"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 brian sullivan joe and andrew are off today good to have you here. >> good to be here, becky. >> you will see at this hour, there are some modest declines red arrows dow down 15 points s&p futures off 7.5 nasdaq off 31. yesterday at this time, we were down more. we were talking before the opening bell, dow down 230 points we ended up down across the board. dow has seen four positive sessions in a row.

t if you want to look at where the major index stands, we will show you the year to date chart what is important about the numbers is we will look from the all-time highs dow 8.2% it back in correction territory. not bear market territory or not even correction. s&p is down 10.8% from the all-time high. it is in correction territory. nasdaq is out of bear market territory. that is down 19% from the all-time high. you are looking at the numbers from the year to date where the nasdaq is off 16%. look at what is happening in the treasury markets the 10-year treasury trading at 2.8% it stands there today. the inversion with the 2-year treasury at 2.11%. we know it means you are likely to see recession at some point down the road. this is what the yield curve has been telling us for a while.

home depot out with the numbers. we have been waiting to hear about this the first of the major retailers. the numbers here are incredibly strong for the quarter, the company coming in with earnings per share of $5.05 compared to the estimate of $4.94. a significant beat you are looking at revenue numbers. $43.78 billion comps were up. above expectations 5.8% versus the 4.9% the street was looking for. looking at comps, brian, they were talking about sales up 6.5% year over year these were the highest quarterly sales in the company's history the ceo ted decker said the sect of second quarter performance reflected strength and demanded for home improvement projects.

this is interesting. a lot of retailers having trouble, brian the need for home improvement is strong from what home depot has been seeing with this >> it is clear there are no recessions here. not only were the quarterly numbers the blowout with $5.05 which is past the estimate, but highest of the highe estimate. the guidance is good 3% comp store sales for the remainder of the fiscal year that is right where the estimates were the key there is there is no cut. remember, walmart numbers out later this morning, cut back on july 25th. these home depot numbers, we looked at them for ten seconds becky, i'm looking through them. we have a guest on right now i don't see anything that can be construed as negative in the numbers. they are blowout i don't think that is tv hyperbole. >> let's bring in another brian and ask for more

brian nagle at oppenheimer knee jerk reaction these are strong numbers no disappointment as far as i can tell >> i agree with the opening. good morning these are strong numbers what is interesting or most interesting to me is home depot is reporting these results against the back drop of what you and brian mentioned. all of the recession type of slowdown fears we are not seeing it here whatsoever in the results that reported or in the reaffirmation they will have the conference call this morning. they will have more information on the trends. what we see from the release, no signals of weakness. >> you know, it maybe tells you about what people expect from home depot at this point very strong numbers. beating expectations affirming guidance that will come in with what we told you. the stock is not taking off. it was down slightly just a few

seconds ago. right now up by 39 cents people have high expectation for home depot because it is a strong performer, i guess. >> i would say give it time this morning. it is obviously very early my suspicious is sentiment on the retail in general and i have to think these numbers will be a positive for the stock that will play out today >> we are seeing it play out the stock is now up with a gwynn of $2.27 as we are speaking. brian, what does that tell you about lowe's will they execute the same way >> generally, yes. we have the lowe's report tomorrow morning to answer your question directly, strong results from home depot or positive for lowe's there are nuances between the businesses home depot is more exposed to the professional customer.

i think that business and between the diy customer and professional, home depot is exposed. that is a positive for home depot. you see if this comes up it has been really hot the temperature has been hot across the country >> yes, it has >> in some cases, that will hurt demanded for outdoor and gardening. that could be a negative for lowe's i think generally speaking the message here is the home improvement consumer and demand for home improvement is holding despite the consumer pull back that is positive for lowe's. >> brian, talk about the thesis here and if it is bunk, please say so the housing market has been red hot. it has been a selling market now things are cooling down. you wonder if in some weird way home depot could be counter cyclical if housing starts to turn down, home depot may do better because

people will fix up their home a little more to make it look better to try to sell it to a buyer who is hesitant. bunk >> not bunk, brian you are right. if someone is trying to sell a home now, you have to put more effort into it that, like you are saying, could be a driver of demand here the other factor and this gets lost on the market a lot as i talk to clients and investors generally, there is a few that if housing is slowing, that is a negative for home improvement and retail that is not necessarily true if the housing market is slowing, that could imply that people are saying in the existing home longer as people do that, they are who are likely to enhance or repair those homes. that's actually a driver of demanded for home depot and lowe's as well >> brian, this question about the recession and is the consumer losing steam? not if you look at it from this particular arena

if you look across broad area of all of the names you cover, is the consumer slowing down? >> that's a great question, becky. let me answer this way i cover a large number of retailers. a number of them reporting results in the past few weeks. what we are seeing is those retailers that are more exposed to the lower-income consumer, we are seeing more pressure there i think that's where these inflation numbers are having a bigger impact on spending. those retailers are calling that out. we are seeing and i use this a lot with the strong getting stronger home depot is an extraordinarily dominant retail enterprise they have a lot of control over their business some of the smaller companies are more whipsawed in the back drop we see weakness there. there are categories that are

softer right now we see weakness in the home fashion or accessory that is a function of consumer spending shifting back to pre-pandemic travel or going out activities it is mixed right now. i think home depot is in a good spot very strong retailer and still strong category. there are definitely some signals of consumer weakness >> let me dig in deeper on one of the themes you picked up on the strong getting stronger. we have known that with retailers for a while. the ones that were allowed to sky stay open during the pandemic. you get to the supply chain issues and everything i heard from people working in every industry, this is another situation where the biggest customers, biggest players are going to get most of what they he need from the supply chain. it commees at the expense of the maul

smaller companies and buyers how much of a problem is that? how much damage does that do to small business >> i agree we have seen that over the last several quarters one thing i'll say before i answer your question what i see signs of and home depot will talk about it today is the supply chain issues are fading while the supply chain constraints are probably fading. but to your point and in a way, this may sound goofy companies like home depot benefit. they benefitted from supply chain constraints. it allowed them incremental market share they were allowed to capture share from the smaller players that are not what is interesting factor in the home improvement discussion is you have home depot and lowe's control the large portion of the diy market. there is still a large portion

that has a small play which is fra frag fragmented the supply chain allowed home depot and lowe's to capture some of the share they have not been able to capture previously >> finally, what do you think in terms of the stock it is down 28 cents right now. $314 off the high of $420 it is significantly higher than some of the lows what do you do what is your price target? >> i'm recommending home depot we have an out perform rating. we have $475 price target. my message right here is i think when you look through this dynamic we're in right now, this malaise, on the other side of this, i think we are getting a clearer path toward that

i think home depot is an attractive name here very well positioned and run operator frankly, the stock is quite cheap at this point. >> got it. brian, thank you for your time and quick analysis maybe we'll see you tomorrow after lowe's >> thank you very much becky, one down. home depot walmart still to come. the world's biggest retailer with more to do on the retail tuesday. also coming up, oil prices back below $9$90 a barrel the three reasons you need to know why oil is falling. and delays at the airport be darned airline stocks are booming again and an maybe what is going on a the airport? if you are at the airport right now, good luck we're glad you are with us on "squawk x.bo good tuesday morning we're back right after this. ly h.

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welcome back to "squawk box. good tuesday morning let's talk about oil and energy. crude oil prices are $90 a barrel right now not only is oil below $90, but that move wipes out the post russia invasion of ukraine gains. crude oil at the lowest level

since early february good news. what is going on lately? three things at the same time. here we go number one china's economy is slowing down. they have the continued covid zero policy lockdowns. wuhan locked down again. that is about 1 million plus people china uses 15% of the world's oil. they lockdown. they slowdown. crude oil demand falls also renewed hope over a nuclear deal with iran to put more oil barrels on the market. some research suggests that another 1 million barrels per day from iran could come back online -- legally -- where they don't have to do the mid sea transfers in the dark of night and u.s. oil production is rising not fast 12.2 million barrels a day that is the highest since august of 2020.

where do we go from here maybe not much lower that is the bad news look at the futures at the chicago mercantile exchange. the futures contracts. all of the contracts are priced in the mid to high $80 $88 for october. $88 for november $87 for december that is good it may be huge for people in the northeast, becky, that are about to refill heating oil tanks. people in maine, vermont, massachusetts, they may use heating oil to fill their home they are probably just buying it now or about ready to and they are still likely to face sticker shock. some of you out there, if you get a bill, let us know. $30 a barrel higher than they were mid-august of 2019.

