>> i was thinking there is no alternative and now there is an alternative, so tiaa, sounds like a union there is an alternative. tiaa >> yeah, yeah. >> it's taken, though. we got to go >> by cruft? >> yeah, make sure you join us tomorrow, down about 300 "squawk on the street" is next ♪ good thursday morning, welcome to "squawk on the street," i'm carl quintanilla with jim cramer and david faber. stocks are going to give a lot of yesterday's rally back as revised q2 consumption and inflation data runs hot, claims back below 200,000 we're watching the damage from hurricane ian. nike earnings tonight. road map begins with inflation jitters continuing to jolt markets. fed officials say policy not restrictive enough yet >> plus, apple's demand concern,

bank of america downgrades the stock this morning, pointing to signs of a weakening consumer. and, "affordability challenges," carmax blaming widespread inflation pressures for a sharp sales decline and the shares of that company are tumbling ahead of the open. >> let's begin with the markets pulling back after yesterday's rally, jim a lot of these revised numbers, core pce consumption, are q2 numbers, but claims, lowest since april? >> you listen to ms. mester talk tough, and then you get those numbers. it's very difficult to say, well, she's too hard on what they're doing. because those claims were -- i don't want to say they're bad, but the claims are too hot, and david, what we continue to see is big macrodata not giving the fed what it needs, even as we do microdata on companies, for instance, like carmax. and we say, wait a second, they may be working, but they ain't

buying there's service. they're going out. restaurants are big. travel's big expedia told us that but if i were on the fed, i would say, hey, i got to keep this up. >> you got to keep it up in part because of what you've come back to time and again which is wages and jobs and not creating the weakness there >> i know that you're not into my camp. >> i understand parts of it. i do >> i have james gorman on tonight. i'm going to ask about that and morgan stanley i don't know if you caught that. here's what's happening. i'm going to make it very clear. i'm going to say it again. the fed wants to see people more worried about their jobs they'd like to see job loss. fed wants to see your house go down and the one that you really hate, the fed wants to see your portfolio lower because that's spending they need -- how do you -- what controls spending? your job, your portfolio, right? those are -- they control -- >> all true. all true >> the house >> i think we may have this teed up, because john gray joined me

yesterday at delivering aflpha along with whitney, but he had comments that were interesting and actually point to some of the questions/concerns that you have take a listen and focus at the very end of his comments here on the labor markets. >> i would say, inflation has begun to slow, certainly we see it in shipping costs for the manufacturing companies. we see it in commodity markets labor is probably one area where it's slowed a little, but i would say labor markets remain really tight >> there it is >> that's about as perfect as i would expect from one of the smartest people. >> that's why i wanted to use it because it does go to the point you've been making labor markets remain tight and by the way, this is bloack blackstone, which has many portfolios in varied industries

so can give you a reasonable snapshot >> look at jonathan gray, no axe to grind, wants to get it right and what it says is the fed cannot stop until we have major job losses right now, where are the job losses they're at bed bath & beyond they're doing terribly they're at docusign. they're doing terribly they're at peloton what are the great companies, other than goldman-sachs, that are laying people off? the answer is, no. i never want to root -- it always sounds harsh -- for firings, but when the good companies lay people off, that's when they'll be done >> bank of america has some charts out today what is your main concern about the economy in a recession in terms of job security, say, take the tranche who make less than 50 k, about 25%, are worried about their job security i assume you think that number needs to get higher. >> i remember in 1980, '81, when

volker was doing -- reagan about to come in everybody was worried. david, everybody was worried about their job. i was worried about my job i would get up in the morning and say, am i going to get laid off today? and you're thinking about, you know -- you're not thinking about, hey, i'm taking a trip. you're thinking about, do i have enough money saved for if i'm laid off so i can get another job? that was an extreme period but that's how people used to be >> well, this is a somewhat extreme period, certainly when it comes to what we're looking at right there, the two-year and the ten-year, and yields moving around that ways that have been unprecedented in terms of the weekly/daily moves, carl, and again, once again, we see the market keyed off of, two-year yield up, market conceivably going down, move was affected yesterday. >> we are still not seeing another thing that the fed wants. we are not seeing -- no bids for homes and homes going down now, we are seeing the end of bidding wars, particularly in new york but that's not what they want. they don't want -- remember,

housing -- they want your house to be worth what it was before the pandemic >> you mean, sell below list is essentially what you need to see happen in big ways >> look, they want to roll back to before pre-pandemic, and i understand that. prices really rallied huge since pre-pandemic so, i think that these were numbers that backed what mester said >> speaking of which, mester did talk to steve liesman in cleveland earlier this morning she said, m-2, as a metric, not reliable, at least not yet hasn't been for a while. says she wants to see long-term inflation expectations come back down, and then she talked about whether or not we're restrictive yet. here's what she said >> we're still not even in restricted territory on the funds rate so we've moved the funds rate up 300 basis points this year, but look how high inflation is >> we haven't even mentioned the uk and sort of backward look at

yesterday's move ft today cites a bunch of people saying, we were looking at severe scenarios yesterday, prior to that move >> lehman's scenario, when you bring up lehman, it looks like they were caught -- strategy that was about interest rates that i think it's pension funds. you shouldn't be caught. but the question i have, david, is who's caught here now >> we keep wondering i have, you know -- i make calls every day, trying to sort of hear if there's anything out there. i'm sure there will be, especially with moves like this that are almost daily in terms of -- yeah but right now, jim, i don't know of any big blow-ups to tell you about at all i know people are concerned about it at the same time, given the volatility on the equity side, and the, you know, nobody wants to put that incremental capital to work. they're afraid to do that too. nobody wants to take a lot of risks. >> no ipos >> the only ipo you did have, porsche, was seen as being a blowout. it's going to be fine, but it's not going to be, perhaps, the euphoric reception that some had

hoped for that might even sort of add to animal spirits >> no, and i think, carl, that i look at the carmax story today, about if used cars are in the -- they're untiin the cpi, and the doing down, but it won't be until october that year over year they're down, even though carmax quarter was obviously horrible the only thing that i fear about -- and i know i was very -- thank you to steve liesman for mentioning, they know nothing what i am concerned about is if you go back to the 17 rate hikes we had from the 2000 period up until the housing crisis, for the last four, everything seemed great to them, and -- but we had rot underneath we do not yet have rot un underneath, but i think that the idea -- what i called for last night is, let's take it a little slower let's be more prudent. let's do 50. let's not stress the system.

let's not have something like england, because it's not worth it you can take things up slower. it's more prudent. and i think jay's a prudent man, so i'm betting he doesn't do 75, 75, 75, because there's no hurry to it. it's obvious where he's going, but let us get there at a time when we can catch our breath >> so, some of these dovish option hedges that have been trading the last couple days, one of them would benefit if they did 50 in november and then paused or maybe even cut >> they're not going to cut, because the two-year's saying they're not going to cut, but i thought that when i listened to ms. mester, she said that two-year piece of paper is real bad, but i think there's nothing wrong with being prudent prudent, in this case, is to see what so many 75s can do, because we've never done them. you know, david, i love this here from jonathan gray. they have that big housing portfolio. >> yeah. >> at what point does 7%

mortgage make it so that it's not easy to sell your house? >> that's a good point he said on rental housing, real estate's still very strong on a year-on-year basis but slowed sequentially we're definitely at a point where it feels like they're heading down but still have a long way to go, certainly have a long way to go to the fed's target of 2% inflation but you're right, when you have products that take in enormous sums of money, quickly becoming one of the largest rates out there, because it was offering a 4% or 5% yield, well, that doesn't look nearly as interesting and cost of capital obviously figures into all these companies' businesses. >> rates have -- >> rates have gotten crushed we haven't talked about that much lately, but the reets have go gotten crushed >> they're coal miners, not canaries the yields are indicating that

