good to have you on, and whatever we think, it's still friday thanks, kevin. liesman's got cheeseburgers on the way. >> yeah, saw what happened jobs report came out >> things reversed >> much stronger >> now rates are back where they were nothing's changed whic it's crazy >> have a great weekend. we'll see you monday "squawk on the street" begins right now. ♪ good friday morning, welcome to "squawk on the street," i'm carl quintanilla with leslie picker, mike santoli at the new york stock exchange. jim and david have the morning off. june jobs is a miss. first one in over a year, and that's with some negative revisions. two-year yields back below 5% but stocks are still on pace for a losing week. our road map begins with that slowing job dwgrowth, the fewest jobs added in june since december of 2020 plus, treasury secretary

yellen coming to the defense of u.s. businesses while walking a diplomatic tight rope in china and checking in on the state of consumer, levi's slashing its guidance and costco same-store sales slip once again. let's get to reaction to the jobs number. restaurants down eight, first decline there in, i think, 28 months government jobs, about a third of the jobs added. >> yeah, so, private sector was a little bit weaker in terms of job creation it had the market really in a misdirection move leading into this yesterday was all about, you know, mini-panic in the bond market about a super hot number in the adp report, so this really did take away a lot of that concern on the other hand, there are no all-clears in this particular moment in the cycle. it's either, you know, a weakening jobs picture is okay we can moderate the growth that's expected. but a miss after 14 months of beats on the topline payrolls number, it brings up the idea

of, is this finally the inflection point not sure we have to panic about that yet, but you do mention the stronger wage number we are on track for the fed to be doing more and i think we're just at this moment where you're never too far away from one thing you're afraid of or the other. the market's had a nice run here bond market is kind of calming down, but not really taking back a lot of that yield jump yesterday. we are in a zone where yields at this level, especially going up at that pace, do pinch in terms of equity sentiment, in terms of bond market volatility feeding into equity volatility and also restraining the economy. we are -- we're up in the area of real inflation-adjusted yields we haven't been in 15 years or so, and that means the real economy kind of gets restrained by that. all those things put together, it was a bullet dodged, i think, in a sense you know, because we really were leaning toward the potential for a big upside surprise. but now it's, where we are do we have to brace for more

slowdown fed is still in the game >> initially, you did see more of a reaction in the bond market i'm curious, mike, as, you know, traders started to digest this report, what is it that gave them more comfort, do you think, once they got past that initial print? >> i think it's the softness in the headline the downward revisions from prior months and this idea that we're not in this headlong re-acceleration moment in job growth therefore, labor tightness is not getting exacerbated. we are all of a sudden looking ahead to a cpi number next week, some people are saying it's going to come in below 3%. got a lot of things working in your favor of getting a benign number for cpi next month, and then the question is, well, you're kind of running out of the better comparisons and maybe it firms up from there but that's the tricky spot we are in, and then, you know, between now and earnings reports, i think this is what we're going to be kicking around, how the fed reacts to this kind of in the middle labor market report. >> certainly that's going to be the tone of next week between

the macro print cpi and of course the banks on friday your point about whether or not this is the best it's going to be this year is exactly what b of a says today. they say, "use q3 tightening as an opportunity to position for a hard landing," and although june cpi will be the trough, there's a strong likelihood it goes back to the 4s in the second half >> which is exactly why i think you're not going to get something from the market inferring the fed's next move, saying we don't have to worry about that anymore i think it's an okay mixture of factors that are driving things right now, which is, the fed is moving in small steps. that's okay. the bond market is sort of stopped assuming we're going to get a rush to cutting rates, which means perhaps we're pushing off the recession risk earnings have flatten oded out

things are in the neutral zone as opposed to falling away in a more damaging way. >> as you look through the data, the average hourly earnings, those did surpass expectations rose by 12 cents or 0.4% that, of course, is what the fed is paying attention to, because that is what keeps inflation stickier, regardless of where the unemployment rate is, if people are getting paid more, i mean, as long as it stays where it is. >> they'll spend it. i agree. it's funny, there's a lot of work right now talking about if that's really a causal driver of inflation or if it just kind of reflects the environment we've been in for a while, but you know, somebody could counter that and say, you know, real disp disposable income is going to go positive again or stay positive, and that's not a bad thing for the economy, so i think that's where we are yesterday, cyclical stocks took it on the chin with that yield move bank stocks suffered again so, it wasn't about, oh, the big mega cap names that have performed so well that really took a gouge out of the market

