tv Squawk Box CNBC August 31, 2022 6:00am-9:00am EDT
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good morning, and welcome to "squawk box" here on cnbc. we're live from the nasdaq market site in times square. i'm melissa lee along with joe kernen three straight days of losses and we do see a mixed open with the nasdaq looking to eke out a 30-point gain at the open here the s&p looking to be off by about three points, dow looking to be down by 54 the s&p and nasdaq each fell by about a percent yesterday. here's where markets stand for the month of august. today is august 31st >> i showed you how to do that. >> which i didn't know >> january, february, march, april, may, june, july and the knuckles have 31, and then you go back and you'll be able to do that you've said you memorized it how long can it take you to do that >> over the course of a lifetime, joe. >> you do?
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how many days does february have >> 28. >> is it the only one with 28? >> yes >> no, they all have 28. go ahead >> that's such a dad joke. >> it's not a dad joke is it too early for you to know that each month has 28 days? well, we're talking about total days in a month. >> no, we weren't. >> i said which months have 20 -- you missed you failed. the dow is down by 3.2%, this is for the month of august, which is 31 days according to your knuckles. s&p is down by 3.5%, nasdaq is down by more than 4% this is news you can use at this time of the morning. >> which i drag. >> which you drag, yeah. >> my knuckles treasury yields, we are watching this very closely. we got the ten-year at 3.161, the two-year at 3.497% wow. 3.5. >> i need to be reminded, not only what month and day it is, i need -- the other day i said is
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it monday? i really -- >> sometimes the days feel differently, like to me today feels like thursday. >> do you -- you've heard the expression that -- well, you're probably not there yet but as you get older it seems like you have breakfast every hour. and now weeks seem like they're interspursed with slight little sleeping periods, but it doesn't fe feel like seven days anymore it goes so quickly i try to get five or six hours of sleep and then i'm back at it and you know what, the alarm never goes off anymore. >> you just wake up ahead of time. >> i'm already there i don't know what it all means euro zone inflation hit a new record high in august of 9.1% topping expectations, which were at 9%. it's the ninth consecutive record for consumer price increases going back to november of last year higher energy prices the main driving force.
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>> new york fed president pushed back on market expectations for a rate cut last year williams said he expects interest rates to continue higher and to remain at those levels until inflation is subdued. that echoes chair powell's comments at jackson hole where he used the words, for some time language this is not something we're going to do for a very short period and then change course. that's sort of reiterating what a lot of fed officials have said recently, including kashkari >> it's a common name, john williams we used to play star wars or jurassic park. >> is it too disrespectful or do we lose the rights to play that music? >> i think we lost the rights. >> you could hum. >> i could, but in the background do you think that would be distracting -- whale yo while you're doing the business news would it hurt to have that playing in the back so people get what that means, but still listening to what you're saying. >> let the people know that john
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williams composed -- >> yeah, yeah. he's probably the greatest composer for recent big films and you go to him when you want a lasting -- and he delivers every time, right? >> i think it would add a new dimension. >> that's what i mean. don't we want that >> yes, but i don't know if it's wrt what you would have to pay to play the music. you could hire an a cappella group to do it there are ways around it you could do fake star wars music. >> knockoff. >> knockoff music. >> like all the drug companies do to get some terrible -- >> to do all the side effects. you need three minutes of side effects. >> ooo ozempic >> i'm ready to do something with the drug companies just because they're spending money on that. i'm ready to let medicare negotiate so they stop the ads. >> lower prices for you, terrible music
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>> stocks to watch, snapchat, usually lay off people in a perverse way sometimes the stock goes up on that news, but not if it's indicating how bad business is laying off 20% of its work force totaling more than a thousand employees. if you didn't know snap had that many employees that's quoting a report in the verge. it says that -- see, now verge is a band, now we could play that famous song from -- but no, we won't do that shares are falling sharply on that report, down more than 25%, wow, since the beginning of july. >> all these media stocks that have had just a terrible go of it, and all of it is advertising. >> right >> the decline in advertising, which we've seen >> right and it all -- is it all pointing to some type of serious slowdown we have two straight quarters of negative gdp with the jobs number no one's
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willing to call it a recession, but are we entering a pretty serious slowdown >> well, i mean, consumer confidence came out yesterday, right, and jolts came out yesterday, and both were better than expected, which would indicate that maybe the fed has a tougher battle to fight in terms of inflationary pressures. we haven't seen, i think, a lot of these numbers show up in the data yet. >> were you here for jeremy siegel the other day maybe you weren't. jeremy siegel was in, and i said, you know, you were worried about inflation because of m2 growth and the first thing he said is m2 growth has ground to a halt, totally stopped for the past six months or something he said that is significant, and then i saw earlier today there was an economist saying what has happened to m2 is predicting a really sharp slowdown in 2023. something more than a semi hard landing. something pretty hard, so i don't know we'll see. but m2, not growing like it was,
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and that's -- maybe it's good if you worry about, you know, money supply growth out of control, but they don't have consequences i think that's what scared people s jay powell said that, it's going to have consequences >> all of it, that's what bill dudley said in that bloomberg opinion piece months ago what the fed is doing will have consequences, one of the consequences, lower asset prices across the board. >> lower asset prices, lower home prices. this is what i started complaining about, that bad policy has bought a recession for all of us. none of us want one, none of us want higher interest rates we'd all like to be able to borrow things at less money. if you're starting a business, everything we'd like to do entails a strong economy and a good labor market and higher wages for everybody. because of all these crappy policies throwing money around, now we're all -- we all -- a recession now. thank you, sir, may i have
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another. that's what they're deliberately trying to do that's thono way to run an kpli. >> it's hard in a pandemic situation to say you know what, we're not going to do the stimulus, that will inflate every asset under the sun. >> it's like saying, yeah, we know that maybe 30 -- no, maybe 70% gets to where we want it to go, and we know that there's what do we call it in retail, shrinkage or leakage >> shrinkage. >> shrinkage and leakage are bad. >> shrinkage is an actual term in retail. it sounds like something else, shrinkage is an actual like -- >> there's theft -- >> which is -- >> yeah, all right i don't know where we were going, but -- >> you're totally distracted. >> yeah, for whatever reason, i think that we may be looking at something worse. and i don't like it. i don't like that that's what we get. >> and this is exactly why the markets are doing what they're doing right now.
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anyway, we're watching royal caribbean this morning, partnering with spacex's starlink satellite network to offer internet on board its ships. it's aimed at combatting bad internet on cruise ships out to sea. royal expects to have it fully deployed by first quarter next year. shares of chewy getting hit hard revenue missing the mark as consumers curb their spending habits over higher prices. i thought pet spending was inelastic. che chewy offering a disappointing forecast for the current quarter and full year. pvh shares taking a hit. the apparel maker earnings topped estimates but revenue and guidance cut short cutting 10% of its work force in its global offices. hp shares are falling, the company's ceo telling jim cramer he's seeing signs commercial customers are spending more cautiously on pcs over macroeconomic uncertainty.
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that stock is down 6.5% this morning, joe. russia's gazprom halting the flow of gas through the nord stream 1 pipeline. we're going to talk about the fallout for europe next. and then later we're going to get the adp private payroll report for the first time in several months adp chief economist neil richardson is going to join us to explain the new methodology at 8:15 a.m. eastern time. you're watching "squawk box" on cnbc what if you were >> announcer: this cnbc program is sponsored by ibm. ibm, let's create. so, you partner with ibm consulting and use ai to analyze millions of data points to help predict player performance and bring fans closer to the action. now you're serving up head-turning insights and transforming your business into the top seed.
