peaked i think we also need to get to a point where the rate of macroeconomic slowdown is moderated, and i think we need better valuations still. >> all right we're going out on the highs peter, we want to thank you for joining us this morning. >> going out on the highs here >> we're going out on our highs on this friday morning >> after 800 yesterday >> we'll see everybody on monday morning. we'll see where the market ends today as well. have a great weekend "squawk on the street" begins right now. ♪ good friday morning, welcome to "squawk on the street," i'm carl quintanilla with jim cramer david fakber has the morning of. half a dozen bank aeearnings, t uk sacking its finance minister and retail sales gave us a bounce ten-year yields back to pre-cpi levels big banks, mixed, jamie dimon doubling down on his economic

warning, saying the bank is prepared for bad outcomes. the uk u-turn, prime minister truss aban ddoning the controversial fiscal policies. and grocery giant, kroger to buy albertson's. let's begin with the markets the major swing yesterday, jim, and then i assume you think the bulls like a goose egg on retail sales here >> yeah, but i have to tell you, yesterday was some poorly positioned people, even some major houses were short calls, got completely crushed they thought when they saw the number, kind of not unlike what lloyd tweeted, he said, if you had the number, you would have been run over. lloyd, come on, man, i miss you. it was just one of those times where people were -- the big boys were wrong. and they got caught. and now we get this number today, retail. it may stay caught for a little bit, but there's no doubt about it, to me, if you're trying to figure out s&p earnings for next year, they're lower.

and the price to earnings multiple will be lower, so this was a little -- this was a short squeeze. make everyone know it was a short squeeze but then you have very good bank numbers today, so it makes it so the short squeeze is a little more painful, because there really were -- i even have -- i know people are slagging morgan stanley, but they did have some great money flows, good pretax margin wealth, did the biggest buyback. the wells fargo quarter was magnificent. charlie sharp's back the charlie sharp that we know as being the genius who is able to make a ton of money he's doing it. jamib when it comes to mortgages, traditional business. i have not -- citi's hard for me, a little impenetrable, but we used to start with wells, say they were great, and you had all these problems with wells. they're going away >> the charge on some of the regulatory matters, but you're right about net interest income beating revenue ahead.

provisions on credit, provisions, $784 million or so >> yeah, look, i will say, i mean, what charlie does better than anyone is he quietly makes it so that the head count goes lower. the net interest income is just extraordinary here, and i really, really felt that, you know, you went from 265,000 people when he took over the bank, down to 240,000. i think he can take out another 20,000 $2 billion charge, yes, he had to do that because there's obviously issues with regulators, but the expense structure here is going down so fast, and the quarter to quarter net interest income was up 19%, quarter to quarter this is the one. my travel trust owns it. i was so happy, jumping up i said, it can't be this good. charlie could not have delivered this good a number, and he did those of us who remember charlie at other situations were just waiting for this quarter, and we got it

and this is the breakout charlie quarter. >> feels like we're in that moment where you're getting a lot of income boost because of rates and yet not huge, dangerous signals on delinquencies. >> none. i mean, one of the things that charlie is making very clear, that he'll make very clear today, is, where are the delinquencies? he's being careful, but there basically are none and remember, one of the things that people have to understand, if you're a banker, if you buy treasuries with the money that i put you a deposit and you give me nothing, really, to speak of in deposit, that's what you make, and they're doing it now, look, jpmorgan, that interest revenue went through the roof this is an unbelievable number morgan stanley expenses miss, but they -- no big losses. so, i look at this number, unless jamie dimon says, we're burning down the house, which is a song my daughter likes very much, i think that's going to be fine but it's wells you know, charlie and i have

been -- sometimes we're back and forth. this time, though -- >> on jpmorgan, i mean, we knew where expectations were on ib revenue, down 47 is actually a little bit ahead of where the street was >> i couldn't believe it this should be the quarter of nothing. nothing. by the way, you know, wells is involved with the albertson's deal they didn't used to do that kind of thing that's the kind of, hey, listen, they're a client, now we're going get some fees. that's a fantastic business. great gross margins, and i really like it and jpmorgan did much better, given the fact that there was not a single ipo the only thing i worry about with the banks is elizabeth warren if she isn't jammed on some other things and sees how much they're making, ouch because they are making so much money. and look, i'm -- my trust is a shareholder of wells, so i want wells to do well, and they did not let me down. >> right well, the senate changes hands,

and might be a tougher road for her. >> senate changes hands? holy cow >> it's not unthinkable. >> wells goes to 80. >> yeah. as for monday, we'll get bank of america, and i heard you tell joe that you thought goldman might be one of the more important prints >> yeah, because goldman is -- they're all the trading and all the mergers and they're all the issuance, so if they can do a good number, then suddenly we really will pay more for these stocks so, goldman's a litmus test simply because they're the one that's most levered to all the businesses that we know have slowed >> also, coming in, in front of the goldman print in the next few days, is this news about apple and the high-yield savings. today, jpmorgan says, who stands to lose? everybody else paypal, square, traditional banks. >> oh, they've been doing that -- look, the buy now, not pay later, has been their mantra i will say that fintech is final set. i just think that fintech was

loved for a while, but the banks, the core banks figured out, what we're going to hear when brian moynihan speaks next week is that they are the bank that all these other ones want to be. square's not delivering, and i keep -- i like the cfo, but i think that one of the things that were happening is that we saw from twitter, you can't have an absent ceo. i thought he was doing a good job at twitter, but i don't think he's the number one choice to be captain. >> probably not. >> i think that could be a clean your desk situation. but block's not run by anybody and that's always been a problem. it's kind of like the panthers, okay like, until they get a coach -- >> does that mean that there's less danger of upside expense guidance from traditional banks if there's less of a fintech element to compete against >> yes like, the only fintech element that i thought was meaningful was how much -- i don't know if you saw that you got 3% now on

your goldman account i got 3% today so, the goldman apple is good, but the fintechs, their days come they had unbelievable growth, but now the margins are coming apart. now, see, goldman, down in -- that's like the stupid goldman people who were short calls yesterday. carl, there were some people yesterday who went home and they had five mezcals, and they're still hungover when i was a newspaper man, i used to see guys drink whiskey in the morning like, what are you doing i'm pounding some jds, you know, green. i don't know anyone who was short those calls yesterday, i really think that they are candidates this morning for not being -- they're for alka-seltzer someone lost so much money yesterday, i don't even -- they lost more than the bank of england. >> yeah. fourth biggest reversal intraday

for the nasdaq, fifth largest ever for the s&p >> can you imagine how wrong they were? they got short, and just when they finished their short is when they got the wama-jama, the upside that's what we used to call it, the wama-jama. >> given what you said about the reversal and given what you've said about some of the banks, we had dan niles on, he said, he's not long by any means, but he thinks october could be an up month. >> i was shocked at that, and i love dan, he's an old friend, about 30 years this morning, loop capital does the unthinkable. they say it's time to buy micron it's time to get in ahead of the cycle. we have had the prolonged price declines, they've been steep, sharp production in earnings, significant capex cuts, that's when you buy micron. micron is up 10% from when they said, please don't buy us. like sanjay is, like -- my wife said, would you please be nice to him he's one of the nicest people in the world. so i will say this about sanjay.

