has scaled back on their participation level, still has positions on, et cetera, and that's part of the group i'm talking about with the apple and microsoft, et cetera they have positions, they're just not adding to them. >> jj, thank you very much we got to run. >> have a great weekend, guys. >> you too here we are on the last trading day of the week, the quarter, the month, and right now, we're in the green, so we're going to hand it off to "squawk on the street" that way see you back here next week. >> yeah, don't mess it up. >> if anything happens, it's their fault. >> don't mess it up. ♪ good friday morning, welcome to "squawk on the street," i'm carl quintanilla with jim cramer and david faber. good riddance, september and q3, futures are flat as the corporate worries pile up here nike, micron, meta, carmax and fedex. core pce runs hot, two-year, 4.18%. our road map begins with another rough quarter tomcoming to a cl.

the s&p down 24% in the past three. investors digesting policy expectations five fed speakers cross the tape pay. >> plus we do have micron warning of tougher times ahead it's planning to cut investments by up to 30% shares, though, actually up ahead of the open. micron's chairman and ceo will join us exclusively. and when it comes to signs of a weakening consumer, well, take a look at nike the shares are tumbling. this is inventory stores and rent-a-center is also falling as it says macroconditions hit its retail traffic >> let's begin there with the markets on this final trading day of the month and the quarter. jim, we had talked for a while about how preannouncements were a bit light in conference season they've added up now >> yeah, i think that what happened is that a lot of companies seem to be deviating from what we always thought is what you should preannounce with if the expectations are x, that you're 5% less than x, the old days, you would put out a

release. now, you have companies that you may have thought were doing okay there was much positive commentary about nike going, saying, hey, the stock has fallen so far. how much further can it fall much positive commentary about micron we're going to salespeak to sany about how it can't get any worse, and people are acting as if it can't get any worse, which is foolish, because it shows you they haven't done any work >> that's interesting. there's a couple notes out today on micron saying the capex cut is making people feel a little bit better >> but sanjay's not feeling better i mean, sanjay, when you do the work, is saying, it's going to be a longer time than you realize and the capex is going to -- the cut is going to not immediately -- they're going to do everything they can, but david, you have companies, really smart companies, that seem to be genuinely surprised about how things have deteriorates how did they not know? >> i don't know the answer to

that and i guess that may be true, but at the same time, i do hear sort of that, yes, we're going to cite headwinds, but few are going to say, this is recessionary conditions that we're facing >> well, i think they're all trying to stay away from a broad, sweeping statement about recession. they are dealing with their own business now, i mean, nike, i'm so used to having nike conference calls be uplifting, and you feel like, well, put on my jordans and -- no this is one, we had a huge amount of inventory in transit, we have a huge amount of inventory in the channel, we have a huge amount of inventory in the stores, it's the wrong inventory, it's apparel, and i'm thinking, is this nike is this nike is this the nike i know? it's not >> this is not just also strong dollar impacting them, china lockdown clearly impacting them. >> down 13%, sure. >> it's more than that it's bad merchandising in your opinion? >> no, it's they found out that you could -- there were a lot of

people who felt that the shipping would take long, and the shipping got much quicker, so that the customers got -- they kind of got the material before they needed it, and they don't need it anymore, and nike was continuing to pump out the apparel, and look, i'm sympathetic to both nike and micron, because you lose china they just lost china you have a situation where you're not sure how long it's going to take to get merchandise. you have a situation where your retailers want merchandise aggressively and were double ordering and then suddenly, they got the merchandise, and they can't sell the merchandise now you have like brian cornell, i pulled up with him last week, carl, and he took the gutsy action he got rid of the inventory. i mean, he's my hero >> that's what nike is going to do >> one of the reasons i put in my memo. i do my memo every morning, david, i don't know if you see it i bothered to put in that ali stores has a major hiring event. now, that was meant to be a

little bit of -- that's true, they do have a hiring event, but will we see nike apparel at ali's? i think they'd rather burn it. >> remember what a challenge it was to get them to go on amazon. that was the hill enough here's what donahue said about their ability to see around some of these very sharp corners lately take a listen. >> we don't have any crystal ball around the external factors, whether it's fx, whether it's inflation, whether it's the impact of energy prices on consumer spending and so, matt will talk a little bit about the assumptions we have built in to our second half, but what we're focused on is what we can control, which is staying on the offense, and we believe that we can meet consumer demand regardless of the macrodemand, meet consumers, and gain share through this period >> so, two things, jim one is, this is going the

biggest gap down on earnings in 20 years on nike the other is, when you put vf corp. and carmax and nike together in just one week, that -- these consensus estimates are have to come down. >> ben soto, who works with me on "mad money," and i'm going back and forth i said, listen, i want today's vf corp.'s numbers he said, people still cutting numbers? i said, absolutely >> did you say vf corpse >> no, i like that vf corpse. i'm not talking about the corpse kind you love this. i can tell because you've got that wry smile but can we understand that john donahoe is a great executive, and that's what's really shocking here? john is a seasoned, great executive. and they have, let's just understand, that they have a level of inventory that is shocking, and yes, he can take share. if you have 65%, year over year inventory, well, you can take a lot of share, because you can

flood so many at any price david, taking share is not what i want to hear right now >> understood. understood and anike and micron are going o be two features today. we'll talk about micron in a bit. but back to the broader market, if i could, for a moment, because it has been a painful september for anyone who owns stocks >> yeah. >> and in fact, if you own bonds, it hasn't been great either >> no. >> remember, price goes down, yield goes up. >> but people are very bullish >> who's bullish >> this morning. this morning, i get up, at 3:30, and futures is green >> futures were up until that "journal" reporter tweeted something at 7:30, then things turned a little bit. you know, nick -- >> oh, about pce which, yeah, you know, people are going to quibble about financial services >> it's still way over where it should be. 6.2. they want it to be at 2. and the guardian of the galaxy,

mester >> is that what we're calling mester >> the guardians >> oh, the guardians got it takes me a while >> then we got the commanders down in washington >> and you heard yesterday from cleveland. >> that was one of the -- >> back to the nfl because now's the time when we have to talk about -- >> nfl had a bad night last night. >> can we talk about the market again this quarter >> i'm talking about the market. >> this horrible month, this very poor quarter. i'm looking at some of the gainers and losers charter communication. >> that's problematic. >> yeah. broadband, obviously, adds -- well, they're subtracting, not adding, real potential competition from wireless and real questions about pricing power over time. you had that downgrade yesterday from barclay's that was just ugly in terms of taking numbers down $2.5 billion in equity fedex, of course, we know. and then vf corpse as you just

mentioned, which is very recent. >> advance was very hot, now it's not so hot. >> what's interesting is that netflix is actually one of the best gainers of the quarter. >> well, netflix, people are believing in the ad-supported. if you have a harder -- a consumer's a little more constrained, you take those ads. you know what consolation energy is >> tell me >> nuclear >> right >> and people think nuclear's making a comeback. and i will tell you, there will not be a nuclear -- >> you'd be surprised to see them coming off the lows they have had very strong quarters and we will keep an eye open for netflix's ad-supported service it's going to be very interesting. they keep talking about it's an early '23 event but i think it may be sooner than that. some people telling me you could be seeing it as soon as november >> dinaisney's naming who they e today and they think that's going to matter as a negative and positive piece today about