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developing news out of russia, gazprom says it has shut down gas flows through the nord stream 1 pipeline today. this three-day halt follows a ten-day shuttowdown in july they are blaming the shutdown on maintenance around a key turbine engine germany is disputing those claims nord stream 1 has been running at 20% capacity as germany r-- they'll have to sit and wait to see if gazprom turns those back on the country is better prepared far nord stream outage now as its storage is nearly 85% filled storage usually gets drawn down even with continued flows of natural gas into germany
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if the nord stream stays off it could drain the storage quickly. european spot natural gas prices now, they've come down in recent days but still more than 800% higher than one year ago. joining us now, amena backer, energy intelligence bureau chief tell us what do you want to start with we can start with natural gas, gazprom, oil prices, iraq, iran, opec plus. what goes into it, all these things >> there's a lot to cover these days, a lot of volatility in the market in both gas and oil a lot more in gas than oil per se let's start off with the gazprom shutdown in europe as you mentioned that the europe is better prepared they did fill up their reserves, which isgiving them a bit of a cushion, which they didn't have before, ask tnd that's the reasw
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sa saw gas prices drop down a little bit from their previous levels and there was also news that the eu is also reforming their electricity prices, but again, i mean, that's something that's going to take a long time, but for this winter, i would say that europe is doing its best to meet demand. i think they're trying to cushion consumers to the largest extent from the higher oil prices russia said that this maintenance is going to last three days russian officials have blamed the sanctions really on the cuts that have happened more than the official reason of maintenance so let's just wait and see on the oil front, yeah, you menti mentioned a number of factors. we're seeing oil again trading at a little bit under $97. we keep getting these inflows of
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news that iranian barrels are coming the deal between the u.s. and iran is imminent personally, i think it's still facing a lot of challenges here. i'll believe it when i see it, but for now i wouldn't count on these iranian barrels easing any of the perceived market tightness. and you have an opec plus meeting. the next ministerial is happening on the 5th of september. we understand that all options are on the table i know that previously mentioned the cuts, which they had implemented in 2020 and 2021 this doesn't necessarily mean that the group is going to be discussing a cut he didn't mention that a cut will be discussed a the this upcoming meeting so we just have to wait and see what their new policy is going to be for the months to come. >> we heard maybe there could be cuts is it possible there could be an increase is anything -- you said anything
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is on the table, so the entire -- it runs the entire ga gamut? >> well, yeah, everything's on the table, anything is possible at this point in time. they really want -- i mean, their main mission right now and the concern of many of the opec plus states as you saw from official statements that came in last week, there is a huge concern about the volatility they basically don't want this market to be swayed in the overly bullish or overly bearish direction. they're going to want to control this market and avoid these movements that really harm the energy industry at large because when you have these huge swings between going up and down, traders can't hedge, and this impacts the ability of investors to put their money into the upstream sector and make sure that we have energy security in the future >> it's hard to figure what's going on i guess jay powell still casting a pal on the oil markets today
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in terms of these look like demand worries what we're seeing, although supply maybe not as front and center. do we need to try to gauge what kind of winter that europe is going to have? is there any way we have a farmer's almanac, does that work anymore? people say it work is there anything to use to try to gauge how severe or mild the winter could be in europe, and would that have a huge -- >> personally don't ask me that because i don't know what they use to predict the temperature of the winter, but again, it kp depends on the severity of the winter for this year, i think europe is prepared, but who knows about the next -- i mean, all of these -- next winter all of these measures they're taking right now to increase renewable energy, the reforms and so on. you're talking about the entire eu the eu is a very bureaucratic
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organization, and it's very difficult for them to go into from the planning phase into the implementation phase so this is going to take a long time so yes, we should be focusing on this winter, but also looking at next winter. >> if some of it is -- some of the energy is moved to consumers rather than business, i mean, i could see a sharp slowdown in demand for business, and even a recession in europe based on that, which may be if that would ease prices. it's weird the way everything is sort of counterintuitive you know, if things -- to get too high, then you get the recession. then prices do come back down, so that's possible as well, amena? >> sure it's possible, and it's something that, again, opec members have alerted to. they don't want to see the economy, the global economy go into a recession this is something that is counterproductive for them we want to see demand growth so again, achieving that kind of
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balance between prices is very important for the producer group. >> very good amena, thanks. amena bakr, we'll have you back in the future to talk about this thanks, good to have you on. >> thank you. coming up, news out of china's auto sector, one ev stock taking a hit in hong kong overnight. right now as we head to break, take a look at the biggest premarket winners and losers in the s&p 500. this is not just laundry. this is laundry that's smarter than the dial, with ge profile smarter wash technology. more care for your cashmere. more power for your workout gear. this is smarter sensing and dispensing. fully optimized cleaning, no more guessing. getting the best out of everything that goes in. ♪♪
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bringing the stake from just above 20% to just below 20%. the chinese electric carmaker reported strong numbers for the first half of 2022 tripling net income from the prior year those shares down by about 8% right now. joe. >> reading about baidu and some of these taxis people are in there. >> robo taxis. >> yeah. people are there like watching just in case you going to sit in the back of one of these things? i don't know its robo taxis have grabbed 10% of the ride hailing market it's in a suburb of a beijing city and the company says it has more than 100 robo taxis operating in the area, with each vehicle running more than 20 trips and local rules require human staff to sit in the vehicle with passengers as part of this test program in the suburb that's about a 30 minute drive from the center of the city it's really happening, huh
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amazing. coming up, bed, bath and beyond shares have been on a wild ride, ahead of today's investor update. we're going to tell you what to expect next as we head to break, here's 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 the right wireless plan for you. so, you can stay connected to all your drivers and stores on america's most reliable 5g network. that sounds just paw-fect.
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bitcoin's a little better this morning. yesterday no indication we were ready to just fall off another -- >> no indication, but it felt sort of -- didn't it feel weak some mornings the futures are weak and there's no real reason. but taiwan shooting a warning shot at a drone. >> maybe that was it i thought we had done -- i thought monday's performance was kind of encouraging only to see tuesday just descend into madness. 300 points, whatever it was, bitcoin under 20, back above 20. we're in the soup again it seems like you know what month it is tomorrow if you know there's 31 days in august, you know tomorrow is september. you know what comes after september? october. you know what happens in october? what happens in october? >> bottoms are made many times, but to get to a bottom, it means there's a descending thing ask then maybe a bottom. maybe not this year. maybe not this timement bed,
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bath and beyond shares sinking sharply in the last few minutes after a filing revealed a proposed stock offering. courtney reagan skrjoins us now ahead of the company's investor update later this morning. was that a big shock, courtney you need money to keep a business going >> yeah, i don't think it's a big shock, but of course the stock reaction to even no news, joe, is very volatilie these days there's an awful lot of questions the company really needs to answer. with about $108 million in cash and nearly 1.4 billion in long-term debt, comparable sales now 23% in the most recent quarter, there's real questions about liquidity. plus, the retailer has an interim ceo and has for two months is there a permanent successor what happens to all the major changes that ousted ceo mark tritton? tritton was brought in after a 2019 activist campaign, the
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activist that's involved in kohl's now tritton cleared out a huge percentage of historical stacked to the ceiling inventory and he bet big on new private label lines. his private label strategy was successful at target, but it really has not worked at bed bath tritton brought in new leaders, closed stores, sold off assets including christmas tree shops he reengineered operations and long l logistics and then a global pandemic set in. consumers clamored for home goods to make the most of those stay-at-home orders. bed, bath, captured some of that demand as time went on it missed out. it had merchandise stuck in transit or delayed, and then it became a target of wall street's trading community with many sessions seeing wild movements in shares prices on really no news in march gamestop chairman ryan cohen reveals he took a 10% stake in bed bath, he got three
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new board seats and pushed for the sale of buybuy baby. in mid-august he sold his stake and volatility in the shares followed they've got a lot of questions to answer here, melissa. >> they spent, what, a billion dollars over the past -- their cash pile was over a billion dollars a year ago, and now they've got $100 million in mao do you think we'll hear about refinancing that debt, restructuring that debt? is there debt that's due immediately? >> yeah, i think investors would love to hear that. i don't know if we will. i hope that we will get some confirmation of the reporting from "the wall street journal" about this other loan that they had supposedly secured for maybe around $400 million. but that still hasn't been confirmed. so to me, cash is really the biggest, most immediate question, especially if you're operating a typically cash flow positive business when you've got these sales coming in day after day, month after month
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and if those sales aren't coming in and you don't have the cash in reserves, i think you've got a real problem on your hands. >> buybuy baby seems to have a higher valuation than the core bed, bath and beyond store, if bed, bath and beyond were the unit and buybuy baby were the main business, maybe it would get a completely different -- maybe that's sort of a strategic shift that would garner a higher valuation? >> yeah, that's a very interesting thought certainly sort of switching it around. when you look at the store count, i think it is 700 plus bed, bath and beyond stores and maybe 100 plus buybuy babys. but you're right the valuation is really strong i hadn't even thought about really swapping it around for the banner names its ryan cohen had pushed to sell buybuy baby. we'll see what we can do to unlock that value. i worry if the sort of moment in time to get the best price to sell that unit has passed. i'm not sure if the company wants to do it that now is a
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great time that they'll really get the biggest bang for their buck with everything else that's going on in the market and the broader economy. so we will see i think there is value there i think they just got to dig through to find it and i think a lot of mark tritton's ideas frankly were not bad ideas. i think that they were all done very quickly and then unfortunately you also had the pandemic happen which then sort of snarled all the plans for that merchandise replacement. >> courtney, thanks. courtney reagan with the latest. shares are down 20%. are you going to mention, joe, that you love the store, don't you? >> we kid about it i like a heavy duvet, and i know they have those. >> like a weighted blanket >> yeah, like a taylor granden type thing yeah, cakind of a security thing i like bed, bath and beyond. i've been there a few times. >> with the 20% coupon, why not go there. >> we have pretended that on
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rainy saturdays andrew and i go and just -- you know, we spend hours there. we don't necessarily buy anything we just looked at everything. >> you browse. >> we browse. >> my other thing is that we had tritton on, and i don't know, triton oil, you know, tritton, triton, i got so mad he's gone now, right so i don't have to worry about that anymore i can call him triton as much as i want. all right in our squawk pick segment we're taking a look at buying opportunities amid this pullback in the market let's bring in chairman, ceo and cofounder of orius asset management great to have you with us. it seems like a difficult environment. we're even seeing the most defensive stocks from august highs pull back double-digit percentages, and i'm thinking of names like apple down 10%, microsoft down 12% seems difficult to put your toe in the water so to speak now >> well, i think, melissa, we're
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in a trading range if we're looking at where the market has been over the last few months, we went up 17% we got up to the 4,400 range now we're back below 4,000 and it's bracketed by perhaps p/e ratios around 16, under 16 and 18, so apple bellwether for the market, you know, it's the biggest company and everyone looks to apple for signs this also happens to be about the weakest trading week of the year but we think that you can look for some opportunities and stocks that have already told you what they're seeing for the rest of the year and they're selling at reasonable valuations cme group, so cm,e is a trading platform the mercantile mart. they trade interest rate futures, derivative foutures and stock indices. there's a lot of volatility in that market. the stock is down 15%, earnings
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estimates are going higher and we think cme over the next couple of quarters are going to show really good results so that's definensive but it's also growing nicely. that's one and then there's paypal. paypal was a darling during covid and it really fell apart it's down 70% over the last 18 months trade for 20 times next year's earnings they cycle through the good covid numbers and then the bad numbers following covid when people started to go out more and we've got elliott management on their heels trying to get them to cut costs. they say that sales are pick k up so we think paypal in this environment again is defensive, but it's also a growing company with an activist involved. >> right >> so those two are names we think are attractive right here. >> thanks for outlining the opportunities you see. appreciate it, kari fire union
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goldman sachs dropping all covid protocols and will be requiring all employees to return to the office five days a week joining us now lydia moynihan, new york post wall street reporter i try to keep my own opinions out of this, lydia we were supposed to -- remember 2020, supposed to reopen by easter what is goldman sachs, what is their conclusions now? the pandemic is over ask it's just -- it's not that important anymore. i felt that way for a while. i'm healthy. i've been vaccinated many, many times. i've gotten the boosters, i've had covid. so i haven't worried about it or
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worn a mask in a long time so this seems late to the game but for the corporate world which is so cya focused this is like a big risk for goldman sachs to do this >> well, i think if you read between the lines of the memo, yes, this is a memo about lifting all covid protocols, but i think this is really about not just a memo to employees but sort of a marketing campaign to all of these banks' clients, right? if you are a company you are coming in to hire a bank at a seminole moment, and they are a gun for hire you're paying an arm and a leg because you want them to be efficient, to be aggressive, and to do a fabulous job you want a bank that is going to have employees who email for breakfast, who work on labor day weekend, work on holidays. you don't want an investment with employees who need emotional support dogs to get through the day, who are blaming covid or worrying about being
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exposed to an illness and you think that is an excuse to stay hom home you don't want someone who's going to try and quiet quit, the quiet quitters are not going to make it across the investment banking rubicon. and david solomon and jamie dimon, they all get that so as much as this is a shot across the bow to employees, i think this is also a way to sort of burnish their brand's image, investment banking revenues are down, and they really want to promote themselves as sort of the top tier bank that is going to get the work done this really is a marketing campaign, i think, and david sol mob wants to sort of paint himself as somebody who's first and foremost going to put clients first and demand that his people come back to the office. >> we have a segment almost every day on back to work, and there's two options, either there's a new normal where it's a hybrid model forever, or what david solomon and goldman sachs are saying, it's over.