oil is well above where it was pre-pa pre-pandemic, becky. we are about $35 off the high we hit a couple months ago. not a lot of relief, but little relief and maybe good numbers for the walmart numbers that are going to be coming out soon. >> brian, we were talking with helima croft and jim cramer about the sudden glut of energy and oil in particular because you had russia trying to pump as much as they can they need more and more money to fund their war and everything else happening with them war with ukraine so, this glut of what they were sending to china and china having to slowdown in the economic numbers yesterday you look at the demand and supply at the same time. all of a sudden, in the space of a month, talking about not having enough energy for five years to come and under in investment and make sure we get enough out of the ground to make

sure the economy grows to see the swift reversal and now oil glut it may be temporary. it may be something that lasts a month or two months or significance months. six months. it is a weird reversal it is a different world than what we have been talking about. >> it is also very different how our views change over time on way up, $90 a barrel was expensive. oh, my gosh. now $90 on the way down. >> that's cheap. >> yeah. remember that. $90 is still $90 the one thing i have been saying about energy and i'm hammering on electric. we talk about gasoline i get that the reality is the rate renewals are coming for people in the united states where they may be on a fixed rate for power at home now we're getting word, i have

people on twitter posting bills around america we may be saving a lot of money in gasoline compared to a couple of months ago. i'm willing to bet if it is a cold winter that electricity and home heating costs in america are going to continue to surge any savings that people have from gasoline may get wiped out by the higher utility bills this winter i will say be thankful, becky, that we are not in europe where they are paying 400% to 500% more than we are the uk, becky, is talking about going to three-day a week school not for covid, but because of power costs. think about that >> what? so they won't pay for the schools to be heated or lit, but still have to have the kids at home learning from there shifting the costs back to the

consumer, i guess. >> working parents cannot get a break no matter where you are. the working parent can't catch a break the last couple years. >> no, they cannot let's hope for the best in that situation. when we come back, we are going whale watching not this kind of whale watching. we will show you the big moves that the wealthy investors made in the second quarter and those have been revealed in the s.e.c. filings. and the move that disney should spinoff espn. wl talk to an a analyst about the possible responses stick around we'll be right back.

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all right. time for a little whale watching this morning the world's biggest investors revealing the moves from the regulatory filings not because they want to they have to first up david tepper cut the position by 36% in the second quarter. some cuts in microsoft, micron and alphabet and mosaic and macy's one large new position was constellation energy it took a stake of $155 million during the quarter warren buffett's berkshire ramped up stake in apple last quarter by 4 million shares. that stake was worth $123 billion at the end of the second quarter. berkshire did sell the stake of verizon in the second quarter. that was worth more than $70

million. it owned the stock since the third quarter of 2020. believe it or not, that is a rapid reversal for buffett who stays in positions for basically forever. berkshire added to chevron and activision-blizzard. he had been adding to that for a while. he got in activision in ar arbitrage. he surprised everybody when he revealed that at the annual meeting this past year in may. >> that was not necessarily a sign that warren buffett is getting big into video games it was an arbitrage opportunity? >> he revealed it in front of the shareholders you know, i think bobby was there from activision and he

found out when buffett told the ou audience worth showing up >> adding to chevron and we know he has been adding to occidental as well. correct me if i'm wrong, warren buffett owns 20% of occidental petroleum. a lot of people are saying these oil and gas companies. they are the fossils or dinosaurs. to your point about owning things forever, it is clear that warren buffett or somebody at berkshire is not necessarily betting that oil and gas companies are going to die any time soon. >> that was the one add from tepper got out of technology names, but jumped into energy name. >> yeah. carl icahn we had data. decreasing the holdings in the small mid size refining company

and decreasing holdings in cheneire energy. if you owned them the last couple quarters, warren buffett made a lot of money. >> the same time buffett was buying whales are circling each other >> just billionaires trading stocks among each other. wouldn't it be nice? we have more to do and we will talk more about this. we will talk about dan loeb's stake in disney with michael natanson and sara fischer. why he wants espn to spinoff. and the impact of the inflation on the markets dom chu is back to crunch the numbers. as we head to break, look at the s&p 500 winners and losers dow futures down a touch we're on a four-week win streak. grab another cup of coffee

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good morning welcome back to "squawk box. live from the nasdaq market site in times square. we have red arrows s&p futures down by 9. nasdaq off 29. remember, we were under more pressure than this yesterday morning at this time markets managed to rebound dow actually on a four-day winning streak and closing an ab above the 200-moving day afrng f average for the first time this year joining us right now for a look at what it means for the industrial sector is dom chu with "sector nomics. >> becky, so important for the investment thesis this year and beyond

the industrial sector is by no means the biggest sector in the s&p 500. it has been an out performer so far this year. it is not down by as much as the broader market the orange line is the spdr s&p 500. the industrial sector has interesting dynamics with the inflation story. we asked the team over at y charts to take a look at the relationship between inflation and industrial stocks over the past year and perhaps beyond it turns out that among the stocks that have the tightest correlation, as the inflation goes higher, so does the stocks. waste management and republic

services over the past year. the blue line is the u.s. inflation rate using cpi the orange and green lines here are republic services and waste management you see the tight trading relationship as inflation goes higher, so do these stocks the opposite is true of certain other parts of the industrial complex. specifically the companies tied to aerospace and airlines. if you look at that relationship over the last year, many stocks have the opposite, meaning as inflation goes higher, these stocks go lower. look at the jets the u.s. global jets ticker j-e-t-s. inverse relationship there as airlines typically go lower when inflation goes higher, it is opposite for waste management companies. becky, that is a dynamic to keep an eye on especially if the narrative goes higher or lower

traders will be watching in the coming months or quarters. becky. >> dom, school me on this. waste management or trash companies were more closely tied to the economy if there is a strong economy, people are buying more things and throwing out more things you see it in the numbers. how is the inflation so important to them? why does it matter >> the story may have shifted here because inflation side of things may not impact their business as much not to say the costs don't go higher or not impacted by rising prices, but investor thought that even in times of distress or times when inflation is going higher, there is still a very big need for those types of services those businesses do not become as impacted as some of the other ones because of rising cost pressures because people tend to stick with those services, waste management or hauling off trash, even if issues are going higher.

if investors feel that way, this is one of the places where it is insulated. it is about relatively in markets. some industries are less impacted in investor eyes in terms of the overall business than others. waste management was one of those which was interesting that no matter what, inflation goes higher, and these stocks do the same thing as well >> dom, thank you. >> you got it, becky >> see you later becky, before we get to the next segment i'll tell you a funny story. i went to the dump the local dump the other day the dump had changed owners or names. the new sign it changed the bright lime green logo with a leaf on it it was beautiful it had the world environmental in the name. i drove up to the dump nothing else had changed the same dump. they had a really, really

awesome new logo with a leaf on it i just -- it was beautiful exact same >> that is called marketing. changing your image. >> just -- i need to do that brian sullivan with a green leaf logo on my head. joining me now is katherine rooney bara. i'll not ask you to comment on dumps changing their name or logo let's check on the market. the market was in the dumps a couple weeks ago 50% retracement back off the lows where we were how do things shape out? >> the market is banking on the fed rating lower than anticipated. there is a fear of missing out is my sense in terms of retail investors plowing into the market and expecting that fed

put still exists if the markets crash and the fed will not hike as aggressively, but maybe cut. maybe they are joking with regard to the kwquantitative tightening brian, that is set to go to 95 billion in the month of september. i'm cautious i think the labor market is set to rollover. we see productivity losses combined with rising labor costs. that's a recipe for job cuts not additional job gains i think 2023 is going to be a rough road i'm advising clients to remain invested and be hedged protect your portfolios and look at structure products which can cap your down side in a volatile 2023 >> okay. i was going to ask remain invested where you said structured products what do you mean by that

>> you can find products that will help cap your down side it limits your upside in terms of where you're situated and what your positioning is these are items in our firm we structure as per the needs of the client it is not one defined product that we look at for each specific client. brian, energy and i heard you talk about industrials utilities. staples. i prefer to take this opportunity to rotate if we are not already in more defensive position sectors which out perform in recessionary environments and to do so at this point rotate out of the ones that have moved higher cyclicals. more high flying stocks which are supported by the narrative that the fed is going to not just not hike as aggressively,

but perhaps even cut >> we're showing utilities on the green, kathryn you look at the inflation reduction act. a lot of that money is in tax credits that fall for upgrading grids to meet all of the power demand coming. are you a believer in utilities? >> i'm a believer in the sense of recessionary environment which is what we are potentially in for for 2023. we want to be more conservatively positioned. the inflation reduction act is a focus on climate change and really health care i do think that the point here is where are we in the economic cycle, brian my conclusion is not only are we on the down side, but i think we're in to see a more difficult environment in the next year when we get consumption dropping

because people are starting to lose their jobs or afraid of losing their jobs. you can't really continue in an environment with record high vacancies and record low unemployment and dropping productivity where companies are getting less output per hours worked while labor kocosts continue to rise what is happening is the rollover in the market and focus on wages which are negative. that is what is going to affect not just consumption and real economy, but, of course, earnings going into next year. >> all right very real worries there. we will see what happens with the job market i appreciate you coming on "squawk box. thank you. brian, thanks. we are awaiting quarterly results from walmart numbers are expected at 7:00 a.m. eastern time. we will bring you the numbers

when they cross. you can watch or listen to us live anytime walmart shares are up about 80 cents ahead of the earnings. >> announcer: sector nomics is sponsored by sector spdr etfs. to adapt in the changing world, you could hire a professor of theoretical mathematics. we all know this equation, right? he'd crunched numbers day and night. that's it. to maximize profitability. morning.

