right now. good morning welcome to "squawk box" here on cnbc i'm andrew ross sorkin here from washington, d.c. joe kernen is live in teams square becky is off it is just the boys, joe >> it is remote >> a hell of a market. >> how is the audio? you hear me instantly? >> instantaneously >> okay. that's good. it's like we're -- >> it's like we're sitting right next to each other. >> i don't have a jacket guess who sent me a jacket dan amos of affleck. he sent me that. would you feel comfortable if i join you >> every time i'm in d.c. with the back drop behind me -- >> you're not running for

anything >> obviously here in washington to meet with my supporters no >> independence tip typicallyi rare >> yes. >> if you would, i would let's talk about the market and where it is headed this morning it is up. after what was a big down day. equities at this hour looking to open 170 points higher on the dow. nasdaq up 112. the s&p up 29 points that comes as we contextualize it here. it was the lowest close for the dow and s&p since late 2020. vix joumping three points.

we might have a bounce this morning. we will see where the market ends the day we had a lot of morning where it looked like we were starting in the green. >> five straight horrific days if it were to bounce, no one would believe it, andrew that is a good sign. i'm still holding out. i'm still holding out. mike wilson, 3,000 everybody else 3,200 i'm still holding out. the intraday low on june 16th was 3,639. where did we close yesterday 3,655. we're right there. i would say we're testing the lows what do we call breaching the lows i would say -- would you say

3,500 breaches the lows in a meaningful way >> it breaches the low we have to get katie stockton back we might be breaching 3,200 or more >> we do need to i'm holding out hope the back drop has gotten uglier in terms of the fed -- >> the global picture. >> i'm worried about the fed, andrew pendulums do swing and they stay too long easy. is it possible they make the same mistake the other way and not realize they have already done enough and go too far >> you are making the barry sternlicht debate. i don't know if we're there yet. i don't know >> would that be fitting to transitory, transitory, transitory oh, my god we were wrong. tight, tight, tight.

we'll lick this. oh, my god what do we do? per perfect symmetry >> it is not just tightening in the u.s., one reason the move lower and this is putting everybody in the position they didn't anticipate. >> they are still behind the curve. unless they get their act together they don't want to tighten it up either they have their problems do you want to tighten in countries in southern europe do they want tightening with ge germany's economy? you have people in russia like every man between 20 and 60 is trying to sneak out of the country. that is messed up what is happening. >> joe, is the thesis -- upside

thesis -- >> it can't get worse? >> the upside is the fed and other central banks realize they made a mistake and ease up earlier than people thought and there's -- if that were to be the case, is there a rocket up i don't know you will still deal with the supply problems. >> i that would be the -- the market inter medium term would love that. if the fed blinked would that be a mistake? do we know inflation is so systemic that we need a volcker moment is it going to stay tight if demand does go down? that is the one thing. job market holding up. the rest of the economy with the mortgage rates at 6% and people's 401(k) down

it is hard to say everything's fine i think we skeipped. we showed the notes. the pound and yuan so many global things that you are referencing to take into account. we will have cathie wood on. i'll embrace her view point today. we'll having flying automated taxicabs that's my story. i'm sticking to it the future is going to be great because of technology. right? >> yes, but let me ask you the jobs question in the meantime. that is the central piece of the fed looking at if you believe things are easing up, you hear it anecdotally. it doesn't show in the data. if you talk to the ceo community, they say it is easier to hire. still not easy, easy not what it used to be

the question is is there a tipping point in the situation then, people don't talk about it employee hoarding. labor hoarding concept companies have been holding on to people because they have been so worried if they lose one or two people from a particular group, if they didn't want two other people in that group, the cost and possibility of finding them is so hard. if that is true, they couldn't be holding on to 20% extra if at some point, they decide now is the time the markets better and i can let some of the people go, i know it sounds per perverse, that would have a remarkable deflationary effect >> the journal piece today is on big companies. you are starting to see softness they are thinning the ranks. small businesses still can't find people. that is a still mismatch we need to match the people that

are available with the jobs that are -- a lot of them, you need a totally new skill set. a lot of them you don't. we have cathie wood and judy shelton on later. >> we have a big show today. >> i don't know. it is so light it is sky blue, this jacket. >> if you put the jacket on? >> that might make it worse. >> do you have a pocket square that is the question >> no, no. it doesn't close it is so far from closing that it is almost embarrassing. they didn't ask me for a size. chicago fed president charles evans defending the central bank's recent string of rate hikes speaking with our colleagues in europe, he havevans was pressede central bank needed to carry out 75 or 1 hike

>> i think we have been very clear in the communications and i'm a strong proponent of the summary of economic projections and the fact we indicate where we think the path of the funds rate ought to go to justify the projection the exact timing of that path to me is less important than the fact we continue to get to the point where we think we ought to be whether or not, you know, it is a larger increase at the next meeting or continued increase to get there before very long you know, if you look at everybody's projections, we all have the same spot by march. >> evans said the main concern for the fed is staying on top of tackling inflation let's go to london now where the bank of england said yesterday it's monitoring financial markets closely. we have that going for us. we will not hesitate to change interest rates to bring down inflation. joumanna bercetche joins us now from outside the central bank.

she tweeted about the doom loop i don't like to talk about anything that starts with doom, joumanna we're here let's do it. >> reporter: i'm standing outside the bank of england. i listened to the conversation with andrew. the headline inflation is running close to 10% they also have a currency that lost 20% of the value. they have to do something to bring down inflation at the same time support the currency there it is a lot of pressure on them to actually deliver hikes a lot more aggressively. the flip side is that the more aggressive they go with the rate hikes, the worse for the economy at a time when consumers are facing rising energy and utility prices and faced with the prospects of higher mortgage costs as well. all of that means it will hit the medium term growth output which will desen-sendtivede-senm

if you look at what has gone down t has been dramatic the 10-year gilt bond is higher. the pound is down 8 points in two days of trading. i think there are three things going on the first is as i said, the bank of england has been cautious with the hiking cycle. there was a meeting on thursday last week. the market wanted 75 and they went 50. that was negative for the pound. the second thing is the deterioration on the public outlook. on friday, the first budget delivered by the new british government and spelled out 45 billion pounds of unfunded tax cuts that is set to add to british borrowing in the coming years. deterioration in the public

finances outlook at a time when gilt and borrowing costs are higher investors did not like that. they started selling into the market on friday gilts are 50 basis points higher in yield terms all of that continued in the yesterday trade until the bank of england came out with the statement. we are monitoring the markets closely. we are not going to come out with an emergency hike now, but we will not hesitate to act if need be. potentially at the november meeting. the november meeting is factoring in 175 basis points. we talked about the pressure on the central bank and the pressure on the public finances. i wandt to add a third element the dollar has been so strong and the fed very much into the hiking cycle and having ramifications across the world the difference the bound is

weakening and the euro is as well this is a specific pound issue at this case >> a lot to take in. joumanna, the contagion from the rest of europe in terms of energy issues as well. a lot of people think the uk problems are imported or exported directly out of germany or the rest of europe as well. over here, we're not -- we have demand problems. we add to demand by spending more money on different things i guess a tax cut adds and is counter propductive too. that adds to the demand and makes the central banks and bank of england's role harder >> reporter: yeah. that's precisely it. i think what you mentioned about the fiscal outlook is really

important and specific to the uk as well. many people were surprised how expansionary the budget was on friday this is not the timing for it. you don't need a inflationary fiscal package when inflation is running 10%. it is adding more fuel to the fire and putting more pressure on the bank of england to counteract the fiscal looseness by making the monetary policy tighter. energy prices are tripling in the next month all of that is going to hit consumers hard it will hit the companies hard the central bank will be in position to aggressively hike as the economy heads into recession which is likely going to start in the next few months >> joumanna, thank you joumanna bercetche a rainy london stop the presses >> reporter: yes always >> raining in london

thank you, joumanna. we'll talk about potential buying opportunities with the dow and s&p at the lowest levels of the year. don't miss "squawk box" exclusive with ark invest cathie wood entire world riding on your shoulders. no we covered it either way up or down "squawk box" will be right back. ♪ ♪ wow, we're crunching tons of polygons here! what's going on? where's regina? hi, i'm ladonna. i invest in invesco qqq, a fund that gives me access to the nasdaq-100 innovations, like real time cgi. okay... yeah... oh. don't worry i got it! become an agent of innovation with invesco qqq ♪ ♪