he came on and said, we don't really have a lot of hope here, and loop says, time to buy >> i saw the same thing just timing the inventory cycle on tsm. but you have said you thought semis are vulnerable still >> i still think that the last three weeks has been very bad for them, and i hate to be so granular, but it really is i'm getting week to week, and they're just not doing that well, and they're not doing that well because pcs are still bad but really because of the biden. no one really knows what he means by high-performance computer what they're afraid is they're making parts for companies who are then going to be told, listen, that stuff, you don't have a license to sell that's who's really caught and it is. now, will there be a new gaming cycle? a lot of people have given up on gaming if you look at nvidia, they've got new cards, and they are lifelike, so if there is a new gaming cycle, that could matter. but everybody's frozen by biden, because they're all saying, geez, how do we get a license to

sell in china? that's the worry kind of all frozen because of that >> yeah. real policy game right now we mentioned the uk this morning, and the prime minister, liz truss, is due to hold a news conference later on this hour. expected to scrap parts of that tax cut package amid this recent turmoil. she has fired the chancellor joumanna is outside 10 downing with the latest this morning hi >> hi there. well, we had a tweet out of the outgoing chancellor a short while ago, confirming that the prime minister had skid asked ho stand aside and he had accepted. what's interesting is he said, it's important we move forward now to emphasize your government's commitment to fiscal discipline, and the reason i bring this up is this government has been under a tremendous amount of pressure since they released that mini-budget on september 23rd, coming out with a big portion of unfunded tax cuts, which shot up borrowing costs in the uk. we saw huge ramifications on the

gilt market in the space of 24 hours, we had about 100 basis-point move higher in yields which prompted the bank of england to intervene, to bring in some stability. so ever since then, there's been a lot of pressure on this government to backtrack on some of those measures they introduced in that mini-budget they've done one u-turn already with respect to this higher income tax rate but there is expectations they may have to do more u-turns on things like corporation tax. they had plans to freeze it. that may not go ahead anymore, on dividend tax as well, and we do know that the prime minister is expected to give a speech in about 20 minutes right here in downing street we also know that the -- they have appointed the next chancellor, jeremy hunt, who is also a long-standing member of the conservative party he was abctually in the race to become leader of the conservative party in the summer he didn't win, obviously, but in the past, he's spoken about the importance of reining in inflation, and this is very key for an economy which is seeing

headline inflation rates of close to 10 percentage points and a central bank that obviously has to act aggressively not just to counter that, but to counter very expansionly fiscal policy as well so, a lot of moving parts here, both on the fiscal side of things but also politically as well, as some people are saying, look, not only has the chancellor gone, but maybe the prime minister as well maybe her days are numbered too. >> we're going to watch for that you certainly have the whole world watching policy in the uk this morning joumanna, thank you. jamie dimon's on the tape now, asked about the uk situation, calls i want a bump in the road, says he sees volatile markets but nothing systemic >> well, i think that these -- our banks have so much capital, and i hope that mr. barr, who's now in charge of the fed, recognizes that the level of capital they have has made it so these things don't really -- they're glancing blows, and i never thought that would --

jamie just said, damn good returns. jamie, you're supposed to say, darn good. at least he's not hurricane jamie. he's much more like -- i think he's -- the bronx bomber but one of the things that really shocks me about all the british stuff, there was a time, carl, where we would be on our phones, monitoring britain at 4:00 a.m., just saying, what's going to happen? and now, our banks are so solid, and they're in such disarray, that it's almost as we have all kind of just said,you know what ever since brexit, these guys have been -- they've stopped being a great power. and i think it's horrible for those of us who love britain, go all the time, but they're not a great power anymore, and it's an amazing -- i mean, they've taken themselves out of the great power group, and i think a lot of -- ever since brexit, they really haven't figured out what to do. >> it is amazing relative strength in banking structure versus the rest of the world. relative strength in energy versus the rest of the world >> i wouldn't put my -- i mean,

i'd rather put my money in monte depask you get a good paleo ceo. remember james bond? but i think that london is a fabulous city, but it's the center of the food world, not the banking world. what a comedown. >> we're going to watch it obviously, day's not over yet in the uk when we come back, we'll talk about the supermarket deal, one giant about to get even bigger take a look at the premarket here, trying to add on to yesterday's gains even if you might not believe they're long-lasting we shall see "squawk on the street" continues in a moment. i traded my taxicab for a food truck and a dream. i'm larry villalobos, owner of cachapas y mas,

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we planned well for retirement, but i wish we had more cash. they have no idea they're sitting on a goldmine. well they don't realize that if you have a life insurance policy of $100,000 or more, you can sell all or part of it to coventry for cash. even a term policy. we've got to tell them! hey, guys! you're sitting on a goldmine! do you hear that? i don't hear anything anymore. find out if

you're sitting on a goldmine. call coventry direct today at the number on your screen, or visit coventrydirect.com. this deal to create a supermarket giant is now official kroger agreeing to acquire albertson's for $34.10 a share, that deal valued at $24.6 billion, including debt. together, they operate nearly 5,000 stores and kroger's rodney mcmullen will be the ceo of the combined company he'll be on closing bell today, 3:00 p.m. eastern time almost 700,000 employees lot of discussion yesterday about antitrust implications >> there should be, because the -- i've done a lot of work on this. in 2015, when safeway merged with albertson's, made a deal with the ftc to sell 168 stores to get this deal they sold them to an outfit

called heaggan a few months later, heaggan went out of business, literally went bankrupt, and all the guys got the stores back, like safeway and ashland sold it to heaggan, heaggan goes under, goes back as safeway, so what the justice department has told me is they will never, ever allow this to happen again now, the way to get this deal done is they have to do exactly that i think that rodney's fabulous i like albertson's but i don't know who their advisor is but they better make it -- they have to come to terms very quickly to the ftc,because the ftc and justice feel that that merger between albertson's and safeway was the dumbest thing they've ever done, and they've said they would never allow this to happen again. i want the merger to happen, because they say that there could be heft, and they can fight for the consumer but they have to spin off, and both the ftc and justice department regard it as a great black mark on their legacy that

the outfit they gave it to went bankrupt almost instantly and the stores reverted. so, watch it but if you're sure about it, don't be >> yeah. they do -- >> my information is better than their information. >> they do make some attempts here, say they're going to invest half a billion in synergies that they would use to pass on lower prices >> a billion might be better they have to be very careful, because we've been waiting for jonathan canner from the antitrust department of justice. this was handled by the ftc, the previous one ftc is going to hate this deal, because the ftc is very, very left but canner's been waiting for a deal to be able to say, you know what you can't do this. of course, they can always fight in court but this is a deal that has a lot of overlap, and if they don't have real companies buying, not joke companies that can go bankrupt, then this deal will be killed >> so, you don't have high faith in a close, and you think the price action here is justified

>> if the democrats lose the midterms, i think the agencies go nuts and become as deep and hard left as you've ever seen. it's all about the midterm so, the democrats, i think that albertson's needs to see the democrats win, because otherwise, all they have are these agencies, and the agencies are going to show their true colors, which is, they are -- the people who are running these agencies are as left as you're ever going to believe. when i say left, they don't want combinations i'm not saying elizabeth warren's going to run everything but i am saying that we have not heard from jonathan canner yet he's got 555 orders. they've got a lot of smaller ones, but this is the one. he's a caged tiger and look out he's the head of antitrust for justice. he's really smart. >> we spent a lot of time talking about lena khan. >> she's smart but i know canner, and he's from paul weiss, which is my law firm, and he's truly -- he's very aware of

the colossal heaggan failure that they really got just snookered on, and they never want to be snookered again so, i think that rodney ought to come on and say, listen, we're not going to let heaggan happen. heaggan is crucial because that's what's in the minds of the ftc and the justice department they never forgot. 2015 >> we'll watch that this afternoon. >> had rodney come on our show, it would have been front and center >> i'm sure they'll handle it. when we come back, we'll get cramer's "mad dash." countdown to the opening bell on this friday. don't go anywhere. what if you were a global energy company? with operations in scotland, technologists in india, and customers all on different systems. you need to pull it together. so you call in ibm and red hat to create an open hybrid cloud platform. now data is available anywhere, securely. and your digital transformation is helping find new ways to unlock energy around the world.