there's stress there i don't think there's stress in either one, but when i look at simon, this is a great company and they've been very wise the whole way. they paid out, what, more than $33 billion in distributions i look at these and i say, okay, that is what the fed should look at it's so granular >> they're going to have that kind of a move, though, in an interest rate environment like the one we have right now, aren't they? because they've always been about yield. >> right but i do think that the weakness in the economy is going to be in consumer spending. that's where i'm looking at it and so, carmax -- bed bath is up today. that's just so stupid. we all know that -- well, when you have minus 28 comps, all i ask them is, please come up with a story that's a comeback. that you can come back from. >> for every carmax and bed bath, there's a hawk, where bank of america says today dealers don't have enough bike

inventory. vail, season passes up >> that's the mixed picture. i counter that with, simon properties, with a 7% yield, which says it's many of the stores we shop at will not make it i know the group is weak, but that's devastating that's devastating so, the fed has to look at buying goods versus the, hey, i'm alive, let's go somewhere post-covid the post-covid, which i call the nine wedding scenario, i mean, there's a lot -- there's weddings stacked up like airplanes at o'hare. like, i got to go to this one and that one i got one in vail, one in como, one in georgia this is what happens people are catching up with their lives. and once they've caught up, well, then, ms. mester's going to be too restrictive. >> 2.5 million weddings will take place this year the highest since '84. one reason why walmart's selling dresses now. >> that's a lot of weddings. >> 2.5 million

>> that would be 5 million people >> that's incredible >> look at him how many shoes >> you like that, carl >> that's what i'm here for. >> think about that. this is what -- what is powell really faced with? an unprecedented number of people who have to go travel in order to get to these weddings that's a lot of people >> that's, like, one out of every, what, 80 people in the country? something like that. >> then they have kids, you know that's something that often happens and they got to move out, rent. i don't know there's -- i don't want to say there's too many weddings. i'm all in favor of people getting married, i've done it twice. >> like liz taylor said, it gets better every time, right >> her perfume still is a best seller >> meantime, hurricane ian has been downgraded to a tropical storm, headed toward the middle and north of florida, not before battering the state. southwest part, as you know, was particularly hit hard, causing devastation and widespread flooding more than 2.5 million without power. president has declared it a major disaster

that opens up some fema funding. jim on "gma" today, the lee county sheriff says fatalities may number in the hundreds, around fort myers. >> what a beautiful area i know there were people -- we have some good coverage earlier about people who wouldn't go, who wouldn't abandon, and they tend to be people who are elderly, who are the least able to handle what happens, and we saw this, by the way, in the fires in northern california and southern oregon. a reluctance to leave when you know that this is coming and that's who gets hurt i will say, first responders, amazing job. red cross, amazing job but also, home depot and lowe's. amazing job. remember, business is still the greatest source of what i regard as social -- >> it's going to be quite a while until they're obviously able to -- >> that part never gets hit. that was always the reason -- >> fort myers and naples yeah tampa was spared to a certain extent because the track o

originally had it going into tampa bay. >> which side are you going to move when you're done? west side or east side florida? >> i'm not going to florida. when i'm done? >> i mentioned, i have james gorman on tonight. >> i'm very excited to hear what he has to say. look forward to that interview >> you don't know? you talk to him all the time >> i try and speak to him but obviously not on television. >> that's tonight, "mad money," 6:00 p.m >> i did get his cell phone recently it wasn't redacted from the twitter litigation gorman's number out there. i tell him to change his cell phone. >> david, we got to move on. >> we'll take a break. got a push and a pull on apple today, bank of america downgrades, rosenblatt upgrades. take a look at the premarket as at least the qqqs look to give 'r fm lmost everythingro weesy. wee back in a moment

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apple's moving lower in the premarket again. bank of america cuts to neutral from buy, cuts the target from 185 down to 160. mohan this morning saying, apple shares have been perceived as a relative safe haven. however, we see risk to this outperformance over the next year, as we expect material negative estimates revisions driven by weaker consumer demand he says, this has played out in services and soon we'll see it in product

>> very strong analyst i know it's easy to shoot apple down, given the fact where the other stocks are my concern is that people will sell on this, and then not be able to get back in during the next product cycle we know that china is -- i'll call it a disaster, okay we saw baba cut. huge amount of apple in the last 48 hours it does not confirm the negative thesis it confirms a mix. inventory bubble, definitely in low end. very difficult to get high end now, david, the people -- the high-end phone is where the money's made the services -- >> well. >> what? >> right margins are even better. >> we've seen this play out time and again. people want -- they want you to -- look >> what about china, jim china's 20%, right 20% of sales >> it's not good >> and again, we talk about the lockdowns and the zero covid policy, but the impact that it has had, we may have not focused

on enough. because when you talk to ceos who do business there, it's their number one concern >> sure, because each week, it seems like business gets worse so, if you were at the beginning of this, they were still selling a lot of apples, people were buying but now, no. people are very dispirited >> could there be -- could bit a result simple of that, lack of demand in the chinese market >> i think so. it's underestimated. it's the swing, absolutely, but the good side for apple is the t-mobile versus verizon/att because verizon/att needs you to get that phone you can't get the higher-end phone until, they say, late october. i'm being quoted november for the high-end phone so, i mean, in that sense, there's something going right there. but china -- i mean, i hope we get more people on to talk about china because what's happening in china is unprecedented. i mean, you can't lock up people this long. are they going to -- the word is that they're going to stop the

lockdowns after xi gets elected, but with the -- re-elected with the vaccine, carl, that's only 40% effective, we know that the current strain of covid is not as lethal, but that's a huge number of people and we all know people -- i mean, every time we come in, more people are sick, and we're all vaccinated, so people have it worse in the flu in some cases but a lot of times less. this is all worse than the flu so, i just think that they're totally unprepared >> china's a huge element. by the way, yesterday was the first time since 2020, s&p gained 2% without apple's help, with apple in the red. >> pretty amazing. >> yesterday, i felt horrible. i did a show last night, which basically said it was a dream. it was one of those dream episodes i'm reading some stephen king right now. very stephen king, dreaming, where things are good and then they go bad. king, by the way, will be our charles dickens. >> yes, you mentioned that many

times. >> i just think that you should be reading stephen king. >> i have read a few of his books. >> did you read "1964" >> i read "11/22/63" and now i'm reading grant on your recommendation >> how good is that? how about the way grant was the most anti-ku klux klan >> he was a real abolitionist. >> and frederick douglass was the most important person in his campaign >> i'm not up to that point. >> no spoilers we'll get cramer's mad dash and countdown to the opening bell n'gowautures in the red. dot ay. this thing, it's making me get an ice bath again. 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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some of the laggards this morning, carmax is definitely going to lead you on a pretty horrendous report. revenue way below, big eps miss, talking about challenging conditions, near-term pressures, along with some chips in there and travel don't forget, you can catch us any time, anywhere, just listen to and follow the "squawk on the street" opening bell podcast we're back in a moment ♪ ♪ 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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>> announcer: the opening bell is brought to you by nuveen, a leader in income, alternatives and responsible investing. all right, we've got two minutes until we get started with trading here at the new york stock exchange, and everywhere else, of course we are looking for a down open this morning after yesterday's rally on equity markets. coinbase takes us in a bit of a different direction for the mad dash >> i think we can't lose site of the fact that something i think the fed very much wants to be eviscerated, which is crypto they wanted not just a crypto winner, they wanted a crypto blizzard and this morning, wells fargo comes out with a piece called, coinbase global, challenged environment means operating results will remain under pressure, and they started as a sell david, i thought this was pretty pertinent.