yesterday. it was the stuff that really is responsive to the cost of money, the trajectory of the economy. >> yeah. interesting note out of fitz just now, labor supply seems to have hit a ceiling as we didn't get any further improvement in labor force participation. they note that the unemployment rate did tick down a bit marginally, but to mike's broader point about macro uncertainty, that was a large theme for andy jassy yesterday talking about how europe may be doing better than they assumed but certainly the overall picture globally >> i don't think any of us believe we're out of the woods with the economy i think there's a lot of uncertainty, and i don't think anybody knows what the next several months are going to be like, and like everybody, we've got a plan, and you know, we had a plan the last few years too, and things changed >> pretty interesting series of questions about a.i. and chips and getting revved up to compete with nvidia.

a consumer that's cautious and also not just taking a look at costs in the media division but across all their different silos. >> it was a really great interview that jon fortt did there, talking about a whole host of issues he asked him again, of course, whether he would be interested in spinning off aws. he said they could be talking about that what they're 80 and the answer would sfil be likely the same they have no plans to do something like that any time soon, but the a.i. impact, i think, is really notable here, because obviously, they have a ton of competition, but he believes that aws will benefit from the overall computing power that comes with the advent of a.i. as it gets bigger and then of course the role that make alexa would play with regard to anticipating your next move or anticipating what you're going to ask about next. >> i thought the message across almost all of the topic areas was, you know, it's business as usual here at amazon, so we know there's this big a.i. opportunity. we've been there for a while, so we're doing what we've always

been doing and that's going to help the business down the road. on cost, we're always attentive to all kinds of costs, so they're not getting this big, hey, we have the year of efficiency, we're going to get margins up, this is a new campaign, we're going hard at this it's like, nope, this is what we always do. we deliver for the customer and that's better for everybody in the end. i found that was a bit of a mixed or muddled message, and maybe reflects how the stock has performed, which is there's not this one thing to seize on that says, amazon is levered perfectly to this very exciting thing that we want to capture right now, whether it is the margin story or the a.i. story or something as a global initiative >> that's a good point also tag slking about speed as well >> yeah. >> but even increasing that. >> and how that helps in the long-term. i think it's the right message it's totally core to how the business has been founded and the original shareholder letter from jeff bezos and all the rest that they worship over there, but i just didn't feel like

there was this sort of high metabolism, here's what we're up to now and it's different and new and fresh, and here's why you should be excited about it that's just my broader take on it but very realistic and pragmatic and a lot of credibility behind everything he said >> that's definitely jassy's style. meantime, we're watching china today. the treasury secretary's visit there. first as treasury secretary. here's what she said overnight about her message to the country's senior officials >> during the meetings with my counterparts, i'm communicating the concerns that i have heard from the u.s. business community, including china's use of nonmarket tools like expanded subsidies for its state of enterprises and domestic firms as well as barriers to market access for foreign firms i've been particularly troubled by punitive actions that have been taken against u.s. firms in

recent months. >> eunice yoon joins us from beijing to talk about her visit and how it's being received. >> hey, carl where secretary yellen made those remarks as she met with american business executives here for an american chamber of commerce event, companies that were represented were boeing, bank of america, medtronics, s&p, among others. now, the president told me later that his folks were very pleased with this hour-long conversation that he had with the treasury secretary and that it really dressed -- her trip really addresses a key, what he describes, pain point for doing business in china and that is the u.s.-china tensions. secretary yellen had also met with the country's premier this was the highest level official that she will likely meet during her four-day stay. he is xi jinping's point person to woo foreign investment and also has been tasked to try to

dissuade countries, especially from the west, to continue to derisk or reduce their ties with china. now, secretary yellen had also made quite a bit of an impression here, and that's really one of the most interesting parts was the commentary that we were hearing in the state media as well as in social media state media has been focusing on how her plane -- when her plane landed her, a rainbow appeared, and they're saying that this really shows harmony can come about after conflict, suggesting that the government really wants to put a positive spin on this visit, and the social media commentary has largely been focused on the fact that she dined at a local eatery that was very ordinary and was sitting in an open setting with average chinese, and people, carl, were saying, wow, somebody at this high level with this high standing in the u.s. government just sitting there with anybody