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about wells a few moments ago, up almost 4% delta's not far behind on this upgrade out of cowen unh as well, raising their guide for the year >> beautiful >> don't forget the opening bell is coming up in a few moments, and you can always catch us any time, anywhere, by listening to and following the "squawk on the street" opening bell podcast don't go away. and he's more dangerous. he isn't dead. we finish this now. let's go.

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>> announcer: the opening bell is brought to you by nuveen, a leader in income, alternatives, and responsible investing. time for cramer's "mad dash" as we count down to the opening bell >> the situation with netflix upcoming is probably one of the most controversial i've seen for instance, jpmorgan comes out today, and they say that it looks like that people are -- say that remains discussed stock our coverage and sentiments view positive citi's come out and says, sentiments viewed muted. i like this. i like it because i think, one, they're going to be able to tell a good story, and two, i think the ad support is at a really interesting price. $6.99. so, i think this is the stock in

f.a.n.g. that's actually acted the best in the last three months and it may actually be an interesting situation. >> $6.99 >> pretty good >> four to five minutes of ad per content hour is that a -- is that a good value proposition? >> i don't know. when i watch hulu and i watched "the bear," i felt that was the level, and it was very hard, and you tended to want to fast forward, but, i mean, i think there are a lot of people who really believe in netflix, but felt it got too high i never thought it was too high. but then again, i know, i've done well in life. but there's a lot of guys who are neutral, and so it's -- the set-up is a good one >> i love the moffett report yesterday looking at the number of episodes that debuted in a quarter, last quarter. netflix, 1,026 episodes is five times everybody else combined >> well, i have a hard problem really disliking situation down here, and i do think management

is very straight >> certainly, talk about a u-turn, it's taken a while, but the u-turn on advertising is remarkable >> remember how much they say, it will never happen but the world has changed. you got to change with it. they're still doing better than most of the conventional media >> let's get a look at the opening bell here at the nyse. capital firm marsh capital, congratulations to them as we see brett filling in dow looks to add on to the gains back over 30 k >> they're going to bring that short in, carl how do they get their short in >> and back close to the 3,700 level on the s&p >> look, i think that the prevailing wisdom was that we were about to go to 3,100 to 3,300. this is the battleground the background are the people who think we're going over 4,000 versus the people who think we're going back to 3,300, and the disparity is so great that

that's why i think we're going to see a lot of shorts, because i think a lot of people just say, this is the moment to really crash the party, really hurt the bulls but the bulls came in yesterday at a level that was -- i didn't think they had the capital to do what they did yesterday. and then the bears, for the last 400 points of the dow, that's a very serious session yesterday in terms of what it said about the psyche that was the worst number possible and we didn't go down. i know, the lloyd tweet -- the lloyd blankfein said, if you knew it, they wouldn't have shorted it they were on the wrong side of the trade. yesterday was a fun day for a lot of people, a lot of people to watch us, because it was a reminder that a lot of money can be made if you just own good quality stocks a lot of the high-quality stocks did well yesterday i mean, you know, companies -- the familiar brand-name stocks companies that you just think, you know what?

i can -- i can find unh. unh is not a problem they're my insurer there's that kind of thing it was kind of the purloined letter, the stocks that went up, they're the ones that were right there and that gave a lot of people real hope to see microsoft up eight bucks, so it was a very bullish session, and it can't just be over in one day. and if goldman does well next week and bank of america in a couple days, you're going to be able to say, we got leadership >> does it make -- we talked last week about some of the bullish call-buying with strike prices in the 4,000 range for october from march does that still make sense >> i trapped people. the people who sold those calls, i feel, did not protect themselves, and the people who came in with guns blazing yesterday, sending the market down 2%, betting it would be down 5%. i talked to a number of people yesterday who said the mashrkets going to crash, and when you were -- you better mean it in

october. and i was -- the pushback i gave was, i don't know. i mean, haven't we been kind of a rolling correction it's been 11 months since november the average bear market lasts 13 and i got the, no, you don't know what you're talking about, we're going to crash you know, from people, by the way, who were not alive in the '87 crash. people who literally were just kind of conjuring what a crash looks like, and the answer is, it's not like this i don't want to see the market go up too much, and i know that the s&p earnings are coming down, but if we actually had the same leadership we had in '91 and '92, which was the banks, they're fabulous leaders >> watch the banks this morning. financials are up, but we mentioned delinquencies don't seem to be an issue. we'll talk to leslie pickering in a moment, but dimon saying, no leverage blown. >> and charlie scharf making it clear, where are the delinquencies? we don't have them

and charlie scharf, again, i respect him as much as any banker in the world, and he is literally just combing them himself, looking, because it's almost eerie how few there are now, maybe, at a certain point, the fed -- i don't know. the fed may -- what does the fed want to do with that do they want to make those people be delinquent it's really a solid, great american story, wells. it used to be a fantastic bank, and the number of fines that charlie's had to pay, that weren't his fault, are staggering and by the way, all new board, all new top reports, and i'm willing to say that wells is back i really am. and i didn't feel that way ever since february of -- february 5th of 2018, i've hated wells because that's when janet yellen put the wood to them. >> you've been pretty critical, although you have hinted there's operating levers to pull, maybe more so than any other peers >> i think charlie had to -- i'm speaking of charlie scharf he had to get his personnel in

he had to be able to get a handle on the technology and he had to do what i regard as what charlie does best of all, which is to have a great operating ratio, meaning, getting more out of your people and also letting some people go. >> yeah. >> i mean, you know, they used to call him chainsaw charlie i don't think that's right that's really wrong. what he is good at is making money. he's making money. >> yeah. as for yields, jim, ten-year, as we said, back to levels before we get the cpi number >> how do you like that? that's not supposed to happen on a weak retail sales. look, i still don't think -- i've been adamant that the fed funds rate goes to five. and that mester's right, because things are so hot, and there's nothing in the -- maybe retail sales is little week, but the pushback i got yesterday was, you think things are so hot, but you know that credit has become very difficult to get.

and you know that mortgages are difficult to get i'm not hearing that on the call so far but that's the big rap is you just wait. it's not so much that the mortgages are seven. you're just not going to get credit >> a lot of travel names doing well this story about united yesterday, jim, potentially weighing an order for 100 wide bodies, would be one of the biggest orders ever. >> good. it's an extremely full flight. i mean, how many years now do we have to go over that that would be amazing. those stocks, i speak to a lot of executives and lebeau does too. this is a halcyon time for travel we've been waiting for those planes all the companies that are in the plane business, different parts, finally going to happen american was good. i mean, american went down to 12 and that's where it was during the beginning of the pandemic. i think delta is a huge buy here, and i tend not to recommend the airlines

i really like delta here i think it's very good >> some other just banging through a few stories. one is caterpillar they waved the mandatory retirement age >> i'm so happy for him. he's an operator i think that he has been uniquely hurt by the strong dollar i don't think people realize that the strong dollar is a tariff against the united states, that if the president were a little more thoughtful about these things, he would realize that our great american companies are being killed because of the dollar, and he would be helping them. but i don't know what he's focused on, other than the sun >> what do you want to do? you want to see some sort of coordinated selling? >> i want -- no. i want him to say to those who are dumping that when we do the big infrastructure next year, because -- that we're not buying japanese or korean we're buying american. that's what we're going to do. we're no longer going to make

