good morning, everybody. welcome to "squawk box" here on cnbc we're live from the nasdaq market site in times square. i'm becky quick along with andrew ross sorkin good to see you zbheen good to see you. it's been a while. >> like ships in the night. >> ships in the night. if you take a look at this hour, you will see red arrows across the board the s&p futures off by 22 and the nasdaq off by 87 this comes after another strong day at least for most of the markets. the dow yesterday did have its first five-day winning streak. s&p was up but the nasdaq was off slightly,

down by about 25 points. we'll see what happens as we continue to get some of the earnings reporting coming in. in the meantime if you take a look at what's happened with the treasury market, it's 0.87%. the 5-year, 3.293%. there's a bunch of things we have to be focus nond retail land lowe's is just reporting we'll get to that in a second. we're expecting numbers from target plus, the government retail sales data comes up at 8:30. forecasters are expecting a begin of just 1% for july. so a lot going on there. and then in retail land, check this out we're watching shares surging in activity at bed bath and beyond. where is joe for this, becky, given that i know this is his favorite company, skyrocketing

more than 70% to an intraday high of above $28. this is amid multiple halts ended yesterday's session 29% higher thises after a regulatory filing monday night that shows gamestop chairman ryan cohen placing another bet with strike prices between $60 and $80. that means he's betting the stock can rise as high as $80 per share. for context, the stock closing on monday at $16 cohen purchased it and grabbed a lot of attention the ticker was the most popular mention in that chat room yesterday. we're going to talk more about the story in the next half hour with tom sosnoff from tastytrade on where that is coming from. >> lowe's did come in with just

in terms of earnings per share better-than-expected number. that's what we saw from home depot yesterday too. pretty handy beat on that bottom line but if you look at the revenue number, revenue came in below expectations 27.5 versus what the street had been expecting and the comp store sales were down 3% compared to expectations of an increase and with home depot, 6.5%. yesterday lowe's shares were higher at the beginning of the session when people were looking at home depot numbers, they were under pressure by the afternoon the stock picked up. let's take another look at what's happening with lowe's because they're also giving some guidance for the quarter i'm going through the numbers. it looks like the business outlook right now, they're expecting full year, 2022 store

and comp sales, expect operating income and dill lutd earnings per share toward the top end they say in the first half, sales performance for improvement for do-it-yourself trends, but there's also disciplined expense management and productivity initiatives coming through with some of these things they're now looking for total sales of $97 billion to $99 billion. 97.5 is where the street is. that kind of mirrors from them they're looking for comp store sales anywhere from down 1% to an increase of 1%. gross margin rate, up slightly compared to the prior year and interest expense, 1.1 to $1.2 billion total share repurchases, $12 billion. capital expenditures of $2 billion. i know we have somebody who can

tell us what it all means. >> absolutely. let's bring in brian, the senior equity research analyst at oppenheimer who follows home depot and lowe's your top takeaway in terms of that top headline? >> good morning. beck y i think you summed it up well as we always do, we're going to evaluate lowe's, and on that blass, lowe's is weaker. it's not a bad report. what they're basically saying is their sales tracked modestly high expectations. nonetheless, these lowe's results look somewhat weak sneer look, the stock now -- i'm looking at lowe's. the stock is down 17% on the year obvious lilt was much lower two months ago in terms of both home depot and lowe's as a bellwether for where you think the consumer really is

and where you think housing really is, what do you think it says >> well, look. it's a great question. i think it says -- again, putting aside what i sense as modest weakness, i think we step back like you're saying. it's basically saying the consumer's in good shape to make it simple, say they did roughly flat comp store sales here in the fiscal second quarter. that's coming on top of really substantial gains over the last two, three years now so that -- to me, that says this home improvement consumer is holding quite well of course, this is happening despite all these concerns about either a slower housing backdrop in the united states or slower spending generally, and you're not seeing that here with lowe's. >> hey, brian, looking through the numbers, they're saying they're seeing $13.10 to $13.60.

i know the consensus is $13.39 where are you? >> we're right in line it's consistent with what they had said previously. so they're trimming topline guidance modestly by saying they're going to the low end of the range. >> the same-store sales outlook, again, compared to what we saw from home depot yesterday, is a little disappointing, i would guess. but maybe it's heartening to hear they're really making sure they're paying attention to margins. what's more important? >> well, look. that's right as analysts follow retail stocks, we tend to look first and foremost at sales. that's usually the best measure of the health of the business. but it says something. it says something that they continue to maintain their margins. as i talked a lot on your show, the ceo has done a phenomenal

job of repositioning his business lowe's is a better company than it was premarket i think this is another test i also want to comment on the sales. we talked about it yesterday with home depot. what the weather -- you know, weather's been really hot. that's probably more of a negative for this dyi customer home depot is more skewed. lowe's is more skewed. the backdrop is not quite as great for lowe's the point i'm making, marvin is able to manage through with sales. >> brian, final question for so many years we did talk about home depot you talked about home depot as the better company operationally, that was how you looked at it then there was the period where lowe's looked like a value play and then marvin came in how do you assess it now in terms of you could only own one? >> they're quite similar look, if we're just looking at

these results over the past, you know, say 24 hours, home depot's once again the better run company. i want to say that again lowe's is much better than it was. >> in terms of value, though, do you say to yourself that there's more -- some people have looked at both of these companies and said, look, if lowe's can get their act together and they've gotten their act together more and more, they've got the gap to catch up to home depot, right? >> absolutely. absolutely so lowe's is a much cheaper stock given the multiple which it trades. also what you were alluding to operating margins of lowe's remain significantly below those of home depot. >> brian na gnagel, good to tal about you.

time for politics? >> yes. in wyoming, congresswoman liz cheney has lost the republican primary to trump-backed challenger harriet hageman by a wide mar jib too. here's what cheney actually said after that loss. >> tonight harriet hageman has received the most votes in this primary. she won. i called her to concede the race this primary election is over. but now the real work begins >> meantime in alaska's primary, senator lisa murkowski will advance to the general election. this is what we've been watching for, the general election. that goes along with trump-backed challenger. that's the way they do it in alaska and. sarah palin has grabbed one of the four spots, keeping alive

her hopes. she hopes to fill the remaining months of don young's term that race is too close to call. blazing hot inflation numbers for the uk overnight we've got challenges coming up from the one and only steve liesman. then later, president biden signing off on some of his top priorities we're going to talk to national economic council director brian deese. that's going to be taking place in the 8:00 hour don't go anywhere. "squawk box" rolling on right after this >> announcer: this cnbc program is sponsored by ibm. ibm. let's create and start crunching a year's worth of transactions against thousands of compliance controls with the help of ai. now you're making smarter decisions faster. operating costs are lower. and everyone from your auditors to your bankers

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welcome back to "squawk box. new overnight, the consumer price index cleaning on an annualized basis, lifted by higher food prices at supermarkets, the government saying the price hikes have been in categories that require a lot of lay before or utility usage like dairy the price of a point of milk has more than doubled in some stores since the start of the year. i want to talk about all of this with our good friend steve liesman who joins us now to talk about today's fed minutes. but, first, steve, you've got reaction to the uk inflation

data >> yeah. nothing brings up fears of the '70s around '80s like double inflation. uk has an inflation rate of 10.1%. it's global, worse on the other side of the atlantic at least for now, and the question is how does this all impact the u.s.? u.s. inflation, 8.5%, year over year lower than uk and higher than france the different is u.s. inflation fell in july, but it was up in the other three countries this likely reflects proximities of the other countries to the impact of the ukraine war, weaker currencies, and a central bank behind. speaking of the fed, today's minutes could be something of a reset for markets. they heard a pivot toward earlier policies, a pivot that ignited a rally we are in the middle of here s&p up 8.4% since the last fed meeting, followed a 9% gain from the june to july meeting stocks kept on rallying. even after fed officials

insisted the market was wrong to price in rate cuts next year rather than rate cuts next year, jim bullard told us on cnbc it was more likely to be higher for longer kashkari said fed cuts next year are a very unlikely scenario, and daly said markets are really ahead of themselves. it should tell you the extent of the more hawkish view is shared by the committee that could be a wakeup call. >> you have been saying this repeatedly, that you think the markets, i think, have made a mistake in terms of understanding what the fed is going to do going forward. you have the market on one side, sort of the academic economists on the other who clearly think the market is very, very wrong and then you have the wall street bank analysts sort of in the middle

why is there such a dispersion in terms of understanding what the fed is really thinking >> i mean i think there's a bunch of answers to that question i mean, one is i feel like markets sometimes hear what they want to hear, and the market wanted to rally, and so it sort of heard powell say we're going to pivot here. i mean i didn't hear that. by the way, the futures market has kind of come a little bit closer to the fed on this score here if you look at the market, the fed rate outlook has priced in futures market it's come up a bit over the past several weeks. i think that's one part of i look we're in a period, andrew, where there's no guidance. remember 2021, the fed was not thinking about tightening. we don't know that to be the case right now we've had some better inflation numbers. that's been a positive for news the market and they've take than into consideration so there's a dispersion of opinions because there's a

dispersion of data and a dispersion, i think, of plausible outlooks for the future. >> steve, i would say -- i don't want to put words in your mouth. boy i would say you and anyone who covers the fed knows it, that they haven't pivoted and they're raising rates and the market, i think, thinks something else hard to understand how this could be the case. >> you know, this happens from time to time what is it that yogi berra said? predictions are hard, especially about the future the fed doesn't have the greatest track rate. we did look at the fed's predictions for the year ahead, and they can be as wide as -- off by two percentage points where they're going to put their own rate andrew, i don't care if somebody takes a bet betting against what the fed is doing i think that's fair game the question you have to ask yourself as an investor is are you paid for the risk of betting against the fed.