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there's no new normal. come back here, whatever you get from the camaraderie and the -- whatever goes on in face-to-face office settings, it's important we're going to have that again is that going to -- we going to accomplish that eventually, lydia? are there going to be stragglers that two or three years from now are still not having people come back >> well, if you speak about wall street, i think this is an industry where people will be expected to be back. you know, as i mentioned, these banks want to pitch themselves to clients as places where if they want people in fiver days week, the other piece of this the new york post reported on last week, jamie dimon is quietly making a stealth campaign to get his people back five days a week, and of course this comes as he's investing nearly $3 billion to build a new global headquarters that's taking up an entire city block
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in manhattan so a lot of these firms have made huge bets on real estate. they can't go back and undo that and when these offices at jpmorgan open in 2025, jamie dimon doesn't want three people showing up to the office i do think the real estate component is a bigpiece of thi debate, and i think the other thing here is that wall street was not designed from a compliance standpoint to have people work from home. we even saw this week they've been reporting morgan stanley putting in house attorneys to monitor trading desks, right i think from a compliance standpoint that is another piece. it is really difficult to monitor people and make sure they're doing good work and not breaking rules if they're from home. >> i mean, things unique to investment firms notwithstanding, just as a society the risks is not going to be zero we have dr. scott gottlieb on, he tax about what the probable -- i'm not going to call it herd immunity, but how many people have now their
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immune systems have seen covid at this point, and it's a pretty good number at this point. that's why the risk is so much less but you're never going to be able to get to the point where someone who's immune compromised happens to -- you're going to be able to trace something from someone who comes back to work, who had covid, who gives it to someone. do you think those situations where there's still a really bad outcome, is that going to be enough to square people into not following through on this? it's never going to be perfect we don't test for flu every season that there's some nasty flu that kills 50,000 people we could, and you'd want to know, oh, i have flu i've got stay home for the next ten days but that's what we do now. jill and joe biden still wear masks outside walking around they both just had covid why? >> well, i can't speak to the white house or what the biden administration is or isn't trying to do, but i don't think i as a society, you can make rules
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for the outliers we talk about the immunocompromised. it's important not to dismiss those people this is 1% or less in the population you've heard all of these ceos, executives say if you are in a situation where you have cancer, where your spouse has cancer, we will absolutely work with you. i don't think that anyone is suggesting that they're going to, you know, demand that if you have cancer you show up to the office that is not what's happening here you need to make rules that ap apply at a macro level, and you can make exceptions, you know, here and there on a micro level, but you can't be setting rules for ab entire company based on a handful of people. there are always exceptions. writ large, you're right, everyone's been exposed to covid. most everyone in new york has had it, and if this is really a concern for you, then you probably shouldn't be living in new york city. i hate to say it >> it's kind of crowded around here lydia, i'm curious if there is any fear at all that workers
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won't necessarily go to other banks that have similar policies because if the rules are all the same, then the rules are all the same, but that there might be talent lost to other industries. investment banking from a young person's perspective, you know, lost some of its appeal. we hear about young associates complaining about the long work hours, and we're also hearing about the very tight labor market, and that workers have the upper hand here. how does that all factor in in terms of retention of employees? it's not just losing employees to other banks, but there are other places where talented, young smart people can go. >> of course absolutely, and i do think it's important to note that banks expect that after two years pretty much anyone who's weathered that sort of hellish first years of investment banking, they expect those people to leave. that's nothing new you're right, people do have more options than they've ever had but working at a goldman sachs or jpmorgan or morgan
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stanley as a banker for a couple of years is something that everyone wants on their resume, right? these are still very prestigious institutions and they're absolutely going to get very motivated people who are willing to show up >> lydia, thanks, very good. good to have you on. you're coming to us from home today? >> you know, the only reason i'm n not sitting right next to you is because you guys don't allow guests. >> no, we do now. >> next time i will be sitting there right next to you. >> i'm going to start throwing my weight around and that's substantial. less than it was i'm going to do that >> we'll be there to see it in person >> excellent we'll have you in. >> thank you >> good to see you rngts coyou. tensions escalates between the u.s. and china over taiwan we'll bring you the latest after this break a plan with tax-smart investing strategies designed to help you keep more of what you earn. this is the planning effect.
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u.s. and china overnight, taiwan's military fired warning shots at chinese drones just off the coastline. joining us, from tilman and company, leo taiwan has said that it will exercise the right of self-defense in counter attack if chinese forces enter its territory. how do you view the situation? is it a true escalation? or is it so far just a war of words that, you know, they have to say these words, but we won't necessarily see action >> you know, one of the biggest challenges facing companies and investors is to detective over time what appears to be seemingly unrelated tactical events and connect them into a trend with major strategic implications we have seen this with supply chains and with china and taiwan they have been building for a very long time, and china has been absolutely adamant that
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there's only one china taiwan is an essential part, and of course taiwan is determined to defend its eindependence so this is a complex situation, but we believe there is a significant likelihood that china will assert control over taiwan in some shape or form in the coming years >> in isolation, in a vacuum, this event might be troubling, but not necessarily truly concerning, but there are events around it, leo, which makes the context seem more concerning for one, people's congress is going to meet october 16th, where she's expected to have a historic third term, where he would be the most powerful leader since nmao see tongue and then nancy pelosi's visit.
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>> in addition to building its traditional military, china has been perfecting its hybrid w warfare. you can asfusume if it moves int will be a combination of cyber tool, economic, diplomatic, and it can take many different forms. it will probably also be timed when the west is perceived to be in most disarray and weakened. and the perception here is that compan companies and investors are not necessarily thinking through the variety of scenarios that could unfold and not changing their dependence on supply chains. corporate responses to russia and ukraine are not going to work with china. you can think of a lot of implication for financial market, economic growth and
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trade across the board both short term and long term >> we can imagine a world in which the supply chains are further disrupted because we're living in that to some degree, and we have lived through what has been the worst of that during the pandemic, leo, so i'm wondering for companies that are thinking about this situation, what are some of the scenarios that maybe should be on the radar that are not currently in your view? >> i think the best way to describe it is that to this point, most players are trying to use tactical remedies, band a aids the way we manufacture, the way we manage inventories is extremely dependent on china and taiwan and supply chains in general. and what we have seen is general reluctance to significantly diversify away from these sources of production and end trade with china it's been a but the puzzling
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it's almost similar to the way that the baltic republics got themselves off of russia several year before europe is facing some of these issues so there is a foresight that can be used. and there is a preparedness that can be created it just requires strategic thinking, and this's at's what'n missing in our view. >> leo, thank you. leo tilman all right, we got to go. >> yes >> you pretended leakage wasn't a real thing i will tell what you retail lea leakage is there's shrinkage and leakage. coming up, bed bath and beyond will update investors. bo'll have more "squawk x" straight ahead talk about leakage not just laun. this is laundry that's smarter than the dial, with ge profile smarter wash technology.
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at fidelity, your dedicated advisor will work with you on a comprehensive wealth plan across your full financial picture. a plan with tax-smart investing strategies designed to help you keep more of what you earn. this is the planning effect. good morning stocks wrapping up a losing month with the three-day averages riding a losing streak. new morning, gazprom halting
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the flow of gas to germany plus, we go inside biden economy. jared bernstein will join us to discuss the president's plan to tamp down inflation as the second hour of "squawk box" begins right now good morning, and welcome back to "squawk box" here on cnbc, live from the nasdaq market site in times square. i'm joe kernen, oh, you get a two-shot at the top of the sixth there was no two-shot t wa, it was alu >> you better be on. if you got it, flaunt it u.s. equity futures are
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positive that's in spite of, i guess -- i think it's good if treasuries go up with what's happening with oil. almost 350, right? i wish rates would go up to show t you that we're not dead. you look at heoil, what the hell is happening with oil? $89 oil makes no sense we need to talk to jared bernstein a little bit about that it's good, obviously, for gas prices >> what oil is telling you, in light of potential supply disruptions in the middle east and the ten-year yield is telling new terms of it falling. >> the two-year going up doesn't help as much but the ten-year needs to go up. crypto, risk on. it almost gets boring, talking about crypto now >> why >> we try to bring people on to try to explain what's happening, and all you have to do is look at the nasdaq.
