it's monday, september 26th, 2022 only two days until delivering alpha. i can feel the anticipation at "squawk box" begins right now. good morning welcome to "squawk box." becky and andrew are off today i'm melissa lee with joe kernen. we are looking to open down under 1% on the s&p 500. down 29 at the open. nasdaq down 64 here is where the markets sta stand from june. treasury yields have been a

determining measure in the markets. remember on friday, we reached 3.8% level 2-year treasury at 4.29% energy prices with decisive moves this morning wti is down. $78.18 brent at $85.50. cryptocurrency has been a barometer for the tech trade we are seeing green arrows here for bitcoin and ethereum and solana. and fed president raphael bostic spoke yesterday and reiterated the 2% inflation target he said there is positive momentum in the economy and his words some ability for the economy to absorb the fed actions. >> we need to have slowdown. no question about that i do think that we're going to do all we can at the federal

reserve to avoid deep, deep pain it's not going to be easy. there will be likely job losses. if you look over the historical history here and the economic experiences ourks there's a really good chance if we have job losses, it will be smaller than other situations. >> it sounds good, butpresents the fed with a prop. that is the topsy-turvy blunt industry the fed deploys every month, we have gotten a strong number. stronger than people thought any normal time normal people and any normal time you would say good in this setting, it should allow the fed, you would think maybe,

to raise rates and if employment stays strong, it could be a soft landing. >> exactly >> except when it is that strong and rail workers can asking for 28%. that is part of the issue the fed is trying to nip in the bud. it is not good it is not good to say wow this is too good. >> we are employed we are making wage gains for some reason that is negative that is the sticky part of inflation. when they say we have to raise prices, we have to do this and that because wage inflation is a problem. that's inflation still it's a problem >> i like -- remember catch-22 it is so funny it is like everything that goes on in the army -- you want to

get out of it because you go to war. in his view, you want to get out. obviously, a lot of greatest men and women in the world serve our country that way in his ironic world, if you want to get out on an insanity plea, you can't do it because you couldn't be insane if you want to get out seeing you want to get out means you are sane enough to realize that's the catch-22. it reminds me of the same thing. the way we are doing things. it is so topsy-turvy and not a way to run an economy. >> think about what they are doing in the uk. newly elected government >> low taxes less regulation. >> it goes against the central bank and what it is trying to do they unveiled the measures the day after the boe raised rates. >> increase supply instead of hurting demand that is what we have done

stupidly in that country the spr brought down oil what is bringing it down now is the prospect of a really hard landing. our markets are not doing better we're not doing better the dollar is doing better >> relative to the other countries. >> the microcosm why not boost supply instead of killing demand bringing down the price of oil look at the permitting thing manchin has the piece in the journal. >> the gas were $2 a gallon again. do you think people would drive lessor more? >> i don't know. some people have to decide on driving or hamburgers. >> or eating >> beyond meat whatever people are eating manchin has a piece today. he is just begging

i don't know he is the most unpopular guy in the country. miss his permitting bill. far right nationalist in italy becoming the first female prime minister after the election yesterday she looking to assure financial markets to maintain fiscal discipline despite the radical tax cuts more on that story in a few minutes. new in the last hour, tropical storm ian has strengthened to a hurricane. florida residents are watching the path as it goes through the caribbean. governor ron desantis declared a state of emergency and urgesed residents to prepare for heavy winds and high seas. forecasters expect flooding in the florida keys as soon as tomorrow. elon musk will meet with

twitter lawyers over his bid to abandon the $44 billion takeover he will have a deposition today, tomorrow and possibly wednesday. he needs to reschedule that wednesday one. answering questions ahead of the trial. this will determine if he will go through with the takeover bid. it is not known if he will appear in person or by video for the deposition. coming up, the british pound plunging to the record low overnight following the announcement of tax cuts to the uk we go live to london next. do not miss the exclusive interview with arc invest cathie wood you are tcngsqwahi "uawk box" on cnbc >> announcer: this cnbc program is sponsored by baird. visit bairddifference.com.

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welcome back to "squawk box. let's go live to london where the british pound hit the low against the dollar we are watching the reaction to the italy elections. we have julianna tatelbaum with the latest >> melissa, good morning european markets picked up where we left off on friday. more selling across european equities we had a bit of a bounce this morning, but investors immediately faded that rally the selling continued. now every major market trading lower. italy, investors reacting to the

expected result from the italian election yesterday with the right wing coalition claiming victory yesterday. in terms of uk markets, ftse 100 down 1%. the real action has been in sterling you mentioned overnight we saw sterling hit a record low versus the dollar this is in the announcement of the tax cuts coming across the board raising fears of inflation spiraling further from here and raising the expectation of the raising rates from the bank of england. it feels momentum is building around the potential for emergency interest rate hike from the bank of england this year turning to corporate news. unilever ceo alan jope will retire at the end of next year the board will search for replacement and will consider internal and external candidates this comes two months after

activist investor nelson peltz joined the board melissa. >> julianna, thank you futures are down now 277on the dow. on friday, we were down 850. it looked like it would really get bad. then it closed the last half hour and tried to rally. it pared losses to less than 500 dow points add 300 to whatever it was on friday friday it closed below 30,000 for the first time since the june 17th low. triggered by fears of global rece recession. let's talk about the fed and markets now with christian

in watching central banks, that is an oxymoron is there a strategy in there >> conservative. >> a.j. who is with bny. christian, philosophically, is the fed the arsonist trying to put out its own fire at this point? >> that might be a little bit harsh. what is the case is having fallen behind the curve and scrambling to play catch up. it is in danger of the hamster wheel of the 75 basic point hikes. before they learn from the data how far they should be going and

how the policy works with a time lag. the risk is rising here that the fed ends up overdoing it and causing recession that may or may not have been unavoidable to bring this inflation down and this at a time when with the uk and many other problems glob globally >> chris, the job market is remaining strong and we know there is sticky inflation. a day doesn't go by where we don't hear it is a new normal in terms of the hybrid work force or article in the journal today of all of the people who want to live at home and stay at home. maybe with their parents or maybe not. you are dealing with a different situation. what if everything else in the economy is saying we're in a

sharp slowdown the employment picture stays strong because of the participation rate or the post-pandemic issues keep the economy strong, but the economy is really falling off a cliff. is it possible they are not data depe dependent? >> i think you are bringing up important issues here. i say two things first of all, i do think that the fed has to be careful with the time lags and potential mismatch from the bottom up and top down picture flag more inflation risk a year ago with the macro data that the fed focuses on. we see company level anecdote going in the direction, perhaps, of disinflation pressure starting to come through the system the other thing i would say is you are right. the labor market is different from the one we were used to

i think i read the fed is they feel they have to have one or two things go right before they can really slow down think about stopping further down the line. you have to see the inflation data subsiding itself or you have to see the defense and strength of the labor market cool off in a major way. at least one or the other before they are going to be willing to come down from defcon 1. >> a.j., what does that mean for someone who has to help clients maybe not make money, but p help them lose as little as possible? what would you do, a.j.? >> right you, you have to remain defensive. we are advising our clients to be under weight equities we are looking at large cap companies. income generating equities and companies with free cash flow.

the ability to pass through the inflation pressure with fixed income, we're neutral and under weight for a short duration we start to see the ten-year rise, we see more duration to the portfolio. we are overweight assets, but pulling back on that commodities piece. we are starting to see energy prices come down a lot of it has to do with the outlook for potential global recession. still overall, remaining defensive in the asset allo allocation keeping dry powder as well >> people made the point it used to be no alternative and 2-year treasury at 4.3 is an alternative, isn't it? >> absolutely. when you start to see the 2-year treasury rise up, you look at 4.3. you start to discount back the cash flow. even at the 10-year treasury

level. you need to bbe compensated fore equity level when you look at the multiples on the stocks that clients are getting a good compensation for the risk they are taking in the market until we see some of the volatility come down and fixed income market and rates stabilize, you will see a further selloff. the fed showing what the potential terminal rate could be is lifting up that two-year more until we see stabilization in rates, you will clearly continue to see a selloff in the market >> one positive, a.j., and we have to go i'm starting to hear that people not just the fall position that stocks over time go up 5% or 6% a year in a ten-year period, you can expect a 5% return over ten-year periods annually for stocks. people are starting to wonder

maybe we paid it forward and we don't get that over the next ten years. that may be a good sign if people think out to wring out the complacency. do you think stocks are long term yo do you have to be 25 years old to buy stocks? >> there will be another entry point back into the market the thing to do is remain defensive and keep dry powder on the sideline we will see that pivot point at some point the fed is giving themselves space to ease policy if they have to. the market has been looking for the pivot point. look back at the last 14 or 15 years with the low interest rate environment. getting to the point which they can be restrictive to bring inflation down to pull back the monetary policy. they are really trying to put themselves in position to potentially go back. >> a.j., next time, can you

change the chart i'm not talking about the 401(k) >> invert it >> would it kill you to put an inflation chart. >> next time i'll be in the studio, joe. >> that's a good idea. a.j., thank you. krishna, good to have you on thanks. coming up, a warning for you who regularly lease cars economics of the dealership have changed. phil lebeau has the story next a conference you don't want to miss. join the most powerful investment event of the year delivering alpha returning if pe in person on wednesday we will share risk and opportunities. scan the qr code to register we'll be right back.