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welcome back for an update on hurricane ian strengthening to a category 3 as it approaches cuba it will gain intensity to a category 4 florida is bracing for a direct hit predicting landfall in the tampa bay area tampa airport suspending operation. residents have been ordered to eva evacuate strong winds could begin on wednesday at 3:00 p.m. this is the first hurricane to disrupt oil and gas production in the gulf of mexico. bp and chevron have been evacuated personnel. occidental is implementing emergency measures there could be some cost to all

of this in the energy sector and when it comes to the safety of everybody, we hope everybody gets out >> first things first. then we'll deal. we have the spr. a few barrels left i hope thanks, andrew. major indices finished in the red extending last week's slide. as the s&p 500 took out the june closing lows the futures are bouncing back at 200 above. in terms of the dow, it is better i think we were almost 300 higher first thing i saw bouncing all over. i don't know rates not crazy today. we will look at treasury yields. let's talk rates and markets

with sherry paul at morgan stanley. and covering the fixed income is senior strategist at barclays. meghan, you are a rock star. it is all about you. normally talking about stocks and we would go to you second. we have to go to you first let's ask you the question just wondering if it is possible that the fed which stayed at the easy party too long and now go to the tight party it seems fitting >> yjoe, the fed is going to likely overdo things here. if we look at the projections

from the meeting, you can see they are at maximum uncertainty across almost all of the components they are forecasting right now. they are still going at this very aggressive clip of rate hikes. we are expecting another 75 basis point hike for them to deliver. it is almost like going at 75 miles an hour without knowing where the next turn in the road is going to be >> that's perfect. that is fitting. they really don't know what they don't know they admitted that i would think that is the first step toward recovery is admitting it i would slow down to 35 or 40 and that's not what is happening. >> that's right. what they do know is they need to get inflation under control ultimately what they need to do is inflict some pain on financial conditions to basically get that cooling they

desire on the labor market they are using a nice term for this rebalancing the labor market what this means is they need to drive unemployment higher. you know, an unfortunate cost, but ultimately because we face very strong demand inflation here in the u.s., this is the medicine that effectively the economy needs to take here >> i'll get to sherry. one last thing we have that now the participation rate is low. we pay people to stay home now everybody is talking about hybrid work. i don't know if it is really the classic tight labor market we saw. they are going after the wrong thing and, you know, you may end up hurting the rest of the economy in the classic labor market or tight labor market from what we have seen in the past. >> certainly, joe. what they are doing now is

winding back a lot of that an accommodation we saw post covid. you mentioned the fiscal stimulus we saw. they are in the process of winding that back. the treasury market has to digest more debt than it has been over the past couple years. this is causing a lot of problems for the treasury market we have seen over the past couple days or so. the incredible rate volatility that we have seen in the u.s. treasuries is the deepest liquid market in the world. >> sherry, i don't think you should switch yet to fixed income for managing wealth. you got to admit that. it hasn't been something you had to worry about. sherry, you want to rebalance the next time the market at the point where it bought and rebalance at a time in the

inflationary rising rate area. should woule do that? >> we are in a crucial moment to get investors out of the old party and get to the new thinking and step out of the economics of the politicized bond market and take a look at what the opportunities are in the signs of the stock market which tells us winners become losers and losers become winners. we are in a reset. we have 11 sectors of the s&p 500 with 30% of the stocks retested the lows. regardless of the broader market, it is a buying opportunity for many people. if i had a choice between stepping in the politics of the bond market or capitalism of the stock market, i'll take the stock market every day >> you are preaching to the choir. the issues you talked about

tested the lows enough to where you feel comfortable buying right now and recalibrating your portfolio? >> that is right the biggest thing i encourage investors is we are in a massive leadership change in the 20 plus years i've been managing money, we have to take stock of that. you want a barbell portfolio present value cash flows and anchor the portfolio against what i call idea maturation. we have to move to dividend growers on the front end of portfolios and center within sectors. separating out staples against tech innovators. health care innovatorsdelineatet >> you gave us the broad brush of what people should be buying,

sherry. >> one more time within health care, health care staples. traditional players. biotech. preferred growers are utilities and real estate. real estate had a nice pull back here you make money in down markets you want to keep markets and the time for high quality companies is when they are on sale that would be the short story, joe. >> okay. you are not from kentucky, are you sherry not from those pauls >> no, i'm not not that i'm aware of. >> maybe just -- thank you, sherry good to have you on. meghan, thank you. stick with the fixed income. we'll have you both back a great partnership. sorkin, don't you think? >> absolutely.

we have more coming up this morning from d.c we will get you ready for the investor summit of the year. delivering alpha conference. it's a day away. details after the break. right now, we asked top strategists about the biggest concern for the market the majority saying they are worried about the fed being overly aggressive. so maybe something for us to think abt,ou joe "squawk box" coming right back

welcome back to "squawk box. we're one day away from the delivering alpha conference. we have leslie picker joining us with a preview >> reporter: andrew, in the year where the average 60/40 portfolio of stocks and bonds is down 20%, up performance is

paramount. that will be the thread that will run through the conference. the delivering alpha event taking place tomorrow in new york city. it will be the first time we are back in person since 2019. the speakers span asset classes and strategies stan druckenmiller will be with us as many others. i'll sit down with dan ivascyn we'll have a panel focused on short selling and a one-on-one with ken griffin with the midterms over a month away, we get the climate with the deputy secretary wally adeyemo. tickets are still available for

purchase at deliveringalpha.com. >> leslie, it will be an amazing day. we will get a snapshot across the country and how investors are thinking especially given the federal reserve and other central banks. what is the one thing you are looking forward to >> reporter: andrew, this is cheesy to say. this is the first time back in person in three years. i'm looking forward to the conversations that take place in the room you know this better than anybody. so often with the conferences f y , if you have a digital model, you get the side conversations and see who is talking to whom and during times like these, it is important because you really have so much uncertainty out there. so many questions. when you have people who have such diverse experiences and thought in the same room

together, that can be really bene beneficial >> leslie picker rubbing elbows with the big guys tomorrow appreciate it. joe. >> so much -- you remember in davos when everything was great. think about tomorrow we have people who really worry for a living i'm looking forward to it. >> there will be hand wringing, my friend. >> i don't know. the weekend. we'll see. maybe it's so thick right now that maybe there is light at the end of the tunnel. it is not an approaching train coming up more on the crisis on europe and mcc. michelle caruso cabrera is joining us next. throughout hispanic heritage month, we celebrate our

teammates. here is our producer patty martel >> there is a saying in spanish. it literally translates to put in your batteries. i wanted to fire up the next generation of latinas and latinos to continue to build on the work of so many that per severe before us embrace your heritage. we are all hispanic. we are diverse we eat different foods and wave different flags, but bonded by a shared history we are bicultural. let's own. it it. it's our super power

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welcome back the futures right now are at the left levels since the show s stst sta started. they were up earlier 300 by the dow. this is the early morning rebound that i don't know how much faith you put in it we'll take it. now to the crisis in europe. the continent struggling with energy supply and weak currency against the dollar joining us is michelle caruso cabrera. we had this election in italy and sweden some of these candidates are not

euro lovers. eurozone lovers. does it survive? it survived er other crises. you don't have -- you have desperate fiscal. >> monetary union where discipline is not imposed by the markets necessarily. super unwieldy yes. what we have seen is a shift to the right. i think a lot of that comes down to the energy crisis in europe they committed to a transition the technology and capacity power generation not there yet the costs are very high. what you have seen in the uk and the drama and the pound is focused on the budget that came out last week. if you dig deeper, it is related to the energy crisis think about the budget proposed. tax cuts lower regulation

normally markets like that especially in the country with plenty of borrowing capacity they don't have a high debt to g gdp. they could borrow more it is coming at the same time they aresidizing energy look at this this is the percentage of gdp subsidized by countries for energy we are already right now at 6.5% of gdp for the uk. in the budget, not only do they cut taxes and say they will lower regulation, but they are also going to keep spending on subsidy. that is why you have seen such a dramatic, you know, fall in the pound. which, by the way, makes the prime minister's job harder. they import energy which is priced in dollar it is more expensive

subsidy gets bigger and bigger the higher the borrowing cost. it is a tough situation. >> long term, you would think those are good things for the economy. >> that's what the prime minister is arguing. get through the short-term pain. >> does it remind you of the fed? right now, the markets are like the fed. they would like it to stop we're told long term this is what we have to do it is always about make me chase. don't make it right now. i think. >> right look, she is in a tough position she's a conservative she wants to deliver on a conservative agenda. at the same time politically, and this is happening in italy which elected a far-right prime minister they have to soften the blow of energy costs you cannot survive politically >> we will have judy shelton on later. we constantly talk about what a

crummy way to run an economy when you handle inflation through killing demand you cause recession. it would be better instead of killing demand if you increase supply with tax cuts and lower regulation that's the way that you want to do it organically. that would discount the fed role on everything else i wish the fed wasn't such a big part of our lives. the economies could stabilize if the eco they were allowed to proceed unsh unshackled. >> we have positive real interest rates at some point what would that look like? >> you know what it would cost the risk capital you don't risk it on things that aren't going to payoff. >> right or not -- you know, anecdotal evidence several years ago, i had a friend in bond sales she put her grandmother in high

yields that's the only place to get yield. they is trying to generate income look at the two-year you don't have to do anything. you can put your money into a two-year and it will yield more than 4%. put aside the fact it doesn't keep pace with inflation every single other investment out there has to look better than putting your money in a two-year note. much higher rate of return than a year ago. >> i'm so pleased. she is still a republican, fix this is really nice to see this is nice you can change the -- you can't change the leopard spots >> i don't know what you are saying. >> you still got it. thank you. what was the name of the book? you know i'm right >> i have expressed discontent with boeth parties for a long time >> you still got it. >> plenty of people in my party

who think fiscally we need to be. >> really? both of them one or two okay good let's not get into this. >> you brought it up >> because of what i heard i was worried. i don't know now i know still see the leopard spots. andrew >> you see what you want to see. you see what you like to see. >> very good point, andrew >> that's true coming up, when we return, airports across the country bracing for worker protests today. we have details next. and economist judy shelton will talk about worldwide inflation and the fed and much, much more. always one to say provocative things you can watch or listen to us live right now on the cnbc app. we're coming right back. live shot of new york tyci i'm in washington, d.c. this morning. back in a moment

welcome back to "squawk box" this morning executive edge showing airports dealing with the wave of protests from workers and bartenders and lounge attendants at san francisco international airport. it happened yesterday over wages and staffing flight attendants expected to demonstrate at 21 airports around the u.s. and in london. this is all happening today to draw attention to workplace problems made worse by under staffing ing neither strike is expected to disrupt travel this week, but this is the latest sign of upheaval in the transportation sector. when woe e come back, more n the shock of the housing market next you can follow quasquawk pod on

