right now, they're going to up about 109 points higher but after a big down day yesterday, nasdaq looking like it would open about 13 points higher, s&p 500, up about 8 points, all of this sort of comes back around, but we really got to see what's happening at 4:00 today. make sure you join us tomorrow, a lot more to talk about sq "squawk on the street" begins right now. ♪ good thursday morning, welcome to "squawk on the street." i'm carl quintanilla with david faber here, cramer's at 1 market in san francisco stocks trying to recover from the fed hangover as other central banks around the world hike rates, bank of england, the swiss, indonesia, japan propping up the yen for the first time in a quarter century, two years still above, the curve still deeply inverted. the fed updating its plans to slow inflation but the fed chair

admits it's unclear if that will cause a recession. >> plus, home prices are notching what is the biggest drop in nine years and the market slowdown is weighing on new homeowners we're going to dig into the quarterly results of two home builders and the s.e.c. reportedly set to stop short for banning payment for order flow as part of the new rules while shares of robin hood are soaring this morning. >> let's begin with the markets and the fed after yesterday's selloff, jim i'm reading your morning note. special carnage edition. what does that mean? >> well, i put that out for investing club, and this is my morning memo, which i felt had to be a little more dire, if only because i think the fed -- i know david disagrees with me -- the fed's now targeting your savings they have no choice. they realize there's been tremendous transfer payments from the government to you powell very clearly said these have to run out. they have to run out before spending gets -- cools off he wants that.

and david, i thought that was really interesting, was that was powell just saying whip inflation now. powell was saying, look, i don't know, i'll just keep doing it and that's one of the reasons why i think the two year is not done going down in price and up in yield >> he made it very clear as he has previously, jim, that he wants to see slackening in the labor market no doubt about it, right and he did indicate -- he did indicate as well that he doesn't know it's probably worth listening to and then discussing. take a listen to chair powell from yesterday >> we don't know no one knows whether this process will lead to a recession, or if so, how significant that recession would be that's going to depend on how quickly wage and price inflation pressures come down, whether expectations remain anchored, and whether, you know, also, do we get more labor supply, which would help as well >> you and i don't disagree on that being a goal here, jim.

you know, what i was questioning is your idea that somehow people who are on an hourly wage who are no longer working are going to come back because they're seeing their savings depleted as a result of investments in the stock market that, i find a little harder to fully understand, but that said, you've been very focused on the slackening of the labor market being a chief dpoelgoal of the . >> i think the fed has to track their savings. the stock market, i want to be very careful, they have to attack your i.r.a., your 401(k), your self-employment plan and your savings because this is the only way that jay powell seems to be able to figure out how to get more people in the labor force. now, we're beginning to see that working, so in some ways, when i hear him say, we don't know where it goes, it concerns me, because he is winning. it's just that i think he doesn't want to win. i think he wants to run away i think he wants to beat down against inflation. he wants to take, you know, instead of having a small "w," he wants to really, really crush inflation, and i think that

really kind of made people very concerned, david, because that kind of win means maybe you were thrown out of a job, you, not you, literally, but people around the country >> although, we never know >> we never know one day, i could not be at this desk, and that will be it. >> no. no, you'll be there. please >> okay. >> oh. i will i'll try to be there for you, jim. >> well, jim, you point out your savings account, but also your home equity, and i know you noticed today, two things. red fin, luxury home purchases, down 28, biggest drop on record. and even in manhattan, after six months of record-high rents, manhattan rents beginning to plateau here >> i thought that was incredible i saw you tweeted that and carl, one of the biggest reasons why housing hasn't come down is because people basically are stuck and rents keep going up they're stuck with that changes. the mindset's going to be

different. now, we didn't hear that from either kb homes or we didn't hear it from lennard, meaning we didn't hear that home prices are actually falling year over year, but we did hear cancellations. we heard pausing in buying, and we heard a term i've not heard in ages, carl. people are canceling because of buyer's remorse. that must be music to jay powell's ears. >> yeah, this is an interesting split this morning because kb home orders, jim, down 50, order volume down 51 i mean, orders down 12 isn't nearly as bad, and you can see that reflected in the premarket. >> yeah, i mean, look, and yet kb home has bought stock i didn't think they were going to do that that signalled longer term bullishness. these actually were very opposite quarters. lennar seems to be making a ton of money and i'm not saying they're not concerned. they see what we see but both of them have increasing

gross margins, and david, if these companies are making more, year after year, again, that does not fit with what powell wants. >> no. i mean, to your point, fwrgross margins at l ennar were up 190 basis points year over year. >> there you are again, what powell is fighting is the idea that people can still raise prices, and that gross margin increase was involved with bryceprice going r and as long as he sees that, he's going to keep raising rates. >> yeah. well, when's it going to end, jim, is the key question, and where? i mean, we can just keep asking that question. the market continues to. what's the terminal rate when are we going to get there and how long are we going to stay >> historically, what happens is you get to equilibrium, and then you fall off a cliff, and the cliff, i think, is within the next three months. there will be -- there's buyer's remorse. people will just say, you know what i'm not buying a house

i can stay where i am, or i can move to another place where the rents are lower, as we heard from carl. you know, carl, i just think that jay powell's job right now is to watch. because as these quarters are reported, you're not getting strong quarters, but the next thing you're going to get from housing, cancellations, and too much inventory we are not there yet but historically, when housing rolls over, it rolls over in three months and that's why powell is paying attention. >> he's just going to watch? what is he, chauncey gardner he's just going to sit there and watch? a lot of people criticized the fact that they sat there and watched inflation. you kept saying it was transitory a lot of other people did. and it wasn't. they should have moved >> these are gigantic rate increases off the base and yet, the two-year shows you, he's going again and he's gone again. and what will happen, david, is you'll look like a real sucker if you buy a house that's what's about to occur you're buying a house in 2008 at this point and you're going to -- as soon

as it gets off the lot, you're buying and it is going down in value. that's what's happening. that's the win for powell. he wants your house to go down in price he wants your stock portfolio to go down. he wants you to feel inflation and be worried about your job. these are the things that happen, none of them pleasant. i didn't hear anything about powell saying, don't worry, we'll get through this he's not saying that, david. >> no, you know what jeffery gundlach was a guest on closing bell overtime yesterday with wapner. always like listening to the bond king. remember when he used to come on with us many years ago he seems to be echoing some of the things you're saying, jim. >> i think the economy is going to be showing signs of weakening, so i think the unemployment rate is going to go up and i think we're headed to a recession, and i think the fed should have paced this differently, but now they're so committed to this 2%, that i think the odds of a recession in