disney etsy, by the way, i had josh silverman on they have -- i don't know if you caught their ads in the nfl? those ads are very powerful and they're working. and they're bringing in business and yeah, it's important to know nfl ads, by the way, i keep hearing over and over again, i'm not shilling, are working. because the numbers are up so much for the nfl >> we talked about that yesterday. you're right about the new disney plus chief, but jessica does trim back down to 127 or so on disney. around 143 or so >> my travel trust owns it sometimes i feel like an idiot about it, and then i come back and i think, what is -- if you're looking for brands, what's a better brand? >> there isn't one >> thank you >> it's ubiquitous, one of the greatest brands of all time. it's not helping its stock, though, is it? >> no, it's trading like canopy growth not as good a brand. >> yeah. >> jim, this morning, bank of america, who's been bearish for a while, says we're tactical bears. they say, short the twos

they are looking at 3,333 on the s&p to get to panic, which is why i wanted to get to gorman and what he said to you about panic last night on "mad." >> i'm not seeing panic in that. this is not '87. it's not even '91. it's not the dot com crash and certainly not the financial crisis that doesn't mean it can't become one of those, but it's not there yet, and behavior supports that. >> now, bank of america's point is that we had bang of england and bank of japan, but it's not coordinated, and it doesn't reek of panic >> i like bank of america but they call it tactical and actually that's strategic, and they ought to google those two to realize that when you make that kind of comment, it's strategic, because what you're saying is there's real stress in the system that's not tactical. i think gorman, much better, saying, look, let's put this in perspective. gorman, by the way, is not that fond of all these people coming on and saying, it's worse than this or worse than that. he's making a specific point,

which is that money was too easy, and now they have to tighten it, and there's going to be problems but the banks are strong, and any time you say that, people say, they're not really strong, but when you look at the bank balance sheet -- >> they are. and the fed is on top of it. is even leveraged lending, they're cutting back >> everyone keeps saying that's the next big thing it's not the next big thing. >> i don't think so. >> we're hungover. we got too much -- there was too much -- >> you're not going to see a lot -- you heard altman on "squawk box" this morning. non-investment grade leveraged buyout is not going to get financed there's a handful the banks are going to take a haircut on >> but that's low. >> this is not no >> i've been looking and looking and looking, and i'm like, guys, who come on and make these statements, can we just put it in perspective and then gorman comes on >> gorman came here? >> yeah, i got him two segments he asked if you work here. i said, yeah, you're right there. >> is faber still with you guys?

>> we were right there >> you were. >> yeah. >> you could have dropped by >> any time i've interviewed him, he makes me come to morgan stanley, first of all. >> he's talking about these guys who come on delivering alpha and say, that's why i bought the 110 acres in pennsylvania. and david, barbed wire and, by the way, bunker with camels, okay >> canned peaches. >> canned peaches. and fruit cup. syrup. >> right >> and hawaiian punch. >> by the way, we're going to get that exclusive with the micron sanjay mehrotra after the break. we're going to get to a bunch of other names, meta, big day for tesla, and more on the hurricane and what putin is saying today back in a minute

micron tough times remain ahead they preannounced before, due to elevated inventory level and then a lot of other things, frankly, including weak consumer demand joining us now on the cnbc exclusive is micron president and ceo, sanjay mehrotra sanjay, thank you for coming on the show is this the worst it's ever been >> well, jim, thank you for being on your show you know, certainly, these are unprecedented times driven by unprecedented confluence of exogenous events related to china lockdowns, the russia-ukraine war, all of this impacting consumer as well as the supply chains, and then certainly high inflation impacting consumer spending and the macroeconomic uncertaint

impacting the buying patterns of customers as well. and in addition, there have been, due to the strong surge in demand during the pandemic, large amounts of inventory that have been built up across our end markets, across all our end markets, at customers, and customers are now, given the macroeconomic uncertainty, going through inventory adjustments, and this is what has brought steep drop in demand for us and we are, of course, reacting. we are reacting fast, making adjustments in our supply to bring demand and supply in balance. and of course, our financial outlook has also been impacted by excessive pricing decline as well so, we are taking actions in order to bring supply and demand in balance, and what we see, what we currently model is that second half of our fiscal year is when we start to see that demand will begin to ramp up, because inventory adjustments,

we believe, would result in significantly improved inventory by the timing of our second half of fiscal '23. >> people should know that this was the fourth quarter of your fiscal 2022. in your conference call, you talk about massive buying of your common stock. you bought 34.5 million shares for $2.43 billion in the last fiscal year. now you have 1.5 billion, perhaps, negative free cash flow why did you buy all that stock >> well, jim, we are committed to returning our free cash flow in terms of share purchases, and if you look at our share purchases in fiscal '22, yes, we did buy at record levels, $2.9 billion of share repurchases during the year, and you know, we are buying at levels that are below the highs

when you compare with the highs during the year. so, long-term, i think what you have to focus on is the long-term. beyond this challenging environment of fiscal '23, the demand for memory and storage will continue to increase, driven by applications such as a.i., 5g, electric vehicles, autonomous, all of this will drive semiconductor memory to go -- industry to grow faster through the decade than the semiconductor industry broadly in general so, this -- we do believe that our -- we remain committed to cash flow to purchases will be prudent, and in the long run, we do believe these will provide a healthy return for our shareholders >> just to be clear, you bought the stock back at an average of $68. it's now $49 you do -- you're cutting your nearly 50% fab capex do you think your competitors will also do that and is there

any possibility that things could stabilize before the middle of next year? >> in the deram industry, historically, you see that the suppliers have been disciplined, have been rational in terms of cutting back on supply when demand and supply get out of whack. and of course, micron is taking evasive actions, as you noted. 50% of new fe cut in order to bring our supply in line with demand currently, inventories are high. '23 will be a challenging year, but we do see that second half of our fiscal '23, demand environment improves, revenue rebounds, and the inventories over time will improve, although will remain high, and therefore, these actions are critical, and of course, jim, macroeconomic environment, these -- it's highly uncertain visibility is low. we certainly are doing our best to manage our supply, to bring it in line with demand and i think -- you know, if you look at the past, this is what

has been needed in the industry to return it to normalcy, and important thing is that when you go through multi-cycles of the semiconductor industry, that's where memory and storage is becoming a bigger part of the semiconductor industry, and that's where our opportunities lie, and micron is executing well on all the factors that we internally control in terms of our technology execution, product momentum, customer relationships, strong balance sheet, and of course, continuing to look at improving our free cash flow and addressing the future and making the necessary investments for the long-term. >> so, sanjay, i want to make sure i understand. it's david your optimism for, let's call it, the second half of 2023, is based on previous cycles and what you think in terms of how you've positioned the company? because you're obviously saying, listen, these are -- your cfo said, unprecedented times, difficult to see into the future with any great clarity, so i

want to understand why you do have that confidence in the second half, that things are going to bounce back in terms of demand >> well, couple of things. right now, the demand to the suppliers is very low because our customers are using their inventory to fulfill the end-market demand so their usage of memory in their end-market products, in their end-market applications is higher than what they're buying, so this typically takes a couple of quarters for their inventories to get normalized. of course, after that, supplier inventories have to be normalized as well, so one is that we believe that it will take two to three quarters for customer inventories to significantly improve, and that puts us in second half of our fiscal '23 time frame in terms of demand trends improving also, in calendar year '22, smartphone and pc demand has come down significantly versus the expectations in the earlier part of the year

we do project that, in calendar year '23, china will open up you know, post-covid, china economy should rebound i mean, over the years, we have seen, you can never write off china. as well, that will bring back some of the demand trends on smartphone and pcs so, these are -- look, this is how we are modeling it, and of course, macroeconomic environment is uncertain yes, visibility is low, and if, you know, there is further economic weakening beyond what we have in our expectations, then, you know, some of the timing can shift, and we will make necessary adjustments >> so, sanjay, given what you just said, and because a lot of your commentary was about weakening demand across end markets, can we say that you believe pc smartphones will be the first channel to turn? >> well, certainly, pcs and smartphones, weakened first, and