this so that our infrastructure bill turns out to be a windfall for komatsu, but that would require a huge amount of work. you got to spend some time on that or you can just do what i just said >> yeah. we'll see. it's certainly going to impact trade, gdp >> it's just up against that strong dollar, and it's not fair, and remember, the oil companies -- remember, china was passed by the oil companies as what the biggest use of caterpillar. and so they're losing on china they're losing on oil because the oil companies think there's no pipeline, it's not doing anything, and then they're losing on the strong dollar, and this is jim's time on raw steel, and i wonder what numbers he could put up if it wasn't three strikes that he's got against him, because he's a terrific operator and i'm to glad that he got that stay, because he deserves it. >> not a huge market cap, but beyond meat is a story today they're going to lay off about a

fifth of the staff >> they're beyond bad. >> they slashed the sales guidance the ceo, who was arrested for alleged assault, is out. >> yeah. that was that nose-biting razorback instance >> yes >> that was -- that was -- i would call that ill-advised, to bite the nose of a guy at a razorback game >> yes >> i mean, maybe at the penn state-michigan game. because there may not be as much focus on nose bites. >> there's some trash talk about how eagles fans behave in advance of the weekend's game. >> i talked to brandon brooks, he's retired, now at goldman-sachs. he did tell me he's worried about the defense. but no, i mean, i did a radio interview with an eagles podcast, and i admitted that i never threw a batter just a snowball. >> we mentioned netflix and media a moment ago this twitter story, jim, is interesting, where the company lawyers said they're seeking documents related to some

unnamed federal investigation of elon musk. >> yeah. i thought that was unfair. i mean, come on. it's probably a -- you know, just -- i don't know whether that was brad taylor, the chairman just my advice to the people at twitter, just play your hand you're going to win. you know shut up and win. that was a bad -- they don't need that. they're going to win as long as they don't antagonize and i thought they don't need to say anymore. they should keep their mouth shut >> wait for the close. >> yeah. >> yeah. we'll keep an eye on that. obviously, twitter's going to be a big story. and as for netflix, we didn't mention ubs today going to 250 from 198 >> right, no, look, i think that netflix is the tale of the tape. i think i was earlier saying i thought goldman, just because i'm looking for new leadership that's what we lack. the semis, you know, that's october 18th for netflix, the semis were our leadership group for so long, and now they're --

they're just horrible, although i remember i like healthcare and unh can be a leader. they've done a very good job this quarter and i like the banks and that would be a lot of the s&p. so, we could forget, maybe, about the tension of microsoft their market cap is still big, but it would be incredible to say, i think key bank is interesting, up 4.5% yield, it's 16 it's down from 27. that's what i'm looking for. low-risk, high-reward key bank and i know that's a small bank and people may say it doesn't matter it's in cleveland. no, everything matters and that's what i'm looking for is that kind of situation. >> all right really quick on oil. chris murphy, foreign relations committee member, tweeted last night, jim, about his idea to basically take some patriot batteries out of saudi and give

them to ukraine as sort of a reaction to their opec plus production cut move. >> those are the expensive ones. all you need is that new raytheon truck that sees around the corner the raytheon is just a couple hundred thousand it costs a couple million each time you fire a patriot missile. that would be a very big deal to take them away that would be more than just a for-show statement the saudis are rapidly becoming part of a -- it's almost like we think they're a part of the axis of evil. they've been our friends for years. i'm uncomfortable with how this thing is going, only because they've been a friend, and it would be a shame if we can't just come over to them and say, listen, you made a mistake here, let's rethink this as opposed to some of the stuff that's coming out. >> yeah. certainly sounds like that's what they were trying to tell them in advance of the cut >> i know, but the enmity is -- against china, against saudi now, china's never been our real

friend, but the saudis have been a great ally >> meantime, 3,692, we continue to watch for headlines out of the jpmorgan call. leslie has some. good morning, leslie >> no surprise, most analysts focusing on the macro in trying to pin ceo jamie dimon down on exactly where he sees degradation in the economy, if not now, then in the future, and he reiterated that the consumer does remain very strong, but he believes the extra money they have in their checking accounts will be depleted by mid-next year dimon adding that the combination of inflation, higher rates, higher mortgage rates, oil, volatility in the fallout from the war in ukraine will string future numbers related to consumer spending, and as a result of that, he was asked, then, about the potential fallout from volatility in the uk market, whether he's concerned about a capital shortage at some point over the next year, given the effects of quantitative tightening.

he said, qt is one of those big uncertainties because it changes the flow of funds around the world, particularly as it pertains to deposits, but he noted the event in the uk as a "bump. >> it's inevitable you're going to see them. whether they create systemic risk, i don't know i have pointed out, it's harder for banks to intermediate that, and that creates a little bit more fragility in the system that does not mean that you're going to see a crack of some sort, but it's almost impossible not to have real volatility based on the facts i've already told you >> dimon says the probabilities he's giving for a soft landing and something worse remain about the same the firm added about $800 million for reserves and restructured the make-up of bonds on the balance sheet due to rate movements during the quarter, trying to get a better mix there. shares higher today in part because the firm did guide higher than consensus on net interest income and upped the full-year nii amount at

$66 billion. that's about a $10 billion higher than they initially had however, investment banking continues to be a weak spot. we've seen this throughout earnings all morning with dimon specifically urging analysts on the call to model for lower revenue in that division next quarter than this quarter, which already saw declines of about 47%. they're seeing, in the pipeline, it doesn't look like we're going to get much improvement, at least in the fourth quarter of this year, guys. >> interesting leslie, as you're talking, truss in the uk, speaking of all that, has wrapped up her presser, argues, jim, will keep the corporate tax rise we recognize because of the current market issues, we'll have to deliver the mission in a different way. >> wow they've got to get it together i mean, i don't know they're a major -- they are a major country. i don't think they know what they're doing. it will change tomorrow. >> there's a look at the pound just a whipsaw action, today and

the last couple weeks. our thanks to leslie would you argue, jim, that dimon's comments today have sort of softened the headlines about 20% drops that we got a couple days ago >> yeah, i think what he finally did was a little -- which was, hey, it could be this, it could be that. it wasn't, like, it's going to be that. and he knew it he knew that he could not just say, listen, it's going to be bad. so, he gave much more balance, which therefore moved things back and made you feel much better about what jpmorgan is saying and the world i still am concerned that the s&p estimates are too high, but what jamie dimon did was take off the table the notion that he was extremely negative and instead just talked about that he got the word. he got to work >> we didn't really touch on citi fraser did say today, don't see a financial crisis they reiterate the full-year expense and revenue guide.

pick was a miss, though, jim, up one. >> and they continue to pause the buybacks we are confused why they were buying back so high, and then as the stock price got lower -- i don't know of the big three that we have had today, you have the banks of wells and jpmorgan and these guys morgan stanley is an asset gather you've got to understand that the numbers were affected by the acquisitions they made, by the e-trade, and if they just broke out the actual numbers like the light, people realize that morgan stanley was very good but they're not actually back here people have to understand that they are not citi, i got to learn more about, because the trading revenue disappointed, but the stock is so cheap, maybe people just say, well, you know, let's take a flyer. i don't like flyers. i like whales. >> that's an interesting

morning. so many banks to get to. didn't really touch on pnc or u.s. bank corp >> no. no but i'm going to stay extra attentive. >> okay. >> they never let me do that we got a lot of chairs today's a big day. >> we don't lack for chairs. some of the opening ganlz gaines fading here. dow is up 145. as a reminder, you can get in on the cnbc club with jim sign up at cnbc.com. we like to provide this qr code on the screen, give you two seconds to use that. takes you straight there as we go to break, watch bonds today, little bit of relief as the tape back to 389 or so and the two-year back to 4.43 after approaching 4.5 earlier in the week be right back.

