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 going tostart with

weakness in china. that is having an impact on the market the country's economy stumbled in july, causing the central bank to cut two key interest rates and the performance of that economy having an impact on oil. we'll also get to that speaking of slowing, peloton and best buy both announcing that they will be cutting jobs as we head into a busy week for the retailers. that is earnings related and finally, no loveen for app loven. no thank you, reaffirmed its commit menment to iron source. we'll give you the details we'll start with the markets and of course worries about that slowdown in china. that country's central bank announcing surprise rate cuts. and any number of the indicators, any number of the indicators show things are not moving very quickly. >> let's take it head on in the old days, every time they

cut rates, the market used to go higher now there's a belief, i think, worldwide that they're in a 2008, 2010 program meaning they don't know what to do that they have mortgage problems i pushed back and say wait a second, it is a totalitarian government they can wipe out any debt they want there's no, let's go to congress and hold this thing up there's no t.a.r.p. issue. they'll just, if they have too, close the bad actors and they'll detain them. so i think that the idea that our market is trading off china, including our oil market, is just once again thin monday august after a big friday. you know, much ado about nothing. >> you have to grab ahold of some story when you're the market >> so all right, so around quarter four, no narrative, no one knew what to do. >> quarter to 4:00 in the

morning? >> in the three hours between then and when i got dressed it was a full scale rally in the last two hours, oil is back in bear market territory. but nothing has happened so i find it to be a little factuous, not unlike bed bath looking like it got a bid because of the meme people much ado about nothing, which is not a great play, just a great title. >> yes, yes. we spoke many times about the strict covid lockdowns in china having an impact we knew it was having an impact. obviously, the country is more open now than it had been previously i don't know what numbers are going to look like going forward. but how much of this is backward looking to a certain extent. i don't know what the expectations are when it comes to a cut in rates there. as you pointed out, previously, the market might have moved higher >> look, they let the insurance companies, they cut the

insurance -- the reserve rate. they used to be a big source of capital. there are so many bankruptcies including at ever grand. >> you made the point, this is also coupled with the property bubble deflating >> again, it's not -- and maybe they can't give us much money to the belt and road initiative, sri lanka in trouble, but david, we can become china centric or we can become india centric with 1.4 billion people, or indonesia centric. brazilian centric. if we just wake up and determine what we're going to do as traders, as investors off china, i think we're going to be really stupid >> it is the world's second largest economy? >> so what, we're the world's largest. we have tremendous demand. we don't know what to do we had layoffs at best buy which amounted to like five stores we had peloton, but they had too many people. you look at adp, look at their

chart. that is a measure of what's going on in our country. so we can fall prey to the idea that president xi, who i think we put in office basically forever because we went and did exactly what the chinese nationalist -- what we all didn't want, which is us going to taiwan, and we act as if, why we decided to saber rattle, it hasn't done anything, but i just think we're not china. we're the u.s. and we're trading like we are china, and that's future trading going back and forth because there's nothing to do. the equivalent of choppy, when they should be doing nothing there's nothing. i mean, what happens if i came in here in the future, there's nothing. >> by the way, they very well may be a half hour, an hour into trading. >> take me off last week, where we had two obviously key indicators show that inflation is at least tamer than it had been

a cpi that was flat, a ppi that was down a little bit. and a market that responded quite positively to that and the prospect perhaps the fed will be done sooner. >> when you say it's peak inflation, the people who have bet their careers that it isn't usually come up with, it's not peak, or it's going to come back and there are more people who bet their careers against the june 14th rally, and i have seen it a long time if you lay over june 14th with the current, that was june 14th was the peak of the ten-year, 3.4%, the people who were negative, june 13th and 14th, were people who said the bear market is down 20% now is the beginning of the rollover, and at 3.4%, now is the march to 4.0%. those people were the people who have stuck by their lack of opportunity on the short side, but they keep going. they rejoice today they'll be anywhere you want don't walk down the street, you're liable to hit one jumping

out a window there's without a doubt to me a cohort of people who refuse to believe no matter what yet when you look at june 15th, 13th, 14th, and you see the spike in oil to $113, which now we're in the mid-$80s. you see the interest rates up big and you realize that was the last hot cpi and then you have a flat cpi and then a down one, that's the beginning but when you say that, it's considered to be you're an apostate i'm not an apostate. i look at the fact oil spiked to $115 and then went down and interest rates went to 3.4% and then went down that's just imempirical. i'm not going to be contrary against something occurring at this moment. >> that said, there are plenty of sophisticated investor whose have told me and still seem to be holding on to the ideas that earnings in particular are going to be hit in the coming quarters as a result of significant reduction in demand and this

rally is unsupported ultimately because we're going to need not higher multiples but we're going to get lower multiples given the lack of earnings growth and in fact the reduction overall year to year. >> look, we're going to see numbers in the next three days that are very indicative of how strong the consumer is we have maybe perhaps we have an inventory backup, which would signal it. i know that the bears have in their quiver the fact that if adp is right and we keep looking for -- we have people looking for jobs and they're able to augment their salary every time they move, the job offers, then yeah, those people will be right. you need to see some softness in wages, which there's been none >> none, no. >> and you need to see used cars go down in price and most important, you need rent to come down. >> they need to be taken from the august new york manufacturing index collapsing, to this is peter, thanks

31.3 from what had been 11.1, well worse than estimates. one read on a regional manufacturing index. doesn't mean much of anything. >> interesting one of the things that nick of swaun swan song was saying, the economy is incredibly strong in my area. if you look at his area, almost every part of industrial america, almost every part, so i would rather prefer that than the new york area because our manufacturing prowess other than cement is not that strong. >> good point. >> we're not a factor. pennsylvania, philadelphia, not a factor >> sadly >> give me st. louis, factor >> got it. keep an eye open for those >> let's move on to some corporate news this morning. it's transaction at least story. announcement we follow pretty closely last week. that was the unexpected unsolicited offer from app loven

to buy unity it was a somewhat complex deal involving shares that hadn't been fully listed but ultimately was going to give 55% of said combination to unity shareholders and 49.9% roughly of the economics, although they were even offering the ceo the right to run the combined company and more board seats to that side, but this morning, we have unity saying no. and you'll see the big beneficiary right now is iron source, because of course, one key to that offer was that you stop -- you halt your deal to acquire iron source. you can see that stock is up rather sharply >> if you're a venture capitalist, you still are thinking number one, i want to do software. that's been the best investment. now, until this last year. where all of the software companies that come public, we

don't need them. please stop bringing software as whatever, software as a circus we need this consolidation because the stocks are awful >> the read i get is that unity is very focused on realtime 3d for more sectors than just gaming >> that's what you have to do. >> that iron source will help them extend to what they say will be multiple sectors to offer this realtime 3d >> who else needs real life 3d >> i don't know. >> if you take a look at the last quarter, the preannouncement of nvidia, they're betting the farm on this and so far, the farm is barren so i don't think we need another company doing industrial 3d. what do they want to do, military3d >> that's strategically why unity is saying we want to move forward with the iron source deal unclear what applovin can do now, i haven't had a chance to

talk to the peemp this morning you said you would give up 55%, by the way, there you see -- >> what does it say about applovin >> in favor of the merger agreement with iron source and reaffirming the recommendation to vote in favor of the iron source deal. applovin, again, not really a lot of roads to go down here sequoia and silver lake are significant owners of unity, and by the way, they're also involved in the iron source transaction. and they're on the board one would expect they were key voices here. >> you're an investment banker you're sitting at your desk, and silver lake comes along andriessen comes along and they say, okay, look, we have a deal. you can't say, you know what, we don't want that deal the market has too many, software has a mobile application technology companies. you say, you know how many deals we have done we're jamming this deal down your throat.