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welcome back to "squawk box" this morning we want to talk about mortgage rates this morning, because they continue to rise, a significant increase from the start of 2022 and rates were just 3.3%, with home cancelations above 15% for the second straight month, and home buyers are suffering from payment shock. going to try and talk about some of that in just a little bit this is the issue, and what is

that going to do to rent, long te term, right? >> yeah, it's good if you are a landlord i worry about, remember what refinancing used to do in an economy, and you felt you could do the home equity thing or whatever, and that's gone. >> that's not coming back anytime soon >> that leg of the stool is going to be gone for years >> right now, not a terrible problem insofar as i still believe -- i think bank of america said it, 80% of mortgages are locked in place for years, and that's the question which is at some point this rolls and that can become it's own conundrum and we want to talk to patrick

about this, and what do you think? right this second it seems to be not having the largest affect, but when do you see things rollover >> we are starting to see it already. my business focused on the multi-family sector, which is the renting products, and lenders can't forecast where rents are going to go and interest rates are going to go, and without financing, the real estate sector comes to a halt. the for sale single family market is a matter of time it's a psychological game, like you mentioned, when people see home prices going down or not going up, they feel strapped and their interest payments are going up, and when debt rolls over and they need to refinance, they will not be able to the conversations i am having with my investors around the

world, this is reminiscence of 2008 >> 2008. we know what happened in 2008. you think there's a possibility, when you start to think about the real estate complex that that rolls over in such a bad way that we get back to that moment >> i do. i lived through that moment, and that moment is why i was able to get on the game -- the market to begin with when the downturn came, i got active what is going to cause this one is the capital markets, and it's a financing issue and a debt market, and lenders over extend themselves and forget about bad times, and bad times are coming and the fed is causing a recession, so when you have layoffs and people making less money and less disposable

income, you know, it's a psychological affect that could cause bad things to happen >> patrick, we have been talking about the banks and the strength of the bank for many years, and we talked about the capital requirements and such, and do you look, and when you talk about this being a 2008 situation, all of the debt, all of the mortgages and real estate debt, corporate debt, you think could rollover like that are the banks not prepared this time >> of course, not. what happens is they may be behaving well, but the people they are lending money to, the debt funds out there, these phantom banks that popped up, they are not, and they are not using the same risk measurements, and i will tell you right now there's no financing available from banks, and if i kpgo to buy a property

used to get 20 term seats and now i get three or four, and banks are out of the picture right now. what that tells me is they have a lot of problems on their hands that they may not be necessarily disclosing >> we're up against a hard break. rents, people worried about rents increasing, and what are you seeing and do think that will persist, or do you think if rates come down rents come down? >> it's a factor of supply and demand, and in the sunbelt there's still more demand than supply, and we were raising rents at 25 to 30% the last couple of years and that's coming down a little bit, but still we're raising rents -- last year was the highest rent growth i have ever seen in my career >> patrick, i want to thank you, and i want to have you back, and

people probably want to turn off the tv hearing this bad news, but we need to make sense of it. thank you. >> thank you >> harsh words >> oh, look at you >> this is -- the only other two people is nick saban and deion sanders. >> it matches the afflack -- >> do you remember "tommy boy. ♪ fat guy in a little coat. >> what am i supposed to say

>> i am not sure i am not sure. maybe that nobody should ever really make a jacket this slur >> what size are talking about there? >> i have been working out i would need some kind of a vice it's small obviously i look -- the camera must not add ten pounds because they sent me one that is a little too -- i can't wear this. coming up, an clivexuse with investor, cathie wood, coming up t 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.

stocks set to bounce after yesterday's losses we will get a live report from london is the market set up for a big tech bear rally? we'll find out where you should be putting your money to work. and hurricane ian is hitting cuba as a category 3 and expected to strengthen as florida gets ready for a direct hit. that's straight ahead as the second hour of "squawk box" begins right now.

good morning, and welcome back to "squawk box" here on cnbc live in times square. i am joe kernen along with andrew ross sorkin >> you took the coat off already? >> yeah. honestly, trying to button that thing i could get a hernia, and i tried so hard -- our viewers are so great and immediately people sent in gifs of chris farley in that little coat and it takes my mind off the bear markets >> yeah, you need to there's a little green maybe it holds up. >> andrew is in washington, hence the beautiful capitol behind andrew. u.s. equity future -- that's a

great shot always a great shot. u.s. equity futures up 300 treasuries at any moment, if yields were to spike again, that's usually what gives the stock market -- adds to the angst. what is next after three comes four, potentially, and we already got it 4.25 doesn't look bad, does it, for a risk free rate of return -- >> i might take it >> two years and then you saw oil, oil is up

a little last night, you could kind of watch bitcoin -- you could watch the futures obviously, as well, the s&p futures, but they are pretty highly correlated the bitcoin started acting firmer late yesterday and now it's up a full 5%, which is on a relative basis >> in the meantime, the futures are higher this morning, and marking five straight days of losses, and the s&p closing at its lowest level of the year we have global markets covered all morning here we are going to london right now here in just a bit about what is taking place there, but we begin with dom chu >> there's not a huge amount of

trading, but there are some stocks on the move this morning trying to bounce back from yesterday's losses we are going to highlight some of the sectors and industries that saw some of the biggest selloffs in yesterday's trade, and maybe with the economic narrative, the recession looming, oil and gas stocks or a huge focus there, and we are seeing more trading activity in the premarket, and energy stocks in particular, and halliburton, marathon oil, and they saw the losses yesterday and are trying to balance in today's session now. if you look at the travel and leisure section, that was one of the ones that got hit hard in yesterday's trade, and cesars and carnival among those that

got hit yesterday and they are seeing a bit of a bounce now and then during yesterday's selling pressure, the nasdaq and the technology sector was an out performer and we are seeing some of the bounce today in apple and microsoft, north up a%, and amazon up 1.68 the only reason i put these stars here is because in the selloff yesterday, apple and amazon and tesla were positive, and that gives an indication that maybe there's a shopping list for some of the mega -- >> right, you read the article that tesla is holding up like

apple, which is an interesting and new dynamic in the market world. back to you, joe >> thank you >> tech could give some -- maybe a little support at this point it'snot like there has not been, i would say blood in the streets on a lot of tech it's not like they just held up ignoring all of the macro backdrop they sort of let us down, and maybe they lead us back up and cathie wood, an aggressive fed, big swings and currency, we'll break it down. and then gene munster, he will share his ideas on how you should approach it "squawk box" will be right back. ♪♪

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we can go with good morning. it's really the perfect storm over here in the uk, and let me walk you through the sequence of events over the last few days. thursday the bank of england delivered their rate hike 50 base rates, and they were expecting 75 followed up on friday by the first budget out of the new uk government, 45 billion pounds worth of unfunded tax cuts these are the biggest tax cuts delivered since 1972, and sent investors on a path of worry about the future of the uk's public finances because a lot of these taxes will be funded by borrowing, and this is an open economy, and because the pound is weakening, you are sitting on a deficit which all the factors

are making investors nervous, and the onus is on the bank of england to do something about it they put out a statement yesterday saying they are watching developments closely, and we're now looking at 165 basis points priced into the next november meeting, but the pressure is on them to act more aggressively, the trade-off being they will have to hike into a time where consumers are faced with higher utility prices and mortgage rates, and that could be a heavy tradeoff considering the fact that the uk economy is poised to go into a recession in the next few months possibly >> we are going to be talking about this same issue with judy shelton in a couple minutes.

