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 along with joe kernen and andrew ross sorkin. let's check out what's happening with the u.s. equity futures three days in a row of declines, at least for the dow and st stooupd. we were down then in the green only briefly and now dow futures down by 32 we made so much progress in the month of july and the early part of this month. at this point the nasdaq is off by 23%

we got out of the bear market territory. back there at this point s&p is back in correction territory. the dow is down close to 11% from the all-time highs. if you have been watching treasury yields, they have been moving up. right now the two-year is at 3.3% but we'll continue to keep an eye on this if you have been watching energy prices, that's where you have seen a little bit of relief. energy prices, down -- or actually up. they were up yesterday the best day since the middle of july this morning up $94.56 is where we're sitting for wti. brent at 101.9 during the trading sessions it was up at the highest. >> the nasdaq got out of low

territory and it got into a bull >> it was -- >> a bull within a bear or a bear within a bull. >> we're going to get into a semantic argument. back-to-back with a quarter of recession. was that a new bull? no you would call it, a snap back of the bear? >> a bull within a bear. >> right but that was a big move that we had since june 16th or whatever. even the s&p had a pretty good move >> yeah. all of those the s&p was looking at getting out of the territory, too. >> they almost won my bet with el erian the mets just lost two in a row. >> yeah, terrible.

global markets -- we're going to get to this. sorkin, everybody deserves a vacation in august it's when we sort of do there's three of us here we can coast, man. we can do 1/3 of the interviews now. we've been doing half, half, half, half i'm coasting i'm not feeling -- so when you do get -- when one of our friends, one of our co-anchors gets time, we have to work harder we do need occasions. >> to rejuvenate. >> kids have the same schedule we need to be off. >> good to be back with both of you guys >> i looked at -- i've got to worry about pet co, i have to focus. >> we're going to be focused very serious. >> dog days of august, that's what this is.

>> dog days we decided since it was serious, it's late july and early august. >> that's true that's true. >> it is the low volume. a lot of the play zwrers are some somewhere. >> we're waiting to hear from our fed heads. neel kashkari said he's worried the markets will under estimate how high they will go. suggests the fmoc might need to be more address sieve. kashkari is considered the most hawkish of the fed heads that's interesting before he was the most dovish. >> right >> he needs medication or something. he has gone from one side -- bullard at one point did that as well he got hawk i shall than kneel.

>> what do you say inflation is, sorkin if it's. what are we saying is the inflation rate that we need to get the two year above to withstand this cycle i want to know what it is, if we have 5, we have serious issues and jackson hole is not going to be fun. >> of course it's going to be 5. >> you have to get inflation down. >> isn't that three more -- >> bring it up to meet inflation. >> we have two or three games? >> a series of 500%. what's that going to do for the ee done my estimate.

>> we're going to kill the economy because that will help that's not going to do anything to energy prices in germany and europe something we can't go for. we're going to keep raising, raising, raising would you prefer run away influence? if you don't do it. >> are you arguing for the core? >> no. i'm arguing that near term we need that pivot. >> i don't want the medicine. >> you'vegot to take the medicine. >> you've been calling for the medicine for the last decade i've known you. >> i know. i know i go back and forth. >> this is the first time i remember the back and forth part. >> here's what i think

here's what i think. you need to increase supply. we need investment we need businesses flourishing >> all of it. >> yeah. >> when there are too many dollars and you don't have enough stuff, instead of trying to lower the amount of dollars for demand, why don't you raise the stuff you're doing. >> it takes years. that doesn't help financing and innovation. >> do you honestly believe this? >> it is a supply side argument. >> i understand. if you listen to larry summers, you can't think we've tamed inflation. if that's what you're saying energy works into the rest of the production system. it doesn't stay a headline. >> do you remember how affoafford

able energy was. you're cutting off your nose despite your face. i listen to him once every 12 hours. >> broken clock? let's talk about somebody everybody is talking about, legal drama between elon musk and twitter. today the delaware court will hear arguments on both sides over access to documents twit zter is talking about it. we learned a former twitter executive blowing the whistle on the company accusing it of m misleading federal regulators. this could help musk in his legal claim.

he claims he wants to get out of the deal the more i think about it, becky, unless the whistle-blower can contend that the board or the executives knew of other estimates laying around, it may not be right and they chose nod to disclose those. if they did it fraudulently, i don't know if the whistle ploeer's claims change the dynamics i'm not sure the judge wants to go and do all of the discovery

around that issue. not potentially. it does muddy the waters it seemed like the show, i tent know, was this that a violation from what i hear, the company has not seen the unredacted 84 page complaint from the whistle-blower at this point. >> right. >> you'd like to hear the response to things but i can understand them wanting to know exactly what they're being accused of beforehand. there were things that i didn't know about that the whistle-blower brought up. i think it muddies the water we'll see. this is coming up so quickly in october, too >> if it really got spicy, i think it could make a

difference. >> anything that violated the ftc consent decree. >> at the moment though, so much is not focused on the bots if the issue are the bots, it doesn't seem focused enough on the bots is there data to show -- you have to show fraud due lens and i don't know i think that's going to be a high standard. by the way, not only fraud due lens you could have the executives going to jail for fraud and it still not be material. >> that would be interesting >> my point is, it has to be material it's not actually whether it's fraudulent or not, it's whether it has -- >> material adverse -- that's interesting. i'd like to know the company's response to some of these things, too >> the interesting thing is, this guy, peter, the hacker who's doing this, was hired by

jack dorsey. jack dorsey was still on the board when he left he was on the board through may. this guy was fired in january. so what i would also be interested in hearing is jack dorsey's take on it. >> he was the peanut. >> he was shedding a lot of light on the consciousness of the whole thing which is -- >> oh, goodness. >> well, you can't -- that's not a quality everyone has, as you know. >> are they not focused on shedding light on consciousness at bed, bath & beyond? >> who knew our favorite place would become a meme stock. did you know that? >> we're so meme to begin with -- >> we are. we are. >> we are. >> do you think people on tv are meme have you met a politician that wasn't -- >> me, me, me, me, me.

>> no, that's why they're in politics >> now to the latest on the meme stock, bed, bath & beyond. they've reportedly tapped a financing source to shore up the liquidity. jpmorgan has a lender. they need to give lenders confidence that they can ship goods to the retailer. it will provide where it is. >> we have 5% more when there's two of us. >> we do. coming up this morning -- >> 33%. >> i'm going down to 33. >> okay. >> i might even go to 25 that would be impossible. this morning's stock to watch including shares

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welcome back to "squawk box", everybody. shares of nordstromare down after they cut the full year forecast take a look at the shares. down by 14%. guys, if you listen to what they said, look, they're cutting

their forecast it wasn't chopping it. they see annual sales of charred up 5 to 7 35%. >> i did "fast money" monday and tuesday. i have these long discussions. i did long discussion about that their forecast was worst than the sales guidance. >> 230 to 320. why, the markdowns >> i thought they had less ip information and they had a

horrible reaction that the stock had. it was all the way down. where was it it used to be kind of a hot collateral. >> it was what was still doing so well was cleting. err, nordstrom was seeing strong demand for people wanting to get out there and see stronger clothes again. >> 1994. >> oh, oontd you're doing double knew the dput. five or six hours on the road trying to get in and out to do both shifts. difficult. >> are you doing it tonight? are you doing it tonight in. >> did you talk about urban

outfitters >> rnls ysh. poetsing lower concept customers have to increase decline in digital sales and that stock down nearly 3%. then la-z-boy. all could use one. furniture reported better than expect the mack cry macro back toll brothers cutting the delivery supply chain and labor shortages. revenue falls short. that stock still down. what we're seeing across the

board around the country by the way, by design when you think of what the federal government is trying to do that company will get hit no matter what. intuit beating the forecast. raising its quarterly dividend. >> diana was on last night talking all about toll brothers. i listened to everything she said toll brothers here to for had not been affected by rising numbers so much because people are -- you know, it's high-end homes. they are not quite as price senses and they're dropped so the housing is showing it.

we have the co-cio and anthony wo woodside from lgim america dana, we were having a discussion earlier about what we should use as the inflation rate what do you use right now? what should we say it is in terms of the fed has to get the two year to x to be above that we don't use 8.9% or 8.5% interest rates. >> let's heap not. what do we need to worry about >> i don't think 5 is a bad number i think 5 is a good equilibrium number to say, yeah, we need rates to be where we want

inflation to end up being. i heard your conversation. i don't think it was off at all. markets have been focused on recession. we're getting hawkish comments from kashkari. i was actually more surprised than not that the market expected more dovish pivots from the fed this last month, right we had such great performance for about a month. really, i don't think we've got any reason to think the fed could back off at all from rate increases. >> anthony, the other thing we talk about was what the fed can like aim at directly and what's really causing the inflation itself.