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if your car lease is almost up, be prepared for a different landscape at the dealership. we have phil lebeau with more on how things have changed. >> melissa, a lot of people are hearing about this for the first time re reacuisition fee one of four vehicles add a dealership was leased. they consider those sales. they were leased now it has dropped down to 17% part of the issue is more consumers opting to buy instead of lease the dealerships and automakers are offering fewer to lease.

less volume and inventory. automakers and dealers would rather sell than lease a vehicle. many have cut leasing by 30% look at the change in the monthly payments for leasing and buying and what is happening in the last year. the gap twin between the two ha wi widened. it is almost $600 a month on average. if you like to lease a luxury vehicle, you will pay a lot more than that. look at the dealership stock remember, typically people after a three or four-year lease, they will go into another lease the vehicle they lease goes to the used vehicle supply. that is a great pipeline for dealers. that dried up or slowed down one specific automaker, ford, i want to focus. ford's popularity with the ev. the demand out there whether it

is the mustang mach-e or lightning 150. ford said when it comes to leasing vehicles, they will no longer allow people leasing them to buy them out at the end in part because they want to keep the ev supply within the ford family as much as possible they want the dealers to have the option to sell the vehicles. when it comes to leasing re-acquisition fee, melissa, this popped up in the last year at a lot of dealerships around the country and automakers are not happy about this you will have dealers, although not in the contract for people originally, you wacnt to give back the car at the end of the lease? okay if you want to buy it, it will cost $950 or $1,000. people are saying what is this the dealer says it is a

re-acquisition fee that is what it will cost. a number of automakers told the dealers to knock it off. you really have to look at that when you lease a vehicle >> re-acquisition fee. they made that up. that reminds me of fargo get the true coat. knock $100 off the true coat i have a personal anecdote, phil last time i turned in my luxury vehicle that was leased, a lot of times with the low profile tire, you mess up the wheels on the curb when you try to turn it in, they charge you for that. a ding here or there i turned it in i said do i owe you anything oh, no, no they didn't take it back as a lease. they immediately took it and wanted to sell it. they didn't care what condition. >> absolutely. >> like an idiot, i should have

bought it. >> joe, that's why a lot of people are saying at the end of the lease, i don't want another lease. i want to buy the vehicle. can i go down thestreet to carmax and sell it for far more than what i originally had with the value. that is the impact of the residual rates that is why you have some dealers try to tell you, okay, if you want to buy out the lease, another $950 on top of what it will actually cost to buy out the remaining. >> somebody should look into that that's a scam. >> they went to mckenzie get the true coat. >> got to get it phil, thank you. >> thanks, phil. they talk like you, too, phil.

chicago, fargo coming up, we take you live to china where declining real estate market is sending shockwaves through the economy that's next. and hispanic heritage month and we are celebrating with our teammates. here is our friend on "squawk box. oscar munoz. >> bias exists in america. it always will well have to be honest about it. there is an old adage you have to work twice as hard to get half as far. i believe from my heritage, we believe we want to earn our place on the earth and planet and communities. if you look at the stats, we are not just a growing community which everyone talks about we are growing economic environment. we are voters. we are purchasers. large amounts. the gdp of the latino cohort in

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good morning welcome back to "squawk box" live from the nasdaq market site in times square. i'm ready to celebrate from minus 280 to minus 180. if you just waking up, we were up early on and green when i woke up at 3:30. then by the time i got here, we were down 260. now we're down 192 as we talked about it on friday, if you weren't paying attention, we were down 850 points after the horrific week on friday. it pared losses. weakness again and it is all

based on what happens on the yield curve. this is what is causing it every time an uptick in the 2-year treasury or 10-year treasury, the 10-year treasury $3.765 the fed is going to 4% on 2-year treasury are we refilling the spr for the emergency? >> the lowest level since january. >> do you think the midterm election cqualifies as an emergency? we need to release 1 million barrels a day of crude. to china where hundreds of unfinished housing projects have been a symbol of the deepening economic sector. we have eunice yoon with more. >> reporter: joe, i'm standing in front of one of them.

construction restarted on this one. this used to be owned by evergrand. it was transferred last month to one of its state rivals. authorities here have been prioritizing delivering homes ever since homeowners across the country started making it known online that they would stop paying mortgages on unfinish ed apartments according to one that tracks complexes, 340 complexes in cities are taking part the trouble in the property sector accelerated a year ago today when evergrand flagged it may not be able to pay back the $300 billion of loans because of tighter government restrictions. since then, home sales and prices are down from a year ago. property investment also declining. citi says nearly one-third of all property loans in china are classed as bad debt.

the government has taken some supportive steps nothing major like a chinese tarp, ala u.s. circa 2008. a lot speculation is leadership prioritizing debt and concerned about that we are seeing some more minor moves. targeting the unfinished homes through the special loans amounting to $30 billion through policy banks the regulators confirmed that kicked in as of last week. s&p says that china needs a lot more money they say at least four times as much to fix the problems in the real estate sector in the worst-case scenario, ten times as much. it doesn't look as though the leadership is going to go that route and that starts raising other concerns here, at least

within the economists and with local authorities that there is a conflict shaping up where the leadership wants to prioritize the debt and local authorities wants to prioritize propping up the real estate because they make money off land sales and other taxes. the expectation now, joe, is all of this is just going to continue to drag on the property sector which accounts for 25% of chinese gdp. in turn, that weighs on the economy. s>> we had president biden say t is over here, the pandemic it is not over in china. i don't know if you can hear me, eunice if you have very few people. >> reporter: i just heard the start of it. >> can you hear me now can you hear me now? >> reporter: yeah, i can hear you. >> we said it's over here.

president biden said that. it's not over in china how will it be over if a lot of the immune system of the population haven't seen or isn't immunized. when is it over? that's why tesla moving to india or whatever. people are making plans, maybe, to not do as much business in china. that has to be on the radar screen of president xi >> reporter: in terms of the pandemic is over no idea. like you said over here in china, there is no natural immunity because people have had vaccines, but we haven't had as much virus compared to other parts of the world in terms of when the covid lockdowns might end? that is what people are wondering about over here. right now, it looks like what i would think to be the more

optimistic camp. belief the lockdowns will ease after not the party congress, which is the political reshuffle when president xi would take another term in october, but another important event that is supposed to happen in march. there are folks here that i talk to that say there is no way this continues. the lockdowns are too oppressive and difficult on the economy it will not happen those to me are optimistic people and less optimistic people think because president xi would be able to consolidate his power having a surveillance tool such as the health codes in the phones or the increase in keeping an eye or having all restrictions and that's a tool that any authoritarian regime p would love to hold on to for much longer than march >> eunice, thank you

nobody knows i guess i wasn't asking for an actual prediction. it is the rhetorical when will it be over coming up, futures pointing to lower open. we are off the pre-market session lows here. dow losing under 200 s&p down 24 points we will look at key technical levels after this break. later, we talk to dan niles and where he is seeing opportunity reminder, you can watch or listen to us live anytime on the cnbc app - yieldstreet presents: alternative investing with kal penn and older kal penn. - oh, the stock market is doing that fun thing again. - hey news from the future, you're going to live through that about 10 more times. (laughs) - oh, it's no stress. i just discovered yieldstreet. they vet investments that don't ride the stock market rollercoaster. - ooh. i think some of my gray hairs just reversed. - yeah. you're welcome. - [narrator] become an investor today. yieldstreet: private market investing.

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that's life well planned. welcome back to "squawk box. equities pointing to a lower open on monday s&p looking to lose 23 at the open nasdaq down 55 here is the pre-market decliners

in the s&p we have reopening trade. live nation and match down 2%. here to talk technicals as the market tries to price in hawkish fed, let's bring in carter worth. carter, great to see you >> good morning. >> what do you see for the s&p charts >> i think we're all obviously looking at the same thing which is to say do we or don't we make a new low? do we under cut that mid-june low? june 16 or june 17 there is one way to figure it out which is best. it is to look at other aggregates as well as constituents within the s&p and make inferences. the semiconductor index is below the june low kbw is below the dow jones industrial average is below

most of europe not only that, but major stocks within the s&p the thinking is the s&p itself will in fact under cut the low the question is by how much. one thing we're looking at is the msi world country index which is $45 trillion more than the s&p in total market cap is now not only under cutting its june low, but back to the pre-covid high almost precisely it has given back all of the gains associated with the covid recovery were the s&p simply to do that, we have an 8% drawdown from here that takes us to 3,400 that is the reasonable level to consider >> 3,400 carter, i wonder because at one point we had a 50% re-tracement of losses. a lot was made of that is there anything or maore damae

associated at 3,400? is it a lasting 3,400 level we revisit here because of the progress that had been made that had been given up? >> precisely that. i think that is the single worst thing. you say we were able to recover. a lot of money was put in the market it takes a lot of capital to move the s&p up 18% to 19% which is what it moved from the june low to the august 16 high. that becomes an accelerant as the capital reverses it is like putting fuel on the fire the balancing act is actually the problem now. consider this, we are unchanged since june 15th. it is basically october 1. how can the market be oversold if it hasn't gone down since june 15th? oil is down and copper is down

since middle of june the market has yet to have the real beating that other aggregates have had since june. >> yet, even with the negative market view, carter, you are relatively positive on the biggest of them all. that would be apple. >> that is a conundrum it is what will finally cause the crack that apple gives way apple might just be so defensive and that's crazy to say because it is not a stable or utility or health care stock or pharma. if you look at the action last week, i would cite of the s&p 100 largest stocks, two were up. ac pepsi and lily consider the other number that on a trailing 12-month basis, 25 stocks, a decent amount of the 100 of the oex are up.

health care or utilities or staples or energy. one of them is not apple. maybe, maybe apparent sle is a defensive play here sdp. >> carter worth, thank you >> big net his nickname coming up, we dig into the drop after the break. and we have our daily podcast. follow our podcast on your favorite podcast app i told you you need an app. listen anytime wel rhtac'lbeig bk.