meantime, as the fed continues to flight inflation by raising interest rates, the pain being felt around the globe with skyrocketing prices, and joining us now is the chief economic correspondent. good morning to you. the question i would ask that we have been debating all morning, do we think the fed was behind the ball the first time in terms of raising rates and now may be behind the ball in terms of raising the rates, in terms of where the economy may be headed? >> yeah, there's a lot of reason to believe that. if they raised rates in 2021, they would have time to calibrate things precisely, and then they allowed inflation to get as high as it did back in the spring, and now the race to try and catch up with where they are racing to be and prevent these kind of inflationary

expectations from selling in, and they can't fine tune or calibrate precisely. >> speak to the issue of credibility. part of the reason the market is sensing the idea that they are going to keep going, and part of it is about credibility more than anything else, if they were to ease up, either next month or the month after, would that hurt or help their credibility? >> that's a tough position to be in, and i think it would damage their sense, you know, when they promise, we have resolve and we will do whatever it takes, and you can't give the speech powell did last month or last week and back off six weeks later if you are going to have this kind of commitment mechanism and say we are going to puts rates as i as we have to, and then if you turn around six weeks you are in a bad spot, and this is

the price they are paying for for not raising earlier in the year >> there's starting to be cracks in terms of the labor market, and getting easier for people to hire folks, and they are releasing some of the employees into the labor force, and maybe a polite way of saying they are going to lay them off, and does that change the doom loop we are talking about? >> it's not going to happen that quickly. we just got up to 4% plus two-year yields. it's takes time for that to flow into the economy we are seeing housing crack and that's a gradual process in six months we could be in a clear recession. if we are just talking about kind of ceo chatter and earnings

calls are a little gloomier, and given the sense that their credibility is at stake and they have to do the stand up stiff and move forward no matter what, it's going to take some real movement in the real economic data, not just the forward-looking stuff. >> i would hate for pure stubbornness to have all of us pay the cost for that. remember the transitory stance the fed took, and they took that for way too long and ignored the data, and now it's almost on the flip side, they are not going to be data dependent on the tightening side, and it seems like they are informed by everything they heard about the '70s and paul volcker, and then suddenly data dependant -- now

it's a bad thing and it means that you have feet of clay that's a bad position to be in and we could get hurt from that. >> you are right i think there's a difference between what data we are talking about. are we talking about payrolls, or are we talking about inflation showing the things that's going to be pushed down in time or early warnings. we had the initial surge, and the job market looked rockier in the summer and now it looks a little better. the distinction is they will want to see real evidence that things are taking a shift -- >> what if it's not your father's -- all these clich'es, but what if it's not that, but it's post pandemic and low

participation rates? what if it's -- what if the rest of the underlying economy is totally in the crapper, and all you have left is the job market? >> well, there's reason to think that might happen. all the companies that had labor shortages for the last year and a half, and maybe they won't respond the way they usually do in a recession, and maybe they will hoard workers and if that's true you will not see payroll numbers drop the way they do in a downturn >> we had a real estate investor on in the 6:00 hour that mentioned a year that makes me anxious, he mentioned 2008, and he thinks things could be lining up like that do you think that's possible we talk about the balance sheet, and he says don't think about those guys, he says the loans we

are getting today are from everybody else, a shadow banking system >> i just wrote yesterday that i see parallels right now and between august 2007, and it was the early stages of what became the global financial crisis. the parallel i see, you see the uk potentially a warning sign of what might happen in the future, and nothing bad really happened in the economy, but there were cracks forming that became a recession in a global crisis i do feel some of the same kind of warning signs happening right now, and the question is not do these higher rates worldwide have an impact, but the question is how severe and how fast does it show up that's the piece we have had to model out, and we have had zero interest rates across the entire western world, and if the

neutral rate is higher than that, and how many business models no longer work and how many banks are no longer viable and how many industries are in question, and that's the part where talking to individuals and businesses can gain, and we have never seen an adjustment of global rates happen in the last few months >> and i don't want to call it conventional wisdom, but everybody is looking at the down side is there any upside story here worth considering? >> yeah, i think the upside story is this is a bumpy road for the u.s. over the next few months, and whether it's technically a recession or not, who is to say? and the equities for the corporate debt, this is not the crisis kind of situation where you have widespread bankruptcies and huge sells in stocks, but

it's a borderline recession, and you can imagine some assets could be attractively priced >> neil, great to see you. coming up, hurricane ian being felt in the energy complex. and we are going to discuss the impact of the storm on the energy sector in a bit and we are counting down with our interview, cathie wood, later this morning and there's still time to register for the conference, you can scan the qr code on the screen "squawk box" will be right back.

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thanks to avalara we can calculate sales tax on almost anything, anywhere, automatically. avalarahhhhh. what if tax rates change? ahhhhhh. filing sales tax returns? ahhhhhh. managing exemption certificates? ahhhhhh. business license guidance? ahhhhhh. does it connect with accounting? ahhhhhh. item classification? ahhhhhh. cross-border sales? ahhhhhh. what about? ahhhhhh. ahhhhhh. do you have those budget markups? thank you. mmhm. [bubbles]

amid concerns, a partnership between jetblue and american airlines have heard competition in large markets, and the justice department will start

laying out its case to unwind. >> joe, it's an antitrust trial that is expected to last the next three weeks, and during those three weeks we could hear a number of executives through jetblue and united, and depending on the witness list, how it shakes out, and the alliance between jetblue and american, and both wanted a better way to compete with delta, and so here's what has happened since they formed the alliance, which, by the way, was approved by the previous administration in 2020 15 new nonstop routes have been added and 17 new international routes, and increased frequency,

and those are the numbers that jetblue and american cite that they have held the competition, and the doj under the biden administration says we don't agree, and we think this alliance is essentially a merger without officially being a merger, and it hurt competition particularly in the northeast, and they want to unwind the partnership. after opening statements and arguments today, then we will hear from jetblue's ceo, robin hayes, and he will be the first airline executive to testify today, and we are going back to january 1st of 2020. as you look at the airline shares, keep in mind they are all being crushed right now, so there's no way to look at the chart and say this is definitely looking at the alliance, and most importantly the question is what happens if this is rejected

by a judge if a judge says this alliance is fine and they can continue, what does that say about the potential merger between jetblue and spirit conversely, if a judge says this is anti-competitive, does that further hurt what might happen between jetblue and spirit we will probably get a decision early next year, and that's a guesstimate at this point. >> competition, i don't know, it is, good, phil, we need it, in all areas, especially with inflation. i think that's whywe had amazo digital world. that's why we have been so used to 20 or 30 years of not having to worry about it, and it comes back with a vengeance. what was that -- i got a call yesterday about a lease running out, and i asked them when they

called me yesterday, about a reacquisition fee? >> reacquisition fee some dealers will charge you for you to buyout your lease, maybe $800, $1,000, and i had it happen to friend that asked, what is this that was not in the lease. >> we can try. thanks still to come here on "squawk box," gene munster is breaking down the big tech selloff and the impact of the stronger dollar. and don't miss an exclusive interview with cathie wood for her take on the markets and the economy. iss awbo aching "squk x"nd th icnbc

welcome back to "squawk box. 308 on the dow now does it hold maybe it's oil and maybe it's

the ten-year it could be anything it could be the dollar or the pound. let's bring that in. amazon down 39 alphabet, down 35. and joining us, gene munster we have been talking about some of your quasi comforting comments about a rally, a potential rally, in technology, but we're paraphrasing it with a bear market rally, so what if it was a rally that turned into something more than a bear market rally would you just change your tune or are you sure it's a rally in a bear market that is destined to fail or could it be something more than that >> there's a 20% chance it's

something more than that, and i don't want to bury the read here, and the reason i think it fades is that the fed has public enemy number one, inflation. they have a duel mandate that is stated but they drifted away from that. the key factor here is inflation. their ability to continue to fight that is going to be the biggest mechanism, of course, will be through interest rates and that's negative for tech and we are thinking about the cpi number, and it's less likely we are going to see a cpi number sub 4%, and we will see those numbers before the fed backs off, and i think that ultimately this continued persistent higher rates longer is going to be negative over the next, let's call it, six months. if i can frame in the optimistic

side, there's an investor piece and traders. for the investor, it's simple, apple is down 17%, and so people say that's a reason for it to pull back. i believe the reason why it's down 17% is they are fundamentally in a good place with their products, and we checked iphone demand, and it continues to be elevated and that's a safe haven, apple if i can frame in the spring back related to some of the other tech companies there were ten high flyers -- i identified what i considered the biggest high flyers in 2021, and those stocks are down on average 17% to date, but what caught my attention in anticipation of the bear market rally is they have an average short interest of

12%, and typically these types of companies have a three to 5% short interest big tech has a 1% short interest, just to give a perspective. and that 12% short interest can spring back nicely, and this is not investment, but i think you can see some of the companies back up in the next couple of months >> if it was a 50% selloff, that's a tradeable bottom you are making, but i don't know if you need to keep calling it a bear market rally. would you have a problem long term holding these stocks from these levels if you are saying it's a bear market rally, and let's say it has a nice bounce like you just described, so do you expect new lows if you don't expect new lows why are you calling it a bear market rally? why not just call it an entry point now for stocks like meta

if you loved it, 62% from here, if it's down 62%, maybe this is just an entry point, not a bear market, not a rally, and not just a tradeable rally >> that's a fair perspective my sense is the reason i am not calling it the bottom or just -- i can see you talking about 30% through the next couple of months, and maybe it doesn't give all that 30% back, but enough of a retracement where people say this was a false start. ultimately you are getting to the real atopic here, which is what is going to happen with these companies in 2023? i think 2023 is going to be a great year for tech, and i think we will get back to higher growth rates, and luke owns meta, and i didn't highlight that as a safe haven because

there's controversy around it, but i would agree with that perspective, that if you have the luxury of owning these for a year plus, and the time that i have been following tech, i can't remember -- actually, i can remember 20-plus years ago after the dotcom, i think there was a sense these companies are all going away, and i think if you can hold something for a year. year and a half plus, you could have high flyers >> did you think there would be a selloff a year and a half ago, gene, and did the depth of the selloff surprise you >> a year ago we were about 60% -- our fund was 60% in cash, and it was a painful back half of 2021, and our investors were disappointed given the market

continued to go up and we continued to hold cash, and things reversed and we are still down on the year and there's no congratulations being down less than what the market is down, but we are still down one-third in cash, and we have private investments, and if you want to know what an investor thinks, look at their portfolio and ours -- we don't want to miss the sustainable rally back and the hope is we will put more money to work over the next few months in anticipation of the good 2023. >> you are going to watch cathie wood, right? >> can't wait. >> i bet she has similar viewpoints, i'll bet, in terms of if you buy it here for a while or buy it here for good? she might be a buy it here for good >> i suspect that's the case i am more measured in my

optimism, but i appreciate what she does >> excellent i am sure the feeling is mutual. >> thank you coming up, we will talk oil prices on the rise as the market turns its focus to supply issues and disruptions in the gulf of mexico thanks to hurricane ian plus, less than an hour away from our interview with ark invest ceo, cathie wood. we're back after this.