i saw this happen in the year 2000 >> you have to stop for a second because i have lost your train of thought what are you saying? >> why are the same companies constantly able to do these crummy deals that nobody wants >> being the iron source deal is a crummy deal? which is the crummy deal here? >> when applovin came public, it was an opportunistic time to come public and now it's down 61%. they burned every single person and then some. only you could prevent forest crummy deals >> okay, so your point is the deal you're talking about is actually the ipo or the -- >> yes, i'm sorry. i'm talking about the notion you have these companies that are all dedicated to software. intellectual property software, database software, and they're all the same venture capital backers and they're really powerful the firms themselves are not powerful like a goldman, they want to make their quarter so no one here is -- >> no one pushes back and says, you know what, not time for you to come public

>> they say, it's andriessen, we have to do it. silver lake, that's how they work this is how i make deals because i have to make the quarter. so what i'm saying, it's less than rigorous, okay? less than rigorous >> okay. okay i've got you now >> right that's why we have all this junk we have to deal with >> so you're saying they're not even a real company? >> a lot of these companies lose money because they were going to, i don't know, software is everything, david. >> iron source was interesting to me as well because of course it had been a spac and then they decided to sell out. >> all right we have a real company today coming public. >> we do >> getty remember getty in the first round? they're back >> you're kidding. >> all right, see i'm learning things in real time. >> it's not the museum, which is an excellent museum. >> the getty is a great museum love it, and a beautiful spot if

you ever get a chance. when we come back, concerns about a slowdown in consumer demand, of course, just talking a bit about that peloton and best buy do institute some potential job cuts we'll talk more about that give you another look at futures. 15 minutes from now, we get started with another week of trading here in the middle of august more "squawk on the street" straight ahead

all right, major retailers are getting ready to release

quarterly results. that will be this week and we are seeing more signs of corporate concerns about slowing consumer demand, at least in certain sectors. peloton telling employees it plans to cut nearly 800 jobs it also is going to raise prices on some of its equipment and will close several retail stores and best buy also announcing that it will be cutting hundreds of in-store jobs nationwide to reduce costs this in response to slowing sales amidst what are changing consumer habits. >> yeah. >> what's the takeaway >> well, change in consumer habits the actual job cuts are really in the home entertainment business that was red hot when we decided we could work from home obviously, the spend is back on to services. people catching up with their lives, going traveling, of course, traveling is very problematic because of all the airline cancellations. peloton, look, i think that that

company was obviously terribly overstaffed and that was a -- look, peloton, can we admit that was the ultimate in stay-at-home >> they were getting high on their own stash so much. you know what i mean you just believed, he was going to -- i mean, he bought all those houses, he levered himself up >> john foley? >> yeah. >> thinking about running for mayor. >> i was critical of john foley. all i can tell you is he is very nice >> is he very nice >> very nice okay so knock it off. move on. >> now they got a serious guy in there. mccarthy, man. >> he's no nonsense. >> no nonsense >> he does not suffer fooled gradually or people who are even kind of fools. he doesn't suffer mensa, these guys >> is the plan going to work out

here just cut, cut, cut your way? >> has to shrink rather dramatically, they still own the market they own the market. >> but are we going to be describing it as it's a nice little product >> it's niche. >> instead of taking over the world. >> people are still downsizing their footprint. >> what? what do you mean whose people >> the companies doing work from home what's interesting is we have this rent mismatch all these offices that could be turned into rentals and we have a tremendous rental mismatch this is my idea. >> you have an idea here now we moved on far past peloton and we're talking about work from home and most office buildings are 45% unoccupied >> a nonlinear path. >> i like to keep people up on you. >> let's talk bed bath >> wait a second, you were going somewhere with this idea >> the rental idea

i saw adam newman has a new plan for rental >> you know, the building plates for many of the midtown skyscrapers, for example, do not lend themselves easily to being repurposed >> why is that we have a repurpose going on right next to us >> the older buildings do. i'm not an rchitect, i don't even pretend to play one on tv >> i'm saying if you have a great need for rental, maybe -- >> what i want to talk about is anybody getting -- we're never getting back to five days a week how about four >> no, it's all -- >> three three? i think three. >> it's by whatever you think is right. >> tuesday, wednesday, thursday. >> there's an empowerment of young people because they can get a lot of jobs. they can determine >> that's going to end >> it's going to end it's not >> leverage is going to go back to the employer at some point. >> when? david, demand doesn't exist anymore.

there is no demand >> i think it will and you'll start to see people show up in the office more often. never going back to five days a week >> except for us >> leaders of organizations, though, not happy about it by the way, productivity, it's going down >> how many leaders of organizations welcome it that's an interesting story. >> only the ones who don't want to go in the office themselves >> yeah. only the strong survive? >> if you don't want to show up, you don't have to have anybody else show up >> i'm saying the world has changed and you and i have been left behind. >> we have been dinosaurs for a long time, and we will be for a lot longer because as i like to point out, they live for 300 million years. they dominated the planet. yeah coming up, this dinosaur is going to tell us what his mad dash is. we'll count you down to the opening bell one more look at futures we get started with trading seven minutes or so omfr now we will have a lower open.

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s&p laggards are as you might expect given the decline in oil prices, energy related names. we'll keep a close eye on them talk more about oil as well in a little bit first, we ha aadve m dash, though

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all right, let's get to a mad dash, then we have an opening bell what have you got? >> okay, david a piece somewhat remnescent of what we have bib been seeing for a long time, research on deere they report 8/19. what's the outlook, sunny. fantastic. there's a bumper crop we don't talk about enough, which is why one day food is going to come

down in price. but supply chain, like everyone else, still an issue david, until we get supply chain not an issue, jay powell has to stay on the case and raise the supply chain is still -- >> where are we on supply chain bottlenecks now? what are the key issues? >> i was with oshkosh, which makes fire trucks. nats a pretty safety oriented feature. they have the supply chain is semi-conductors, large, large. but it's also like everything is much more sophisticated. so you could be axel everything has more technology on it. the bottleneck was the analog to digital. you have this whole culture in our country that went digital too quickly without the -- >> it still goes back to chips it still does? >> because we don't make them here and we had no control. and the chinese, which we don't talk about enough, bought far

more, a double order so you have -- but we still do not have enough chips to make tractors so you end up, david, with something where deere -- you can't get enough of it >> all right, there it is. get started with trading at the new york stock exchange. doing the honors at the big board, getty images. it is celebrating a recent listing with the nasdaq. i'm sorry, the listing at the nasdaq xtage, a new digital asset trading platform created by xpe >> this is a company, the second time around. and david, you can see where the stock is, and it's a spac. it's at $30. what do we say about that? >> not bad >> small float, or how do we deal with the fact people are making money with this spac, or is this like a lucid where you