unclear whether there's a path for coin's sustained profitability. i like profitability i find that often leads to higher stock prices. why? well, binance is competing and david, i know you'll love this jpmorgan sam bankman-fried's ftfs is slashing everybody's margin and average fees per transaction across the industry have declined by 50%. a lot of that is the man, sam b bankman-fried. >> we talk about him a lot sam bankman. fried. >> is he the jpmorgan of our era? >> yet to be determined. >> is he vanderbilt? >> could be. >> is he carnegie? >> if he gives a lot of libraries, he is >> that would be nice. >> this is, carl, the central

issue. will sam bankman-fried corner bitcoin? >> we'll watch that. wells definitely sees 15% downside on coin opening bell here in the cnbc realtime exchange. at the big board, it's jpmorgan chase celebrating hispanic heritage month, education services provider of china celebrating its 20th anniversary. >> is jamie up there >> no, he's not. >> did you look? >> i did >> yeah, me too. you never know where he's going to pop up. hurricane diamond, you know? you ever see that song bob dylan wrote a song about him. >> hurricane diamond >> no, he wrote a song about reuben "hurricane" carter. >> okay, okay. >> obviously, pretty negative breadth here at the open dow is going to open down about 200, jim >> this is a do-over it never should have happened yesterday. you wanted so badly for people

to sell and buy back but that's just churning people we can't churn we're going to get a chance to buy because it's so oversold and we'll get some data that i think will go the bulls' way we just don't have it yet. >> yeah, well, i mean, we'll get in the morning for sure, get some more inflation data jpmorgan did have one note this morning on mega cap tech, first day in a while we've seen several -- we've seen real and multiple long only buyers, but that was, you know -- >> that idea seems to be getting unwound. >> every day, amazon comes out with something good. nobody cares new releases, new product. thursday night football was a big win for amazon, but we don't care we don't care because it's a stock, and right now, we're in that moment where if it's a stock, it goes lower >> yeah, i'm not sure if thursday night football moves the needle for amazon anyway >> but they made a smart move. i disagree with that >> really? >> yes, i disagree with that >> you think -- really >> i think they got -- i think

it was a good risk/reward and it's paying off. >> it may very well be, but it's part of one service, part of a larger issue, when amazon web services is really the profit engine of the company, retail is enormous, but of course, questions about margin you're talking about something that's -- >> you're probably referring to best prime sign-ups over three hours. >> thank you >> i mean, the league's averaging the best numbers since about eight years. >> why is draft kings stock not go up? the amount of gambling is just extraordinary in this country. >> today, the headlines are about senator warren asking ftc to block i-robot average is going to be $19 starting wage and they're going to move a bunch of call center employees remote >> we're in a period where, look, government's hostile amazon had too many workers. now, they're -- when i was out

to amazon web services, by the way, they are hiring that is an unbelievable business but when i look at that stock, my travel trust bought some stock. why? because amazon is a great company, which i had just met, and they're doing well, and when this era of pain is over, that stock is going to snap back. but the era of pain has to do with the fact that the veil -- the veil is -- this services we're waiting for -- i told you what we're waiting for your house to go down. you'd be worried about being fired. those are what they want they just won't say it you can't come on air bz and, you know what? i want you to be worried about being fired, i want your portfolio lower, and i think your house has got to come down. who can say that what person would come on and say that, other than me? >> nobody. >> thank you i rest my case >> i'm not sure you made your case >> tyrone power.

>> my father met him in kyoto and said he was the coolest man he ever met. >> how did we get on tyrone power? >> prosecution rests, "witness for the prosecution. david has got zero cultural -- >> i think that's unfair >> for a guy who should have been "jeopardy!. >> i think that's unfair >> for a guy who should have been "jeopardy!" and would be much better. he won "jeopardy!" and i bet -- did you ever need the card >> occasionally, yes you're being very kind >> most of the time you knew the answer i watch bell >> that's his mom. >> on the last one that he was run running," jeopardy!" oh, my. >> those were good days. one good day >> layoffs for $500. >> that's all you do, five shows in a day back to the markets. we don't have a lot up this morning. did you see the positive note on rivian >> i thought that was stupid >> why >> because they're not --

stock's not going up it was dumb. i don't know what am i going to say hey, that was a brilliant move >> because it was dumb >> i got to tell you, at the same time, i think the jets are going to be in the super bowl. >> all right that's about there as well >> well, when you look at what's going on, how many days can people cut the rails here we go again cut the rails. citi the rails -- how about this vf report i mean, i feel like taking my north face coat, which i love, and just taking a shiv to it shiv it. that was a bit -- >> yeah. bank of america did some work on vf corp. and investor days are normally positive, not this one. >> oh, my. at least columbia is doing well. i had a meeting with lulu yesterday, with the woman who's running the mirror initiative. they've turned lulu into a razor/razor blade model. you watched the show

>> i watched part of it. >> you thought gorman was on last night >> no, i think i was at the gym and it was on, so i watched. >> what'd you think? >> it was great. >> oh, thank you >> i was right there right over there >> i love that stock, why? because that's what it's going to take to own in this environment. they're going to make their numbers. the multiples shrunk they're doing a lot of interesting things that is going to make it through this period. >> kind of brings to mind what nike's going to tell us. b of a today also points out naykn nike has a history of fading intraday on earnings, doesn't mean it opens down but often when it opens up, it ends the day down >> i know it's a portfolio, but moss did say it's seven turns below, which means that people paying dramatically less, but then again, here we go david, it's china. >> yeah. china is an important market for them and we continue to have real questions about people's ability to go out and shop, willingness to do so >> why do you need a new pair of

nikes if you're not allowed to go out anyway? >> you're not going running. you're not going anywhere. >> so, you buy them to stare at. >> or apparel or anything. >> china -- david's right. we should be doing show after show about what it's like to have 1.4 billion people -- >> they're not all -- to be fair it's certain metropolitan areas, all of which are larger than anything we've got in this country. they're not all on lockdown. it's just been the waves and the uncertainty it creates about when and if it may happen to your area. >> do you want to give your elderly mom or dad covid we were really gripped with that in this country. we were all concerned. i think that china is going to have a huge problem with that, because that's who -- that's who got hurt that's who died, were the people who don't have a voice, the elderly, and china is -- my father worked for the chinese, they cared tremendously about the elderly.

so, i think that there's going to be a continued lockdown, even after they open things >> maybe >> because they won't give them the vaccine. and that is just -- people i know in the industry are just saying, it is one of the great travesties of our time, that they have something to be, like, it's not polio, we all got our polio vaccine. but it was -- it's a disaster there. >> apple's a disaster. >> you look at apple apple's down another 3%. the nasdaq is down about 30.6% for the year, and obviously, we know many of the growth stocks that were the high flyers, and many others, are down well more than even the 30% that the nasdaq is down for the year. you know, it's funny, because i did -- well, not necessarily funny. i did ask jon gray, who runs blackstone day-to-day, steve schwartzman's still ceo, about, you know, their private equity business and where and if they're seeing opportunity, particularly because the cost of capital, obviously, is going up, and so that does affect the

return parameters for any deal you might consider i thought his answer was interesting because it ended up that perhaps there is value in the public markets take a listen. >> best opportunities today tend to be on the screen, because the markets tend to throw the baby out with the bathwater they take speculative tech companies or tech companies that are making a lot of money and say, you know, i'm nervous, i don't want to own anything and so, i think strategically, you focus on assets where the pricing reflects a more sober environment, maybe too sober, and early on, i think it's in the public markets >> he's kind of encouraging, and you know, it's interesting because vista equity as well, we've seen them active in the public markets obviously, they focus on enterprise software companies, but there may be opportunities for long-term investors who are looking for returns that spread out over many years, jim