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dow's up 200. some laggered on the nasdaq 100, some tech checks and we talked about the semis.

lam research and amd will be on the top five list. we'll get to stop trading with jim in a moment.

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let's get to jim with stop

trading. >> citi putting out a positive catalyst watch for amber crom by and fitch. a lot of the brokerage houses want to say, you know what, some of these companies, they have ebitda, they're not going out of business let's start taking an interest in them. that's very positive because the market's been down for so long, people are saying, you know what, i've got to start making -- a line in the sand if they're not going out of business, if they're not going to be bed bath & beyond, i'm taking a shot out of it. i don't know if bed bath & beyond is going out of business. i know kohl's is in trouble. we're seeing what people are saying -- the promotional environment is discount. that itself is a sign that people are getting a little more confidence in the market. >> it's interesting. the journal did a piece this week on cotton, down 45%. >> that's a great example. if you look at pvh, which is

very leavered to cotton, their stock is at 49 when manny ricoh ran it, the stock is triple where it is now. it's down 53%. europe is doing well a great store in europe, is not doing well i don't know some of these stocks are really, really low unless you think they're going to go under, it does make sense to accumulate a position >> how about tonight >> well, i have rusty brazil, he's been dead right about everything there's a lot of people who are angry at the saudis. some of the things jamie dimon is quoted saying not so good things about the saudis. i wonder if that's a side show i wonder if canada going to pump more, are we going to pump more? the oil people i deal with truly dislike the president and are holding oil back because they

want to make money for the shareholders if they felt they could have a photo op with the president, they would feel more inclined. the president is under a lot of heat from business people. business relationships are very important. >> i think they recognize they maybe are a tad insular. we'll see if that changes after midterm. >> jpmorgan is up four wonder if they're mad. the president is seething. >> jim, we'll see you on tonight, "mad money," 6:00 p.m. eastern time, wrapping up a big week for us on "squawk on the street." we'll stay on top of the market volatility pretty steady open dow up 200 don't go away.

with welcome back to "squawk on the street. rick santelli. the last of the breaking news of a wild week. first of all, business inventories for august, up 0.8%. follows up 0.6%, unrevised 0.8%, the biggest since june when it was up 1.4%. maybe what's most noteworthy, january through june we were up

double digits on inventories last month, single digits. university of michigan sentiment, this october preliminary, which means in a couple weeks we'll see the final read indeed, it could change. if we look at the headlinen in, it's 60 -- excuse me, 59.8 so, it's a whisker blow 60 59.8 continues to show we now have had one, two, three, four mourt above that 50 we had in june which is an historic low. 65.3, current conditions 65.3 is pretty juicy because in june we're at 53.8 finally, on expectations, 56.2 that is the only one that is sequentially lower than the previous final read, which was 58 now, let's get to the inflation numbers, shall we. on the one-year inflation, boy, it ramped up a bit 5.1% 5.1. and we've had several months

where it dropped down. we've gone 5.3, 5.4, 5.7, now 5.1. high water mark was in march and that was 5.4 that goes back to 1981 and finally, if we look at five to ten-year inflation, it ramped up, 2.9% high water mark, several months, the last being june, 3.1 again, 2.9, 2.9, 2.7 and then pop back up. good news, there's been improvement on two out of the three. all three are well above their extreme lows we had in the summer pricing pressure isbuilding, but quite a bit below extremes carl, back to you. >> rick, our thanks for that rick santelli. good friday morning. welcome to another hour of "squawk on the street. i'm carl quintanilla with margaret brennan market trying to add to yesterday's gains. we took a spill. today has the eco data, m&a, the

uk. >> exactly 30 minutes into the trading session, three big movers we're watchingstarted with united health delivering a quarterly beat helped by lower costs for covid testing. health care, another sticky inflation story when it comes to consumers. shares up 3% beyond meat shares slumping. announcing another round of job cuts pointing to reduced demand for plant-based products shares are down 5% nor northrup grumman downgraded to neutral. it's up about 30% year-to-date making buying now less compelling down about 3.5% right now. uk prime minister liz truss holding a news conference last hour losing parts of her tax cut package, firing the chancellor

joumanna bercetche joining us from london. >> reporter: the last 24 hours, the sacking of the chancellor kwertenge. the chancellor is staying in her role she says she's going to see through her mission, and a rue newed emphasis on economic stability. a nod to some of the market price action we've had over the last couple of weeks with that huge selloff we saw in gilts right after the announcement on september 23rd, the selling off of the pounds. both of those assets have recovered since then mainly because this government has come about and done so many u-turns. this is one of the highlights of the speech she delivered a short while ago. they have also reversed a decision on corporate taxation they had plans to put in place a corporate tax fee to keep the level at 19 percentage points.

she's now backtracked on that and will will set to go back up to 25 percentage points. that saves about 18 billion pounds on the uk budget, which will be welcome news for investors looking at the state of the british public finances and worrying about how they're going to bring it all back medium term. one thing i should mention is she did appoint jeremy hunt as the new chancellor on october 31st, a fiscal event where the new chancellor is expected to spell out their medium term fiscal plans and perhaps then we'll get more of an idea of what this government is planning on doing to bring those debt levels under control as to the prime minister herself, she certainly lives another day despite lots of speculation as to her own future and whether she can continue with this sort of diminished mandate giving how many u-turns have happened over the last couple of weeks. >> we're certainly going to try to read the mood of conservatives from across the pond thank you, joumanna bercetche, outside 10 downing.

turning back to the broader markets, reversing for a moment on those numbers invesco's brian leavitt and amy wu silverman amy, let me start with you yesterday, the role that closing hedges played. can you explain what you think happened >> sure. you know, especially around big events like cpi. we've seen a lot of hedge monetization and a lot of options being opened we both saw people who owned put options closing those put options and we saw people initiating calls in indices. essentially what happens is the dealer on the other side ultimately has to buy shares as part of their dynamic delta hedge. on a short-term basis that can really contribute in high volume environments to inkra mental inflection points in the market. that's what we saw around midday yesterday. >> brian, does it mean anything for at least the medium term, in

terms of the trajectory? >> i think it does for the medium term. i think in the near term we still have challenges. we're still in in a contraction environment. usually in that environment you're easing policy we're still tightening and trying to figure out the terminal rate on fed funds that creates some near-term challenges i guess it depends on how we define intermediate, six months, a year, two years, that should represent a pretty good hold period for investors, especially once inflation comes down. equities tend to do well near-term challenges around policy uncertainty hard to believe we're still saying it. if you're a long-term investor, there will be some pretty good buying opportunities forming here. >> near-term challenges, how do you balance those against midterm elections? i ask that because i know you've written some reports on what the market tends to do on the heels of that. >> the market actually, since you can go back to eisenhower, the market has always done well in year three.