major indexes coming off a second straight week of losses the nasdaq has fallen more than 10% over the past two weeks. its biggest drop since the pandemic plunge in march of 2020 and mega cap tech stocks suffer big losses for more, let's bring in cleo managing director. do you think we're going to have a hard landing, ie, a recession, which would be, even if it's garden variety, could be pretty seriously. and if you think that, is it already reflected in the s&p >> we're in the midst of a lot of turbulence and it's not going to get better. we're in for a lot of headwinds. and i think there's a hard likelihood of a hard landing here i think that the s&p, it doesn't look great but the reality is that there's probably a long way down to go, especially for the big tech names where, you know, they were

flying really high a year ago. >> so you think that we just heard someone use 3400 as a potential target for the s&p that -- when you know that there's bad things right in our face, a lot of times you got to decide whether the market's already anticipated that and it's something worse has to happen you think there's something worse ahead that will take us lower? >> a few weeks ago people thought we would see qe again next year and that's just not realistic and not happening. i think for those people who are overly optimistic on the summer rally, this has been, you know, a bit of a wakeup call and i think that much more of the market now is in line with the fact that, no, this isn't good, right? look at any major country in the world right now. it's all bad news and that's got to be priced in eventually and i

think that we're on our way there. >> well, we've actually had opposing viewpoints. just last week, we had one individual saying, you know, the fed is -- even 70 basis points isn't enough we need 1%, maybe more than that to get under control whereas we had another gentleman who is a real estate billionaire who said we're already falling off a cliff as far as the economy goes sarah, so the fed could be data-dependent and maybe doesn't need to go that much further if things worsen really quickly is that possible >> we're going to hear a lot from the fed this week but the reality is that the fed has been pretty clear that they don't think that they're stopping any time soon and they're the ultimate decisionmakers here. inflation isn't stopping and so i don't see any sort of magic turnaround here.

>> they're pretty sure inflation was transitory until they weren't. anything they say, i don't know how much credence -- let's bring in dan flax, senior research analyst, and we've had some people, dan, today saying that tech needs to catch up with some of the pain in other areas of the market is that what happens or does tech stay strong -- not stay strong, but down a relative basis, does it outperform from here on out or join everyone at lower levels >> good morning, joe i think technology or select technology companies can outperform for current levels and i say that because even though they're clearly cyclical headwinds, economy slowing, there's weakness in the areas of the consumer, the secular trends around mobile, around cloud, around e-commerce, those remain healthy. so what we're focused on in this environment is trying to identify companies that we think

are investing, innovating and delivering value to customers. i think that will matter more to their share prices over the next 12 to 24 months. you like at nvidia, leader in ai, which delivers value in areas, amazon, e-commerce and their cloud business, qualcomm, areas like 5g and an interesting auto business. and so those companies are innovating, they're delivering value. i think those stocks are attractive even with the cyclical headwinds that we're facing in certain parts. >> so you have the fortitude to buy more and buy now, is that what you're saying >> that's exactly what i'm saying if you're looking at company who are able to deliver value, those that were able to execute on product cycles, think about google with search, but that's a

very durable business. you look at a company like motorola solutions, for example, a leader in public safety, a lot of the infrastructure, a lot of 911 centers can't receive text or video, motorola is a leader they have growth in areas like video. and so we think that even at current levels, given the challenges, these are stocks that we're buyers of and we think they're very interesting with a one to two-year horizon >> time flies when you're having fun. thanks, sarah. we're going to have to end it there. dan flax we're moving on. we got to go. the big question for the markets right now, can the fed engineer a soft landing or are we headed for a recession. futures meantime rebounding from premarket session lows "squawk box" will be right back. what's going on? where's regina? hi, i'm ladonna. i invest in invesco qqq,

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good morning futures falling as investors brace for what could be another rough day for global markets the pound at a record low against the dallas is a hard landing inevitable a breakdown of what the fed is thinking as investors brace for a recession. and ian is set to pummel florida. we'll get you up to speed on the latest track and what it could mean as a 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 time square i'm joe kernen along with melissa lee. up all morning, all afternoon, most of the night. look at that smile, though, because we're together becky and andrew are out u.s. equity futures at this hour are -- when i was talking about all the anticipation for delivering alpha, you started laughing -- >> because you were arcastic. >> i don't do sarcasm early in the morning. and i was doing it right now about you enjoying being here, that was not sarcastic, was it >> i was agreeing that was sarcastic. >> u.s. equity futures -- it is early. she does have -- what time is that groundbreaking show on in the afternoon.

>> 5:00. >> so you're at least a 12-hour day. all right. you're in the prime of life. this is when you do it, right? treasuries, there's the markets down about 200 points. we're down more than that -- we're actually up right at the -- two, three hours ago. actually in the green. a lot of it you can almost watch the equity markets move with maybe the ten-year or the two-year which has gotten a lot of attention because of the -- it no longer makes sense to say there is no alternative for stocks 4.29% is not that bad. take awhile to double your money, 72 divided 4, what is that 16, 17 years it takes. still better to have stocks if you're in a rising market. but for -- >> go to one year. >> risk/reward, it's not bad

it's something to do with what's happening. oil below 80 a barrel. it's not 120, 130, 150, any of those numbers that we saw. and then bitcoin -- or crypto kind of indicating at least at this point maybe we don't have just a horrific riskoff environment. we still might but it did manage to trade back above 19,000 barely >> the s&p 500 contested its lows today the british pound sitting at a record low against the dollar. come dom chu is standing by and let's take a look at what's going on overseas. >> european equities have started out the day on the back foot the pace of selling has abated

from what we saw on friday the exception, the italian market trading about 0.4% higher investors are reacting to the election yesterday the polls got it right this time around but the big focus this morning, no doubt, is on the uk trading lower. serialing down 1.2% verses the dollar hovering around an all-time low we're down nearly 5% versus the greenback. friday, we saw the new government, deliver extensive tax cuts at a time when inflation is running hot so now market expectations of more rate hikes are building the bank of england now seen by the market to be boasting a base rate of 5.8% in a year's time. rate expectations on the move higher this morning. that is part of the reason we've seen sterling bounce off the lows of the session.

in corporate use, unilever in focus as the ceo will retire at the end of next year the board will search for a replacement and will consider internal and external candidates this announcement comes two months after nelson pelts joined the board. unilever shares are trading higher and we're up 0.5% one to watch today is no doubt going to be pound. we are watching very closely to see whether we retest the lows of the day for now, we have bounce. but people on the lookout for any reaction from the bank of england. melissa, we'll hand it back over to you. >> emergency meeting, emergency rate hike is certainly circulating out there. thank you. >> let's get to dom chu with a look at this morning's premarket movers. >> joe, melissa, that negative sentiment that was just mentioned with regard to the british pound and everything else happening over there, it's not helping the market

narrative. one of the reasons why you're paying a little bit more attention to what's happening with the markets here, is because that pessimism is creeping into the main street talk, the man on the street type of situation, a lot of investors wondering if this is in fact going to have even more downside ahead. melissa has mentioned some of the testing of the june lows that we've seen. when it comes to the dow jones industrial average, yes, a lot of folks on the professional side like to look at it as an indicator. when it comes to the main street media talk of what's happening right now, a lot of times we focus on the dow jones industrial average because it's the people's index the one that people identify with the post. 29,600 level at one point during trading on lowest levels for the dow going all the way back to the highs that we saw before the pandemic in february of 2020. so we've blown by those june lows and now we're -- we've

basically done one massive round trip from the pandemic lows to the record highs back down to where we were pretty much exactly in february of 2020 before covid was even a thing. so kind of keep that in perspective for just how far it's gone up and then down in the dow jones industrial average. you take a look at the premarket trade at names like devon energy, down 1.5%, freeport, american airlines down and bank of america, i'm using that as a proxy for just the overall banking sector, the mega cap kind of -- mega cap is not a big word, but more the money center banks which do well when the economy does well and maybe don't do as well when the prospects for the economy are not as good. they're down about 1.25% now but it's not all red right now we have some of the big casino operators check out wynn resorts and mgm,

las vegas sands and entertainment, up anywhere from 2 to 11% they're having a big move higher because melco is easing restrictions for tourists to allow them to actually go over there and game again for the first time in around three years. so, joe, watch the casino operators, especially the ones with heavier macau exposure. >> do you think we need to lose a couple presidents cups to make it -- >> interesting you didn't think it was interesting? >> i was riveted >> was it an nbc thing if it was prior to it, i would be scared -- i wouldn't say that >> you didn't watch any of that big come back that they had? >> it's not -- no, it's not tina there are alternatives didn't you know there was a lot of things going on yesterday

besides a presidents cup >> football, of course all kinds of things. i was watching all kinds of things. >> there are a lot of -- there's a lot happening. i don't know, dom. i saw justin thomas hit a couple shots and i said, i'm going back to -- of course i wasn't betting on golf. maybe that's the problem we've won nine straight presidents cup how badly did the international team get hurt by deflections to liv? >> i don't think at all. i thought the international team this year was fantastic. by the way, not that this is -- i don't want to make this about liv versus pga tour, but i watched the presidents cup and i was glued to the television. the crowds were massive around there there was so much more energy. >> really? i missed out, i think, i guess >> here's the thing, if you look -- there's no doubt that the liv kind of golf phenomenon has changed the narrative in the

sport, but i was very, very glued to the television watching the presidents cup -- >> the international team was decimated by defections to liv and they did manage to bring in some new stars. >> i don't know. i watched justin thomas go down yesterday. i watched a few other guys over the course of the last few days. >> all right cameron smith, joaquin neimann all right. you love your golf that's for sure. >> coming up how aggressive will the fed stay as it works to tame inflation? what should investors expect before we get to the break, let's get a check of the markets. the s&p looking to lose 30 points at the open "squawk box" will be right back.