>> it's early prices trickling down to all parts of the economy. >> it's very complicated situation, particularly with the geopolitical outlook we agree with dana we think they keep the foot on the pedal. inflation, 8.5%. core cpi at 5.9% really it's about whether they broke 50 basis points or 75 basis points yes, energy price is a risk. it's too early for the fed to take their foot off despite signs of slowing. >> what's your number that we need to have a target of, anthony?

is 5% a good number for you? not double digits. could it get to do you believe digits >> inflation is going to broadly come down in the coming quarters we think inflation is going to come down slowly at 8.5%. we think it will coalesce around the 4 to 5% range within the next 12 months we expect to see given that they're at estimated neutral we think they will go from a full-fledged sprint to jog and 50 basis points in september and reach to 4 to 4.5. >> dana, you are definitive.

is there any opportunity in areas of fixed income or equities do you have to be very selective? >> yeah, you know, a lot of folks will say it's a stock picker's market when you have markets like this. volatile, a lot of aspersion to me, you want to look at what is your time frame, right? are you holding for the long term are you worried about what's going to happen in the short run? i think odds on that we if not are already in a recession, we do get to a recession. we talk about the fed a lot. they can't afford a stop and go. go defensive long term view, you might want to look at areas of small caps if you can hold on buy now and hold onto it diversified small caps, not meme stocks >> anthony, we don't want to stop and go policy but we don't

want to go forever how do you know when it's time to stop? is anyone that good? >> i think that's a very good question, joe. if you look at what the fed has done it seems no one is really that good to predict the direction of the economy. 2020 the fed said inflation is too low. 2022 you see the fed trying to catch up to the economic reality on the ground. i would look at credit spreads they exceed 200 basis points their concern will be foremost on

i like people with fixed income. stocks are like, who are we supposed to -- they're taking their cues -- we zajac son hole every sentence we zajac son hole. thank you both when we come back, president biden is reportedly ready to announce student debt cancellation today we have the details next. reminder for you, you can get the best of "squawk box" in the daily podcast. follow squawk pod on the favorite podcast app and you can list jenny time. we'll 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

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welcome back, everybody. et cetera will' -- let's get to today's executive edge president biden is expected to announce loan forgiveness. they will forgive $10,000 for borrowers making less than $125,000 a year. loan payments paused for more

than two years were scheduled to resume at the end of this month. more than 40 million americans currently hold debt tied to their education and the total amount of student loan debt exceeds $1.7 trillion. critics warn that canceling debt could make inflation even worse. in fact, guys, i saw a report earlier this morning that said more than 80% of republicans think it will make inflation worse and more than 40% of democrats think the same thing i think maybe the bigger issue is it doesn't hold any schools to account >> right. >> where you have seen tuition prices outpace inflation for decades at this point. if you do this, it doesn't do anything to try to rein some of that in either. >> i just know what we're going to hear. it's how many people that gave up things for so long to put things off are now going to be paying for other people. >> right >> things that they --

>> it's going to be the same thing we had in 2008. >> right. >> when people talked about should we be helping people with their own mortgages. that was the debate. >> right. >> that was actually -- that was very politically popular this is a lot less popular >> presses all kinds of lines. >> particularly popular with democrats. >> politically popular with young people who tend to have more student loans. >> you mean, the people that benefit from the -- yeah, it's more popular. >> yeah. >> it crosses -- >> we've got to figure out how to deal with the costs at the first stage before i think you get to the next place but that's just me. >> well, majoring in french renaissance poetry probably isn't a great idea. >> in terms of making money to pay off your -- >> not that there's anything wrong with that, but i don't know what do you do with that tough. >> you could have a policy around providing loans only for certain majors. >> what's that >> you could say -- i mean, look, there's lots of

conversations -- >> we do to a certain extent if you agree to teach in certain places that makes sense if you are looking at shortages where you can't find people in these jobs. >> we need to match -- everyone says that, we need to match where the jobs are that could include technical skills as well >> absolutely. >> the french major thing i think is not -- the truth is, that's not -- most people -- that's not the majority of majors, but -- >> not that. but there's -- 50% are useless probably. >> we have to figure out a way to make the whole system better. >> do it as a minor. >> there are veterans and others who have been scammed as a result of higher education, corporate education and the like those folks i wish we actually could find a way to help but in a very surgical way. i think when you start to do this in a broadway it becomes complicated, probably

inflationary, but it creates a moral hazard issue i think we're all talking about. >> yeah. >> nonetheless, when we come -- >> computers and minor in mandarin might be the way to go, you know what i mean >> i don't know if you can ever do business with your mandarin degree we'll see about that. >> right coming up, higher energy costs posing a big risk to the economy at europe and at home. we'll talk about price pressures. yesterday's s&p 500 winners and losers lily! welcome to our third bark-ery. oh, i can tell business is going through the “woof”. but seriously we need a reliable way to help keep everyone connected from wherever we go. well at at&t we'll help you find

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welcome back to "squawk box," everyone natural gas futures hitting a 14-year high this week close to $10 this week 9.this is the latest tick. joining us to talk about this and the higher energy prices is amarita sen.

amarita, how do you explain what's happening with natural gas right now? how high do you think it will go >> the u.s. gas prices are driven quite a lot by what's going on in europe you are in unchartered territory. there are so many fears on russian supplies into europe that is just keeping the market very, very nervous it's not that the balances have tightened that much to warrant these type of moves, but it's an unanchored market. sentiment is such that you are seeing and you will continue to see such crazy moves ahead of the winter and there's a lot of fear in particular about how much demand destruction there's going to be. industries cutting back quite significantly. what if it's a cold winter what about rest home heating, all of that. now in the u.s. in particular, the freeport out table and l&g outage is bearish.

it means that the u.s. can't really export more gas and it does allow some more inventory build in the u.s. itself that's not what the market is focusing on now. it's all about what's going on in europe which is driving u.s. prices higher. >> it was just over a week ago that saudi aramco was out with the earnings and mentioned they could be in a position where they're getting ready to potentially produce more, that they were ready and able to do that we all took that as a sign that maybe saudi government was preparing to do something like that now i'm reading this morning in the wall street journal that saudi arabia is now signaling that it may actually cut production what's going on? are they just messing with us at this point >> no, i think they've been very clear in terms of the statement he brought out and he rightly called this a yo-yo market this market is working or just going off on random headlines, even bullish headlines have been

interpreted bearishly. you've seen prices come off. it's right now and i've been saying this for a week now we've had algos, huge volatility all the prince is trying to say to the market, look, yes, there are concerns about a recession now there are even rumors or concerns around a potential return to iran saudi arabia and opec plus will make sure the market is fable. the fear that's led to the rapid drop in oil prices, that's essentially what he came out and talked about is opec is still in charge of the market and that should not be forgotten. >> amrita, there are now increasing forecasts for well above 100 again. i don't know whether you think 150 is in the cards this cycle or not, but my question may be something that you don't really -- it's out of your lane

a little i'm wondering how much of it, if it were to do that, how much of the energy complex filters down to our overall inflation rate in this country and if other commodities roll over, do they all end up being bid up again because of transportation costs is it that system snik if it gets bad in europe, can it really keep our inflation rate stubbornly high? i'm thinking about jackson hole an what the fed is going to be able to do -- >> yeah. >> -- with things out of their control. if it's a really deep recession in europe, does that offset it to some extent, the price pressures? >> right that's kind of what the market has been pricing in, right otherwise it's very hard to explain the disconnect between gas prices, which have been trading above $400 per barrel equivalent in oil terms and oil prices being below 100 the narrative is gas prices will cause a recession which will

cause oil prices to fall so far we haven't seen that. so far we've seen demand being very, very strong. to your point about inflation, this is a global market, particularly for oil less for gas but we would expect to see, especially if you do see the gas pressures remaining in europe, there is going to be feedback throughout the u.s. as well. again, even if the prices come up, transportation costs will be high energy is a component, not the biggest but a big one. energy prices had allowed the cpi prices to come off as energy prices pick back up, you would expect some of the inflation numbers to pick up other sectors are cooling off. it's not a one for one i do want to make that point but it is important to highlight we are structurally bullish we've been warning about $100 oil prices for years this is really the start. >> amrita, thank you

we'll talk to you again soon >> thank you. coming up on the other side of this break, a live report from beijing where the chinese public is pushing back agastin covid policies back with that story in just a moment

welcome back to "squawk box. in china we are seeing growing frustration among residents over very strict rules pushing some to now speak out in the heavily controlled country eunice yoon reports from beijing. >> reporter: people here in beijing and around the country are spending so many hours doing this, waiting getting covid tests every few days many find it frustrating someone defaced it painting in chinese, stupid f'ing prevention