they will stabilize first as well, i would think. and the second thing i want to point out is that in these kind of macroeconomic uncertain environments, typically businesses do go to technology, you know, whether it is cloud or other applications, that they leverage to increase productivity, to increase efficiency, which is required in challenging times like this, which all industries currently are facing, not unique to memory and storage industry so, technology has a way of pulling you out of these challenging times, and you know, when you think of all the applications that businesses use, such as a.i., these require more insights from data. they require more memory and storage as a result, and that's -- these are the kind of trends that as long as memory goes into these cycles and these down cycles first, memory tends to come out first as well. >> sanjay, jim started off this

interview by sort of asking you, you know, are these unprecedented times? i know your cfo used that word in the conference call would you agree? is this unprecedented, and therefore, a hard -- very hard environment in which to really make predictions >> i mean, no question in terms of inventory adjustment that we are seeing, this is unprecedented. we had a record fiscal third quarter, and our guide for fiscal q1 certainly points to unprecedented levels of demand drop of course, we are taking actions, too, that are very rapid in terms of cutting our capex, cutting our supply growth for the year we will be bringing the supply growth for dram to unprecedented low levels, record low levels as well, so this year, while the demand is at record low levels in terms of demand growth, next

year, the supply growth will be at record low levels and that's what will bring back -- improve the trajectory of demand-supply balance in the industry. so, these are challenging times. nobody has the crystal ball. but we are definitely taking decisive actions, and i have been in this industry over 40 years and over the cycles that we have gone through, i think that's the most important thing, to take actions with respect to restoring the industry supply-demand balance and that's exactly what micron is doing now. >> that's precisely what you must do. 50% cut, i hope, is enough to turn things around sanjay mehrotra, ceo of micron, thank you so much for coming on the show >> thank you, jim and david. >> let's take a look at the premarket here on this final day resqwkn e re and the quarter mo "ua othstet" continues in a moment.

>> announcer: the opening bell is brought you to by nuveen, a leader in income, alternatives and responsible investing. let's get to the opening bell this morning on this friday, final day of september in q3 with the cnbc realtime exchange at the big board today, it's public storage celebrating its

50th anniversary, and at the nasdaq, it's ef hutton, acquisition corp., celebrating its recent ipo there's a name we don't talk about much >> the check scanner incredible they're not the same carl, while we were talking to sanjay mehrotra, who was kind enough to come on the show, carnival reported some very bad numbers, and i think if we're -- remember, we were supposed to be in a service and travel economy. this would be an indication they may be traveling, but they ain't cruising, and this is a very stark number that's going to impact royal and norwegian, particularly because a lot of people felt that, you know what, now that we're past covid, we can start really going again and their orders were below historic levels >> well, you look at income and spending this morning, i mean, the consumer is not saving the way they were earlier in the year >> no. and i mean, i think at a certain

point, what we're going to do is start bifurcating this market, david. we're going to find companies that truly have no economic exposure or very little and we're going to buy those i know that professor segal this morning said, look, i'm an index guy, and that's fine, but i think it's our job, periodically, to find out what they're buying, find the bull market somewhere, and they're buying companies like pepsico, which have costs coming down and price stock coming down. and i like that kind of situation. >> yeah. yeah you know, like carnival, i would guess, here, or do you just showing -- by the way, we should point out, because we did get an update, u.s. gap net loss $770 million, adjusted net loss $688 million for the third quarter of 2022. adjusted ebitda did turn positive for the first time since they resumed cruise

operations so, that's a milestone for them. and occupancy was up 15% from the third quarter over the second quarter >> they lost 65 cents. the consensus was 11 cents i think what we have to point out is the facts just don't support the continued strength of the consumer on a microlevel. on the macrolevel, the consumer just keeps getting stronger and stronger, but if you put together a mosaic of these companies, i think you would have to say, you know what we have to be a little more mindful of how quickly our increases are playing out with companies, even though the broader data continues to support aggressive tightening. >> we have had this talk a few times now of companies that are facing lower input costs, hanging on to their retail margin the spread between wholesale and retail gas is way above what the long-term average. >> i know. >> and they're going to keep doing it until they have no good excuse >> everyone should just go to

costco, go get the membership, because they're not playing that game they're playing a volume game, and they're calling all the suppliers who said, hey, you know, we've got transport is up, and our rent is up, and they're saying, all right, now it's time to roll that back if you still want to sell here. that's what they do. rich galante, not jay powell, rich is in charge of inflation in this country. he's the cfo, and they're calling every -- >> doug mcmillon's not doing that at walmart? shouldn't he be? isn't that what walmart has been known for? >> they don't talk to me i don't know >> saying, hey, come on. you can do better. >> well, that was my understanding. but rich is spelling it out in a way that is very important in a conference call. i don't have as close a source at walmart as you do >> well, no, i don't have them anymore either >> come on, you did the age of walmart, several documentaries >> i did two of them but it was a long time ago yes, i'm touching you to let you know, it was a long time ago >> don't touch this. >> i did get to know doug a bit,

but even that's a long time ago. >> well, look, i think that costco, remember, is not a margin game. it's a volume game so they're going after everybody and saying, time to roll back. now, that will mean, as they always have, carl, they take huge share now, this is not the kind of share that nike is taking by default. it's costco saying, okay, this is our chance. everybody raise prices, now if you want to be in our stores, we have very few skus, if you want to sell in costco, you roll back and if you're a supplier, you do want to sell in costco, because it's a hundred million members so, follow them, not follow jay powell >> we didn't really touch yet on what zuckerberg told employees about restructuring teams, freezing hiring, the fact that he had expected maybe the economy to stabilize by now. if anything it's gotten worse. >> i thought it was interesting because if you remember in the last conference call, he said, it's going to get worse. so, then, it got worse, and i

was surprised to hear him say, well, it got worse he lowered the boom. in my conversations with the company, i made it very clear, if you're going to start your conference call by saying, the worst is yet to come, that doesn't give us a lot to say positive about your company. so now, we have the worst. and yet david, whatsapp. that's a $10 billion company let's do something with it >> i would hope so they spend even more than that to buy it, as i recall >> there's a sale. the sales are good we could spin that off, make that merger with a cable company for all i know >> okay. whatsapp with a cable company >> i mean, a communication -- >> you just think there's a lot of value at whatsapp >> that's what i'm saying. >> and they haven't fully monetized it >> no, they haven't monetized it at all but look, mark has said the worst is yet to come, so people are buying up stock. i don't know carl, i mean, like, everyone wants to anticipate the bottom and yet you have guys like zuckerberg who are saying, listen, it's not the bottom. go buy the stock, but it's not

the bottom sanjay mehrotra, he's not saying that the bottom's here carnival cruise, not saying the bottom's here. nike not saying the bottom's here you want to anticipate the bearishness, the tactical bearishness? >> they're talking economy, aren't they? >> no, they're talking they don't know i mean, is the storm going to hit us it's in south carolina, for heaven's sake. >> we sit here every day talking about, all right, fine, what the businesses may see, but has the market already accounted for it? it was kind of interesting to see micron stock not really actually up at the open and down -- >> how many people told you to buy nike ahead of that quarter they said, it's all down it can't be down anymore >> micron's up 3.2%. >> great let's judge it all by the first -- >> get to a point where your market is anticipating >> you're right. six minutes, he's got it look, micron, i've seen micron, go to check 2018, it can get