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and i don't know who moves who it's like one-to-one almost or .99 >> above 20,000. developing news out of russia gazprom say it is has shut down gas flows to the nord stream today. the monopoly is blaming it on maintenance. so once again germany and. rest of europe will have to sit and wait to see if gazprom turns those gas loads back on. the country is better prepared for a nord stream outage now as its storage is nearly 85% filled storage gets drawn down even with continued flows so if the nord stream stays off it could drain that storage very quickly. european stock price for nat gas right now trading lower. benchmark dutch is down 6%
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uk nat gas is down by 10%. they're still more than 800% higher than just a year ago. let's get to dom chu with a look at this morning's premarket movers i'm going to wait to the end, but i don't need to with this liv golf story, because it is a business story times a thousand. and the latest, cam smith. there's saad eaudi. you can talk about saudis, dealing with china we can make this a business story. how about neiman joa joaquin niemann is joining liv >> i have a lot of thoughts on this but i will go through the movers first, and then i will have this conversation with you. >> eat your vegetables, and then we'll get to -- >> dessert >> strawberry shortcake. >> vegetables first. let's talk about the meme stock.
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that's bed bath and beyond it's off its session lows right now, down about 17%. ten bucks a share or thereabouts. bed bath and beyond has issued a regulatory filing, and they said that they are looking to sell more stock there was no indication about how much stock they want to sell, but they are going to raise capital, that's i guess, the bottom line here, and that's what's pressuring those shares, the idea that they could have a diluted effect all this ahead of what's anticipated to be a strategy update on their turn around plans and everything they're trying to do to get things right later on today so bed bath and beyond shares right around ten bucks then paypal shares higher. it's been a pretty tough road, down about 67% for the overall
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stock. but you could see earnings per share growth driven by cost efficiencies, cost management and of course an activist investor involved in the stock so they say the price target goes from 94 to 114. and a mega cap tech check. they attempted yesterday, failed apple, microsoft, tesla, nvidia and meta up fractionally about 1% and just one more thing. i'm going to toss it back to you, but to address joe's earlier point, this is very much a business story, and cameron smith for the liv tour and pga did say it was a very big decision and gives him more time, because of the schedule to spend more time in australia what i thought was interesting, and this is not because i'm outrightly supporting pga or liv, harold varner iii
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i don't know if you saw that statement, he basically acknowledged the fact that this is going to be a transformative amount of money for him and his family, but, but, that he was going to use some of that money to help further growing the game of golf for young folks out there to gain access to the game and said in the statement, can you use this as my receipt i pledge to do this. so i mean, i think a lot of these liv golfers, because of the pr snafus they've had over the last couple months have refined their message to say you know what, we're doing this, it's better for us please don't judge us if do you it's going to hurt but we have to move on with our lives. >> won the players and the open. so that's the most successful current guy at this -- number two in the world, too. >> number two in the world did you watch riff ear yeah?
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>> his fellow country men, neto pereira. >> i never have to worry about bringing something like this up with you dom >> you and i have these conversation on the golf course all the time, too. >> well, yeah, i try to distract you, but it doesn't help >> not when i'm your partner joining us for more on the market, global investment strategist at j.p. morgan bank >> good morning, thank you for having me. >> we were talking earlier about yields it's amazing to think that a year ago the two-year yield was about .25% less than. and right now they're at cycle highs. the ten-year note is well off the early summer highs, and i wonder what you think that signals. >> i think it's signaling a
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direct read-through about what powell has been telling us jackson hole was very much a reiteration that the fed is going to stay hawkish until inflation comes down we know one month does not make a trend. obviously over the course of the next two week we're going to be looking at what happens out of that cpi print but what comes with the jobs report on friday and to us, i think it's just a reflection of elevated recession risks and also this potential that eventually the hiking cycle will end and longer term the fed had start bringing its policy rate back down >> you know, it's sort of a push-pull. the harder the fed goes against inflation, ie, the rate hikes, they're determined to get to 2%, maybe that's a good thing, but maybe it makes the recession probability higher how do you view that >> it's a lot of pretzel logic right now. but priority number one has to be getting inflation down.
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when we think about consumer confidence moving back up and the easing in financial conditions because of the rally, i think the fed is very easily justified in going by 75 come september. but let's, again, wait and see what happens with cpi. two months might at least be, you know, perhaps not clear and convincing enough evidence that inflation is coming down, but enough in the right direction to get us 50 instead in september >> you've got a global view, so i'm curious as to how you factor in europe with all of this, and with energy prices skyrocketing and things not looking to get much better there, how does that impact your view and is there a trade signal out of europe, ie, maybe don't even go near any of it >> we are globalry dly diversifd
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but we're leaning toward the more resilient parts of the market like those geared to the luxury consumer. i know a lot of people were chalking up friday selloff ex-exclusively ex-exclusively to the fed. it's very possible that we could start to import so weakness, and we are cognizant of the fact that risks are higher in europe so definitely something we continue to monitor and something we're not being dismissive of. but for the u.s. the primary driver is going to be the fed and our own inflationary picture. >> yeah, we get the ecb meeting the week before the fed. that should and interesting couple weeks for us. i'm curious, it seems like you would be very defensive in the united states, is that right >> very defensive, but as we
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look across this landscape we are getting excited by some of the opportunities that the current risk distribution of risks is starting to present we're towing back in to some of those risk-seeking areas of the markets like preferred for example, which we think offer a better risk-return profile than an area like high yield, and we're also starting to getmore and more interested in the mid cap, thinking about positioning for the next cycle and what the rebound is going to look like on the other side of this >> elysse thank you. coming up, a sec rule change that could have activist investors popping champagne a little more frequently scd then later, we'll diuss the president's economic agenda and much more. "squawk box" will be right back.
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welcome back to "squawk box. private equity firm apollo global management agreed to sell parallel infrastructure. the deal would create one of the largest cell phone infrastructure companies in the u.s. more than 2,000 sites, either operating or under construction across 41 states this was once parallel and
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combined with palo star's harmony towers byd sunk overnight after berkshire trimmed its stake to bringing it to just below 20%. the car maker reported strong numbers for the first half of 2022 tripling the income from the year prior retail leakage >> oh, we're back to leakage >> because i saw you raise an eyebrow. >> i didn't know if leakage meant something else >> stretchage and leakage. >> i knew shrinkage was a real thing. >>'s k it's kind of interestingt it is. we've built a full screen. let's say you're in a small to medium-sized community this is where the local supply of what people are looking for
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just doesn't cut it. so the demand isn't satisfied locally and a lot of the demand leaves and goes outside the smaller medium-sized community to a neighboring community that has a super store. >> a local gross store y grocery store >> there's a gap there, and these are fairly large community, some of them. and if you don't have a chili's there or an outback, you life anleave and go to a restaurant, and economists have written volumes on analyzing it and what it means and what can you do about it and the surplus factor and ways to deal with it >> here's my question. when you said leakage, before, did you know what it meant
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>> i knew it was like shrinkage. i remember "seinfeld", george was in the pool. >> yeah. >> and leakage, you think of those potato chips, olesz tra. you read this warning and who would, it gives me, i don't want that other thing i don't want that other thing to happen under any circumstances coming up. developing >> break >> you remember beano? >> yes >> quiet before, beano before, quiet after. we talk about all this stuff russia's gazprom say it's shut down gas flows through the nord stream today check out shares of chewy. the company cut its full-year outlook and did report a surprise profit, but sales are
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lagging as prices rise and consumers focus on pet spending on food and medications rather than some of the other, other more optional services "squawk box" will be right back. time now for today's aflac trivia question. in 1998, apple introduced the imac at what price point the answer when cnbc's "squawk box" continues '6 gaaaaaaaaaaaap!!! is that a goat?! you talkin' about me? gaaaaaaaaaaaap!!! i think this goat is saying “gap.” must be talking about the expenses health insurance doesn't cover. so who's talking about the money aflac pays to help close that gap? gaaaaaaaaaaaap!!! aflac! aflac! gaaaaaaaaaaaap!!! it's about to go down, baby! aflac! aflac! stop that goat! get help with expenses health insurance doesn't cover at aflac.com
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. now the answer to today's aflac trivia question. in 1998, apple introduced the imac at what price point the answer $1,299 it was the best-selling computer of the 1998 holiday season >> investor fights are about to get more personal. here to explain is leslie pickert. good morning >> a somewhat technical rule change is expected to have big changes for the world of activism and involves something
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called the universal approximate eye card it will allow investors to vote on any mix of their candidates the co-leader of the firm's voting practice says it give more leverage to activists >> the universal proxy is a game changer. activists are popping champagne. this is not good for corporate america. this is the most impactful rule change for proxy fights in a generation >> experts say that vote subm splitting increases the chances that activist may win seats.