control along with the slogan associated with the 1989 protests at tiananmen square at the station that sensitive phrase is gone the staff said the covid testing station was cleaned up within hours. the health workers told us more stations were vandalized nearby. part of a rare display of discontent despite the watchful eye of the chinese state we're in a district in northeastern beijing this is one of the covid testing stations that had a chinese character painted on it. the word translates to years eight stations were sentence sild with different chinese characters that people came to realize it's already been three years. i'm numbed numbed by relentless controls they can keep cases to zero but also seem to be pushing some here to a breaking point

and health workers told us that so far there is no news on whether anyone has been caught andrew >> oh, goodness. eunice yoon, it's going to be interesting to see people speaking out like that eunice, coming up, the inside line on chip stocks. we're going to talk about that and so much more stay tuned u' wchg quk x"yoreatin"sawbo right here on cnbc

welcome back to "squawk box. the nasdaq adding to its losses with yesterday mark ing a

three-day losing streak. is this the time to buy into tech good morning to you. you know the question is, would you buy into, would you buy in tech land at a time when we think the fed is going to be raising interest rates after what seems like, i don't know if it was a head fake, but the market seems to have shifted its view of what's really happening here >> yeah, you have to kind of take a zoom out view a little bit on what's going on, no pun intended with the tough result for zoom the other day but the demand for tech is going to continue to gain momentum the way companies are looking at the seculars the way we're looking at how cloud is going to transform businesses the way we're looking at how ai, for instance, is going to drive companies forward and the ability to use data. in the zoom out look, we're going to see growth in these areas. of course the multiple compression, everyone wants to time the market and get in at

the exact right time having said that, the demand is only going to continue to grow, and companies are going to make bigger investments in things like ai, automation and cloud. >> so it sounds like your view is fed be damned, it doesn't really matter if you're a long-term player, this is where you want to be even at these valuations >> well, the valuations are far down from where they were, but of course they can still be seen as high company today that is reporting is nvidia. we know it's down almost 50% from its highs but still trading at a fairly high multiple. people look at a stock like that and say is this when we get in it was at 340 and roaring forward and people thought the gaming boom would never end. we're seeing that particular trend slow down. we're seeing marketization in certain areas. but we know we are in earl y

beginnings for ai. and nvidia, you can look at and say they are the leader in ar and that likely isn't going to change anytime soon. you look at qualcomm and that name constantly comes under pressure even when's delivering and it sits around a 10 to 12 multiple depending on the day. and this is a company that has leadership in an area like 5g, which the demand for hand sets, the mobile, the way we -- >> qualcomm specifically, why do you think that is? i've always looked at that at a u multiple basis what do you think it should be trading at and why do you think it doesn't get that credit then >> qualcomm is a love to be hated name at times. some of the long-term regulatory issues it's faced with pretty

much every regulator in the world. the battle it as faced with apple, all those things weighed on the company in some ways, but if you look at how important it is from a national security level. you look at the role that its chips play in everything pretty much every smartphone device, even apple can't get away from qualcomm and the ceo has taken it in some new areas, like iot, and it's had a number of wins in automotive, and you have to look at that and say it's pretty attractive >> you like alphabet and some look at it and say it's going to be very exposed to the advertising market and it would be the first to go if we're headed into a recession. >> i call it an above the fold we've seen it for meta when snap's numbers came out at

the beginning of the earnings wave, everybody thought it was doomed and alphabet came in close to the expectation. of course there were near misses, but alphabet's business seems to be far more resilient and when a company decides which part of the advertising they're going to steer' away from, alphabet's going to be the above the fold advertising partner and the business is going to be resilient. >> we will leave the conversation there and keep our eyes on these names and see where they head. becky? >> thank, andrew when we come back, breaking news on the mortgage market. futures this morning are playing to a lower open on wall street remember, we have seen three days of losses now, friday, monday and tuesday, the biggest losses coming on monday. s&p futures are down by about 4.5 this morning the nasdaq off by about 21

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good morning waiting for the fed speak. futures are lower as we get closer to the fed's jackson hole economic symposium and the twitter fallout. and president biden will

reportedly announce more student debt relief. this all comes as the second hour of "squawk box" begins right now. good morning, and welcome back to "squawk box," right here on cnbc. i'm andrew ross sorkin along with, drum roll, becky quick and joe kernen we're all back together. >> for a while >> and >> for a while only for a couple days i'm actually going to take my own vacation >> no, i meant, i meant for decades in the future. i didn't mean, i just said we're going to be together for a long, long time. >> oh, we're going to be together for a long time i thought you said we're not going to be together >> no, we're together now, and in case you're wondering, it's going to be for literally decades, hopefully

>> kdecades to come, decades to come i'm sure the viewers are looking forward to that. >> you too >> take a look at the equitying. the nasdaq looking to open about 1 19 points lower as we await word from j. powell on what he's going to be saying at 10:00 eastern hole a.m. in jackson hole on friday mark your calendars. ahead of that gathering, neel kashkari said he's worried that markets are underestimating how th high it could go

i don't know why, but it seems everybody this week got hawkish. maybe should have been hawkish from the get-go. >> at that's me. different drummer. andrew, demand is why we create jobs and give people the american dream and everything. i don't, i don't want to hurt demand i don't want to hurt the job -- >> but you don't want -- >> i know, i know. >> and the monetary excess >> feeling kind of whiny let's see how diana feel, the weekly data on mortgage application just released moments ago. diana olic joins us. we want that data, and i saw you last night, weave he a talked a t lot. are we going from boom to bust will we make that full move, do you think? are we going to stop somewhere before that? >> in house smging this that's t

we're talking about. it's likely a correction, not a bust there's still demand if we could get more supply in th there. mortgage demand still cratering, and i'm going to offer you a t tiny glimmer of hope, joe. first-time buyers may be slowly returning. mortgage application fell last week volume w21 where is lower than the same week a year ago. theres with a jump in demand for government-backed loans. and these are loans that are favored by first-time buyers those were up 4% through the week and the average loan size is dropping, indicating more buyers on the lower end of the market this, though, even as interest rates shot back up, the average on the 30-year fixed increased to 5.65% from 5.45%

that rate was right around 3% a year ago demand for refinances dropped and were 83% lower than the same week a year ago. rates started this week even higher as investors worry again about potential recession and await what some expect to be more hawkish news at the fed condition for instance in jackson hole joe, was that whiny enough what you were looking for in for? >> what you just said makes me very whiny you can't use your house as a piggy bank none of this makes me feel, making me feel very whiny. >> done. >> any suggestions >> new buyers may be coming. >> you have the first-time buyers, there's a glimmer of

hope this market was completely overheated first-time buyers couldn't get in you needed to pull it back a little bit how does the supply go up? >> supply goes up when builders build houses you saw toll brothers last night. >> that's what i mean. it's like deja vu. i talked to you last night about all the same stuff >> whine y, whiny >> it makes me happy to see you, though let's get to frank colin, he's got a look at the premarket movers, and frank, you're going to be talking about what's p haing ppening in the housing ma. >> profit did beat estimates you see in the chart here, the luxury homebuilder was down.

the ceo says rising interest rates, higher home prices and economic uncertainty are all leading to the slowdown. nordstrom also falling, citing falling demand, shares down right now in the pre-marpt t it stay just has too much inventory. something we've heard from a number of other retailers. ceo eric nordstrom says they are adjusting to navigate what they call short-term trends also it looks like we're seeing a reversion to the meme with the reddit trade bed bath and beyond up more than 16%. amc, old school amc up 2%. amc preferred equity up. and gamestop, short interest right now on game interest, up

about 23%. back over to you meantime, let's look at what's moving this morning steph, it's great to see you we've got a whole bunkch of earnings numbers, nordstrom, which stocks do you want to own or not own going into this friday talk by mr. powell? >> well, good morning. i think the market's going to be choppy for the foreseeable future i think the biggest question that i've gotten in the last couple of days is we're an up 14% from the lows of june, and why is that? can that continue? and i don't think it can continue because quite frankly, we still have inflation we still know the fed is raising rates, and i don't really care if it's 50 basis points or 75 basis points in september, they're raising rates because inflation is out of control, and

it's everywhere, right not just rents and raises which we've talked about, natural gas is up 14-year highs. oil has stopped going down food prices are up 13% and of course we, the core pce we get the number on friday, but the last reading was 4.8, and the fed want it s it to be high. i think that group, this tech and growth are more vulnerable i want to own pricing power stories, and you know i'm overweight energy. you know i'm overweight energy, materials, and i think higher rates helps the financials those are the three areas lie like right now >> what do you do at this point? you sell all the retailers at the point where we're seeing a nordstrom which had held up, because they were at the higher end of retail, starting to

crumble to some degree here, >> yeah. >> what does that portend come christmas? >> i think you want to be very selective and discretionary. i think the big box guys are in a lot of trouble at this point in time. they' they're not expensive. the problem is sales decelerated throughout the quarter you want to own the value proposition companies. i own target, that has not worked out but di do believe they will wor through their excess inventory they are up traction ttraffic. they just have the wrong inventory. tjx, marshall's, they benefit from the excess inventory. i like star bucbucks or mcdonal.