worse. i think the company's very good. >> it will get worse >> it got to $300 million for japan. that was very good i'm just saying that sanjay is not bullish. so, you want to anticipate when the bottom occurs, that's great. but that's a long time between now and the second half of next year >> by the time he says, the coast is clear -- >> then it's at 90 but i'm just saying, look, there's a lot of companies that are doing incredibly well. why do i have to buy a company that's not doing well? that's what i'm saying colgate. pepsico. coca-cola. eli lilly is having a monster quarter and a monster year these are real companies, david. united health is doing amazingly. they keep raising the prices if united health came on, they would say, well, our price increases are sticking and people need us >> we talked about humana. >> my travel trust is in humana. i switched to humana because

they were offering a program that wasn't that great they changed the offering. anybody who listened to it, the offering is much better. and then i got micron, and i'm thinking, okay, what happens -- i happen to like qualcomm very much i've been very wrong i like christian but what do i do when the number comes out and it's not good? what do i do just say, hey, that's not my job? it's fine? i can take a beating the beatings will continue until the morale gets better >> it's the conundrum that many investors are facing right now >> why do we have to buy companies that aren't doing well when we could buy really good companies that are doing well and the stocks are going higher? what's the matter with that? >> there's nothing wrong with that it makes sense it's difficult to choreograph. >> jj was on, apple is the last refuge i think the high-end apple is doing well the low-end apple, there's too much inventory i like the service economy, but apple has had periods where it's been down 20%, 25%, and you had

to buy it, not sell it that's all i have to say about apple. you will not catch the bottom. that will be caught by someone else, but you'll get in the stock before the next big move >> guys, it's friday sometimes like to come back to spacs once, of course, the home of great speculation, great opportunity, great hopes, and as we like to say, dreams, because remember the days when everybody had a spac and a dream well, spac dreams continue to die. i wanted to update people because liberty media, remember, there's always interesting that liberty media, which, in many ways, resembles a spac in and of itself, trying to figure out the best way to buy different assets and position itself portfolio appropriately and use various and often complex structures to do so, would have launched a spac, but they did but now they're done liberty media saying, you know what we'd love to get permission from you guys to wrap this whole thing up, even sooner than our termination date of january 26th

why? well, we've observed what it believes were high valuations in '21, a declining ipo market in '22, significant public and private market volatility, which have prevented the company from securing an opportunity that it believes will offer a compelling return on investment for its stockholders and so, another spac dream dies. by the way, week ago, did not point out that cohen robins, that very large spac that was buying a european lottery operator called off their deal their termination date is a few month out, but one would expect, like so many recent spacs, you're going to liquidate. your termination date comes up, and you liquidate. your spac dream dies >> you know, they used to, when you said something negative about them, they used to defend them >> who >> the spaccers. >> oh. >> i was approached by -- by three spacs. >> i'm sure you were >> to give up -- when i was in

contract talks just give up everything. >> just roll into a spac >> just be -- and you be the face of the spac, whatever, and i said, you people are charlatans and mountebanks and they never spoke to me again, and i'm gratified. i have a lot of friends. i don't need new friends >> well, the market could use some friends, carl the nasdaq's down another half a percent, the s&p down a bit more than that. again, a lot of weakness in autos. gm down another 2% selling just continues >> there's j&j hanging in there. >> merck, all hanging in there >> carl, i think our job is to point out that there will be stocks like apple that will be up eventually. i mean, if you bought the ten most actively traded stocks in the dumbest day in history, which is the day before the crash in '87, a year later, you were okay. you were up. so, that's -- i mean, it's okay. i don't mind anyone buying but you have to recognize that

you could lose more money. that's all i'm saying. but you have other stocks where you actually may make money if you buy them, and i prefer making money to losing money that's a strategic analysis, not a tactical >> good point. as we go to break, let's watch bonds today. going to get very busy we got core pce as we mentioned, 4.9 year on year estimate was 4.7 still got to get through a bunch of fed speak today, including brainard and bowman and williams there's a look at bonds this morning. two-year is still below 4.2% space. the boundary of human achievement. the new frontier. ♪♪ eh. ♪♪

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welcome back to "squawk on the street," rick santoli here live with breaking news. there's more yet to come this breaking news, s&p global, well, it's the chicago pmi and the reason chicago pmi is important is because we watched some of the more national numbers like ism and s&p global.

we're expecting 51.8 wow. this number is not good. 45.7 this is rather shocking, actually, 45.7 that is the lowest level on the chicago pmi going all the way back to june of 2020, june of 2020 so, over two years and in the rear view mirror is 52.2, and keep in mind, we haven't been under 50 -- we haven't been under 50 since june of 2020. we see that interest rates, well, they're moving lower, and what's fascinating is that we're right around 3.69% on a ten-year that's down ten basis points on the day, but it's unchanged on the week, because we have had a wild week of rates moving higher and now significantly lower. squak "squawk on the street" will

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time to talk twitter take a look. just this week, you know, we want to play risk at home, it's been a decent week for you, if you've been following the goings

on in the delaware court we're getting closer to the 17th, which is when both sides will square off, but they've already been doing it. long hearing on wednesday. we're still waiting on an opinion from her, both sides claiming privilege for certain communications growing frustration, it would seem, from chancellorcommunicat. growing frustration from chancellor mccormick from elon musk and signal, which he says is the best, most secure he also deleted a number of potential texts that twitter wants to get its hands on and signal obviously has very strong encryption we'll see what comes out of the hearing and what either side is able to get ahold of that they don't already, but twitter is alleging sort of bad actions on the part of musk and his lawyers in terms of what they say they're going to give and actually providing and then the back and forth between dorsey and musk, which has gotten some attention this

morning or late yesterday in terms of their text messages interesting to see the back and forth between musk and dorsey and dorsey's sort of endorsement of musk taking over. but not particularly relevant to the case itself, which is going to go back to whether musk has the right to back out of the deal because he says there are more bots in the program that what twitter said previously no talk of settlement yet. i'm not hearing it i may be missing it. there is still, jim, an expectation. i know you had it at some point that at some point mccormick gently tries to encourage the parties to not bring this to her courtroom. >> that's right. >> and some people believe that will potentially happen. does it have a five in front of it if you're twitter probably given the strength of their case who knows if we'll get there meanwhile, the stock creeping closer and closer to 43.

>> the chairman will argue we should get the full vote i think something will be done a little less. i was surprised, david, when you read some of the tweets, did you notice that musk - >> the texts, actually, not tweets. >> sorry that parag and musk liked each other on april 2nd and on april 9th they disliked each other if you're a billionaire, how does that work >> i don't know. there's fun, interesting things here signal texts between larry ellison and elon musk. >> what's the dollar size? 1 billion, whatever you recommend. whatever works for you i'd recommend $2 billion. >> my favorite is like they do the same thing can i call you not right now. how about tomorrow now good >> they were like -- >> just call.

>> they were like people it was shocking. except for -- i mean, musk is like, i'm an engineer. larry says, i'm an engineer. okay, wow. let's work that out. and i'm going to buy your company. who says this stuff? on word. i'm going to buy your company. >> meanwhile, gorman didn't say anything when you had him on about morgan stanley - >> he did. he said he couldn't talk about it >> we've shaved the opening loss dow is down 100. let's get to bob pisani. >> the basic problem is the pce numbers were not sufficiently low. they were hotter than expected you can't get this narrative going we're seeing consistently declining inflation. that's the major problem fed's not going to let up based on these numbers we've seen. take a look at the sectors here. it's very defensive, basically nice rebound after a terrible quarter. real estate, consumers, the least down, health care. the stuff i care about, the

cyclical stuff, the metals, semis, autos are all underperforming today. that's not a good sign i want to show you the quarterly performance. it's not the monthly that matters, it's the quarterly. remember, we were near a bottom at the end of june you want to see what's much worse. so, the s&p is down about 4% you see what higher rates are doing to reits it's destroying them 60% decline in some reits. semis, materials, communications, this is the stuff doing worse since the end of june, cyclicals that's what you want to see here that's what jumps out at me. for nike, what can we say about nike to the broader market too much inventory, okay it's interesting, the inventories are up this much, particularly in north america. china sales down 16% that tells me they're constitutional vulnerable to the shutdowns there. you could switch this around and say, supply chains are easing. promotions are going to weigh on the margins.