to make an entrance here now, can you get the financing that you want? that's a question. right now, you know, the citrix deal is getting done around 10%, not pretty so that's a difficult area right now for some parts of private equity but there may be opportunities, says mr. gray. >> enterprise software, longer term, has been the single best investment >> yes >> and yet they're, right now, the worst investment, so i think that jonathan gray is right again. you can take a look at the enterprise software and know that some of these companies are going to do very, very well, david. and i think that when you look at the longer term, but the longer term has become something that i really want to encourage on our show, but i respect the fact that that's a sea of red. >> it's hard to build a position when you think you're going to get another chance tomorrow, down another percent it's difficult to actually put on risk, so to speak, and certainly those who are paid to do it for a living don't want to do it right now, it doesn't

appear >> carl, i spend a huge amount of time with marc benioff last week at salesforce, pretty joyous time, understand the dollar makes things very difficult, made that clear multiple times a stock that i recommended at $8 many years ago and i look at it i look at the chart and start to sell, and then i go out there and there's 40,000 people who are ravenous about the company and you know that when things turn, this is going to turn fast so, can you own it while you wait for the turn? i think that people at home, younger people at home in particular, have to say yes. if you need that money two years from now, that's a tough call. but for what it's worth, and it wasn't just because i watched the red hot chili peppers, who were unbelievable. for what it's worth, it was a celebration of capitalism, for dreamforce, and a celebration of earnings and orders. and brett taylor, the co-ceo, and business is good business is good at workday. but people are afraid.

enterprise software is incredibly necessary business is fantastic in cyber just fantastic, palo alto networks i mean, i'm talking about fantastic, okay? and no one wants to buy that stock. i've got in the bull pen but if you buy palo alto now, i can't guarantee anything but i can tell you that that company is doing incredibly well there's no cessation of business it's probably the strongest quarters that is out there and nobody wants to own it because it's a stock and stocks go down, but that ends. and it ends in a guy like nikesh that's going to be the winner because he's taking share and his product is invaluable, and i don't care that the chart looks like k-2 or kilimanjaro, which is not that hard to climb. how about rainier?

very hard. shasta forget about it. >> certainly was one of the highlights of last earnings -- the last earnings period goldman had a note out yesterday trying to explain how their oil target was so wrong, and they said they didn't count on the dollar asymmetry, but jeff curry comes out today, market's going to go into deficit or is in deficit and will tighten further. they still see 85 to 95. >> opec plus has to go and make things more restrictive, and our government has to stop the bleeding of strategic petroleum reserves, but when i have -- when garner made that call and said, this is going right back to 80 and then 95 and then 66. and that's why we sold half of our oil stocks were overweight for the travel trust, and i wish we had sold every one of them. but the ones we have left do have good yield. and i think that's terrific, except for halliburton, where we came in after meeting with the company and were dead wrong,

thinking that stock -- >> keeps buying more oxy another $350 million worth >> do we think he's not smart? >> no, we think he's very smart. >> is he buying carmax, by the way? >> i don't have any idea >> no. >> i didn't know that he was buying oxy yesterday >> we asked about oxy. >> i know you did. the question is, it doesn't appear that he wants to buy the entire company that is an obvious question given how much he's bought, well over 20% at this point guys, we're reversing everything that we did yesterday. >> it was just a total do-over didn't happen. >> nasdaq is down 2.4% >> it's incredible >> over 31% year to date >> that's why people hate the stock market >> i mean, the auto sector, for example, gm down 6%. ford down 5.5% tesla down 3.5%. >> tesla does have issues. piece today that was very positive on tesla but still talks about delivery estimates are too high i continue to think that ford

represents great value sold some in the 20s anxious to try to buy that back. general motors, i think, marry b mary barr is doing a great job but lose it. >> or rivian, $65 price target how did they get there utilize a ten-year discounted cash flow with a 14% weighted average cost of capital and a 5% terminal growth rate and a discounted rate to get to that price. >> do they like carvana? >> carvana has not gone well it's been suboptimal, as you would say. >> bought a car, brought it to the house, i didn't like it, they took it back. how do they make money >> well, lucid is the biggest ndx loser and there are no ndx gainers at the moment.

>> no? is that right? remember when mark hanes said if it's 9-1, the late mark hanes, then you have to do some buying? >> all i got on my screen is merck, bristol-myers >> i think you should add eli lilly. i'm trying to get their weight drug and i believe their alzheimer's is going to be as good as biogen the weight drug. loses weight no downside. >> send me more information. i'm interested another day of washout let's get to bob pisani. >> good morning, guys. and we basically given up all the gains that we had yesterday. david had a great point, it's really hard to put on risk in this market because the market's picking your pocket here day after day, you're getting faked out here, and it's making it really difficult so i use very simple metrics for risk on, risk off

arc innovation, semiconductors, metals and mining, these are good examples of risk on, risk off, all three of them down 2.5 to 4% today. everything else within that range. banks, consumer staples doing a little bit better, but not much bett better if you look at mega cap tech, bank of america downgrade for apple here, lowest level since july apple's held up better but it was 176 in august so we're down 15% since then there's amd and nvidia, down microsoft is down about 28% so far this year. so, yes, all right, comparatively, apple's held up a little bit better but not much better if you want to know the issues with the market, we got three issues today, just happened. truss is defending those tax cut proposals, which are inflationary, over in the uk the jobless claims numbers came in at five-month lows. that's not what the fed wants to hear, as jim has been aptly pointing out all day and then we had mester talking to steve, rates still not in

restrictive territory and we're not at a point we think we should be stopping on rate hikes. maybe somebody should send loretta mester the carmax earnings report. did you see these numbers? 79 cents what this wasn't close to any analyst estimate it's half of what the expectations were. used car comp sales down 8.3%. it's very simple you want an equation we got higher rates, we got higher prices, and we got big affordability problems here's what carmax said. we believe a number of macroeconomic factors impacted our second quarter unit sales performance such as vehicle affordability challenges that stem from widespread inflationary pressures as well as climbing interest rates and low consumer confidence. send that to loretta mester because it looks like this move by the fed is definitely having some impact. look at this down 17% that's a new low, 52-week low for carmax investor confidence is also in terrible shape i follow these aaii numbers,

american association of individual investors, look at this, 60% bearish. this is two weeks in a row, 60% bearish, twice the normal numbers. it's never been two weeks, 60% bearish in history this goes back to 1987, this survey bullish, only 20%. usually it's about 40% so, still terrible numbers here. as carl mentioned upcoming, nike coming up, and they're like fedex, though. they're a big global company 20% of sales in europe pce price index for tomorrow, carl, 0.1% for the headline, month over month, 0.5% for the core, anything that is better than that indicates lower numbers than that, i think, will help the market for sure tomorrow we'll keep an eye on that. carl, back to you. >> we'll see what happens in the morning. bob pisani as we go to break, let's watch bonds. the dow is down about 475. two-year, 4.2% ten-year just below 3.8%

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take a look at the heat map of the nasdaq 100. not a single component in the green this morning yesterday, 2% gains. today, roughly 2% losses s&p down almost 70 basis points. we're back after a short break don't go away.