we know howard schultz is back involved so i think there are a couple of areas within discretionary that you can be part, but you want to be very selective. >> is there any part of tech you want to touch? is there any part of you that looks at zoom at this point and says it's come down quite a lot. >> no. >> maybe there's value here >> no. >> i mean, not zoom, because they benefitted from stay at home, right? it's kind of obvious in retrospect that's not an area i want to play at this point in time what i'd like to do within tech is do a barbell. i am underweight tech. you know i like ibm on the value side and ak sen tour on the growth side. s so i think there's also cyber security they had billings of 34% and the stock is down 17% from its recent highs so there are pockets within tech that i like.

i'm suffering a bit with meta, as you know, but i think you can pick your spots. i think you can be very much disciplined on value, though, valuations here. >> steph, i want to thank you. and i want to thank you in particular because i think we probably hit maybe a dozen names in the course of maybe three minutes. so >> always fun. i always enjoy it. >> got a lot of important perspective. thank you. coming up, tesla share set to split for the second time in two years. the stock is on the comeback trail from the june lows should investors get in? that discussion is next and check out petco. the ticker is woof the company is expected to roll out quarterly results soon and we'll a talk to the ceo in the next half hour interesting. nobody cuts back on their pets before we head to break.

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call and start saving today. comcast business. powering possibilities. tesla's three for one stock split takes effect tomorrow morning. this will be the company's second stock split in two years. the first was in august of 2021. since then, tesla shares have risen 101%

joining us with what's to come this time around the garrett nelson also our bear this morning, craig irwin, who's a research analyst at roth capital. why don't we start with you, garrett. you admitted that just the stock split itself doesn't necessarily mean anything, but it does tend to mean something in terms of the stock prices afterwards, why do you like this at this point >> it's more psychological companies with improving prospects and rising stock prices tend to execute stock splits and conversely, companies with deteriorating prospects tend to do reverse stock splits. it is worth mentioning that academic studies have shown that post splits tend to outperform the broader market by a one to three margin

it might appeal to more retail investors. tesla has a very avid retail investor base. >> craig, we're calling you the bear this time around, but that may not be completely fair you've got a neutral rating on this company do you do give tesla props and point out that they are the ev leader but think there could be better valuest w elsewhere >> tesla's the leader that created the market they've done an impeccable job i think there's much better value elsewhere. you have a $900 billion company three times the size of the largest automaker in the world, toyota and last year they had one tenth of the sales nothing tesla has can't be brought to market rapidry by toyota you've got a lot of other very good choices to invest in. i guess ford tells a great story of the spinoff coming next

january. people love their rivians. i can go on and on people have options, and i think if you look at relative valuation and credibility of all these other vehicles coming to market, i think tesla will likely underperform in the next few years and people are better off picking up another horse >> you do agree with the point garrett was making that retail investors are pretty important >> retail's essential. retail's essential for my entire space, you know, sustainability and clean technology for the last many years. yes, this will be positive for the fundamentals behind the way retail buys stocks it is very good for liquidity, which is good for all sorts of different thins,gs but obviously, retail's a part

of that. they're looking at 40,000 vehicles per week by the end of the year, more than 9.1 million units in capacity. they're incredibly well teed up to keep selling great cars, but i just think people are much better off looking at some of these other options out there, and many of them are high credibility and likely to be a much better value at this point. >> garrett, it's not just the stock split that has you liking this company, at least this terms of the new news out there, the inflation retdux act you sa real puts them in the driver's seat >> the law that was signed last week, starting january 1st of next year, both versions of the model y should be eligible for the $7500 federal electric tax credit that's really important, because no tesla vehicles were eligible for the tax credit previously. the law also disqualified about 70% of the available evs on the

market in the u.s. interest any tax credit so the model y is already the best-selling ev in the u.s. with the model three a close second the lower priced version of the model three should qualify for the tax credit also. these two evs are by far the best-selling evs in the u.s. that really gives them an edge competitively starting in the new year >> garrett, are you looking at a price target of $1,245 in the next 12 months you are looking for $250 one of you is going to be massively wrong. how do you duke this out, craig in. >> i'm looking at this and i think it's the timeline. tesla's a great company probably for the long run it's really just the timeline. when you have a dozen real competitors in a maturing market, i think the relative valuation will be very, very

different. and that is what's materializing quickly. remember, there are going to be about 500 evs on the road by 2025 if you hang out at the fast-charging stations, you'll see people love the cars they're buying they're evangelicalists for the cars they're buying. there are others that don't have to do as much heavy lifting as tesla had to do at the beginning. >> do you think he's nuts? >> no, i don't think he's nuts, but bears have been making the valuation argument for a long time, and it just hasn't worked because the stock keeps going up we think the play here is really a tripling in tesla's earnings over the 2021, the 2024 time frame. that's how we see the earnings growth playing out and we also think tesla has a huge capital advantage you look at the two new factories they're ramping up right now in germany and texas

and their plans to grow their production by a factor of 40 between 2020 and 2030. so we think tesla, you know, th multiples are justified. the basis for the price target are 60 times the 2024 estimate we think that's justified given the future ahead of them. >> let's book theiris day a yea from now and see how it hashes out. a quick programming note for you. we do have an exclusive interview with one of tesla's largest hair holders r ron baron.

and coming up, the legal battle with the social media giant. plus, president biden expected to deliver more student death relief we've got that and more. "squawk box" rolls on. now for today's aflac trivia question what national breakfast chain claims it serves 341 strips of bacon, 145 waffles and 127 cups ofof cfee every 60 seconds the answer when cnbc's "squawk box" continues 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... (shelf crashing) yeah... ♪ ♪ aflac!

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now the answer to today's afla aflac tref yeah question what national breakfast chain claims it serves 341 strips of bacon, 145 waffles and 127 cups of coffee every 60 seconds? the answer, waffle house the chain has approximately 2,000 locations nationwide welcome back to "squawk box. we have a developing story out of washington, president biden expected to make an announcement today on federal student loan relief he will take steps to forgive up

to $10,000 on student loan debt. payments that were paused during the pandemic are set to resume at the end of the month. the total amount of student loan debt exceeds 7 $7.1 trillion. i imagine it is a political food fight in washington as well, joe. >> yep >> we have a lot of issues i'm excited, you know, i noem' we know i'm weird, but i want to hear about petco. did they cut back on their kids before their pets? >> spouses for sure. >> spouses for sure. but people do not cut back it's inelastic we had somebody the other tay

s day say smucker >> they wanted to charge me like $1,000 for an x ray of my cat's stomach. he's fine. they wanted a thousand bucks >> did you ask him in. him? >> he's fine, he a fur ball. plus, senator patrick leahy joins us to talk about the state of the comply, inflation and much more. o'veon's from rmt. whs that other guy from up there? stay tuned, you're watching "squawk box" and this is cnbc.

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petco out with earnings this morning. down 1%, but only 16 cents, cutting its full-year forecast business remains resilient amid economic uncertainty

joining us, petco ceo, and is this a margin issue because of higher input costs because were the comp store sales, they were up again. i don't know how many straight quarters that is, was that below what you were hoping for, for the comp sales? >> morning, joe. we were happy to be growing in a tough market our comp was up 4% we did have some pressure from mix. you were talking about whether folks cut back the good news is they don't cut back on food or services like grooming and vet there was pressure on the supply side but food and services were both double digits in the quarter. >> so you have to think about mix, too, like all retailers you have to make sure you're providing exactly what people want or else you can get stuck with some stuff. is there discounting that goes on with leashes, for example

>> that's right. i saw you last night saying retail ceos may have the toughest job >> you were watching >> i was >> i said if anybody dee sservet make what ceos make. becky's got a cat. but your symbol is woof. is that any commentary on y preparation for your pets? >> i have twins, and i love them both it's the same story. i love both dogs and cats, but back to your inventory point, we do not have the inventory problem that most of the other retailers are talking about. we're very comfortable with our inventory in quantity and makeup so we don't have the need to do live the promotion that many of the other retailers do >> give me your input on inflation, how long it lasts, input costs, what you're planning for is it troublesome for you is it,

must be a lot tougher to navigate are there transportation issues that factor into your bottom line >> you talked about the guide. we wanted to do two things with our guide. we wanted to be prudent and conservative to make sure that there's still economic uncertainty, we wanted to make sure we gave ourselves room to meet or beat we are seeing, we think, the top or improving supply chain environment, both in terms of supply as well as some of the freight, and that will flow through the p&l over time. so i think we saw the peak, if not we're getting over the hill on some of those input costs >> if i were to decide, if i were an investor looking at buying petco, where would you, what are you going to expand in whexpand where do you see the opportunities?