the market after, i think, you look at the long chart, we're still down quite a bit to the extent you say, you know what markets are weighed down it pays for me i have an upside return of bedding against the fed. i don't think it's unreasonable. i think they're ahead of themselves if we get a big decline in inflation over the coming quarters, perhaps the fed can do a little bit less. like i said, i think the fed has an appointment with 3% funds rate when you have guys like charlie evans saying 3.75% to 4%, you take that very seriously. >> hey, steve, can we go back to numbers out of the uk? we've been talking about inflation as a global problem. i understand they have a unique issue. that's going to be a big factor in the inflation numbers we see there. does that not wind up impacting

us in any way? we're kind of looking at things in the market, at least speculating the market is not going to go as far when you see the numbers coming out of the uk, it makes me wonder, what's the contagion factor >> i think that's reasonable i think they have different economies. they're more tied to international trade than we are. their currencies are down more their central bank is behind where our central bank is. for the moment, we're okay we also produce an awful lot of our own energy, and we've been exporting it one of the big differences, becky, and this is a debatable issue in economics the u.s. is probably a price maker, not a price taker so we're probably more -- less affected by overseas inflation

than other places. china probably has more of an influence on pricing since china in many ways is the factory of the united states. >> steve, thank you. we'll talk more about it in the days to come. when we come back, a joke tweet that appear taos be moving the stock of a publicly traded company. and later, target is set to report we'll bring you the interesting reaction on wall street. stick around

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in three seconds, pam will decide... i'm moving closer to the grandkids! wait. i got to sell the house! don't wait, just sell directly to opendoor. easy as pie. piece of cake. whichever. when life's doors open, we'll handle the house. twitter an tixs from elon musk last night, tweeting he was buying man u, later tweeting it's a long-running joke and he's not buying any sports teams. that admission that it's a joke didn't come for four hours after the tweet and there was quite a lot of activity.

manchester united has been traded publicly on the new york city sinew york stock exchange, since 2012 he supports the left half of the republican party and the right half of the democratic party but, andrew, i didn't know if he knew it was a publicly traded team, but clearly market manipulation if you're looking at this as a regulator. >> well, i mean, i don't know i it was market manipulation in this case, i believe it was unintentional. >> my guess is that, too, but you're talking about a lot of people who made and lost a lot of money in the 4 1/2 hours. >> in terms of market manipulation, it's only market manipulation if you're de demonstrably trying to buy it and sell it yourself. >> isn't there that level of

with great power comes great -- >> there's no question he should not have tweet ted this in in which way give than people made and lost a lot of money. i'm not making that argument i'm saying in terms of thinking of it as truman in lags, my guess is if -- look, interestingly there's some folks online who have been looking at options activity, and there was a big bunch of it very, very recently did somebody put a bug in his ear? that's when it gets more complicated, if, in fact, there's something else going on. i don't know generally, i think -- not sympathetic, but i think it was a mistake. i think. >> we do have numbers coming up. we're going to continue this conversation, but we have earnings quarterly results from target, they're due out in the next minutes. i should mention target shares were up yesterday, 4.6% after the strong numbers from walmart.

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all right, everybody welcome back tar get just out with its earnings, and it is a significant miss on the bottom line target reporting a second quarter profit of 39 cents a

share. that compares with the street estimate of 72%. comparable sales were up they had estimated an increase in sales of 2.8% it's actually 2.7% if you're looking at traffic growth. comparable sales growth representing 2.7%. they're looking through a lot of different numbers. the company is trying to put its best food forward talking about they really cleared out a lot of inventory in this quarter, did all their hard work is what they're basically saying and think they're well positioned for what's coming in the second half of the year in terms of guidance, they're planning cautiously for the remainder of the year, but they do say current trends support the company in into low to single digit range and around 6.5% in the back half of the year watching the stock, it's down by

2.8% the stock was up yesterday by more than 4% you were talking about big gains yesterday. up again this morning by about 1% before we heard this. we're talking down 1.7%. it's going to be interesting to see how the street actually reacts to this the company said they gained unit share in all five of its core merchandising categories in the second quarter i spoke with the ceo brian cornell and talked through some of the things they were talking about. they say they're leaning into food, beverage, toys, and beauty that's is similar to what walmart said yesterday all things being discretionary, they're being more cautious. they're looking at seasonal things they say because they've gotten rid of so much inventory, their plan is really to have the stores ared to go for things like halloween, for things like the holidays, for things that are going. they say right now they have billions of dollars on the water

right now. back to school is wrapping up and they're going to be getting ready for halloween. you'll start to see that at the end of august. let's bring in stephanie link. we're going to get her reaction. i want to point out -- it actually just turned positive, stephanie. this is one people are going to look for and try to get a better read on what to expect in the second half of the year. you own target stocks. so what are your thoughts? >> the earnings miss is a surprise and a disappointment. the reason the stock turned is the operating guide answer at 6.5% i didn't see the margin number for this quarter we knew it wu going to be something like 2% to 3%. that versus 5.3% in the first quarter and 9.8% last year so you could see how much the margin has deteriorated as they clear out this inventory they had $2 billion worth of inventory to clear so i want to see what the

inventories numbers now look like this is not exactly a surprise this is a challenging environment. and the fact that the second half of the year has that margin target, that's a good sign at least you're in the process of getting back to somewhat normal. >> brian told me they have inveen inventory they're going to be cleaning out he said he feels good about things in terms of the store being clean and ready go what's your take on that. >> absolutely. it takes a long time to get this stuff cleared. consumables at target is about 43% of total revenue apparel is 57% you can see people aren't buying app apparel, becky, right? they're buying the basics, the consumables, foochltd and beauty hopefully that's good for estee

lauder this week we shall see the fact of the matter is they've good to get that consumerables piece more like 50% of total rev nigh. i suspect that's what they're going to say on the call. >> we heard from walmart yesterday too. i would ask you to compare them and tell me what this means about the american consumer in general. with walmart they were talking about seeing more customers coming in, trying to get to everyday low prices. they're beefing up on things like groceries that's great you can bring in more people, but it is a lower margin business. >> that's the whole problem with the margin stories for both companies. i mean, look, the margins fell 106 basis points for walmart yesterday. i haven't seen the gross margin number for target, but i suspect it's not pretty either that's because of the mix and also the markdowns to get the clearance and get it out of their inventories. so i think they're working it

through. i think the consumer is feeling the pinch, especially on the lower end. the reason i like target is their customer base is a little bit on the higher end, but they're both kind of struggling, if you will, on the margin side, and they will for the time being. i think if you look at traffic and tracks, that's pretty encouraging as well. so i prefer a target it trades at 14.4 times the earnings if it gives back some today, i get it but i think there's val dwru for the long run walmart is a great company it's creating it at 23.5 times the estimates. i think the better value and the better risk/reward is target. >> so i'm looking through the chart on this gross margin rate for the three months for the quarter that just ended, 21.5% for six months it was 23.5% versus 32.4% you kind of knew that was the

case the bigger question is what are margins going go for the second half of the year >> that's exactly right. expectations are 23.9% they came in at 21%. that's versus 31.3% p. you can see again the pressure that the margins are taking as they price this stuff at a lower level and also because they're selling things that are obviously a lower price, and that's the mix. >> beauty you mentioned being one thing. i know toys is another area that brian cornell is going to be focused on, that they're seeing consumers still spend on the holidays on things like back to school and toys because people are going back to birthday parties. obviously they're not going to show up with electronics you hear that they're going to be cautious going forward with discretionary things but really beefing up on things like holiday. what do you think about that strategy >> i think it's the right

strategy right now because obviously the consumer is getting hit from inflation and just the economic backdrop in general, the slowdown in the economy. i think it's the smart thing to do brian cornell and team have done a very, very good job at changing on the deep, if you will, right, that if things are going in one direction, they'll move their merchandise into that direction. it just takes time, but they've done a very good job in the past at switching where they need too in terms of the merchandise, and i think they'll do it again, but, again, we have to just be patient. by the second half of the year, i'm encouraged that's a really good sign that things are going to get better. >> do you own either home depot or lowe's? >> i don't. i think they're both great companies. i look at lowe's andthank

goodness they're doing a good job on the expense line. they're seeing more pressure on the do-it-yourself side. i like both companies. i just don't want to fight the story of housing starting to return permits were down on single-family homes 11% yesterday. that's a leading indicator for housing. we know the fed is slowing i don't know that i want to fight that battle even though both stocks are relatively in expense active relative to history. >> there's a theory if you're not going to be buying a house and home prices are down, they'll fix their own home but you're worried about that consume fehr we're headed into a downturn >> yeah, i do. i think some of the companies have done a great job delivering some of the numbers, they're

very encouraging i think home depot is being more conservative on the guide going forward. that's okay. they're still going to see 3% comp pe tense in the second half of the year. but, again, the multiple gets weighed down because you have these concerns on the macro. so while earnings may hold in there, you're not going to get multiple expansion. >> stephanie, really quickly, you're not going to be buying home depot or lowe's, would you buy anything with target based on the numbers >> it's a large position i've been adding throughout the quarter. it's trading at 14 times with the ceo that's doing the best job they can in a transition and a bench that's got a great balance sheet. yeah, i think i'll be adding to target. >> stephanie link, thank you see you soon. a lot more tore can come

where business and entertainment weak and we'll talk about "better call saul. and we'll talk about president biden's signing of the $7 ooh billion inflation reduction act. men mber you can watch us any ti othe cnbc app we're back after this.