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c'mon kids. this. sucks. well if you just switch maybe you don't have to be vampires. whoa... okay, yikes. oh sorry, i wasn't thinking. we don't really use the v word. that's kind of insensitive. we prefer day-adjacent. i'll go man-pire. jim, what's on tonight >> i know this was off the record, but we do feel like we have to find something to buy. i just sent my assistant -- my portfolio manager, what do we have to buy here i'm going to ask james gorman if we've gotten too negative and not thinking at all about 2023 and if there's something to buy. >> ask him about twitter >> i just asked taylor about twitter and he gave me an answer he said, we're doing well. i said, you can ask me any

question about twitter. >> twitter says we're still missing text messages. >> they're not happy with musk's lawyers. people think i pick on musk. i don't. he's amazing. >> a lot of people say that about you. >> jim, we look forward to it. "mad money," 6:00 p.m. >> delivering alpha was a great show. when we come back, b of a cutting apple, the s&p below 3650

good thursday morning. welcome to another hour of "squawk on the street. i'm carl quintanilla with morgan brennan and david faber at post 9 of the new york stock exchange pretty much undoing any gain very weak breadth, especially in tech >> we're 30 minutes into the trading session. here are three movers we are watching right now we're going to start with carmax, those shares are skidding they are down about 21% after

missing quarterly estimates on the top and bottom line. the used car dealer -- that stem from widespread inflationary pressures including climbing interest rates and low consumer confidence. a mega cap under pressure, amazon announcing a another pay increase that will cost the company $1 billion a year. we'll see if retail rivals follow suit. shares of amazon down 2.5%. jeffries posting better than expected quarterly profit. getting a boost from upbeat merchant banking results which helped offset a slide in deal-making. >> that he took that $80 million charge for that device problem all these banks have run into regulators as well. let's get back to the broader markets. pulled back more or less giving up all of yesterday's gains.

dom chu has more on the actions. >> it also puts the s&p 500 now about 24% below the record highs. that's how big the drawdown is at this stage, david, to your point about the kind of pullback we've seen giving up or getting lost at least most of the gains we saw on yesterday's session. beginning of the year with record highs, the drawdown is 24%. we're just about near the lows we saw over the course of the past couple of days. but you want to keep a close eye on 12 points below where we are because that was the intraday level thereabouts that we hit two days ago that's the new benchmark for whether or not we can find a bottom in the market for s&p interest rates, you mentioned them we're not at that 4% level yet we're still near those cycle highs and what's more importantly, some traders are watching this notion that this has been, in fact, a ten-year yield that has been well above its 50-day average level over the course of the last several weeks now at this point. ever since the beginning of

september. whether or not there's any momentum that comes out of this trade to the upside for yields will be a key factor that's affecting the mega cap trade. morgan mentioned apple numbers all down anywhere from 2% to 5% at this stage. interest rates part of that story as well as just the overall weakness in technology another place to keep a close eye on right now is what's happening outside of mega caps in terms of semiconductor stocks the semiconductor etf is at a new 52-week low down here. it gets a little more notoriety in this area but not every stock is down today. there's a handful clinging onto some flat levels right now, maybe some slight gains. at this point they're all in the red. colgate, palmolive, general mills, smuckers, hershey, they were positive within the last

half hour, even thousand drifting to the downside >> appreciate that dom chu. yesterday at cnbc's delivery alpha conference ken griffin talked about how people can best position themselves amid this volatility >> the 60/40 portfolio looks better today than at any time. >> why so? >> ten-year bonds at 4%. when ten-year bonds are at 75 basis points or 1%, there's no real upside to the bond in a moment of recession that's often characterized with inflation now with the ten-year bond at 4%, if you go into a downturn, and inflation heads back towards a one handle, all of a sudden those bonds are worth a fair amount more than they were today. that's a win in your portfolio in the green when your equity is likely to be in the red. >> let's bring in citi equity strategist scott and tracy mcmillan scott, i'd love to get you to

bounce off the griffin's thoughts and talk about if not bonds, at least how equities tend to behavior in a year following inflation peaking. >> i think that's a really good question typically inflation peaking comes with the other side of economic traction, if you will so, typically it's the fed response to peaking inflation that leads to a more onerous outcome. how do you position against that there's a school of thought from a cross-asset perspective that in that scenario, you're going to favor the fixed income side of the equation and per the previous commentary, the rate backup is giving you a way way to think of the 60/40 versus the highly correlated construct we had between equities and fixed income over the past couple of years. >> you had a note the other day where you talked about the fed increasingly using its voice as

a policy tool and that may have an impact on behavior that might force you to rethink your view of a severe recession, which you had pretty low odds on. >> essentially, you know, the fed is very clear in jackson hole that setting fed expectations is part of the fight against inflation and we're just making the point we think they're using their voices, part of that the determination around using the fed funds policy rate to affect inflation is part of the discussion that ultimately affects behavior the bottom line is there's no epic surprise here that as you continue to work that policy towards higher fed fund rates, you bear the risk of a more dire economic consequence on the other side we had given severe recession a 5% probability i think what we're suggesting is that probably has to get tweaked up as we move forward.

>> tracy, i want to get your thoughts on this, the idea of a 60/40 portfolio looking better today. do you agree and how do you counsel investors to put their money to work today? >> we do agree what we're seeing are higher bond yields and those higher bond yields do make bonds more attractive than we've seen in years. really over the past decade. we want to counterbalance that with the growth prospects of equities we still have an earnings correction ahead of us and we also have what we believe is going to be a global recession ahead of us. if investors are waiting until we get through those, it's probably too late. if they jump in ahead of those events, it's probably too early. what we're counseling our investor to do is stay patient here to play defense. to have that diversification of

a more balanced portfolio with bonds and equity allocations in them and diversify thurt into things like commodities and alternatives >> when you talk about an earnings correction, do you expect that to materialize in a meaningful way in the prints we start getting in the next couple of weeks or does this have a ways to go in terms of working through the system and m ultimately seeing a bottom manifest in commodities? >> we do think it will take some time to work its way through the markets. so we're watching earnings we think corporations right now are in a pretty tough spot labor markets are still strong we saw that in the numbers that came out earlier today supply chains haven't completely healed that is hurting them in terms of higher production cost at the same time we're seeing high inflation and rate hikes

and that's hurting them in terms of their revenues. we do think it's probably going to be a few more quarters. we think earnings estimates need to come down through the end of this year and come down for 2023 >> some bulls counting on and trying to pound the table on seasonality, arguing once you get in october, you get past the midterms that q4 historically gives you a good setup is that even material to your outlook right now? >> the seasonality part not so much i do think, though, we're set up for a risk-on rally called a relief rally at some point during q4. that's more predicated on one -- i'm going to counter the previous comment i do think we'll see ongoing resilience through the q3 reporting period, which kicks in in a couple of weeks i don't think it will take much in terms of a shift of the perception around the fed

narrative around some data point, and much like we saw yesterday's action, you see how quickly the market can respond to that. what we're suggesting is that with sentiment as dire as it is for our index t won't take much in terms of a shift of perception around the interest rate front combined with ongoing steady fundamentals through q3 to trigger a rally that plays into our ongoing view that we've been using 3650 since the springtime frame as a level we think more or less. mates where the s&p could trade. a couple of dynamics here give us more confidence, if you will, that the setup in the q4 is fairly constructive. >> we'll see as you said, 3630 at the moment. appreciate that on another important day. thank you. >> thank you. meantime, you'll look at

live pictures from jacksonville beach as now tropical storm ian batters northwest florida. the storm bashing the with torrential rain, high winds. it slammed into florida west of fort myers as a cat 4. the fifth strongest storm in u.s. history flooding roads, knocking out power to millions. the full scope is still undetermined the president has declared a major disaster in florida, and that will open it up to fema funding. >> of course, our thoughts and prayers are with all the folks on the ground there right now. as we head to break, here's our road map for the rest of the hour cathie wood adding another space name to her portfolio. we'll tell you which one. apple getting hit again, down over 5% over the last two days we'll speak with the analyst hyped that call next. porsche making its market debut, one of europe's largest webl oerg er 'll have more on that.