could just come right up to them in an ordinary place, really different from what they see here >> fascinating i guess we're glad it wasn't a thunderstorm during that first day, eunice. thank you, eunice, joining with us day one i think it's a four-day visit. we'll see to what degree this moves the needle awfully difficult thread to form between being tough on export controls but not destabilizing the relationship even further. >> yeah, and seems like it's mostly been about atmospherics and signaling and saying, we want to maintain a dialogue, so all those things eunice was mentioning maybe is a positive in that case if we're deciding to say that this was a friendly and kind of congenial get-together, even though, you know, we have our issues most of them very aired at this point. we want to make sure we don't kind of, you know, really further have a sudden break in disengagement. >> right, and that was the whole

point of her and then, you know, secretary of state blinken before her just kind of re-establishing, making sure that line of communication is open, doing these in-person visits, but again, behind the scenes, i think china's very skeptical of this. you know, there are all sorts of steps in place to make sure that we're protecting national security, especially as it pertains to things like a.i., things like chips, and so to your point, carl, it's a very delicate balance that you have to, you know, walk as you pursue these talks and make sure that that line of communication is open in a way that kind of benefits both nations. >> yeah, although, i mean, the administration has worked hard you mentioned blinken, now yellen there's talk that maybe raimondo does a visit next. there's talk about a summit between the president and xi, maybe in san francisco later in the year so, that -- at least that ping-pong effect of discussion is probably, i don't know, would you argue it's market positive >> i think on a net basis would

be market positive it's a removal of a potential negative is the way i would think about it too it's remarkable. what are we, five-plus years into when the original tariffs were in place? we're not even talking about rolling most of those back it's been a long process of re-establishing a different, somewhat more tense terms of this relationship. >> yeah, i was going to ask you your thoughts on just the overall timing obviously, with china more in slowdown mode, does that make kind of the leverage picture, who has the leverage between the two countries, does that shift but at the same time, we're over here tightening as well, so it's, you know, a little bit dicey. >> i think it really just reinforces the mutual dependence to a degree. we kind of would love them to grow as well at this point it's not a zero sum, hopefully >> a lot of companies would agree with that. when we come back, a lot more on the jobs number this morning. we'll talk with david kelly of jpmorgan asset management. take a look at the premarket

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welcome back to "squawk on the street," futures pricing in an 89% chance of a 25-basis-point hike this month after the june jobs report showed nonfarm payroll's growth below forecasts. joining us now, here at post nine, is jpmorgan asset management chief global strategist, david kelly. david, thank you for being here.

so, you had payrolls coming in, you know, about 257,000 higher in june, unemployment rate going to 3.6%. >> yeah. >> you know, what's your take on what happened last month and why the softer read isn't really doing much to stem the market's expectation for a hike this month? >> well, i think the first thing is that a lot of people overreacted to adp yesterday, because adp is so flakey a number private payrolls within this report grew by 149,000 adp said 497,000, so they missed it by a factor of three. so, i think people overreacted to that. what we're seeing is a welcome moderation everything we're seeing says the labor market is slowing down but just slowing down slowly, and i think what we're really learning is what does ten million job openings really mean for the pace, for the relationship between growth and jobs and it's just keeping job growth strong even though there are parts of the economy that are clearly

slowing. >> is it slowing enough? it's slowing slowly, but what does that mean for the fed's calculus >> well, i wish the federal reserve would not worry about this so much next week, we're going to get a cpi report, which i believe is going to show year over year cpi at 3.2%, a third of what it was a year earlier so, there's no question that the economy's slowing down and inflation's slowing down so all we're arguing about is the pace of its slowing down and i don't think it's worth causing a recession for a second derivative that's why i think the federal reserve is just overreacting to this the way they're tightening just raises the risk all the way down the road >> doesn't that support, though, the stance in general of powell of, let's go slower and just take in more data between our decisions to hike? >> yeah, but it doesn't support the idea of overshooting rates and then cutting them in '24 and '25. you should go slowly, get back up to where you think the number should be in the long run, but they think the federal funds rate should be 2.5%.

