad economic performance in china was just reported overnight as well as some talk that there might be some loosening of some supplies around the globe take a look at some of the big names in the energy sector down this morning ahead of the open chevron giving up 3%

c conocophillips and exxonmobil down. tomorrow, we have july housing starts wednesday, retail sales, and the most recent fed meeting. and thursday we get the jobless claims and existing houses on the homing front we'll hear from home depot, walmart tomorrow, lohse and target on wednesday and kohl's on wednesday. kids get ready to return to class and there's a short afternoon of teachers. mitch daniels joins us next. check out the winners. the nasdaq and the dow "squawk box" will be right back.

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per share. with the start of the new school year just around the corner, school districts across the united states are stwrucling to hire teachers there are 300,000 teachers and support staff needed this. coming year that they just can't find for a closer look at this ir, let's bring in purdue university president mitch daniels. he's the former indiana governor and former fomb director as well it's good to see you this is an issue that people throughout the country are burning out, quitting, you can't find replacements. what's happened? >> i think you've named some of the most salient points, becky you say, take a closer look, and we should. this is a -- appears to be a big problem in some areas, no problem in many areas. the u.s. department of education just two months ago found only three teacher vacancies per district around that left all

summer to fill them. rand corporation last month found more people enemployed in the schools than the pandemic. remember that gusher of printed money the federal government spread around during those times. so what we seem to have is a very specific problem in some districts. unfortunately the ones where many of our most vulnerable children go to school. in certain specific areas, math, science, the english language as a second language, special ed, but not a general problem. so i think we have to think selectively and surgically about it. >> it may not be general but wide swaths. in arizona the governor signed law in 2017 that allowed people without formal training to teach in the classroom as long as they had five years' experience in the area relative to that now he's taken it a step

further. as long as you have a bachelor's degree does it make sense >> it certainly makes sense. there are an enormous amount of people who are talented and would like to participate and we've walled them off unnecessarily and for far too long you also mentioned i think, maybe the key to this issue over time is retention. we lose far too many teachers. they loose a lot of young teachers because they're blocked by rigid systems with career growth when people have asked them t top three reasons are workload, which includes a lot of administrative non-teaching assignments and lack of administrative support, and most critically, i think, discipline and the failure of schools to provoid it, require it, and back

up teachers when they do. >> two things. first, i respect you greatly and i love a lot of the things you do, but the idea of having a lot of people without a college degree teaching in classrooms, that seems like a bit of a stretch. i'd like to know my child is being taught by somebody who has taken the steps to go to a fine institution like purdue. >> i understand that we don't have anyone telling us predictively about that person to teach well. maybe that goes a step too far, but it is a step in the right direction. my home state has done the same thing, and many others are doing so i think it's very wise, at least in moderation. >> you mean in terms of opening the career to more people, but you're not talk about indiana actually taking the step to say you don't have to have a dlj

degree do this >> no, they've not done that, and i would bes he pant to do that maybe some em station of effectiveness and ant and knowledge could replace the bachelor's degree, which i'm sorry to say, many bachelor's degrees to a detriment is does not tell you much. >> that's true i know you're not a big fan of throwing money around, president daniels, but there's a wage gap between teachers and other professionals, something like 21%. that compares to a gap of 6% going back to 1986 is part of the problem not paying enough? i've seen anecdotally, they've said, i can make more money at walmart? >> i think we can say it's not the problem. when they ask teachers

themselves why they're leaving, money is not the issue it's the discipline and support and physical safety in some cases. le ten percent of teachers in recent years have reported not just unruly classrooms by threats of actual violence by their students and that's a big reason, i think, teachers, and, by the way a lot of parents have been looking for alternatives to too many of our public schools >> i once der if you could talk about the broader implications to this. could we ever get the economy back to normal if we're 300,000 teachers short i have to think that affects child care and people going to work to make themselves available for the work force when we're talking about a four-day school week, i'm wondering what the parents are going to do on that fifth day. >> look, i'm not saying that money well spent, more money, even more money, can't help. and i'm not saying more teachers