whether or not the president's party loses seats or not i don't know if that's a coincidence, but year two tends to be worse. year three tends to be better. it removes one uncertainty from the market i think the most likely outcome you get here is some form of divided government i'm not here to predict what the house or senate is going to do, but it seems most likely to have a divided government in an inflationary environment, markets probably like that it means not a lot more gets done similar to what we saw in the uk we don't want more stimulus in an inflationary environment. it's just one uncertainty that gets removed as we head into next year. >> amy, some of the trading technicals at play in the market yesterday in that massive midday reversal we saw for the major averages what is the options market, what is positioning there telling you about the future now >> so, look, you know, the options market and volatility in general remains quite high it's also inverted meaning the short term is higher than the longer term

that shows worry essentially saying we're kind of going to expect this plus or minus 2% move per day. what i will tell you is in focus now is really earnings and i think you're going to see a decline in some of the macro correlations we've seen as people focus on idiosyncratic risks. we're seeing traders focus on single names we saw it in financials, call trades betting for upside with the financials portion reporting in the next few weeks. i think that will slowly move into mega cap tech and energy as we get into the onslaught of earnings in the next few weeks >> that's a great point, especially after half a dozen banks reported this morning. are we in some kind of sweet spot where net interest income is good, delinquencies haven't hit yet? how long is that runway? >> for one, the banks are better capitalized than we've been. we're in better shape than we have been in past recessions you should expect in an economic downturns, in an earnings

recession, the more cyclical parts of the market, the banks will come under some pressure. if you look in aggregate probably still have some room to go on earnings then it depends on what multiple are you willing to pay if earnings are at 180 and willing to pay a 20 multiple, we're at fair value. i'll come back to where yields are in investment grade corporate. look where forward valuations are on equities, starts to create opportunity. >> you mentioned earlier, terminal rate, what is the house view right now >> yeah, the third time be a charm for the market first there were 4, then 4.5, then 5 i think we're looking 4.5, 4.75 as a terminal rate typically you would see the fed funds get up above the year-on-year percent change in core pce

i think you're around 4.9. maybe we meet somewhere around there. maybe the market got a little reprieve, a respite yesterday because we're starting to get the sense that maybe we're getting short rates to somewhere close to what the terminal rate is going to be once two-year rates peak, that's when risk-taking starts. >> amy, i want your thoughts on this as well, especially since i read your notes, there's talk about the pain trade is now. most definitely to the upside. >> yeah. you know, we focus a lot on the tactical positioning, especially with most liquid options trading in the one to three-month period i'll tell you, we went from a point earlier this year where people were not well hedged to a point where people have either become well hedged or they're in cash and essentially, you know, you create the situation where there's going to be fomo if you start to see something that builds on itself in terms of positive momentum. i think that's why in the market now, on days like yesterday, for instance, you start to see these

very out of the money calls being owned in indices, especially in long duration assets part of the reason for that is people do consider that a hedge. it's simply just an upside hedge. so, i think that's how people stay with their toe in the market, even though i think net-net the sentiment in the options market remains very bearish. you start to see people say, you know, look, with volatility at these levels, is that an attractive yield as well in comparison to what we're seeing in rates and cash. certainly that rate suppression for the last ten years is moving the other way where we're seeing volatility flow back not only into equity volatility but process volatility as a whole. >> generations having to learn -- go far back and read history about what life used to be like. thank you. have a good weekend. let's turn to the banks specifically citi, jpmorgan, wells fargo reporting before the bell.

leslie picker has been monitoring all of these calls. very busy. >> yeah, a bit of a juggling end. morgan stanley and wells fargo calls are under way right now. jpmorgan's ended about 45 minutes or so ago. so far both calls with regard to jpmorgan and morgan stanley, their q&a em ck encompassing die morgan stanley said the highest inflation in 40 years meant, quote, the fed had to move >> my opinion is they moved late but they moved they're going to keep moving you know, rates are now around 3% they're probably going to go mid-4s that remains to be determined. with that there will be consequences so far we haven't seen clarity around inflation abating

my gut is that we will see that clarity and it will be more evident certainly by the middle of next year and i think the fed will be successful in this journey. that's a gut from all the numbers i'm looking at but doesn't mean i'm going to be right. >> and jpmorgan's call last hour jamie dimon spoke about how inflation will sdmreet consumer checking accounts bit middle of next year, which would strain future numbers noting his probability is tied to a soft landing versus something more adverse haven't changed in the last three months among the other big reporters today, morgan stanley is the only one firmly in the red after missing on the top and bottom lines. you can see shares down about 4% right now. wells fargo, citi and jpmorgan seeing strong income and guidance around that in the quarter since each of those firms has more rates exposure and more wall street focused

peers. >> leslie, really quick on jobs and financial services i see gorman is on the tape right now. we don't see any need for draconian measures but it's clear they identified some efficiencies >> yeah. that's certainly the case. i also spoke with the cfo of morgan stanley earlier today, and i asked her about what their plan was for head count, especially as they look at inflation. i noticed their expenses were down across the quarter and she said they have no update in regards to head count. jamie dimon also about head count on the call by mike mayo who said they have the highest head count across the industry after growing their employee base during the quarter. and dimon basically said no one should read that as a sign they think the economy won't slow in the future but they were basically being opportunistic

about hiring that talent now because mayo was basically saying, if you think the economy is going to deteriorate, don't you think it makes to hire for cheaper down the line. he said, no, that doesn't make sense for us. >> thank you we'll let you get back to the calls. we're going to bring in ken leon good morning to you. given the fact we've had this first wave of earnings this morning, we have rising net interest margin, we've got rising credit loss provisions, we've got investment banking falling dramatically of course, we've seen the tight lending conditions continue to persist. break down -- i'm not going to say break down all of these quarters but looking at that bigger picture, what looks like a buy here >> the buy is going to be the most interest sensitive banks. clearly the lending and interest rate picture is better than the investment banking side, butting me on the spot we're going with bank of

america. it has the highest ratio of interest income to total revenue and it's a great quality and execution. we did see good results for the banks for jpmorgan and even wells fargo today. >> the credit loss provisions piece of the puzzle, does it give you any reason to pause when you look at this sector is it showing any kind of warning signs just looking to the broader economy and next year amid the ferocious rate rises we've seen >> not yet it would be on the credit side and it would be really in credit cards. they are building up reserves. these will be needed as we get to the middle of next year, possibly for a shallow recession. it's not going to be a soft landing. banks are prudent on the reserve side, but if the spreads are great on lending, that might exceed what the reserve. that might be the story today.

that might change as we go into early next year. >> did you see anything today that was truly concerning regarding loan deposit ratios? that's one of the things we were looking for going into these prints. >> it's the other part of that, which is really deposits that actually declined. there might be more competition for deposits, particularly on the consumer side. banks have lagged giving you the best rate so that might be an issue as well. the head count leslie was talking about earlier, jpmorgan up 9% on head count. probably in november we'll see some cuts in the capital markets because investment banking in the fourth quarter is not going to be much better than the third. >> we just touched on b of a, but how does it set us up for the rest of the banks to report? >> i think it's going to be more of the same, which is green light in terms of consumer and

commercial bank lending. we just have to endure really awful results in the capital markets for investment banking the markets are trading equities has bern disappointing today, fixed income in that area have been pretty good we're going to get more of the same the regional banks is going to be really the story. my other colleague covers it they don't have the capital markets. i was a little surprised the regional bank stocks are not up more today on the net interest income story we've heard today from the lower money banks >> quick last question for you wells fargo is up 3% we know there's a company-specific story that's been playing out there, this turn-around story. your take on what we heard today. >> better than expected. they seem to be at least managing through their regulatory and compliance

issues they're getting their businesses back in shape. they even have a more competitive credit card. they're doing better >> okay. ken leon, thanks for joining us. a lot of morgans in this discussion today >> as we go to break, take a look at our road map for the rest of the hour, including a major grocery deal as kroger buys albertson's for nearly $25 million. we'll discuss. plus, we're watching the chip stocks under pressure again. the smh on pace for its first negative week on five. elon musk saying spacex will stop funding star link terminals in ukraine a lot more "squawk on the street" is straight ahead. don't gonyer awhe. with all the major averages now negative and buying your starter home. or whatever this is. but the things that last a lifetime like happiness, love and confidence... you can't buy those.