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bank of america downgrading apple from buy to neutral and cut its price target it's now 160 still above where the stock is b of a predicting a weaker consumer the ab list who made the call joins us talk to me and our viewers about

this risk/reward profile and why you see more downside to the stock deserving of a downgrade >> yeah, good morning. thanks for having me i think the key here is you have to change when the facts change. when we look at the data, we're seeing consumer spending is starting to slow down. when we look at app store data, we have some charts in our note we look at, app store data for apple which grew 5% in the june quarter is declining 2% in the september quarter and the month-on-month trajectory is getting worse. when you look at it from a china basis, that grew low single digit last quarter, declining 8% this quarter these are meaningful changes in demand trajectory when you consider the fact that the app store is an install-based business you don't see these wild

movements in demand deceleration number one, we take the demand profile of the customer is changing that is worrisome. the second thing we look at is what is actually lead indicators of demand. as we look at some of the iphone launch, and it's still pretty early days, we see that the lead times are tracking below last year's cycle in general, but the mainstream model is especially lagging. and the concern here is that when you think about the unit deceleration you could get from the mainstream model, that might overwhelm any benefit you could get from the pro we go through that in our note as well. when you put all the numbers together, we think estimates are too high apple has been very resilient when it comes to estimate revisions. they've been sitting about 645, 650 over the past year and world around us has really changed. as we look at the next year, we think there is significant risk to these numbers and that's what we're reflecting in our estimate

and ratings. >> understood. let me come back to something you just said. we had reports yesterday about the high-end -- the pro model doing fine the mainstream model is extremely lagging. what are you seeing? what date are you relying on to get that sense >> yeah, so one of the things that we look at is lead time and one of the things we look at is availability of product in general. when you compare availability of the iphone 14, the mainstream model, compared to the last three years of launches, the phone is readily available you can walk into any retail store, into any apple retail store or carrier store and pick it up. that hasn't been the ka is in three years. we think the reason for that is this is the first time that apple has not upgraded the chips inside the 14 along with the 14 pro and the 14 pro max that is a real departure from

prior generations. you always had lockstep in tandem the upgrades of technology across all new generations of the phone this time it's not we think that is actually something consumers are aware of and make a decision based on do i want to upgrade to a 14 or not or defer that upgrade? is it significant enough for me or not or can i boy a cheaper 13 instead? just to be clear, this has nothing to do with order pattern changes just yet because, look, it's only 10, 12 days since the product started selling. we don't think order changes in the supply chain are made out until late november, early september. it's a view that demand isd dedec dedecelerating >> have you modeled out how apple perform and how things like iphone sales perform when we do go into a recession? >> yeah, great question.

it is on a relative basis, it's been absolutely very resilient when you do go into a downturn, within a matter of weeks, demand does sometimes fall apart. we saw this back in 2018 we've seen this actually with the iphone c cycle as well you have periods in time when demand can come in significantly lower. we saw years where iphone demand was in the low 180 or 185 million units. last year was 245 million units. our base case is now modeling 219 million units, which is a 10% decline. so it's not really super significant in the grand scheme of things. we're not calling for a bill of 200 million unit decline at the same time, we do have to acknowledge when you raise prices in europe, and the economy is consumer and the consumer is struggling, in china you did not raise prices but the data points around initial sales

are weak and in the u.s., even with strong carrier incentives you're tracking flat, there is downside to units. ail though it's resilient, a 10% cut in units is not that surprising in terms of what's happening globally with the consumer. >> i remember during covid you were at a neutral for a while. you would come on and we would say, what's it going to get you to take to move to a buy you finally did. is the outlook as uncertain as it was when you had your prior neutral? >> yeah, carl, when we upgraded the stock last year, the economy was doing a little bit better. we felt consumer demand was much more robust and i think that as you look over the next 6 to 12 months, the level of uncertainty here is unprecedented. when you look at it in terms of inflation, when you look at it in terms of fx, we're talking about moves in the yen and the

euro and the pound that are between 15% to 20% on a year-on-year basis those are massive headwind that did not exist a few quarters ago. those need to get renormalized you either get a hit on translation or demand destruction, one of those two. our review is things are quite dire in general for the broader economy. i think the market is telling you that i think in general when you look at what is the outlook on consumer spend, i think most people would agree that we're maybe at the brink of a consumer recession. and so is apple just not going to see anything at all because the high-end consumer is insulated? i would like to remind everyone that apple sells maybe 60% of its consumers to high-end consumers but 40% go to people who are not necessarily high end. that is the part that even if you got sort of, let's call it, a 20% demand decline over there,

that's eight points of headwind right there. when you multiply that with fx headwind, it translates into significant risk there's going to be a point when all that gets factored in. we're at $5.87 for earnings for next year and the street is at $6.45. we think there's a lot of room to go here >> well, based on those numbers right now, the pe is coming down if they hit them given 4.5% decline in the stock thank you. >> thanks for having me. cathie wood's ark invest taking a bet on space adding shares of space company rocket lab to the autonomous technology etf as well as the space exploration and innovation etf both under pressure. it's the pure play spac the firm has owned since selling its position in virgin galactic.

shares down 65% along with the broader space sector downdraft last week i asked founder and ceo peter beck if he thought his company was undervalued. >> we pride ourselves on executing. we're the second most launched rocket behind spacex most companies don't want to look back and what they promised when they came public. we're very happy to because we've exacuted across everything we said we would do. >> that's a key points in terms of looking at the sector, which has been very speculative. we've seen selloff aggressively since the end of last year with other tech names and other so-called spacs and speculative tech names they do actually put rockets into orbit and are manufacturing satellite and satellite parts for other companies as well, which is part of the reason he joined us on set last week on the heels of their investor day. >> technology -- we were talking about apple. big implications for how their

devices will be used over the next ten years. >> actually, rocket lab is supplying indirectly into apple with that global star partnership that's involved in these new iphones, too just a lot of interconnectedness and the ecosystem around apple continues to get larger, david and, of course, we're keeping an eye on all of it on this broader market selloff today with all the major averages again lower for the week >> yes, a lot lower. today we see the nasdaq down 3% giving up more than all the gains just from that brief rally yesterday. >> s&p did take out tuesday's low of 3623. that will send you back to the lows from december of 2020 we're going to check in with jeffrey's after the break. ♪ ♪

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i'm frank holland. here's your cnbc update. hurricane ian has weakened to a tropical storm with 55-mile-an-hour winds. but it's still dumping heavy rains on northeastern florida. governor desantis calls it massive, saying it should only be seen once every 500 years rescue crews are looking for people trapped in their homes by rising water there are two reported deaths. ian is moving into the atlantic and expected to regain strength and make landfall in south carolina tomorrow. instituted the kremlin says it will formally annex four regions of ukraine in ms. cow red square is closed to prepare for a celebration sham referendum have been denounced in the west as illegal and rigged nato says all evidence indicates

nord stream gas line was. the market selloff has been picking up steam today we did get below 3623. the vix elevated at 33 isn't necessarily the 40 or so some people have been looking for and even the dollar at 112, not back to the 114 we got earlier in the week bob pisani is on set >> we're back to crummy technicals 440 new lows at stock exchange 16 stocks down for every one advancing. it was 10 to 1 advancing to declining yesterday. complete round trip on that. percentage of stocks above the 50-day moving average, 11% that's it. that is what it was a couple of days ago that's a terrible number all the internals are terrible

let me show you some stocks moving the auto stocks are collapsing today. carmax is the catalyst here but general motors, ford, aptiv, borgwarner parts all the parts manufacturers sitting down speculative tech, new lows across the board teledoc, zoom at a new low block that's $1 off a new low. roku the same situation. we've been talking to david. you were talking about the reit situation. the mortgage reitss are getting decimated. invesco, that stock, it never recovered from the 2020 numbers really but that stock was ten times higher a little while ago. we're talking down 60% this year new york mortgage, same situation. these stocks never really recover from the 2020 situation.