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this morning we have a wild story for you three men were charged with fraud and other crimes in a scheme involving a company that was worth more than $100 million in the stock market despite only having a smalltown new jersey deli to its name and they were charged with fraud, and the men expected to appear in court at a later day, and the men were also accused of market manipulation by the securities and exchange

commission, and the investigation is ongoing, joe. it's a wild story brought to light in part by david inhorn where we said the pastrami must be amazing only one store reminds me of the market pools from the 1920s when you effectively hand out shares to family members or friends, have them buy it up to make it looks like there's hot interest even though there is none. >> i think it's -- it is a suburb of philly i don't know where this place is did you see another stock that wasn't -- it wasn't a deli hometown deli rose 939%, and they had a waste management -- >> yeah, that was the other part of the business. >> e-waste -- stick an "e" on

anything that was up 1,019% not too shabby it was a suburb of philly. >> kind of incredible they could get that much interest going, and who they had to pull into this to make it work >> they sold it for 15 grand, and the inventory was -- you know, meat goes bad. >> i still want the pastrami sandwich >> yeah, must have been a heck of a sandwich. have to move on. it's tough for many investors to see a silver lining in the steep stock market declines but there are many ways to turn stock losses into tax savings. there's a few of those around. sharon joins us with more. do you have to look hard >> you have to look hard, joe,

and you have to get ready to do the work now if you turn stock losses into tax savings by tax loss harvests, and you can subtract that from capital gains by selling other investments and by doing that, you can reduce the taxes you owe. >> we experienced a real estate boom and many people were taking advantage of that to sell their properties, their rental or homes, and so loss harvesting gives you an opportunity to bank market losses and to be able to offset the gains from other property sales >> now, she points out if you sell your main home, the irs will let you exclude $500,000 if you are married and file jointly, and you could have more capital gains than that, and it doesn't apply to a second home

or investment property you can deduct up to $3,000 a year and carry forward any losses -- extra losses indefinitely another strategy in a town market is to do a roth ira conversion, and you can do a pretax ira to a roth ira, and with the slide in the stock values you won't pay as much tax as you would have a few months ago, and that's another strategy you have to do >> you get a new cost basis for the future -- that's interesting. is it by january 1st >> you have to do all this by december 31st, so it will be factored into your 2022 taxes. >> the old adage is never do anything based solely on taxes >> no, you shouldn't i just feel at this point people

are looking for something seeing their values go down and their portfolio balances go down, and where can i find relief and this could be a strategy that works for both >> i think you need an accountant, don't you? >> you need an accountant and financial adviser, you need a team >> it doesn't seem like it's totalll losses on the other sidee irs. >> they are coming, 87,000 of them waiting in the wings. i can't wait for that. >> if you believe in the law and "l law and order, you believe in paying taxes >> the whole 87,000 -- >> you want to enforce certain

laws and not others. i don't understand >> tell me about it. >> and then hurricane ian churning in the gulf, and we will have a breakdown of the oil sector next,nd a don't miss our interview with ark invest ceo, cathie wood. if you wake up thinking about the market and want to make the right moves fast... get decision tech from fidelity. [ cellphone vibrates ] you'll get proactive alerts for market events before they happen... and insights on every buy and sell decision. with zero-commission online u.s. stock and etf trades. for smarter trading decisions, get decision tech from fidelity. to adapt in a fast changing world, for smarter trading decisions, you could hire a professional pit crew. go, go, go. sorry. nope. okay.

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welcome back to "squawk box. hurricane's ian impact already being felt bp and exxon saying they have shut in production with the oil platforms in the gulf of mexico. a category 2 storm is expected to intensify in the coming days. it's the first of the year to disrupt oil and gas production in the gulf, meanwhile occidental petroleum saying they're implementing measures for facilities in the region and the next guest says the latest break below $80 a barrel means like the stage of death in a bullfight. here to explain, rebecca batten at cibc private health that's something why do you say that? >> you know, i say that for a couple of reasons and mostly because the fundamental backdrop in crude is known to be really positive we have limited is up plays and limited spare capacity and limited inventories and the

bullses have been chasing at that red banner and that thesis over the past several months and they've constantly been beaten back by a slower recovery in china and weakening demand in the u.s. and summer driving season not living up to expectations and finally this last move in the dollar and the macro environment kind of just putting that final spear in the bulls' back and pushing many, many, many speculators out of the market as they have to say i'm done with this trade, i'm calling it quits and i can't take this trade anymore. it feels like the bulls in some ways have lost their will to fight in the positioning sense there's not enough conviction right now as we move into winter and we know all these supply disruptions are likely ahead of us to re-engage with that trade in a macro environment that fully eclipses what is happening fundamentally in the commodity >> we have delivering alpha survey because we asked

participants where oil will finish and 23% say the price will be under $80 and 74% say between $80 and their 10037 only 3% say between $100 and $120 which of those numbers do you agree with >> i am in that base case, 74%, but i do think they're underestimating that upside tale of what can happen here and that mostly comes from geopolitical events as we head into december and sanctions are imposed on russia, and as the u.s. tries to impose a price cap, right? these have a lot of potential to go very wrong. russia has displayed a likeness to use energy as a weapon and they're doing it with natural gas. if we push too hard there's a chance that russia retaliates and we're seeing a lot more than

the market expects to come off the market we're seeing roughly 16% and the base case, i do think 80 to 100. i'm closer to 90 to 95 because we overestimated how much demand will be hit due to the slowdown and at this point crude has priced in an aggressive recession and it's overdone it i do see it over 90 to 95 and it's in the 19% range. >> just to put a fine point on it because we do have this headline about hurricane ian how do you factor that into this equation >> it's from a market's perspective and it's a little bit of a non-event to be honest with you we are looking at four platforms and i see shutdown and 00 barrels of production that may be, you know, off line for a temporary period of time so right now if the storm ian stays on that trajectory that's not a big deal and that's not to say the humanitarian aspect isn't very serious if that storm moves west, that's

a very different picture and that's where you start to worry about energy infrastructure and lng exports and refining capacity and longer term damage that can happen and that's when you price it into markets and right now it's not a factor for the market >> i want to ask you about this thing that happened in washington, the white house competition council met the president again calling on oil companies to lower prices at the pump and here's what he had to say. >> we haven't seen the prices reflected at the pump. meanwhile, oil and gas companies are still making billions in profits. to the company owning gas stations, bring down prices you're charging to reflect the price that you pay do it now. >> what do you make of what he just said? true false? somewhere in between >> it's somewhere in between so i would say when i looked,

prices at the pump versus the commodity they have moved on a national average pretty much in lockstep so there's been significant price reduction at the pump. i think what he's referencing is some of the western states or on the coasts you still have elevated pricing and my pushback to that comment would really be that you've kicked out all of the refining capacity in those regions and it costs a lot more to get the crude there and you're still having transit costs to get there i don't think there's price gouging going on from energy producers and refiners it's difficult for every single state to get below -- >> rebecca, profit margins this year versus last year look like what >> profit margins this year versus last year much higher as you referenced and we're looking at profit margins that are north of 10% and are very healthy.

now let's be clear that comes at a time after we've seen the energy sector decimated for six, seven years where profit margins were destroyed. so yes, they are clearly making money right now in this environment, but they are also responding to market forces and i would hesitate to say that they're doing any kind of gouging, and i think they're running their business as other companies in the s&p are also doing. >> we have to run and we appreciate your perspective and we'll keep watching the energy complex as prices continue to move. >> thanks. coming up, economist judy shelton gives us her take on controlling inflation and why she thinks the fed is getting it wrong and later our exclusive wrong and later our exclusive interview thwi, we'll be right back.

this desk... and this conference room! i am filing status reports on an app that i made! i'm not even a coder! and it works!... i like your bag! when your digital solutions work, the world works. that's why the world works with servicenow. thanks to avalara we can calculate sales tax on almost anything, anywhere, automatically. avalarahhhhh. what if tax rates change? ahhhhhh.

filing sales tax returns? ahhhhhh. managing exemption certificates? ahhhhhh. business license guidance? ahhhhhh. does it connect with accounting? ahhhhhh. item classification? ahhhhhh. cross-border sales? ahhhhhh. what about? ahhhhhh. ahhhhhh. do you have those budget markups? thank you. mmhm. [bubbles]