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take the xfinity mobile savings challenge and see how much you can save. switch to xfinity mobile today. investors are nervous about the health of the economy as the fed moves to tame inflation. joining us now president and founder of macro policy perspectives good morning to both of you. i want to start off with what is

going on right now around the world. as the fed is aggressively battling inflation, sending the dollar higher, we're seeing moves in currencies that are emerging market moves. we've got the yen extremely weak we've got the uk, the pound at record lows. and i'm wondering how you view the ripple effect around the world? >> right this was always my concern about the idea that the u.s. could engineer a short and shallow recession to cool off inflation. the u.s. has the strongest economy in the world if the u.s. goes into recession, that means the entire global economy is in recession and i think that's -- we're at a tipping point now. and the faster the fed goes, the more pressure there is on the dollar -- through the dollar on other currencies and it's been quite extraordinary from the yen which, of course, that's a special situation, the bank of

japan, the lone holdout with dovish policy. of course, the uk has its own special situations, but, you know, everything is a situation and the bottom line is, the global economy is in a much more precarious state than the u.s. economy. the drivers of this inflation are complex. everything from demand to multiple supply shocks and so the monetary hammer coming down so hard is really straining things and it's been an extraordinary couple of weeks. >> what's your view on what is unfolding around the world complicates the fed's battle and it's really aggressive stance that it's been taking? >> the clear message from fed chair jay powell is that they're a one-mandate central bank right now. they're worried about inflation. and that means that other things, including the health of the rest of the world are unfortunately rather low on

their list of priorities what you're seeing in the markets is really the logical result of what the fed told us last week, is that they're prepared to cause a recession to get inflation back to their 2% target their forecast now is for an unemployment rate of around 4.5% next year. and the other kind of grim thing to think about is that the things are looking after success like employment and inflation are lagging indicators they could have tightened quite a lot and done a lot of damage to the financial markets before they actually get the signal that they are -- that they're looking for that things are looking. so we could be in for quite a few months of very difficult times. >> and, julia, just to follow up on that, in terms of the full effect, we won't see the full effect for quite some time i'm curious to know whether or not there is more force behind the impact eventually given what is going on around the world and the course of the other central

banks as well. does it make the damage worse? >> that's certainly the risk while you want to cool off demand to ease that side of the inflation pressures, what you could end up is some very nonlinear dynamics and some need to address financial crises and that certainly would be undesirable. i think the fed has scope at this point we know as greg pointed out, inflation is the ultimate lagging indicator. even employment is a bit lagging. demand is moderating commodity prices are down. there is scope for the fed to shift to a 50-basis point pace nobody is saying take your foot off the brake or pivot, but they could in the interest of global stability down shift to 50 basis points that would be you're no longer the fastest car on the road, that would take pressure off the

dollar and allow for more of an adjustment, that maybe comes with less of the kind of crisis fallout that we're looking at now. they probably need data to lean on, some domestic data, some slowing in hiring, easing in inflation pressures, but, again, headline inflation is easing inflation expectations have responded to the fed's aggression so, you know, there is scope for them to kind of down shift in the interest of global stability to a steadier pace to maybe allow for some of these adjustments and not crash the car into the wall. >> greg, i'm wondering if there's any sort of of a fed putout any more. i'm not talking about necessarily a level on the stock market because the fed has made clear that it doesn't necessarily care about the fallout on asset prices. but in terms of unemployment, for instance, is there a rate at which the fed would say you know what, we've reached it, 5% is it, that's our limit we're not going to risk anymore? >> you're asking exactly the

right question yeah, i think the short answer is yes, there's a fed put out there. i think it's out of the money. the thing that people still haven't got their heads around is that the cycle we're in is different from the last 20 or 30 years. in the past, inflation was generally under control. it was around 2% it's just to the case now. like chair powell said, he thinks underlying inflation is around 4 to 5% that's too high. they don't have the room to switch their focus to other factors. by the way, melissa, that's true of the rest of the world too it would be one thing if the rest of the world has low inflation and they could say, all right, we're going to let our currencies drop. that's not the case. almost everybody has an inflation problem. one of the reasons the pound is getting pounded is inflation has

one of the inflation problems in the world. their inflation is higher than ours they don't have the flexibility to ignore what's happening they've got to raise interest rates to deal with whatever the market is throwing at them bottom line, there's a fed put, it's deeply out of the money that's the hard reality in a world where inflation is a problem when it hasn't been in over 40 years. >> in the course of that time frame, julia, a lot of other things can break and i'm wondering, do you think that we're seeing the glimmerings or the early stages of any sort of financial crisis around the world given that there are so many hot spots in terms of where their trouble is brewing, whether it be asia or the uk >> right, right, there's any number of hot spots. in fact, i mean, probably the bigger concern is while there might be smaller hot spots where you can point to as a source of crisis, the real issue is that

the three big engines of the global economy, we can't look to sort of drive -- to be a buffer and to drive the economy forward. china is certainly struggling and doesn't look like it will be the engine of growth any time soon europe is in the middle of a war, a ground war, a real war that is complicating the economy and supply chains and then the u.s. economy, as greg highlighted, with an inflation problem. the fed is determined to bring that down at the cost of a recession. where is the engine of growth that could serve as a buffer to ease some of the adjustments in other areas that maybe have some structural elements? it really is kind of a precarious moment that there isn't -- there isn't the policies based on the monetary side as greg highlighted, you know, the uk is really a kind of

sobering example of the lack of fiscal space and what can happen when you push that envelope too hard something for all advanced economies, including the u.s., to think about there is a -- there is a tipping point and, you know, after a very unified global response to buffer the economy against a pandemic, now we're seeing some -- the opposite of that, the lack of policy space to provide a buffer yes, there's a lot of risk in the world, you know, there are positive developments, one could imagine, that could make these trade-offs easier if there's a resolution to the war in ukraine. certainly the lower commodity prices is sort of a buffer, kind of provide some easing in the

inflation pressures. >> all right >> that should help. but there aren't a lot of easy trade-offs >> thanks so much. >> my pleasure coming up, is the end of the bear market anywhere near in sight? mike wilson is going to join us to discuss his latest note to clients and his outlook for the reminder of the year here's a look at this morning's winners and losers in the s&p 50 quk x"ill be right back.

new this morning, tropical storm ian has strengthened to a hurricane. it's expected to strengthen significantly as it approaches the state. governor ron desantis has declared a state of emergency and urged residents to prepare for heavy rains and rising seas. forecasters are unsure of where it could make landfall florida produces more than 70% of the nation's supply of citrus and right now let's take a look at the price of oj, sitting at

three-year highs. >> oj futures trading places still to come, a very youthful-looking mike wilson on this shot here is going to join us to dig through the recent market volatility. i use a really ancient headshot too. >> so when you come on, it's a surprise. >> no. looking out from here, i feel like i look like that head shot until i see something real that's my story. i like that. plus, we're going to try to take an early victory lap. although he has not won under anyone's rules on this bet but he's going to give us his thoughts on the fed, international markets and more stay tuned you're watching "squawk box" and this is cnbc.

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♪ welcome back to "squawk box" on cnbc. easy dow jones, down 160 now. easy, easy was down like 250.

it's been down bach to 250 down 160 now nasdaq down about 60 and the s&p indicated down 22 or so. is this the calm before the storm? you don't want just up 300 points. >> no. >> you want some more backing and filling today at the beginning and a slow sort of bargain-hunting move -- >> but i think you want a divisive -- i think most people want some sort of move lower. >> no. 40-year on the vix >> there's a lot of reasons why the vix is -- >> but you don't think we've had the -- the ultimate question, is there always a capitulation toilet flush because this has been a very painful -- >> it might be another thousand cuts if we really go to 3400. >> i don't want to go to 3400.

>> but a true test of june lows. >> it's going to cost me if i do you know what it means, it means i'm spending an afternoon with mohamed at a jets game or a mets game that sounds okay >> it really doesn't sound like a losing bet. >> all i get is taco bell. back in june, our guest said the s&p 500 would struggle and could fall to a level of 3,000 that was one of his worst-case scenarios. but that would represent an 18% drop from where we closed on friday mike wilson is chief investment officer and chief u.s. equity strategist for morgan stanley. under anybody that is, you know, looking at the situation closely at all, a recession compared to last -- those last times you were on, much more likely and maybe even like it could be a worse recession than we factored in last couple of times you were on is that where you are?