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apple employees in california have been called back to the office starting in september where they are expected to work three times a week that is according to media reports saying employees are asked to go in the office on tuesday and thursdays and individual teams will pick a third day for in-person work brian, they are not the only company doing this companies are trying to ease people back in to come back to work maybe not five days, but three days or four days. >> i don't envy management they will have a lot of hard conversations at many companies doing that they basically forced people to stay home and now they want to bring them back. you can argue the merits all day long i like being in person we're not in person right now, i look forward to it in a couple of weeks. lot of

people have changed their lives. becky, you and i have fairly young children child care is a disaster it is an absolute disaster try to get child care at home. baby sitters are gone. if you can find them, what was the article? $30 an hour. a lot of families will have to make hard decisions and i'll add this gasoline demand is still relatively high the last weeks numbers which were elevated. what happens to gas now? a couple of million people are starting to get back on the highways >> i was looking at usa facts. this is the steve baumer situation. who is leaving jobs from one occupation to the other. child care workers 16% switched okayccupation in 2. and if you compare that to 2017, that is higher with 12% and 13%.

same with teachers teachers and instruction in 2017, 10% and 10% switching only passion occupations. 15% stopping working all together those are the significant pressure points. areas where there was a lot of issues things they he ave been through the last three years that's where you see it. >> last week on ""squawk" we talked about the proposal for new york city. it would add $23 not the lincoln toll that is $23 on top of the $17. if it is enacted, it could cost people $100 per day to drive in to new york city all in. not a lot of people drive to new york >> good luck convincing workers

to come back when you do that. >> the trains stink. >> if you were worried about covid or anything else or odd hours or the crime in the city at off hours or during normal hours, good luck with that clean things up. >> yeah. or the train doesn't run because they lack engineers or you pull in penn station and you see at the port authority at penn station which can be depressing. a sad state. more people are driving. i don't know how it plays out, becky. when we come back, we will talk about airline stocks. they have been surging in august we will dig into that move after this break. we have results from walmart expected at the top of the hour. big numbers. big expectations thatto u sckp right now 75 cents. "squawk box" will be right back.

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> joining us is steve trent, airline analyst at citigroup there's talk about a recession, but you're not seeing it in the numbers. >> you're correct. i think that what we see so far is a very good dynamic when we compare the booking curve versus three years ago. so volumes aren't back to where they were in 2019, but volume

looks very strong. so technically we're in a recession, but when we look at ticket demand, that's not showing up in ticket demand at this juncture. >> is the demand coming from vacationers? people who just want to get out there? or is the demand coming from business travelers business travelers is where the real profit is >> that die namynamic is changig what we're see something robust demand from the leisure segment. and you've had a little bit of rolloff from the various categories primarily because airlines have pulled back their schedule so there's not enough equipment out there to get back to fully 2019 business demand is actually a little bit softer than leisure demand, so we'd expected some

team a time ago that we'd see some structural adjustment. because telepresence and zoom would possibly supplant some of the pre-pandemic business travel now there's a cyclical item on top of that in terms of what's happening with interest rates, so it's possible that some companies out there are taking a second look at their travel budgets. and it's become more expensive to borrow money. >> of all of these airline, the big majors, which are your favorite >> we're big fans of delta airlines i know that business travel is not back 100%. but when we look at our survey, trance trans atlantic is looking very good, even with all the problems we've had with baggage delays in

london, united airlines were rated on that one. and even if business doesn't fully come back, these carriers have done a great deal to de-risk their operations for example the amount of loyalty programming and card. >> refe card revenue plus the push toward economy plus's opposed to basic economy. >> steve, thank you. good to see you this morning, and thank you for joining us >> pleasure. >> brian >> coming up, would he are moments away from the big numbers out of walmart how is the latest guidance coming now stay tuned for that and more on disney as one big hedge fund says they should cut espn loose we'll talk about it with michael nathanson and sara fischer next.

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good morning stock futures pointing to a slightly lower open after yesterday's comeback rally retail earnings in focus this morning we've already heard from home depot. up next we have walmart and the market reaction coming up. plus, get ready for sticker

shock. the average car payment hitting a record high, the numbers you could be paying for a new vehicle. that's ahead the second hour of "squawk box" begins right now all right, good tuesday morning, everybody, welcome back to "squawk box" right here on cnbc i'm brian sullivan along with becky quick. joe and andrew are off today good morning, becky. dow futures are down a little bit fair value is up we saw this yesterday. futures down a little bit. markets ended up on a four-week win streak, gained back half our losses for the year in the s&p 500. so a nice run in equities. we'll see if that continues right now. it's not indicating it will, but walmart could turn the whole thing around

treasuries, pretty much at the same level back this mid april hard to believe with all the fed talk but at 2.8%, that's about where we were about four or five months ago, the price of oil ticking just under the 90 dollar a barrel mark. and the crypto world, not a hot lot of change here >> it is the number we've all been waitin waiting for walmart. >> for the second quarter, walmart is reporting adjusted earn beings of $1.77 about $2 billion above estimates. the company does note that

strong global sales are driven partially by inflation the full results are coming about three weeks after the company issued a profit warning for the quarter ending july 29th now a projected adjusted earnings decline of 9% to 11% per year u.s. comp sales driven by grocery, transactions. average ticket up 5.5% sam's club saw even stronger comp sales walmart's newer global advertising business grew 30%. overall, the operating income fell almost 7% i spoke with john david rainy, and he said the retailer is seeing the quarter itself ending

stronger than what we guided to at the end of last month also seeing more medium and high-income consumers coming into walmart with three quarters of the share of food with incomes of $100,000 or more. there is evidence of trade down in both in terms of quality and quantity they're buying things like canned chicken and tuna. instead of buying pack items of five or 12, it's looking more like five or six an improvement from the prior quarter. and about 40% of the higher u.s. rent inventory is a reflection of the higher cost. and i will sit down with walmart

ceo doug mcmillon in bentonville, arkansas for a more complete look at what happened here that did improve toward the end of the quarter >> i want to call up the stock chart again. walmart shares up by about 3.9%. this comes weeks after the profit warning that they issued. just talking about what they were seeing in the stores. was the trestreet's reaction to harsh at that point? saying consumers are trading down and getting pinched by inflation? i'm just trying to figure it out. did the street react too harshly? it t did things improve in. >> a little bit of both. when they had ended the quarter, things were looking a little

more dire. there was may and june, they c called that one section of the quarter. then there was july. we saw some back-to-school spending pick up when it comes to school supplies, hot necesnot necessarily apparel. i asked specifically, when you seegas prices fall, does that really impact the consume r psyche and they said they don't have an exact reason, about you that was part of the reason for the turn. >> of course walmart sells a lot of gas i'm going to be a little bit, okay, you're down there in bentonville, so you, i'm going to be a little bit nasty on these numbers here, and the one

thung i looked at with home depot, inventories jumped 12 billion dollars. from the same quarter last year. 59.9 billion a $12 billion rent build you wonder, and i know you'll talk, you have a huge interview, how that will impact margins going forward if they can't sell that stuff. >> absolutely. when i went through those numbers, he said look at the $11 billion in the u.s. inventory. 40% of that value is the result of higher inflation. then of course there's some higher inventory build that we wanted because we're building for back-to-school $1.5 billion of that $11 billion in u.s. inventory is the amount he would sort of like to wave a magic wand and make disappear. but he doesn't believe the

retailer will have a hard time selling it it may just to your point be a lower margin they did talk about having to add in more promotions as part of the warning three weeks ago. he said home and electronics and apparel are still those categories that are under pressure >> that was going to be my next question, courtney, where can you expect the sales coming? everyone on the planet bought a new tv over the last few year, things like bicycles, i hear there are lots of bicycles out there. >> exactly bicycles, patio furniture when everyone was hunkering down and buying all that for home it took a long time for the supply chain to get those through. once the demand sort of waned, the supply outstripped it. to your point on electronics, look at what best buy had warned they came out just after walmart, and that stock didn't crater as much, i think the

april lisa analysts were saying no huge surprise >> walmart shares up by 3.5% this morning on this news. target shares higher as well target reporting later this week with its own earnings. courtney has that interview coming up with doug mcmillon, the ceo of of walmart. >> what's amazing is they cut their forecast by 13% on july 25th and just beat the street by about 13%. the their better than expected numbers came back from where they cut them on july 25th 13% going down different than