made money for a while >> every so often it happens >> that's your analysis? >> yes >> solid every so often, the phillies beat the mets. >> yes, one out of three times the phillies will beat the mets. >> you don't have to be that granular there are reasons why a deal like this works, and a lot has to do with the fact it's a real company, yet the company can make money, which i find fascinating in itself, david it can make money. so isn't that something? >> yes that is something. and an anomaly when it comes to many of the companies that have gone public through the spac structure as we have discussed many, many times >> and david, more and more spacs obviously are giving the money back >> many are liquidatiliquidatin. that's starting to happen in a much more significant way. >> when they started, did they believe thriwere easy picking companies out there or did they

not care because people were throwing money at them >> it was like, let's give it a shot even if it trades down to $4, we make a lot of money. >> a shameless exercise in financial mismanagement and s.e.c. not being on the case >> yeah, in some ways. >> okay. >> yeah. >> where do you want to go >> the incentives between the two, you know, i want to go to oil, because we haven't actually talked about it. you spoke about it at the top, but let's look at what's happening. as you saw with the losers on the s&p, they all, the five are energy related names give me your latest take on wti at $87.25. >> okay, well, we have been testing, going lower, low, then jumping up but i think there's an actual market where oil should be between $80 and $85 might be the

right level. >> what happened to all thos people saying we're going to be at $120 again very soon or in the fall >> they believe russia was going to be blocked, that russia would not be able to get out, and 2 million barrels were not able to come online. that was wrong it turned out that people were not as interested in stopping the russians, like the indians they took -- 1.4 billion, they're taking all you can get you get a nice discount on the oil. oil is fungible. the russians may have been able to pump and pump more. why? because this war is getting very expensive for them, and it does look like they continue to lose a lot of men they do poorly and need more capital to finance the war will they go full blown? they have not wanted to. it turns out the world was awash in oil just as these people who were saying $120 were saying $150 >> you know, i know, i mean, saudi aramco is another name, of course - >> they can't count as much. >> the largest profit as a

public company, saudi aramco is barely public, but the numbers were - >> they claim they're going to produce more, but overtime, no i just keep pointing out to the idea that you have to take advantage of these declines because guess what, we like oil lower. it's anti-inflationary >> we do >> inflation being the actual bogeyman of our era. and we have something coming down that was supposed to go much higher, and by the way, if you said it was going to $150 or $200, what have you been able to get away with? any criticism for being wrong. if you were, say, a head coach in the nfl, let's say you're the offensive line coach who made that call for the washington whatever they ares, you would be fired. and before the season even started. but in our business, david, we applaud them for being outliers. >> we move on quickly. >> okay. next >> sometimes there's interesting arguments to be made they don't necessarily end up

with the right stock price or the right price in the commodity. you have been there as well. >> i have been wrong, but the thing is, david, i have been wrong, here's what i say i was really wrong about wynn because i thought there wouldn't be a big lockdown. i was not early. i was not debating it i committed capital. my travel trust, and the travel trust lost because of a covid lockdown that i didn't anticipate. there. >> okay. >> ping. that was the deal, were you here for that deal? >> no. i don't recall being here for the ping deal. >> because no one needed the company. 17 companies do the same thing >> a lot of orphan stocks out there. >> absolutely. a ton of them. >> we're down .4 on the s&p. the nasdaq already is back to flat, jim. just kind of looking here around for some of thenames we focus most closely

>> wouldn't we be thinking retail does better with gasoline -- how about disney did you see disney's numbers last week? >> yes, they were quite good >> well, does that take a little of the pressure off bob chapek, that maybe he's good given the fact the rest of the industry has not been good? >> yes, i think that's a fair point. i do >> so what do we make of that? >> what do you mean? >> well, i mean, you have a person who has been criticized for things that i don't think he deserved and now he's righting the ship and no one says, you know what, maybe we ought to reopen the book on chapek and see whether he's not the buffoon we were told he was by other people. >> well, you just did it, didn't you? >> yeah, i did >> no, listen, disney obviously had a very good day after earnings although the stock did come off its highs, but then it followed up on friday with another up day and it's up yet again this morning.

>> spoken like someone who's going to take his kid to college. you're a lucky person. >> i know. although i have a long drive and then we have to move in to just a horrible off-campus - >> we have not talked about tesla. >> no, we haven't. and 37 minutes have gone by. we haven't mentioned musk. >> i thought it was important to go over him because he's supposed to be good for your numbers when you talk about him. we did that. >> stocked 3 million cars, right? >> we don't have -- tesla is a bellwether >> tell me >> an important bellwether of retail investing that's why you follow it you don't follow it because of whaunch he says. you follow it as a way to talk about the animal spirits of the industry >> it's almost back to being a trillion dollar company. so one of the by far largest companies in the world >> david, the reason i'm bringing it up is because if you are bret taylor, co-ceo of

salesforce >> co-ceo of salesforce, chairman of twitter, who is at the center of dealing with mr. musk and his - >> and you would like to end this before dream force, but you can't do that. david, is this good or bad if you're twitter, that tesla stock keeps going higher >> i think it's good because i think it's more likely that musk will say, you know what, fine, i'll pak this ticket and let's move on. let's settle i'll give you $50. will you take $50? and maybe if you're that board, right now you're like, no, we're going to nail you. we're going to take you to court and crush you. but you probably should be thinking, all right. i can close that deal pretty darn quickly >> my question is, david, the timeframe. timeframe. >> yeah. >> now, timeframe is now >> not quite you know, lvmh, they didn't start really until they took depositions.

>> arneault was like, no thanks. so when musk, when they start to depose people -- by the way, they subpoenaed everybody at twitter. >> i haven't gotten a subpoena i felt left out. >> if you're one of musk's buddies, you're getting a subpoena, they subpoenaed everybody, trying to make it more of a pain for everyone, so they'll turn to him and go, come on, man, really. >> they're not used to getting subpoenaed people have to understand, usually about 20 hours of their time, which they regard as being incredibly important, is taken away and usually tortured by lawyers who do nothing but torture you >> yes you speak as somebody who has been subpoenaed. >> many times deposed. >> state your name, jim cramer it's under -- i realize one of your houses, you call it james cramer is that your house >> yes do you have anything -- this is how it goes. are you taking any medicines what is that

i object to that okay, we're going to bring a motion in front of the court, we want your list of medicines. >> exactly, nobody wants to be subpoenaed or have to be deposed. >> it's a terrible thing >> with tesla up dramatically from its lows, you have more money, you sold more stock maybe you just give them an offer they can't refuse. >> micron, sanjay basically preannounced the second time, and even the third time if you count the meeting that was going on that we didn't know about, about the cloud slowdown >> right >> so the stock is above the second preannouncement what do you make of that the first one really wasn't a preannouncement. it was a guide lower >> people are looking past it and listening to sanjay's five-year plan i don't know >> that's what i'm thinking. they're looking past it. the reality is that the basic