in certain place wouldn't be useful the most important need we have for teachers is for quality teachers i think they tutelage be paid far more than today. simply throwing numbers of people many of them not proven effective has not done it. we've spent by far more than anybody in the world and we're not getting results that dozens of countries are so i think we need to be careful and really look at the evidence here it's been obvious improvement for a long time that a quality teacher in a large classroom produces better result than a poor teacher in a small one. >> mink could i ask you to put your old omb hat on, which you and i used to talk about a bit -- the state of the government financial business do you worry that the interest rate burden is going to weigh us down >> it's not a matter of wo

worrying we know this to a mathematical uncertainty. it's only our position that is protecting us right now and the troubles that other countries are having if i -- when i look at today's young people t people on this campus and the little ones coming up, my number one concern for them is the unconscionable debts that we're going to dump on money that was spent on current consumption. by any historical measure, we're past the danger point and we're in a zone which is potentially economically ruinous when the bills come in and which, again, work a great inequity on those who inherit the bills. >> mitch, i know we didn't bring you on to talk every current event out there, but we did see china actually lowering interest rates today, which goes against what every other country in the

world is doing does that concern you? is it okay because we're going to see it? what's the bigger picture. >> i don't think i'm equipped to prognosticate on that. i will say i hope that it doesn't move anyone to want to retreat from the federal reserves actions, which have begun, i think, to head us in the right direction about inflachlgts that's their job i hope no one suggested imitating the unusual move. >> thank you, president daniels, as always for your time. it's great to see you this morning. >> likewise. coming up, new york congressman hakeem jeffries, plus a check on meme stock with former chair joe moglia. we check out futures as we head

to break, down 184 on the dow. stay tuned to "squawk box. we'll be coming right back

good morning welcome to "squawk box." we look at the winning streak since last november, china's slowdown, the second largest economy posting weak sales we'll get a live update coming from beijing. and will the inflation reduction act live up to its name as president biden prepares to sign the bill we're going to speak with congressman hakeem jeffries of new york the final hour of "squawk box" beginning right now. good morning, everybody. welcome back to "squawk box. this is cnbc, and we're live from the nasdaq market site from time square. i'm becky quick along with steve liesman and mike santoli

joe and aaron are off this morning. after four weeks in a row of gains, you're actually seeing red arrows this morning. down by 192 points the s&p futures are down by 26 points the nasdaq off by 64 points. you can look at treasury yields, but we should also be watching oil prices ten-year note is sitting at 2.815% the 2-year is at 3.238%. the oil prices will tell you where a lot of the pain is coming from this morning after we heard if from china talking about the weaker than expecting economic numbers coming in much weaker than anticipated and seeing the central bank in china cutting the interest rates while the rest of the world is raising things tells you the second largest economy in the world may be having issues with demand that's why you see wti off by about 5% brent also down by 4.8% and natural gas prices off by 1.6% but this is telling. wti at this point 87.59.

all the weak evest numbers, thee related to energy names. >> speaking of oil, becky, this morning we have another concrete example of how it's become for those controlling production saudi state oil giant aramco reporting a 90% surge. q2 profit came in at more than $48 billion up from $25 billion last year. the half year profit was close to $88 billion that easily eclipses the largest oil makes like exxonmobil, chevron, and bp. one of the things we're seeing here is you have -- they did say this morning they're ready to increase output if needed. there's some calls here by rbc that maybe they could speed up production of both natural gas and oil, which the global economy seems to need, and that would, i guess, weigh against profits.

>> you've got those coming from both ends. it's not often you see 5% drop on oil prices. maybe you have some saying we'll increase supply. that could give you, especially on a monday morning in august when a lot of people around around, that's why you could be seeing that. >> there's another element a third element, maybe this is peak oil profits how much better do you get than 90%. >> what was it $44 billion? >> up from 25. >> up from $25.5 billion if you look at exxonmobil, they were under 18 and change by the way, apple made more money than exxon mobile did. they made $19 million, but this eclipses that as well. >> what are they going to do with that money? where does it go does i got back into energy

production when i was a reporter in the 1990s and i followed the oil production, they got into computers and printers they went in and got rid of businesses and reyoorienting business there's a lot of extra money out there. what do they do? >> they're still paying a dividend you've got share buybacks that go through. >> but how does it get reinvested in the economy. starbucks says the national labor report relations board workers are guilty of misconduct