13% going up >> didn't you ever do that as a kid? your parents ask you how you're going to do in math in you think you're going to get an a you tell them you're going to get a b. and you come home with an a and say you beat expectations. >> courtney said things looked about tho better than in may or june >> americans spending $400 million on gasoline a day. we're going to get back to home depot and walmart, but let's get to dom chu what have you got your eye on? >> you just got the walmart stuff, right i >> those shares are now down by about a half percent they've been volatile, fractionally higher or lower at one point they were down 2% to 3%. it's over 50,000 shares of roll

righ volume right now by the way it posted sales gains at established store locations that beat estimates as well and reaffirmed its full-year guidance decker did say it was the highest quarterly profit and sales in history there's still the demand for home imprompt projects the marginal decline zoom video, which is tdown about 3% due in part to analysts over at citi group who downgraded this to a sell rating and cut their target price to 90 bucks it was 99. they cited things like rising competition, profit margin pressures. watching zoom video shares town.

and payment-related things to keep an eye on rh visa and mastercard down due to an upgrade in paypal. they like paypal's cost containment plans as well as the share buyback plans and the elliott management while they do think visa and mastercard has mastercard are already seen. the daiwa call is in part driving the action back to you. >> hey, dom, i know you keep your eye on these markets, what do you make of this four-week win streak that we've been on. has there been anything that has stuck out to you about it the most >> the interesting part about the move higher is it seems as

though all of a sudden people have got and little more optimistic about the earnings picture and haven't focussed so much on the valuation side of things a lot of the reason you saw the down side is especially in mega cap and immedimedia services was interest rates it seems to have stabilized on the long side of things. but the earnings pictures have started to come back a little better corporate results are okay people don't seem to be as concerned about valuations it does give ah myou a moment o pause, right if they do come back, it means there's a leg lower. it's a big debate about whether the fundamentals can justify the move we've seen. it's a 50% retracement of the losses that we've seen

it's a pretty significant move higher, guys >> small caps leading the way up 20% in a month's time. dom chu, we'll see neyou in a bt my friend, thank you coming up this morning, we're a looking at the futures we had been looking at the dow down about 82 points before walmart reported walmart's a dow component. its stock jumped and the dow futures showed some improvement, too. s&p futures are down by 6 this morning. the nasdaq indicated off by about 20 we should point out that the futures are coming after these gains yesterday of they extended the winning streak to four days in a row they're at their highest level since may 4th. we're going to talk about that

after the break. third point taking a new stake in colgate-palm olive. we're going to have more othn e move later in the show "squawk box" will be right back. . the hottest brands. like nike, jordan, the north face, and more. and, with one-hour curbside pickup, it's never been easier to sport your style.

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this recent rally in the market showing some resilience the s&p 500 is now up about 17 since its june lows. and the next guest tells us they're calling the fed's bluff. emily, what do you mean when you say that we're calling the fed's bluff. >> being wit equity markets, ppi lower than, pecktations. still hot. the data suggesting that inflation is coming off the boil here it's rallying on the hope that the fed is not going to overtighten here pretty interesting that equity markets are loving the inflation data,

but bonds really haven't flinched futures marketed still rising in a 50/50 chance of 50 basis points so bond markets are actually pricing in slightly tighter fed policy that may be based on more hawkish fed speakers over the last few weeks but equities going fully risk on here we do think the fed will probably cut in 2023 but they're going full steam ahead for the rest of the year >> we had bill dudley on, the form head of the fed in new york he said the fed is iffing to hgoing to hav to be very stringent

doe don't be fooled. >> we think the bond market is probably right here. you have to remember that the fed and all of us as investors are mostly looking at backward-looking data, and frankly, becky, friends don't let friends use lagging economic data in making investment decisions. we prefer to use the leading economic indicators, which have been decelerating at a rapid clip but probably have further to go until the data bottoms we want to wait until that bottoming takes place before we move further into risk assets. the cycle's moving fast. we want to play defense right now. so we're really embracing bonds, move up the capital structure, be really patients a the eicycl plays out and get ready to play offense in 2023.

>> meaning that you think we're going to go back toward our lows in. lows >> the s&p was down from its peak in january. we're now down only 10% and looking at a pe ratio that's elevated again we're trading at 18 times earnings on the s&p 500. so prices have gone up at the same time that earnings estimates have moved lower it's pretty notable right now to watch this rally and market at the same time that earnings estimates are moving up. we want to look at getting more defensive, still aggressive fed. i think it's too early to get overly optimistic. and we're seeing investors add tons of risk to their portfolio. we talked about the meme stocks.

not a great time to load up on higher beta, cyclical assets in our view >> emily, if you're just hooking thr looking through. home depot and walmart people had continued interest in investing in their homes, and walmart had bet areter than expe is this something that tells you maybe i need to reassess >> yeah, it's great to see that in the second quarter we did see continued resilience from the u.s. consumer. another thing i think is important to remember is that company earnings are nominal, not adjusted for inflation, and we've seen revenues being the biggest drivers. that's pretty typical of

cyclical periods where pricing power remains. companies are able to maintain those margins by passing higher prices along to the end consumer, and the results that we've seen are clear evidence that that's been able to happen many as we look forward we do see a war on margins playing out. higher food prices are weighing on the kooum consumer. and we think they willes shoe the things they want for the things they need as we move forward over the next 12 months emily roland from john hancock >> do you need a new car but have been holding off hoping the prices come down

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all right, welcome back. any of you out there looking to buy a new car hey nmay need to a little more room in the budget the monthly payments have climbed past 7 upd for the first time ever. new car transactions in july were down a touch from the record set in june among the factors are interest rates of course. supply chain constraints, viewer

insen the beer t buyer the other day i took a photo of a burger from a local chain. nobody commented on the burger they were like, why are you driving a vehicle that still requires a key i remember you drove a jeep comanche or whatever it was for years. what i've learned, you know what, i mean, well-off people drive expensive cars rich people, mott not saying wee rich, but rich people drive modest cars.

i'm not blowing the money on a car. >> it depends on if you're driving into the city. >> the car will be destroyed by potholes that a giraffe would need a ladder to get out of. >> when i got rid of the yejeep traded to another used car >> people are making fun of the key, manual windows. and a thumping stereo system that has been upgraded, i will say that >> i would expect nothing less all right, still to come, walmart just out with earnings we're going to dig through those numbers with a retail expert it has pulled the dow almost back to the flat line. dow was down by about 82 points, now it's down by 10 points

tan dan loeb's suggestions for disney, that includes inspning off espn stay tuned you're watching "squawk box," and this is cnbc ey collect hunda points like hrv and rem sleep, so you know all you need for recovery. and you are? i'm an investor...in invesco qqq, a fund that gives me access to... nasdaq 100 innovations like... wearable training optimization tech. uh, how long are you... i'm done. i'm okay.

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all right, walmart reporting their number as short time ago. they cut their forecast on july 25th pretty much reversed that forecast joining us is jerone modis the street seems to like it. how do you raidead the numbers? >> good morning. indeed, the numbers are pretty much correlated with the latest reading on consumer sentiment, which is the consumer felt very negative but then consumer sentiment picked up in july and so did spending at walmart. when we look at inventory, they

are up chaompared to a year ago. on some of that, it is very evident that the consumer behavior at walmart is pretty much in line with what we're seeing in the entire retail space. the low-end consumer trades down and the middle class consumer continues to look for value. the membership at walmart reach add all-time high this exact same time last year, the second quarter of 2021, however, this year it increased 25.6%. this is a very good sign in terms of revenue and shows that the middle class consumer continues to cut out the netflix subscriptions and are trying to look for value and get a sam's club membership in order to save money at this pump >> how much does gas matter to walmart? obviously, they sell a lot of gas, but it impacts their s

shopper more than maybe any other. >> when we look at the comps, that's what we want to see consistently, the people getting the memberships in order to save at the pump are actually parking their cars and going into the stores, and it's also translating into consistent strong sales within the store. both of those comp numbers have been consistently strong at sam's, walmart and even the other discounters that sale gas like costco. it's a big deal to attract the customers into the store >> target is comingout tomorrow, lowe's as well is there any kind of trend that you've already seen or are looking for, jarhone >> so target caters more to the middle class consumer.