welcome back to "squawk box" this morning "better call saul" fans saw the final episode. there's a business-related moment we wanted to show you not a spoiler. this is one of my favorite shows and i know we're all fans of vince gilligan and peter gould who wrote the show, but there's a nice little moment in the show that relates to warren buffett without giving away too much to set up the clip, jimmy and mike have a moment where they have $7 million, and they talk about taking $6 million of that and buying a time machine, and they say they're going to split up the $1 million they have left. they talk about if they could go back in time with their time

machine, where would you want go listen to this >> there's some people i would like to check on in five or ten years. you. >> that's easy may 10, 1965 that's the day warren buffett took over at berkshire hathaway. i figure, we've got a million left from building the time machine. i would take my half and just stick it into berkshire and then i'd come back here and be a billionaire. is there such a thing as a trillionaire. >> i believe berkshire was trading at $19 a share, so

$500,000 would have bought you 23,316 shares, which tould word be about -- of course the price is $461,000 give or take so that would be $12.1 billion so i think that's a worthy time machine. you wouldn't be a trillionaire. >> a billionaire several times over good plans. >> well done. >> there's a connection vince gilligan had both charlie mung ger and warren buffett earlier in "breaking bad." vince knows them, he goes out to the annual meeting there's a pretty close connection you see why it winds up in something like that. >> not only that, but warren ended up, i believe, going and taking a visit to the "better call saul" set maybe back in 2015 he always talked about "breaking bad" being one of his fachblt

shows, and i suspect "better call saul" is next. >> it is, it is. coming up, we've got the numbers behind the child care and teacher shortage in america, and we'll have that for you next. as we head to break, let's take a look at the s&p 500 winners and losers what do you mean? these straps are mind-blowing! they collect hundreds of data 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. how will your business adapt to change? you could hire an office full of peyton mannings. what's up, peyton? good morning, peyton.

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. as employees are being called to return to the office, they are facing more challenges at home, including the cost of child care in 2021, 16% of child care

workers switched jobs and occupations and 14% stopped working entirely joining us right now to break down the data is usa facts manager, poppi mcdonald. we've been talking about how child care is hard to find and it's hard to find teachers but there aren't natural statistics to track a lot of these things, you guys are shining some light why don't we break it down with child care first >> usa facts heard the swirl of concern of are people leaving their occupations because of the pandemic and when it comes to the numbers, we wanted to rlook at government data, what does it tell us about who is leaving their occupations. 13% of americans were choosing to heave their occupations

far higher, though, for child care workers, where, as you mentio mentioned 30% chose to leave their occupations. for teachers, below the average, about 9% are choosing to leave their occupations. it's been fairly consistent, however, higher when you look at occupations in teaching like pre-k or kindergarten. or teachers assistants so you can certainly see concern as parents go back will there be qualified day care teachers there will there be teachers there to support their kids? >> how does this match up with what we've seen in other occupations. i know we thought nurses were burned out, that they were going to be quitting their jobs. this ran through a lot of

occupations many >> we did not see that for nurses what we're looking at is who chooses to leave their occupation not nurses choosing to go from a hospital but remaining a nurse and going into a private care setting. nurses we saw to be pretty consistent but when you look at an occupation like day care workers, three workers, they are up there with bar workers. if you are a parent, looking at who's taking care of your child during the day versus who's serving your food, both valid occupations, but we are seeing child care workers up there in direct correlation of the data it's the compensation right there with maintenance workers

and folk whose work in landscaping. the lower paid you are, the less trien tr trac tr training you have, the higher the chances are that you will leave your occupation. >> you think about walmart and target where they were raising minimum wages. amazon was paying a lot more too. are they switching to go into occupations like that i do you track that? >> we don't know what they're choosing to do we do know in child care worker, 16% said i'm choosing a different occupation we don't know what that was many 14% said i'm leaving the workforce all together that is a pool of talent choosing no holonger to work you've got day care workers for $13 an hour, you have teachers

who make an average of around in the united states, an average of $67,000. that varies, mississippi it's closer to 45, new york is closer to 85. so it varies depending on where you live, but when usa fact does an analysis of teacher wages, when you look at inflation since 2000, 33 state, those places have not kept up with inflation. you have teachers in the profession for 20 years and their purchasing power is actually less. in three states, teachers saw a 10% decrease in their compensation when you compare it to inflation and the cost of living >> guess the numbers, we're looking at numbers that are outdated already you have a lot of changes in federal policy where you're not paying people if they're not going into work. you have things that have come a

long way from the pandemic, where you have therapies that people can get and a lot of ways to improving medical health if you contract covid do you think these numbers will show a big change when you look back at this year's numbers? >> we will be following the data, we will be looking at january as people return to their jobs and there will be more demand as in-person work increase increases in september, more demand for child care. and we've seen schools with pandemic relief funding and trying to support kid whose were doing work remotely. what will it look like in september, how will that change is thichange we'll be following the data. we'll be looking to see how it impacts our youth and children >> poppy, thank you, poppy macdonald from usa facts

we've got a lot more coming up on "squawk box. we will be digging into the surge of activity in bed bath and beyond and as we head to a break, here's a look at the stocks at the other two major retailers we've been reporting on all morning. lowe's and target. lowe's up about 3% target off about 2%. we've got much more next take a look the a futures. "squawk box" coming right back after this welcome to your world. your why. what drives you?

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good morning the dow making it five in a row now. the market's winning streak rolling on but fighting to keep it going today. futures are facing pressure ahead of the open. target and lowe's reporting this morning. we'll run you through the numbers and talk about the retail landscape and keeping on that retail theme, retail traders piling into bed bath and beyond we'll be hearing from tasty trade founder. the second hour of "squawk box" g begins right now

fgood morning and welcome back to "squawk box" right here on cnbc. i'm andrew ross sorkin along with becky quick we are down and we will show you how down we are. about 106 points off on the dow. nasdaq off about 95 points, the s&p off about 27 points. we'll also tell you where treasury yields stand. can you look at the ten-year note, 2.869. and given that energy costs are a huge part of how people are thinking about the world these days let's show you wti crude and finally for those of you playing crypto at home, you can look at the price of bitcoin, almost 24,000, getting back up there once again, becky. all right, let's get over to dom chu. he's got a look at this

morning's premarket movers >> just based upon the conversation you and andrew were having in the past hour with regard to lowe's and target, that's where we have to start. that will be the overriding theme in the market trading this morning. target shares right now have been volatile in the premarket session so far so the big box retailer's down about 2% right now but like i said, it was down much more. target comes out with earnings that missed expectations revenues were roughly in line. it took a conscious effort to move rinventory. the reason why some of those numbers may have kind of come in at least a little bit more positively for target shares off the lows, they did maintain that

operating profit margines are going to be in the roughly 6% range. so maybe some stability being broadcas brought back to operating margins. we'll see what we hear later on down the line from conference calls. now lowe's an opposite direction move it was a mixed earnings report lowe's came out with a mixed report profits and revenues did come in somewhat with analyst expectations, but the profit side of things overall did see at least an impact negatively speaking spe speaking from what they called a shorter spring season. they attributed some of the weakness in things in do it yourself customers did not fare as well, but was offset by the contractor, the pro side of the business lowe's because of that up about

3% rieft noght now. you spoke about it last hour a check right now on some of the premarket action on manchester united, the soccer club. this is all after tesla ceo elon musk tweeted overnight that he was interested perhaps in buying the soccer club and hours later saying no, it was just a joke. it didn't really have an impact. early on, those shares are higher right now i'm putting tesla and twitter up there because tesla shares can be impacted anytime he does anything because he's the ceo. and by extension in the ongoing legal battle between musk and twitter over the takeover of the company and the legal battle, twitter shares are off about .2 of 1%.