it asks for future elections to be conducted sri a in-person voting, not mail-in voting starbucks says it was reported by a career professional at the labor board. meantime china is shocking markets with surprise interest rate cuts while the rest of the world is raising rates eunice yoon joins us right now she's got more from beijing. eunice. >> thanks. china's central bank unexpectedly cut key interest rates by ten basis points and pumped the equivalent of $60 billion in there industrial production, retail sales and investment assessment all miss and the economic data seems to suggest the downturn is broader and deeper than expected the relative bright spot is

slowing down, a lot of it because of lockdowns and depressed demand here as well as oversears. the property investment number was looking kind of scary. property news sales down by a third. youth unemployment hit another record at neil 20% now, the rate cut is small analysts believe that we are going to to see more to come, but the overall message from the leadership appears to be that they are worried about the slowing growth, but not to the point where they're going to reflight the economy, which is what they usually do, to meet their growth targets guys >> so, eunice, is the idea that they won't reflighate the econo, will they look at lockdowns? >> reporter: it doesn't look as though it's going to happen any time soon. the leadership has said time and again the covid lockdowns are here to stay because zero covid

is so important. from their perspective it saves lives. president xi jinping said they're willing to see a little bit of a sacrifice on the economy. but in terms of, you know, outside of zero covid, it looks as though they're also not so willing to stomach some of the costs of stimulus. they have this blowedbloated pry sector, and the reason the rate cut was so small is they were looking to target excessive savings here chinese people tend to save when they get really nervous, and you're starting to see a buildup in savings so this might be a way for the leadership and the central bank to make the deposits look less attractive. >> eunice, it's a little weird i'm looking at the chinese inflation rate at 2 president 7% a r how is it that china has been immune to the global

inflation that's been out there. and is the pboc really onboard with a stimulation of the economy with just a 0.1% that seems like just a nod, not really a move. >> reporter: steve, i didn't hear the second part of your question, but in terms of inflation, the inflation rate has been low the government has been able to point to one of the problems on the food side. in the last set of numbers, it was more a problem with pork for the most part they have it under control because they have big reserves for food, but for the most part, they have been able to avoid a lot of the big problems with inflation. in fact, they're still seeing problems with commodity pricing. so i mean, for the most part, they say they have it under control, but we're going to have to see >> eunice, thank you let's get back to the broader markets.

stocks have recaptured more than half of their total losses from january into june, but the market might not be in the clear, at least not yet. mike's been taking a look at whether the signals are lining up for more gains or pullbacks what did you find, mike? >> you know, becky the market itself is forcing the issue. it's become a very balanced debate here. a reason a lot of folks are giving the rally the benefit of the doubt is not just that we've recaptured the total losses since the start of the year. the lowings here in mid-june, this is the utf, 3636, intraday low, we're up from both of those. you can see a modest little pullback this, you know, starts to look like a pretty decent bottom. if you had the average coming in, it would come down there, 4300 and change. that's why a lot of folks are saying it has something to prove right here valuations also arguably don't

look all that attractive because the market never got super cheap. here we are with the broad market you guys were talking about the energy move. here's wti crude over two years against the broader basket of kmomts what you see is obviously a very sharp move lower here recently by crude, but it outperformed by so much. a really flattening out of other commodities. oil is within its own supply and demand and got momentum money in there near the highs and that's all rationalized probably decent news in the overall inflation if oil stays back on its heels. take a look. look at the merging markets versus china specifically. there's an etf with all-emerging markets. that's the first line. you see this revooivl in all other emerging markets since mid-july, when was that? that was when the u.s. dollar

peaked and risk assets in general, people getting less concerned about runaway fed interest rates, for example but china is operating on its own cadence with the lockdowns and the slowdown you see some divergence there. by the way, china is about a third of the overall emerging markets index? how do you factor in with what bill dudley told us earlier this morning? he thinks it's a bad thing because it creates loser financial conditions, which the fed is going to have to do more to try to tighten and bring back in when you start hearing former fed officials talking about things like that, saying the market's wrong, it's coming back too quickly, and the fed is not unhappy when equity markets come down who wins out there does the market win out or is this a situation where you can't fight the fed? >> i don't think it wins out