is it in services you provide? acquisitions is it innovation in. innovation >> that's part of what makes us unique we went from standing still to 200 vets in our stores today we have $58 billion opportunity in small town rural. we opened our first small town rural location and it is exceeding our expectations by a far amount right now rx food, rx medications are both growing double digits. so we have significant growth opportunities ahead of us, and that's part of why we were cautious, because we want to make sure that we continue to invest in net growth so not only are we growing today but we can capture the growth of the category going forward >> i was under the impression that even in a slowdown, an economic slowdown, i don't know if we're not really, unanimous in calling this a recession or not, although recent polls, i think a lot of americans think

we're in one or headed for one do you have to pull in your, your horns to some extent there? do you get less aggressive about things? you said people won't buy leashes, but there are things, i wiould think pets woul be recession proof but you do see things that people can cut back on >> food, they don't cut back on. lots of people are talking about downtrading. we're not seeing downtrading we're seeing continued shift toward premium products, whether kibble or fresh-frozen products. we're seeing continued traffic in grooming salons, in our veterinary hospitals it's the supplies. this is the exact same play that happened in 2008 during the recession. it's transitory. as the economy comes back and as the stimulus overlap wanes, those businesses will come back. >> what the hell am i looking at do you sell marmots?

nice marmot, man that's a big lebowski quote, but i can get an alligator >> you can not get an alligator. >> what's the weirdest thing i can get? >> you can get a bearded dragon at petco and we have lots of enthusiast whose come in for bearded dragon, for fish, for lots of different -- >> you make money on fish? >> fish, fish have profit associated with them, yes. >> they definitely make money from us because of the replacement theory >> you own those >> no, we catch those. >> we can help you with your veterinary services next time you get a fur ball >> it was a fur ball, got a little panicked as a new cat

mom, threw up twice. they wanted a thousand dollars to check and make sure there were no blockages. you know, i wouldn't even have my kids at the doctor after they threw up twice vet care is expensive. how profitable is that line of business for new. >> if you go to yeurope, but hee it's only 2% to 3% it's part of our drive toward recurring revenue. i see insurance penetration increasing in the united states. and we, we have a great offer today, but we're going to make that even better in q3 >> i'm your guy. i've paid for spinal surgery, ak bu puncture, underwater therapy. i have a malty pooh and two german shepherds >> i'm with you. i have a double cancer survivor

who is still rocking at age 14 >> you looked at my twitter account? that's all i tweet b about. you don't see my kids, but you will see gunther and freddy. you are will see my kids that's a lie i love animals i like people okay but we love animal, don't we they're so pure. >> we love animals that's the truism of all the petco team >> we don't deserve them we don't deserve dogs. >> cats maybe. >> you going to do me a favor and let me pet you >> thousands of years ago, cats were treated aroyalty by the egyptians, and they have never forgotten that, but i love my cat. and he knows it. when we come back, auto sales continue to surge and inventories remain tight

we're going to check out the sector and find some names to of was, next. plus, you can follow squawk pod on your favorite podcast app and listen anytime stay tuned we'll be right back.

welcome back to "squawk box" this morning take a look at the futures right now. we are red on the dow, off about 5 points, but things have turned around a little bit. the s&p up about two points. also want to tell but a new survey, that 70% of adults are worried about a recession by the end of next year three quarters are people are actively taking steps with their finances, paying less and saving more for emergencies and retirement, looking for more or stable income. can you talk yourself into a recession? >> sure you can. there is one place that is resistant to any down turn you look at demand for new and

used autos not showing signs of slowing down, that means that profits are rolling in for the auto dealers. what happens if you want to walk in and try to get a new car these days >> we've talked about this, becky. there really is very little supply, that is on the lot, available right now. almost everything that is sold has been preordered or a dealer has said look, i've got their uthis used model you come in, whether you're a couple states away, and we'll get it to you. there was a quarterly look at what we have with all dealerships when it comes to annual profits as well as dealerships bought and sold, and the annual profit in the first half of this year, it was up to 4.2 million on an annual basis so what you're looking at is just a few years ago it was 1.5 million for an annual profit this year, dealerships are on

traffic, each dealership site, not the chains, each dealership site is on check for a profit of $4.2 million they've got a few thing working in their favor demand continues to outpace supply that means record used auto prices and they make their money on the service side. the ev threat, remember, that was going to kill dealerships? no take a look at shares of the internet-based auto retailers. in the last year these guys have just been hammered whether it's carvana, vroom. we're talking about brick and mortar in addition to doing int internet sales, penske auto

group, they're close to their 52-week highs because people continue to look at them and say service model is not going away. and that's where they make their money, and they've got all of these other factors going in their favor. so strong business right now for auto dealers across the country. >> hey, phil, when you walk in and try to trade in your old vehicle, are you getting the premium on that just like you're going to be paying a premium >> you're getting a premium. it's like buying and selling a house. sure, you're selling your house at a premium and say wow, look at all this money i made, you got to turn around and put it into another house and here's how much it's going to cost. it's a similar thing with used autos. yes, are you getting a great deal there are people selling their used autos for more than they bought them a few years ago, but they're turning around and putting it into a new or used car at a record price.

>> how long before inventories catch up withdemand is what's the expectation >> most think it's going to take at least until the end of 2023, and that's being generous. we are seeing increased production, and it's hard to notice this, but you are seeing the level of inventory for the auto makers slowly increase. i mean t wa, it was down to a 2 supply now's into the mid-30s you've got to be up into the mid-60s before it's normal it's going to take a while t industry is slowly getting there, i say bit endy the end o year twitter's former security chief claiming the social net network deceived federal regulators what does it mean for elon musk's battle with twitter and as we head to break, check

out the futures this morning things have just turned around the dow now up about 10 points, nasdaq up about 16 we're coming right back on a wednesday morning. ast-moving mas with dynamic charting and a futures ladder that lets you place, flatten, or reverse orders so you won't miss an opportunity

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devices in and out of the home. i mean, can i have a bite? only from xfinity. nah. unbeatable internet. made to do anything so you can do anything. welcome back to "squawk box. tiktok is testing a new nearby feed that will display local content to users the idea is not only to help people find more relevant videos

but discover events and places in their area. apparently, snapchat already offers a sim lailar feature users ask explore a map with content shared nearby and instagram. i didn't even know i had an account. your husband messaged me about it >> a fake account. >> i don't know. people are watching, i'm launching a crypto trading flfl platform you got to be very careful, sorkin, in this day and age. very careful they said people are using your image to try and make money, and i go, why can't i use my image to try, is that something i could, doesn't work for me maybe it's working for other people i thought i was -- >> let's talk about twitter, maybe somebody's trying to make some money somewhere i don't know we are now 55 days away from the trial between twitter and elon

musk over the billionaire's bid to buy the company now a whistle-blower coming forward. twitter saying the complaint is riddled with inaccuratesies and zatko was fired for poor performance. joining us is tulane professor ann lipton the question isn't necessarily what that all portends for twitter itself but how it portends for this case and how a judge will look at this and say do we need to go through discovery in a way we didn't need to before, do we need to look at bottins that elon musk s

asking for or don't we >> musk's headline claim for why he gets to walk away. >> interpre twitter said it had a certain number and only 5% of that was spam and in fact more of that number was spam. that's musk's headline claim it's in most of his papers now the interesting thing about this whistle-blower is that he actually agrees with twitter on this he agrees that twitter's number is basically accurate than they basically try to minimize the amount of spam withen in that figure but then it opens up this pandora's box of all these other kinds of issues, lying to consumers about privacy,

insufficient security, all these other things that appear nowhere in musk's filings. they're simply just brand-new complaints about how twitter runs the platform. so the real question is whether these singly or in combination or are bad for twitter's business that they would give musk grounds to walk away, based on the idea of contractual material adverse event, something so bad >> and ann, on that, on that, if that's the issue here, that this becomes a material adverse event, effectively, is it one? is this material >> i mean, material itself is a very low bar material adverse event is a much higher bar it would have to have a long term impact on twitter's financial future and to be honest, i'm just not in a position to be able to gauge. can you can read it assomebody wh is a good faith employee, i

wouldn't say disgruntled, but who just disagrees with management about how to run the company. he does make glaciaallegations misleading regulators in the united states and abroad but that is, obviously, that's a really high bar for mufx to meet, and you'd have to ask permission of the court to reopen his filings, basically, to allege all this new stuff that hasn't been part of the case up until now. >> let's go back to that he's going to have to ask the judge. how would a judge even begin to assess that issue? >> normally, would you grant leave to amend your pleadings as justice requires if it's fair game, you know, fair and not too prejudicial to the other party you would allow him to do it this is obviously new stuff. if he had known about it he certainly would have said something. part of the reason musk didn't