>> yeah, i mean, joe, as you know, we're focused on earnings. earnings are dependent on the economy, obviously we think it's unavoidable to avoid an earnings recession and that's what matters for stocks i would say for the bond market, interestingly, rates have been -- rates continue to go up and this idea that the economy is holding together. that's going to keep the fed hiking, the jobs market is strong we showed it in our note this week economic surprise data has been to the upside lately and until that rolls over, we see the pmis in the 40s and jobless claims spiking to a level that we're going to have a true unemployment recession then bond yields will hold up. once those go down and the dollar peaks, then you can probably form the bottom for equities it's all interrelated, right whether it's earnings or the economy, we're in a cyclical downturn for growth and that's the fire and ice narrative to a

"t." we're just not finished yet in our estimation. >> right there's a lot in front of us that's not a surprise. so the case can be made that there's a lot of what you just talked about that are in some of these prices already we've had a terrible year so far. and the only other thing i would say is, if you believe maybe that the job market has some different characteristics than in the past and that the damage to other parts of the economy could be much worse than we know about right now, consumers seem like they're not feeling as good, mortgage rates suddenly are 6%, there could be -- this employment picture might look surprising strong and there's wage issues there and sticky inflation. but we've had some guests on recently who said the economy is in much worse shape right now than people realize. >> you think about real wages, they're still negative the consumer is getting -- or

the employee is getting a better wage now, but they're still having trouble keeping up with prices that's where we are. it's a difficult setup here's a scenario that could be different this time that we have to consider which is, companies are having a hard time finding employees this time because of the shortages in labor which we think are somewhat structural because of the pandemic. and what we need -- we may see that happen where employees don't get laid off this time even though companies see margin pressure because they're -- companies are so low to lay people off, they want to hold on to their good employees. those structural changes i think are going to take awhile to work themselves out and that's another risk to our earnings story that we think whether there's a recession or not -- you can have a recession where you don't have an employment cycle, but they worsen if you had a normal recession a lot of moving parts. look, i would feel better if the equity was premium but it's not

we're at 260, 270, you're not getting paid to take equity-like risk >> how deep, mike, is the earnings recession forecast? do you not have a good grasp at this point i ask that second question only because in the past one month, the dollar index has gone up 4.6% we've just seen some shocking moves here and i'm wondering what percentage of that earnings recession will be caused by just the slowdown of the u.s. economy, the strength in the u.s. dollar. all of these things are intertwined a little bit but strengthen the u.s. dollar and maybe even the compounded impact of profound troubles around the world >> it's a great question, melissa. we talked about the currency headwinds as part of our top-down forecast. as we've said, we think 2023 will be somewhere between 195

and 212. so that's the thing that we're most confident in our work we don't know how this kind of economic cycle is going to play out. but our earnings forecast abilities is pretty good on a 12-month basis it's still significantly below where the street is. every percent that the dollar goes up is about a half a percent hit on the s&p earnings. on the fourth quarter, we're running up 21% right now on the dollar, it's a 10% head wind that's probably not in our estimates quite frankly. the good news is, this is how bottoms are made, the dollar gets too strong and we showed a chart, when the dollar gets this strong, you're getting closer to the end where you have a bit of an accident on earnings or the economy and then it reverses sharply. we're into that zone it's all coming together as joe said, people are aware of it but the market is not priced for it in our view maybe something is different about this market than in the

past where there's so much money sloshing around that we don't get the price that we would like to see, we never get to that level. but i wouldn't bet with that >> so many different things that i think about, mike. is there any chance that the fed -- as wrong as they were about transitory, now they found religion, they've -- they're human, right they've heard feet of clay, they've heard you're not going to have the fortitude -- i've used that a couple of times -- will they really stay tough? will they really stick to the plan makes me think they could miss the data-dependent side of their job and be so, you know -- what volker did so much that they overshoot. i guess the whole notion of

killing demand to make up for these crappy policies that gave us this inflation is not fair to the entire country to induce a recession because of policy mistakes doesn't seem to be the right way to run a country and we're all going to feel it in the stock market too. >> i mean, it's true as your mom and my mom told us, life's not fair. sometimes you get these positions where, you know, you got to take your medicine. and -- i'm not in the business of finger-pointing about how we got here, why we got here. it doesn't really matter we're here and we have inflation that's too high it's untenable and now we got to take the medicine. we're going to take the medicine, we'll get through this and move forward probably not as bearish as some people because i think we're in this boom/bust sort of environment, like the '40s that we talked about forever. the sooner we can kind of get this thing resolved and the fed gets there, i'm all for taking the medicine i'm a child of the '70s --

>> then do we come back down in rates then or do we say permanently high do you know what our debt service -- are we going to be able to do anything else with -- fiscally when almost every -- almost all the gdp is going to be -- not all of it, but a lot is going to be spent just servicing the debt at much higher rates and that's going to cause a slower gdp and sort of a permanent headwind for us? >> that's right. but, look, we've been in a world of financial repression for 15 years, since the financial crisis we've had, you know, very generous policy, negative real interest rates and that hasn't served us well i would argue that qe is deflationary you need to have inflation so we're getting, you know -- we're getting the solution that we need. we're all looking for inflation. we've gotten more than we bargained for.

it will ebb and flow that's our view. rates are going to go up but they can't go to 8% overnight. that's untenable it won't work. it's going to stair step up, stair step back down we're at the end of the financial repression if we're not at the end, we go back to the other policies, that means we're in a debt trap i'm in the camp that we got to go through this period, we got to get inflation higher to get out of the debt trap >> what's your worst case now? you still say 3,000? what is your medium case 3400 i don't want to put words in your mouth -- i do but what's your average downside from here. >> low 3,000s, but it's 50/50. because a soft landing for earnings looks like it's not feasible soft landing for the economy

might happen, but that's not going to be for the earnings i think that's a number to think about. look, joe, as you know, we're not going to stay down there very long. we're getting closer to the end. i think people need to realize that we've been in a bear market for over a year. international markets for longer so a lot of damage has been done we're not telling people today to be selling stocks we've been saying that for over a year and we're starting to, you know, get ready to be more aggressive it's just not time yet in our view and to be premature can be costly. >> you saw that head shot we used of you and now you -- you still look good, but the year has -- that was just a year old and that has taken a toll. this market -- look at that. you see what i'm saying, mike. this is taking -- how long are you going to do this we appreciate it but if this is what's happening -- >> joe, did you ever see cinderella when i look in the mirror, i

only see a beautiful person. >> me too. but when i'm looking out, i have this idea that i still look like we all do. mike, thanks for playing along i appreciate it. and you know what, there's something to be said for that, the look he has now. you know what i'm saying >> experience. same thing with you, joe when stock markets were on the upswing, bonds were out of favor. but now bonds don't look so boring we take a look at why younger investors want bonds now and a special event, "squawk box" is going to be live at cnbc's delivering alpha conference this wednesday. tickets are still available to meet with economic leaders, policymakers and the world's best investors as they share insight on risk and opportunity and navigating this new market dynamic. scan the qr code to register

we'll be right back. i look like that

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to find positive returns for some, it seems like bonds might not be so boring anymore sharon joins us more with this sharon >> melissa, millennials were more likely than any other generation to sell their investments over the past year this is a generation that has mostly invested in stocks or crypto and it hasn't gone so well lately. they're bailing out. a recent survey finds nearly half of millennials, 49%, sold all or some of their investments from august 2021 to august 2022. that's compared to '21% of gen x, 17% of gen z and 13% of boomers. what are millennials buying now? well, bonds seem to be making a comeback even among younger investors it is important to understand a body's credit risk as well as its duration, financial adviser says it's a good time to consider a range of fixed income

assets from securities to investment-grade bonds but not as long-term investments. >> adding bonds into your portfolio at this stage in the game is very much a tactical play it's maybe a one-year or two-year time horizon. it could be shorter than that. i don't think that this should take place of your equity portfolio. i don't think you should be selling your equity portfolio to buy bonds. >> well, of course, you should think of them as -- in your portfolio as just a temporary placeholder for extra cash again, not holding on to them for the long term, melissa. >> what are some of the best places for investors to buy bonds right now? >> bond mutual funds may be a good place to start. she recommends using a firm that doesn't charge commission fees like vanguard or fidelity. they could help you customize a

portfolio that includes bonds. >> and do you put the bonds into an ira or 401(k) or better to have them in a brokerage account? >> of course, with bonds, you can add them to any of those accounts you'll have more tax savings with iras and 401(k)s. but the issue is how long do you hold on to the bonds because in general, fixed income has a lower risk tolerance, a lower rate of return when you have bonds in your portfolio too long, it can drag down performance and so even though you want to see positive returns from fixed income assets to help you sleep at night, younger investors need to make sure they're focused on growth over many decades and historically the best bet there has been stocks. >> sharon a lot of great information. thank you. coming up, oil continuing to slide lower as the dollar surges rri sitting around 70 bucks a

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>> yeah, so what we're seeing is that you have this incredible energy crisis in europe that is pressuring the euro and now with the latest u.k. measures, it is also plere pressuring oil prices negatively the only reason why this could be sustained for a while longer is that the slowdown in consumption in klchina has begi some room for oil balances to not continue to tighten at the pace we were seeing previously, right. going forward, as china reopening, even from spring of next year, we still don't have a solution on the supply side, right. so we're seeing big accounts start to decline in the u.s. we're seeing saudi arabia get to pretty much its target production levels.