that's the read-through. our margin pressures, particularly over higher prices, going to get a lot of issue. we'll talk about that next week. here you see the retailers, new lows, gap, big lots, a new low jerry seigal has a new book "stocks for the classic" with new data and stock information this is the encyclopedia you want sta stanley. >> i see no way the ten-year is not going to be the same yeah, we might go through a recession, fed overtightens. stocks are claims on real assets they're claims on capital. actual property. copyrights those things will go up with inflation. to think that the dow is going

to be the same 20 years from now, really, i think, totally flies in the face of history >> and he meant ten years from now. his main conclusion in the book, carl, inflation adjusted, stocks move up 6.7% a year and about 10% not inflation adjusted this is his key conclusion we'll have more of my interview with siegel on cnbc pro. this is why jeremy siegel is famous, for that contribution to financial history. this is one of the great financial investment books of all time it's on my shelf should be on yours, too. carl, back to you. >> bob, fantastic. bob pisani. >> it's one of my favorite books, absolutely. 6%, i think, is right. chi chipotle, this morning baird has a piece talking about whether this new garlic steak limited offer is going to impact numbers. but then pulls back and says, stop trying to judge this company on the limited offers and just accept the fact that this is still the premiere i agree with that.

this is the premiere quick serve restaurant to go to. and i stand by the idea, as does this analyst, that this is an opportunity to buy a company like this in a difficult environment. >> you've long said it's all about through-put. >> they know how to do it and they know how to manage their finances with brian nichols, a genius, and jack hartung is fantastic. i'm standing by my long-standing thinking, and i just want to buy companies that are good. you like that? >> that's smart. >> buy companies that are good no, no >> jim, have a good weekend. we'll see you tonight. "mad money" 6:00 p.m. eastern time. >> just quoting you. >> dow's gone green. we're back after a break

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good friday morning. welcome to another hour of "squawk on the street. i'm carl quintanilla with morgan

brennan and david faber. bulls are trying to close out the month and quarter on a somewhat positive note dow did go green a few moments ago. it's got everything today, pce, micron, meta, fed speak, let's get to rick santelli. >> this is the last data of the third quarter. university of michigan, our september final read expected to be a 59.5. a bit of a disappointment. 58.6 and it's lower than the 59.5 in the rearview mirror but still not a bad number considering we were at 50 in june, historic low. 59.7 on current conditions that bests the expectations and our last look and 58.0 on expectations that's what lies ahead and 58.0 is a bit of a disappointment as well we were thinking of a close close to 60. on that 58.0, that low water mark there was actually in july

at 47.3. even though we have a bit of a disappointment on the headline and expectations, there is still much higher than we were in june and july now, let's look at the inflation gauges, shall we one-year inflation, 4.7% once again, just like pce, these things are a bit hotter than we want to see, even though the high water mark was 5.4. that was in march. that was the highest level since '81. now, 2.7 is our five to ten-year inflation rate that's a little more tame. that's one-tenth below expectations and our last look and the high water mark there was 3.1 on various occasions the last being june of 2022. morgan, back to you. >> rick santelli, thank you. we are 30 minutes into the trading session. here are three big movers we are watching this morning. shares ofcarnival getting crushed, reporting results and reporting a large loss despite reaching 90% occupancy on august

sailings as the company says it's continuing to close the gap to 2019. those shares down 16%. amlex pharmaceutical on the move the fda approved als drug, first to gain approval in five years it has turned negative shares of nike getting hammered after reporting 44% increase in inventories for latest quarter, saying it would offer more discounts heading into the local day season nike did report better than expected profit and revenue for its latest quarter here's the company's ceo john donahoe addressing the issue on the call >> we're going to work through the excess inventory to get to a full marketplace as fast as we can and try to do it in an intelligent way that takes share. as my predecessor used to say, throw a few elbow as long the way. we're coming off a strong

quarter and we feel good about our competitor position and we do not see any signs of slowdown >> not yet seen any signs of slowdown stocks down 11, almost 12%, carl and it does sort of speak to a broader trend we've seen seeing in recent weeks in the market. the idea of whether it's nike today or micron, which we'll talk about later, or fedex or now marist in the last couple of hours with comments by that ceo as well. carmax, the idea that even though the numbers are resilient, where consumers in the u.s., for example, are concerned, you're still starting to see a slowdown in the pace of spending you are starting to see this maybe, perhaps, move towards pre-pandemic normals in terms of what consumers are focusing those dollars on. >> the goods part we had a handle on. maybe fedex wasn't the outlier that some said it was. now that the carnival news came out this morning, david, maybe, i don't know, maybe you start to see some loosening and tightness

on the services side, the travel side. >> yeah. that continues to be a key question in terms of consumer spend, especially, and the willingness to spend further on trips. carnival shares picking up -- picking up steam to the downside stock had been down single digits not long ago. not a good response for that quarter, despite what were some positive trends, obviously the first time actually showing serious ebitda >> i wonder if there's any read-through from nike to amazon as you see that company moving to hold another prime event next month as well. you have to wonder what the inventory -- we were talking about this, but what the inventory numbers across retailers. >> some are scratching their head why apparel wasn't down on the last cpi print given everything we've heard from walmart and target and now nike, and maybe that is going to get reflected in the coming months

certainly a disinflationary force we're seeing at the micro level. thinking of all the preannouncements we did, they were mostly cannibal companies, nucore. >> it goes back to the conversation we were having for the last couple of weeks, whether that's a canary in the coal mine. industrials seem to be the area, at least in terms of preannouncements recently, where we've seen the softening happen the quickest. >> as we put together another rough quarter coming to a close, the s&p to the downside. joining us, morgan stanley cia leslie and jeff. lisa, you said this was in the works and now that we have corporate warnings, chicago pmi, these inflation expectations, is the market getting to a zone where you think stocks are interesting?

>> yes, i do i mean, you know, we have -- for the past six months we have talked about the third quarter likely going to be the confessional season we need in this bear market want only to reset 2022 full-year earnings expectations but then in turn 2023. i think one of the conundrums for putting in a bottom on the stock market has been what are the estimates for next year and, therefore, what is the true pe in this market as we know, and we've talked about this a lot, up, bottoms-up analysts have been extraordinarily low to readjust their estimates. right now for 2023, we're only 3% off the peak estimates for next year, somewhere between 245 and 255 a share. at morgan stanley, i know you speak to mike wilson, our chief

investment strategist and our cio very often he's at 212 for next year, which would put the forward pe multiple on this market upwards of 17. that's still not super cheap to us we need confessional season to play out and to rebase the earnings forecast. >> jeff, that's interesting, 212. i mean, the bond market got religion on rates. do you think strategists get religion on earnings >> i do. you know, we've heard a number of warnings, as you've talked about. we're going to get a number of those going through this season. not only do we have the downward pressure of these rate hikes but we have inventory gluts just about everywhere, even in the chip supply chain. there's a number of problems coming up around the world one of the ways we've been focusing on how to invest in this recessionary bear market with earnings likely to come down, i think you want to focus on high dividend paying stocks generally a sizeable dividend is