2023 are very high i mean, i would put them at 75%. >> 75% and/or if he's right, what do you want to own? what do you want to not own? >> well, i think if he's right, you want to own cash because he's obviously going to take down the earnings of a lot of companies you could find the general mills, those companies do well, because the raw costs come down but they're not going to lower the price of cereal to you the one place i disagree with gundlach is that it's not that the odds of a recession. it's just he doesn't care if we have a recession that was what he said yesterday. i don't care if we have to have one, we have to have one, and i think it will stop short just because we're going to see every cyclical company say the same thing, which is that, short-term, we're bad. longer term, we're good. and if short-term, we're bad, carl, why do i want to own that company stock, given the fact that analysts are going to cut numbers? >> right carl, to jim's point, you've

wanted general mills or hershey or kellogg or campbell's soup. all of those have been very strong performers. >> yeah. and we're going to, you know, we haven't yet mentioned -- actually didn't get to walmart yesterday, jim 40,000 seasonals is not as high as they normally go. target today saying they're going to do 100 k. and they're going to start target deal days as early as october 6th, so this holiday is looking promotional as we expect it >> brian cornell is speaking at the conference that he was just talking about, and let me tell you, i think that what's going to happen is he's going to say, we have no choice. we have to add people because we still think business is going to be good, but i also think if i'm target, i'm so glad i took the big charge against inventory, far bigger than walmart. and brian cornell has been saying that. they bit the bullet, and it was over they don't have the inventory hang that walmart has. so, you know, i think the people have to understand, target's

ahead of the game. that's why they can hire so many people >> that's interesting. the other big story regarding at least cost-cutting, david, is meta the report in the "journal" looking to cut as much as 10% of expenses pretty soon morgan stanley ups their '23 pss estimate, 3 to $8 billion of '23 opex savings >> jim, you were talking about this weeks ago every so often, i actually give you credit >> really? >> yeah. >> thank you, david. >> you're welcome. >> i thought you were on your phone. i didn't know you were listening. that's so cool >> yeah, i was listening out of my right ear, but you were talking about the -- this very subject, exactly in the same way, that they were culling -- none of them seem to like to say that we're actually cutting people, although wall street might react positively to more concrete language, but you were talking about this >> well, it's not like district 13

we're not talking about the -- some sort of -- it's not a game. it's not "the hunger games." but they're doing two things one is, there's a really good piece today, i was reading, and it's very, very long, about how the company is cutting their way to a gigantic number, which is something that nobody's thinking about at all i'm very excited about that, because i think that there is a lot of fat at meta, but the other thing, david, that people just are endlessly talking about, monetizing whatsapp and i think that's a very, very big deal it was a major theme at the conference i am at brett taylor talked about it people are very excited about what's going on at whatsapp, and i've got to tell you, david, they spun the thing off, the stock would be higher. >> well, there's a piece on the tape this morning, david, about chief metaverse officers getting multimillion dollar paydays. p&g, caa, crate and barrel,

lvmh, all with a chief metaverse officer. do you think we need one >> i do. i select you as our chief metaverse officer, carl. do we have the graphic it never -- always love to see jim as his -- i think it was somebody on twitter said, it looks like he's -- i won't even say what it looks like but jim, again, we've been talking about the metaverse here at this desk for quite some time there it is. >> oh, geez. >> there he is, strip club owner jim cramer that was somebody on twitter i can't get it out of my head, every time i see that. but jim, you -- listen the commercial opportunity in the metaverse, to be serious about it, and by the way, disney obviously, i talked to chapek about this week, he doesn't call it the metaverse, but he has a different name for it because not everybody wants to adopt meta's name for it is seen as significant and you're going to have to have a presence there, clearly as carl just said you're going to have people you're paying millions of dollars to set your strategy >> i think that when i speak to nvidia, jensen huang, brett

taylor, when i go through all the -- when i went through all yesterday, the different booths of salesforce, i know this is probably not what you guys want to hear, but we're going to have to have a special five-minute meta piece we're going to have to be in a meta mall, the three of us that's how powerful this is, and it may replace a lot of what we see and hear about us. but we are going to have to be in -- every show is going to have to be in there, at least for a few minutes. it's that powerful >> do we have to spend, like, 10 minutes trying to high five each other? there we go. thank you. can we move past this, you playing paddy cake here i go. >> it's where people are going to be selling things, because it's so easy to try clothes on and then click and buy the meta is going to be a place that we all go to, to buy or sign up for things it's much more powerful than any other thing i've seen in terms of buy sign-up, except for amazon and google.

>> that's pretty fascinating yeah >> it's great. >> people are writing in they're saying, look, i remember jim, when my company got their first social media director, people like, what? what's that for? doesn't look so silly now. >> no, we are definitely going to have a social media director, every company, our company, that just deals with meta because there are going to be people strolling through the mall every day and you're going to have to have presence in that mall, including people like us, because we have a subscription business, so you better believe we're going to be in the meta mall we have to have our own name for it david, why don't you mull over what the name should be. it's something you're very excited about. >> i will give it some real thought. i don't want to use meta we're going to come up with something else and i'm going to make you look a little different in our maliaeta mall >> i think i look fabulous, frankly. >> you do. you're running from the feds every day there, but you're looking good >> when we come back, why shares of robin hood are up sharply

this morning and where the s.e.c. fits into that picture. take a look at the premarket we'll get to crm, a little bit more there with jim, darden, and a bunch of calls today on square or block, novavax, in a moment 4. you know the most exciting part of la... is the hotel pool. you know the only thing better than this trip, is the next one. the delta skymiles® american express card. if you travel, you know. you know real chili never has beans. you know a cappuccino is for the morning

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robin hood's going to open up better than 8% this morning, according to bloomberg the s.e.c. is poised to let wall street keep payment for order flow transaction,jim that would be definitely good news for hood strategy >> oh, look, this is a stunning

victory. and stunning because a lot of people felt that the government would say, this has to end it's been going on, and it's got to be banned because these companies are making too much money off you. the government has totally reversed its position as far as i'm concerned. you know they do this. as long as they're transparent, they can do it david, you know that the average investor doesn't know if they see whether it's transparent they'll make a decision. i think the better way to say it was, hey, you know what? this isn't hurting you you're getting the same price as everybody else but the idea that all that matters is transparency is what they've done with spacs, bad ipos, it's what they've done with bad projections and now they're saying, listen, as long as you know that you could be gaffed, it's fine. is that really a strategy? >> i'm not sure it is, but i also would caution, to a certain extent, we may want to see what the s.e.c. says. it's a bloomberg story

they are sourcing people familiar with the matter, but they do go on in this story, and that's all i have to refer to, because i haven't done reporting on this, that the s.e.c., jim, may still enact other changes that make the practice less profitable that, again, according to those same people familiar with the matter so, we may want to see the fine print here >> you're absolutely right, but that must happen there must be a level that the government deems is gouging. carl, you can gouge on payment for order flow, you can make so much money if you want to, and i believe robin hood has made a ton of money robin hood would say, listen, our prices are just as good as everybody else i come back and say, you know what they better stay there, because if you go over a certain threshold, then we're going to come after you because right now, it seems very toothless, but david's right we haven't seen the whole statement. but this is a huge win for robin hood because this is how they make their money they're not making a lot of money on custody, so the stock goes higher, higher than this,

certainly. >> yeah. and then tangentially, we'll watch all things crypto today. a valuation of $32 billion which would be in line with the prior round. >> kate rooney sat down with sam bankman-fried, the jpm of crypto, as we like to refer to him. any company -- >> david -- >> yeah, well, any company that can keep its valuation at the same level in this market, they're doing something right. so, we'll have to wait and see but most -- most new offerings are going to bring down your valuation. given what's gone on over the last six months, jim >> how much, david, does jay powell want to see bitcoin below $10,000? wouldn't he just say, yes, we're winning? you know >> i don't know. i don't know is that really -- is he going to get excited if bitcoin trades below $10,000?