building blocks are needed and that flash might be coming back a little more. i pointed out, although this same pattern happened when he reported and then cut numbers and then the stock ran but i just want to keep track of mu, because mu said they were cutting production and when you cut production, david, the glut ends >> it does >> what are you on there >> i'm looking at a report remember, we were talking a lot about the old seattle genetics and the journal had been reporting quite frequently on the imminence almost of a deal to be acquired by merck. would be one of the larger transactions haven't heard much i don't have anything to share in terms of where that stands, but i would note i think this was late friday, i believe, or on friday, didn't get a lot of note that this arbitration with

daiichi over a 2008 collaboration agreement, they did record the arbitrator ruled in favor of daiichi citing statute of limitations and a disagreement on interpretation of the contract. this analyst and others i think also believe that that doesn't necessarily stand in the way of a potential deal, but it was something they wanted to get resolved, if you remember, in some of the reporting, before they potentially actually agreed to a transaction and the stock sold off on that >> the doctor when he was on "mad money," has indicated some formulations that really have to do with any cancer, any form which would be incredible for merck. but the amount of money from merck, it would question their balance sheet. >> right >> that's the problem. could be like disney buying fox. >> here we go again with that. >> i'm just endless. >> why do you keep coming back

to that? >> i want to talk about the comcast downgrade. >> comcast got downgraded, down 21% this year, far more than the s&p. was downgraded again of course, coming off what was not a great quarter at all for the industry overall in terms of broadband ads or the lack of them, both for charter and for comcast. >> why do people feel it's such an easy downgrade? >> it's written by some guy whose last name is faber >> oh, my god. >> who knew? >> jefferson faber >> no relation none >> very presidential >> that guy has the coliseum named after him. >> that was after us >> that's faber. >> was it university or college? >> you're saying college in my family long before animal house came along >> so we're dealing with the market that was not, again, the futures indicated it's a barely down market. the market is gaining its

footing. we're beginning to see stocks like eog, i look at eog because it's one of those companies that a variable dividend. that's your stock of the day that's the stock to watch. >> right >> that's the key to this market, eog resources. can that come back there's a variable dividend. >> i don't know. can it come back >> i'm saying, you know, we don't know that's what we're looking at >> you said it's the key to this market >> if it rallies, i know there's a lot of false pessimism >> i see i see. okay all right. should we go to bob pisani and get more on what's going on in the broader market you okay with that >> i'm cool with it. >> you out there, bob? >> the important thing is i'm staring at oil we're about to break $87 in oil here we're talking about the lowest levels since february for that, and of course, that's weighing on energy. take alic at the big sectors

here no surprise, energy the big dec decliner, and some of the big names jim was mentioning on the downside china also weighing on the markets a bit early on if you look at the semi-conductors for example, they're holding up the semi-conductor etf just went positive cathie wood's ark positive early on wrrg rather amazing it was positive right at the open there, so that's holding up fairly well. energy stocks, jim is right, 4%, 5% decline in the higher beta names, apa, halliburton, schlumberger, they tend to move more than the overall market down about 5% overall. the big debate over the weekend, what kind of rally is this is this a new bull market or is this a bear market rally a lot of big market technicians were commenting about the fact we had a great run at 17% from the june bottom. almost 90% of stocks are above their 50-day booming averages. and most importantly, we have retraced 50% of the drop from

january to june. and that tends to be important because market historians notice that when you retrace a little more than that, you tend to hit a bottom you tend to be the start of a new bull market rather than a bear rally old market historians like sam stovall at cfra, a lot of people were talking about this over the weekend and noting how far we have come with a variety of sectors that are more than 20% off their lows if you want to call that a bull market for that sector, go ahead, but it was rather diverse, and the bulls are right about this besides cathie wood's ark innovation, consumer discretionary, 27% off the mid-june low technology as a group, 22% off the low. semi-conductors even better than that the small caps, the russell 2000, 22% off their lows in june and the dow transports, this is not just obviously big cap tech stocks or cathie wood stocks this is a very diverse group of different companies, different sectors that are doing very well

right now. so we also see things like banks that are 21% above their lows. utilities as well. so it's a pretty broad rally you can't just say it's technology stocks. that lends credence to the fact that we are definitely in an up trend. the thing that has happened that has caused consternation is the market multiple has expanded we haven't seen a big expansion of earnings expectations they're fairly flat. the market multiple, what you pay for a stream of earnings going forward, 21 for the s&p, mid-june, it dropped to 16, today it's 18 and heading towards 19 folks, when you get towards 20 or so, you have to make some pretty big claims about the market and the economy to get a multiple towards 20, a lot of things need to go right. you need to see right now in this market, what would you need to have a really strong rally and a big multiple you need signs of decelerating inflation, number one. you need some moderate growth. you would need some signs of a soft landing, certainly no severe recession at all would

justify a market multiple anywhere near 20 and you need a fed pivot, the end of the rate hikes and talk about maybe cutting in 2023. all this seems a little far off, doesn't it, to argue for a big multiple that's the problem the market has right now. and that new york manufacturing number that we had this morning, well, that didn't help at all. those numbers were just terrible overall, although the prices paid were helpful to the bulls as far as anything moving here today, if you take a look at some of these chinese stocks, china listed stocks here, they're going to be delisting, and what was interesting is five of them announced they're going to be delisting. guess what, all five of these are state owned enterprises. soes there's 270 or so companies that list here at the new york stock exchange there's only seven state-owned enterprises, soes. the government owns them five of the seven announced they were going to delist i think this is an indication that the chinese government clearly is not going to allow

state-owned enterprises to have their books examined by u.s. regulators it's open about whether or not private companies will allow that maybe that's the deal that will be made here back to you, david >> bob, thank you. bob pisani, yeah, taking a look again at those names that are delisting. >> by the way, back here, as a reminder, you can get in on the cnbc investing club with jim you can sign up, find out more cnbc.com/jointheclub, or as we like to say, point the phone at his forehead >> thank you, david. >> you're welcome, or the qr code on the screen >> let's give you a quick look at the bond market of course, not an unimportant part of our overall market, is it, jim? sometimes we give it short shrift you talked about the high end yields in june and when we are right now. on the ten-year, now 2.76% we had been as high as 3.4%. we'll see if the financing market opens up as well in certain areas that have been a bit more closed up

talking more high yield there than anything else we'll be right back.

there's a look at gainers. remember lumina was down sharply on friday after significant earnings miss and disappointment they're bouncing a bit trehe you can see actually disney at the bottom there, continuing to power forward. up next, we're going to have stock trading with jim [yodeling] yo-de-le-he... (man 2) hey, no. uh-uh, don't do that. (man 1) we should go even higher! (man 2) yeah, let's do it. (both) woah! (man 2) i'm good. (man 1) me, too. (man 2) mm-hm. (vo) adventure has a new look. (man 1) let's go lower. (man 2) lower, that sounds good. (vo) discover more in the all-new subaru outback wilderness. love. it's what makes subaru, subaru.