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now the sec says that the rule change puts proxy voters on equal footing with a small minority of investors who did actually attend meetings in person where they could always vote for their preferred mix of candidates jer' jerry gensler says this is an important point. >> i would think if they gain one seat, it's hard to effect change with one person yes, i agree it's a good step in their campaign as opposed to losing entirely. but the impact won't be that great. >> oh, yeah, absolutely. one or two board seats in a ten-person board doesn't necessarily move the needle too much in terms of strategy, but when if comes to kind of winning and losing, you know, an activist can then go back to their lps and say we got one or two people on the board. they're a vocal member of the
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board. they're well-respected they're going to have to hear our ideas in the boardroom more than if we were shut out entirely from the management standpoint, they don't like losing one or two board seat this is a big game changer for them as well >> thank you still to come, member of president biden's council of economic advisers will join us plus, we are expect being the latest adp numbers s stay tuned. you are watching "squawk box," and this is cnbc
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>> morning that is true, joe, what you ar saying is correct. russia has announced that they are halting gas flows on that nord stream pipeline today for a three-day maintenance period volumes had heralready been rung low, at around 20% but no flow will go into germany now. according to gas infrastructure europe, gas reserves are already at 80% this is a target the eu had set for november 1st so this has taken some pressure off wholesale gas prices we are looking at dutch ttf prices it had spiked up to 339 euros per mega watt-hour it's down about four percentage points but the important thing is
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policymakers are very much on this case. the european commission president has announced that the eu would be looking to hold a summit on september 9th to discuss energy security and how to de-link electricity prices from the jump in gas a cold winter could still leave europe very much exposed to these higher gas prices. also just want to mention that today we've seen a much higher inflation trend out of the eurozone cpi came in at 9.1 percentage points today versus july of 8.9. that constitutes a 38% jump on energy costs year-over-year. european stocks have been trading on the down side down about four percentage points as we deal with this energy crisis in europe, joe >> let's bring in kristy
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goldfuss and vivek ramaswamy, founder and executive chairman at strive to mye, it looks like europe rushed the move to the transition to renewables or clean energy or whatever you want to call it because of pressure in the green lobby, and in the real world it's going to have very serious consequences it already is, and probably not just because of putin. we'll see what the winter brings they're already talking about manufacturing in germany slowing down because of this your point is that the transition wasn't fast enough, that fossil fuels got us into this mess and unfortunately, i think, christy they're the only things that can get us out of
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this mess near term. >> it's a surprising assessment given the previous story about where it is right now and through energy efficiency and renewables, they see this path out of this. let's be clear again about what got us here. the neighbor is the petro dictator that is what's causing the current problem. and you can't blame anything else on that situation so certainly, they see the path forward through energy efficiency and renewables, really over time bringing down those prices and right now energy efficiency is the thing that's allowing them to restore to a place where they don't have to worry about this winter. but it doesn't have to do with the green lobby. this these do with putin and his war in ukraine >> i know you've seen people say putin only has this opportunity because of the action with
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nuclear plants if renewables represent 3% of the total right now, i don't know what it would cost to make that economically feasible, even if you could make it economically feasible with wind and solar. and the only, do you, you dispute that the only way out of this mess for europe is hydrocarbons you think renewables can help heat homes in germany this winter >> no, that's not what i said. energy efficiency is what we're talking about right thousand a now certainly in the short term we are talking about fossil fuels and really those are what need to be around during the bridge but we just saw congress and the president take historic action to invest in corporations and consumer cons consumers.
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b but the conflation of the move to renewables and energy efficiency with the action of putin cutting off fossil fuels really brings together two issues that are separate, i mean, our reliance on fossil fuels and the moment that the petro dictator decides to cut off those supplies, that's what's causing inflation that's what's causing gas prices to go up, not this transition to renewables. >> fossil fuels have brought us the type of lifestyle we're able to have right now. it is a reliance on fossil fuels, because nothing else would allow us to do this at this point >> well, that's because the fossil fuel industry is really standing in the way of making that transition and allowing it to happen. i really believe that the investments that we're talking about over the next decade are going to put us on that path and i mean it's not just a matter of belief, this is what all the analysis shows >> vivek, where we are, i think we'd be further along, i don't
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know what are, let me tell you, just a quick anecdote we had secretary buttigieg on, and we were talking about the same thing, you know, does the u united states want to end up in the same boat as europe. are we rushing our transition here as well and he said the world, the world needs the united states to lead. yes, we want to beat germany in the transition, and it's, that, to me, it's just like living in some utopian dreamland, some fantasy world. >> it is living in a fantasy world. i love pete as a guy, but at the end of the day, you have to ask yourself why we just blame russia with all due respect to christy. it evades the deeper question of why it is that we were so reliant on russia m thein the ft place. it is systematic underinvestment in fossil fuels.
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you want to talk about some of the energy reduction measures in europe, let's be specific. there's now a measure calling for air conditioners not to be set below 81 degrees fahrenheit. and you know what? winter's going to be even worse. winter is coming this year and you wonder what putin's thinking russia has a long history of outlasting its european opponents over long, cold winters. look at napolean, look at hitler there's a cautionary tale for the united states. but i also want to put a positive point on for the united states the number one reason that europe is still able to live a first-world lifestyle right now is because of united states liquified natural gas, lng exports. if it were not lng export, europe would be living like a third world nation right now and the only way the u.s. is a leader in lng is because of the
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mas mas massive investment under the prior administration there's a bright story for the u.s. leadership as well. but i think it is a cautionary tale for anyone who criticizes without recognizing that's what saved the day. we can point to russia and putin all we want. if we don't look in the mirror and ask why we put ourselves in the position in the first place we will make the same mistake again. >> when and how could you replace the lion's share of fossil fuel to power the grid, for transportation, for, you know, flying across oceans everything that we do, when, what year do you see, well, number one, what do you talk about, solar and with end? or what's going to replace it.
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what's going replace it and how is that possible to satisfy the needs of this world with where we are, what year are you talking about doing that and what are we talking about if it's not natural gas >> i don't think it is this century. the second of all, i'm not sure that's a desirable destination when we could be focussing on other solutions instead. carbon capture there are other solutions, but to do it in a way that is also more respectful of the environment. at the end of the day, you know what's interesting, the steps that they took underinvesting in fossil fuels want good for the environment. for every investment takes place in the united states or canada or norway, shifts instead to russia and china, not only is that bad economically, not only is that bad geopolitically t is evegeopolitically, it
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is bad from an environmental standpoint methane is worse for global warming than carbon dioxide. it comes down to the psycho social need for fulfillment. it's virtue signaling. at some point, the appearance of virtue becomes more important than being virtuous itself >> i don't mean to interrupt you. you didn't even say short covering, and i cut you off. but christy, what is going to replace, what are the fuel sources that are going to replace natural gas or hydrocarbons what's really going todo the lion's share of the heavy lifting, and do you think it can be done in ten, 20, 30 years how long >> it's going to be wind, solar,
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geotlermal it's going to have to be a whole array of clean source. and that's really what we saw under 300 plus billion of investments that came out of congress and that the president just signed into law in the inflation reduction act. but i have to speak to this virtue signaling that vivek has been bringing up over and over again and the anti-esg movement. this whole concept that having more information about the impact on the environment is forcing people to make decisions is really contrary to capitalism, isn't it investors need to make decisions about short-term risk and long-term risk what we're seeing right now is the colorado river is drying up. that is millions of people in the united states. that is their source of actual water. in europe, if we're looking at what's happening there, the issue's entirely compounded by climate change in france right now they can't run their nuclear power plant bass because they don't have enough water.
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how is that virtue signaling when they are asking to disclose their information on the impact on the environment it's completely disingenuous they're bringing up issues like abortion >> do you think that the colorado and the problems in france, those would, we can change that by, you think we can actually, we can change that >> absolutely! we can change that, just -- >> oon even though they're builg coal factories in china unabated >> that's what the science show. just like we put advancements and seat belts in cars, we need to advance to a clean energy that is correct >> i'm waiting for a named hurricane this year. and we're going to get out of august without a named hurricane. >> that's goodn news for
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everyone. >> vivek, we've got to do this we've got to fix the weather pronto we'll see you later. bed bath and beyond just out with an update on its turn around plan. the stock is plunging. details after the break. down 25% right now futures meantime are indicating a higher open to close out the month of august. we will be getting adp private payroll data at 8:15 a.m. eastern time this morning. and jared bernstein will grown us to discuss inflation, the fed and much more. plus, get the best of "squawk box" in our pod cast app and listen any sometime.
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baby chain earlier this morning it filed to sell an additional amount of common shares, 12 million at some point in the future joe, they also offered an interim second quarter update, i think this is what's interesting as well. they plan on spending basically all the money that they have on their balance sheet right now, which is, you know, just north of $100 million, plus a lot of their financing that they have just secured when you just do the math. >> is this a meme stock, too >> it's a meme stock, yes. >> define a meme stock you just find a company with the worst prospect s for the future and just buy it? is that how it works, basically and hope that it's going to move on technical >> technical squeezes. >> one idea. >> the meme lord, ryan cohen got
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into this stock. >> and left everyone hanging >> and dumped it >> so you need one idea, that is buy the crappiest, fundamentals company you can find and hope for the best. >> yeah. so free cash flow basis of $325 million. so they just secured $500 million in new financing, and they have $100 million on the balance sheet. they say sale also decline about 26% compared to a year ago >> in the old days, graham and dodd, they thought you should find companies with good pross pekts. >> it's a new world, joe this is swing trading, right they look for stocks that will be volatile that you can trade options. yet, bed bath and beyond, the fourth-most actively traded single stock option in the u.s coming up, white house economic advisor jared
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unbeatable internet made to do anything so you can do anything. with xfinity internet, you get advanced security that helps protect you at home and on the go. you feel so safe, it's as if... i don't know... evander holyfield has your back. i wouldn't click on that. hey, thanks! we got a muffin for ed! all right! you don't need those calories. can we at least split it? nope. advanced security that helps protect your 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. the latest reuters ipsos poll, and joining us to discuss that and more is jared bernstein, member of president
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biden's council of economic advisors i'm going to pick on you a little bit today and preempt you with what i think is really a bad way to describe how we pay for the student loan bill. and i'm wondering if you know how it's going to be paid for. because you're such a great economist and you come on cnbc and you understand things so well, to say that we've got deficit reduction in place, and therefore somehow that's going to cover the $500 billion that we're spending on student loans, just because we're no longer in emergency spending mode, from the covid years, to take credit for lowering the deficit by a trillion dollars because we're no longer spending it on these emergency, and saying therefore we've somehow got this slush fund of $1.2 billion to work with is disingenuous, and we haven't heard anything better from the beard
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from the biden administration. >> i think you just called me jason. >> i'm sorry, jared. jason furman, your colleague >> my friend >> that's how way channeling there. but one of the first things the biden administration says is it's paid for >> let me unpack, you're raising good questions, and any reference to slush funds is completely inaccurate and inappropriate, and i'm sure you've not heard that from any of us. here's story the decline in the budget deficit expected to be well north of $1 trillion this year, we've heard $1.7 trillion from the congressional budget office, is not just because spending has come off of the pandemic era programs that's part of it. but in fact, if you look at the
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percentage change of receipts coming in to the treasury, they've actually been larger than the negative spending that you cited. so one of the offshoots of the very strong economy, the very tight labor market is strong receipts flowing to the treasury, and that's drive record levels of deficit reduction. now what we have been careful to say is that when you're reducing the deficit, 350 billion the first year, 1.7 trillion with a t the second year, and you're spending in the case of this student debt relief program that delivers crucial debt relief to over 40 million borrowers, that spending is far outweighed bit amount of that deficit reduction. it's a very simple point saying basically 1.7 trillion is a lot bigger than 240 billion, the lat are being the cost as we've said
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of the debt forgiveness program. >> why do you think so many of your, people on your side of the aisle, larry summers or jason furman, or take your pick, do you think that the number of votes garnered in november, does that make up for the push back you're getting from people who would normally be allies >> look, i've tried to listen to pre pretty carefully to what jason and lawye larry have been talking about, i don't remember them saying that the deficit reduction that we've been talking about is anything different than what i've been describing the idea that way more deficit reduction, i think that's consistent with what they've talked about where they and i are on different sides of this is they've argued that this will be inflationary, you know, we've cited goldman sachs analysis, many other economists saying if
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you look at the expenditures from the debt forgiveness, they look to us to be about the same magnitude as the restart which also begins in january one is pooling on the economy, and it offsets the other now one of the things that jason has pointed out and he's right is that you can't take credit for anything that's in the baseline and we don't do that in our accounting when it comes to the deficit and the debt what i have just described to yo you, 1.7 trillion debt reduction, those numbers don't play any of the baseline that wrasen h jason has warned us against. >> jason even pointed out, and others, many others, and to have to push back on guys that are, you know, they want to be on
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your side. i know larry would like to back your programs. i know that jason would like to -- i haven't even brought up what the other side has said about all these things that's just vociferously against all these things in the ei.r.a., you point to deficit reduction. this eats up all that deficit reduction and adds another, nobody nose, but probably another $300 billion onto it just to mollify or apipease the far left progressive and maybe get a few votes, do you really think it's worth it politically to have done this? >> i think the thing that's missing to our conversation that's really germane to it is who benefits if you just look at the cost, which is what you focussed on so
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far, and you don't look at the other side of the equation then you're going to get into some scre screwy politics of the type you just mentioned if you look at polling, student debt forgiveness is supported by significant majority so it's not just the far progressive left there are over 40 million people who are going to get debt relief and going forward, tens of millions of people had benefit from a much better plan that significantly reduces the burden of paying for forthcoming college debt now because the student debt forgiveness has an extra bump, an extra 10,000 for pell recipients, 75% of the beneficiaries of this were in fact pell recipients and they have incomes typically below $60,000. that's one of the reasons why almost 90% of the benefits goes to individuals with incomes under $75,000.