>> has he ever been excited about anything >> very even keel. we didn't even mention dimon yesterday at the house calling crypto, what, decentralized ponzi schemes? >> i love jaime. hurricane coming up to crypto. sam, pause, and then b bankman-fried. >> that's my new way of doing it sam bank man fried. >> cramer's mad dash will count down to the opening bell as we got a collective 562 basis points in aggregate hikes this week alone and we're not done yet. ba ia me ckn mont

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take a look at futures here, and yields there's the two-year cracked above 4 yesterday for the first time in over a decade. now almost 4.09. the twos tens have inverted up to 51 basis points earlier this morning. that's the widest since 2000 quick reminder here, cnbc's delivering alpha returns in person this wednesday. you can hear what the world's top investors have to say about navigating this market just use the qr code to register we are back in a moment.

sf >> announcer: the opening bell is brought to you by nuveen, a leader in income, alternatives, and responsible investing. all right, let's get to a mad dash before we get you to an opening bell darden is the name margins are not the game here, are they >> no. what we're seeing here, david, is precisely what the fed is worried about, about labor costs up 7.9%, food and beverage up 16%, year over year. there is also a sense that these costs are not done going higher,

but on the other side, they've got some things that are good. they don't need to discount. they still have same store sales that aren't that far off the stock is up 14% for the year, so it will come down but david, this is not a win for jay powell, because if they continue to say that food and beverage up 16%, that stays, then you know that jay powell even has to take aim at olive garden, my favorite italian. >> lower income consumers having some stress, aren't they, jim? >> but no discounts. no discounts no free pasta if you just walk by us. there is no -- when we see discounts to get people in, when we see labor costs down, when we see food costs down, year over year, then jaye powell, i'm going to treat him to a meal at olive garden i may take him to capital grill. >> guys, let's get the opening bell here and the cnbc realtime exchange with the big board.

it's a maker of lithium ion batteries, celebrating its recent listing via spac. online video platform also sharing its recent listing interesting, jim, there's a -- we mentioned lithium ion batteries. f ford's got a statement out a few moments ago, going to have their financial chief manage supply chain on a global basis, on an interim basis, and you got tesla recalling about a million because of some detection problems with the automatic reversal system. lot going on in cars and supply. >> right, well, i had kyle on this week and he is in charge of gm's self-driving, and he was talking about, look, we got to do all this stuff in-house, including building our chips we're going to be like tesla i put those words in his mouth, but basically, we're not going to worry about supply chain.

we're taking care of it ourselves. we can do the software we can do the hardware ford has to get on that game plan right now, it seems that almost every day there's bad news out of ford, and even though cars and trucks are selling well, if they're going to do the kinds of numbers they're talking about for when it comes to what i would regard as being all ev, which is where they ultimately want to go, well, they got to get control of that supply chain. if you're at the mercy of these different companies, they're not going to give you what you need. i think kyle -- remember, kyle vote is in charge of the things that we see everywhere in san francisco, which is self-drive, and gm wants to own the supply chain. jim farley wants to own ev, but is not talking about control of the supply chain and that's, to me, a very big problem. >> we didn't really get to salesforce, jim. you know, it's been such a tough tape all week long, but some of

these operating margin targets and revenue targets for 2025, 2026, are pretty interesting >> i was surprised that people would actually buy the stock on this the reason i say this is because salesforce has become one of the most hated stocks out there. it's in the dow. the projections they're making the $50 billion, the margin expansion, brett tailor made on our show, i thought that was st extraordinary and the people should look at this company and say, you know what maybe their products are more indispensable than we think. david, i think salesforce is doing incredibly well. but they have the dollar they're huge in japan. they're huge in europe so you're going to have people say, you know what they're going to be hurt by currency the issue, david, as far as i'm concerned is, when will we say, you know what? let's forget about currency. everyone's hurt by it. let's focus on core growth, ex-currency and its real good.

that's what salesforce is going to have. >> you had brett taylor on "mad money" and he was talking about scale and their commitment to obviously profitability and particularly cash flow and shareholder returns. take a listen. >> as we scale, we're committed to profitability and cash flow and shareholder return so we know it's two really significant things as you know, we have a $50 billion revenue target for fiscal year '26. with that, we committed to over 25% operating margin when we reached that milestone we announced a big $10 billion share repurchase at our board th authorized in the last earnings call and we said we're going to allocate 30% to 40% of our free cash flow to return to our shareholders going forward >> 30% to 40% going back to shareholders i want to get your take on that, jim, but i also wanted to find out, did he say anything at all about twitter? >> sure, well, first, this is a big pivot for salesforce they're always talking about growth now they're talking about

profitable growth. they're talking about a big target for revenue, but they're also saying, listen, shareholders, you're going to get capital. that is not been salesforce's way. they had just been buying company after buying company i pulled a switcheroo on mr. taylor what i said was, look, i can talk about twitter, because i didn't want him to say, i can't talk about twitter but he actually, i thought -- i think he made you feel that elon musk is very much -- elon musk might own that company he did not say that point-blank, but i think the perception is among everybody and i think in his team, among his team at salesforce, not his team at twitter, is that elon musk is about to be handed one of the great pieces of real estate, which is twitter, and then twitter may be actually doing well, and that is what bret said, that twitter's doing well. you know, david, that's not been

the narrative at all >> no, that's not the consensus. you said it yesterday, which seems to be more, if this deal were to break and this were to simply be trading on its fundamentals and/or lack of them, the stock might be as low as 15, which means that at $54.20, well, you could argue mr. musk would be overpaying significantly for this asset, which, of course, twitter argues is the only reason that he wants to get out and has nothing to do with his claim that the proportion of bots on the platform is far in excess of anything they've said. remember, it's not just that he can say that, and might even be true he's got to prove intent, fraud, and a material adverse effect on the merger agreement, and so to your point, jim, there is a belief amongst those who own the stock here, certainly, and many others who are following the case, that the judge or chancellor mccormick in this case may well order specific performance, which would mean to mr. musk, you need to buy this company on the terms that you agreed to, $54.20.

>> taylor said nothing about those things he did just say, look, the company's doing well would not comment on anything involving litigation but david, i've got to ask you if the company's doing well, does anybody care right now? >> the company -- i'm sorry. i'm not following the question >> i mean, basically, i mean, all these companies, they always -- you think that meta says it's doing poorly i mean, pinterest? no one ever comes out and says, listen, we're doing poorly right now. what a great opportunity for buyers in this case, the buyer is elon musk it was, i found reassuring, that bret said that twitter's doing fine, not reassuring that he would -- well, he's not allowed to comment on musk, but i think, david, the stock is down substantially. >> yeah. without a doubt. if this -- if musk were to be let out of the deal, or with a small payment or something along those lines, this stock collapses. there's no doubt about it. it collapses >> i think that's totally true

>> that said, the key question for mr. taylor will be, do they decide in some way to try to enter some sort of settlement talks with musk, given the risk, however small it may be, that they don't get specific performance in court and then therefore are willing to take 4 or 5 bucks off that purchase price. no sign yet. no sign yet they're willing to do that, jim >> none. >> we're still a ways out from the trial beginning. >> i think that the way that the market's treating these kinds of stocks, the people who are on -- in twitter right now at this price, they need -- they need to complete a deal with musk, or else they're going to lose a ton of money >> yeah. speaking of confident ceos, satya nadella said he's confident that company is going to gain approval for the activision deal.