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let's get to stock trading with jim >> let's look at apple growth is decelerating, should we be worrying more on advertising. the answer to me about whether we should be worried is this is a classic reverse head and shoulders and apple trades entirely on technicals. >> represents more than 7% of the s&p now. it outperformed the s&p dramatically. >> the dollar is not as strong as we thought. between when they report and

when they report is halfway. so i just say that all these reports about services are fatuous and you should continue to own, not trade the stock, even as the analysts want you to trade it endlessly why they do, i do not know almost all the way back. >> yeah, look at that. >> i told you. look, it's stupid. >> what have you got on them >> i'm going to dissect getty imaging. >> you are >> yes, i am i want people to know how people can understand a spac is good. it's a company that makes money. we have very few of them the supply, the float. i like you being back here doing this stuff >> i was back last week, too, do you remember >> yeah, i just said it was just meant to be nice >> i know, but you never know. >> you know, i felt -- >> you were there for four

shows. >> i was gardening over the weekend. that explains about being nice here >> all right >> i did, why wouldn't i, the mets, second best record in baseball got more on the markets for you. don't go anywhere.

good monday morning. welcome to another hour of "squawk on the street. i'm david faber along with leslie picker. we are live. morgan is on maternity leave still. let's look as we go into the second half hour of trading so far. a mixed picture. well off the lows that have been indicated by the futures and the nasdaq up. wanted to come to walt disney. why are we putting that up because we do have some breaking news for you this morning involving dan low and his third point, of course large activist hedge funds that

our viewers are fairly well acquainted with. actually, in fact, if you may recall, almost two years ago loeb owned a large stake in disney and was pushing for things at the board at that point in time in terms of, for example, not reinstituting a dividend and spending more money onthe dtc business subsequently he sold out of the stock, actually made a lot of money, and now he is back in we've learned of a new letter from mr. loeb to ceo in which mr. loeb outlines a number of different things that he at least suggests would be helpful to disney. the letter though is reading more like a positive letter in the sense of one that is offering support to mr. chapek and the various endeavors that he is making including as he moves to try to recreate disney to a certain extent and perhaps faces some opposition from his

own board of directors let's get into it at this point though because loeb in the letter does say a number of important things that he would at least like to see doesn't mean they're going to happen cost cuts. disney's costs are among the highest in the industry, we believe disney significantly under earned relative to its potential and therefore third point is urging the company to embark on a cost-cutting program that addresses both margins and the disposal of what they call excess underperforming assets. loeb continues to push for the company not to reinstate a dividend but, in fact, to use the cash that it is generating, free cash flow to pay down debt and perhaps repurchase shares but to use the cash more towards the growth initiatives that have already been outlined at the company. you can see disney shares beginning to trade quite actively the stock has benefitted over the last three sessions from

better than anticipated earnings and at the beginning of the letter mr. loeb congratulates mr. chapek when it comes to espn, loeb, plenty of anchors have said the same thing, loeb said maybe you want to spin it off. he's also talking about hulu saying directly being integrated into disney's dtc platform will provide significant revenues and synergies and believes he would like to see them try to acquire comcast prior to the contractual deadline in 2024 even saying it would be prudent to pay a modest premium to accelerate the integration. although, again, there you're dealing with our parent company comcast and their willingness to enter negotiations so not necessarily a straightforward path there finally, i mentioned espn. he does say there's a strong

case to be made that espn should be spun off to shareholders with an appropriate debt load that will alleviate leverage at the parent company and then ends the letter by actually saying that the board, in his opinion, at least, would benefit from a so-called refreshment. disney's a world class company that deserves a world class board of directors that dehas a world class record of leading organizations. he says, quote, leslie, not meant to single out any current board members but we believe there are gaps in talent and experience as a group that must be addressed by the way, third point says it has amassed a significant stake in the company at this point you can see disney shares are up roughly where they were prior to us sharing this news, but interesting that mr. loeb is back involved in the sftock a letter does mean he could get

more involved on a board level down the road in terms of whether he has some candidates or whatnot. >> great get by you, david faber, in getting this letter. we should get a sense of his despise of this what it is at the end of the second order because we have a 13 app deadline today potentially we could get a sense when he was buying, if it was that recent. >> i think it has been fairly recent buying, again, mr. loeb, did, if you want to follow him, did do quite well in terms of amassing a position back prior to october of 2020 when he also september a letter to the company at that point outlining certain things he would like to see. the stock actually did move up appreciably and it's my understanding that he actually left and eliminated his position even despite the recent run up lately, you can see exactly what we're talking about, he has taken another position again, a noted investor who

obviously we know as an activist in this case though, this may follow more of the playbook that we saw mr. loeb do with nestle, mark snider there in terms of giving him some cover to do some things that he wanted to accomplish. >> sell as well. >> yes perhaps even buy replacements in board members if that, in fact, became the case. clearly this becoming more of chapek's company than his p predecessor who i obviously have great affection for, bob iger, who ran the company for 60 plus years. >> one interesting thing at the end here, he says, i look forward to discussing these topics with you in the letter, which would indicate that the topics and these conversations have not necessarily been ongoing. this is a new letter. >> yes >> and, you know, very early stage in that regard, but you're right, he starts off the letter by being very complimentary. >> yes. >> coming in and, you know, saying you guys are doing basically a great job here, and

then kind of launching into the idea of more cost cutting, board refreshment, spinoff. >> some things are well known. comcast in terms of its approach to hulu and what in fact would happen it's no secret disney would like to have full control of the asset and it may be our parent company sees they want some leverage do you see this prior to the options coming through in 2024, unclear. espn spin, plenty of bankers have talked about that it may in fact be some way to create value, particularly if you could send a lot of debt along with t. obviously it's a significant cash flow asset but it's one having depleted cash flows as we know the cable universe becomes smaller and smaller with cord cutting although espn is a very important part of the overall bundle unclear how you exactly navigate that simply asking the question is mr. loeb leslie and somebody who covers activism as close as you do, the

end of the letter in which he says he would like to see the board refreshed is interesting and saying it's not meant to single out any current board members but we believe there are gaps in talent and experience that must be addressed, those aren't fighting words at all -- >> no. >> -- but they have to be taken for what they are given who they're coming from. we've seen disney back off a bit from some of the levels it had earlier in the session >> yeah, no. interesting development nonetheless. for someone who knows the company well, who's been in it before, who's seen the transformation over the last few years saw a key entry point. i think that's why you're seeing the reaction you are today if loeb sees this, maybe others should as well and that's why the stock is jumping >> we're going to move on. we'll keep an eye on disney. up 1.6%. let's turn to the markets though overall, and specifically china because that has been the main impact at least thus far this morning. data shows china's economic activity did slow across the

board in july. that did prompt an unexpected rate cut oil and the energy sector particularly are getting hit hard right now and the belief of course that a slowing china will need more. let's get over to eunice eun she joins us from beijing. >> reporter: china's central bank, as you said, surprised the market by cutting two key lending points by 2 basis points it pumped $60 million into the market those two moves coincided with some pretty ugly data for july industrial production, fixed asset all missed it appears to be broadening out. when you look at the industrial sector which has been a relative bright spot, that's been looking weaker and weaker because of the covid lockdowns as well as depressed demands, both here and china as well as overseas. the property sector which has

been a traditional growth driver also stagnating big time property investment dropped by the fastest rates this year. new sales down by roughly 1/3 and then youth unemployment overall hitting another record around 20% now the rate cut is small, but -- and mostable lists believe we're going to see more to come. the overall messaging from the leadership appears to be that it's worried about the growth but not enough to reflate the economy the way it has in the past to try to meet its economic growth target. guys >> yeah. and obviously a huge discrepancy between what's going on in china and what's going on in much of the west in terms of its rate policy eunice thank you so much. oil prices dropping by more than $4 a barrel on fears. for more on the market let's bring in wells fargo investment.