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kroger officially buying rival grocery store company albertson's. sara eisen joins us at post 9. >> we have an exclusive with rodney mcmullen from kroger at 3:00 p.m first of all i'll share you the details. investors will receive $34.10 a share for every albertson's share. you can see we're a long way from that right now. that includes a special dividend it works out to a 33% premium to albertson's closing price before word leaked of the deal. it's valued at about $24.6

billion in enterprise value. the results are really, really large grocgrocer kroger has 2500 stores albertson's has almost 2300 stores together that's more than 710,000 employees and more than $210 billion in revenue. why does kroger want to do this integration? more scale means for cost savings. they announced $1 billion in synergies. and the power to negotiate now with vendors it's all about competing with the elephant in the room, which is walmart, and the emerging threat, which is amazon. but there's a really big hurdle. that is potentially why albertson's and kroger stock are both down today. the regulatory issue this deal does include divesting stores, so it's not too much concentration in any certain location like california where there's a lot of stores. up to 375 stores total to be

divested still, here's the market share setup. the combination would have 13% market share of grocery sales in this country the number two pure play grocer would be hodel hayes with less than 5% share. but it it doesn't count costco and walmart. walmart still has 22% market share. so, kroger is going to need to argue to the regulatory authorities that we need a strong number two player to compete with walmart no question, it's going to be a hard task. the deal is not expected to close until 2024 they're really going to have to figure out how to sell to the biden administration right now, who's already been skeptical on deals, why this is a good thing for consumers, for food inflation, which is already running, what did we learn yesterday, 13% ahead of last year and, of course, for the unions, a big part of the story as well. >> the notion they would invest

half a billion on synergy and pass those savings onto consumers as part of thes concessions, i guess, in advance, how would you even hold them accountable for that? >> checking on the pricing so - >> we don't know what the price would have been otherwise. >> kroger has invested a lot in price over the last few years. and not as much as albertson's i think they could feel they could come down to albertson's pricing to compete with walmart, who has the everyday lowest prices, according to their own slogan no question that the authorities would take a look at things like pricing and hold them to account. i think it's also part of kroger's plan to grow revenues for a company like albertson's to do that with pricing, to do it with distribution and warehouses and e-commerce, where kroger is very far ahead of albertsons they would need to argue that pricing will go down for consumers. in fact, maybe a good case to come together to do that because

it's going to be all about rising prices in an inflationary environment. >> it is amazing to see albertsons down 6% on this news. >> rick santoli said 5% spread the market doesn't think this deal is going to get done. >> we do know the biden administration has been and the regulators of this administration have been incredibly anti-merger, anti-deal across so many industries so this is certainly going to be a key one to watch the arguments about by getting bigger we become more competitive, we've heard that from other companies and other industries to your point, i wonder if that's something that's going to stand up when inflation is running at the crazy highs >> one of the things about making that argument, there's not a ton they can point you in terms of historic deals in the grocery space. for instance, not a great track record albe albertsons/safeway tie-up. albertson's tried to go public three times.

they finally did, trading below the range. it's hard to blame the success of these major food deals -- i don't think the amazon/whole foods deal came out in any way we thought they would take over the grocery world. they've got 3% share right now it's hard to tell historically what's going to happen but no doubt the kroger lawyers are getting ready and in position. the divestitures are a big part of the story to make sure in washington state and arizona, they're not eating up all the competition. >> i see what you did there, eating up. sara eisen, thank you. looking forward to that interview later today. as we head to break, check out shares of nutanix. those are surging on reports they are considering a target rival. you can see shares are up 24% right now. even as the s&p is down 1.3% even as the s&p is down 1.3% ckn o.

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welcome back to "squawk on the street." markets digesting the big news out of the uk and the aftermath of yesterday's hot inflation report and today's weak retail sales. steve liesman has the latest on the markets around the globe and how they're reacting >> yeah, morgan, the reversal by the truss government is one piece of critical news people are processing kansas city fed president georgia is out on the wire saying they need to stay in restrict ty territory and stay there. she wanted a 50 not a 75 repeatedly the outlook for the fed remains sharply higher after yesterday's inflation report and fresh signs of consumer weakness in retail sales. almost forgotten, the bank of

england is scheduled to halt its bond buying program. the ten-year gilt, the best benchmark of the market's angst over uk markets rallied on rumors of the fiscal policy u-turn and sold off with yields rising back above the open. it remains to be seen if the u-turn is enough and bonds can stabilize, especially if the boe follows through on plans to halt the emergency bond buying program today and resume gilt sales at the end of this month this morning the boe bought very little paper in the program. that could be a good sign that the pension funds that were the source of the liquidity troubles have righted their financial positions. now, another question is if markets turn their attention back to the fed where the outlook for the funds rate is higher and even rising the futures are pricing at a 451 funds rate for year end and peak

funds rate in april of 491, up more than 20 basis points since that inflation report yesterday. markets also processing, retail sales coming in below expectations the unchanged number means it's going to end up being negative once you adjust it for inflation. for the moment, financial stability concerns receded with stability in uk now investors can turn to the fed inflation and the economy. carl, i'm out of breath covering all that right there >> i was going to say, is that all? steve, thanks. steve liesman -- >> is that all i didn't talk about confidence or anything, wholesale inventories. >> let's bring in larry meyer, former fed governor, great to have you back. good morning >> good morning. happy to be here >> i just -- to get your thoughts on what esther george is saying right now, she's referencing some excess savings that is clearly in people's accounts that buffer suggests the fed may have to raise rates to a higher peak than would otherwise be the

case, even as steve said, she's more of a gradualist what do you make of that >> well, i certainly believe, and believe for some time, the fed would have to raise rates faster than they expect. we're at 5.25 by march so, retail sales doesn't really matter the economy is slowing down. probably going into a mild recession. this is all about inflation. they can't take their eyes off inflation. they have to talk tough, be hawkish and move aggressively. >>. >> when you think about things like food and medical care and shelter are those things you see responding in -- like goods have the last six months? >> well, not food prices, not shelter prices certainly energy prices. so, we've had three months where they've been falling you'll notice the three-month --

headline cpi is 2% so misleading. inflation is at a 40-year high that's all you need to know. that's all the fed sees. >> in light of that, larry, i saw one analysis this week suggesting every bad cpi report, like the one we saw yesterday actually delays the pause another meeting. is that your sense as well >> well, it's not another meeting. but you're absolutely right. it's not their preferred measure but it seems to come out right before fmoc meetings when the report is bad t solidifies the higher rate at that meeting they're going 75, i know that. i never use the word know. economists and forecasters never should but we know that the markets have priced in a 90% probability. they got to go they have no choice. and they want to go 75

>> what does it mean as we start to look to november? what does this mean for the fed narrative and for fed chair powell's narrative about how all of this is going to play out as we head into 2023 with inflation remaining so sticky despite what's already been such aggressive rate hikes? >> yes he knows that. he has to speak consistent with that and he shouldn't put much emphasis on anything on the real side the labor market is still very tight. what's happened in gdp, we're in the -- recession that means the unemployment rate is going to begin to rise. that's good. a mild recession, that's good. i like to say recessions are a policy option for the fed. >> employment rising to what, larry? we've seen all kinds of

estimates as to where unemployment peaks out i think some of the highest numbers we've seen are around 5.7 out of b of a. does that seem high? >> no. we're at 5%. we have to reconsider after the cpi report, the minutes, et cetera so, i certainly expect to go above 5% that's quite reasonable. a little aggressive but quite reasonable >> right certainly not a number we're familiar with at least lately. we'll see how high it goes, larry. we didn't even get to uk maybe next time. great to have you. larry meyer. thank you. >> thank you so much bye-bye. still to come, we'll talk elon musk as he signals spacex cannot continue to fund starlink satellite service in ukraine as we head to break, watch the airlines cowen upgrading delta rising that to 54 bucks a share delta is up 3.5% all the other major airlines are

trading higher again today as well back in three.