necessarily, but i think the market might be operating on a little bit more of an anticipatory premise the fed has told you, we're not going to be proactive about this we're going to wait for the publishes inflation numbers to come down before we even think about moderating or stopping the tightened campaign markets by their nature are going to try to anticipate the turn what they see now is inflation is enough of a downslope that either it takes care of itself and again gets back to an acceptable range or maybe the economy hits the rocks and the fed has to react to that in some way. so i get why the market is trying to position itself here also, markets got way oversold and kind of washed out in mid-june it's bouncing from there i do agree that when financial conditions loosen, it increases the budget, so to speak, that

the fed has where they can spend in further tightening moves, or at least that's the way they would view it. >> mike, real quick. is the economy commodity peak you show there, does that line up with the s&p bottom right there, and is this simply then a relatively simple story of a rejuve neigh or rekindling of margins? >> it's really close you could get more specific about it and say stocks have been anti-gasoline all year. when gasoline peaks, you did see it it's not going to stay just that way forever, but it does seem as if that was the main incenter ument of pressure on the economy and markets, and -- >> it also, as you said, it was peak dollar, and the dollar has softened from there. >> not only that, but you also had a fed over prior months that essentially hitched its policy

to gasoline prices because it was pointing on inflation and it also was pointing to inflation expectations an condition super services which is a proxy for gas prices >> mike, i want to thank you because you're walking right back over here see you in a second. all right. coming up now, that the inflation reduction act has passed, we'll ask hakim jeffries whether it will work plus we dig into the pickup of new stock trailing with former tv ameritrade chairman joe moglia, and what does the inflation reduction act mean for tesla, gm, and other companies looking to develop the next generation of electric vehicles, the will definitely be winners and losers all that and more when "squawk box" returns

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president biden planning to pass the clie inflation reduction act. joining us now, congressman hakeem jeffries, he chairs the democratic caucus. congressman jeffries, thanks so much for joining us this

morning. i guess there's a bunch of places to start on this. let me start from one place. did you think this was going to happen >> we've consistently been able to get big things done with people starting with the american rescue plan, put money back in pockets, get kids back in school. it was an historic investment in fixing our crumbling bridges, tunnels, and transport then we, of course, moved on to gun safety legislation, that was also the first meaningful gun safety bill passed in 30 years then we passed the c.h.i.p.s. and science act that will bring back semi-conductor production to the united states of america. so building upon that track record, i was always cautiously optimistic that we would be able to move forward with the inflation reduction act, thank we were able to get it over the

finish line. president biden will sign it into law shortly. >> can yo u address the criticism? there's not a whole lot of reduction in the inflation redux act. >> with respect to health care costs, i think there will be an immediate benefit in the context of strengthening the affordable care act and ensuring that the premium tax credit subsidies that enable health care to be affordable for more than 13 million americans remain in place and don't subject it to the potential of dramatic increases in health care costs that's an immediate benefit. also, the seniors across the country will finally have an opportunity to have medicare be able to negotiate prescription drug prices thatare low owner their behalf, using its bulk price purchasing power

that's a pretty commonsense approach when tens of millions of americans are on medicare, but the law as you know had p prohibited up until this point >> you have the spending up front and the thing that's the most powerful when it comes to introducing inflation is at the back end, if i'm not mistaken, 2025 why isn't there more up front, congressman? >> the deficit has been reduced significantly during the first 18 months of the biden administration that's point number one. the additional $300 billion in deficit reduction that will take placeover the window of the inflation reduction act is also there. the immediate relief it will provide in the next few years in the context of health care costs is pretty significant for people i represent who over the last decade they have been largely concerned and complaining about the dramatic increases in health

care that they've been experiencing now, of course, most recently, over the last year or so, we began to see gas prices increase thankfully gas prices have also declined for the entirety of the sum every sengling day of the summer, and there's reason to believe as you discussed earlier on the show that that will be sustainable moving forward, and what the inflation reduction act is going to be able to do is ultimately drive down energy costs as well by incentivizing efficiency in the context of energy both on the residential side and commercial signed by hopefully extending the tide of the extreme weather events that are good for the economy and the northwestern people. there's a wall street editorial say this is a big dip to china and china has all the