it's like a charcuterie place. >> this is the evergreen story. >> it really is. meantime, want to talk about the broader market joining us once again is stephanie link, chief investment officer at hightower good morning to you. we talked to you literally a couple minutes ago about both of the retailers we're looking at we're looking at a market that's going to open lower this morning. does that make sense to you >> yeah, it can continue between thous now and the end of august. september is historically a challenge for the markets. and we get more finflation data

and more economic data and then the fed meeting. i do think we're in this choppy environment because we still have to deal with inflation. it's too high. and the fed is really got to fight it >> what's the chance the markets really get rocked today. there's the market view that somehow they're going to take their foot off the neck of the economy. >> yeah, no, i don't think they're going to take their foot off, honestly. i don't think they can with a core pce number of 4.8% and their target is 2% they're continuing to be behind the curve. do they do 75 in september i don't know rates are still going higher they have to slow down growth. i don't think the minutes are going to be that market moving because it's kind of backward

looking, right >> let me ask you separately about the meme stock situation we're seeing with bed bath and beyond what do you think that ryan cohen is doing >> i have, i have no idea. i mean, this company is in a world of hurt in terms of the financial metric, right? their adjusted ebita fell last quarter, 218 million and earnings were a loss of 449. the same-store sales were down 27%. i don't think selling bye-bye baby is the answer to be honest but. bed bath and beyond just missed it, totally missed it. they don't really have a digital presence they have too many box stores out there. there's a lot they can do to fix it, restructuring it, but it's going to take a lot of time, and you don't think you want to be anywhere near this, especially, the stock's up 350% in the last

three weeks. >> i don't know if he clearly think it's worth $60 to $80 or the no. not. but he's got these options he also owns shares, which he could sell, interestingly. >> yes, he can he obviously thinks there's a lot more they can do they have a new ceo. they can close a lot of the stores they have to get more of a digital presence they could sell bye-bye baby i just don't think it's going to be an overnight fix, and, goaga, the stock has had a heck of a move i think if you're in this thing, you take your money and be happy that you made money, but i don't think you stick around it's too much of a challenge it's going to take too long to fix. >> would you be short this company? >> i would take my profits in

this company >> take, just get out, basically. get out. >> just get out. just get out yeah >> see what's going on at these stores remember when people were talking about whether they were keeping their air conditioning on or turning it off to save electricity? >> you know, kramercramer's bee talking about you better get in there and take this opportunity to make sure she raises cash go out and sell more shares while you have the opportunity to do it so you can get through any liquidity issues you have. he's been pretty vocal about it. >> i should say, by the way, they said that they didn't turn their air conditioning off it might have happened at one store, but it was not ordered -- >> it was not intentional. >> for what it's worth >> okay. when we come back, the latest data on mortgage applications and the state of the housing market and later, how ceos are feeling

about the economy and business conditions roger ferguson, vice chairman at the business councilnd a trustee at the conference board will join us to discuss "squawk box" will be right back. power e*trade's award-winning trading app makes trading easier. with its customizable options chain, easy-to-use tools, and paper trading to help sharpen your skills, you can stay on top of the market from wherever you are. power e*trade's easy-to-use tools make complex trading less complicated. custom scans help you find new trading opportunities. while an earnings tool helps you plan your trades and stay on top of the market.

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and it's never too late to join them. get $450 off any new purchase of an eligible samsung device with xfinity mobile. or add a line to your plan today at xfinitymobile.com welcome back to squawk we've got breaking news from the housing market the latest read on weekly mortgage demand, and diana olic

joins us fwhonow with more on t. >> mortgage rates fell a tiny bit last week. the drop in homebouyer demand added to the woes. we're down 18% from a year ago this is the average rate on the 30-year fixed dropped. it's off the recent highs but still way up from a year ago when it was around 3%. that in addition to inflation and swgeneral concern about the economy are keeping home buyers on the sidelines the application lost another 5% for the week and we're down 82% from a year ago. rates started this week kind of flat, but at the could move on the retail sales numbers coming out in the next hour

>> diana, it's going to be interesting to see how the fed looking at all of these numbers. appreciate it, becky in the housing starts plunged to a 17-month hoelow this week. and we've got the national association of homebuilders telling us we're in a recession at this point. is that accurate >> that is accurate. that started a few months ago. once the ten-year yield broke, demand is falling, incomes will be falling less money will be made by real estate agents and loan officers. so we are in a traditional housing recession, while the u.s. economy itself is still not t at that stage yet.

>> what do you see when we look around at these numbers? >> i would look at this as a stronger version of what we saw in 2018. 2018 mortgage rates got to 5%. the builders paused on production this is just a more, a bigger hit to the economy when existing home sales are going under 5 million. the builders are done ild buildg single-family homes for a while. they want to sell the last eight months of supply and incomes are going to be falling. loan officers will be making less the refinance market is dead the purchase market, there's a lot of capacity where people are fighting for a smaller piece of the pie. it isn't like what we saw in 2008 household balance sheets are much better now, where in 2005,

'06, '07, '08, people had foreclosures and bankruptcies. we don't have that kind of housing market, but total activity is falling. rates are too high it looks about right when mortgage rate goes from 3% to 6% >> wher > >> there's a big gap in the number of houses on the market and the number of people who want to buy houses >> that's the savagely unhealthy housing market we're in. we have two to 2.5 million active listing we started the year with 870,000. we're at about 1.26 million using the nra members.

we got caught in a very bad place. inventory had been falling for years in this country since 2014, and here comes the biggest housing demographic patch ever, with low mortgage rates. we finally paid the price of not having enough product, not only for home buying but for renting as well. >> let's kind of play this out jim cramer had a really interesting point on this yesterday. his point is that the homebuilders are being really organized about this and really efficient and making sure they're not going to get caught by building too much and gifting cagettin caught with an oversupply. if were you hoping that prices were going to come down and that will ease the pressure on inflation, maybe with rents, too, maybe not in the card this is time around >> you know, when we talk about the builders, they're here to

make money they're not like the march of dimes. so don't look for them to kind of save us from the housing shortage there's an active group of listing people every single year as demand gets weaker, inventory accumulates. by next year, if mortgage rates are around 5% heading to 6%, we should be able to get inventory back to 2019 levels. that's enough to keep the housing market functional we had 14 days median days on market, that was the lowest levels ever going back to 2011 it was 101 days. we're in a savagely unhealthy market we needed mortgage rates to go up because home sellers and home

builders have way too much pricing power. and if nobody checks them, can you see what happens prices get escalated out of control because inventory broke the all-time lows in 2020. so hopefully by next we're we can get back to 2019 levels for the national market. there's parts of the u.s., austin, idaho, phoenix, they're h already there. they're going to go slow and steady for many decades. >> so logan, you're saying this is a savagely unhealthy market, not necessary ily a savagely unhealthy market for the sellers, but it still sounds like the sellers have the upper

hand in most places. am i hearing that right? >> yes in many parts of the u.s., inventory is not happening like that is in austin, las vegas but, again, once rates rose 3%, the buyers are being hit on both sides. they're hit by home prices still rising this year, and then the percentage increase is historic. it's very hard for home buyers home sellers and builders have it great but home sellers pushed it to the extreme. and higher rates needed to create balance i actually agree with the federal reserve. housing needed a reset but, again, kind of, we don't a have to worry about a housing crash or foreclosure crisis. >> logan, thank u fyou.

first time we've had you on. >> great to be here, becky >> coming up on the other side of the break, a grim picture on the state of the economy roger ferguson will join us to discuss. and two big retailers reporting this morning take a look at lowe's and target they're going in opposite directions this morning. we're going to get retail sales data ler iatn the show don't go anywhere, "squawk box" coming rooity back the aflac pre-pain show. aflac! paul is about to suffer a shelf-inflicted injury. luckily, aflac will help cover his unexpected medical bills. aflac! maybe you could use the money to buy a step stool. i have a step stool. so why are you climbing a shelf? the stool's on top of the shelf, isn't it paul... baci backgh bact back yeah... ♪ ♪ aflac!

now the answer to today's aflac trivia question. richard james was a naval engineer who invented what iconic toy in the answer the slinky james was trying to develop a means to hold sensitive shipboard instruments when the idea for the toy was born. >> the slinky, the slinky, the wonderful, wonderful toy it's time for a roundup of yesterday's primary elections. in wyoming, kcongresswoman liz

cheney has lost to harriet haeggman here's what she said after that loss >> tonight harriet haeggman has received the most votes in this primary. she won. i called her to concede the race this primary election is over. but now the real work begins >> mieantime, in alaska, senato lisa murkowski will advance to the general election along with trump-backed candidate and sarah palin has clenched one of the four spots for the race for the congressional seat, keeping alive her hopes for a political comeback she is also a candidate to fill the remaining months of the late congressman's term mail-in ballots will be accepted throughout end of the month as long as they were postmarked on

or before yesterday. still to come this morning, we're going to talk about shares of bed bath and beyond, because think are soaring right now. and we're going to have more on that and other meme stocks on the move in a big way this morning. and later, don't miss our interview about brian deese about the inflation reduction act. stay tuned you're wating uachsqwk on cnbc and this is us in just a moment.