saying, we feel very confident that we will come out -- that was an interview on a competitor -- come out on top, is basically what he means you know, again, there's another deal that there's certainly some questions about, jim although there, i hear a lot more positive things about the fundamentals of activision and blizzard, particularly as this year ends and next year moves along in terms of "call of duty," what they can do there, the next iteration and the fundamentals catching up with what was a lag for quite some time >> it could be very interesting to see if they don't do something spinoff, something e-gaming remember, microsoft wants the software, but there is a -- an incredible e-gaming component that's buried within that, and what you want to watch, i think, is any sign that there's -- they're already planning on doing that, because it would make you feel more confident the deal would close i think it's something that's going to make it so bobby is able to really achieve what he wants to achieve, which is a

universal e-gaming and playing it everywhere. competitive e-gaming >> all right, jim, defense names, again, in focus i think it's greg this morning in his d.c. note says the overriding discussion right now in the beltway is increased funding for the pentagon in light of threats from iran, north korea, clearly what's happening regarding russia and ukraine. >> the fact that we've depleted a lot of our arsenal is extraordinary. i mean, how did we let that happen the high rer-tech weapons, that we could have a shortage of some of these that's outrageous. that's why lockheed martin would go to 500. who's ever thought that the pentagon can't send a bunch of javelin missiles and still have a lot of javelin missiles? i was -- i found this extraordinary. so, yes, i know poland has to bulk up. i know every country that is adjacent, nato countries adjacent to russia has to bulk up there's not enough weapons out

there. that stock can go much higher than it is now it's probably the bluest of the blue chips, david, because everything they have is in demand worldwide >> already up. yeah there it is for two years as well looking a lot better than the broader market to a certain extent >> well, the semis -- >> another name that -- yeah what about semis >> they're the leadership group in a negative way. >> well, you got a couple things working against them today, citi, jim, on micron, as dram prices plunged, they see them cutting spending by 40% on m micron and then intel and amd, b of a cutting some numbers. >> this is incredible. i had a couple companies i had marvell on yesterday and skyworks their orders are extraordinary, no pause whatsoever. at the same time, when you're hearing what the analysts are saying, you have to say, what's going to happen to lam research,

which makes a lot of the computer equipment that is needed in order to continue to have micron grow we are in a major correction when it comes to inventory and don't forget, that extends to nvidia. they are in correction mode and inventory depletion mode and that's why if you look at the stock of nvidia, it can't find a bottom >> well, neither can intel neither can intel, jim, right? right at a 52-week low at $28.25 that's it. that's the low >> wow >> only $116 billion market value now. >> wow these are the worst stocks in the market they're the worst stocks in the market >> when do you want to consider owning them? i mean, you know, some people look at that and go, all right, thing's been almost cut in half and obviously go back even longer, take a look at a ten-year on intel. you have not been positive on it for quite some time. >> no. no >> that's interesting. that ten-year helps. >> i can't come up with a reason >> that is not a pretty --

>> the spinoff, look, i had liam griffin on from skyworks, he's got unbelievable orders and the stock's at eight times earnings with a semiconductor company with apple as a customer and doing amazing, so why should i pay 12 times earnings for intel if i can buy sky works it makes no sense to me. >> is this is a lot. >> yeah. i mean, i'm looking at our parent company, again, down to $32.44 is comcast. trades at less than six times ebitda >> well, we are -- >> some of these numbers, carl, just in terms of losses on the year to date are extraordinary >> yeah. >> disney down 33% for the year. warner brothers discovery, a new 52-week low, down 50% for the year netflix still down 61% for the year and on and on from there >> i mean, it's a reminder, jim, we are in the back half of september, and we've been

talking about weak seasonality for a while. actually, stieffel this morning takes a look at october, which is sometimes called a bear killer they say 4,400 for q4 and q1 on the assumption that the fed doesn't get incrementally hawkish from here and as a result you get tips reversing course >> that's exactly where i am i think the fed basically jawboned you to a much higher fed rate maybe they don't have to do that we've got to get through this month. we must get through september. i'm not saying it's the promised land it's not milk and honey on the other side, but this month is horrendous we've got to get through it. this kind of action, this bear market action, is just driving people away. and there are stocks, as david said, when you look at a -- warner brothers discovery, that's a real company. gigantic company and the thing is just in free

fall i've got -- i can give you a hundred stocks in free fall. if you want to, during the break. it's incredible out there. >> we started talking about -- yeah, meta is down again had looked up ever so briefly. free fall? down 58% 58% for the year >> but general mills is up >> yes >> cheerios. >> yep general mills is up, kel logg i up >> absolute worst -- this has no followers. these are companies that are raised prices to you and have raw costs coming down. there's about five of them left. at one time, there would have been 20 or 30. they can't merge because antitrust won't let them we don't have anybody -- if that's what we're going to cheer for, go to the supermarket >> we've been talking about this, a lot of these consumer packaged goods and grocers, like, they keep talking about inflation, because they kind of want to keep their pricing where

it is for as long as they possibly can >> absolutely. speaking of pricing, guys, just to end on one, jim, that we haven't talked about that often, united healthcare is up 24% for the year and now it is one of the largest market cap companies, bigger than nvidia again. $480 billion, good old unh >> they got their way. >> they got the change healthcare deal done >> remember, now people are talking about healthcare costs going up it's just -- powell's playing whack-a-mole >> there's a lot of plates -- a lot of plates spinning, no doubt about that that said, crm, chevron, merck, helping to keep the dow's losses limited to 136 let's get to bob pisani. >> chevron, one of the few gainers of the year, so once again, high of the day, right at the open, dow is positive for about 30 seconds, and then went negative, we're sitting at the lows for the day it's hard to keep moving three-year is a -- two-year is at 410 right now the ten-year at 3.65, i see,

hard to get the stocks up at those kind of levels take a look at the sectors oil is stable, around $85 the last few days, so that's up. a little bit of hiding in consumer staples and healthcare, not much tech's down as you can see in the transports that's another new low for the transports jim was talking about free fall. we're starting to hit some significant new 52-week lows in the s&p 500 in some big cap energy -- excuse me, big cap tech names, new lows here, alphabet, meta, microsoft, micron, intel's been at new lows for many days, essentially, but this is a new class here to join the new low list the dow, visa, verizon, walgreens, elsewhere, mastercard's at a new 52-week low, kind of surprising, you might think. so, the question is, how do you price stocks at this level that's the problem we really have a problem because the fed's higher for longer creates very wide ranges of outcomes in the earnings of potential multiple and simply put, a wider outcome means

higher volatility, which is exactly what we're getting so what's the right earnings for 2023, for example? the consensus is up 8% right now. put that back for a minute the important thing is, what are we doing here? is it going to be up 8% flat is the right multiple 13, which is recessionary or 15 or 17? we don't know. and depending on what your position is, you can get a very wide range in estimates for the s&p 500. so, a good one is, look at evercore today, he had pretty much consensus for 2022 earnings at $221 the consensus is $225. but he had a high estimate for 2023 he's now flat. same number, zero growth in 2023 the consensus is $243. change these estimates here, 15, 16, 17 times, or 200 or 221, you