>> good morning. stock futures are pointing to a big bounce as we make our way towards the opening bell you can see futures, 300+ for the dow which is coming off its lowest close since 2020.

why? well, this could be something. chicago fed president charlie evans is cautiously optimistic or optimistically cautious that the u.s. can avoid a recession, but there are more rate hikes ahead. >> whether or not it's a larger increase at the next meeting or continued increases to get there before very long, you know, if you just look at everybody's projections we've pretty much all got the same spot by march >> we will talk about the u.s. economy this hour and all about it, inflation and what you need to know about your portfolio and the big lineup that you don't want to miss as the final hour of "squawk box" begins right now. ♪ ♪ welcome back to "squawk box"

right here live. i'm andrew ross sorkin joe kernen holding down the fort and becky is off today let's take a look at where the markets are set to open. of course, we're see something green on the screen, but we've been seeing a lot, a lot of red and what you see now may shift on us. the dow right now looks like they open up 320 points higher and the s&p 3500 off about 49 points and we are in historic territory and down to levels not seen since before the pandemic let's show you the ten-year as well right now we are at 3.821. the two year i don't know, joe, if you could buy would you? 4.244. we've been talking about the dog, the tail and bitcoin. bitcoin up above 20,000 and you're looking at that and

moving, as well. eth moving higher. we talked about hurricane ian just a little bit before when we talked about the energy complex and where we see wti crude now at $77 and alaska saying that's not actually the news. big news in florida, of course, and in cuba for those that will be affected and how much of that will affect the energy sector is still a real question. we've got -- >> andrew, do you -- it's in the eye of the beholder like a rorschach. can you do a quasi link in one eye. is it possible to do that? i can only blink one eye i can't do beth. i don't know if you have that. >> i don't either, but this was not a blink -- >> i can curl my tongue -- >> people will -- don't do that. that will end up on a gif or

something and you don't need that, but you know what i mean charlie evans almost said something that almost sounded -- he said all that other stuff which he needs the prerequisite stuff of we're going up, we're going up, but he did seem to say maybe it's just the slightest blink that could be data dependent. >> i think they always said they're data dependent and from the credibility perspective can you be data dependent, if you will and continue on this path so if in a month things turn, can they turn around and say actually they look at the data or do you think that that would hurt their credibility >> i just hope that they're not locked in the -- in the not repeating history. we don't want to let it stop and start which killed the 70s, ten years. it really set us back. what if it's a totally different

situation that doesn't need, where don't need to kill the patient this time. it would be nice if we didn't have to. >> we can hope not given some of the comments we heard from neil irwin from axios and a real estate investor and they were even talking about 2007 and 2008. let's hope that we don't go back to those scary times >> meantime, we have news just breaking this is about cathie woods this morning. she's launching a venture fund on customers to invest in public and private companies through the tight knapp. the minimum is $500. she's been a bull throughout all of this, joe, and if you look at some of the prices of where her funds are, again, we're in pre-pandemic territory >> yes, we are 2020 yeah, 2020. >> but then the question is, maybe this is the time to invest, by the way i think a lot of people would say why would you put out a new

fund in this tumultuous time this is when, historically, when things are bad things can get good >> that was my point with gene mutual fundser you can buy here for a bear market rally, but okay so do you think that they eventually tech hits new lows. well, no, probably not really why is it a bear market rally trade and why is it an entry point for the long term. semantics. >> it depends, are you in -- i don't think we're in a 2008 territory. 2029 it was not -- >> what? >> 1929, not a straight line and also 1970 not a straight line. no which one are we >> i don't know. i don't know, but cathie wood might have some thoughts on that >> yes, and then we'll talk to judy shelton about everything else data dependency. is it dead is that so yesterday, data

dependency no we've got to stick to our guns although that could be dangerous. >> let's get over to dom chu, we've got data for us and stocks that we've been looking at with the top pre-market movers. >> we have to key on some of the points of the conversation that you and joe just had to where the market impact is being felt more and where these higher rates have certain asset classes in the future. one of the places that we saw play out pervasively yesterday in the trade was that anything tied to housing and real estate. these were some of the biggest laggards yesterday and they're the ones that get hit hard, and like the way thai did yesterday. on a relative basis, d.r. horton is now up a half a percent with the pre-market trade and lennar is up about 2.5% and prologis i threw that in there because it's

a real estate investment trust tied to the industrial things and it is up 2.75% and we'll watch real estate-related stocks also, another place to keep a key keen eye on, and they tend to do better when the economy does better and as opposed to being more insulated like utilities and staples. cf industries and mosaic both in the fertilizer space up 2% to 4% and albemarle, and titanium and that sort of thing one of the plays to keep an eye on is the interesting upgrade from the folks at cantor fitzgerald and the initialization they've now taken lucid group and covered it witha know overweight rating and that's roughly 60-some percent higher than where we were yesterday they think lucid has things like

range, luxury offerings and that sort of thing and that's helping to shape their view. they think they're up and lucid, this is a stock that's lost half its value over the course of the year and we'll keep an eye on those stocks and we'll send it over to you. >> thanks, dom >> chicago fed president, charlie evans says he remains cautiously optimistic that the u.s. can avoid a recession if there are no more external shocks here he is talking to our colleagues on "squawk box europe" this morning >> i think we've been very clear in our communications and i'm a strong proponent in the summary our communications to indicate where the fund ought to go to justify our projections. the exact timing of of that path to me is less important than the fact that we continue to get to the point where we think we ought to be. so whether or not, you know, it's a larger increase at the next meeting or continued

increases to get there before very long, if you just look at everybody's projections we've pretty much all got the same spot by march >> joining us more to talk more about this, the fed, rates, judy shelton fellow at the independent institute and former federal reserve board nominee and the author of money meltdown, restoring order to the global currency system judy, it's great to have you on. >> let's not think about past mistakes that the fed has made let's think about, at this point in time do you think the risk is greater that the fed relaxes its stance too easy, too early or continues to stay too tight for too long which is the big risk to the markets right now? well, what a world, joe. we're having to interpret whether there was any kind of a half wink in those statements

from a monetary policy official. i think it's a mistake for the fed to make decisions in accordance with some kind of false bravado. and i don't think what chairman powell is doing is similar to what paul volcker did. paul volcker really was targeting the money supply he let interest rates go wherever they want to the go in 1980 the fomc directive said that the federal funds target would be between 8% and 14%. the fed was selling off securities to move the interest rate this fed is doing something very different. they are paying a record high interest rate on a pile of cash kept at the fed and effectively bribing commercial banks and mono market funds to keep that

money from doing anything productive keep it in cash in a risk-free, government-guaranteed account receiving over 3% now, maybe 4.5 pie the end of the year. as little sense as it made to pay people not to work, now we are -- our central bank is paying banks not to lend and paying money market funds not to allow their cash to finance productive investment in the real economy >> if you wanted to cause demand to be last to bring down inflation which is the tool that the fed uses, that's a viable way of doing it. the question is is whether you kill the patient in the process and whether inflation at this point really is ingrained for a long period of time or maybe it is quasi transitory because of

the crazy labor market that resulted from the pandemic and the re-opening what if it's not a wage price spiral like the '70s if we go up another three or four quarter-point cuts, what if that's way too much, judy? >> exactly the problem with the way the fed sets interest rates by paying money on cash is that we really don't know what the real rate, what the real cost of capital should be. it's artificially established and the fed thinks it should be restrictive and think of that. where is the logic at a time when we're trying to increase supply to soak up the demand, the fed's strategy is to slow down economic growth at a time when we're finally coaxing people to come back to work, the best strategy is to increase unemployment, and i really think your point is well taken on the impact on the patient. i think we'll look back on this

era of central banking, the same way that we look at medieval medicine with the same idea that doctors would help get rid of a illness by bleeding the patient. i don't think the fed has made a good case for why crushing demand is a good way to address inflation. >> judy, on top of everything else, long term, what are the prospects for gdp growth if it goes up. we're spending real lealy just n debt service how do we produce the gdp growth that we're looking for by risking capital and making capitalism what it is. >> do you see a ten-year period of where gdp is hurt from the amount that we're paying on in the new higher interest rate >> well, yes yes.

i think it constrains gdp growth i think that's the point you've already seen the fed estimates for this year come down significant and again, the idea of having the interest rate be restrictive means that the fed wants it to be whatever it has to be to eliminate some of the potential growth that would occur in the private sector, that would approve the benefit of productive, economic growth for the country as a whole we're trying to say that we won't allow what would be the real rate of interest to equilibrate, we want it to be higher than that so by definition, we will get some suboptimal allocation of capital, and as i said, the fed is steering these huge funds to keep money in cash instead of engaging in the noble art of financial remediation.