samir samana and jonathan golub. you know, i want to start with you, samir, because you cover kind of the global market. based on eunice's report and everything we're seeing out of china, how concerned should we be about this data and the subsequent move to, in fact, ease over there? >> with an emerging market, you should be pretty worried we've been unfavorable a lot of it can be tied back to china, which is the biggest weighting within emerging markets. probably the big growth engine maybe the part that goes left unsaid they can't ease and go to what they've done to foster growth because the developed markets, central banks are increasing rates the way they are. they would clearly see the capital fight and see the system more fragile unfortunately for china and the emerging markets, the threats are growing and we would avoid that area. >> jonathan, having some

spillover effect here in the u.s. even though markets have climbed their way up towards the opening back to the flat line. broadly speaking with u.s. equity markets, we're kind of at this inflection point. we're done after summer, come back after labor day maybe people will be paying more attention. who knows. you have morgan stanley on one side saying they believe this bear market rally is short lived. jpmorgan believes the market has room to run. which market are you in. >> i'm in the jpmorgan camp. nobody wants to see a major slowdown in china, but what the fed is trying to do is to damage demand and bring down inflation. the reason the market has been up 17% in the last eight weeks is because oil prices are falling, expectations of a slow in the economy to something which looks close to stall speed allows the fed sometimes -- this is not my credit suisse call is

sometime around the first quarter the fed can stop the rate hike cycle, at least pause it, and allow the momentum of this thing to go forward that's what the futures market is telling you slightly weaker data out of europe weaker data out of china is effectively doing the fed's job here, which is it's slowing global demand. yes, the market didn't like this, but 35 basis points down on news that china looks like a bit of -- this is really bad news it's the market absorbing this pretty well that there's an offsetting positive here. >> what does it say to you overall in the market particularly coming off too tame an expected inflation report in the last weeks >> i think what it says is the environment we've seen in the last eight weeks has lagged and the reason is is that the -- again, i believe this but also this is what the market is saying the odds of a soft landing are higher now than they were two, three, four months ago

i'm not saying we're going to have a soft landing but the odds are increasing that's what's driving the market up if you look at the nature of the companies that are winning, tech companies, more speculative companies, companies highly shorted, those are the things that win coming out of a recession. those are things that win when the economy is getting a reprieve so the market is giving you a very consistent read on this. >> sameer, you have a different read your base case is the growing probability of a moderate recession sending it into 2023 you're looking at the potential for the fed to hike 75 basis points in september. how do you kind of look at what jonathan's saying with regards to the backdrop you're looking at >> longer term if the fed does get inflation under control, it's probably a positive for the equity market. it's no surprise rates have come down and growth stocks have led the way. look, you've come a long ways in the past six or so weeks if we were having this

discussion at thirty-six fifty, completely different discussion. you're a contrarian. a fed pivot, softer landing. you're out in the boonies by yourself now it's pretty much the consensus trade, right, is the fed has to figure it out, inflation will come down and we're all back to the means, back, cristo working again the contrarian trade from mid june is a pitch. that's not to say we don't see up side to the 2023 target by the end of '23, from here, i would say probably the next 10% is much more likely it's down than up. >> jonathan, you also point out this idea that value is behaving more like growth these days and the fact that it's delivering stronger revenue in eps growth in q2 than the growth gains, but the market would suggest otherwise given the recent activity in the last two months, right? does that give you pause or give you concern that it's more

detached from fundamentals. >> this is a little bit separate from the story we were talking about, which is the general market if you look at what's been going on now for the last several quarters and expect it to continue, megacap tech is actually delivering really bad earnings you know, we had a good earnings season between 10 and 11% eps growth and the -- you know, if you look at the fang stocks, they're down like 20% on earnings the market is beating by 5 1/2 and the faangs are missing by 1 1/2% the average company in terms of the earnings, up 10, 11% you have energy, which has been off the charts in terms of earnings you have banks which are a disaster you have megacap tech. it's almost as if there is no average. you have these things all over the place and it's really hard to discern like a single trend on earning if you were to say on average the earnings look pretty good, but if there is an area that is

concerning, why is tech not participating. it is simply that it is pay back for all the pull forward you had during the down turn ignore tech and they'll get right or is there something wrong with some of these franchises that make them a little bit more challenged >> those franchises are some of the most important names in the stock market. >> 100%. >> if they miss or go down, you're not going to get a lot of traction, are you? >> i agree with you. am i concerned we're going into recession in the next six months absolutely not am i concerned that over the next four quarters that we have the opposite of what we've had, since the iphone came out close to 15 years ago, i don't remember a quarter where tech -- big cap tech is under delivering by 20, 30% compared to the rest of the market and every one of these seems to be idiosyncratic. there's one store for apple, amazon, facebook. >> apple is doing pretty well,

right. >> but in terms of their -- right. if you look at how they did with their -- what was their numbers for the quarter? anyway, the point being it's softer than we would have anticipated compared to history and it is something we're looking at. >> clearly a microcosm of ongoing debate in the market now. jonathan, sameer, thank you both very much for joining us today. we've got some breaking news out of the home builders sentiment turns negative diane olick has that for us. >> reporter: good morning, david. home builder sentiment in the single family market dropped 6 points to 9 on the nahb. 50 is the line between positive and negative sentiment this is the first time it's gone negative since a very brief plunge at the start of the pandemic before that it hadn't been negative since 2014. it's also the eighth straight month of declines after hitting a decline two years ago. the nahb is calling it, quote, a housing recession.

they blame higher mortgage rates, higher inflation and construction costs still one in five builders report lowering prices to boost sales and cancel projects. buyer profits dropped 5. regionally sentiment dropped everywhere but fell hardest in the west where home prices are the highest. tomorrow we'll get the latest on housing starts and building permits and these numbers today would indicate that we will see continued slowing there as well. back to you guys >> okay. diana, thank you let's take you to a quick break here before we do that, here's a look at our roadmap for the rest of the hour that includes how you might want to play the retail sectors just ahead of us, two big earnings reports we're going to get this week. then the winners and losers in the ev space from the reduction act. those who have the information

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taking a look at the u.s. global jets etf the ticker is jets it's down about -- you can see right there, about 10% on the year but up, there it is, 15% since just the start of july and that is a bit better than the s&p during that time frame southwest airlines is the fund's second largest holding this morning argus downgraded that stock to a hold it had been a buy. you can see it's not having any impact on the shares in a negative way though they say the airline will be hurt by inflationary pressures and capacity constraints while adding in their opinion, they don't expect the shares to hold higher until it becomes clear that costs have stabilized again, leslie, not paying much attention to that. >> still down ubs's art cashin is with us that is after a quick break. this thing, it's making me get an ice bath again. what do you mean? these straps are mind-blowing! they collect hundreds of data points like hrv and rem sleep,