get wide rapnges of outcome. what's the right earnings number and what's the right multiple? nobody knows that's the problem, because the fed is creating so much uncertainty out there. the one thing that's for sure is everybody is bearish did you see these aaii numbers look at this 61% bearish. i think there's five times in history it's been 61% bearish, so historically, it's about 32% are bearish. bullish, 17% historically, it's 38% so, remember, these are sentiment indicators, so sen sentiment indicators are contrary indicators so extraordinary high levels of bearishness is good signs for short-term market bottoms. this is why they're used sentiment indicators are only useful at extreme levels this, 61%, that's pretty extreme level, carl, and obviously, there's so much pessimism out there that nobody particularly thinks this is a bottom but certainly a lot of people out

there at the american association of individual investors are not optimistic for the next several months. carl, back to you. >> bob, thank you. bob pisani quick reminder as we go to break, you can always get in on the cnbc investing club with cramer you can sign up, find out more at cnbc.com/jointheclub or, of course, we provide the qr code on your screen it takes you right there as we go to break, it's going to be hard to take your eyes off yields today two-year, 4.11% and the t ten-year, 3.65%. dow is down 125. don't go away. (vo) with their verizon private 5g network, associated british ports can now precisely orchestrate nearly 600,000 vehicles passing through their uk port every year. don't just connect your business.

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let's get to jim and stock trading. >> earlier today, they asked, what can you buy i'm continuing to say you can buy health care, drugs, food, anything in the supermarket. that brings me to eli lilly. people are talking about this may be the biggest drug of all time, a drug that's a weight loss drug with no side effects and that is propelling a lot of the analysts to say, this is the one toown. my trust owns it i believe this is the stock you can buy. it's down, you have to find something in tech to buy, as tough as it is. >> you're right about lilly, ubs

buys, 363. pretty interesting tonight you have slack and splunk >> slack is owns by salesforce but it's such an important driver of their business, i have to speak to stewart. and gary steele is turning around splunk. people are saying, i don't care what the fed does, we have to find out it is a free-falling market. when it's nine to one, find something to buy that's what i'm going to do as soon as i leave the desk. >> jim, we have a lot of work to do today before the week is out. vix back above 28. the sentiment, as you said, lousy, as we expected, going into the back half of september. we'll see you tonight on "mad money," 6:00 p.m. eastern time dow is down 131. s&p about 125 points now above the june low we're back in a moment

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good thursday morning. welcome to another hour of "squawk on the street" look at post 9 more central banks hiking rates. japan intervening on the yen deep curve inversions. the dow basically less than 200 points away from the june low. now lei crossing the dap let's get to rick. >> we have three scoops, instead, down 0.3% this means we have six months in a row on negative reads of leading economic indicators and six out of the last eight considering this is august have been negative. quite an historic run. it seems as though leading economic indicators are leading and the equity markets certainly seem to be following interest rates are guns hot across the curve, whether you're looking at twos or tens getting

closer to 7.3% one bit of good news is we are seeing a bit of reversing on some of the inversions in the yield curve and the long maturities, we need to pay very close attention considering it was just this week that ten-year note yields popped above their mid-june highs just a whisker below 3.5% morgan, welcome back back to you. >> why, thank you, rick santelli we will jump on that yield inversion question in a moment we are 30 minutes into the trading session. we're going to start with darden restaurants, the olive garden parent reporting mixed quarterly results. same store sales growth coming in below street forecast and that is sending darden down about 4% right now novavax shares are getting downgraded to neutral. jpmorgan saying guidance cut may not have gone far enough stock down 10%

now down more than 80% year-to-date. and a bright spot in the market robinhood moving higher on reports that the s.e.c. will let wall street continue payment for order flow transactions. stock is up about 2.5% right now. still down will 42% since the start of this year david? >> central banks are on the move around the world this a day after the fed delivered that third historic 75-basis point rate hike steve liesman joins us on a day as well where we're seeing the two-year yield above 4.6%. quite some moves there >> did you say 4.6, david? >> 4.06, 4.06. >> thank you you freaked me out for a minute. >> didn't mean to alarm you, steve. >> i was like, did i miss that woo! 4.16, just to be clear, which is high and on the way up but look, there's increasingly no place to hide anywhere in the world from rising interest rates as global central banks react to

their own inflation problems and to the fed's outside rate hikes. the one main exception, you can hide in istanbul i'll get back to that. uk raising rates by 50 three of the nine voters wanted to go 75 norway up by 50. indonesia up by 50 switzerland up by 75 japan leaving rates unchanged, but doing foreign currency intervention, as carl mentioned earlier, supporting the yen a bit. turkey, marching to its own tune cutting rates by 100 basis points to 12% in the face of what looks like 80% year over year inflation, all of this coming after the fed's third 75-basis point increase. markets had already ratcheted up th 4.6% for next year and that top market expectations caught up, now the market is on board with

that 4.6% peak rate. fed chair powell said he thinks it's likely the fed actually hits that forecast. >> we've written down what we think is a plausible path for the federal funds rate the path we actually execute will be enough it will be enough to restore price stability. this is something that, as you can see, they've moved up. we're going to continue to watch incoming data and the evolving outlook and ask ourselves whether our policy is in the right place as we go >> powell said there may come a time when the fed stops and waits to see what impacts the hikes are having on the economy, but he said now is not the time. back to you. >> the big debate has been, of course, in some ways the markets, whether they believe powell, i guess, is one way to say it, as he keeps trying to convince them he's going to do whatever it takes to bring inflation down is the message starting to get through, in your opinion, steve? >> it is from that thing we

talked about at the beginning, the two-year note. it's a real rate it's in the economy. it's 4.16% it is up dramatically in just the past several weeks and, look, david, if i hit you over the head once, okay twice, okay. this is the third time the market's been hit over the head with a 75-basis point rate increase if you don't think the fed is serious about what it's doing here, i guess you deserve whatever is coming to you. maybe another hit in the head. >> touche i want to go back to the mere synchronization around the world. the fact you are seeing other policy experts tighten and tighten aggressively in their country, but the exception, of course, being japan. talk me through that because it's causing some major ripples in the currency market as well right now. it seems to be in its own, it seems, unprecedented experiment.

>> everything is moving everywhere in the world. you have emerging market issues with debt, emerging market currency issues. some countries, of course, better than others in japan the feeling of the central bank in japan is that all of the inflation influences are external they're not internal they come from higher energy prices, things that japan has imported and they do not feel as if they are subject to the same inflation rules that are taking place everywhere else around the world. we will see, but i think the current -- the people making the bets on the currency don't agree with that. and they have been essentially selling the yen as a result. japan came in to intervene i will say this one thing, interventions are not successful very often and they're often not successful when they're unilateral. it remains to be seen if japan, which, by the way, is very close to the ecb and the fed they talk all the time if they get any help from the fed, i get no indication they will, but it may be the

intervention flounders if it's just japan on its own. >> thank you very much for that. our next guests both say yesterday's fed decision solidified fire their expectatis for a recession in 2023. joining us mellon chief economist vincent reinhart you do think the notion of a recession got endorsed. >> we think the fed endorsed it. there's no question about it when you move your unemployment projections that high when you drop to 3.5%, you have never escaped a recession, you know, fast upon. to be clear, evercore isi still thinks there's a ray of window and believes we can escape recession but that is closing quickly. >> with unemployment going to what, do you think >> the fed's projection is 4.4 clearly, when you think about their rhetoric, all of the direction of where the error