but the numbers today is a positive sign that things could have also turned around at target still, when we look at all of the discounters. when we look at target, walmart, costco analysts are most bullish on those companies that sell gasoline, and they've been raising those estimates even more stronger at a time when they've been lowering all the other retailers. even though we see a strong number at target tomorrow, analysts are still bullish on the discounters that sell gasoline >> jarhone martis. the street does like walmart jarhone, thank you very much have a great day appreciate it. w becky when we come back, we'll have more on the markets and other names reporting this morning. and don't forget, can you get the best of "squawk box" on

squawk pod and listen anytime. we're going to check out the winners and losers in the s&p 500 this. >> mo. therpeople will be looking and digging into that, but already, target is getting a unboce stick around, "squawk box" will be right back.

hi, welcome back to "squawk box. joe and andrew are off today here's how the market look we're seeing stock futures come back walmart's coming out better than expected really pretty much where they were before they cut their forecast on july 25th. still walmart up

we are seeing dow futures exactly flat maybe also helping walmart is the continued decline in the price of oil right at 90 bucks, and we are seeing gasoline prices down about 55 or 60 days in a row a little good news and relief for the american consumer at least on the gasoline side >> we will take what we can get. this week marks one year since the taliban recaptured control of afghanistan, and many companies have been working to build a bridge between the evacuees in the united states. kayla tausche has a look from some 81,000 afghan evacuees have been relocated around the united states. nine months in, more than 100 companies pledged to hire and

train afghan refugees. industries like hospitality and leisure have been among the most popular and some of the most ambitious companies, according to tent and upwardly global. this is one of pfizer's 68 af afghan hires he analyzes spline chain data. the most foreign concept since moving here is working remotely. >> i'm working, can you please go out when he went out i locked the door >> transportation like getting a driver's license to go to the office and child care remain the top challenges for afghan refugees, but the biggest asset in the slowing economy will be their mobility

>> one of refugees' soup powers is that they are more willing to move in the united states for work they've been able to capitalize on that to go to places where there are still great jobs available. >> the farther we get away from the withdrawal means that the less data that we actually have on these evacuees, where they have settled and how many have found work we talked to several government agencies, and there's actually not data on how many of them are employed, how many of them have that work authorization and how many are still looking for jobs. >> the companies that have stepped up and said that they would be doing this, that they would be bringing the hires in, are they willing to talk about these issues much? >> many of them are. and when i spoke to tent, they said yes, there was an initial ground swell of support immediately after the evacuation but it grew to 100 companies, they're going to have big announcements next month with new forward-looking commitments from a lot of these companies about continuing to hire,

continuing to train many of these evacuees so that they don't get lost in the u.s. economy. >> i guess part of it is child care as you mentioned. would you have to think just being able to figure out through society here, there's a will the lot of changes. >> i spoke with another nonprofit, and they said one of the biggest challenges they saw is the afghan culture is one based on storytelling. the elevator pitch was something that a lot of interviewees were not familiar with. gettin getting them to distill their stories. >> here's a story that is coming out of europe grabbing our attention. i will call this random but interesting. it's going to seem a little

weird, but it's important. maybe we'll call it wbi, wired but important. here's one of europe's biggest zinc smelters is being temporarily shut down because of higher labor and other costs it's one the biggest zinc smelters it is a big ingredient in a lot of thing, including certain types of industrial metals and batteries. kind of a sideways electric vehicle. we've been talking about european power costs this is one of the first major industrial companies to announce that a big plant of any kind is going to be temporarily shuttered for what they're calling maintenance, but there's no sign of when it's going to reopen you wonder if already-stretched supply chains for things like

libertaria electric cars, we wonder if this is going to be the first of many of these industrial roll backs and shut downs in europe because electricity costs make it unaffordable to make anything. could there be a day when a major car company in europe says we're going to stop production because we simply can't afford to make cars at any level that we can sell them at. this is a zinc smelter i know it's a bizarre story, but zinc and these weird metals matter >> i keep hearing about neon gas, helium, all these other issues that come up that were produced in ukraine or other places we didn't realize how dependent and how thin the supply chain was on some of the issues. i think you're going to come back to this again and again and those places are now

problematic. >> now they're desperately trying to keep nuclear plants open listen the russia invasion of ukraine, putin's stupid war, that's a major issue here it's not the only issue. we were in the uk in november talking about this, the coming thing, bad policy-making decisions. terrible weather the drought drying up the rhine river. we've got a lot of problems in the united states. >> i think about the european friends who are blessed and lucky to be living here right now. >> agree >> coming up, members of congress requesting a brefg on the ongoing national safety administration's probe into tesla. some of the auto pilot, alleged auto pilot crashes we'll talk about that with a

congresswoman coming up. let's get a check on home depot. highest quarterly sales ever profit, $5.05 a share. the street might have wanted a little bit more. home depot actually down about a half percent stick around oh, that's wrong. what's wrong? your swing. that's terrible... you gotta put your knees into it, put your knees into it. that's too smooth. too smooth? watch this. ♪♪ you try it. ♪♪ better. ♪♪ oh, you gotta move your feet. charles. alright, alright, i'm going. i'm going.

apple employees in

california have been called back to the office starting in september where they're expected to work three times a week employees will be asked to go into offices on tuesdays and thursdays and individual teams will pick an additional third day for work over the summer, apple employees had opinionbeen working two dayk in the office. some are trying to get more back into the office. >> apple's got a new head quarters i'm sure they don't want to sit empty. they spent a lot of money on that building. the federal reserve is about to ratchet up kwquantitative tightening steve liesman is here with a little-known reason why this may not create the trouble that it

has in the past. steve? >> yeah. it's complicated but i think it's important story what is that complicated cbi the federal reserve is two and a half months into quantitative easing it should put upward pressure on interest rates, but hang on a second rates on the long end have been remarkably stable. the ten-year is even down a little bit since the announcement of the fed's plans in early may it may well be fear of recession, a policy pivot, but there's something else going on that isn't widely known. the treasury has actually been reducing the size of its quarterly issuance partially offsetting the qt. treasury net new issuance has declined every quarter

it's estimated it will drop again. they are estimates based on projections from the treasury. so why is this happening first, treasury issued a lot of debt preemptively during the pandemic, not all of which it ended up needing debt is still going up, just not as fast as the market expected, even with aggressive qt. right now the impact of qf is being overwhelmed by the right sizing and normalization it will be put to the test when the fed doubles the run up next year if net issuance rises and maybe you don't get the help from the tax receipts that we've been having here brian, becky >> really quickly, i guess it offsets the tightening there's not more debt being issued into the market, that itself is tightening, but it offsets the idea that there wouldn't be buyers there for all

of the debt because the government was such a big purchaser to this point. >> smart people watch the fed's balance sheet. sma smarter people focus on net re-issuance. the treasury is issuing more at the time the issue is net new issuance has been declining, so there's not as much paper to be soaked up >> steve, thank you. let's bring in jeremy segall, professor of finance at the wharton school of business we've been trying to focus on the markets, see what's happening. we had bill dudley from the new york fed, he was on yesterday saying that he thinks the equity market has it wrong, that the fed is going to have to do a lot more tightening. you're going to pick the other

side of that tricky thing to fight the fed. >> it is, but, yeah, i'm going to pick the other side of that i think that we will have maybe 100 basis points left, i mean, perhaps 50, 25, 25 i think you hoolook at forward-looking sensitive prices they not going up. the only thing going up is going to be wages in certain sectors take a look at the housing industry, which was a major, major inflationary force in the last two years the nahb index which was report add reported a few days ago has had the biggest drop in its history. only march 2020 to april 2020 it we have a bigger drop. if you go on the ground with

real estate brokers, they say prices are softening everywhere. and, and remember housing is 40% of the core index. now, will you see that in the official statistics? no because of the way the government does official statistics, they put it in very lag. so you're going to see housing prices continue to rise, rise, rise there, but on the ground they're not. on the ground, the sensitive commodities, the real prices are not rising and i think if the fed takes a look at that, they had not have to go more aggressively. so i think the market has it right here i think the june is going to be a bottom and the second half of the year is going to be quite good >> so basically, you think's time to declare mission accomplished >> i don't thank the fed for overdoing stimulus, providing the government with all the

money that theyant w wanted, bu you take a look at the money supply, which is what i do i have often, they've brought that to a screeching halt we've had virtually no increase in money in 2022, and, you know, my feeling is, and i actually voiced, if they continue this tight, they would produce a recession. if they begin to loosen a little bit. i mean, not loosen in terms of rates, because there's built in, but not keep that money supply, the biggest slow down that we have ever seen, begin to raise that a little bit, i think we might great softndl landing tha everyone else was thinking was not possible i'm becoming more optimistic about that n >> what do you think are the odds that they're listening?