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welcome back to "squawk box" this morning take a look at futures we are in the red across the board. nasdaq off about 127 points. the s&p off about 34 points. check out shares of target, target reported a second quarter profit of 39 cents per share compared with 72 cents missing there. and then take a look and by the way, that stock now off about 3.5%

lowe's reporting as well earnings coming in at $4.67 as compared to $4.58. comparable store sales fell. and you compare it against home depot yesterday, clearly home depot in a stronger position on a relative basis at least this morning, becky thanks the latest reading on confidence shows it continues to deteriorate. ceo confidence plunged further in the third quarter an overwhelming majority of ceos say think are preparing pofor a brief and shallow recession. let's bring in roger ferguson. he's the former ceo.

tiaa and a cnbc contributor we always watch consumer sentiment so closely because that can be a self-fulfilling prophecy how do business leaders and their confidence levels have any sort of impact on the economy as well >> good morning, becky, thanks for having me. the answer is that business leaders make a large number of decisions. we look at their plans for hiring, capital expenditure, and we also have questions involving inflation. so they're telling us how they're seeing inflation as well so it is important to watch these surveys, and when we see ceo confidence plunge to the levels we're talking about now, around 34, anything below 50 under

indicates a slow down either now or coming. they're expecting a contraction. they are watching closely. >> when they say this he are expecting a contraction, they do think it's going to be shallow and brief, though. that may be key to this, if they're not planning for a big downturn, maybe that's something to take a little heart in. >> no, i agree we asked what they expect in the next 12-18 months. only 7% that they were not expecting a recession. that did leave us slightly over 10%, 12% who did expect recession. you're right but given the talk out there, that may be some comfort to some people >> in testimrms of them seeing

strong demand, what do they know that we don't? what do they see on the horizon that concerns them is this orders that are coming in or not coming in? concerns about the supply chain? >> i think it's a little bit of everything i think it's certainly a sense that things are still challenging. we see that in a number of numbers. one is they're still seeing input costs that are rising or expected to stay high. that may be a reflection of supply chain uncertainties they're still having trouble filling some jobs. importantly, only 50% of them expect to increase their labor force. that's down from 63% so i think they're seeing that and i think overall, knowing that interest rates are going to rise, they see future conditions in general weakening so some supply chain pressures,

price increases and interest rate increases >> what the fed may do is the lingering question you're a former ceo, a former v vice chairman at the fed do you think the fed had overshoot? >> they got started relatively late we see them moving in pretty large increments, you know, debating 50 and 75 basis points. importantly, the other thing that's happening, and the survey indicates this, while inflationary pressures are down slightly, they're a long way from the 2% goal and target they're talking about. the core pc is well above 4.5. the fed's going to have to tighten and tighten to the point that the economy does sink into

this mild recession he we're talking b i think the ceos are seeing that. >> so are the ceos being smarter about this than the equity market they look at it as everything's fine, no recession coming or at least not a long recession and the fed's going to stop raising interest rates at some point in the not-too-distant future >> i think there's a disconnect between the market and the fed and the market and ceos. we've heard a number of fed presidents clearly say that, you know, they are at a place that's different from where the fed is. the market's expecting them to raise rates a few more times, and then start to cut, quite a hump-shaped move kashkari is talking about

terminal rates of the federal funds rate well above 3.75 some are talking about it being well above 4 we heard mary daley the other day clearly say that she does not believe this hump shape is likely to occur, she's expecting them to raise rates and keep them there for some time there's a disconnect between markets and fed, and the same thing with respect to ceos markets are much more optimistic about the fed turning from tightening to loosening than i think is implied by what the ceos are saying and seeing >> we will be getting the latest fomc minutes coming up later today. that will give us a clim glimpsa

what they were thinking. >> i think you're right, the minutes are not likely to move the market it was kquite a while ago. the fed itself, at its last press conference, chair powell talked about the amount of time between the last meeting and the next meeting and how much data is to come in. but i think the market should be paying more attention to what they're hearing from fed policymakers that would suggest that the fed is intent on getting inflation down to 2% and raise rates and hold them at higher levels than the market seems to be expecting. there's room for disappointment, shall we say, for all the optimists in the market place. >> where would you put your concern level on a scale of with

uh to co one to ten >> i am worried that the inflation number, while they're coming down ever so slightly are only coming down ever so slightly when i look at the survey, i would find that, you know, well over 80% of the ceos say they expect to continue to be raising salaries and wages well over 3%. and so i think there's inflationary pressure still to come that's what the ceos are telling us so i put my concern at a 7 level. inflation seem, you know, relatively sticky. the fed is having to move very, very quickly and i always worry when there's such a disconnect between markets and the fed, that there's likely to be a collision of surprise. >> one way or the other, somebody's playing chicken roger, thank you we will have you back very soon,

but we appreciate your time today. it's great to see you. okay coming up on the other side of the break, chinese tech giant tencent. and why retail traders are continuing to pile into shares of bed bath and beyond and elon musk joking about acquiring manchester united. follow squawk pod on your favorite podcast app and listen anytime. stay tuned careful now. - thanks. -you got it. and thanks to voya, i'm confident about my future. -oh dad, the twins are now... -vegan. i know. i got 'em some of those plant burgers. -nice. -yeah. voya provides guidance for the right investments, and helps me be prepared for unexpected events. they make me feel like i've got it all under control.

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. welcome back to "squawk box," everybody. watching the futures this morning, and after a fifth day in a row of gains for the dow. in fact, that's the first time that's happened since may, you are seeing a little bit of a pull back this morning of the nasdaq down by 130 the s&p off by 36, but andrew, we should probably point out that the futures haven't necessarily been a good gauge of where things would end we've been down the last two

mornings and they a have closed up anyway. the morning's not an indication of where you will close the day. >> it isn't, and i imagine this is a little bit of a flinch from what we will see from the minutes. i suspect people are starting to get a little worried >> when you look at the uk inflation numbers, that adds concern, too we think inflation is maybe peaking, that's the hope at this point here, but when you see things overseas, that's a different situation. the uk has a lot of energy problems unique to them right now, but it's a global problem if you think you can techdodge t tencent missing forecasts. a number of factors hurting the company in the quarter, and

eunice yoon has more >> reporter: tencent missed on both revenue and profit and shrankity workforce by about 5%. the company was hit by covid lockdowns and the economy. creating a rienvironment for businesses that just didn't feel like advertising gaming also stalled. that generates about a third of total revenues they think beijing's lack of title approvals as well as restrictions on playing time for minors hurt the business overseas, tencent faced what it called a post-pandemic digestion period in other words, people started going out more and not playing games as much at home. looking forward, the company's fo founder, tony ma, said think would be focussing on their cloud business

he believes the business is going to improve as the economy improves, but no word yet on what the company may or may not do there's a holot of rumors out there about its stake in a food delivery company their earnings call is at the top of the hour. we might hear more then. guys >> eunice, thanks for that this is an indication of where the chinese economy is, but to the degree this has anything to do with regulation, how do you overlay this at all? >> reporter: definitely, when you look at the advertising business and the gaming business, there are reasons why the regulations would impact those areas of tencent's business the company said education was affected for their advertising and that was notable

what happened in the education field? theres with a big crackdown. also in terms of gaming, the limitations for kids to play only three hours a week. before they said they wouldn't be impacted, but obviously it is and then with this rumor of a possible stake sale, there has been a hlot of discussion. it's a way to apiece the regulators here. because tencrent and alibaba ar the big ones here. it looks as if the relationship is being unwound f . >> the relationship of the big daddies being unwound.

later, reaction to re ttail sales data mickey drexler will break it all down with us "squawk box" will be right back. power e*trade's award-winning trading app makes trading easier. with its customizable options chain, easy-to-use tools, and paper trading to help sharpen your skills, you can stay on top of the market from wherever you are. your record label is taking off. but so is your sound engineer. you need to hire. i need indeed. indeed you do. indeed instant match instantly delivers quality candidates matching your job description. visit indeed.com/hire

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bed bath and beyond after a new bet on the retailer. and continues the resurgence of meme stocks with amc theaters, robinhood and arc. joining us, tom, i want to get into it with each individual name but theres to does seem to be a trend here what do you think is happening >> well, i think there was a, you know, we had a pretty decent size or durational hiatus, and i think everybody got the bug again. there was a little, there was a big demand for speculation, andrew, and i think that it's back just, it may be short-lived, but it's back. >> am i wrong to think, tom, you have to have the bug to be back and also money to be back. money is not really back things have moved a little higher over the last couple months, and maybe that's what

we're talking about here >> i think after trading these markets for many, many decades, people, they regroup and reload. and i think that once you catch the bug at any point anywhere in your career, all of a sudden it feels like hey, i'm missing something when i'm not trading i think this is really good for business i don't think necessarily bby going up or, i think it gets people excited and it's good for you, us, and the industry. >> can i call it insanity? when you look at this stock, talked about it being 70% interday yesterday, indicates that he thinks at least or he's hoping that the stock pays out

to him when it's at 60 or $80. but is that realistic? >> no. explain the trade as far as you can see what's happening here. >> i mean, no, it's not realistic, and no, in my wiorld from a trader's perspective, i would say it's an idiotic play, but, you know, i mean, he's taken a shot, and he's trying to create some excitement around whatever he's doing. sometimes people think they can move markets, and i guess sometimes they can get people excited if they get to the right crowd. but usually it's pretty, again, it's hard to make it last. and i mean, realistically, the expected move in bed bath and beyond, given where the tstock closed last night, stock closed at 20.5, if you're buying calls at the 60 level, statistically,

in probablistic terms, it's an idiotic play >> we got a nice soundtrack coming in, tom we appreciate you jazzing up the place. i don't know if we have a license for that music, so we'll try to keep it down. i will ask you about the idea, though, that he's buying at $60 or $80, do you think that just, propping a stock up temporarily doesn't help you if you are a long-term owner unless you think he's selling equity at the same time, i don't understand the trade. >> no, i don't think he's selling equity at the same time. that would be a very dangerous route to take. i do think he's trying to create some excitement. and, you know, there are sometimes when people buy very far out of the money calls they do create some, let's call it, i don't want to call it manipulative excitement. but it gets people fired up.