minerals it needs for electronic vehicles and batteries should we be doing more to onshore production >> that's certainly something we can take a look at in the context of a broader approach in terms of industrial policy to bring jobs back to the united states of america. that was the centerpiece that the semi-conductor production was heavily concentrated in the far east and taiwan and china. that was a problem so in the context of trying to figure out more broadly how do we bring domestic manufacturing jobs and other jobs back to the united states and reverse the trend of them going in the other direction for decades, i think it's a good thing and a reasonable thing to explore. >> congressman, a bunch of your colleagues are over in taiwan right now. what's your view of whether or not they should be over there and china's reaction

>> well, listen. they've been an ally there are geo politics to it we have to be sensitive to that. the administration has to be sensitive to it. we want to be able to send a message as appropriately as possible as the leader of the free world we believe in a strong democracy and that's the message my colleagues are trying to send. >> congressman jeffries, thanks for joining us. >> thank you. coming up, helima cost joins us from rbc c capital markets.

how much lower can prices fall as a reminder, you can get the best of "squawk box" on squawk pod on your favorite app you can listen any time. we'll be right back.

welcome back to "squawk box. the stock index futures on the softer side.

they haven't moved in the last half hour or so. s&p 500 down by half a perfect sent similar for the dow. the nasdaq outperforming just slightly we're watching solar stocks and electric vehicle makers. you see solar stocks there down just modestly. they have had a very, very good run after the passage of the inflation reduction act. ev maker tesla, modestly green and the rest of them also in giveback mode after we have gotten a nice rally from across the board. speaking of tesla, elon musk making headlines as well, tweeting yesterday, congrats giga shanghai on making the millionth car. the factory had been struggling after months of lockdowns and part shortages in kai na. more on the inflation reduction act, not all companies will benefit equally

phil lebeau joins us now to break that down. hi hi, phil. >> there are a number of plans in place we're not going to go through all of them, but we'll look at who benefit whoonsd doesn't ben fichlt you look at tesla, general motors, ford they've got the production either in place here in the united states or coming out relatively quickly and further out in the next several years the ev losers haven't put any plans in place for production in the united states. as a result, it's going to be some time before it comes online you're looking way out into the decade before subaru, mazda around lucid, that's where they expect to benefit. bottom line, for japanese

automakers, this could be a rough couple of years. here's one of the researchers who put together this data from resource. >> the japanese manufacturers in general are the biggest losers in the sense they don't have the installed base for making call cars in north america. they also don't have the battery backups set up yet. >> take a look at toyota and nissan and let's compare them with general motors and ford you have general motors putting six ev plants in the united states over the next several years. that's going to be a big part of allowing them to offer customers the act to get the federal tax credit or at least the tax incentive right off the bat. also take a look at shares of rivian last week the company reported its q2 results

remember, rivian went to its customers and said lock in the current $75 ev incentive because it goes away once it signs the inflation reduction act. as soon as that happens, you see these new incentives kick in and that's going to limit if many people will be able to get the tax incentive from rivian in the future guys >> phil, i've been waiting all morning to talk to you elon musk is out with a tweet about $3 million teslas? >> yeah, i saw it. >> puttet in context for us. it sounds like a lot of cars everybody wants to really know what's going on with tesla is this bill good for tesla and the lead it has on the other ev companies? is it bad, or is it neutral? >> first question, 3 million, that's a lot of vehicles, especially for a company that a decade ago was making 5,000 vehicles a year, but to put this

in perspective that's 3 million over ten years, toyota, ten million in one year. they're rapidly increasing production but in terms of how tesla ben it froms from the ira, they're in the best position. they have the vehicles that are likely going to be able to -- the model 3 or the model y, you can get those under the restrictions that are in place for the price cab. remember, it's 55,000 for a car, 85,000 for a tesla or truck. everyone is in good shape. remember, they didn't have the old incentive. they had already gone over the threshold for offering that to customers. >> i'm going to lose that incentive if i don't do it this week. >> no, no, no, no, no, no. you're mixing apples and oranges. that's rivian. river yab offered that and other

companies under the old incentive, which goes away once president biden signs the new ira. >> phil, you're the best thanks for coming on this morning. >> thanks. when we come back, hour retail investors are navigating the summer surge in the markets. plus, are we witnessing the return of the meme stock trachltd chairman joe moglia will join us for the wide-ranging conversation. that's next. stay tuned you're wchating "squawk box" on cnbc live from the market site at time square across your full financial picture. a plan with tax-smart investing strategies designed to help you keep more of what you earn. this is the planning effect.