in i >> i hope they listen to everybody and realize that the past mistakes, money was too loose, and now they say we don't want to make it too tight. one has to realize that the so-called natural rate of interest, people like larry summers who said we have to go way above 2%, we have to go to 4, 5, 6. interest rates have fallen around the world, and we're already above neutral. in terms of that so if we go to 5%, we're going to absolutely have a very inverted curve and definitely guarantee a recession. so they have to, they have to be cognizant that their 2.5%, under a 2% inflation forward scenario is really too high it should really be about 1.5% >> we're about out of time but very quickly, you think that we have bottomed that the june low was the bottom

for the market unless the fed puts us into a herecession in. >> yes, unless they say oh, my goodness, cpi are just too high. i'm not saying stop now. but if they take a very aggressive, 75, 50, 50, you know, movement up to 4, 4.5, 5%. they're going to be sorry that they've been so tight. >> thank you for your time and your thoughts, we'll he ssee yo soon two auto makers requesting a briefing from the probe into tesla and crashes allegedly involving auto pot 're going to talk to one of the congresswomen behind the probe.

good morning earnings season is not done yet. we'll get you up to speed on what walmart and home depot had to say apple wants its employees back in the office. the report says the company is finally prepping for a return to

work, but it may not be exactly the same as pre-pandemic and, is dan loeb right should disney spin off espn and make a bigger grab for hulu? the final hour of "squawk box" begins right now good morning, everyone that's brian sullivan, i'm becky quick, live from the nasdaq market site in times square. why don't we take a look at u.s. equity futures this hour we've been weaker through much of the morning but we did see significant improvement. walmart is a dow component it reported better than expected numbers. stock's up but can you see the dow futures

are down by about 20 points. s&p futures down by about five points the nasdaq off by 23, and this comes after reversal yesterday the futures were down in the morning, the dow now up for four trading sessions in a row and above its moving day average yesterday. brian? >> let's talk more now about walmart. we've got the numbers crossing this morning the market seems to like them. let's dig in a little deep where he coe cocourtney reagan is in bentonville, arkansas. >> it's already 80 degrees they did note the global sales were partially helped by inflation. their full-year guidance also improved slightly after giving

that warning three weeks ago comp sales for the u.s. region grew 6.5% driven by an increase in food sales. walmart's global advertising business, that's sort of a newer segment, grew 30%. overall operating income did fall almost 7% year-over-year, and i spoke with new cfo john david rainy. and he said there were encouraging sales of school supplies the chain did see more medium and high income consumers coming in they're buying things like

canned tuna and chicken. units of beans are up. pack sizes are generally smaller. rainy classifies the u.s. consumer as quote, relatively healthy but notes stress from higher prices. a 750 basis point improvement from the prior quarter, rainy said 40% of the $11 billion worth of higher u.s. inventory is due to inflation, with just about $1.5 billion what rainy would like to wave a magic wand and disappear. we're going to dig much more into this quarter and more with walmart's ceo doug mcmillon when we sit down in walmart's hometown of bentonville, arkansas >> their team is watching you

now. walmart's always watching. co courtney probably can't say it, but can you give us a tip of how you're going to start off the interview? don't give too much away, because the pr people have their pens in hand, watching cnbc. >> what's really important is to talk about inflation and the different levels, what the retailer can control and what they can't and category by category, it's going to be different. i think it's fascinating when they gave that warning three weeks ago it was a profit warning, but sales were trending higher then, and they still trended higher it's such an interesting die cot my you can see sales increase but profits fall because of lower-margin goods selling more. it's important to dig into that more that's just one thing we're going to talk about. >> looking forward to it 10:00 a.m. eastern time.

g glad you're there. let's get over to dom chu. h he's been looking at some of the movers this morning. i'm guessing walmart >> a very big driver of the action this morning. home depot is driving things as well, but not in a good way. the other direction. walmart's adding an implied 35 points you've got roughly 25, 20, 25 points coming off because of home depot home depot is a much more heavily weighted part. if you look at home depot, the number three weighting, versus walmart, home depot shares down about 1%, $3 per share walmart, home depot rather, comes out with earnings and revenues, sales growth at

established locations that all topped estimates quarterly profits were the highest on record for home depot and demonstrates that maybe the home improvement trade still has some legs. nonetheless, we weaker in the trade. also keep ago cloing a close ey. l laggards we got the poorer than expected economic data from china we're seeing a rebound today copper and gold up about 1.5%. marathon oil, among those you want to watch closely for abit of a rebound as oil price come back as well watching what's happening with allied financial we got news that berkshire hathaway indicated that they had tripled their stake in online mortgage and auto lender, allied

financial. berkshire hathaway, brian, has a roughly $1 billion stake in allied financial big reason for that move higher, bri, i'll send it back to you. >> dom chu, thank you very much. all right, on deck, some in congress want more information on self-driving systems and cars like teslas and why actions continue to happen somebody was killed in europe last night and later, should sndiey cut espn loose (vo) this is more than just glass, walls, doors and carpeted floor. it's a place to change the world. loopnet. the most popular place to find a space.

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hey, what does this button do? no, don't! welcome to the fastest internet on the largest gig speed network. are you crying uncle ed? no! a little. only from xfinity. unbeatable internet made to do anything so you can do anything. all right, welcome back and good morning beautiful day over the nation's capitol. a pair of democratic lawmakers want to know what national regulators are doing about car crashes involving tesla's advanced driver systems like auto pilot or fsd, full

self-driving joining us now to talk more about theis, democratic congresswoman jan sakachakowsky. >> we sent a letter, the senator from michigan, harry peters and myself sent a letter, and we said we want to know more information about what's going on in, with tesla. we are seeing multiple accidents, 273 accidents, far more than other, other auto makers that are on the, on the road these are supposed to be driver-assistance technologies but actually, what tesla has done, they have branded what they're doing as auto pilot, you

know, that sounds like it's automatic. and the full, full self-driving, what is that supposed to mean? and has even told drovivers that when they go on long distance or short trips that there is no requirement for drovivers in the driver's seat to act on anything that's just not true we have seen crashes of people, five people have so far died from these tesla crashes not only automobiles, but, you know, we are seeing this as a real growing problem and tesla is leading the way, and it's really unfortunate, i just want to say these are technologies that are so important for the future, and we want it to go right so we have asked for full

disclosure we want briefings. we want to know exactly what's going on >> and overnight, it's not just tesla, though. they are the leader to your point. there was unfortunately a bmw accident in europe that killed the passenger because apparently the self-driving went awry and they ended up veering into traffic. >> whoever it is needs to explain to the american driver that self-drive does not mean watch a movie or whatever else it means hands on the wheel always >> tesla also has passenger play that would set up the ability for passengers to, you know, do all kinds of games online.

no, you're totally right there has to be a clear explanation that right now there has to be full attention paid during the driving, to make sure that we don't depend totally on these, on these automobiles to make sure that we're safe. and so we know that there are about 38 investigations going on right now of tesla but, again, i think you're correct that we need to do fully, full examination of the total field so that we can move forward. people are really wanting to be able to at the end of the day have self-driving cars, but the experiments that are going on right now have sown thhown that are a lot of holes in the process of getting there >> what would be an effective outcome to this, congresswoman >> well, among the requests that we made to nhtsa, the national

highway transportation safety administration is that we want to have a full briefing. we want our staff to be able to see the investigations that have been done. we want to know if nhtsa, the regulator, has enough resources and authority to do what we need to do. we think so. both senator peters and i are chair of our committees in the house and the senate that deal with auto safety and so there clearly needs to be more guidelines, more clear pathway to achieve where we want to go without the kind of increasing accidents that we are seeing particularly in tesla, but not only >> illinois congresswoman, jan schakowsky, thanks for joining us, keep us informed of how this goes this is a big and kbrgrowing to.