>> to what end i think if i'm going to spend money to get people excited, that's great, but it's not an investment >> no, it's not an investment, and it's not a good trade even on the off chance that it works, it's a four or five standard deviation move you're talking about something that's a fraction of a percent so is that a good move it wouldn't be for me, and it wouldn't be for you, but some people are like, hey, you know what? i'll roll the dice on a less than 1% chance of something happening. maybe that's the way certain people think it's not the way i think >> talk about rolling the dice, and i don't think he was rolling the dice nevertheless, elon musk hitting up twitter saying he was going to be buying manchester united then hours later saying eh, just joking enough people took it seriously that the stock really moved. >> that's a much different, a

much different situation i mean, what did the stock go up, about a buck or something? the option volume increased. but i think it's at a $2 billion market cap there are a few people that are going to take wild shots with, you know, with anything elon says he's got that kind of power. but i think he was just, you know, teasing the market place >> becky and where i talking about this earlier with that power comes responsibility and given the sec settlement before or around his own companies, should he be talking about stocks at all? was this a mistake in that he didn't realize it was a publicly-traded company? >> it's possible he didn't realize it was publicly traded because i didn't real advertise was publicly traded. he's walking down a very dangerous path and i don't like it. so far he's had a bit of teflon to him

and nothing has stuck with respect to the regularittors but if the rest of us did something like that, it would be pretty ugly. all i can think of is that he really didn't know it was publicly traded. >> tom, want to thank you for joining us this morning and trying to help us better understand all the things taking place this this wild and sometimes weird market we're living in. >> i completely get it thanks so much >> thank you becky in thanks, andrew when we come back, president biden signing the inflation reduction act into law yesterday. we'll have more on that with brian deese, next. plus, we're expecting the latest retail sales data we'll bring you those numbers as soon as they cross "squawk box" will be right back.

good morning stocks setting up for a slide off the opening bell, now just 90 minutes away. the dow's on a five-tday winnin streak, but it's down across the

board. we'll bring you new retail sales data from the government at 8:30 eastern time and the inflation reduction act is now officially law. we'll ask brian deese when americans could start to see real-life benefits final hour of "squawk box" begins right now good morning, everybody. welcome to "squawk box" here on cnbc we are live from the nasdaq market site in times square. i'm becky quick with andrew ross sorkin joe's off today. we've been watching u.s. equity futures and it hasn't been a pretty picture the dow futures off about 188 points nasdaq off by more on a percentage basis, down by 121 and the s&p tdown by 33

dow was up yesterday for the fifth day in a row, the first time that's happened since may the nasdaq was off but slightly. the ten-year yielding 2.889% two-year standing study, it's a little higher at 2.339%. one of the top earnings movers this morning, target posting second quarter revenue in line with expectations but a miss on the bottom line. profit down almost 90% from a year ago target significantly cutting its prices during the quarter to try to get rid of excess inventory, things it had stocked up on that the consumer suddenly no longer wanted it is now positioned tor a rebound. target saying its 1.2% operation rate would improve to about 6% in the back half of the year

telling me they really cleared out a lot of inventory they're focused on a couple hundred million in inventory they'd like to be rid of they talked about discretionary items. they're not going to be loading up on discretionary items. they'll be cautious about that, things like electronics, but they will be very aggressive when it comes to things like holiday, they were very aggressive in getting rid of things and making sure they were supplied for back to school and back to college. that paid off for them in the month of july. they're going to be starting with october, with halloween stuff in the stores as early as the end of august. that's going to be coming. they're beefing up for what they're expecting for christmas and holiday, because they say in talking to consumers, that is where they are seeing that they want to spend. not only do they want to travel

but get together with family and holiday. he said they have what he called billions of dollars of inventory on the water right now trayyingt make sure they pull forward for holiday. >> we will see i hope people keep buying. but meantime, want to get straight over to dom chu he joins us with a look at some of the other top premarket movers >> the retail story gets a little bit nuanced and more complex given what we've seen in terms of results from lowe's and tjx as well. let's tar let let's start with the lowe's story. those shares are up about a percent. earnings here at lowe's, the second biggest home retailer next to home detailer, they come out with profits that, yes, beat estimates, but it was revenues

and grotewth and sales that cam in above estimates also a little less of the idea that the do it yourself kind of people that go in there for discretionary items didn't fare as well in terms of sales on that front, but the contractor or pro side of the business outweighed that. but on balance you have lowe's guiding to the lower end of its previously stated range for the full year. so you have a more positivish story. it's a similar story with tjx, which is the parent company of marshalls, tj maxx and home goods. tjx is down about 1.5%, even though earnings were better than estimates, but revenues in comparable store sales came in below estimates, but tjx cut its full-year forecast but the inflationary environment in america did lead some of their customers to alter their

buying habits. people buying a little bit less given the inflation environment. watch tjx companies, that's an interesting one to see the consumer health commentary and bed bath and beyond. nothing really fundamental about this one those shares are up about another 25% right now. we've been speaking for a couple weeks about the rise of the retail trader, the return of the meme investor and trader those shares are up another 24.5%, driven in part by ryan cohen buying or his company using options and bullish options bets if you look at that stock, it's now massively higher over the course of the last couple weeks here as you can see here, but that's the reinason why a lot o the meme traders are focussed on

bed bath and beyond. just about five minutes ago, it was 8.5 million shares traded premarket. we'll keep an eye on that. >> in the mane timeantime, ther more evidence of hot inflation around the world >> the uk needed an extra digit. it came in at 10.1%. highest number as for july, highest number in 40 year, according to forecasters, it is heading higher u.s. inflation came down in july j.p. j.p. morgan is saying uk inflation could peak at 13%. bigger effects on energy in the uk its economy is more open to global trade, and we have a much more active fed. still, rates, could explain why

rates in the uk ten-year is up 14 basis points. u.s. futures came off with the announcement this morning. on the fed, markets are trying to pivot, a pivot that ignited a rally. the s&p is up 8.4% since the last fed meeting, following a 9% gain from the june to july meeting. stocks have kept on rallying even after fed officials suggested the fed was wrong to price in cuts next year. neil el kashkari said markets ae really ahead of themselves brings us back to the minutes, which should tell investors the intent to which more hawkish view of policy is shared by the committee. so it could be that this rally has to withstand hawkish

minutes. >> we were talking about that with roger ferguson. and his take on it was even if this is hawkish fed minutes that come out, the market might not take it as a huge concern, just because we've got and lot of better data points since then, in terms of inflation in the united states. the jobs market. i just wonder if they look at it and think, okay, it's hawkish, but it's also a little outdated when things are of momoving so quickly. >> i was interested in the behavior of the futures to the uk data. i got it down about 1% i don't know if the guys in the back have that but it is down, about a 1% swing at 2:00 a.m. this morning. that there's this concern. i don't know, it's to like all these sort of uncertainty, is that a concern about global recession recession? because citigroup is out talking

about recession. are you more concerned about a stronger fed there you go does that tell what you happened happened look at that i speak and there it is. >> we saw the same thing happen earlier this week when we got those really lousy economic numbers out of china and we were hoolooking at an improvement in things until those numbers came out all three of the major averages closed higher. i think there's a lot of skittishness out there but what we're seeing now -- >> and this inflation recession dynamic that's all over the place. i'm more and more convinced we need a slow down if for only one reason we've got to build inventories back up. and i think this idea of excess inventories you're hearing from the retailers, i think that's a good thing, getting back to the

pricing environment you could negotiate as a customer. you go into a car lot now, and they slap you across the face and say you want what? >> with this economic boom, there's more demand than supply. you bring it down, that's one way to fix the supply chain, not the best way to fix the supply chain issues but one way to correct the problem. >> get the cars back on the lot soki i can walk away you go across the street, you may be getting coffee but you're not getting a car. >> steve, thank you. >> see you at 8:30 coming up on the other side of this, the inflation reduction act is now the law of the land and consumers, are they going to be feeling its effect anytime soon and what about the stepped-up tax on businesses? we'll speak with brian deese

take a look at stock futures we are in the red this morning stay tuned you're watching "squawk box" on cnbc

big corporations will now pay a minimum 15% tax instead of some of them got away with paying $0 in income tax. i'm keeping my campaign commitment no one earning less than $400,000 a year will pay a penny more in federal taxes. >> that was president biden just yesterday, before he signed the inflation reduction act into law. the legislation includes a close to $370 billion investment in climate and energy policies. billions more to shore up the affordable care act and questions remain as to whether or not the bill will live up to its name and actually reduce inflation. fascinating to see you literally after we heard the inflation numbers out of the uk in double

digits i'm curious how you think about that and how you think we're going to be hearing from the fed later. we'll see those minutes in terms of where we are and the inflation story in the united states >> it's great to be here i think the numbers we saw this morning underscore that the inflation challenge is real and it's global. we're seeing inflation prints across the developed world we always see the averages thousanow close to 10% they also underscore that the united states is in a better and more resilient position to address this issue than virtually any other major economy. obviously, we've seen some welcome moves on inflation in july and the trajectory of gas prices continues to come down. we're close to $1.10 down from the highs that we saw in june. so that is all, that is all