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now if you compare who we're helping, say, to the trump tax cuts you find numbers like the penn wharton folks that showed 75% of the benefits of debt forgiveness go to the bottom 60% of households if you look at the trump tax cuts, 10% went to the bottom 60%. why this is as popular as it is, not because it's catering to any part of the far left as you suggested but it's helping people who really need breathing room >> there are states where 60%, 70% of the people didn't go to college and they're working their bu butts off, and now they're paying for guys going to harvard. plumbers and fedex guys are going to pay for ivy league degrees. >> i'm glad you raised that. >> hold on i'm going to have to bring you back people aren't going to believe that >> i can't leave but that.
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i'm quoting professor sue danarski it has not been driven by 100,000 debts incurred by students at expensive private colleges but $8,000-loans from for-profit clenls. >> they do not go to the people you cited. >> you have to check back on that one it's in the "wall street journal," it's everywhere. >> 0% of these benefit goes to the top 5% 0% so i'll put all of this on my twitter feed so you can have it. >> and i paid that guy to cut the grass again. >> thank you. >> that happens every time >> we want to keep going >> thank you, joe. >> i can't, we can't we got to -- jared, thank you. we'll see you.
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all right, let's check out the headlines we're watching for you this morning as we are looking at futures pointing to a higher open. s&p up by 11, bed bath and beyond updating investors the plans to cut 20% of its employees on its corporate staff and across its supply chain, will shed 150 stores and discontinue some of its brands and has decided to keep its bye-bye baby chain, saying it is the most valuable part of its portfolio and ed intneeds to ben there. that stock is down 24% we're also watching shares of hp inc. it is the latest computer maker to force a slow down on spending on electronics take a look at chewy shares also
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tumbling tumbling as consumers spend more on food and medication rather than toys and treats >> you don't sell beds >> there's no beyond >> there's no beyond and there's no beds. >> they've got kitchen stuff >> no beds no beds. it's false advertising you go in there, i'd like a bed. >> they sell bedding they don't sell baths, either. >> mike santoli, did you miss me we'll always have monday >> we will i'll have friday i'm not sure if that's with you. >> i won't be there. >> but absolutely the answer is
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yes, i do miss all of that take a look at where the market's set up today. the index has sagged below some level that maybe the bulls were hoping would hold. this is the s&p 500 etf. this regained exactly half or just a little more than half what this has done since yesterday is given up half of the rally. it scenes sloshing higher and lower. i do think there's a case to be made that the market's getting almost as oversold and sentiment's getting almost as worn out tas it did near the lows 3900, is the next area folks are looking at to say that one should perhaps matter as we deal with all the fed speak and the sort of mixed economic news. energy kind of an interesting dynamic. crude oil has been lower you lost this potential break
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higher out of this down trend. that's crude it kind of broke higher and has fallen back toward the six-month lows let's call it then you have xle. the earnings estimate revisions in the companies themselves have been moving higher, even just to adjust to $80 crude and $6 natural gas. it has migrated from there's an absolute shortage. and the spr isn't going to do any good to say now hurricanes are coming, supply isn't that sure it's interesting to me how the bullish case has adapted and maybe people are reaching for why it should be going higher. the dollar is very strong. the rest of the world, oil is still pretty high. that's another piece of the puzzle over two years, how has this market changed chips versus chips doritos versus nvidia. gr graphics cards let's call it.
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it's all about safety as opposed to the kind of hypergrowth idea of what the chips can do on the nvidia side of things. it is still now an equality and dividend-growth tight market we'll see if that changes if we get another rally, joe >> all right, mike, very good. and good luck on friday. are you here friday? >> no. >> i don't know, going to be a, maybe people are back by then. >> i usually can work well with whoever you throw at me. >> thank you for your service. >> what am i, chopped liver? >> i always, i always coddle you. >> let's get to the markets. amy silverman at rbc capital markets, great to have you back. we were just talking about bed bath and beyond. the stock is down 22%.
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and even though it's a small compan company, i wonder how you see the activity it has brought to the market and how it's holding up in light of the market volatility that we're seeing >> good morning. just when we think the mime stmeme stocks are over they reappear again. what they are doing is buying call options you saw that peak in may 2020 and january 2021 even with the things we're seeing in bed bath and beyond we're nowhere near those peaks, whatsoever at the absolute highest, you saw call option very, very overbid compared to the puts that's only come down to a handful of names
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so we're nowhere near the peaks we've seen >> the vix has remained relatively muted even in height of the market volatility, and one would think that we could see that spike and one explanation is that people aren't in the market using the vix to hedge anymore or not as much what are you seeing? >> yeah, i think that's a very valid narrative right now. unfortunately, equity has misbehaved so those folks who did hedge, even with the market path going down really didn't get paid out as much as they should have partly because of the path the s&p took and because it was a slow grind down for part of it, and unfortunately, when you deal with derivatives, a lot of what you deal with is path and timing, so a lot of people have gotten rid of those hedges that's why you see equity skew come down to all-time lowe's
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w lows. you know,y your cross assets tel you it should be higher, but people just aren't plagying bal rate now right now. >> the vix is muted. >> yeah, you know, when i think about the coming couple months toward the end of the year i thinkeq think volatility has to pick up. if you look over the past decade, september and october, those are the highest volatility
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months for the vix and so, you know, we're getting out of august. people are returning from vacation, more eyes on the ball. and secondly, it tends to pick up during political event, and obviously we have midterms coming up, and of course there's always unknowns on top of that coming up, private payroll data from p.ad we'll bring you the numbers and instant reaction straight ahead.
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coming up, it is back. the adp employment report, it's been on hiatus for a revamping and today it returns the headline numbers and the instant market reaction are next first, though, as we head back to break, check out this morning's biggest premarket winners and losers you're watching "squawk box" on bccn
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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. a minute to adp. and meanwhile we have a few headlines from cleveland's fed president. she says they need to raise and hold them. she says the risk of recession over the next year or two have in fact moved up and that we'll
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have to endure some pain it will be painful in the near term to bring down inflation treasury yields, let's take a quick check. two year at 3.27 take a look at oil the ten-year yield plus the picture in oil tell a really interesting picture. wti's at 89, down by 2.75% let's get to steve liesman >> 132,000, adp using new methodology. 132,000 new jobs krcreated, les than 268,000 from july goods sector, we are able to get some of the same calculations from the prior survey as well. so small business, 25,000.
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and can you see double that for both medium and large-sized businesses looking at it again, the leisure and hospitality sector does trend. interestingly, education health services were down by 15,000 i can't tell for sure if that's a seasonal adjustment issue. manufacturing unchanged, prerhas picking up some of the weakness. a new aigsddition. for those in the same job year-over-year, up 7.6%. but look at that per job changes. this is picking up something we've seen in other data as well up 16% if you change jobs. so melissa and joe, i don't know if that's something you guys have been thinking about but if you did, you'd be in the double digits. that job stayers number is also
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higher than the government numbers. i don't know, we can talk to our guest. nila, are you there? >> i am here >> investors aren't really here to understand how the mousetrap was created. they just want to know is it better in a concise way, tell us what is different about this new adp report and why it's better in your opinion >> it's independent, and it's not a forecast of what you'll see on friday. so the last time we talked, steve, we had that beautiful grand tetons backdrop. and we look at this as a different picture of the same landscape of employment.