>> thank u. still to come, the latest major airline to cast bet on a super sonic jet that could cut a flight from new york to london in half. follow squawk pod on your favorite podcast app and list ton us anytime we'll be right back.

welcome back to "squawk box," everybody. hope you're having a great start to your tuesday. the market likes the numbers home depot going slightly in the other direction, but walmart's bigger the market could go anywhere in the middle of a four-week win streak for stocks we have gained back or retraced, as they say, about 50% of our losses for the year, part of that has happened as oil prices have come down price of crude oil was about 125 bucks a few months ago up 90 bucks. natural gas, though, that is the one to watch, back above $9. natural gas matters a lot more

to industrial economy than oil does back above $62 in europe apple is the latest company thinking about return-to-work plans. bloomberg reports that apple will require corporate employees to come into the office at least three days a week beginning next month. that is tuesday, thursday and another day agreed to by individual teams google, facebook and others also bringing workers back for three days a week. twitter and air b and b are allowing people to work from home you're wondering, will they lose employees? for two years they were told to stay away, it's not safe go away. people move therk they change child care providers. there's going to be a lot of

conversations conversations there and in other areas that have been locked down >> you wonder if there is a time that it turns. if it's no longer the "take this job and shove it" market then you have a harder time getting leverage but i think it's going to be coming in bits and pieces, small steps and different industries are going to handle it in i have different ways i don't know if you've seen this yet this morning >> i mean, if you move -- >> go ahead. >> if you move from san francisco to boise and sold your house and bought a house in boise, even if your income remains the same, you've just given yourself a gigantic raise. >> you've got to find the job, make sure that somebody will and this will be the issue if are you a highly-skilled individual you can probably find noir compa another company that will allow to you work from home. this is not going to be an everybody does the same thing.

and i don't know if you've seen this this morning, amazon and nielsen striking a deal. the ratings firm is going to be covering the footage of thursday night football it's the first time it will be including it in its viewings report no surprise f when you know you're going to have a big live audience, amazon probably wants to brag a little built abo bit about how many people watching >> i'malways skeptical when it's like 72 million people watched this, and you find out th they measured two seconds.

super sonic passenger jets getting another nod from a major air care jury. phil lebeau joins us this is a place for american airlines to boom the super sonic jet. american has placed a firm order for 20 of these jets to fly at a speed of up to mach 1.7. that will cut down the time on tr trans atlantic and trans pacific flights. for boom, this expands its order book so it logged in 15 firm orders from united last year with an option for another 35. now you have the american order. jal, japan airlines, has an option to buy 20 overtures in the future and the ceo of boom says he

believes the move and the push for cleaner travel is a big reason why airlines are much more interested now in overture. >> 100% sustainable fuel flight times that can be as much as half as what we have today. miami to london in less than five hours >> american did make a deposit, non-refundable deposit to buy these aircraft we weren't told the exact amount, but i'm told it wasn't a large investment let's see how it pans out. boom needs to manufacture the overture the first test flight is supposed to be in 2026 and go through the certification process which can take longer than many people expect, especially with a new aircraft

if all goes as planned, becky, 2030, by then, overture is expected to be in commercial service. but, again, they've got a lot of hurdles to clear between now and the end of 2029. >> how much suis it going to co if you want to fly this? >> boom says it's going to cost a fraction of what it would be if the concord was still in service today. the airlines are the ones, not the manufacturer, who set the price for a ticket let's see, it's really hard to calculate right now how much they might sell a seat for in 2029 stay tuned we'll be right back.

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welcome back to "squawk box. rick santelli here with breaking news our july raiead on housing star, 1,446,000 seasonally-adjusted annualized units it's down close to 10% from

last month better than expected but less a man sequentially we go back to june, this goes back a ways. i know we're going see diana olic in a few seconds. single family versus multi-family how many homes are under construction, due to labor or shortages aren't completed, the higher cost, whether it's interest rates or monitoring if prices are reflected all of this makes it very difficult. when you add in, the market's starting to ease financial conditions a bit against the will of the fed, it's going to

be handicapping housing that much more difficult. brian, back to you >> rick, thank you very much and rick referenced diana olic let's get into it and to these numbers with diana we're going to go to you first your take on the data. >> it's a disappointment on the starts, below expectations, and we we were expecting a drop we're seeing weakness in single family and multi-family. but you saw single family starts month to month drop 10%, but you also see them down over 18%. sorry, glasses, year-over-year the rhineason the permits were higher, that was on the multi-family side. what does this all say

the builders sentiment fell. they are not seeing demand, not seeing buyer traffic, sales expectations over the next six months are low they're just not seeing it because of affordability it's a big problem that we're seeing cancellations double almost what they were in april it's not pricisurprising that te starts would come down there's a 9.3 month supply the builders have a lot of stock that they aren't able to sell. and that supply is getting to be too much so they're obviously lowering starts accordingly again, not a great read on this. we do need to see more affordable rental housing.

a lot of these multi-family housing starts are not in the affordable category because of the high material and land costs. >> 63,000 home purchase deals were canceled in july. that is the most ever. so even if starts are coming down, people say i want to buy your home and then backing out with interest rate hike, 1% on a $500,000 home matters a lot. >> it does and really, what we need to see is the affordability increase here housing is a third of the cpi. if you want to bring down inflation, you've got to bring downe downe down housing costs we've had, i don't know, ten or 15 year of undersupply of

housing. that's one of the reasons housing has been so expensive, especially as diana points out, in the affordable housing realm of things. what's happening with the fed trying to slow down economy, housing and later autos should get the brunt of it. but it's unfortunate what we need is supply to bring do down housing as much as getting rates right here, brian. >> yeah, diana, how do you see all playing out ahead. rick, jump in here as well wages are up, costs are up rates are up people are still feeling pretty flush, diana i just don't have a crystal ball on how it shakes out >> there is definitely demand for housing out there. you're seeing it from the millennial generation. it's not so much the price and affordability for many so, it's

the fear do i want to make my biggest purchase right now there's also the fear of catching a falling knife on the prices but on the red fin report, yes, cancellations were the highest ever, but they only go back to 2017 i wouldn't say ever, because i'm guessing we saw more cancellations during the sub-prime mortgage crisis. but there is still strong demand you're just seeing the strength because like steve said, we still have this crazy supply and demand issue because we underbuilt so long after the great recession. we're probably still in need of a million units to house all the demand that's out there. >> final comment, rick, they waived inspections family of king cobras in the basement, don't worry about it

foundation's cracked >> as much as we see the negatives of the housing, there's still a contingency that circumvents many of the issues we discuss here. i if i had to make it quite simple, it's about jobs, jobs, jobs i'm a believer that jobs will be the last to turn it really will be about affordability. nothing is going to underscore affordability more than if we start to lose these good jobs that we see every friday of the month. >> just a quick comment here i'm impressed this morning by the strength of the consumer as witnessed in the earnings reports. i was saying earlier theiris we and late last week, that it's as good of an economic macro worth

as we're going to get. i would have expected a shift from goods to services, but it sounds like the goods producers have some issues but are doing relatively well. >> thank you guys very much. king cobras. very dangerous you go first for more on this new data that we have and the health of the housing market, let's bring in ali wolf clearly we've turned a corner, clearly there's something going on how would you describe this transition >> yeah, so as we look, as we look at the market, remember that housing is the ultimate rate-sensitive industry. we were in this fun time we were going through a party in the housing market the past couple years because interest rates were so low, and we had so many buyers eagerly looking to purchase a home. and as we've seen interest rates

go up now the monthly cost for a mortgage payment is up 40% compared to where it was at the beginning of this year it's no price to me that as you have the borrowing costs go up demand has pulled back but i think context is important. where we are right now from the sales point of view, we're back to 2018, 2019 levels that's dramatically slower but captures a more sustainable pace >> the national association of home homebuilders this week said we now in a housing recession do you agree >> i think there's no question that when sales go down, start goes down as well. we have seen most of the metrics in the housing show that we probably are in a housing recession right now.

but whe had a really precipitous drop there are signs that we leveled off but at lower levels. >> we have come off this incredibly hot market. i'm still trying to categorize it we're not in this zooming, booming housing market, but you still have a lot of people who need to find houses. you still have rents that have been climbing dramatically what happens next instead of 77% of homes having at least another competing bid, only 44% have it. that still sounds like a relatively strong market from it will depend very much on the market that you're talking b parts of the mountain west and west coast in the u.s. have slowed more notably, where there are some homes sitting on the market, and they really don't have any buyers that are interested, at least not without some kind of price cut so i think what we're finding in the housing data, to your point,

there are still so many people who want to purchase a home, they weren't able to over the last couple years because the market was so feverish and so strong, but now they're hitting this affordability wall, where unless they see a price cut or incentives from the builders to help sweeten the deal, they're going to sit on the sidelines until they feel more stable or there's more of a market correction >> how much of this is just the volatility in mortgages, too, which by the way have come back down same thing with gas praises. prices. we soared past $5, but then it's down you look at the bond market, it has calmed down, too >> yeah, but i think the math is still important in this discussion a few months ago when we were looking at the change in the monthly payment, it was up 60% and what i said earlier is we

were up 40%. absolutely, mortgage rates have come down, and the housing market at 6% basically froze we did not see much activity at all. as interest rates have come back down, you see consumers say okay, maybe i'm willing to go back in. what builders are doing is they can offer mortgage rate buydowns if it's around 5%, for some builders they're offering a rate of 3.5 or 4% >> in terms of the math, this is a much tougher situation for the homebuilders, because they've been dealing with higher costs they were willing to suck it up because they had a higher market if the market dies down you're stuck with what happens in between. how much of this is a problem for the homebuilder because they got stuck in the middle of the severe supply chain issues, and now they've lost a hot market to sell it into