they tried bouncing after that, but essentially just de decimatd i mentioned the market technicals, almost 500 we had almost 1,000 at the weakest point. it's not quite as bad. 1 to 16 advancing to declining, that's a terrible number overall. as for the issue we talked about this earlier, the three big things here. the truss in uk cut proposals. rates still not in restrictive territory yet. not at a point we think we should be stopping on the rate hikes. according to carmax, it's working. those rates are killing the buyers >> their actual number almost half of what analysts had estimated. bob, when i talk to market

participants, we talked about this earlier, the willingness to take incremental, to be the incremental buyer is not there right now. a lot of people very -- know it sounds if uny to professionals, but very mixed up and afraid they don't know what to do or when to commit and they don't want to take risks here we are. one day after being up, 2%, we're down three >> the market is picking everybody's pocket it's giving the illusion that somehow yesterday's move was significant and then it sells right into it. i think yesterday, by the way, was significant because people point out, i think an additional risk factor. people were saying, bob, the central banks around the world are losing credibility to the extent the b of e acted to address that issue, the credibility issue, i think that was a positive that may have been a risk factor we weren't talking about we tend to focus on, okay, we're concerned about inflation, we're concerned about recession and erosion of earnings. credibility issue as a risk

factor, i think, is probably there. we haven't talked about that enough >> i mean, some might argue they're just responding to some crazy policy by a new government, right? >> yes, absolutely they had to. if they had done nothing, look what happened. there were people down here saying, bob, they're losing control of the things over there. they had to act. to the extent i thought yesterday was positive for the extent they had to act and did so decisively. unfortunately, you see, it's not moving the market. the minute yields start moving up, we're captive to the market. all you have to do is watch two-year yields. that's all have you to do these days when oil used to move the market every day, just had to watch west texas now you just have to watch the two-year yield every day when that starts moving up, the market moves down. >> it's a key point you make, and certainly the issue of credibility where the uk is concerned, where japan is concerned, where china is concerned looking at what's going on there with fx this

morning. we had so much fed speak they're doubling down on what you could argue is a volcker playbook it seems the fed is year there's a credibility issue the world over but they need to hold pat, stand pat on inflation and, of course, we're now retesting june loes the s&p below that and it does seem like the technicals are going to get -- >> you have to admire the single voice they've been speaking with they're not cracking the fed put isn't there. certainly no evidence it's there right now. now worry at a very interesting level. 3600 or so this is where slightly more bullish analysts think we will s stop the numbers are 3,000 to 3600. you have $200 for earnings and 15 times forward that's what people instead of being quasi recessionary number, the current estimate is 332 for

earnings you drop the numbers 10, 15%, keep the multiple around 15, which is low in recessions it can go to 13. that's a low number. 3,000 is the bottom. 360 is where a lot of other people are rear right in the range now. har net talked about, you nibble at 3600. gorge at 3,000, right? >> we just had b of a with a dark view of macro and how that would affect apple >> now we're in this territory where people are starting to say, this is getting a little interesting. let's see. >> it has been orderly >> if gets any more orderly, it will kill us >> maybe we need that panic day. >> 34 yesterday on the vix 35 is my level that's where it was at the highs on june 16th, the highs on the

vix. orderly, we need a little less orderly and a little more total fear and sense of a bottom here because it's killing us here watch nike tonight they're like fedex 25% in europe. they got 20% china those are big global numbers to watch. >> when we're talking about orderly, s&p is down 2.5%. bob, thank you >> does it feel orderly? newt folks tuning in are probably not feeling so happy. >> shaking a little bit. we'll continue this conversation with david. i want to get your take on the, quote, unquote, orderly action we're seeing here today and the role that central bankers, both here in it the u.s. and the world over are giving this week. >> it's a central bank driven market every client i speak to is

unfortunately focusing in on macro and they don't want to focus in on macro. it makes a good living for me. the guys that are -- the guys on the investment banking side. it is going to remain with us. i think you guys were 100% right in your earlier conversation the fed is stalwart, pushing, wants to fight this inflation. it's going volcker-esque, even though many people thought they wouldn't in many ways, that's the long-run gain. that's what we should look to as the go elin the end, the positive, the anchoring of long run inflation anchors and what that means for positive, maximum sustainable growth that we can get down the road. we don't want to lose that anchor that would be a return to the '70s and a lot of repair work. there's a lot of pain that gets us across that rubicon that's what we're taking right now. and we'll have to take that short-term pain to get to the

long-term gain. >> how long do you think the short term is and how deep do you think the selling could go from here? >> one thing i've been arguing with our clients and why i'm not in that 3,000 camp, and i haven't been, although i've been pretty negative for the bulk of this year, and i really think these are the levels that gets interesting to own, is that when you have a lot of nominal gdp, nominal income growth. we're in negative real term growth we got confirmation of that today. we have 8% nominal growth. that's nominal income that's in the economy. last year nominal income grew at 10%. 20% over two years in nominal income it's very hard for assets like equity assets, commodities, real estate assets to go down and stay down when you have a lot of nominal growth i think that nominal cushion is something we need to think about. especially if inflation sticks around longer.

real rate higher, multiples lower, but we also have this nominal cushion that's sort of helps with valuation and thinking about where the ultimate end point is for the s&p on a bottom. warren buffett told us to look at valuation simply in the equity market by taking the total market cap and dividing it by nominal gdp as i said, nominal gdp is ripping at levels we haven't seen in 30, 40 years largely because of inflation if inflation stays persistent, it's going to stay high. that should be a cushion to the downside that's how i see the cushion to the downside that's why i can't get into that 3,000 or below 3,000 camp. i haven't been there all year, even though we've been quite negative i think these are the levels where it gets far more interesting. >> right here, these are the levels what does that mean, far more interesting at these levels.

explain what you mean. >> what i mean is that cushioning of nominal income growth starts to kick in down here we're going to get a period at some point, nobody knows when enough is in the system. we'll get to 4, 4.5, we need to watch it, we slowed things down. we'll see it in the employment data and inflation data. as soon as the fed gives you that, hey, we're going to watch for a little while, you'll get 5% to 7% pop maybe you don't want to be there because you have to go down too much to get there. we're closer to that end game than people think. i don't know if it comes at the end of the year, q1 but one of the two, and i'm very confident if inflation stayings sticky, my nominal cushioning is going to buffer me on the way down and i don't have nearly as much

downside we've gone 22, 23% in the year we've chopped a lot. we've taken a lot of valuation out of this thing. real rates are higher, dollar is stronger, all the thins we need to do to fight this inflation. it's just not -- it's not that exciting for me to play for another 10% to 20% down. >> i get it. everybody seems more confused, perhaps because they're not macro experts or have experience in focusing on that. how would you describe your conversations and what you're seeing on the other side when you're talking to these people trying to make decisions >> you're absolutely right i'm getting asked to do podcasts for tech guys in silicon valley to talk about macro with their little -- their twitter group or this group or that group hey, what's going on

why has there been no tech ipos. there's such a reach to understand the macro what is the fed doing? why are are they doing it? i'm trying to be clear with our clients and all these folks. i think the fed is doing this for the long-run good of the economy. they're trying to anchor inflation expectations and not make the mistake of the '70s to make sure that happens in a period of high inflation because of these adverse shocks, you have to go through some short-term pain. you have to understand the tradeoffs and also not get people so focused on this idea that the fed is making all of these mistakes a lot of my friends, colleagues, ex-colleagues, people i do a lot of events with, they beat them up at the end of the day, you can go back and monday morning quarterback all you want