know much about twitter's platform is he didn't take the opportunity to do due diligence. on the one hand, normally, there they're fairly free with amending pleadings, but on the other hand, they're on the expedited schedule they're having every day fights about discovery and what has to be produced. and this would dramatically expand the subject matter for discovery. on the one hand i can see her not wanting to cut this off. but it would disrupt what is already a very tight and difficult schedule >> and finally, when you think about this whistle-blower filing with the sec, that would enable him to capture a whistle-blower reward how do you think people are going to look at his own incentives and motivations in

terms of coming forward, and is it possible that elon musk in the course of all this could compensate him in anyway >> i don't know. he's denied having anything to do with musk i think something else is going on if you're a whistle-blower to the sec. if you say a company lies to the public investors you get potentially a cut of anything that the sec can collect in terms of fines, and you get protection from retaliation. he claims he was fired from twitter, so he has every incentive to make this into a securities fraud kind of case, but they are not that securities fraud like he tries to attack the securities filings, but he hasn't got much there. his stronger claims are simply that twitter was not properly protecting privacy, and that's not a sec problem that's an ftc

problem. h he can get financial incentives, but it's not obvious that that's this kind of case, even if twitter did do the bad things they're accused of doing >> ann, want to thank you for joining us this morning. appreciate it very, very much. joe? we're going to see breaking economic news on the way, durable goods orders for july, plus, are we going to get into a recession debate and if the fed can actually stick that soft landing, and i'm going to say stick around, say stick again. "squawk box" is coming right back

good morning futures pointing to a lower open the global markets in wait and see mode as the focus shifts to jackson hole and a key speech from j powell. and we'll a talk to senator patrick leahy. plus, a lifeline for bed bath and beyond? the latest developments in the meme stock sagas a the final hour of "squawk box" begins right now.

good morning and it's, i think they turned around, again, andrew. it's actually up a little bit now. >> we just moved up. >> kind of flat. welcome to "squawk box" here on cnbc live from the nasdaq mart market site in times square. let's check out the equity futures. the nasdaq up 32, dow up 33 or so and the s&p indicated up eight after three straight losing sessions, a pretty big one, in fact, on monday, after what had been a pretty solid midsummer relief rally from a terrible first half for the year now some people think we're in a position, perhaps, to go back and take a look at those june

lows june 16 lows of around 3600 and change on the s&p. treasury yields are, you know, think, remember they got down to 2.6, 2.7, 2.8, now back above 3. >> talk about some of the other headlines. take a look at nordstrom, they are falling this morning the company cutting its full-year forecast telling investors it's being hurt by excess inventory and slow down in demand. one of the first times we've really heard nordstrom's getting hurt in all this in a big, big way. take a look at bid ed bath and beyond j.p. morgan conducted a marketing process to find a lender they need a loan deal to provide liquidity and give investors confidence that they can still

ship to the retailer take a look at shares of petco they're under a lot of pressure, missing the mark on the top and bottom line, cutting its full-year outlook as it faces higher costs becky? thanks, andrew our senior markets commentator joins us from the nyse the last three days have not been what we've experiencing in the last few months. which one's going to weigh out here the norm for the pull back or the norm to pick up? >> it seems like the pull back so far has been relatively expected and it was almost 19% about 4% off those highs that's not that alarming it seems the market has pulled it self into a more neutral balanced spot ahead of the wrackson hole conference that

starts tomorrow. it hasn't necessarily negated that upturn. i would say as long as the s&p does not get down much below 4 us though. let's say 3900 and change, it seems like that rally is the prevailing mode, but that's obviously, relatively big. take a look at some sectors of the market that have been making more decisive moves. you look at the energy exploration, xop along with crude oil. crude has bounced a little bit here but you sighee the stocks themselves have raced ahead. here's right around the ukraine administration now maybe the market, the stock market is saying there's more sustainable demand but also natural gas of course is closer to its highs and that also drives xop seems like a relative upturn at least for the energy stocks. industrials somewhat quietly

have outperformed the s&p 500 at this point not every cyclical group has so this is industrials, beating the s&p 500. and then we got used to thinking of the new economy industrials, semi-conductors have obviously struggled. it's definitely kind of a spotty leadership story right now but there's some comfort out there that some folks are saying industrials are seeming like they're gathering some kind of strength which wouldn't necessarily be the case if we are hooki looking necessarily be the case if we are hooki at a sharp down >> higher yield, higher rates has been the bigger picture maybe than the market's decline in the last couple days, what do you make of it >> yep, the 3% mark on the ten-t ten-year yield has held being

w equities in check. we're, we kind of got busy talking about how fast the fed is going to raise, now it's about how much is left i do think, the market is saying fed has more to do the big question is can the economy handle what the fed has left toe do, and i think the answer's maybe >> how do you think inflation play these that? because inflation numbers coming down at least thinking that we hit peak inflation, that had to do with energy prices coming down. if they're back up, where does that leave us >> gasoline prices have continued. i do think, still, especially for august number, the gasoline part of the inflation story is still looking relatively benign.

we'll see if that can continue joining us right now is andy sigg he joins us for an exclusive conversation for those who don't know it already, andy has more than 25,000 employees that he oversees, and you're talking about $3 trillion in their customers' assets that he's overseeing as well you've got a really good view about what's happening what's happened over the last couple months over the summer, and has it been a surprise to see the strength in the equities market >> well, becky, good morning the markets have clearly been a wild ride all year couldn't be more proud of the work our advisers have done alongside clients, helping them stick with long-term plans and asset allocations. i wouldn't say surprised by the rebound in the markets we felt the market was incredibly bearish you know, which is why our team has spent so much time trying to

help clients stay focussed, medium and long term >> what do you think happens now? if this summer wasn't a surprise, what comes next? >> well. >> we're suggesting that they step into the market if they come to us with cash but what we are doing is helping people pivot to think about where do you want money invested for 2023, 2024, 2025 one of the big traps is hey, we're living in the rear view mirror there was a lot of volatility. now let's pivot and think about where the opportunity's going to be out alivedhead of us energy, health care, solid areas of technology. this is where investors want to be putting cash to work. >> andy, the last couple months

have been good for the market, but their yis year has been rea rough. is there a breakdown in younger investors, older investors what are they seeking? what are he they ready for >> to a certain extent what's happened in our business and businesses like us reflects how the welts management industry has matured. we did not see spikes in volatility, spikes in trading activity in the first part of thor yoo what we did see was a substantial increase in advisor client conversations it was up 60% year over year, and in those meetings, what he would find our advisors doing more often than not is helping clients stay anchored to asset allocation don't let the emotions of the moment, the cross winds of the market knock you off your long-term plans. if nothing has changed in terms of your risk tolerance and

goals, the portfolios that have been set are probably solid and the work to be done are like tax lost harvesting, thinking about more tactical rebalancing. that's been the nature of the activity as i said, that's a world apart from what her merrill dealt with years ago. >> when i was there, we were introducing the cma account, and i'm thinking about how the entire business has changed now. is it all a wrap fee and if you're, are advisors able to recommend cash equivalents and still get paid the wrap fee on that and on fixed income? so they really have no vested

interest to favor any asset class at this point, i would think f think. is that the business model now for your financial executives? >> well, they're very much, this is a fiduciary business. for the lion's share of revenue around investments based on an investment advisory fee as you said, also the banking activity is a big part of our business, and joe, what's incredible f you thincredible, our revenues were up year over year and pretax profits up about 19% year-over-year that reflects how this business is driven by fees and how much more balances and diversified it is it's a world apart >> are your guys a lot more trained, i mean, i bet you have to know a lot more now, in terms

of, you must have a lot of, i don't know, cfas or cfps to compete nowadays, are your guys a lot more, would you think, ready to handle across the board asset allocations, et cetera >> certainly around asset allocation, but as you went to much more broadly, we're number one and number two in the market in terms of having certified financial planners in our business individual financial advisors still exist, but they're the exception. the rule today is to serve clients as a team, generally, in terms of training it's much broader than just investmentsins it's how can we deliver everything bank of america can do we want to be your lender, your banker, be there for you if you're a business owner or executive and utilize the

services of our investment bank or commercial bank that has caused a much broader array of professional development, and then with core investments, we also lean much more heavily today on our chief investment office and our research department. we're trying to take the dispersion of compliant portfol portfolios down. >> where do you all come down? where's merrill, where's bank of america? >> we are, we are unabashedly bullish. joe talked about not seeing, not seeing the bull as much. believe me, the bull is outer that brian moynihan, myself, the rest of the leadership team, we're very proud of the modern merrill strategy and it's unfashionbling today to be a bull. and i think the difference this opinions comes down to which client base are we talking about

and what time horizon are we talking about? you tend to hear more tactical messages for institutional client, some shorti-term bearishness. there is no place in the world like the u.s. market and the u.s. economy we see what our clients are doing and you can't help but be bullish when you're with them every day. >> is that immediamedium to lon? >> you talk about 2023, 2024, 2025 you're going to miss a world of opportunity if you're not bullish. >> andy sieg, we appreciate your time >> toxic masculinity maybe a cow. >> a bull market >> i'm just trying to fit in you know, it used to be, you know, merrill lynch.