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we're basing it and highlighting and focussing on the adp micro data, which includes over 25 million workers. we then re-weight it to represent national averages based on national and more comprehensive data so the key here is it's independent, and the key in this release is that we're seeing the second straight month of a slowdown in the adp numbers under this new meth olology. >> let me just go back a little bit. the old methodology used other economic indicators in addition to the adp data. >> that's right. >> so are we seeing more of a raw change in your data, and as we said, you guys are servicing 25 million employees on payroll, which, if i'm not mistaken, on any given month is bigger than what the bls is showing us >> we have a large and
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comprehensive, fine-grained data set that we can match in a lot of ways the distribution that you're seeing in the official data so we are confident that we can highlight our micro data and re-weight it for national averages, that looking at the model-based approach, the way we did it of before to forecast fr survey in the source data was not the best use of our data we feel that this approach, looking at the skcale of adp data, using it independently to provide a private sector view gives you a different lens of the labor market that is valuable in our current discussion of where the health of the economy is right now. >> melissa, i know you want to question >> i want to know what this data means. it looks like the payroll number
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is up less than when you compare it to estimates, but the wage inflation number is, it looks pretty high, how should investors come away from this report >> first thing to note, mellis sark mellissa, we are releasing 12 years of history not only see monthly, but can you see weekly data. and the trends are offered both on a seasonally adjusted and non-seasonally adjusted. the key here for the take away is that we're seeing a slow down over the last two months in national employment. now, if you look at the pay-in sites, we're looking at payday at that for over 10 million individuals that have been matched in our data set. what you see is that for most of the year, pay increases for workers who stayed in the same job over the course of the year is above 7%. now the good news here is that
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it's not going, accelerating faster, but the challenge when we're looking at inflation is that this rate of change is much higher than we saw in early spring of last year in 2021 when the rate was closer to 2%. we've seen significant acceleration in wages but that is stabilizing at this elevated level. >> so sticky wage inflation at this point thank you. we've got to go. steve liesman, thank you as well coming up, more energiny nes the latest headline concerns hydrogen plus, delivering alpha returns. and i'll be sitting down with legendary investor stan truck trucken miller scan the qr code under register.
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phil lebeau joins us now with the details. hey, phil. >> we don't talk about hydrogen very often when we talk about future for vehicle transportation so much of the focus is on evs, but increasingly, you'll hear both analysts on wall street as well as those in the transportation industry saying h hydrogen is going to get a lot more attention later this decade bosh will be building a plant in anderson, south carolina creating 350 jobs with production starting in 2026. and here's the way this will work these had be hydrogen fuel cell stacks where the hydrogen will go over the fuel cells, creating the electricity that will power semis, and that's where many people believe hydrogen fuel cells have the greatest application. long haul commercial delivery. nikola, they are schedule to
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start next year. they're already testing some of the protest types in the los angeles area and when it comes to hydrogen-type technology, don't forget general motors has a rather robust program focussed on ramping up investments. they're already working with honda in the detroit area. so we'll start to hear more about this in the next couple year as increasingly hydrogen fuel cells get more attention. i it's still a hilllittle ways of, but they're putting the blocks in place >> we had a discussion a few minutes ago about where we go, how long it takes to get there what is your, anything that moves is a phil lebeau subject pla planes, training, automobiles >> sure.
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>> whatever. >> what fuel source is going to fuel the future, and how long is it going to take to get there? we got sun, we got wind. i mean, we got nuclear >> great question. now you're asking, now you're asking what's the fuel source for, what's the fuel source for ev batteries, because ev batteries will ultimately be powering most of the vehicles in in -- >> right >> but you bring up the great question, where do you get the power to fuel those evs, put the energy into the ev batteries is it going to come from power plants and we know how many of those are coal fired around the world. they're not going away anytime soon it's a complex question, joe in terms of ultimately, what's fuel source there, is it oil, gas, coal especially overseas. >> hydrogen might be part of it. so you're right about that >> it will be, down the road
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but it's very early right now. but they're putting the pieces together so that ultimately, and it's long-haul commercial where you'll see the first application. >> do you remember pons and fleischmann, phil? i wish so much that this had been real, coal fusion unlimited energy for as far as the eye could see. fortunately the experiments were not repeatable i don't know if it's ever that possible, but we that close. keep up the good work. hydrogen will that power the grid and all the evs? carbon capture maybe you do the elon musk, everybody's got solar panels on their roof and batteries that maintain, you know, when the sun is ut, and then you do your ca with that. i don't know maybe some combination of all those things >> on paper, it all sounds
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great, joe, all sounds great on paper. >> i know, but you're not going to davos anymore, anytime soon to talk about these things on private jets that's the beauty of the elites. thanks, phil >> okay. coming up, wall street looks to return to the five-day in-person workweek with at least one firm dropping many covid protocols. check out shares of bed bath and beyond, ahead of a strategic update to investors, announcing it secured $500 million in new financing, that it's going to lay off 20% corporate stock and close 150 stores you're watching "squawk box" on cnbc his, babe. that means that your dreams are ours too. and our financial planning tools can help you reach them. that's the value of ownership. power e*trade's award-winning trading app makes trading easier. with its customizable options chain,
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so how will that new revenue be spent? new housing units in all 58 counties, including: permanent supportive housing, tiny homes communities, project roomkey supportive hotel units... and intensive mental health and addiction treatment. in short, 27 means getting people off the streets and into housing. yes on 27. welcome back to "squawk box" on cnbc. after the adp report, not touch market reaction. s&p looking to add 12 at the open nasdaq higher by just about 91 taking you to treasury yields, we had a little ease back on the two-year yield market flash here, we have news
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just crossing, the quarter ends in september, the stock bity th way, it's halted it's changed its outlook compare to the prior forecast of $2.5 billion and this is because of a worsening economic backdrop. weaker economic trends have amplified corrections and supply chain disruptions. so they've seen more cautious buying we've heard this from a lot of different parts of this sort of complex, the chip makers, hp yesterday, cautious buying again, this has halted it's not trading yet on the back of this news, but we will look for that open. >> we've heard that a lot. so, is it in the stocks? or do we get another quarter
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where we're an even more shocked? >> the stock is down 16% in the past three months. >> but none of this is a surprise anymore it could even get worse in the next quarter >> exactly this is since mid july it's the end of august right now. so in the course of a month and a half or so, things have worsened to a degree where they've had to come out and revise >> and if they don'tout, it's like why didn't you come back let's talk about goldman sachs welcoming back workers to the office full time joining us, kevin o'leary, investor and venture capitalist, i'm looking to see where he is a lot of times he has not returned to work and he tweets out things in, like, his underwear half the time. and catherine, thank you both for joining us i'll start but, catherine. what is, do you have a problem
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with what gold planman sachs is attempting to do >> no, i doesn'n't have a problem -- i said catherine, kevin. i said catherine catherine, go ahead. >> thank you i think that this is exciting news, that we are finally entering the post pandemic phase. employers and employees are certainly ready for that in new york city, we have more than 90% vaccination rate. we've been told from the beginning of the pandemic that that means herd immunity is in place. we have, we've emerged from the most serious health, public health crisis in over a hundred year, and we've come out stronger goldman sachs, i think, is a great barometer. they have been leading in research and investment and
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protocols to deal with covid-19, really, since china. and at the end of 2019 they have been out front in terms of investing, in what we have to do to keep our employees healthy, and now the fact that they are signaling that it's time to move forward, to move beyond masks and vaccine requirements, mandates, and for everybody to do what makes common sense, just like hopefully we will, we've done in the past, with previous health crises >> now kevin and kevin, i'm sure, i was pretty sure you didn't have a problem, i wasn't sure of catherine, but you think we need to get back? >> no, i don't the idea that goldman sachs can get people back into the office nine to five, they're dreaming you talk to students, they have no intention of doing that so if i was j.p. morgan or
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anybody else, i would say we don't insist on that can you work remotely. and basically today everybody has gone throughout last two years, two and a half years, use the example of "squawk box" itself i would be sitting beside new that studio. we're in a hybrid mode forever >> you'll be here. you just don't want to put pants on >> no, i am supporting the japanese fishing pant community. >> i've seen you flip-flop on bitcoin. that's absurd. we do not need to coddle these millennials in their parent' basement that still do not have a job. we don't have to coddle. >> the millennials are like 40 years old now. >> why are they in their parents' basement. >> it doesn't matter whether you want to call on them or not. we're still almost at full
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employment you look at utilization of office space even texas, they're not even at 60% yet. new york, there's a drain of people leaving that's not an investable state the policy there is so anti-business, they're all moving to florida, montana, texas, i don't invest in anything in new york it doesn't matter what happens there, it's november going to go never going to go back to 100% in offices. >> i have to challenge that. we have an enormous a young people going to new york the defendant we have, actually that is encouraging remote work is that rents are at an all-time high we've recovered so nicely from the pandemic that rents in manhattan are over $4,000 a month now. that's making it difficult we've got new challenges
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we've moved beyond the covid challenge. remote work is going to be a flexibility option a new fringe benefit that employees have gont tten used to but young people in particular who recognize the ability to advance is going to depend on personal relationships, and you don't develop those over zoom. >> i don't agree with any of that that's absolutely not true people are developing relationships all around the world. we build teams now, some in dubai, some in india, some working in miami or dallas and they work together and the productivity is remarkable you know, i've got investments in over 54 private companies, in the aggregate, 10,000 employees. we're having our best quarter in history now and we haven't worked together for two and a half years the economy has changed. >> and that will come home to roost pretty soon. >> i hope it keeps roosting. >> a longer term, anybody who's