could be, it could be that it's higher than that. >> this morning, vincent, david rubenstein at carlisle said maybe that number is more like 6 when you get back to target. >> if they really do want to get inflation down to 2%, it may very well be more like 6%. look, we got three tells of recession. the fed's never raised the policy rate this much without there being a recession. the unemployment rate, as in their forecast, has never gone up more than a half point without there being a recession. and chair powell said almost with a certainty that he thought there would be a housing correction tell me how many housing corrections there have been without recession. >> when i hear you say that, vincent, it sounds like you're saying this is the closest we've ever seen a fed chair get to actually forecasting a recession, even though he didn't do it explicitly >> well, don't hold your breath

to wait for an official to say there's going to be a recession. you'll never hear the imf or the world bank say there's a financial crisis you don't want to be the official that was the one that generates the headlines that creates the event. they're always going to be lagging that, and that's completely understandable. he came pretty darn close. they have a forecast of which growth has been marked down a lot, the unemployment rate goes up a lot he was issuing a stern warning i think to steve's point earlier, the stern warning about the economy is the 2x4 hitting investors across the head. he did it at jackson hole. they did it as a group there's got to be some pain because if you don't think the fed could absorb the pain, you think they'll reverse policy too quickly and financial conditions won't tighten enough they need tighter financial conditions >> julian, it sounds like you're holding out a little bit of hope, but if a recession is increasingly likely here, i

mean, just looking historically at recessions, earnings always come down in recessions. do valuations of equities need to come down from here >> they tend to both go down in a recession. but what i will say is -- again, you talked about this on an earlier segment. the range of estimates is enormous 190 on the low end 255 on the high end. 221.50 unchanged year-on-year, we're smack in the middle. that's a sobering thought. but i will say this, the window is still open because we think the fed may not sufficiently appreciate the fact that inflation is starting to moderate we think there's a good chance you'll have a lot more data confirming inflation moderating between now and november 2nd. >> what about fixed income right now, then? i mean, in terms of what people should be thinking about i referenced incorrectly initially.

4.13 on the two-year is it a time to take another look there >> again, i try to tell this to my college age sons that there may be interest on a checking account at some point in their adult lives. but when you think about longer term bonds, if the fed tells you it's confident it's going to tame inflation, if inflation break-evens are telling you that may already be occurring and there's a potential recession, we think longer data fixed income starts to offer value here. >> vincent, do you have any thoughts in terms of where things may actually be worth buying >> well, the problem is you have to get from here to there. and what's in between the jay powell nirvana of price stability and sustained economic growth at low, moderate, long-term interest rates is the fed hiking for a while corporate earnings suffering so, unfortunately, they're all doing that because inflation's

too high what's that tell you cash looks good because the fed's raising the short rates. inflation protection looks good because the fed's raising short rates because of high inflation. and ultimately longer term capital market instruments will look good, but not now >> there was some discussion this morning of, like, say the norway central bank, one of the first to get hawkish a year ago. maybe turning a little more dovish at the margin is that something we can look to because they were farther ahead of us or does the fed have to raise rates essentially for the world right now? >> the fed appears to be on its own extremely resolute course. but what we would say is, if you look at past cycles, they do tend to turn when other smaller central banks start to move. they are certainly noticing that again, they need to see the evidence that inflation is moderating as we said, we think they'll

start to see it but, perhaps, not smart enough to not do it at 75. >> great to see you both. as we go to break, here's our road map for the rest of the hour, including home prices. biggest drop in about nine years as powell does say the housing market will probably go through what he called a correction. plus, decentralized ponzi schemes. jamie dimon calling out cryptocurrencies in yesterday's house hearing. we'll discuss that. a big interview, the ceo and founder of rocket lab on how the space company is helping fuel apple's iphone network. plus, big investor day in new york city. we have a big show ahead

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welcome back to "squawk on the street." take a look at spyder communications services etf, losses nearly tripling that of the s&p this year. meta makes it more than 20% of the xlc and a big reason it's down so much meta have lost 16% as they struggle with slowdown in ad spending the journal is reporting meta will look to reduce costs by 10% in the form of layoffs it's in line with comments mark zuckerberg made in july that declines will continue over

time let's bring in raymond james aaron kessler. thanks for being with us today want to get your thoughts on this report where meta is concerned. also should note it looks like there should be similar belt tightening happening at alphabet. >> yes not a big surprise we've seen this in past recessions if you look at snap, they recently announced they're cutting 20% of their staff i think investors have been -- you've seen facebook or meta and google alphabet hiring pretty aggressively over the last few years. we do think they have cause in a slowing environment. for meta, investors have been more critical and investors expect them to lose $10 million plus we think investors would focus on that. core potential cost cuts, in the near term. >> so, just looking at your coverage universe, whether it's

meta, alphabet or some other tech and software names, consumer-facing names you do cover, it seems like a one-two punch, the macro environment you have the higher interest rates that will eventually slow the economy, likely ding corporate earnings something we were talking about a few minutes ago. and then the second punch they're also going to constrain prices investors are willing to pay for company profits, which is what we're seeing in the market already are there opportunities for investors to buy in here or do they need to continue to stay clear? >> yeah, we think we're getting to the point here, particularly in some of the larger cap names. if you look at alphabet and and meta, trading close to mid-teens multiple excluding cash per share. if you look at earnings yield you're 5% plus earnings yield on those names. we think you're getting to the point here where we have been constructive and with valuations coming in and with potential cost cuts, potentially driving gap earnings higher, even with

potentially risk to revenue estimates here we still like those names. on amazon, i think you're getting back to the point if you do some of the parts analysis, you're not paying much e-commerce business. we value around $90 a share. we value their advertising business close to $30 a share. e-commerce amazon still losing money but we're optimistic in the future they can drive stronger profits on the e-commerce side. >> looking back at economic slowdowns in the past, when you see some big tech companies that have been such aggressive spenders begin to tighten their belts a little bit, is it a canary in the coal mine? >> near term that is we've already seen signs of slowing. we already expected a slowing. we've had tough comps throughout 2022 given tougher pandemic comps, so we already expected slower growth. specific to meta, they are impacted by the apple privacy issues we expect stronger growth for

meta going into 2023 overall, we're on a slowing economic environment and slowing ad growth. the difference between this time and maybe 2008, 2009 is add ver tidzing for online is about two-thirds overall advertising you were closer to 20% advertising. we still think you can grow 9%, 10% per year not likely 15%, 20%. what we've seen coming out of recessions, these companies are leaner, so when we see revenue recovery, profitability, much stronger profit growth coming out of recessions. >> to follow through on that, how does it set us up for earnings in the next couple of weeks? >> next couple of weeks we're looking for relatively in-line earnings for the next couple -- when we go into earnings here. we think we've largely modeled a slower environment for earnings here in q3 i would say alphabet doesn't give guidance. we think meta comes in towards the lower end. snap actually reportedly saw

some improvement in august in their data they were originally guiding to flat for the quarter then they said quarter data was tracking up 8% in our view, july was the worst month of the quarter august likely showed improvement. more people went traveling in the summer and now as we get back into the holiday season, e-commerce should be a driver going into late q3 and q4. >> aaron kessler, thank you for joining us. >> thank you as we go to break this morning, kb home and lennar, as this housing slowdown did weigh on new orders, especially at kbh. cnbc alpha investing summit returns on wednesday you can meet with economic leaders, policymakers and the world's best investors to register, go to cnbcevents.com/deliveringalpha