progress, i think the most important thing from a policy perspective is to do everything we can on the fiscal policy side to compliment what is being done >> what do the white house models look like what does the brian deese model say about where inflation is today and where you think it will be 12 months from now there's lots of concern that we can bring it down as a result of the supply issue and the fed pushing the brakes but to some point there's a view that this could get persistent and be very hard to get down to 2% >> well, i started answering that question from the overall economic conditions. and inflation is one important element of that. but if you look at where we are in the trajectory of the cycle and the economic recovery, we continue to have a historically

strong labor market rekfry we are seeing, you know, some reduction in job openings but continued hiring at a historic pace, and that strength provides resilience in the economy. we're continuing to see resilience in house hold balance sheets, and that is something that has persisted through this transition cycle as well and we are seeing, you know, again, some moderation that we should not count on, that we should not take any one month of data as definitive evidence. but some moderation, and technically in categories where people and families feel it. and that's why the declining gas prices are so welcome. obviously, we're continuing to see elevated price increases on the infood we are in this transition from

having grown very historically fast and in the housing market, the direct consequence of the fed's tightening from a policy perspective, we looking at where can we take steps that actually provide consumers some relief, provide families some relief, and how do we do that in a way that's consistent >> i want to talk about in just a second i don't know if you can see the screen will the inflation reduction act live up to its name? i know a lot of people who look at this bill and say, you know what it's a climate bill, or it's a tax bill or all sorts of things, but maybe not an inflation reduction bill, or maybe at the margin it's up or down a little bit, but that's not really the purpose. do you think that's fair in.

>> i don't i think this is the most significant and consequential step that congress and the president could take on the fiscal side to try to reduce price pressures while also ibupr prov prov prov prov prov providing consumers with tax credits and rebates. it will lower the cost of prescription drug prices to sq consumers. and the fair assessment is that it's historic, taking on long-awaited issues that our country hasn't taken on, like prescription drug and combating climate change, but it also is

the most responsible thing that we could be doing on the fiscal policy side as we navigate through economic time. >> what do you think the imly kafg cation of the 15% corporate tax is >> i think you need to look at the full impact of the fiscal policy that we're putting in place. and let's just step back for a second with the chips and science bill that the president signed into law a few weeks ago and the anaph inflation reduction act, we are making an investment in providing long-term certainty, long-term certainty that there are going to be incentives

>> for a very specific industry, broadly speaking, if you're making over a billion dollars, if are you going to shift in terms of how you spend for r&d >> it's not just one industry, obviously, the chips and science bill has a dedicated focus on the semi-conductor industry but has the largest investment in broadly r and d and innovation across our economy since we undertook the mission to put a man on the moon. if you look at the inflation reduction act, the long-term benefits across transportation affects sectors which are quite broad, from health care, to energy, to transportation, to innovation in manufacturing. people said it wasn't possible to see the kind of rebound in manufacturing and employment and investment that we are living

through right now. more than 600,000 manufacturing jobs created people said that wasn't possible these bills and the puincentives >> can you explain, senator kyrsten sinema, carried interest, how you that i hapthink that happened at the last minute? >> i'm going to let individual members of congress speak to their own policy from the president's perspective, from our perspective, we've been consistent, there's no rational basis for having the carried interest loophole, something we brief believe should be fixed.

and at the same time, broadening the base with a low rate of 15% that will make a big difference. that's something that we're getting done >> you just said that you thought you could make progress on the carried interest issue on the back of this bill. you would need 60 votes to do that how would you get there? >> we're going to, we're going to continue with that and other tax policies that we didn't accomplish in the context of this laexegislation but we have been making the case for, for years. the way we're going to make the case for that is demonstrating the economical logic and practical logic. we need to be fiscally responsible and demonstrate we can make the investments we need

in this country and do it in a way that's fiscally responsible. >> we got to jump, but i got 30 seconds. i want to talk about hearing aids, for those not familiar with what's going on talk about inflation reduction that is probably the biggest inflation reduction for those who need hearing aids with a big announcement from the fda. >> it's a big deal hearing aids this fall will start to be sold over the counter. no longer have to go and get a prescription what that means is lower cost. we estimate the price could come down by almost $3,000 by being able to buy them over the counter and more innovation. this is an example where regulation was creating a barrier to entry and keeping more innovators from the market. and now in addition to being the practical benefit of walking into a drugstore and buy hearing aids over the counter, it's going to open up for companies to innovate.

there's tens of millions of people out there who suffer from modest hearing loss. this is a big deal for them. and, as you say, it's a big deal for lowering prices in a practical way. >> brayian deese, we appreciate you being with us. "squawk box" coming back with a lot more in just a moment.

when we come back after the

break, july retail sales numbers. don't go anywhere. we've got a lot more coming up on "squawk box" just ahead

welcome back to "squawk

box. rick santelli here live at cme hq with breaking news. our july read on retail sales. hl n headline number is up zero, goose egg. unchanged from last month, which up to this point remains unrevised and was strong at 1% happens to be the strongest since january when it was up 2.7. so we are definitely seeing a little bit of a slow down, at least on average with the pace we had last month. revision, .8 if you strip out autos, the number moves to .4 now the control of the core number for retail sales, higher up the economic food chain, up .8, that's a strong number,

we expecting the number up around .6. this series has been running pretty strong, despite the weakness in headline on this particular month, maybe the big news is how much yields are up we're up about 11 basis points in a two-year, yes, i heard you. why? look towards europe. look towards the uk. you want to know what the u.s. is going to be like with our ongoing policy of energy look towards europe. think have double digit inflation. first time in 40 years, and their curve inverted for the z first time since '08 and the two-year shots in europe is up 16 basis points. so an energy awakening, and it isn't even cold weather yet. that's where the big awakening is

we need to pay close attention to these dynamics in europe. back to you. >> want to send it to steve liesman who joins us what do you think? >> i disagree with rick's idea that the uk is pointing to the future of the u.s. sure, it's possible. it's worrisome, worth paying attention to but i think they have a lot of th things going on over there they're a lot closer to ukraine and what's going on. we reasonably self-sufficient when it comes to energy. we're probably going to get a hit to natural gas prices depending on what happens in europe but our policy is appreciating we have a central bank that's been a lot more aggressive than the uk has been. i think rick is right to worry about it, but i don't think it's

definitely going to happen >> rick, you want to reply to that >> no, i've pretty much had my say. that is our future in europe the inflation reduction act has a couple decent pieces in it, but it certainly in my opinion doesn't hammer home the notion that we're continuing, we're continuing to think that the handoff to electric and some of the issues regarding curtailing fossil files is on some type of path that's sustainable. i don't think it is. so i will stick to my motion tnotion that we better pay very close attention. >> a big difference here than what was expected by economists. it showed a 1.6% tdecline. most forecasters were looking for an increase. production was up. apparently, sales were up. why it wasn't picked up this this number is interesting

maybe we'll get a revision or strength down the road i august but you did see a decline in retail prices. i hate to do theis live on tv. inflation in june was higher than it was in july, which came in at zero so in fact, i think this would be an improvement in real or inflation-adjusted retail sales when you adjust for the inflation numbers. the government will come out with that data later but back of the envelope doing this live now, i think it's an improvement on the inflation-adjusted side. >> okay, steve liesman, rick santelli, thank you both continue this conversation about retail, becky. >> that's right. we're going to get reaction to these numbers and we've got target and tjx down. target missed its forecast badly

but it cleared out inventory lowe's shares are moving higher after they predicted full-year earnings tjx down about 1.25% joining us is mickey drexler former ceo of gap and j crew and mickey, you have been in this for a very long time. we are trying to figure out what's happening to the consumer, not spending on things they used to spend on. but how do you see the retail landscape playing out at this point? >> the numbers, i don't think that you've said would make any apparel retailer very happy. i think it's a really difficult time i think that the environment make it is more difficult. it make it is more difficult to forecast what's happening and what's going forward m and i can only speak mostly to

the apparel business enormous amount of turmoil there's inflation, but then there's dee nation m deflation. in august it slowed down my opinion is that no one really knows what's going to be we're all hoping and hope there's not a strategy that it gets better in september way too much inventory it leads to way too many mark downs, which then leads to lower prices and i also fear, and i see lots of orders being canceled so i'm, i'm a little more pessimistic. and when i hear the sales numbers, i think they're much more difficult, because i wonder what the margins are

so i think spending habits have changed. people are out like crazy the first half, pent-up demand and it's slowed down, and people say a lot of people are traveling. they're away they're out of town. but i think the macro environment is a bit scary stock market, inflation continues, you know. so gasoline dropped, but it's still higher than a year ago, i believe. so i'm very, i'm not optimistic. we do the best we can do, and time will tell. >> mick eey, is this just an isu of the consumers loading up on everything they wanted or is this going to be an increasingly difficult environment the next six months to a year? >> i'm not an economist. i think the winners will win on

better i say product and product and product. i look around at the kcondition of apparel i don't see personally, and perhaps others would disagree, lots of creative, wonderful, "i want to have it" emotional goods, and that is critically important. i also think, we're a relatively small company. we tend to be, and i think my experiences, when the companies i was involved with were small, nimble, urgency, can be creative, you can micro manage so i have no idea what's going to happen. there's a lot of bad news out there. and i also think, and i have no statistics to back this up i think people are buying more carefully, buying more focussed. i think the more affluent businesses that have catered to

affluent customers will most likely to better than others. >> we have heard from a lot of the discount retailers this week, walmart and target, in terms o te terms of every day low pricing, they're being cautious when it comes to discretionary items and loading up on things like groceries and beauty and pulling things forward for holiday what they're hearing from the customers they talk to is that they're still willing to spend on things like having family gatherings and birthday parties. and that's where they're gearing their inventory for the year to come does that sound like a smart strategy to you? >> for target it probably is for fashion companies, i would disagree, respectfully disagree, because target's a great company. but commodities are so

competitive today. groceries must have stuff, essentials how many people are in the grocery business almost everyone. so you have to have lower prices, perhaps, or raise your prices, depends on where you go. i think, and i will always say this essentials are more basic. you can defer them they're on sale. and goods that strike an emotional chord, the word you used, are not essential, but they are essential to those who care about apparel that looks good and is made with quality, which, frankly, that's what we do at alex mill. and perhaps when we keep growing, well, i think when we keep growing, those same factors will be important. and i always mention the product. that's what i mention. that's what people buy they go to a restaurant.