welcome back to "squawk box" on cnbc for a mid august morning. there's a lot going on the futures are down 184 points on the dow, 24 on the s&p, and 52 on the nasdaq right there what's the percentage, guys? it's not that much 0.3, 0.4. >> about a third of a percent. >> what was that >> about a third of a percent. it managed to close above its

280 average for the second trading day of this year, january 4th. and then we have oil stocks moving and oil prices moving and all kinds of things moving. >> meme stocks, by the way, are apparently back. just the past two weeks, amc is up right now we want to talk about what's behind the pickup in trading. for that we welcome joe moglia he's former chairman and ceo of td ameritrade and chairman of fundamental global investors joe, this has been kind of an unusual turn, maybe one that a lot of people didn't see i say i don't know what you make of all the meme stock activity. >> good morning, becky when the reddit people put a

good thought together, there's reasonable shorts in the marketplace, i think meme can still put on that type of trade and wind up doing well however t issues we had with them several months ago wasn't what was going on with the meme world. it's because the markets were going down any time you have a day trader involved, the market goes down if you recall when the whole gamestop thing happens, one of the institution al ones caught u with that. it could put them out of business so there's still opportunity for meme, but the day trader world, i think, is becoming more -- you're going to have more pressure. >> let's talk about that specifically that's a more interesting point. we call them retail traders, day

trade traders. i think the perception is when the market was down and it was tough to do, and it wasn't fun anymore. that's the end of the day trading or the day trader at least for now. does that mean they haven't disappeared? they just were hibernating, waiting for markets to go back up >> why don't we go back to the late '90s and the dot-com boom that's when day traders came alive. you had the internegs and the execution and the markets were doing very about, very well until the dot-com bubble burst and for much of 2003, most of them went out of business. fast forward we've had an incredible run for the last if yfew years. it's been the previous few years where the day traders have done well

they've done well in the last six weeks primarily because we had a solid 50% retracement in a bear market, a solid rally they would have done well in that environmental but i think going forward, there's still pressure with regard to the market and the fed increases their rates and then the market rates go up. so margin issues were not at issue maybe a year ago or 20-something years ago, but there would be an issue going forward. >> i guess the bigger question is how many went bust? how many lost their taste for it how many thought, okay, this was fun during covid, but i'm back out there doing other things is there a staying base, and what percentage of that staying base would stick around. >> i do know there are not as many today as there were three, four, five, six months agoey u like an coinbase numbers they had reported a 30% drop in

their daily trading activity you look at what happened with robinhood where their business is that type of trader they lost almost 2 million active traders from one quarter to the next. so that's a legitimate cut now, how many people in terms of percentage are still up? i guess 75%. but if we go into a month -- if we continue to have that, that 75 cents had better get cut in half. >> i wonder what the thoughts are with respect to the industry and so skewed. it's obviously been a big thing with robinhood introducing people to options. on the one hand you can easily overpay and get whipped so you have these single stock etfs that have tried to capture some of that flow for people who might be trading options

every tool can be used to help or to hurt. >> i think that that's a great point, mike. i think the reality is if we go back to what we did at td ameritrade this was 10, 12, 13, 14 years ago when we bought thinkorswim along with that we tried to bring along good education for the individual investors who were going to get involved with that fr. a busy perspective, if irobinhood, i want as many day trards as i can. i want that in my business model. the issue, though, is not so much robinhood the issue for me and i think all of us is what happens to the individual investor, you can't

get involved with options without understand options or futures without futures. with that has to come with real education, not just a spot on the website. real education they can come together nicely and can ooe in effect down the road help the individual inv investor. >> joe, come on. these meme stocks, are they not a measure or a gauge of craziness? i mean when your kiz d comes hoe and says, dad, i bought game stop, nothing seems like a better signal to sell than anybody. if i'm thinking, mainly, is the crazy bs back. >> i don't think so. you go back to the dot-com boom.