a sign of good cash flow high dividend paying stocks have been outperformed all year they have outperformed in every recessionary bear market they're working in every sector and even working in technology, the best tech stocks are the highest dividends are actually outperforming. it's working in the u.s. and europe and japan i think this is a place where you can look to hide out during what's likely to be a period of downgrades for earnings picking up one of the supports for prices of stocks >> lisa, just to pick up on the comments you just made if we're coming into an earnings correction here, if valuations are still looking lofty, even if -- looking into 2023, september's a terrible month, in general, from a seasonality perspective for stocks if the final quarter of the year actually proves as it has in the past historically to be relatively resilient, at least for now, what would you counsel investors to do with that bounce >> yeah, so our perspective is

you got to go where the earnings expectations have already cratered and are fully priced in interestingly it's a little contrarian, but a lot of it is in cyclicals i know earlier this morning you guys were talking about some of the home builder stocks and mortgage reits, some of the industrials. some of these stocks that are getting hammered in our humble opinion, those are the places where you got an awful lot of bad news priced in and we wouldn't be surprised if we got the seasonal q4 rally we tend to go, particularly in midterm election years that's where we would load up. i would also say, to build on your our guest's comments, is that not only dividend-paying stocks but right here, short duration investment grade corporate bonds. they're paying 5.5% with 2.5

year duration. that's a pretty good bet in this environment if you want to own exposure to quality companies with a 5.5% effective nominal yield rate right now >> jeff, do you stick to the u.s. on are do you look around the world, given the fact we do have this incredibly strong dollar and these volatile moves really across the globe? >> i think you can begin to look outside the u.s. i know there's concerns about recession outside the u.s., just as there is inside prices have adjusted far more dramatically and expectations are far lower. so if we do see some kind of fourth quarter turn-around on maybe a breakdown in inflation pressures, perhaps that's where you'll see the best bang for your buck. valuations are considerably lower. they're now 6 pe points below those in the u.s that is a record wide over the last 20 years. certainly much more downside priced in there and, therefore, the potential for a rebound. i would say you'll find higher

dividends outside the u.s. and that's a theme that continues to work if it wasn't for that strength in the dollar this year, international markets would be outperforming by over 1,000 basis points of the u.s. market. there's fundamental underperformance if we can get a break in the strength of the dollar >> finally, lisa, are you of the view that a bottom needs to come in the form of some kind of central bank panic or a pension fund blowup or the vix to 40, some kind of incredible surge in volume >> yeah, i'm not in the armageddon scenario. i don't think we need a central bank intervention or something of that nature, but i do think we need to see market capitulation and we need to see a little bit of panic in that vix. i think one of the vings that's been wild is bond markets have really, you know, reflected that type of volatility you see in the bottoms. and we're now at levels in the move index that rival the great

financial crisis back in '08-'09. we're not seeing that in stocks yet and i do think that's going to mark the final low here i would like to see that >> guys, appreciate it putting to bed this quarter has been a bit of a chore. jeff and lisa, we'll see you soon thanks >> thank you as we head to a quick break, let's give you a look at the road map for the rest of the hour micron releases weaker than expected outlook we'll tell you what the ceo told us last hour about demand. a real-time look at inflation and the consumer as recession fears continue to mount. the ceo of brinker international, owner of restaurant chains including chile's is going to join us. americans are finally going bargain hunting. we'll tell you where and when meban e re" othstet cos ck go big city lights. go spotlights. go stadium lights.

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for chip stocks. the smh down 20% since the beginning of august, touching a new 52-week low. one name in the group, micron issuing that weaker than expected revenue outlook and said sales is being impacted for waning demand for electronics. we spoke exclusively with sanjay mehrotra last hour >> the demand to suppliers is very low because our customers

are using their inventory to fulfill the end market demand. so, their usage of memory in the end market products, in their end market applications is higher than what they're buying. so, this typically takes a couple of quarters for their inventories to get normalized. after that, supply inventories have to be normalized as well. one is that we believe that it will be two to three quarters for customer inventories to significantly improve. and that puts us in second half of our fiscal '23 time frame in terms of demand trends improving. >> david, he seemed to suggest because pcs and smartphones got weak first, they might recover first. also argued that technologies is where companies will turn to first in high inflation environment. >> without a doubt he also believes that china will come back. it's something we note many times, the significant slowdown in china due to the covid

lockdowns that has continued there has really dampened consumer demand. he's of the belief that in the second half, things will start to normalize there you don't want to overlook the challenges they face in fact, the cfo, we're cash flow challenged in the first quarter but an unprecedented downturn, sharp and sudden sanjay agreed with that during our interview. they do expect as much to be negative $1.5 billion in cash flow in the first quarter. >> it was very cautious and yet the stock is trading higher today, up 1.5% on this it is worth noting the smh, the semiconductor etf, as so much of the rest of the market, lower. poised to trade lower and poised to end the quarter later, down 8% we know semiconductors are tied to and investors watch them very closely as an early indicator for broader global economic activity as well inventory again. inventories, inventories, inventories, seems to be the new

theme. >> supply chains loosened up quickly and then it all came in. it's amazing. still to come, we'll speak with chile's parent brinker international on how they're dealing with rising inflation and food costs first, rent-a-center getting cut after cutting first quarter guidance saying economic conditions are impacting retail traffic and customer payment patterns. 'rba itwck is down 18% wee ckn o. ♪ ♪ 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

welcome back to "squawk on the street." inflation a record high, consumers are pulling back on dining and eating out. brinker international owner of chile's, kevin hoffman joins us for his first tv interview as ceo of the company kevin, welcome to the show. >> good morning. thank you for having me on. >> i want to get to the turn-around story that is chile's within brinker first, i have to start with this macro data, including the latest inflation read this morning that

was hotter than expected what are you seeing across your brands is it affecting consumer spending patterns in your restaurants? >> yeah, we talked about in our last earnings call, internal the lower income cash-strapped customer is coming in a little bit less when you have this kind of environment, there's two things you really have to think through. one is to make sure if there's going to be fewer trips to these restaurants, we need to make sure we have our fundamentals incredibly good because what guests are doing is when they go out to eat, they want great food in a great restaurant with great hospitality. those fundamentals are what's going to separate the winners from the losers. so, we're going to double down and focus on those things. the second thing is we have to have hot price points. for that low income guest that either can't come to chili's or casual dining and they need ab incredible price point, we that that abundant value. we have $10.99 three for me

opportunity. and if you compare that to even fast food benchmarks, that's an incredible value in the market i think we focus on those two things, the fundamentals having price points for those guests that can't afford to go elsewhere, i think we'll be okay >> are you making money on a $10.99 meal in this environment? >> yeah, absolutely. you know, we will certainly cost engineer the things we put on that menu. and then the second thing we do is make sure we manage the mix on that, right if a guest wants to trade up to steaks or chicken or other things, we make sure those are prominent on the menu and we can manage that with merchandising for the guest that needs that kind of value, we have it available but it's not something we go plastering all over the menu as long as we keep it focused and we manage the mix on it, we'll be fine. >> so, we've talked about the guest side of the equation how about the employee side of the equation, how are you able to hire and retain employees in this labor market?

are you seeing any signs that could be easing a little bit >> yeah, a little bit. there's two things that i think you're asking about. one is manager turnover, which we feel really good about right now. that's our vice president of operations, they've done a phenomenal job, stemming the turnover at the managerial level, which is probably the most important position in all of our restaurants the other thing is team member turnover we haven't seen that rebound to where it needs to be we're getting lots of candidates but still seeing lots of turnover i heard from our team members and our managers, we have to make it easier to work at a chili's again and make it more fun. when guests and team members were having a good time, that's what we're committed to bringing back to our restaurants. >> how do you make it more fun to work at a chili's >> yeah, well, there's a couple of things. you know, we have some things we call give back nights that we used to have before the pandemic that we stopped for obvious

reasons. that's an example where the guests can choose their cause, their choice, whether it's their kid's softball team, little league team or something for their church they can actually arrange are the restaurant to get a portion of the proceeds that night that go back to that cause. and team members love doing that who doesn't love giving back to their community and having special nights where they can give back to the community that's one example we had a social media exchange with pop star nicki minaj and her fans are calling for chili's to support them. with he had marge for barge, number one trending twitter, a $5 burritos. they got dressed up. that's what we have to get back to where the team members and guests are having fun together and having a great experience.