so the problem has not been resolved >> how did you think about the push-pull going on in europe in terms of potential shortages and a potential of a cold european winter and what the u.k. is doing in terms of capping energy prices >> so, europe has done the work in building enough storage to face a winter if the winter is closer to the temperatures of the ten-year average we're seeing storage and there is plenty of lng coming in, so it is the best that we could have hoped for ahead of the start of the winter. and now the biggest risk to the region is still those winter temperatures and a colder than average winter could still create a lot of upside pressure on prices and additional government intervention. the caps announced so far, it is

interesting, right, because with you don't have full clarity on the what the e.u. is going to do yet. they're talking about capping electricity revenues for non-gas providers. but it is not yet clear how the difference between that cap and the gas driven march electricity twice is going to be presented to the consumer. it is going to be a direct subsidies on the price of electricity which would incentivize consumption to continue or is it just the difference in write checking to low income households, leaving the electricity price elevated leaving incentive for people to save on their consumption. in the u.k., they capped energy bills. even though they did, the levels that we see for energy bills for this winter would still be about 60% higher than last winter. so at the very least, we still see incentives for people to

save in their heating consumption over last winter. >> you who are you seeing investors position in such a complicated supply/demand picture in the energy markets? >> yeah, it is been reflected in the terrible liquidity in this market not just in the front of the european gas price curve, but through calendar '23, calendar '24 so there is an exceptionally high amount of uncertainty and not just when it comes to investors. when we talk to consumers or lng players that would like to hedge their exposure, the cost of hedging, the cost of fixing that price at which they either are going to buy the commodity or sell the commodity has gone through the roof. >> right >> so it has been extremely challenging to not only invest in this market but to man ablg your exposure as consumer or producer. >> samantha dart, thank you very

much. >> coming up, white house economist jared bernstein will join us to talk inflation and recession risk and much more plus we'll dig touhrgh the market volatility with mohammed el-erian

good morning, five trading days left in september it is been a rough month for stocks the nasdaq dropping 8%, the dow under 30,000 for the first time since early summer the s&p testing its june low bitcoin back below 19,000. among our special guests, veteran market watcher jeremy siegel and mohamed el-erin and dan niles. "squawk box" begins right now. ♪ >> good morning and welcome to "squawk box" here on cnbc. i'm melissa lee. along with joe kerna this

morning. let's get a check on how we are seat to open this monday session after a friday decline declines across the board but we're off the premarket session lows s&p looking to lose 21 and dow by 140 and the nasdaq off about 55 right at 9:30 a.m. eastern time ye yields have been a major force 4.291% but the currency markets, wow, what moves we have seen in currency across the board. >> because they're slow over there. >> what do you mean they're slow. >> at doing what they need to do what do they expect. the dollar is going to get stronger unless you catch up and do what needs to be done and they have a problem with all their systems. >> who is they >> europe and the u.k. >> we're seeing the yuan at lows and we've see the yen -- >> it is almost like 2.2%.

>> and then we have caught between the boe and inflation and what the new administration is doing over there. so it is a quagmire. if you will. >> wrapped in a conundrum. >> like a ter-ducken we are at pretty much january levels at this point wti 77.76 and brent is at 85 let's head down to the new york stock exchange and check in with mike santoli mike >> reporter: well melissa, you set up the prevailing wins against the u.s. stock market which remains tail and not the dog. the s&p is under pressure but not in a dramatic move on friday we did get back down to the prior closing lows in june going to open right on top of them today maybe just a slight advantage

over the intraday lows, 36.36. that would be moving it a decimal place. and so this is a retest or a failed retest is going to look like things are getting very oversold everyone was talking about that over the weekend but yields are higher, the dollar is higher some of the underlying situation is less friendly even though credit spreads haven't blown out since they have in june. and you talk about the different currencies here is how it comes together in the u.s. dollar index and an acceleration it is a monstrous advance over the course of nine months and you see it is looking a little bit stretched. and i point out that the pound sterling is overrepresented in the u.s. dollar index. it is like 12% relative to u.k. gdp.

so it does skanexaggerate as we seen the pound collapse. but people ware waiting for this and see if it might consolidate and that might take some pressure off of stocks and take a look at global bonds versus global stocks it couldn't be a cleaner story we could talk about corporate earnings, but this is what the move is. this is the value of all stocks in the world this is the value of all government bonds outside of the u.s. that is the whole story. it doesn't have to link up perfectly like this all of the time in fact, it has not in recent years. but this is the story. so again we're waiting for the yield moves to maybe just kind of get a little bit too stretched in the short-term, pull back and have them gather up, whether that happens by jaw boning through central bank or something else, that is what we wait for. >> the dollar index, with such a pronounced move and i take your point about the pound being

overrepresented there. but when you think about a 4.5% move in the past one month on the dollar index, that is extraordinary. and you have to wonder whether or not it is factored at all into earnings. and i don't think it could be. an you when you think about microsoft issuing a warning on currency and you think what is coming here. >> if i'm listing the things to worry about, that is not high on the list the stock market gets that currency translation on earnings is not necessarily something that you cut the multiple for, dramatically i'm much more worried about demand going away and what the companies are say what the business is doing as opposed to what happens to the earnings i think the rising dollar is a concern in terms of capital

market stress and what is it does to foreign borrowers and governments and the whole idea is that pre seeded kind of rupture in the market. and that is job one to figure out if that is on the horizon as opposed to the corporate impact. >> there was one article this morning that alarmed me. it mentioned asia financial crisis as it relates to the move lower in the yen and yuan. so certainly worth watching. >> that was no fun although we've already had the u.s. equity market impact that we have during the '97 and '98 financial crisis it is something to worry about but we don't know what the umt matt impact will be. >> joining us now, jeremy siegel from the university of pennsylvania wharton school of business great to have you on in your view, what are we at a

greater risk of, the fed, they're in charge and they're the one calling the shots here is it more likely the fed so too tough and too tight for too long or is it more likely at this point they waffle and don't have the resolve necessary to really vanquish inflation are they equal. >> i think the former is more of a risk i think they're talking way too tough for the fed funds future markets now in may, 475, i think that is very much too tight given the forward-looking actual rate of inflation. not what we see and backward looking bls statistics, but forward-looking as i've mentioned many times before. home prices declining, commodity

prices declining and freight rates declining all the way up and down we see declines not rises and i think that -- and look at the dollar, as mike has just said, it is showing how tight the fed actually is. take a look at the money supply. we're going to get it tomorrow, monthly money supply 1:00 people don't talk about it but that is the clue to why we had so much inflation over the last two years and that has stopped not only stopped dead in its tracks, has declined from march for the first time since world war ii we've had such a protacted decline. so the feds talk and the tightening is to extreme that i think that the risk of recession is much higher than, you know, waffling on the inflation. >> you and i are kind of in the

same camp there. and i think that the fear of ending up like arthur burns or whom ever you want to pick back prior to volker, i think that is so front and center with the current chair that that could end up with a policy mistake plus getting burned on the transitory side of things and being so wrong initially, you could end up making a policy error by just being burned by that, you could not? >> absolutely. >> yeah, absolutely. and by the way, i look back at burns. they kept on pouring money in, commodities were going up and we didn't see the dollar soaring like we did. all of a sudden they're worried about what happened -- arthur burns, the situation is totally different right now than it was back then.

i mean, the feds tightening and the talk of super tightening has pushed markets way to extreme. and you know, as i said, as you said and i said, a year ago in september, they said no inflation was a problem at all by the way, chairman powell talked quite a bit about the job opening and labor turnover data and how tight it is. the interesting thing is i look back a year ago september, it is as tight as it is today and he never said anything. >> right. >> about inflation so all of a sudden, what is caused him to change his mind that the same data and yet all of the -- on the jolts, which is now what he's pointing to, and every other data going down has suddenly made inflation a threat when a year ago, when everything

was booming, he said inflation was no threat. honesty, chairman powell should offer the american people an apology for such poor monetary policy that the fed has pursued over the last two years. >> i could almost see professor, that chairman powell should, instead of looking at the job market right now as a problem, he should look at that as the rest of the economy is in danger of a sharp contraction it is a good thing that we have labor holding up for whatever reason and it is a good thing and maybe we could orchestrate a soft landing if anything else is in really dire shape and if the job market holds up, that is what you want. but they're looking at it like, wow, i don't know if they know the rest of the economy in some people's view is already rolled over and they see the stubborn job

market as something they need to somehow -- the job market to weaken before we done our job. that is like a crazy way of viewing things >> well, what disturbs me is when we look at wages, they have fallen way behind inflation. it is hard for me to understand how it could be a cause of inflation when wages are falling behind inflation back in the 1960s, we academics used to discuss what is called demand pull inflation versus cost push. and when costs were going up faster than inflation, thennin na -- then inflation was going to proceed. and most of the wage increases and yes there are wage increases, are catch up. it seems wrong for powell to say we're going to crush wage increases and crush the worker when i don't -- that is not the cause of the inflation

the cause of thein nation was excessive monetary accommodation or the last two years doan shift the blame now to the worker and crush the worker and saying that what we have to do to control the inflation. wrong solution >> yeah, no way to run a -- an economy. i don't know when the history is written in the future about this period, i don't know what it is going to say it might not be -- it might be. >> well let's hope that he sees and the sees the light and the slowdown and we won't get 475. clearly the market is primed for that and that is one reason that it is depressed and when we've seen the biggest rise in real rates, i mean, the degree of tightening is almost never happened like this even the volker shock in terms of the long-term relative is almost not in comparison what we

have seen over the last three months >> yeah. in percentage terms and in how rapid has it been and in the dislocation. even we're still at historically somewhat low levels but where it came from, it could rattle a few things we'll see what is under the surface all of this and that could -- something systemic could be there too professor siegel, thank you. you're an eagles fan are they good this year? >> well, we could argue about the first few games. i think jalen hurts is coming into his own >> yesterday, you didn't see golf what do you do >> i take care of two and a half-year-old twins, joe a little busy. >> the calming effect of golf clubs. >> the white house economic adviser jared bernstein on the