you'd be in a cab and the cab driver would start to give you thoughts or ideas. you'd get a haircut and the barber would give you thoughts and ideas. if my son came home and said he tripled his stock in gamestop, i'd give him money to triple his trade. you're hoping it goes up now forecast you know when to get out? should vow nop i do think it's far more like vegas than what it would be. >> let me ask you one more quick question in terms of shorts. its go scary because you knew the retailers could run you out. some of the more tried hedge funds were not doing shorts they might have done in the past. is this coming back or way too

short of a market to try to short anything >> i think they know what they're doing. they'll be on top of that. what they found out with gamestop several months ago was that all of a sudden retail is a risk to the individual, the institution's provision. because they're thing about it themselves, they need to have the expertise to know when they're taking on too much that was a big lesson in the institution al l al world learn them. >> my son came home and said he met with a financial planner. >> the baseball guy? >> the baseball guy, yeah. you met him. he met with a financial planner with his new job and he'll be

setting up with a 401(k), which is way better. >> 10%, put it over here it is like gambling. >> what if he could have thrown 95 miles an hour none of this would have mattered at all, would it >> new york it still would matter you would have more money to get involved with meme stocks and have a much, much bigger 401(k). >> proud papa. joe moglia, thank you. >> thanks. good to see you. coming up, jim cramer's first take on the week ahead take a look at the futures we have the s&p down 30 points over half a pen sent chl we have a weak empire state manufacturing number, causing a little softness in the it. you can listen to us live using the cnbc app stay tuned "squawk box" will be right back.

let's get down to the new york stock exchange. jim cramer joins us. i was off. i saw a lot of canning you were doing over the weekend and some fishing. i know you have thoughts of what china is doing just in terms of the weaker than expected-economy that's what let's moving the features today. >> it's way overdone

remember, it is a totalitarian regime know tell common thesis now is, really, it's 2008 and our country replayed over there. 21 developers have filed bankruptcy i think it's factious reasoning. i think the chinese are able to change things if they want to. selling everything off china is becoming an endless theme. get used to it as long as they continue this bogus lockdown, they're going to continue to have it. i was told it was a good day for spending, but. i don't know why things are different other than russia is plotting the world. >> i know it's interesting steve has been pointing out what he heard from where they threw a line and basically said, we're ready to produce more if needed, which is kind of an interesting way of thinking about what the kingdom is thinking too.

maybe they're upset the russians are flooding market. i hadn't thought of that perspective. >> russia has made a great sale to china, but to under ya, which is doing really well if you go back to june when oilp and ever since then, it's been way downhill, i's goin to test $82, $83 and come back the united states is strong. >> fascinating, like a pile-up the oil that was going to go to india and china now gets backed up and has to find a home elsewhere and starts to really help supply throughout the world, right >> yeah, definitely. that's why i think refineries have a little leeway remember, no one has been to a refinery in this company because we're all going to go ev in the next 15 years it's going to be a crummy investment, but i think we should be dealing with the deflationary aspects of oil

going down we need to see autos come down and rentals come down, but this is a kind of shocking move for oil. i think it just has to do with there's too much not necessarily related to china, but worldwide >> we have to run, but how was the fishing? >> you know, two black sea bass that were long enough to be able to eat they don't have enough meat on them, so you needed them both. thank you for asking >> looked good the one i saw looked good. we'll see you in a few minutes "squawk box" will be right back with lima croft from rbc to talk about oil taking aeg l lower this morning we'll be right back. what do you want to leave behind? that's your why. it's your purpose, and we will work with you every step of the way to achieve it.