>> what builders were doing during the pandemic is they started to switch to more speculative building, meaning building more homes without a consumer attached to it. they were trying to say okay now we have a better handle on how long it's going to take us to build that home home they need to move that quickly >> it's the same story with the retailers. they were chasing things that the consumer doesn't want any more thank you for joining us and helping us break it down this morning. we appreciate it all right, coming up here on squawk we're going to get jim's first take on the trading day. what's watching, walmart and home depot have to be in there and why one big hedge fund manager wants disany to dump espn

stick around

. let's get down to the new york stock exchange and check in with jim clramer. we saw the housing starts, what do you think it means for the broader economy? >> i was hoping that the, traditionally the homebuilders overbuild right now because they sense that things are going to be really good and didn't count

on two big increases the people who are repgtnting a going to be paying more for rent what we have to look at is we need a glut in housing in order to roll back the 30% increase in housing we've had over the past few years. >> they've gotten caught >> they've got great ceos this time it just really, they'll tell you exactly that you cannot overbuild. you cannot overbuild really smart guys. these guys are not going to fall into the trap that we've previously seen. overbuild and drive prices lower. you have to hope that the existing home sales, those are the ones that you can siee, not going to help supply, but you

need to be softer. >> let's talk about the two big retailers, walmart and home depot, walmart beating expectations, home depot not >> home depot's still related to housing. housing is going down, housing starts walmart, they underpromise add funderpromised a few weeks ago. they could argue hey, listen, we sandbag. but think obviously won't say that john rainy from paypal, walmart may forecast poorly and did better >> i thought it was interesting that the cfo that you just mentioned has said that walmart has canceled billions of dollars in orders. you have to wonder that means for suppliers.

>> everybody has too much. there were a lot who double ordered because they felt that the consumer, in the case of home depot, the actual contractors were going to have so much demand how did this, everybody who's double ordering got really fooled walmart's so big they can get away with canceling orders there are other company wies wh are smaller. this is all positive for the american consumer. people who think there's going to be a recession have to say we don't have that yet. people who think prices are going to come down, we don't have anything in the numbers to indicate numbers are going down. we just say it's peaking >> thank you we'll see new a few minutes. >> thank you >> "squawk box" will be back in a few minutes.

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. all right. welcome back to "squawk box. i want to show you this, something we've been talking about for a while, folks, but it's such an important story natural gas prices continue to surge in europe and, in fact, what they call the dutch itf market, almost at 250 euros per mega watt hour what does this mean? that's about the equivalent of 65 u.s. dollars, so we just continue to see rises. it has tripled this year and it's also now affecting our markets. you say, why to i care what happens in europe. from a humanitarian perspective

and economic perspective, it could be a disaster, but it's likely hitting our numbers now natural gas prices here are above $9 remember, u.s. lng is a competitor in some ways to europe, so our gas prices look like they are increasing in part because what is happening in europe just something, again, to watch in a big global-story. we're getting a look at how wall street investors may have shifted their portfolios during the second quarter leslie picker spent all night awake whale watching and joins us now what did we find out >> that's right. speaking of a humanitarian story, i'm kidding, the theme of the quarter was managers offloading risk with sporadic opportunistic buying it makes sense, considering the s&p dropped 18% in the three months through june which was the timeframe covered by these filings. many major investors sold off some of their tech exposure in particular, dan loeb exited in amazon, dell, sendesk an apple

micron, microsoft. large growth investors like tiger global sold off many tech names in an effort to stem losses in performance. michael berry known for calling the subprime mortgage crisis sold out all 1 of his equity position, meta, alphabet, warner brothers, discovery, to name a few. he added one $3 million group, geo. others added to the value oriented plays as well warren buffet picked up financial, apple and chevron viking global at least doubled stakes in meta, block, blowing and dollar general and ryan cullen, the chairman of gamestop disclosing yesterday some pretty bullish options on bed, bath & beyond, acquired after notching a settlement to get three board seats there. he purchased calls expiring january 20th, strike prices 60,

75 and $80 shares colonel trading around $15 this premarket guys >> leslie, thank you we'll see you in a little bit. mr news about activist investor dan loeb who leslie mentioned, his third point hedge fund taking a reported billion stake in disney calling for the entertainment giant to spin off espn, take control of hulu from comcast faster than it's required to and refresh its board. joining us right now for more on this is michael nathanson, moffett nathanson founding partner and research analyst, sara fisher, axios media reporter and let's start with you, mike m, just the idea of spinning off espn plus, spinning off espn, it would allow disney to do interesting things lobe lace out you could be involved in things like sports betting, does this make sense to you? >> they could be involved in sports betting now the problem is that as

stand-alone would trade terribly there would be no value creation getting espn off of disney at this point sports gambling they can do now. there's small partners that would like to partner with espn and burn a ton of cash i'm not sure how getting espn off your books, levering it up, basing the second headwinds and adding a sports betting would be an attractive play for a lot of our clients at this point. >> long-term versus those looking for a short-term pop >> the short-term pop, look at warner brothers and discovery, that short-term pop never happened i think the markets are on to this these are secular challenges the market could effectively value that, you know, espn within disney. i'm not sure getting on its own is going to be that attractive for short or long-term investors at this point. >> sara, this did cause a bit of a splash because we've been so focused on what's happening with streaming and how the market has changed its perspective on this

so quickly, what do you take from this? >> i tend to agree i also think that espn, while xwooinds with disney's bundle, helps disney's streaming strategy long term if you look at where disney has been positioned in the last year, wall street really wants to see these companies start to drive profits. they've actually seen some growth in their advertising business thanks to live viewership of events espn is not the black sheep it was even a few years ago the other thing in the letter about hulu is interesting to me, if disney was to go after hulu before the 2024 deadline with comcast, i'm not sure, you know, it materially changes their strategy long term i don't necessarily think that the premium they would pay for it would be good for disney given how much they're spending on content and how much there's pressure, including from dan loeb, to reduce costs as is. >> michael, what do you take on that i should point out comcast is the parent company of this

network, but that negotiation coming up, only about 18 months left before something needs to happen. >> sara is right i have in front of me disney's third quarter earnings they generated negative $300 million of cash this year, negative $300 million. you know, we know they have to buy hulu in '24. i'm not sure comcast will let them off the hook given the sweet deal to buy it earlier i agree with sara, the letter didn't change anything in my world. i don't really -- i don't think there's a lot there to tell you the truth because of the five suggestions. they're all productive, but i'm not sure it's a game changer in terms of the narrative of disney. >> you think disney does anything with this or can it withstand the pressure, mike until. >> i think they put up a good quarter. their guidance was good. you wonder how much did they know ahead of this before the quarter came out i think, you know, they have a playbook which is we have to reduce our debt, drive profitability, we have to manage, you know, prove streaming is a good business which we have our doubts on as

you know i wouldn't change course at this point. they have a clear path forward, and i think the market is giving them a lot of, you know, encouragement. the stock trades at a big, you know, premium to the rest of the sector, except for netflix i really don't see this as an undervalued asset the market is missing. >> we're almost out of time, but what about the deal with amazon striking a deal with nielsen to track its thursday night football program what do you make of it >> i think it's a haplandmark we have urged nielsen not just to count streaming but out of home viewership for sporting events this helps to usher more eyeballs into the streaming landscape, particularly for sports and for amazon gives legitimacy to their efforts. they're not just airing games. they're trying to beef up their live sports programming with having some multicast viewing hosts, getting into other

sports, and it helps the entire sector move forward and amazon move forward. >> michael, sara, want to thank both of you for being with us today. good to see you. >> thank you. >> thanks. hey, brian, thank you for being here too brian sullivan, my partner from a little ways away, but we made it work. great having you here today. thank you for everything folks, make sure you join us back here tomorrow. >> my pleasure. >> it's time for "squawk on the street." good tuesday morning welcome to "squawk on the street." i'm sara eisen here with jim cramer live from the new york stock exchange carl and david have the morning off. take a look at futures right now. remember, we had a big turn in the market yesterday, started off weak, got strong throughout the day. we'll see if that can happen today. down 68 points walmart's up about 4% in premarket. that's helping the tone overall. we're still down across the board. nasdaq futures down 40 our road map for the hour is going to start with th