if you think of what should happen in a pre-market economy it's the savings that should be devoted, being compensated with an interest rate, but we devote it to investment projects that are inherently risky that's the nature of capitalism and have the potential to generate higher returns in the future and that's how you raise living standards and that's how you increase prosperity and that's the goal. thou we're interrupting that process through central banking, and i think doing great damage it is ails a very expensive thing that the fed is now doing. they are running at an operating loss now the fed is paying more to keep that cash sitting idle than it's gaining off of its own portfolio, and i think the treasury will have to be covering the difference and talk about the cost -- that figures into it. >> judy, two questions

one is to those who are skeptical of the fed, but say, look, whatever damage you think they're doing to the economy which, of course is on purpose the u.s. is still the strongest market in the world and people around the globe are putting their money here, if things are so bad why is that case? >> i think because we have the higher interest rate you're tracking money for the wrong reason central bankers are currently the biggest manipulators our federal reserve paying these rates is drawing the capital not necessarily because it sees the best opportunities, but it sees that it can also make money on the exchange rate and if american his are so aware how much cash from foreign-owned

banks are being taken advantage of the difference then it's in our advantage since the citizens will be paying the interest rate on that cash >> so this isn't a story about the strength of the dollar or the strength of the u.s. this is a story that we are literally just paying more >> well, i want the dollar to be dependable it's not a matter of being strong or weak it's a matter of where people can get the highest return, and you want them to put money in the united states because we have a market economy that's innovative and that has the most potentially productive investments available. that's investment in the real economy. if you're just luring them with higher rates that's very fickle money and i don't think it leads to a stable economy in the future >> hey, judy one other question i don't know if you saw neil irwin earlier. he cited 2007 which scared the

begeezes out of me and we saw it in the 6:00 hour and talk about the possibility that as these rates continue to rise and not just banks and that's the shadow banking system where so many of these mortgages and loans have gone out that the whole system could tip. do you believe that's the case we keep talking and hearing from banks who say look, we've had much higher capital requirements and the banks are in so much better shape than they were in 2008 true not true >> i think the capital requirements are too high, and i think there's a lot of regulatory ambiguity as jamie dimon said they would love to make more loans and instead we're in this example reserve environment and what a hurdle to beat for investment in the private sector but if that's the case, we're in a safer place. >> that's a safer -- >> andrew, i think what you're asking is are we the safer place

to invest? i definitely think so, and i want to draw that money, but this is yet another failing central banking in my view that these other countries are now forced to try to keep pace with us and we're going to pretend that we have a great system when, in fact, as the dollar gets out of sync with other currencies and there's a threat of regional default because so much is denominated in dollars and i think we'll now see the fed ramp up the currency swath the last time around we put up 500 trillion and basically loaneded that in there ares to other central banks so they didn't have to go to the core exchange markets so is this like 2007 well, we know the housing sector is a huge contributor to the economy as a whole, and i would just say that the fed never saw

that coming, and if any institution was responsible for properly calibrating the amount of money and credit to the global economy besides our central bank i don't know who it would be and yet they didn't see it coming. so they did miscalibrate, so i'm really concerned whether it would be the housing sector or some other area that are not missing and the sooner we accept that, the better. >> judy, thanks. thanks good to have you on this morning, and i don't envy the fed. that's all i'll say, and i hope they succeed, i do, as we all do thank you. we appreciate it >> thanks. >> i got teary because it took a crisis for you to get more on the american green bandwagon i've never heard you speak so positively about how much better this country is.

is the american dream alive and well have you come back into the fold on that notion it's the greatest country in the world, right >> it is >> it's alive, but as i've always said, you need to deserve it and work for it >> okay. but at least we're there where you realize it's the best place, and you just said that again and again, and that's -- that, to me, we're making some progress here, but i just wish it hadn't taken this crisis to get here to get to that -- >> i'm in washington, what do you want in the. >> look behind you >> i know. >> look behind you and sing something patriotic, please. coming up, our exclusive interview with cathie wood and the british pound get being pounded, it says here and the new ark venture fund you're watching cnbc

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coming up, just how much money have americans lost this year thanks to the fall in stock prices we will put a number on it and it's a lot and we will talk markets in the fed in an exclusive interview with ark invest cathie wood speaking at the fed ahead of tomorrow's big delivering alpha event. we poll the nation's top strategists and cnbc contributors and 65% of them think the central bank will take the fed funds rate to 3.25 to 4.5 or to 4.25% this cycle

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>> coming up in just a moment,

breaking news data and an exclusive interview with ark invest chiate wood don't go anywhere. "squawk box" is coming right back

♪ ♪ welcome back to "squawk box," rick santelli here live at cmhq, breaking news, our august preliminary read on durable goods and this is a very volatile series and we'll come back in a couple of weeks and

adjust it. the headline number expected down 0.3% is down 0.2% and that is the biggest month over month negative drop since it was down 0.7 in february of this year you strip out transportation and it improves marketedly up 0.2% and that's the best level since last month when we were up 0.2 and here we go capital defense orders, a proxy for business spending and it is up 1.3% and that is really a good number and the second best of the year outside of january when it was up 1.4% and if you swap out orders for shipments and it is up 0.3 and it is up as expected where the capital goods orders were up multiple times and by the way, in the rear-view mirror, and the capital goods and the category we like, last month,.3 moved up to 0.7 and pretty good outside of the

headline number and interest rates have come down rather marketedly right now you're down 20 basis points and it's down in a ten-year and if you look overseas, same dynamic in the uk where everything is paying attention and the two-year yield dropped ten basis points and the two year down six. they were up a hundred basis points in each of those so the big thing to pay attention to this mornings is fact that we are getting a bit of a reprieve. we're hearing a variety of institutions say it's time to buy sovereign debt and it's gone too far and you'll probably see some green as you see in the equities andrew, back to you. >> rick, i want to thank you for

that and i want to talk to our special guest to talk about the markets and economy and so much more cathie wood. you're in london and we saw the pound reach a low against the dollar i want to get your sense of where we are in this economic cycle, and given the conversation that we've been having all morning, has inflation peaked >> yes well we -- it's very interesting to hear people saying that we'll be able to skirt recession we believe we are in a recession and the durable goods orders that we saw, we're seeing the strength because of activity being attracted to the u.s. and the flight to safety and that's why the dollar has gone up, as well nonetheless, i think we are in a recession and we're seeing

demand destruction and demand for gasoline down to 25-year lows and 1997, think about that so lot of demand destruction and we believe it will continue. the big news here is to hear michael evans this morning talk about hey, we're all on the same page and this could be done in the first three months of this year, so if the market is the discounting mechanism that it should be, then it should be discounting the peak in interest rates. yes. inflation peaked, we believe core inflation peaked at 5.3% and this is the pc deflator that the fed supposedly pays the most attention to, 5.3 in february. it's down to 4.6 and with all of the price declines that we are seeing out there whether it's in retail because of too much inventory, or way up the pipeline with commodities, really falling out of bed, all

of them, we think the inflation rate will be surprisingly low. we would not be surprised to see deflation month to month sequentially for a number of months during the next six month. do you think that the fed is betting in a way they have thus far. i don't think they appreciate how much demand and this week will be telltale that way and we look at a major pivot, and we've been saying this for a while so consider the source. if we're right that deflation for cyclical reasons and for secular reasons, all we do is look at technology and the cost declines associateded with it, and they're massive and we think

during the years ahead it will surprise significantly on the low side of expect eggs and how do you think that the fed balances the issue of credibility given what they signaled about the market with the data there, not appreciating just yet >> i think they have been basing their outlook on two lagging indicators and it means that they're paying attention to the cpi year over year which is 8% and employment and both are lagging indicators and the leading indicators are all saying that prices are going to come down and inflation will come down and the big surprise is the number of months and we will see deflation and it's not just because of the u.s. in fact, we're benefiting of the flight to safety from the rest of the world

what's going on in china is highly deflationary. what's going on in europe, the same this energy is a huge tax on that continent one of the other thing that's happened in the last week that i think is fascinating is that both japan and china have basically supported their currency and they're basically saying no mas. in order to do that what are they doing they're selling their dollars and buying their own currency. effectively, china and japan are doing some of the easing that we think the fed will do increasing there ares in the system >> cathie, what turns things you're already saying we're in recession and the conventional wisdom or the prevailing view is we're headed into a recession if we're not in one right now and it gets worse, not better and you're saying there is a turn and i'm trying to understand what is the pivot point and the

inflexion point that moves things in that direction >> sure. we think employment will come down and the unemployment rate up and the fed thinks so, as well and that's a lagging indicator, a big lagging indicator and we do believe that cpi-based inflation especially because of energy and food sticking and no question about it and energy prices are coming down against all expectations and i would also say there's so much bearishness in the market today we see goldman sachs and black rock saying sell equities. oh, my goodness. this was, like, i remember this was very early in my career. 1992, business week magazine on the front cover saying equities are dead and now you have some of the biggest houses out there who would tend to benefit from a positive equity market saying equities, don't go there we think that the surprises again, both inflation and

interest rates are going to be significant, and we do think, even though we're in a recession that it won't be as extensive and it will be much more of an inventory recession and you get interest rates and inflation down >> cathie, and therefore, we see the market move higher as a function of multiples which have come down or we see earnings actually improve i mean, when you start to look at your own portfolio and we were looking at some of this this morning since ark started, the s&p is up about 81%. you're up about 83%. the mix stocks are obviously so very different, but in terms of trying to outperform the indexes, what do you think about that >> for us to be ahead of the s&p after a trashing over the last year you're looking at end point sensitivity here i guess it doesn't surprise me, but what it says is if you look