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welcome back to "squawk box. futures looking like a 200 point decline on the dow jones industrial average and the s&p looking to lose about 28 and the nasdaq down about by 76. 36.36 is the level to watch on the s&p 500. that is the june intraday low. and cryptocurrency has turned negative and we did have some gains but now lower. >> and the white house continues to push the inflation reduction act will cool consumer prices. joining us now jared bernstein, a member of the president's council of economic adviser and a friend and long time guest here on "squawk box. and i look forward to having you on, jared. because we could be, i think of us like at a bar, saddling up to a bar and we could talk that way. >> that is a very nice image >> it is and i kind -- some of your colleagues come on and i don't

really get anywhere. but with you, i think you're in on it. i think you know what is going on, so that i could be -- >> where ware you going with this. >> i'm going to tell you here we go it is a brutal couple of weeks for the economy. awful inflation numbers and a hard landing and maybe even a global recession according to some the student loan forgiveness, in the middle of all of this, adding hundreds of billion dollars even a trillion dollars to the demand side doesn't that make the fed's job even more difficult. your allies larry somers, and jason ferman both warn that is a problem. the president once again bowing to the far left. does that justify increasing demand and making things worse right at this time, jared? i know you know -- there is no way you could sell this to me

with a straight face. >> let me try the following because this is not reflected in the wrap you just gave me. if you ask them about this, you should try to find out this out for yourself and the thing that you left out is restart restarting loan payments which have been in forbearance that begins in january and if you look at the numbers month by month, the amount of restart even with debt forgiveness basically offsets the amount of forgiveness. it is taking a log off the fire and putting an equal size log on it and we've models this and looked at numbers carefully and we don't understand this part of the plan, disagree with this poibtd we think that impact on inflation will be neutral because restart offsets forgiveness. >> the other thing that i always have a serious bone to pick with

the administration is the bragging about reducing the deficit. so $3.1 trillion in 2020 $2.8 trillion in 2021. so now you're taking credit for lowering that to a trillion dollars in 2022 because we don't have the pandemic related expenses receipts have come in on the horrible too low corporate taxes that you're always complaining about. so they're at record leave levels so you don't think it has anything to do with inflation at 40-year highs. >> first of all, that is a fair question let me get to that but first of all let me point out something that you blew by this and good for you for putting it on the list the part about tax receipts. >> i'm ordering another one. >> please do i appreciate that being on your list because a lot of people leave that off and just think this is a natural rolloff of

pandemic-induced fiscal policy it is much more than that. and in fact, the percent increase in tax receipts into the treasury is actually larger than the declines, percent declines in spending it is 26% versus about 20% and the reason for that is the very strong economic back drop i mean you just had a conversation with professor siegel about how strong the job market has been. that is been historic, almost 10 million jobs, unemployment rate that is low and that is generating a significant tax receipt. so the deficit reduction is real and i think the important part about inflation and people get this wrong too, when you have this degree of negative fiscal impulse meaning the government is stepping on the fiscal brake, that is disinflationary. so both monetary and fiscal

policy where-r pushing back on inflation. >> a am curious what you/the administration has made that question whether or not there is something to be on the fiscal side because if you're not -- all of these inflationary pressures are really in the supply side. >> yeah, so it is a really important question, melissa. because i think what we're seeing in the u.k., one could draw an incorrect lesson from that which is that any fiscal policy going to kind of blow up in your face right now in fact, it is very important to us to stress fiscal discipline and the decline in the deficits specifically because of that negative fiscal impulse point, the government complementing the federal reserve. but if you hit a difficult economic situation, and

obviously that describes the u.k., there may be needs to did some countercyclical fiscal policy but they went back to the reagan-omics and pulled out the supply side thing that have gotten a very negative response from the mark. and we could still have the argument, but in this case, the markets have clearly made a very negative judgment on that. it doesn't mean that cou countercyclical policy backfires. means you have to be thoughtful about what you're doing. >> it sounds like you're leaving the door open just a little bit to potentially some fiscal measures if the future that could help out consumers or being perceived as being more helpful to a consumer? >> i think you just, look, we're in a situation, among the strongest labor market we've

seen, we have balance sheets for some households and businesses in good shape. consumer spending, almost 70% of our economy is growing at a decent clip. so i'm not really talking about the u.s. case. what i'm saying is that you shouldn't overlearn lessons and take things off the table that may later need to be there but in the u.s. case, look at that job market and you see we have some real challenges here. >> i don't even think these are arguments that we have i just don't think there is in way that you could argue that the blunt instrument of just killing demand is the right way to -- to deal with inflation. >> let me speak to that. >> it would be so much better if interest rate could stay low and we could open up instead of releases the spr and killing demand and oil goes down to $70, open up the spigots and get rid of the regulation. boost the supply and then

inflation comes down i know you know that is right. >> i do. >> what could i get you? >> i'll have what you're having. look, you make half of a good point here and i want to underscore it. i'm not going to jump on the fed, but i'm going to completely agree with you about supply side investments and do a very crass advertisement for a speech i'm giving i think at 1:00 on wednesday at the peterson institute where i'm going to get deeply into this and i'm talk going to talk about the biden administration's long-term economic strategy to invest in manufacturing, to invest in domestic semiconductor production, to invest in domestic electric vehicle production, to deeply invest in public goods and reverse decades of dis-investment and why that

is so critical to our future that to me, it is amazing that after a decade, we might be agreeing what true supply side means. it means these type of investments. >> they tell me we have to go. we have told me we have to go. like i said, when i have you on, i think we could talk. we're counting on you, bernstein, with some of the other people in that administration we're counting on you. all right. >> >> well thank you much. >> i think you know what i'm talking about. >> the team here is behind everything i've said so far. so full speed ahead. >> you have to get more sharp elbows get in there, bernstein. see you later. thank you. coming up, mohamed el-erin and delivering returns in person go to alpha.com to register.

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so far it is all about been restraint. we're trying to stop the overheating of the economy lots of people are already in a deep recession. >> there is a put in bitcoin somewhere when i see black rock dealing with coin base, you just know people are coming to buy. >> i think the market has come up the fed. >> and when the fed executes the plan as laid out or has to turn a little faster. welcome back to "squawk box" on cnbc. we bounced a little bit. the s&p 500 looking to lose about 16.5 joe is cheering. hoping, hoping for it to go higher. >> he's going to try to take a victory lap. where is he. >> going to come in due time. >> he has not won yet. >> well you haven't either.

>> i know i haven't. i was closer than he was when we were at 4300. >> and to remind viewers bet was at 4,000, the next 10% wednesday up or 10% down and we almost got 10% up and we have not gotten 10% down yet. >> who hopes for the market to crap out >> it is not a hope. it is a forecast >> i think it is bad to take the shadden froyda of going down. >> you said that with such zest. and taking a look at yields as it relates to the direction of the equity markets 10 year at 3.769% and the two-year at 4.256% the dollar, we're watching, the low of the pound against the dollar but really the dollar strength seen across the board when it comes to the yen as well as the euro.

in terms of oil, this is the second straight days of losses and we hit january levels in both wti and brent earlier in the session. although we've paired losses there wti at 78.28 and as for gold, 16.48 an ounce or down about .48% of a percent. >> epic eric asy macau stocks jumping, the city leader announcing that china will resume e-visa program for main land travelers and permit some group tours and in another headlines this morning, peter weinberg is stepping down as ceo of perilla weinberg he'll continue as chairman of the board and chairman of the working partner committee. andrew bednar is now chief executive. coming up, more, the

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welcome back to "squawk box. joining us now, mohamed el-erin, president of the queen's college. great to see you again just on friday, we were discussing the crazy moves that we've seen seeing in the fixed markets and the currency marks and yet here we are again today and i'm wondering what your take is this morning given what we've seen go on >> so, melissa, it is more of the same as we spoke on friday, it is not just about the big paradigm shifts, three of them. this is about governments and central banks being sources of

r volatility, so they are adding to the volatility in the market that is particularly clear in the u.k. but also in the u.s. with the fed and it is also about horrible technicals it is quite a mess in some of these markets. and these are the main markets for the global economy so, it is in the a good scene. hopefully it will calm down. but we've also got to make sure that policymakers stop adding to the volatility because that is what we've been doing recently. >> telling politicians to stop doing something, is probably going to prove unsuccessful, but what direction do you see the s&p 500 and the world indices going and if there is any sort of compounding a theft of policy mistakes not just here but also abroad, if it makes things even worse than all of this is going on in concert? >> so, melissa, first of all, just to be clear, okay, there is no victory lap with my bet with

joe whatsoever in fact, if anything, i should acknowledge that his bengals beat my jets pretty badly yesterday. i don't hope for markets to go down i'm explicitly saying that i wish that i am wrong but i was asked what is more likely. hold on. hold on. >> you don't have a victory because i didn't take a victory lap at 43.20 and now we're down 8% from 4000 and it is not done yet. and i'm hoping are we going to a jets game or a mets game if you eventually win? if you eventually win? say you win. where are we going >> if, if i win, capital "i" and capital" f". >> it has to close below 4300. and we'll go and have fun. >> to be clear, joe, i don't

want to be right. >> i don't want to you be right for a lot of questions. >> but to go back to the question of melissa, my 401(k) is in place. but what is clear is that we have this relentless increase in the dollar and they are both bad news for corporates and the economy. and until we could break this cycle and the reason why this last leg up in yields is happening, i believe the reason why this last leg up in the dollar index is happening is because we're the safe haven there are fires burning all over, not just in the developing world but the advanced countries but we are the safe haven and one consequence of that is that our currency gets stronger and we have to follow what is happening elsewhere in the world. so that is the tragedy that we're in right now if we didn't inflation, if we didn't have a fed behind the curve, our yields would be come down but unfortunately that is not our reality.