>> you know, b of a has a chart out today that argues real spending in restaurants, real spending, has gone below 2021 levels i'm wondering, can you envision an environment in which you were letting labor go rather than trying to hire >> what we're focused on is getting more out of our labor. we have -- every six weeks we're rolling out new simplification things to take tasks and administrative duties, anything that doesn't help the guest, we're trying to pull out of the restaurant so we make the jobs easier for our teams as well as make them a whole lot more productive just some small examples literally takes years of labor out of our business. we can put that into the restaurants or put to the bottom line we're going to be focused on continuing to make things simpler so we can serve amazing food with great service and a fun atmosphere we can focus on those things, i think we'll be fine. >> as you lay out this strategy, wall street is certainly been

very focused on chili's and this need for a turn-around there how long do you think this takes root and begins to show up in more positive ways within that brand? >> on the long term, i think it's going to take several years. i think on the short term, what wall street and our investors should be expecting of me and my leadership is seeing continued progress every quarter as long as we're doing things to improve the guest experience, you know, help with stemming some of the traffic decline we're seeing because of the economic situation, and improving four wall economic and restaurant margins, as long as that happens every quarter, i feel like we're headed on the right track and we'll get to where we need to be in a few years. this is going to take time as long as we see progress each quarter, i think people can have confidence in what we're doing >> kevin, thanks so much for joining us today >> thanks for having me. when we return, the fight against inflation. former fed governor randy kroszner is going to join us

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let's give you a quick check on the markets you can see where we stand with the s&p up a bit, out of negative territory the nasdaq has had a significant turn-around, let's call it 1% from its lows to where it stands at this moment lail brainard saying the fed is committed to avoid pulling back immaturely >> monetary policy will need to be restrictive for some time to have confidence that inflation is moving back to target for these reasons we're avoiding pulling back prematurely but we also recognize that risks may become more two-sided. >> joining us now is former federal reserve governor and university of chicago booth school of business professor randy kroszner randy, it's been a little while since i've spoken with you at

least. i just love to get an update from you in terms of where you think things are in terms of listening to brainard, listening to powell, bullard, anybody else you want to choose from at this point. >> i think they've been giving a pretty consistent message since the beginning of -- since the end of july, beginning of august, that we're going to keep at it until we slave the inflation dragon and make sure the dragon is dead so, that means that they're going to keep rates elevated that probably means through most of 2023 because it's going to take a while for inflation to come down. they're clear they're going to raise rates to get to a four handle by the end of this year and probably end between 4.5 or 5, at least that's what they're anticipating and then wait for inflation to come down >> randy, there's no shortage of those who say inflation is already starting to come down.

they'll cite many commodities in terms of the price decline i see you shaking your head a bit. i'm curious as to your rebuttal and/or at least your response to that argument that says this fed was too late on one side and it's going to be too late again in terms of maintaining interest rate policy too high. >> we're clearly too late to begin with, but they weren't the only ones. everybody was talking about inflation being transitory i think they need to get credit that once they figured out it wasn't transitory to move more rapidly than other central banks. the question is, how much and how high unfortunately, inflation expectations have not gotten out of control they've been able to keep those well contained actually, over the last few weeks, they've come down to be in the -- kind of in the middle of the range where they've been for the last decade.

that's good they haven't gotten out of control the question is, will they be too tight for too long one never knows when you're in the middle of it, but they clearly said they're willing to make the error on the side of being too tough because they don't want inflation to rise back up. you can see that from what lael just said, they don't want to reduce prematurely that's what volcker did. he brought inflation down and he also made a mistake, easing up too early, inflation came back and then he had to go to double digit levels last -- interest rates at double digit levels last time inflation was this high. >> randy, just to put some context around it, have we ever seen a fed hike this aggressively, this quickly and have it not end up becoming a recession? >> i think it's pretty rare to see something like this. and then the question will be, how mild or how severe will the

recession be i think part of that will be due to the fed but part of that will also be due to choices that mr. putin makes. there's a lot of other geopolitical risks out there it's a fragile time in general and other shocks also we've seen the challenges that the uk had. there are a lot of things that could push us much further over the edge i think the fed needs to do what it's doing and it needs to take that risk, although i don't think the risk is excessive >> randy, i'm thinking about what morgan stanley said earlier in the week. they said we and, frankly, money policymakers have no experience with interest rate changes of this magnitude do you think either the tools they're using or their communications framework needs to be any different than prior cycles >> i do think it's good they're moving quickly i think once they realize they were behind the curve, they're trying to get ahead of the curve. i think that's very valuable also i think it's important they're moving now politically

the unemployment rate is still quite low. it's below 4%. it's near multidecade lows it's very different to be raising interest rates when the unemployment rate is low than when the unemployment rate is 4%, 5% it will be much easier to hold when it gets there, more difficult to raise that's why i think it's important for them to be raising now and taking that risk, they may go a little too far but it's important to make sure not to have the mistake that volcker made in the late '70s, early '80s >> so, in another sense, channelling the volcker era, the plaza accord i realize this current administration here in the u.s. is basically batted down the possibility of seeing something like that manifest again given the fact we have had this strong run in the dollar, we are seeing so much volatility in the world's currency markets right now, is there a scenario from your vantage point where that could actually manifest?

>> i never say never about anything politics will be ruling this rather than the markets ruling this that's always difficult to predict. i don't see a lot of appetite for something like that. you do have to remember after it came down, that's when we had the stock market break it's not easy to get out of one of these accords. >> randy, you do bring up, obviously, during the course of this conversation, there are so many other variables you mentioned putin, for example. none of us know what's going to happen there that could introduce a very different set of circumstances should things change dramatically in that war, couldn't it? >> of course it has enormous impacts on the energy markets and uncertainty we have north korea and russia talking about the potential for using nuclear weapons. this is a pretty risky world you can see why europe is facing so many challenges

they have war on their doorstep, very high inflation, and they have an enormous amount of pressures on the energy markets. we're fortunate we're in a better situation from decades ago. we're a major energy exporter. we used to be a major energy importer. >> randy, always appreciate it thank you for taking the time. >> bye-bye. on that front, we are getting some breaking news out of washington and the white house. let's get to kayla. >> there's been a swift response to russia's annexation and escalation ukraine has formally applied for nato membership after president volodymyr zelenskyy held a meeting with his national security and defense counsel we're still awaiting a response from the white house and nato on that front the secretary-general had previously said, nato's door is open, the preferred outcome would be a negotiated settlement on ukraine's terms, but clearly

that outcome has been elusive. in the u.s. we are getting a multi-agency response here with several different parts of the government unleashing new sanctions on russian entities and individuals. the treasury department is announcing extensions on 14 suppliers to military in russia and belarus. the state department has added restrictions on visas for more than 900 individuals and the customer department has put 57 companies on its entity list perhaps the most important part of the release from the commerce department is a warning shot to countries like china and iran that third countries could be targeted if they choose to support russia and belarusian efforts. they say current united states' export controls on russia can be applied to entities in third countries that seek to provide materials to support russia including replenish technologies that will be seen as a shot across the bow

we'll see how it lands overseas. carl, back to you. >> remarkable morning geopolitically something we haven't gotten to a lot, even with all this news thank you. after the break, we have a lot more on nike shares sinking after results touching that new 52-week low. one of the worst reactions to earnings in about 20 years check out some of the big laggereds on the s&p for the quarter. a lot of these names probably won't surprise you charter, fedex, vf amo tm.nghe