out from here if you're right, we're going to take off from that 83% and we believe much faster than the s&p 500 is for two reasons. one, we're focused on the right side of change and disruptive innovation and two, the traditional benchmarks are very backwards looking and so what is disruptive innovation going to do it's going to disrupt them so i would expect the gap to widen significantly from here. cathie, you're announcing a new effort today with titan around investing in private companies speak to it because a lot of people you would say that this is a terrible time to be introducing something like this and other people would say it's a fabulous time to be introducing something like this, but in terms of people's risk appetite, how do you see it? >> well, we're doubling down on innovation, as you can see we're delighted to be launching

with titan, an an dreesen horowitz funded company and we're moving into distribution direct to consumer pretty exciting. we are offering investors something they have not been able to access before and non-accredited investors meaning they don't need income or asset thresholds and they've not had access to private companies. we want to the make sure that's the biggest question we get when we're ought there talking to our clients and why don't we have access to those kinds of companies our knowledge is such and it's true, if you use accreditation, if you use knowledge as the metric, they would be the accredited investors and they're going to do their homework and titan will help us help them do their homework by continuing to give away our research and exposing them to the management

teams and incredible opportunities both the public and private at a steady state, we would expect at 75% private and 25% public and the reason we're doing it this way is we're giving investors something else they've not had prior. >> those invested in our private/public crossover fund will be able to get liquidity once per quarter and up to 5% of the total fund, and so we do want top have more larger, more liquid stocks in the innovation space, truly disruptive innovation, that is, in order to provide some of that liquidity and we also have -- we're giving our platform to the private world and we've been working really well with other venture capital companies who are

interested in exposing some of their companies to investors who are not accredited in their world. so i'm pretty excited by the adviser team we have, and the network we have, the research that we've been building over the last nine years that we give away to help people understand how rapidly and profoundly the world is going to change. >> cathie, we often hear from investors who say we want early access we want it to be more democrat tiesed and to some degree, that's what we're doing and at the same time there was that call, two and a half, three years ago at the beginning of the spac movement and a lot of people said i want that lottery ticket and there were a lot of other people skeptical about the form that that was taking. obviously, it has not worked as well as a lot of people had hoped. how should investors in this fund think differently about this, if they should at all? >> i think one of the reasons

that innovation broadly has been hurt significantly in the market is the inflation and interest rate environment if we're right and inflation and interest rates are peaking, are in the process of peaking, inflation surely interest rates, the fed seems to want to go again, but if we can see the end of all of this as perhaps economic activity weakens and what's happening in china and europe impacts the u.s., as well, i think the market will be looking at lower interest rates i think that's key, and as i mentioned before, we think that it's going to happen, and one other thing, andrew, i'd like to add. in terms of access, on the titan app, investors will be able to gain access to private companies for a minimum of only $500 as opposed to millions and millions

it mitt take to access these sorts of companies in the traditional venture capital space. it's pretty exciting >> cathie, we have to run and we have two sort of rapid-fire questions and are you buying more tesla are you buying more roku and finally, i'll throw them all together, when we spent some time on the stage at the salt conference a year ago we talked about bitcoin and it's about $20,000 right now and you said you thought back then five years' time from now it could be $500,000 >> we stand by all of them we've been buying roku, and you can see that because we disclosed our holdings every day. i think our last move on tesla was a buy. as you know, we trade around it and it has oheld up a lot better because it is in the broad-based indices now. we have uses it la to trade around and it is the top holding still and our confidence

couldn't be higher, as we see the movement towards electric vehicles accelerate. we're pretty excited about the next five years. i think this year there will be almost 8 million evs sold around the world and we think that goes to 60 million in five years and we think tesla is in the driver's seat. >> okay. >> cathie wood in london, we appreciate you joining us. >> coming up, jim cramer's first take on the trading day, plus the market commentary we just got from cathie wood and a reminder, you can get the best of "squawk box" tonhe podcast app. listen any time. we're coming right back.

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now. jim, i don't know if you had a chance to listen to what cathie wood had to say and also charlie evans, i don't know if it's right or wrong given the credibility and where the fed is headed and perhaps they may ease up faster than we think? >> you know what i thought that interview was telling. of course, telling she's been right, by the way, on energy you know what, andrew, i think they need to see unemployment go up if they do, she'll be right. they don't care that most commodities are in deflation mode he wants to see housing down rent was down. i still don't think it's a victory. and i think when he says more pain, he's jawboning i think he can take it to 4.75 andrew, who borrowed money to buy that piece of paper? because whoever did is just crushed. i would like to know about that.

leveraged loans. there's a couple out there but the amount of negativity does not add up. when i was out on the west coast, people are doing okay but the dollar is going nuts they're all worried about that i don't know i thought kathy woods, she's always pretty bullish, isn't she? >> she has been. play this out, though. is there a short-term trade in all of this? and then, more importantly perhaps, how are you thinking longer term at this moment >> i think there is a short-term trade. we are the most oversold we have been since the beginning of the pandemic and that's pretty amazing. that was down, like, 25 on the oscillator now we are down 13 i think this feels very much like 2018 when the fed went nuts then again, inflation is still lower. look, i don't trust jay here i think jay, if he sees a strong employment number, i think he's going to take action in the november meeting i don't know take a look at the recent -- the

action of the two-year it's been relentless if it turns around today, the trade is over, andrew. >> jim cramer, looking to see you in a couple of minutes >> that's it why? r daweill see you on "mad money". looking forward to it. what do you mean? these straps are mind-blowing! they collect hundreds of data points like hrv and rem sleep, so you know all you need for recovery. and you are? i'm an investor...in invesco qqq, a fund that gives me access to... nasdaq 100 innovations like... wearable training optimization tech. uh, how long are you... i'm done. i'm okay.

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yes, inflation paebgd at 5.5 peaked at 5.3% >> i think it's a mistake for the fed to make decisions in accordance with some sort of false bravado. i don't think what chairman powell is similar to what paul broker did >> kathy wood and judy shelton will talk more about the economy and the markets. let's bring in the managing partner and portfolio manager at dcla and cnbc contributor. guys like you think a lot about risk and reward, sarat has the two-year caught your attention for clients? >> it has, joe

in a sense that what happens is i get calls saying, hey, why not park money into the two-year it comes down to what you said, risk/reward. if you're a long-term equity investor, i think you mentioned it on the show today, this is a good entry point i'm not saying this is the body. nobody can know when the bottom is when you're down over 20 plus percent, there's high quality stocks out there there are ways to actually make money over the next few years if you have a long-term horizon the shorter term, horizon, you can park money at a treasury that all is based on your risk/return and what your total objectives are if you have capital on the side, you start nibbling does it mean you're at the bottom absolutely not if you have capital invested you don't sell at this point you look to rebalance. again, high quality companies.

they will be dependent on the capital markets. they will get hurt those that are now, those that will be growing and have cash flow, those are the ones you want to own. i'm not saying things aren't great in the equity markets. they are not the speed of this selloff the last two weeks has been really bad. and people in our clients are feeling it, and i get it if your a long-term investor like in '18, 2020, it feels ugly when it feels ugly, that's when you tip your toback in and that's what you stay invested. >> so then you have to decide which body of water you want to put your toe into. that's why we come to you a lot, sarat. sectors that benefit from higher rates, slowing economy what does it mean? >> so i would first frame it and to say be careful about capital structure. because the next few months,

even the next couple years, the capital markets are going to look for companies that are going to be a return on your capital. i want capsule companies, comcast, charters of the world they have huge operating leverage i want companies that are going to be, you know, increasing prices across the board. i want the consumer staple companies because people want those products i also want some of the banks. we are sitting there lending money at 5%, 6%. their cost to capital is much lower. they have solid balance sheets we have heard all the bank ceos talk let's not get back into speck la active fervor, some of the companies taken over by spacs. costs are rising we know that for a fact. labor costs are rising, housing costs in terms of rent and other things be very careful. the companies we loved the last 10 years doesn't mean you are going to love them again

look for operating leverage and cash flow. we don't know how have chairman powell is going to take this it will causality more pain for high valuation companies if you have companies in the high 20s and 30s and they are not earning, they are the ones to come back >> tech on a relative basis the risk reward is greater on both sides of tech. you're not there yet >> no, i'm not i'm tipping my toe again, i look at companies with good dividends hey, they've got good coverage it means they have the ability to spend money so we have to be careful there i like the essentialies. they've been killed. you look at in indiinvidia and qualcomms. will we have a glut. everyone is expecting that but those are the type of

companies you want to own. >> thank you for all that. we'll see you again. >> thank you >> andrew, we made it. you'll be back here tomorrow >> heck of a day let's see where we end tomorrow, though or really where we end today we'll see what everyone has to say about it tomorrow. >> let's go to that delivering alpha thing tomorrow, do you want to? >> i heard there are going to be good people there. >> make sure you join us "squawk on the street" is next ♪ good tuesday morning welcome to "squawk on the street". i'm carl quintanilla david fraser and jim cramer are back two-year yields seeing their biggest drop since july. they are a little nervous the fed won't wait to assess the rates. a tug-of-war between fed policymakers some are not seeing eye to eye >> chevron and bp