>> did you see jeremy siegel, do you think there is a risk now that the fed is too tight and too long or is the risk that they lose the resolve to vanquish inflation, to put it to bed for the next ten years, which is -- however long remember what volker did, it lasted 30, 40 years but there are other things that will not happen with volker as well what do you think is the risk for the fed right now? >> we're on the same wave leng on this. i think this is a two-part policy mistake of historic proportion part number one was being seduced by transitory and doing nothing, even in march they were still buying bonds just to tell you, the magnitude of how far behind they fell. and now in the scramble to catch up, they are hiking aggressively on the economy which will be phase two of the policy mistake.

the trouble is, joe, the alternative is not somebthing that will appeal to them so we are going to have to navigate through this historic fed policy mistake >> so what do you -- is it a bifurcated employment, what is the employment picture is distorted because of the post pandemic world that we're living in hard to get people back and skills are changing. what if the rest of the economy is on a precipice and some people want that. >> and that is the judgment that they have to make. if you look at the labor market, that is a strength of the economy. it is a really important strength however, the average person is having more concerns, income concerns they are worried about a

recession and that the fed is going to take us into recession. inflation concerns they have wealth concerns. so when you put that -- all of this together, you know, you worry about the outlook. even though the labor market is strong >> you sound like you're more bearish, mohamed, than when you put that bet on with joe >> no, we're not even there yet. i'm just saying that we are navigating this. i also often stress, melissa, the positive side of this. we were in a very artificial market highly distorted asset allocations. there was no meaningful risk mitigators and people were pushed to do these things and unwinding this so for long-term investors, going to get to a better destination. the journey is incredibly bumpy and getting more bumpy with what is happening around the world. >> and one problem is that it is

as artificial coming out of it because when you see these types of moves, these are not natural moves. these are artificially induced moves on the other side of it and just treacherous, maybe more so. >> that is what happens when central banks distort the functioning of markets for a very long time that is exactly what happened. and that is what people have been warning them for years. every opportunity they have to exit, they went in even deeper and now unfortunately inflation as they said on your show earlier, inflation is such that they have no choice but to unwund all of the distortions that they're introduced. >> right mohamed, always good to talk to you. mohamed el-erin. >> coming up, dan niles on what he's buying and selling right now. but first a reminder to join us at this year's delivering alpha conference the most powerful investment event of the year. in return in person in new york

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welcome back to "squawk

box. futures right now, repaired losses dow looking to lose 128 and s&p down by 18 the nasdaq looking to be off by 36 check out some of the names bucking the trend. the biggest nasdaq winners include jd.com and pin duo duo and a chinese web tilt there coming up, dan niles will join us live. find out where he's putting money to work right now and then tomorrow ark invest ceo and cio, cathie wood. stay tuned we'll be right back.

welcome back to "squawk box. a little more than a half hour to the opening bell on wall street dominic chu joins us with a look at some of the morning's premarket movers >> joe, melissa, the idea now with this market narrative being a little bit more negative now, despite the fact we're seeing a bit of an uptick in the futures. lower growth, possible recession, less inflationary narrative is going to happen going forward and one of the places we're seeing it play out in the markets right now is in the stock side of things, still, the single best performing sector in the s&p 500, which is the energy sector, still up about 28, 29% year to date

but take a look at the chart for wti crude. on a year to date basis, we're pretty much back to where we were at the start of year, up 5%, but that's pretty much flat, going back all the way to january so with crude at the lowest prices since january, it's pretty interesting to see an economically sensitive part of the commodities market that's really taking a turn for the worse here, now back to the lows of the year. if you look at another part, gold prices, typically one that's been tied to inflationary pressures in the past. you got to go all the way back to april of 2020 to find prices this low for gold. prices again on a three-year basis up about 10% but that drifting narrative with inflation kind of coming off in the future, maybe playing out in gold one other place to watch is overall with a certain part of the market within at least the stock-specific side of things in planet fitness those shares are up 4% in an

otherwise down tape. the stock has taken a beating but analysts have upgraded this stock to a strong buy from a neutral. they think the value-oriented gymnasium chain has a recession-resilient business model, more value oriented they carry little interest rate risk and the valuations are pretty attractive right now. nice green stock here in a sea of red back to you. >> dom, thanks tech stocks have been hit hard as rates rise. joining us now is founding fund and portfolio manager. it sounds like you're negative the markets but you think a bear market rally is upon us soon >> yeah, i tweeted that out on friday i mean, if you look back at our twitter account, several times during this year, we pointed out when we thought the next bear market rally would start but we pointed out we think the s&p ultimately goes down to 3,000. we've been saying that since may. we started the year thinking the market would be down 20% revised to down 30 to 50% with

3,000 as our estimate but you get these bear market rallies along the way and over 70% of our technical indicators was flashing when the market was down about 2.4% on friday. so, we try to stay disciplined, even though mondays, you get big crashes a lot of times, following bad weeks, bad closes, but you should expect that and so, covered our shorts today. we'll probably add to our longs. still sitting over 50% of the portfolio in cash. that will become less over time and we came into this year saying we thought cash would be one of the best investments for retail investors unless they could trade their portfolio daily. that's still our belief. >> what would you be deploying money to >> i think you want to pick sectors where the fundamentals are strong, and there's very few of those, so, we started nibbling on the energy sector again, on friday the defensive area, so, walmart, if you go back to 2008, people

shop at walmart when you head for a recession. the stock was up 18% in 2008 the s&p was down 38% healthcare people want to live. so, healthcare's a good defensive area so, that's another good space. we actually, if you want to get more aggressive, we like the online sports betting space. so, draft kings, we bought some penn national on friday, actually, a land-based casino but has a good online sports betting presence as well so, you can -- there are sectors to look, but you've got to be willing to trade a daily our view is, you get a decent bounce, and you put your shorts back on. that's kind of how we're playing this right now and we're looking for our shorts to make us money between now and mid-next year when the market ultimately bottoms not our longs. that's why we're up for the year it's our shorts. >> so, i mean, bear market

rallies are also opportunities to sell, whether it be shorting or selling positions, and spo i'm wondering how you look at that and what you would be poised to short and/or sell. >> yeah, no, that's a great point, melissa so, it's the same stuff we've been negative on all year. so during covid, people ran out and bought smartphones, they ran out and bought pcs, so everything that benefitted from covid, that's the stuff you want to reshort, we think people are going to take smartphone estimates for the year, more focused on the low to mid-end, but we worry about the high end as we get toward christmas same thing with the pc sector. enterprise software, we think, is going to have a big problem because everybody goes on the internet all the businesses go on during covid. now people are going out and doing things in a physical manner you're going to need less software licenses, enterprise licenses next year you've got google, facebook, amazon, all can't hire enough people at the beginning of last

year now they're all freezing or laying off people. that's going to ultimately go back into the enterprise hardware names as well and finally, internet advertising, don't forget, you've got disney and netflix b both launching ad-supported tiers coming up. so, those are two areas we're looking to put our shorts back on or again put them on as hopefully the market rallies over the course of the next week >> speaking of enterprise, that's the shoe that we haven't had drop yet and i'm wondering if you think that is just yet to come i mean, if unemployment is going to tick higher and we're getting corporate warnings and issuances of the desire to lay people off, i mean, isn't it only a matter of time before we start hearing about softness on the business side of things >> that's exactly right, melissa, and that's where a lot of investors are hiding, because they sort of bought into this narrative of, oh, software's

going to eat the world, which it is, but when you go into a recession, as corporations lay off, that's what we're going to start to cut, and don't forget, companies are setting up business plans for next year they're thinking about, how do we save expenses, capex? they're going to be solidifying those budgets as we go towards year-end, having conversations with their software suppliers, their cloud service providers, and saying, you know, we thought gdp was going to be up a bunch, now we're worried about a recession, cutting back on the employees we're hiring we don't need as many software licenses as we once thought and the multiples are very high in that sector in particular. i think that's the last shoe to drop before we hit an ultimate real bottom sometime in the middle of next year during a recession and the fed is sort of stopped raising and maybe starts thinking about cutting but you've got to wait until the fed has stopped raising rates. we're not near that point. >> how do you think about multiples when it comes to software and semiconductors? i mean, software, you mentioned high multiples now, but they also have yet to feel the true

slowdown in enterprise, and semiconductors, just a leading indicator of economic activity >> yeah, i think if you take a step back, i look at multiples across the entire market, and so, you think about it big picture, the s&p is at a trailing pe of 19 times right now. if you go back through 70 years of history, when the cpi's above 3%, the trailing pe is 15 times. that's assuming you get back to 3% so, you've still got a long way to go with multiples in general. to your point, software's where the highest multiples are, because that's the sector that sounded the best so, if you're a portfolio manager and somehow still thinks the market's okay, that's the sector you're going to hide in because service numbers came down, salesforce numbers came down, but it wasn't as bad as in semis or other areas so let me hide in there or microsoft or pick your favorite software name

but that's why the multiples have gotten so high relative to the rest of the market in semis, you have seen some of those multiples come in finally. avoid semis, avoid software because you've still got numbers coming down a lot. semis in particular, because that's tied to smartphones, pcs, hardware stuff that everybody was buying during the pandemic, where now people are going on vacations, going to their favorite restaurants, doing their favorite activity that doesn't retire semiconductors. >> you've got 30 seconds, dan. i just wanted to get your take on apple it was a relative outperformer last week so i'm curious whether or not you think there's a defensive nature to apple still here at these multiples. >> yeah, you know, i keep waiting for the high-end consumer to crack. it hasn't. apple sells high-end smartphones, so it may be one of the names -- we covered our short there. it may be one of the names we pick up this week to pair against shorts, because right now, the high-end sounds okay but in general, you look at the multiple on it, it's just too

high i think the stock continues to go down into the middle of next year that's more something you might pair against a short >> dan, great to speak with you. thank you. dan niles. >> thank you, melissa. >> 13 seconds. make sure you do join us tomorrow we'll see what happens is that lesson up? 53 >> yeah. >> good job, melissa good job make sure you join us tomorrow "squawk on the street" is next ♪ good monday morning, welcome to "squawk on the street," i'm carl quintanilla with morgan brennan and mark santoli stocks do look for the fifth day lower, although we've had a wild ride on cable today, approaching 1.03 the two-year hits 435, oil got close to 77. futures point to a fifth day of losses as yields rise and a pound hits that record low >> plus,