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looking at the longer term impact of remote work is finding out that in fact the young analysts are not gaining as much experience >> why shouldn't it come back, kef snn if they've got this crazy idea that they shouldn't come back, and you say okay, it's crazy, why shouldn't they come back? what's there to fear at this point? >> i'm in the real world. >> at these cars, what about the guys that support the work stamp that comes in here, what about all those maces tplaces that wat comradery. >> oh, joe, kumbaya. cry me a river i'm in the real world. i'm in the real world. >> i'm in the meta verse >> i'm not in the meta verse >> you're going to be at home and in the meta verse taking a trip to africa with goggles on it's ridiculous. >> at the end of the day, things are more vibrant than ever
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>> i would park an employee in new york city the highest taxes, anti-business everywhere >> that's a whole different issue. pick a city that you like. >> it's a value proposition. >> my bottom line is i'm working in the real world. you guys are kumbaya i'm competing with others, not only in the united states, all around the world they don't want to go nine to five in a cubicle. they're raising families, they bought a farm, they want to live in a small town. >> i don't know if you've seen the new offices in new york city they are not cubicles. the new office buildings are full of amenities. >> o'leary, you're in new york now. >> you want to talk about rents, look at miami right now. those are all the new york people you want moving down there because there's good policy there, and they're not required to work in cubicles they can work in their homes if
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they western are you not dealing in the real world. are you dreaming >> there's a delay on the stupid zoom calls i've been back since april 20th, 2020 i can't believe you, you're going to flip-flop just like you did on bitcoin you may know nothing, but you're never in doubt that's your whole selling point on that "shark tank" show. and now you're saying all this stuff definitively you'll be saying totally different stuff in three month. >> no i will not i deal in reality. there is a new economy, a digital 2.0. and nobody wants to sit in a cubicle. >> thank, kevin. thank you, mr. wonderful catherine, let's go to lunch in the city, and then go back to our offices and work good to see you. thanks >> thank you >> you're welcome. thanks for being with us you're here. >> i'm here. >> what happened to o'leary? he just stakes out a position to
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make it interesting, half the time >> it's always nice to hear both sides of the debate. coming up, jim cramer will join us live from the nyse but as we head to break we look at shares of bed bath and beyond down 31% premarket lows after the company announced plans for $500 million financing, plans to close stores and to keep bye-bye baby you're watching "squawk box" on cnbc
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all right, let's get down to the new york stock exchange. jim cramer joins us now. i've got to get into that bed bath and beyond. their business sucks so badly now, jim, that i goto build a position there that's the perfect stock >> yeah, it is, the memesters go out of their way to find real junk their man, ryan cohen made a fortune. he's got three guys on the board but apparently never spoke to them i think it was just good intuition and luck i think target's taking all the random merchandise and run it's bye-bye bath. >> do i get a lot of things wrong about -- >> no, you don't >> things are hard to predict, especially about the future. i really, maybe i miss the whole hybrid work thing. is it really, people are going to be working at home for the
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next ten years half of them are going to be working from home? does it really work? >> no, they go to the club or if they don't have enough money to go to the club they go to the park or they go to the bed bath that's in short hills, one of my favorite once. >> that is a good one. >> you know the racetrack where you get the raisinettes. >> i thi thought we were going k to a new normal. >> we do one day you're going to find yourself fired at j.p. morgan and working at bye-bye baby. >> all right >> you betcha. dimon to bye-bye baby. don't stop at memesters. >> you know why i know that's not a background with you? because i can see the
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programming behind you, and i just saw myself. that can't be on a loop. he's at the new york stock exchange you are there. >> it's a bitcoin. >> we'll see new a couple minutes. on "mad money," after "fast money". >> yes >> don't miss jim's conversation with the ceo of crowd strike stay tuned "squawk box" will be right back.
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bed, bath & beyond shares getting hit hard following the company's investor update. courtney reagan joins us with the details. it's gotten worse since the share offering now i think it's the state of the business again, courtney >> absolutely. there is so much here, joe, and you're right, we saw those shares sink about 19% before the full update when they revealed that $12million share proposed offering in an s.e.c. filing, but there are so many more details to go through. there's $500 million in new financing commitment, including a $1.13 billion line of revolving credit and $375 million first in last out facility this is led by jpmorgan and sixth street partners
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respectively that's welcome news. it had $800 million in cash and $1.4 billion in long-term debt allocations with a 24% drop in same-store sales at the end of the first quarter. they're closing 150 more stores, cutting 20% of corporate and supply chain jobs. this is part of $250 million of a cost-cutting plan this year. capex spend will now be about $250 million also previously they planned for about $400 million the board has determined it will not sell or divest it's 's buy,u baby the push is being largely reversed the retailer will bring back, quote, popular national brands, increasing the current penetration of those by about 20% while it abandons three of the nine new private line, cutting the breadth and depth of the ones that remain by about 20%.
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sue will continue as interim ceo until a permanent ceo has been identified there are new presidents of bed, bath & beyond and buy, buy baby. the chief operating officer and chief stores officer roles have been eliminated. those two gentlemen have departed the retailer is working on vendor relationships and will host a supplier event this fall. recent reports suggested some vendors had been reluctant to send their merchandise to bed, bath & beyond for fear of not getting paid, suggesting those reports might have been right. they need to work on those relationships. bed bath also giving second quarter updates financially saying comparable sales up 26%, free cash flow usage around $325 million. and yes, joe, those shares down about, what, 30% or so last i looked back to you. >> does this give them a lifeline to secure the inventory needed for the holiday season? i would imagine they have to get through that and they've got to make some sales during this key
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time >> absolutely, melissa i would thinkit gives at least a chance of getting the right merchandise in at the right time we know that the supply chain still has a number of snafus there, and if they're abandoning those private label lines they have to fill in with the national brands assuming that's available and if they can get what they want at the right prices in time for the holiday season i think the merchandise shift is actually quite large as far as the action to be taken and quite quickly. i think you can unravel things a little bit faster than you can rebuild them, so let's see what happens and what kind of merchandise they can get in time for the holiday, because last year they really struggled, really missed it things they advertised for holiday in catalogs that went to consumers were already unavailable in november, not because they sold out, because they never came in >> right court, thank you courtney reagan, stock down 28%. >> thanks. >> dom chu has this morning's other movers we're watching seagate >> yeah.
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>> open for trade at 9:00. >> that late-breaking news to your point is coming from seagate. this is the data storage cloud computing hardware maker, thinly traded before it was halted to news, which is a cut to the quarterly forecast and expects fiscal first quarter revenues of $2.1 billion plus or minus $100 million. seagate citing the macroeconomic backdrop and cautious buying behavior among key businesses and customers. they are halted right now. watch for those shares robi robinhood, 10,000 shares of volume due in part to a downgrade by barkleys. they reiterated a $10 price target and think the near-term outlook gets more grim amid regulatory concerns. and energy, a global economic slowdown, oil prices falling,
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oil stocks getting hit aph, schlumberger, marathon, devon, exxon down 2% to 3% back to you. >> joining us, a president and cio. seagate is telling us a continuation of what we've been hearing often, that is businesses are getting cautious in spending, that things are changing quickly considering seagate issue guidance just in mid-july and has to take down the guidance now. how do you factor this into your outlook for stocks, things have deteriorated and are deteriorating that quickly >> clearly we're in the midst of the economic slowdown, one that's likely to last through a short recessionary period. however, i do see two potential tailwinds for stocks that could support a strong close to the fourth quarter of this year. that first tailwind is the
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federal reserve turning olesz hawkish, certainly not dovish but less hawkish a lock-in rate of 75 basis points is all but in place for september, they don't meet in october, and i believe in november and december they'll only raise by 25 basis points at each immediating the second tailwind is midterm elections in november. historically in the last six years stocks have risen on average over 16% following each midterm election that outperformance is more pronounced in the one and three months thereafter. even though we're in the midst of an economic slowdown, that's being accompanied by high inflationary pressures and rising interest rates, we still think there could be a strong close for stocks this year >> does that happen with the cadence of 75 basis points, 25, 25, and that's the hawkishness does a positive finish or a decent finish to the year also happen if unemployment ticks higher in the backdrop because the consequences of the fed's action are these
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by-products of things like unemployment ticking higher. >> yes and ironically enough, that's what the fed is looking for. they're looking to put dents into consumer spending and also the unemployment rate. with all that said, we think that will allow the fed some cover to turn less hawkish as a result when and if they do turn less hawkish, that's supportive for higher stock prices. if you're worried as i am that the fed might be too aggressive this light of the slowing economy, we would suggest you look to traditional sectors such as health care, certain large-cap pharmaceutical companies that pay attractive dividends like a merck or a bristol-myers squibb or even cvs that will allow you to manage through this period of economic slowdown up to and through perceptions and pay income >> are you feeling like investors -- are you recommending to clients that you get much more defensive, or do you still go into the quote, unquote defensive big-cap tech
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stocks, which have seen its troubles since august highs? i mean, apple is down 10% from august highs >> yes we like three areas right now, and all three are part of this new american economy that's clearly emerging from the covid-19 pandemic. first and foremost, health care. small-cap biotechs or large-cap pharmaceuticals that i mentioned earlier. second area we still like is technology one company is aci, which is involved in facilitating realtime digital payments, which are so critical as it relates to e-commerce and findly, as it relates to e-commerce, we still like amazon in this particular environment amazon is clearly trying to spread its tentacles into the health care industry themselves with their acquisition of one medical and their interest in signified health those are three areas we like in this environment, and i think they're three areas that may provide growth potential in the next decade.
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>> kevin mahn, good to see you >> final check on the markets. we have to be out of here by 9:00 on live tv. up 88 points now, 102 on the nasdaq, s&p up 500 hold down the fort rocky mountain high. that's where i'm headed for a couple days. join us tomorrow "squawk on the street" is next good wednesday morning welcome to "squawk on the street." i'm carl quintanilla with jim cramer and david faber final day of august, premarket hanging onto the green despite some weak guidance from bed bath, seagate, hp, reportedly snap oil back below 90 on pace for the worst month of the year. our roadmap begins with futures flat this morning on this final trading day of august. after three days of losses, investors bracing for more fed tightening >> and that cratering meme trade, bed, bath & beyond
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