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we are about an hour into the trading session. stocks up. the s&p coming off the fourth positive week in a row for the first time since last november but lower this morning let's bring in mike santoli for more on what he is watching this morning. there is a lot to watch on this august monday morning, mike. >> there absolutely is, leslie what's interesting is we come into this week where everyone can look at the rally we've had and really give it credit for how broad it was, how there was a rebuild of momentum. so i think the most bullish folks out there are the ones that look at the technical signals of demand, all of them triggering or many of them triggering since the june lows it has taken us to a point where you have to ask what's implied in current market levels about the macro environment. that's where a little bit of hesitation in terms of the chinese macro data did come in

we did have a little bit of a rally in the u.s. dollar on the back of that the demand picture for oil seeming to actually take that down it's all getting kind of synthesized together in equities in a little bit of a wait and see mode i think we've been very logical to say we're a little bit stretched in the short term in u.s. stocks. probably would be able to pull back a little bit, but right now the strength in the tech stocks that feast off of anything that feels like a disinflationary lower growth environment, positive growth is so far working right now. it doesn't settle the debate as to whether, in fact, this's a new sort of sustainable advance that's now underway in the stock market you still have -- people can grab on to a couple of factors and say this is a bear market rally. not even that, if you look at the rebounds that after the 2011 correction and those that had a growth scare associated with them, it's not as if you usually race back to the all-time highs.

there's something you can contend with today i would argue that until sort of the fed 345ibmaybe offers a lit more clarity, they tried to and the market is not hearing that they're going to stay vigilant on tightening well through the start of next year >> mike, it's august 15th today, which marks kind of the midway point through august are you expecting the markets to be more volatile until we get to labor day or less volatile this is as people are kind of away, maybe less focused on the headlines and things like that >> you know, it's interesting, leslie it hasn't necessarily been a z volatile summer. the market has seemed jumpy but not in a way to scare a lot of folks. the volatility index which measures people's demand for protection has been very subdued. we do have an options expiration

at the end of this week. sometimes that does cause some back and forth i think most of the volatility will come around things like the jackson hole meeting for the fed even though we probably shouldn't have high expectations for many declarations happening there, and then whatever we're going to get in subsequent inflation numbers. we're in a little bit of an inflation phase. we're through most of earnings and we're not yet to that point where we don't have another fed meeting until late september that would also in theory start preannouncement season for third quarter earnings but that's a long way off at this point >> yeah. i think, you know, based on what we heard in june, people were expecting more volatility. obviously that hasn't necessarily transpired this summer it will be interesting to see if it takes place after labor day also this week is, of course, retail earnings. what are you looking for there as a broader or bigger indication of kind of where we are in the inflation story, where we are in the supply chain

story and the pricing pressure story. you know, all the big mac crow things that we talked about? >> yeah, i think for the big box retailers, what investors would want to see is that the warnings from walmart and target in recent months were conservative. in other words, they warned about huge inventory miss steps. they had too much. they were going to take care of it i think that the street probably is hoping that they prove themselves to basically be very cautious in that guidance. we'll see if that's the case then any consensus on the state of the consumer. depending on which segment of consumer you're spending, they're not saying they are continuing to spend aggressively or on the other hand they cut back it depends on the product category and the income level you're watching. >> mike, thank you very much appreciate it. time now for a cnbc news update with bertha coombs she has that for us.

hi, bertha. >> hi what's happening at this hour. senator lindsey graham says he's going to appeal a judge's decision issued today that the south carolina republican must testify to a georgia grand jury. it is looking into attempts by former president trump and his allies to reverse joe biden's victory. graham has called his subpoena a, quote, ridiculous weaponization of the law they want to ask graham about phone calls he made to state election officials. china is announcing more military exercise as a congressional dellegate visits the island house speaker nancy pelosi this month has been strongly denounced by beijing. and brittney griner's russian lawyers have filed an appeal of the star basketball player's conviction. that according to news reports

in russia. they say there are ongoing talks between moscow and washington about a potential prisoner exchange back over to you david? >> okay. thanks, bertha. let's turn back to the markets. our next guest seeing several perplexing twists in this market art cashin i'm perplexed. give me what's perplexing you. >> i have to say this bear market rally, if it is such, i believe it to be, has certainly lasted longer than any of the rallies so far this year the fact that we have gotten pretty close to a 50% retracement in some areas would favor the bulls. in fact, when you get there it becomes a rarer event to hold back and retest those, yet i still believe that that will

happen you will note that the year of interim election, second year in a presidential term. going into mid september, i don't know if 50 will live, but it's there the numbers that i'm looking at, the way i'm looking at the economy, i still think it's a bear market rally, but i am perplexed that the bulls have had the staying power that they have had and they continue to be >> yeah. i know well, you're not alone, art, in sort of believing that, you know, we're not done with this thing yet, but i do wonder because i've had this question with other market people, what will get you to change your mind given the strength of this bear market already >> well, i'd have to see a little further broadening. for example, the vix being down

where it is, david, distresses me further that tells me that we're in an intermediate term overbought now we still have some very short-term pluses, some of the very arcane things that people look at. i'm an old cocktail napkin chartist, not into this highly sophisticated stuff, but i think -- i thought we might be topping out about 3 or 4 sessions ago i still think we may be getting there. i'm worried about the vix. i think the key interviews you've had so far this morning have been about china, and that is, in fact, what helped us turn around today the weakness in china, particularly the unemployment among the youth. xi is up for reappointment

that has brought down not only oil significantly but, you know, some of the other -- copper and other industrial commodities are coming down, and that has given the market a little bit of a breather today >> yeah. certainly a reminder of the inner connectivity between the two largest economies. art, i love that cocktail napkin charting analogy you just provided i'm curious what your napkins are telling you with regard to just the overall multiples of the market matt mali points out this morning, he said the last time it peeked in the late '70s, early '80s it was trading at 7 to 8 times earnings compared to a bottoming of 18.5% reported earnings earlier this summer. so even below the levels that we're at right now

you know, how much weight should be placed on that? or do you believe it's just an overall composition of the market is so different that we can't draw these historical interviews >> i was there through the '70s so i recall it very well hopefully we don't get the stress that took us down to 7 and 8 and 9 times, but i do think this further contraction, i think one of the other great interviews on your channel today was bill dudley who has unequivocally stated that they're going to have -- the fed is going to have to tighten things up and we're going to have to see some pull back in employment, and that's going to cause pain and i think that will help this rally roll over. >> art, thank you, as always >> my pleasure, david. thank you. >> much appreciated. we have some sad news to get

to this morning in the world of finance. the former co-ceo at deutsche bank has died after a long battle with cancel jane most recently worked at many facilities. anshu jain was 59 years old.

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to sign the inflation reduction act. phil lebeau joins us with more phil who are the winners and losers here it comes down to a few things as you look at the winners and losers, it tracks the ev

industry and battery production has said tesla, ford, gm, they either have production in the case of tesla already set up or gm and ford where they do some production but it's going to really ramp up they're going to be the winners initially. further out into the decade you finally see some of the automakers benefit we're calling them the ira ev losers most notably as you look at toyota, fisker, lucid will not see this until later in the quarter. one important note notice you don't see chinese automakers on the wall one of the requirements is u.s. production of evs. here's e source talking about what this means for the chinese ultimately entering the u.s. >> this year is going to see a wave of new chinese ev exports to europe and that was inevitably going to come to north america also, but now because of these tax credits, they are going to be ham strung.