welcome back to "squawk on the street." in what has been an intense week amid russian missile strikes, a key means of communication in that country may need new source of funding elon musk's spacex warning it can no longer fund critical infrastructure in ukraine. according to a letter sent last month to the d.o.d. reported by cnn. spacex has helped ukraine stay online as ther communication measures have been hacked or destroyed. spacex is not asking to recoup past expenses but also cannot fund the existing system indefinitely and send several

thousand more terminals that have data usage up to 100 times typical households $80 million in satellites have been offered to ukraine, and expected to exceed $100 million by year's end. recall back in march, president of spacex had told cnbc that france has helped in the effort, at least back then, and she thought poland had, too. this was largely a spacex effort financially. i reached out to spacex for further comment. i have not heard back. at least not yet, carl but keep in mind, spacex is one of those companies with many different costly initiatives under way right now, including, of course, besides starlink and getting that up and running and becoming a robust global business, starship as well for which the next two crew members for the second planned manned flight, spaceflight of that starship system were announced

this week as well. >> what's the case with elon, he raises the possibility this is somehow punitive, getting even for the ambassador that insulted him, saying we're just following his recommendation that's what the scuttlebutt is about today. >> that is what the scuttlebutt is about and he did wade into that on twitter following everything else we've seen on twitter in recent weeks around his commentary in that poll around ukraine and russia but it is, my understanding, certainly this is what cnn reported as well, that letter went out to the pentagon last month. so, perhaps, ahead of some of the activity we've seen on twitter? >> we'll have to watch it. clearly, big implications for the war as we got more putin comments today about his strategy going into g7 pretty fascinating. streaming is in focus as netflix finally announces pricing for the new ad tier. apple faces off with the nfl over sunday ticket how that news is tradeable coming up in the next hour get a check of the markets

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while hispanics make up 16% of the u.s. population, they're responsible for % of the u.s. population, they're responsible for 73% of u.s. labor force growth since 2010. digging through some polling data trying to understand the workplace and economic issues. >> we dug through the numbers. broadly speaking, there's a significant difference in opinion between how hispanic americans view the economy, workplace priorities and opportunities for financial advancement versus the total population on income equality, americans generally agree pay is too high for ceos, but hispanic americans are more concerned about the gap between the highest and lowest income earners

84% of hispanic americans say that fwagap is a major problem compared to 73% of the population when it comes to corporate america's role in fixing that problem, hispanics disproportionately feel it's their employer's responsibility to provide certain financial benefits at work 80% said they believe companies should share financial gain through stock options and 82% say they want employers to match their retirement contributions one area of agreement is the belief that wages need to increase on pace with the rising cost of living the topic on everybody's mind given yesterday's higher than expected inflation number. 70% of hispanic americans say there are too few opportunities to improve their financial situation overall. that's compared to 51% of the total population so what's holding hispanics back well, # 68% say they feel more

likely to be passed over for a promotion or job opportunity just because of their race, and that's compared to 53% of the general population who express that same concern. it comes as no surprise that three out of four hispanic americans believe there is more work to be done to achieve racial equity. carl, morgan, i believe we can agree that these are issues that obviously impact everyone, but not everyone is impacted equally or at least they don't express that impact equally. >> brandon, it's great to have you on set. >> it's nice to be on set. >> ask to be reporting on such a key topic especially now >> thank you. >> all right, brandon gomez. we're going to get a quick check on the market, which are all at session lows the s&p is down, 46 points to 3620 the dow is down 109 points and the nasdaq is down 1.7%. we'll be right back. at pgim, the pursuit is on for outperformance.

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♪ icy hot pro. ♪ ice works fast... to freeze your pain and your doubt. ♪ heat makes it last. so you'll never sit this one out. icy hot pro with 2 max-strength pain relievers. michael is back. and he's more dangerous. so you'll never sit this one out. maybe the only way he can die... is if i die too. [ screaming ] welcome back to "squawk on the street." another volatile week for the market as investors work through consumer demand headwinds, higher rates here to help break down the playbook, sarah levy, swee of betterment, one of the largest

financial advisers you had some news this week around cryptocurrency. given the fact that it was another whipsaw week, i do want to get your thoughts on what you're seeing on the platform in terms of customer activity and what advisories that use the platform are coming to you and saying or asking. >> absolutely. so thanks for having me back, morgan when i think about, you know, how our customers are behaving, it's not -- you know, they tend to take really just the key metrics, right, around inflation. when we think about unemployment, and they sort of weave that into their thinking, and the volatility to some extent has been having them sit on the sideline. what we're really seeing is that retail investors are holding assets in checking and in savings accounts and in particular as rates have been rising, you know, and the yields

in some of these savings accounts have been rising, we're seeing a lot of our customers parking money there waiting to see how the market unfolds >> so customers are parking money there. are you seeing fewer new customers come to the platform as well because they're hesitant or have those numbers continued to be persistent >> you know, we've seen a lot of new customers but we're seeing the new customers more startling on the cash products, so lots of new customers in savings, fewer new customers in investing. >> got it. i guess what is your -- what is your message to some of these retail investors that have used the platform as this volatility continues to persevere here? >> we think this is a great time for betterment, and in particular for sort of a long-term diversified investing perspective, right when you think back a year ago, you think about investors sort of piecing hot stotries, we've never believed in that i think for us, we like people to have a plan and to set up

goals and really think about how do i regularly invest and take advantage of compounding, things like that. you know, when you think about crypto, where we're headed, we took the same approach in crypto that we take in -- which is slow and steady, long-term diversification. >> so let's talk a little bit about that crypto launch it's crypto investing by betterment i can remember you coming on the show last year and talking about the interest from retail investors in cryptocurrencies. since then we've had the so-called crypto winter. the fact that you're launching this now, is there still appetite >> well, we're excited you're exactly right so i think the timing couldn't be better in the sense that, you know, we believe this asset class is here to stay. we never believed that we were going to try to pick winners and losers just as we all recommend that in terms of individual stories within the crypto landscape, you know, same approach we take in -- if you think back a decade ago to when betterment launched, we actually

launched in the 2008, 2009 moment when in general investing was at a low moment there as well i think the opportunity was that we got to put some points on the board with customers pretty early on, right? so we actually think it's a great time to get started and that our thesis doesn't change, right? which is that this is an asset class for the future this is the next wave of innovation, and let's get in it in a slow and steady long-term way. >> okay. and then just finally, quickly, so the cryptocurrency product, you have 12 etfs that are offered to customers as well are there any other areas, especially given how beaten down some of these asset classes are that you're looking at >> so we're offering four portfolios they're really all diversified effectively index products one is a sustainable product, which i think is really exciting to do sustainable crypto, which. and then we have a universe basket, which i think is for the average investor we call them

the crypto curious wanting to get in we think it's a great time to play the market, play the index and let the experts, kind of automation manage it behind the scenes because this is really complicated stuff. >> it's really complicated and it's a complicated market environment. sa sarah levi with the pulse. that's going to do it for "squawk on the street. tech check is next. >> welcome to tech check, i'm deirdre bosa with carl quintanilla and jon fortt. today netflix reveals about its ad-supported tier. the streets bullish on the strategy but is a nearly $7 price point cheap enough to stop the turn and nfl sunday ticket is up for grabs. plus, mark zuckerberg says he missed a giant shift in social networking we'll have that story in just a few minutes. first take a look at the broader markets. they are lower this morning. we are seeing more consolidation in