>> don't blend when you try and fit in coming up -- it's toxic. president biden is reportedly ready to announce student debt cancellation we'll ask senator leahy about next of interstate highway miles, they've got us covered.

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welcome back to squawk we have a developing story this morning. the president is said to take steps steps to forgive $10,000 worth of student debt on those making less than $125,000 many more than 40 million americans currently hold debt tied to their education and the total amount of student loan debt exceeds $1.7 trillion. senator patrick leahy of vermont is the top ranked and longest-serving senator, retiring at the end of this term i want to thank you for joining us and of course also want to thank you for your service i do want to start with this news today on forgiveness,

student debt forgiveness, and whether you think it's a good idea >> well, one, i worry about student debt you know, when i was in college and law school, i had student loan, but the cost of college, the cost of graduate school was far less than it is today. i think a lot of the tuition costs have gotten out of control. they've become far too expensive. it's discouraging a lot of young people from going to college and once they get out, not be able to do the jobs that they're best suited for, only to find jobs where they can pay back their debt that's a spiraling thing that we have to get under control. i'll wait to hear exactly what the president proposes, but at least in the preliminary suggestions, there'd be a limit on the amount, and it would be available only to people within

a certain income level, and i think that makes sense but i think higher education itself has got to look at itself in the mirror and say how do we get these cost under control i know at the university of vermont, they've kept the tuition the same for years >> well, the question i would ask is two fold, one is, what do you do, to the extent that there's going to be some forgiveness of the debt if in fact that's what happens, what does that do towards the spiraling costs in does it only i insense schools to increase those costs. how do you look at the path forward incenting schools to lower cost rather than raise

them >> i said they've got to get the spiraling cost out we're seeing less young people willing to go on and get the higher education they need and that the country needs to have people who can handle the kind of jobs that we really need to fill. and it, it would be a terrible mistake for higher education to think oh, we can just raise tuition costs all because the government will take care of that that's not going to happen, i suspect this is a one-time thing. and higher education, you asked the perfect question, higher education is going to look itself in the eye. >> senator, what do you tell the viewer, the taxpayer who says look, loan forgiveness is not forgiveness, it's a transfer of the cost from one taxpayer to

another, oftentimes the taxpayer, potentially, who could afford it maybe, but a taxpayer potentially, who paid their college bills, in some cases took on one, two, and three jobs their families did this to get them through college, and tlook at this and say this is unfair >> you're going to hear a lot of that but i think one of the things you do is cap the amount, one of the forgiveness, but also of the income bracket where it can be forgiven and a blanket forgiveness would not, would not work. >> i do want to ask you about your book but also about your career and where you see washington and this country right now. it seems as divided as ever. there are some people who think that our democracy is in doubt there are others who think it's as strong as ever. what do you think in.

think? >> it is not as strong as ever that's one of the reason i wrote the book i wanted to show the arc of when i came in, watergate, republicans, as much as it pained them to do it, telling president nixon he had to leave because of the things he did and now people of the president's party, former president's party afraid to question him ofte on top of that, you see people who wherever they get their information they believe some things that are totally false. demonstrably false, but they act on that. we saw that on january 6 with the insurrection people coming in and saying, well, the constitution allows this, the constitution allows that one, idoubt they've ever read the constitution, but secondly, it did not allow what they were doing. and the rest of the world looked at us and wondered if our

democracy, the oldest existing democracy was coming unravelled. i write the book more to say here's the way it was. it was not perfect, but it was a lot better here's what we've descended to, and the senate has a duty to come together, republicans and democrats, to go back to being the conscience of the nation not a perfect conscience but a lot better than it is today and set an example i really am worried about the future of this country >> senator, it's a longer conversation, and i hope we get to have it i want to thank you for joining us this morning. good luck with your memoir, and thank you, again, for your service. when we come back on the other side of this bakre, another name headed to the spac scrap yard we'll tell but it right after

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all right, welcome back, everybody. just a year ago, pharma packs was the number one seller on amazon and the company had plans to go public through a spac merger today it's preparing to go out of business. according to internal documents viewed by cnbc, packable is laying off 20% of its staff immediately and the rest after a complete winddown of activities after the company failed to secure new financing it has abandoned the spac deal in march citing unfavorable market conditions. when we come back, we'll be talking about breaking economic news durable goods. that's when we return after a quick break. in the meantime, you can see dow futures up by about 23 points, nasdaq and the s&p in the green as well.

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welcome back to "squawk box. rick santelli here live at cmehq with breaking news, the july preliminary reed is going to change unchanged on the month, and last month's final read was up 2% if we strip out transportation, we can see that transportation was a drag on the number, because it increases to up .3, better than the .2 we were

expecting and up .3 follows seque sequentialry up .4 business capital spending also up .4. that's a solid number. and in the rear view mirror, nice revision. and finally, if we look at shipments versus orders, they were up .7, a very strong number as well with an increase in last month from up .7 to up .8. so if you average it out, it isn't so bad but we would rather see that momentum to the yum upside we know jackson hole's coming up gilt yields very close to eight-year highs, and of course we're all discussing what's going on with how the market

will continue to proceed ultimately, monday's trade should be key, and many believe it's going to be a little less intense on the interest rate side than the leadup to jackson hole andrew, back to you. >> the numbers and the analysis, we have breaking news right now on peloton cnbc's lauren thomas reporting that amazon shoppers will be able to find peloton products on the site this includes the peloton original bike. it comesafter peloton said it would aggressively be closing brick and mortar stores. joining us, a retail reporter at cnbc.com and talked to peloton's chief financial officer earlier. what's going on here, and how much does this change the game or not >> yeah, good morning, andrew. if you're in the market for a peloton bike starting today you will be able to buy that bike on amazon should you choose this is part of the new ceo,

barry mccarthy's plan. they have a goal of continuing to grow its base of cocustomers. they are going to sell a selection of products. and i was able to talk to the chief financial officer about this news. corneal's told me every month there are about a half million searches on amazon for peloton-related products so the company believes that the customer is there. he also said this is going to be a test and learn approach. peloton wants to test the waters with amazon. but there's a possibility that the company will strike other deals with other retailers down the road in order to gain further distribution one thing that i think is really important to note with this launch, there will actually be a self-assembly option for the bike so if you're a customer, cle

checking out, you will be able to have delivery at home where someone will install that bike, but you can also choose the self-assembly option that's something peloton hasn't offered before and another lever the company is testing to cut costs. >> there's two questions one very practical for users and consumer, the other on the business side for investors in the company. on the user side or the consumer side, if you are a prime member, do you get delivery for free >> that's a good question. i asked could we see this peloton membership at one point being integrated into the prime membership, you know you can see amazon has continued to add more perks to that offering i didn't get a direct answer at that question, so i think that's certainly something, it sounds like that could be in the cards down the road. that would be an interesting tie up, right? there were reports that amazon

was in very early stages of exploring a deal to buy peloton. >> you know, obviously, that has not come to fruition, but this is a step the two are taking to work together. >> in terms of margin, direct to consumer, how much do they give away to amazon >> i don't flowknow but you see this dynamic with a lot of companies auburns had their own stores similar to peloton now they're selling in nordstrom and other partnerships with other retailers just as we're seeing peloton make that approach a lot of these companies reach a point where they max out with what they're capable of doing online and on their own. so it's inevitable, ultimately,

that retail comes full circle, right? these d-to-c brands, they're striking brands withcompanies they see as key partners to their growth >> does amazon just take a margin on the actual product being sold or do they capture any of the subscription ref snu. >> it's my understanding amazon will buy and hold onto that inventory up front they're striking some type of agreement with peloton to hold onto the inventory and the orders would be fulfilled through the amazon fulfillment network. the company wouldn't tell me what revenue is shared or how that breaks down but amazon is going to control the fulfillment. >> lauren, thank you for bringing us that news, appreciate it. >> thank you >> sorkin, is there any -- we've been through our peloton stuff any scenario where you'd call the company, yeah, listen, i'm going to build this myself