they want good food. and wherever they go, they want service. they want quality, experience. >> so what's to happen in the meantime i mean, if you are a retailer who's stuck with an industry or in an arena where the consumer isn't right now, how do you deal with that? in it' >> it's really difficult, and we're being really conservative on inventory i'd rather lose some sales than have an overabundance of inventory to get the last dollar and then there's the future. we're planning very conservatively, because frankly, we don't know what's going to happen i don't think many people know what's going to happen you know, to me, the july numbers, which i don't follow, they sound a little blah, blah autos in there, maybe food,

there's a different measurement for those of us in the "rag business." we want better comps than that all of us do but you talk about huge corporations like target and walmart, i don't know much about them but i assume the culture's different, and of they've got tb grasping in the commodities business >> the one thing i can say is if other retailers are following your lead, and what we've heard from so many of the ceos is that they are going to be cautious on inventory. they don't want to be caught flat flat-footed again. does that mean we're almost getting into the self-fulfilling prophecy that if you don't have the inventory it can't be bought inevitably, people can't buy what's not there but you might also be looking at

much better profit margins, too? >> well, you know, my experience, and i can only speak about that, when you are low on inventory and the business is strong, you chase goods, your margins are higher, and people always manage to buy something or another in a company that, i'll say, has great goods, is a hot business and every time, and i've been doing this a long time, when the inventory runs out, which is very rare, we seem to have, we my experience have had better profits. you're turning more quickly and moving into new goods more quickly. a chase is an i have good and healthy thing in the apparel business >> through good times, profit margins, but, again, from the economic perspective, it's interesting times that we're following, interesting times that we're seeing. if everybody is tight around

inventory better news for the profit margin. it's been such a weird consumer to chase we could be looking at an unexpected turn. >> we could be, and the keyword is unexpected. if anyone knows and can forecast what's expected, i think that's a challenging thing. and also, when you look at inventory, you have to look at weeks of supply. lots of cash is tied up in inventory. but i, again, it's a personal opinion. i, i would be conservative and, you know, i can't speak for these enormous companies, which are, you know, very important part of the american economy i wouldn't know what to do if where i them i'd be in the commodity business, but i also would always be in the style and fashion business i think that's what makes things work as a growth vehicle

>> hey, mickey, it's sorkin here i got to ask you, you know how much i love those old ludlow suits of yours and everything that happened at j. crew in the old days, they have a new designer in supreme talking about style. i'm curious what you think of what they're trying to do there and whether you think it's going to work. >> you know, i get into trouble, sorkin or andrew, my old friend, when i say things about other companies publicly it happened to me a few months ago when i made a comment on, what was that, that i? what kanye. i had six or seven e-mails from my old friends at gap corporation. so time will tell. customers will vote. as long as a company has a point of view and a vision and is consistent with goods that appeal to the customers, all the

companies will do well and the larger the company the more difficult it is to manage i've been there, you know, many more moving parts. many more opinions from directors or whoever. and i'm kind of glad i'm not in that business. we'll see. i think he's a very talented guy. i've always loved his company. bought clothes there, but time will tell >> thank you go ahead >> thank you i've been fascinated by him. and i started looking at the catalogs to see what they're doing. so we will see whether it turns out to and success or not. when we come back, jim cramer's first take and a reminder, you can always watch or listen to us live can you do it using the cnbc app literally right now. if you need to go aresomewhere.

pop us on. stay tuned "squawk box" coming right back

dialogues led by cnbc journalists, the cnbc ceo council provides a forum to shape the future of business and our world. visit the cnbc forum kcounsel fo an invitation. and now, let's get down to the new york stock exchange, jim, for the retail, and not just the retail sales, but you had target and home depot and lowe's, and that is a lot to put together, and what do you think

of the two stocks in particular? >> well, target with a good bottom line to take the clearance which is smart, and we know from walmart, still a lot of excess inventory, and everybody loved it because they lowered it ahead of time. and lowe's is a good number, but more important what we have right now is something that reminds me of gamestop period, and where you people in heavy speculation mode at the same time that the two-year rates go up, and everybody was on the bandwagon yesterday, and it is the wrong time, and people should have liked it a month ago, a bandk to june 16th on the two-year, and bed and bath and beyond is where they can't have because i counted the legal dice, and you can't, and look the other side, and you can just get the approval, and there is some interest, and let's say

attempts to get control of the bed bath different groups that started in other groups, but it is reminiscent of gamestop, and beyond meat, and it is that the market goes down 4% or 5% after. and obviously, short spring and way over their heads, and way too much for the company to save their season with the holiday season, and they need legal advice and i will give it to them given that they can no longer sell, because they are paralyzed. they don't know what is happening to them, because they have the chance of a lifetime and they may not buy their holiday stuff, but they are in the bunker. but when you are in the bunker and waiting for some lawyer to bail you out, then you are a loser. so the sue should come out and get approval, and get the

holiday merchandise, but they are paralyze and they can't take advantage of the manipulation. they are paralyzed. >> jim, what do you think of the health of the consumer playing out based on what we know. >> the health of this consumer is fine, but the fed still can't find people to work, and the rent is do, wnand when we get those two, the fed is done, but they are not done. people think they are done, but they are not. >> jim, we will see you in a few minutes. thank you. "squawk box" will be right back. welcome to your world. your why. what drives you? what do you want to leave behind? what do you want to give back? what do you want to be remembered for? that's your why. it's your purpose, and we will work with you every step of the way to achieve it.

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we are down a little more than half an hour until theope opening bell, and the nasdaq is off about 127 point, and omar aguilar is here, the chief investment officer of schwab investment officer, and i am curious of looking at how you are looking at going into market, especially at 2:00 p.m. when we hear what the minutes say from the fed, and whether they are going to be putting the foot on or off of the neck of the economy, in some ways that

the people are guessing about. >> yes. good morning. i am actually thinking that the minutes are not going to be very surprising thinking about jackson hall coming up very shortly. i think that the fed meeting, we have seen many people from the fed giving insights of their thoughts of inflation, and trying to measure the message of about, you know, the potential pivot in the fed. the biggest part of what we are looking into is, you know, the market behavior with any expectation of changes in the inflation dynamics. the biggest thing is that while inflation is coming down, the high levels are pretty high. as we can see from the overseas data specifically in the u.k., the global inflation is high, and the fed officials are in the particular setup of they do have to send a signal to the market that they need to continue to fight inflation. >> so what do you think though

of the rise in market recently, and we have had a significant rise as there has been a pivot among the investors, and maybe not the economists what the fed is going to do and what inflation is going to look like come this fall. >> the fed is pricing in a soft landing with very few data p points to support it it is not very uncommon as we are going into the late phase of the economic cycle to see this kind of rallies where we are still in the beginning part of that late cycle. that usually brings in tight inflation where we will see the inverted yield curves and seeing the potential fears of higher inflation going forward and what has created the rallies is that we are seeing the labor market that has been very strong, and therefore, the majority of the market participants are thinking that it is going to probably support the fed and give them more wiggle room for future ease

of their type of hiking the rates. so that component is driving this latest rally. >> and that suggests that you are towards the end of the negative cycle, and we have all thought that we are at the end of the cycle, and lot of people have thought that for years. >> well, this is definitely the end of a economic cycle which has been very long at the end of the pandemic, but the end of the cycle has been pretty quick. so what you are seeing is the conditions that i have laid out, and very clear signs that we are in the last end of the cycle, and bull markets don't start up in the end of the cycle, and we will have to see more conditions that the earnings need to coming down, and we will have to see more softness before we think of the bull market. >> omar, great to see you this morning and getting your perspective on all of it. i want to take a final check of

the market before we hand it over to our friends on "squawk on the street" and the dow is down about 147 points, and we will see the 10-year at 6.8. becky, see you tomorrow, and make sure that everybody else sees us as well. "squawk on the street" begins right now. good wednesday morning, everybody. welcome the o "squawk on the street." i'm david faber, and jim and i like to call this hump day, and you will see that we are looking for a open, and we are looking for another open with target and lowe's, and out with a ope