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low carbon future. go blue skies go. go boldly. emerson. i'm a major skeptic on crypto tokens, which you call currency like bitcoin. they are decentralized ponzi schemes and the notion it's good for anybody is unbelievable. so we sit here in this room and talk about a lot of things but $2 billion has been lost every year $30 billion in ransomware aml, sex trafficking, stealing, it's dangerous >> jamie dimon on the hill yesterday calling out crypto in

that house hearing i made the point on twitter, david, that rat poison was already taken by amonmunger so e had to come up with something different. >> he has put a name on crypto, consistently saying, i don't get it, i don't understand it, and i don't think it's a good thing. >> even as we should note, the bank has rolled out products and offerings and services, maybe not as meaningfully as some of their competitors in recent years, but we have seen some moves along those lines, at least until recently with some of the implosions we've seen, he had a lot to say about stablecoin, for example. there are a few names left standing and will potentially be stronger when this market has settled and is potentially more regulated. ftx may be one of them according to our own reporting at cnbc, may raise $1 billion for a $32 billion valuation. >> not a down round, which is

important. that might be the case, as you see from kate rooney's reporting, in line, surprising what's happened to the overall market. >> i think it's worth noting that dimon, all the points he's making are very valid and very real, very big issues, very big risks. the reason you even had folks in the cryptocurrency industry saying, regulation is something we would actually welcome. but at least until recently, until banks themselves started adopting some of these technologies, they were disruptive to the banks and did represent an opportunity for them to make less money. >> it still does represent that threat. >> exactly. >> might come in handy on a clearing basis it's going to be hard to see how much -- maybe crypto is kind of a frenemy. it will make settlements quicker. >> but are the fees as high? i don't know well, after the break, we've got a lot more on that rate hike

decision and market action former fed governor daniel cuerllo will join us. we are celebrating our hispanic teammates and contributors >> when i first came to this country, i only spoke spanish. once i learned english, i only wanted to speak english. and my mom really, really made sure that we only spoke spanish at home to make sure that we held onto our heritage, that we held onto our root i'm so proud of that i'm really proud that, you know, in a crowd of people, i know that i speak two languages, that if someone needs help, i can help them. i can translate for them and i think throughout life, it's opened a lot of doors for me, especially in my career given i'm bilingual. i feel it gives me double the power.

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i'm seema mody here's your cnbc update at this hour hurricane fiona is intensifying to a category 4 storm after battering the turks and caicos after puerto rico grapples with the destruction left behind. many people facing sweeping power outages and water supply issues across the island fiona is expected to pass west of bermuda tonight with maximum wind speeds reaching 130 miles an hour. alex jones set to make his first courtroom appearance and begin testifying in his trial over the claims that the sandy hook shootings were fake jones and his lawyers are trying to limit the damages he must pay to the families who lost loved ones in the massacre it follows a similar case in austin, texas, last month where a jury awarded two sandy hook families $2 million in damages from jones. boston celtic coach is facing a significant suspension for violating the team's code of conduct policy after having a, quote, improper, intimate and

consensual relationship with a female staff member. internal team discussions reportedly include the possibility of keeping him out for the entire upcoming season with a final decision coming as soon as today. morgan, back to you. >> seema mody, thank you. we're about an hour into the trading day. and the s&p right now is trading lower. the level there is 3767. in terms of the gainers on the s&p, it is pharma names like eli lilly and merck. lennar on the heels of earnings yesterday and defense shipbuilding, huntington ingalls. in terms of what is leading the loss loss on the s&p, it's largely consumer-facing names. caesars, darden, etsy and penn entertainment. the fed chair said yesterday the housing market is in for a correction with prices already

coming down. he called that a good thing. what will it really mean, though, for consumers still in the market to buy a home our diana olick has more on that today. hi. >> hi, carl. first and foremost, we need to understand that we already had a housing shortage before the pandemic as the largest generation was aging into home buying years and home building was still weak after the great recession. then came the pandemic and government-induced record low mortgage rates both the pandemic and those rates really drove fast home buying demand and home prices shot up more than 40% in just two years. suddenly now, rates more than double in a matter of months and home builders and sellers pull back, leaving us with still very low supply so, what does that mean for affordability? the monthly payment, which really decides if you can buy a home take a look historically at the share of your income used for a monthly payment. it tracked right along with interest rates historically

until the subprime mortgage boom and then it split because people didn't get 30-year fixed mortgage they got those wonderful no down payment teaser rate loans so they basically paid nothing for a house. prices went way up but a massive crash ensued then the lives moved closer again, but not quite together and the fed rates low. now a massive split again because of sky high prices a spike in rates and people using real 30-year fixed mortgages. the median home price as a percentage of income is up 46% since the start of the pandemic. what that says is home prices, which are already softening pretty quickly, will likely soften further whether that's good or bad news, it depends on where you sit in the market one thing, though, is this correction will be nothing like the last one because borrowers are in a much healthier position, that is homeowners so, we have to wait and see just how those prices go. david? >> diana, thank you. we're going to stay with the fed and, of course, rising

rates. joining us is former federal reserve governor daniel turillo, now a law professor at harvard university good to have you after jackson hole and yesterday, i'm just sort of curious to get your thoughts on how mr. powell is thinking about things and what your take is >> i think, david, that the thing to focus on in yesterday's press conference was what jay powell said after he got the first question he had made his opening statements, he took the first question and then he said, i'm going to answer your question in a second, but let me just say, my message hasn't changed since jackson hole i think that was the entire point of yesterday's news conference he did not give a lot of information about what might change the fed's view. he didn't give a lot of signed posts to say maybe this is when we'll moderate he just wanted to make that point that we're going to do

what it takes to bring inflation down in 2021 at jackson hole, he was trying to convince markets that his read of the economy, which is to say that inflation was transitory, was the correct one. at jackson hole this year and in yesterday's press conference, he wasn't trying to convince markets about his view of the economy. he was trying to convince markets about the fed's resoluteness in the face of inflation. >> well, with that move and the rates we've seen, for example, in the treasury market, even this morning, is the market finally starting to get that >> it certainly appears that that's the case. of course, the fed would like to see financial conditions tightening rather than loosening. let me, though, reiterate something, which i had your program on earlier reiterate something steve liesman and vince reinhart said in different ways. which is the market is going to be looking to see what the fed does if, for example, unemployment does begin to move

up significantly you know, there may still be that issue of will the fed stand firm once the decisions are not so easy? let's face it, yesterday's decision was not a hard one even for someone who's dovishly inclined because unemployment is still where it is. job openings are still where they are that could change over the course of the next few months. >> that's interesting. so, i mean, just hypothetically, we run into a situation where, i don't know, there's an orange county, it doesn't have to be necessarily about unemployment you think they would still argue, look, we're busy frying bigger fish? >> well, i think, you know, the kind of shock or the kind of news -- economic shock or news that it would take to push them off this course right now, i think would have to be a pretty significant one. the reason i think that is back to the credibility point they don't -- the chair and others on the committee don't