the dip in oil this morning weak chinese sales making investors anxious about growth in the world's second largest economy china bank also cut key lending rates. joining us, helima croft, rbc global head of commodity strategy and cnbc ontributor helima, good morning first, is that your read on what we're seeing in oil prices this morning, that it's mostly about china? >> this is a big story weighing on markets for a while the big demand concern has been china. there have been some expectation

over the summer that they would roll back these zero covid policies and we could see an increase in demand out of china. that just hasn't materialized. it's sort of a failure to launch in terms of chinese demand but as jim was saying in the previous segment, we have a lot of oil on this market. we have this u.s. spr release, 1 million barrels a day hitting the market that will unwind in october. and we have seen a real rebound in russian production and exports with those barrels going into key markets like india. the big question is what happens if the eu moves forward with their embargo on russian oil and 2.2 million barrels come december may be facing a challenge getting a new home but that's going to be a key inflection point in the market right now, russia's having very few obstacles pushing their barrels out. >> doesn't that move a little bit in opposition to the standard line that you have been hearing in the oil market for so long yes, prices are down, but really

it's pretty tight supply you're seeing the futures curve tell you that, right, that near term prices have been higher therefore, it's still not a well supplied market. has that shifted or is it just a short term issue of absorbing some of the spr and others >> the real issue is when this war started, we had this buyer strike where we essentially had millions of barrels of russian exports that people didn't want to touch the russians have been really successful pushing those barrels into key markets and again, the key question is going to be, outside of this russia supply, outside of the spr, if you look through the rest of the complex, opec is pretty much tapped out there were comments saying saudi aramco is ready to produce more. that to me is not a new story. they have always been ready to produce more, to potentially go up to 12 million barrels, if the crown prince and the oil minister ask them to do so the question is, is the crown prince of saudi arabia, is the

oil minister, are they going to ramp up production they are really concerned about depleting spare capacity at this stage when we don't know what's going to happen with russia sanctions. to me, the fact the aramco ceo says they're in theory ready to produce, that's not a new story. >> what a difference a couple weeks make we went from talking about how we didn't have enough oil, we weren't going to have enough oil. it was never happening we're in a five-year decline big big problems to oh, my gosh, we're awash in oil is this a longer term issue or do we get back to the things we were talkining about just a few weeks ago. all of a sudden if china's economy looks better, if things open up in other places, we're at a shortage of oil again >> people are saying this is potentially an artificial story when it comes to the spr release. that does wind down in october you're not going to have this additional million barrels being pushed out into the market from the united states, and again, to

me, the russia story is going to be fascinating because again, come december, the eu embargo kicks in, and we're going to have 2.2 million barrels of russian exports that will not be going into europe. and the question is, if you look at the additional sanctions on shipping and insurance, it may be challenging to move those barrels to india because of those additional sanctions that's why this whole price cap conversation is coming in, because from the standpoint of the united states and europe, they necessarily don't want these barrels going off the market, but again, come december, those barrels are at least not going into europe, and a question mark can they go into asia after that. >> speaking of europe and russia, talk a little bit about natural gas, the current state of play as we look into the winter really not that far off the highs even though price is soft this morning >> this is the big economic concern of this war, is what happens with russia natural gas into europe. they have been slashing natural

gas exports through critical pipelines. and the real concern is, are they essentially going to turn off the taps completely and leave europe in a major natural gas deficit. as we said before, gas is a weapon of choice for the russians it does not earn the type of revenue that oil exports earn. so they're perfectly prepared to cut off europe, to try to force europe to change their calculations on supporting ukraine and going forward with these really punitive sanctions that are going to hit in december on oil. >> yeah, december probably come pretty quickly now helima, great to get your take thank you. >> thank you for having me >> let's get a quick final check on the markets this morning before we hand things over the futures, as you probably know at this point, down this morning. the dow is about at the weakest level i have seen this morning down 230 points. s&p futures down by 32 nasdaq down by 79. big story today is oil and they're going to continue to cover that on "squawk on the street" coming up in just a few seconds. again, oil prices down

significantly. helima was laying out the reasons why. first of all, mike, steve, want to thank you both for being here today. giving me my van winkle update on the morning we'll see you soon that does it for us today. make sure to join us tomorrow but "squawk on the street" is coming up now. we'll see you later. good monday morning and welcome to "squawk on the street." i'm david faber. jim cramer we are live from the new york stock y. carl has the morning off let's give you a look at futures. yes, he does jim asked me, is carl off this morning? yeah, i thing so that's why i'm sitting to your right. you look at where we're headed in a half hour from now when we start trading. looks like we're going to have a lower open, of course. >> silly futures traders >> let's get to our road map we're goin