just deliver all the parts, and i'm going to take it i think if i said that to them, they'd say, wait an inch m no , nobody's ever asked us that before i still have a baby crib i it's beautiful it came in a box >> they need -- >> are you pretending you're handy? >> i'm just saying f it's easy to put together, but they have to want people to put it together and to be using it. for them, it's it's razors and blades they've got to get people using it at some point it's worth it to subsidize. >> maybe there are, maybe there are some it's like where are you going to buy the non-alcoholic beer and

it's a false front no one's ever tried before why? you really want that investors are waiting for the fed to begin its annual jackson hole symposium chairman powell set to speak friday joining us a senior fell low at the brookings institution. wendy, i think i might, i'm usually not necessarily in line with when we do these debates with one side or the other we may be for different reasons more aligned on this do you think the fed needs to be really, really strident and hawkish here is that any way to run an economy to try to force us into a sharp slow down to keep inflation under control? or do you wish they'd take a light touch? >> we have abundant evidence that the economy is running above potential. and what the fed needs to do is

manage a soft landing. where they get growth down but at the same time that brings inflation down and that's how planning is possible and today's report actually gives me pause i think today's report shows that the fed probably has a fair bit more tightening to do. >> michael, do you see a supply-side solution to this that stops short of killing the economy, michael is that any way to deal with inflation? it's all we got, i understand it but it seems frustrating to me we work year after year to try and get demand up to create a new company, to create job, to keep finance and costs low, to get things humming, and then when it starts working out really well because of maybe policy mistakes we're going to pull the rug out from underneath a strong economy that's frustrating, is it not? is that all we got

is that the only tools we've got? >> it's certainly frustrating. there's a lot we need to do on the supply side. need to make it more encouraging to invest. none of them we're going to be able to do adequately in the near term to get inflation under control. so this really is an issue of demand dee inststruction. i agree with you we've had too little demand, it's been very frustrating the fed hasn't been able to get inflation up to its target in the years following the 2008 financial crisis, but then, you know, we went kind of wildly in the other direction. and president biden dumped $1.9 trillion of stimulus onto an economy with a $200 or $300

billion hold on it we pushed demand to the level it was unhealthy. that mess has been inherited by the fed, and the fed has the challenge described by wendy the fed needs to cool the economy down the economy needs to be growing kind of below its underlying potential rate the objective is to keep it going, just to keep the growth really slow. that's awfully hard for the fed to do. >> wendy, do you agree with any of that? and i just, begs the question, if we hadn't spent a lot more money, and we have spent a lot of money, maybe some of it was warranted after the pandemic, but if we had done something different, not spent that money, cut regulations, made it easier for fossil fuel producers to, you know, to explore our great natural resources. if we had done a lot of the, even cutting taxes instead of

raising taxes, do you think we'd still need to be raising interest rates maybe that would have beethe solution maybe this is self-inflicted from things like student debt forgiveness. >> i don't think any of the margins you talked about are really the active ones here. yes, we had a lot of fiscal support that created a lot of aggregate demand if we had an economy working in the way we had expected it to work pre-pandemic, the real constraint that our economy is facing right now is that we have rou roughly 3 million fewer people in the labor force than we would have expected with pre-pandemic trends a lot of that is labor force participation. but some of that is just, we had, you know, the pandemic

created a lot of, created a lot of deaths. that has consequences. so we have a smaller labor force. we also have less immigration. and that has prsurprised me the effects of lower immigration and the really persistent bad news on labor force participation. these were not givens. and they've surprised me, and i think the fed has to take them, take them on board in its information. >> michael, do you think any of the problem in the participation rate has to do with innocent adv yichb incentivizing people not to come into the labor force >> i do. i have some research that indicates that the expansion of unemployment benefits part of

the plan in march of 2021 kept people out of workforce. that's expired so that can't explain the fact that the labor force participation rate has been stagnant over the course of 2022, but i think that did play a role in 2021 more broadly, as a consequence of economic stimulus measures that were passed under president trump and passed under president biden, households are sitting on over $2 trillion of excess savings, savings in excess of what they would have normally had if it weren't for the pandemic and associated stimulus measures you know, that has to be keeping some people out of workforce people who are kind of right on the bubble of participating or not, you know, some of those people must be holding back. as a consequence of all that extra cash that we gave people immigration is another important factor and i agree with wendy that if we had normal rates of immigration then that would help

some of our issues on the workforce side of things but i think it's important to point out that, you know, this is not, i think, a story of problems in the labor market filtering into consumer price inflation. i think we have way too much demand the demand is pushing up the price of goods and services and pushing up businesses' demand for workers. and you're seeing that in really high rates of job openings >> wendy, just so i have a clear understanding. if we had someone from center from american progress on, i just think that i've heard certain, you know, areas of the political spectrum that don't want to raise rates. you want to raise rates, but you want to make sure it's a soft landing. if we raise rates, and it turns into a recession, a sharp down

turn, do you think that's worth it to try to put a stake in inflation? or not you're assuming a soft landing i don't moknow if that's going happen i've seen elizabeth warren, others saying the fed as crazy to be raising interest rates right now. you don't adhere to this >> policymakers should be doing everything they can now, before the pandemic and after the pandemic to get potential up there are lots of long-term thin things that fiscal policymakers can do obviously, that should be a priority there are a couple of reasons why we might see an abrupt down turn that causes a lot of economic pain. one would be the fed just overtightens there are mistakes, you know, that is a possibility. can't rule it out. but the other thing is if the fed is bringing down growth and

we're not seeing inflation fall to more acceptable levels at the same time. think about the reasons that could happen it's either because inflation expectations have stayed high, which means the fed does need to do more and it is going to create widespread economic pain, or it's because the economy continues to be hit with really bad supply shocks. and, you know, that's not the fed, that's really bad supply shocks and i have many ideas for what fiscal policymakers should do to get targeted relief to people who feel the pain of a recession. absolutely, there's work that fiscal policymakers should do, but i think those are all the possible outcomes. >> wendy, thanks for your time, also, michael, thanks. good to have you on. >> thank you >> playing the music of the. when we come back, we're going to join m amjicrer live from the new york stock

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let's get down to the new york stock exchange where jim york stock exchange where jim cramer is sanditanding by.

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welcome back to squawk box. looking at the nasdaq, it's not diverging. keeping it up.

the founder of multi-asset strategies. different assessments are here. you think before wrong for the activity? do they stay tight? are they going to be raising interest rates? maybe the second half of next year? >> definitely not pivoting anytime soon. the last 25 years, inflation never went above 6.5%. they have markets and boom economy. we focus on the employment rate. that's not going to happen this time. the inflation rate is going to be sticky. they still have to keep interest rates high. even when the employment rate goes up. this is not the opportunity. >> do you see inflation moderating? that's the key term.

we are at a high enough level, where we weren't going to be too high. >> easy part of the inflation is right ahead of us. as you heard jim talk about it, resell is falling. a few things are cutting off. it's about the whole order. things like that. the dollar value is very high. that helps with inflation. it's right in front of us. we will see the problem. things like rent are going to be really sticky.

we are seeing another good inflation number. markets are going around. these are the highs that we saw from last summer. that is the sugar high. in spite of the inflation retracing that's going to happen. it's going to be sticky. a lot of that is rent. everyone knows rent has gone up. as we see it fall, markets will respond to that.

we are not going to 2.5% inflation very easily. we could see a nice fall for the market rally. once it becomes clear that inflation has a sticky part to it, that's when things get tough again. >> what are some of the highs? you can see that we are getting back on it? do we have new market lows for this cycle? >> i don't think so. we are going to be in a frustrating range where things get chopped up. we go back to last year. 4800 on the snp. that's certainly popular. at the same time, i don't think it's going to surprise the market. i don't think they will fall to where we need to go. 3700 is here. it's a really frustrating range. people don't like. it's hard to manage money in. you need to be patient.

once the fed sees that, we have different presumptions of the rally. it's not going to be fun for anyone. >> under 4000, you probably like it. your entry point will be right there. it you don't think we are going 3000 on the snp? >> no. we are looking at the rally. we were keeping the powder dry. stocks are going to be higher. they were getting very interesting. a percent yields. anything above a percent is good value. eight or 9%, high-yield bonds. we had this tremendous run for

the past 10 or 15 years. we have other places to go to make money. >> that was very detailed. i don't recommend you continue to do that. you have to learn how to say things without saying anything. you gave us some good stuff to think about. we will see how it plays out. thank you. >> you are welcome. >> andrew? >> take a quick five. we moved on a lot this morning. dio w, often points. nasdaq, looking up. we will hand it over to our friends on the squawk box. make sure you join us tomorrow. good wednesday morning. welcome to squawk box on the street. another morning of a pretty tight market range. the numbers of consumers have fairly weak guidance. more big names after the bell. the road