want any uncertainty in markets that they may falter or rethink things until they can make a convincing case that inflation is under control and let me say, i think the situation might be different if a year, 15 months ago, the fed had been giving a different message. they had already been moving into a tightening mode but precisely because there was a widespread view that the fed had misread the markets, they were behind the curve, i think now they probably feel a good bit of internally generated pressure to show their anti-inflation bona fides. that leads some people to worry that they may, in a sense, overshoot precisely because they're so intent on showing that, yes, we really mean this. >> there's another piece to the broader economic policy that i don't think is getting talked

about enough, the fiscal piece they aren't passing along multibillion dollar bailout packages but they're still passing bills that are very -- that have a lot of elevated spending attached to them. so, how is that factoring into the fed's resolve right now? and the moves that the fed is trying to make to bring inflation down as we look into 2023 >> sure. well, i think, as you say quite rightly, the legislation that's passed relatively recently doesn't have anywhere near the kind of near-term fiscal stimulus that the bills passed in 2020 and 2021 did and so while i'm sure that -- well, obviously, the fed has input that fiscal stimulus into the model that they use, i would suspect that it doesn't make an enormous amount of difference. i doubt that they see this as having pushed up growth and

inflation too very much. just look at the way they marked down the gdp -- the sep marked down the gdp yesterday they don't seem to be expecting a lot of stimulus effect. >> what about the dot plots themselves, and the fed funds rate, how much should we be reading into that? >> that's a good question. yesterday you could tell, jay powell used the dot plots as part of this message you know, they had graphics illustrating the change in the dot plots. and that's, i think, the way it's been used for fed chairs since they were instituted when they reinforce the message he or she wants to make, they get trotted out. when they create a dissonance, they are pushed to the background there's a few things to keep in mind about them. one, they're not a collective forecast or judgment by the fmoc it's an agra gags of individual

views. there's no discussion about them nonvoters have just as much weight in the sep as voters. you want to know, whose dots are this year's and next years third, the numbers are not matched up for us. we see the aggregate unemployment number, the inflation number, the central tendencies of those, but we don't see how individual members matched up their projections sometimes the message can get a bit obscure. i will say i think this set, and this is why powell trot it out, this sep was pretty cohesive look at the median and central tendencies, look at some of the outliers and you'll see there's probably more give in which direction the fmoc might go than

just looking at the bottom line numbers would suggest. so, i think my view on this in general is, usually applies some discount factor when you're looking at the sep regard it more as a matter of signaling than any sort of firm or quantitatively based projection >> okay. that's helpful daniel, always appreciate it thank you. >> thank you still to come, we'll talk with one of the world's leading space companies, rocket lab, on how they're helping apple's iphone network plus, big investor day here in new york city. a quick note, cnbc is delivering alpha investors summit returns next wednesday. meet with economic leaders, policymakers and the world's best iners have. to register, go to cnbc.com or point your phone at the qr code on the screen right there and it will take you right there. we'll be right back.

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welcome back to "squawk on the street." a tough year for publicly traded space stocks, large tech from t-mobile to apple are expanding into space space our next guest's company is an industry leader and we're joined on set by rocket lab founder and ceo peter beck it's so great to have you here. >> thank you for having me. >> you had yourinvestor day yesterday. you offered quite a number of updates on everything that is afoot at rocket lab. i do want to actually start with the space system's piece of the puzzle because even though rocket lab is not directly linked to the partnership between apple and global star for space-based connectivity, you are a key supplier how does that, i guess, move the needle in terms of the conversation around space internet service >> i think most people know the rocket company, we go to pains to try to distinguish ourselves not just from being a rocket

company, but the space business -- space side of the business is the larger side of the business it's exciting to be able to work on projects, like the global star project we're providing key systems to, you know, lab systems like that. >> so, is space systems growing more quickly is it on a more profitable path than the rocket side >> it's -- they're both growing about the same amount. i guess, you know, the -- certainly space systems is a more profitable business but launch is the key enabler. launch is the keys to space. it's very rare to have a company that has the keys to space but also can build all the infrastructure that goes into space. we're trying to build an end-to-end space company here. >> let's talk about the launch piece of the puzzle. you offered investors yesterday an update on your neutron rocket electron has been on a tear. 150 satellites deployed to orbit. another launch coming up next

weekend, i believe, as well. >> yep, yep. >> are you -- do you expect to see more launches? when deutsche bank comes out with a number like that, 2030, does that sound right to you >> yeah, it does if you look at what's happening within the industry, you have a large number of very large constellations coming to market. when you mentioned before, you've got amazon piper, you've got teleset. there is going to be a launch crunch in 2026 to 2028 time frame. that's why we're bringing larger launch vehicle, new tutron, to t that. >> reusability, where are we at in terms of that process >> with electron, we're almost there. we caught it midair with a helicopter and getting ready to bring that home. of course, neutron is a reusable rocket from day one. we're strong believers and one of the only companies in the world that actually pulled it off.

>> it's a good time to be an aerospace engineer. >> it's a great time. >> can you talk about labor, was there a waiting pool of engineers waiting to delve into space or are you stealing from other areas of electrical and mechanical engineering >> there's no great resource just waiting for it. we create a lot of them, in fact, so we run scholarships, apprenticeship courses, ph.d. so there's a real aerospace shortage talent, but instead of burying our head in the sand, we go back to primary schools and get kids interested in s.t.e.a.m. because it's going to be a massive problem and into the future if we don't do something. >> i have to get your thoughts on a geopolitical landscape. you are a defense contractor we know more dollars are going towards space-based activities and then, of course, yesterday just russia's putin making

comments about the potential of nuclear war. how are you assessing it and what does that mean in terms of the types of services or products you'll be offering? >> yeah. look, it's a crazy time in the world. i think, you know, russia really took itself out of the space industry you know, russia was one of the space

public. we are happy to. i definitely think there are plans in the industry that are not executing, everyone gets lumped into the same thing. yes, it is frustrating for us. you know, the markets are very efficient at working out where the winners are ultimately, and time. >> so great to have you on set. usually when we see each other you are in new zealand on some crazy hours a day. >> this is very civilized. >> show coming up later. don't forget talking about t ip sector, stock price, and much more. the dow managing to save some losses. now down 70 points for the first time.

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♪ ♪ ♪ ♪ >> and a report is highlighting the growing impact of latino city economy. contessa brewer has more.

>> hi there, nice to see you. the message behind this latino gdp report is that businesses ignored the wealth and power of hispanic americans at their peril. here is why. researchers looked at the core data from 2020, the first year dependent. they concluded that latino gdp that year was $2.8 trillion. of from 2.1 trillion in 2015. that puts it ahead of the gdp in the uk, india, and france. the latinos have a per capita income that is lower than that of non-latino. the real salary account service 6.7% in 2020 despite the pandemic. even as non-latino incomes shrank .1%. and they are spending that money. at $1.8 trillion in 2020, latino consumption is larger than the entire economy of states like texas, new york, as according to a report by the latino collaborators.

what they save on goods and services grew three times faster than non-latinos. and the population is booming. we just saw headlines that hispanics in texas might be the largest demographics in that state. they are younger, there is seeing significant roads and participation, and i want to see if your nbc news group is an official sponsor of latitude business conference. >> thank you. that is going to do it for us right now. text chat starts right now. >> good thing tuesday morning. welcome to tech chat. talking to christiana mann about the impact. growth inspectors phase more tightening. one investor argues that tech is facing a critical juncture. finally, a b