welcome back to "squawk on the street." nike shares slumping after higher freight costs, markdowns and a strong dollar hit profitability for the quarter. bmo retail analyst semien seigal with $110 price target great to have you back on the show are you sticking with that price target and that rating, given what we heard from management last night >> good to be here we actually lowered the price target i think what you were bringing

up makes a lot of sense. i would say the outperform is thinking about nike brand in the long term. we should talk about what happened shares deserve to be down here it would be intellectually dishonest to say otherwise i think now we're watching the mikey machine look like another retailer they're over inventory, chasing promotions that's worth talking about. >> yeah. of course, margins are back in focus, which we've been talking about all year where any of the apparel makers or retailers are concerned. your expectation that this is a read-through to other names as we get earnings season in full swing? >> it's high and i think what's interesting is normally nike is the leader it looks like nike might be following. you and i talked about this work me and my team did about the etc not being what we believed it to be and we're seeing that manifest prit now, we have to ask questions about the strategy because every time the company pushes direct, we see an increase in direct dollars and a drop in margins. that's not what is supposed to

happen but mathematically that is happening retail is good a lot of companies are saying, let's go direct. a year ago this was wildly contrarian to argue against that now i think we're seeing more evidence that's there. i think we have to ask the question, nike historically is this powerful brand, tells a great story, understands its inventory. the more they go direct, the more they sound like a tech story chasing growth for growth's sake. i think we want to make sure others don't discounts were down. don't give them that >> just to parse through it a little further how much of this is a nike company specific story versus nike being impacted by all of these macro trends we've been talking about day in and day out? >> that's a great question the answer is probably a little bit of all i think every company in retail has a little peloton i think everyone saw an immediate pause when the

pandemic hit, then a surge forward. they said that surge is going to last forever so they built their inventories forever and then things slow down the question comes from there, what do you do with it if you have too much inventory, normally you cut it and move on and get more product that's when it's 5%. want 50% the huge inventory influx is supply chain and some is just buying too much. can companies say it's okay to sell less and charge more and make more money? nike put up a big revenue beat last night and look what the stock is doing because they had to give it away in margin. i think it's this awakening. we're trained to think it's all about revenue but we're seeing the market is allowing you to focus on profits, or forcing you to focus on profits. i think this is a nike story but i think it's true of all of retail and deciding, do i need to give away my product at no margin because i have too much of it or do i sit on it if my

balance sheet allows and say, you know what, the customer will come back next year. the problem is, they bought a lot of sneakers last year. we're trained to think about things in 12-month increments but what if people bought 18 months of sneakers or scented candles last year? there's a lot of things where the customer didn't shop in normal tendency and companies that appreciate that can sit on some inventory, bring it back next year when replenishment is back those pulling the trigger have brand erode. >> i want to come back to this idea that direct to consumer is less profitable or perhaps not quite as, you know, a positive a business for them. you control the customer, it would seem to a certain extent, instead of having a third party between you and the customer explain to me why the margin picture on direct to consumer is not playing out as well as it might in the traditional distribution method? >> yeah. it's fascinating because this was a two-week report that took six months because the conclusions didn't seem to make sense.

intuitively everything you're saying, cut out a middle person, we'll make more monday but mathematically we see companies pivot to direct. i think in there the question is why. there's a lot of conversations but mathematically, that's what's happening nike is the perfect example. a company that's watching its direct dollars grow but what they're finding is the profits go down. i think the most important point to realize is there's a lot of cost of running a business the wholesalers take people knock department stores a lot because they're not that profitable not being profitable means it's a cheek and economic distribution shop. the idea of wholesale is the way these companies became big, profitable and healthy, and i think we're increasingly learning that it's a good channel. >> to the extent you're going to cut numbers, is it limited to athletic equipment and shoes and apparel or is everybody going to get the scissors >> it's funny because nike is the beginning of a quarter, end of a quarter we had a report two months ago

or so, early july saying red means go the premise is these companies need to cut numbers. it actually worked you watched a lot of companies take a very big cut. it seems like nike is on the tail end rather than the leading edge there i think in general i would expect the next three months are going to be tough but they're going to be tough because people bought a lot of things and they don't need to buy more things. it bears well into january i think there's a bigger conversation here where some big box retailers told us, this is all about a recession. if you look at it, the data of what people are buying and not buying is tied to what they need it seems people are saying, i ate a lot of cereal. if i used gas, i need to buy more of that i don't need to buy another grill. when i wear them down, i'll buy more sneakers. >> a lot of candle talk. >> it's halloween. >> thanks for joining us

nike is the biggest drag on the dow right now which is hovering around the flat line. still to come, how wealthy americans are taking advantage of a weaker pound. they are going bargain hunting we'll tell you what they're angling for. and as we head to a break, let's give you a check on the biggest a check on the biggest laggards on the s&p 500 today. we talked about carnival missing on estimates there's nike, which we were just talking about. we're back after this.

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welcome back to "squawk on the street." another volatile day of trading to close out the week, the month, the quarter dom chu is looking at the big movers >> it's been green so far, but to give you an idea of the volatility we have seen. we've seen both green and red today. at the highs of the session, we were up roughly 18 points for the s&p 500. down 26 at the lows of the session. tilting a bit more towards the higher end of that range even though things look generally modest now, we've seen gains and losses that does bring us to the s&p 500 in today's trading we are now off about 24% from

the record highs that we saw just earlier this year so, we are still kind of entrenched in that so-called bear market territory, which some traders call a decline of 20% or less. the out performances coming in places like materials, real estate, financials, materials are lagging, and you mentioned the cruise lines i'll send things over to you still to come, is it judgment day for tech cash leaders? we'll discuss that on "tech check" coming up a quick check on hispanic heritage month, we'll celebrate our contributors this is karina hernandez >> i'm a first generation mexican-american i'm so proud of that the reason i am where i am today is because of the sacrifices my parents made to move to this country to provide a better future for my sister and me. it's those sacrifices that give me the drive to excel in my

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. a rush of americans are

pouring into the london and uk property market. they're taking advantage of a significant and perhaps rare currency discount. robert frank joins us with more. >> good morning. with crisis comes opportunity. a year ago an apartment in london that cost 1 million pounds would cost $1.3 million you add in the decline in home prices, you have discounts now of up to 20% or more steve schwarzman of blackstone just bought a 2,500 acre estate west of london he paid 80 million pounds. he saved up to $20 million based on currency. the number of u.s. buyers looking in the uk is now up over 20%. mostly looking in london compared to the peak prices in the uk back in 2014, the combined price and currency drops give you discounts of over

50% in the nottingham hill areas and 40% in may fair. what do you get for your dollar? this georgian townhouse has 11 bedrooms, 9 bath, indoor pool, 28.5 million pounds. $5 million less for dollar buyers than a year ago this 100 acre estate comes with stables and it's 12 million pounds that saves you 2 million on currency >> wow how does that compare to new york how do prices look compared to other major markets you follow >> we have started to see -- though london a bit more price declines, new york, third quarter is not out yet we're not seeing price declines in new york, it's sales

activity in europe we're seeing price declines, so it's a better deal in london. >> such a nice city. >> that will do it for us on "squawk on the street. the s&p 500 making a comeback and the nasdaq as well have a great weekend, everybody. "tech check" starts now. good friday morning. welcome to "tech check." i'm carl quintanilla with deirdre bosa and jon fortt the nasdaq is back to levels we saw in june. meta freezing hiring zuckerberg telling employees that the company is cutting budgets across most teams which will lead to layoffs and google planning to shut down gaming service stadia. and micron planning to cut