the fed is acting the way we should hope they were acting which is to make sure the anchoring of long-term expectations stays with us that's the best thing for equities in the long run they can do it will hurt but the long run, with equities are going to look at that in a positive light equities are the longest duration asset out there they'll look to that long run. i think once the fed says we're getting close to our job well done and they're probably closer than we think, that will be a good day a good week. >> you mentioned expectations, david. certainly meser addressed that this morning bullard talked about claims coming in, as he put it, super low at 193k, lowest since april. can you explain that do you have faith in the employment metrics they'll be using to bring that pivot if and when it comes? >> carl, i've never been a big believer in the phillips curve and these relationships that everybody talks about with unemployment and inflation and so we used to have this term a

few cycles ago a working recession. we're working a lot. we're not getting anything for it we have a really solid job market, but we still have negative growth. i think that's the most important thing is -- and how that happens, why that happens, i think a lot of it is due to the supply side of the conomy, not the demand side. we're focusing too much on demand we'll get through this the negative supply shocks will ebb, we'll get back to positive supply and i'm noting if to worry too much about it. but it gives the fed a lot of cover to fight this inflation. we can be more aggressive when we see these numbers loretta will come out and talk

the way she did. we can be tougher and stronger because we don't have the political fallout on the labor markets we usually seem to get when the economy goes into a tailspin. >> david, great to get your thoughts on a day like today appreciate it. >> take care, everyone. >> you too. let's turn to europe it's in focus as well. the sterling slump, the historic lows let's get over to steve liesman with a special guest for us as well >> david, thank you. i'm in cleveland at the inflation conference but i'm joined by phillip lane, member of the executive committee and chief economist for the european central bank i have to start with what happened in england the last several days there's been a concern about the workings of the bond markets causing the bank of eng tloond reverse course and do quantitative easing or purchasing of bonds there.

does it raise concern at the ecb about market functioning and liquidity in this tightening process? >> i think there's no direct read across. what is true, central banks everywhere do have the responsibility to make sure the bad market functions i don't think i would use phrase like quantitative easing or reverse course for this type of intervention i think it's perfectly correct and sensible to simultaneously make sure markets work through this type of intervention. in fact, it enables or allows the hiking cycle to continue if you make sure the markets are stable >> what about the idea you could be raising rates to a point where markets break? >> again, i don't think this is the analogy we're seeing from the uk experience. let me take your point in the sense of the overall issue of, is it a case we can see bond

market overreactions is it a case we can see bond markets repricing to unintended consequences generates hidden issues that were not obvious on the surface? of course. let me come back to basic principles here. this is especially why, to give you a basic explanation, we are saying we know we're going to do several hikes but we're going to do them over several meetings. trying to do too much in one go is exactly the situation where you might get absorption issues in the markets it remains the case, even when we've made, for us, sizeable moves. there's still the step-by-step keep the market aware that we're on a campaign over a number of months not trying to do everything in a few weeks. i think that's an important principle. of course, what's happened in the uk was essentially a lot of

news arriving and you also have to allow for sometimes the unexpected happenings. >> for example, from the fiscal side let me move on, though you talked about rate hikes coming what kind of guidance can you give people about what the ecb is going to do next and how far it's going to go >> we can be super clear in a directional sense. super clear is that at the very least, we have to move away from the policies of the last several years of super low rates so, this is why, you know, having been fairly persistent with very little into negative rates and balance policies, this year we've moved fairly smartly, including the last two meetings where we now have the deposit rate of plus 75. now, while we're clear about is we know if the data we see today persists at the very least, we need to get to some version of the

neutral interest rate while being extremely clear that, in fact of today's conditions going above neutral well may be in the cards. what we also need to be clear about is lots of uncertainty we do not need today, here we are, end of september, to take a strong view about what 2023 looks like let's get several hikes done and then we can see what 2023 -- >> is smartly the euphemism in ecb talk for 75 basis points >> this is a backwards looking comment. the fact where we've come from, minus 50 for a long time, to zero and plus 75 i think it's very important, the way we decided to handle the uncertainty we're facing is to take a meeting by meeting approach to the exact calibration. it's still four weeks away it's a month there's a lot of data to see between now and then i think this debate about what

exactly is the next move is something we will decide on the day. it really is not particularly helpful four weeks out from the meeting to discuss the last margin of this. >> i have to ask one more question the weaker euro, does that animate monetary policy? is it a concern right now, what's happening in terms of the impact and how it influences inflation? >> i mean, the euro matters with the european economy let me emphasize, monetary policy, just like in the u.s., mostly works through domestic channels so, the exchange rate is not a target for monetary policy it's one of the variables we look at. we know interest rate decisions should mostly focus on the domestic situation, the he can change rate is a minor issue compared to those exchange rates. >> that doesn't sound like a bank contemplating intervention based on what's happening in europe right now

>> i think it's clear. we have a focus on inflation and the most effective technique is to make sure interest rates arrive at the level that inflation will get back to 2% in a timely manner. >> thank you for joining us today. see you soon david, carl, back to you guys from cleveland steve, great stuff today we'll talk some apple. shares down on that share of b of a get a check on the markets pretty much hovering not far below session lows s&p 500 down almost 90

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welcome back to "squawk on the street." everything is down firm. by the s&p is down 1%. real estate is the worst performer today. and if you look at the names

that are leading to the downside, you got health care facility advantages, like ventis, shopping center yogroups the whole sector is down in general. we've seen that play out in places like mortgage etf, rtm. they are both tracking for their worst month since march of 2020. there's more "uasqwk on the street" coming up. we'll be right back in two minutes. ♪

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welcome back to "squawk on the street." one of the biggest public offerings ever phil has more. >> morgan, porsche shares ended higher for the day, which is saying something after what we saw with the overall market in europe this is a highly-anticipated for what's happening in the auto industry 911 million shares being offered. get it 911. 455.5 of those are voting shares the other 455.5 million are

preferred shares and for porsche, this ipo float, it's only 12% of their shares. so, the public only has access to 12.5% of them the porsche and families will have 25% of the automaker. the ceo will be oliver blooma. he is the ceo of volkswagen, which has raised some questions whether there's governance issues down the road for the time being, he will be the ceo of porsche and volkswagen you look at volkswagen, the proceeds expected to be $18 million when it's said and done. they will use half of that to invest in e.v.s. the other half will be offered up as part of a dividend that's happening over the next couple months. a huge day for volkswagen, as they are unlocking the value of porsche. >> clever, phil.

even though porsche had a good first day of trading, we're seeing other automakers get crushed. carmax is leading the s&p lower right now. canary in the coal mine? >> hard to know. one thing they talked about in the conference call, and they were asked about this, whether or not because of the rise in interest rates, because of the high prices for vehicles, are we seeing a slowdown in the consumer we're see ing the price of a use vehicle, in the second quarter, an all--time high of $515 a month. it's higher now. you're getting into rich territory, when you're asking buying a used vehicle, to pay $525 a month they stretch these out as long as they can go you add in higher interest rates, that may be the point where the consumer says, i'm pulling back >> phil, thank you

phil on porsche and carmax and all things auto-related. for the markets, the good news is, we're off the lows the bad news is that the s&p 500 is down under 2% and the nasdaq down 3% that will do it on qua"squawk on the street "let's send it over to tech check. good thursday morning. welcome to "tek ch check." today, the stocks are getting hit hard nasdaq losing 3%, after rallying to start the week. every s&p sector in negative territory. apple is a big reason for the decline. the stock that accounts for 7% of the s&p, nearly 14% of the ndx, down 4.5% we may be seeing safe haven status shifting in real-time if it is, that could lead to greater losses for the broader markets. here's b of