>> reporter: take a look at the chinese auto stocks, we're talking about lee auto, neo, xpang. you need the u.s.-based production that's not in the future for any of these guys compared to ford and gm that have six battery plants that are going into the construction phase relatively quickly. finally, take a look at shares of tesla notably tesla has built 3 million evs elon musk tweeted over the weekend including 1 million at the shanghai plant. guys, that's -- david, that speaks to the growth of that plant in shanghai. when they first announced it, people said, watch out, it's going skyrocket in terms of production and that has been the case 1 million evs have been built at that plant in china. >> that's despite difficulties not too many months ago, phil, right? >> reporter: sure. absolutely. >> in terms of covid lockdowns phil lebeau, thank you

phil talking about tax credits for evs. another industry that will be impacted by the inflation reduction act. solar. investing hundreds of billions in green energy will the act do and of course it's got a lot of different measures there let's try to dig into it joining us now is hayes barnard. it's good to have you. you know, for the purposes of our viewers to sort of understand your expertise, just quickly explain what your company does and then we can move onto the impact. >> thanks, david we took an approach of being technology agnostic, being a conduit to finance clean energy. 40% come from all decisions made in the home, whether that's an ev car you're going to buy, how you're going to power your home. we connect the banks that want

to finance these with the number of companies that want to install them, educate consumers why they want to adopt we're that marketplace, that fin tech that does that work. >> you're connecting them and helping financiers originate loans to finance all of the work you're thinking about. >> absolutely. think of it like a point of sale, like an affirm or a square or a paypal for just clean energy solutions inside of the home. >> all right now let's move into the legislation itself you know, given the tax credits that are going to be available, what are your expectations in terms of what that's going to mean for tee demand, not just sr but other areas you're focused on whether it's heat pumps, artificial lawns, energy efficient windows. >> yeah. if you look at solar, just residential solar, record q1, q2 there is a lot more demand for

people who want to electrify their home and live more sustainably. what they have figured out is a preferential option. they can save money from the very first month when you look at this bill, it's increased the tax credit to 30%. as soon as the president signs it in the next few days. that's very good for homeowners. they'll be able to save more money than ever before with solar energy and battery storage combined when you talk about the other products like heat pumps, there's big incentives in that as well. used to be one time, $500 for a homeowner for a heat pump. now it's up to $2,000 a year that you can get in incentives there's a lot of new incentives for different products like hvac, different window solutions for energy efficiency. >> what are we seeing on the cost curve for many of these products in particular, obviously solar where there's always questions about chinese supply, what we're trying to do in our country in

terms of building up perhaps domestic manufacturers as well is this going to help to bring the cost curve down or is actually too much demand going to lead to perhaps higher prices >> yeah. so the biggest challenge right now is battery storage as you know with the ev demand in addition to homeowners that want to put a battery on their home that's where the biggest supply chain challenges are right now i think this is going to incent more manufacturing in the united states which is very good. the demand is there. the supply is not there. with some of the tariff issues you addressed around solar panels, we've seen those costs come back down as far as the products and solutions for hvac or electric heat pumps, the supply chain is there and we're in a good place. now it's more about educating consumers about incentives who wants the old sad outdated fuel based heating solution in their home when they can have a beautiful new modern electrified solution, lower their carbon footprint and save on average

around $1800 a year in savings for doing that >> yeah. sounds good to me. you know, when i introduced you i talked about your view that the legislation is so big it's just hard to fully understand. what do you mean by that >> well, look, it's a $450 billion market in the united states for all these things homeowners can do to electrify their home what's happening now is people are learning about, you know, point of sale ease in financing. typically it's about $30,000 for someone to make these decisions in the home. i don't have $30,000, how would i have the ability to do it? with goodleap, it's simple, instantaneous, 4 second approval they have the ability to finance these in their home over a period of 30-year period of time inflation has gone up roughly 40% over the last year if you look at electricity, david, it's around 16% when they're adopting these,

they're inflation proof. they're fixing energy over a 25 to 30 year time. that's why demand will be big. business owners can scale their businesses i think it creates a sustainable job boom like real jobs. you have financial institutions with real predictability, we've seen zero increase in defaults and homeowners will save money i think it will be a big opportunity to lead in the clean energy revolution. >> is it still hostage to economic cycles? obviously we're having debates whether we're going to have a recession, whether the consumer may be pinched and unwilling to shell out money for things that will save them money over time. >> that's the thing. they'll save money from the very first month. so it's not as susceptible to other things in consumer demand. consumer demand, customers always want to pay less for electricity, period. they always want to control their energy, period

so what's happening is, people -- they're going to drive an ev. you've seen the demand for that increase significantly and the manufacturers coming online. what people don't understand is you're going to need a distributed grid the utility structure is not set up for all these evs so homeowners are going to want to take control of their energy needs. we see the attachment rate for ev drivers to solar at about 40% today. homeowners are figuring out, if i control my energy needs, i fix my energy costs over the next 250 to 30 years, you know, it's a much better solution than what they have today. this is literally a technology transition no different than landlines to wireless from, you know, horse and buggies to electric vehicles >> right and, finally, real quick, you know, you were the chief revenue officer at solar city before it was sold to tesla. we don't hear a lot about the solar part of tesla's business

do you think we'll start hearing more about that? >> i do. there's a lot of demand for battery storage on the home. homeowners realize they can be much more thought full about when to store energy in their home all the bidirectional inverters between ev cars and homes. it's really interesting how you can kind of share that energy between your car and your home tesla is going to be a leader. people that are buying these electric vehicles, what people don't realize is people are going to put solar on their home, they're going to put a battery on their home as well. all these things are going to interact together. tesla is an energy company they're not just an ev company. >> hayes, great to have you on appreciate having you on. >> appreciate it. >> you're welcome. coming up on tech check, unity striking down an offer with app loving reaffirming the deal with ironsource john riccitello ins joat 11:30

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welcome back if you are just joining us we want to reprize a story involving dan loeb and thirty point taking a significant position filing approval with the ftc so they can engage with management and the board in order to work directly and constructively with all parties in the disney company. the shares have been started up and stayed higher although not quite at the levels they had

earlier in the session a number of things he would like to see or outlines two caught my attention. one is cost cutting with you you don't hear about as often. loeb saying we believe disney significantly under earns relative to its potential. we urge the company to embark on a cost cutting program that -- they want them to engage with comcast and hulu and spinning off espn he ends the letter by focusing on the board he said this is not meant to single out any current board members, but we believe there are gaps in talent and experience in group members and this has to be addressed we have identified members that would make essential contributions. we would be happy to make an introduction perhaps giving some cover to chapek as he thinks

about reworking his board to some extent, a board he has been serving under since he took over in april of 2020 by the way, he was ceo the first time loeb came around with a letter, bought the stock, sold the stock, and now buying it yet again. we'll keep an eye on disney including of course the broader markets. that's going to do it for "squawk on the street. t "tech check" is up i'm deidre bosa and today unity rejects applovin both stocks dropping on the news "tech check" has the exclusive we'll have john riccitello first, connie is with us all hour welcome. so glad you could join us on