i don't agree this w that. i think that might be too low but they should ease up to that and stop this is being way too clever to try so overshoot and bring it down, because we don't know what the economy in the long run is going to do with 5.5% federal funds rate and it could cause a lot of problems we haven't even thought about right now. >> the hawks like waller look at the bank situation in march and argue it was about a handful of mismanaged operations. are they pollyanna >> we know, look, there's a problem on the asset side and the liability sited of the balance sheet. now, the liability side is going to get worse every month that we've got short-term 8 over 5%, there's going to be money seeping out of the banking system, but the probe with commercial real estate, it's going to take time it's like when somebody's twist a ing a screwdriver and eventually you twist and you hear the wood break. by the end of next year, we're going to be below 2% inflation and if we can get there without a recession, why not do it

>> speaking of that asset side of the balance sheet, i'm just curious you're thoughts on global yields right now, 15-year high, the two-year, i think, is a 16-year high investors have been buying bonds on a bet that growth would slow but obviously that hasn't materialized yet, so what do today's numbers mean in terms of a further capitulation on that front? >> i think this is a good time to buy bonds this is your one opportunity here bonds are kind of like the cicada bug they show up every 17 years. this is the year you can actually get a decent deal on a bond portfolio so, this is the first time you won't hear me often say, i'd be overweight bonds but i would be level weight bonds right now because i strongly believe this is not an inflationary economy and we're just on this inflation roller coaster the thing about a roller coaster is, you get off where you got on we got on at 2%, we're going to get off at 2% again, and i think that's -- we can talk about the fed all we like, but in the end, the inflation right is coming

down >> mike was talking about this earlier. at what point do you think the yields kind of get to that level where equity investors start to get more skittish? we have been seeing them sell off in tandem, but at what point is there more of a rotation between the two? >> i think we're very far away from that. i think the people are pouring money into the equity market are not looking for 4% gains you know what i mean even if you have 4% of the ten-year i think they're adifferent crew i think if people get scared about the real economy, that could hurt the equity market or people get scared, that's a real problem with banks, that could be a problem, but otherwise, i think people are going to reckon that eventually rates are going to be lower, because inflation is going to come down, so why not take advantage of stocks that are going to do well in a low-rate environment >> david kelly with a message to the market do not kill the bond cicadas, not this year. david, appreciate it >> any time. when we come back, meta out of the gate with sign-ups for threads. twitter responding by threatening some legal action. we'll get you all the details. take a look at the premarket

here as we wrap up the week. still plenty of stocks to get to we'll talk about what's coming down the pike in the week ahead. more "squawk on the street" when we return. ♪ the biggest ideas inspire new ones. 30 years ago, state street created an etf that inspired the world to invest differently. it still does. what can you do with spy? ♪ ♪

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number on your screen, or visit coventrydirect.com. take a look at some s&p laggards here this morning, little bit of media in there on this note about disney out of wells. we'll talk about that in a few moments. overall, we still are on pace for a losing week, even though we did get some relief briefly in yields on the back of that bs number. opening bell coming up in less than five minutes.

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>> announcer: the opening bell is brought to you by nuveen, a leader in income, alternatives, and responsible investing. twitter threatening legal action against meta over its threads app, accusing the instagram parent of systematic and unlawful misappropriation of trade secrets. meta insists "no one on the threads engineering team is a

former twitter employee. company also claims 30 million sign-ups in 16 hours "the times" today calls it basically the fastest-growing app in history at this stage of the game and on pace to a couple hundred million in a couple months >> yeah, i mean, i guess the quickest sign-ups would be from chatgpt over, i think, a one-month period of time, so that was a hundred million sign-ups this is 30 million if they keep this pace, they will definitely surpass that >> was that app downloads or users? i don't remember but it is interesting. it does get to the point that we, you know, people have remarked on that all these social apps seem to just look the same, feel the same, they kind of operate along the same metrics. jack dorsey tweeted yesterday joking there's seven similar apps that all look like twitter. >> we wanted flying cars, we got seven twitters >> exactly by the way, every streaming service looks like what netflix cameup with. it feels like, here's what's

we're familiar with. by interesting seems like twitter considers it a modest threat. >> to your point, we do subscribe to multiple streaming services who's to say this is a zero sum game and people are going to choose between twitter and threads, if it's one or the other. >> let's get the opening bell here, cnbc realtime exchange, at the big board, it's kodiak gas services, celebrating a recent ipo. at the nasdaq, it is nuzee coffee packing company as brett fills in and we're just north of 4,400, actually, right on the nose on this friday. as for meta itself, "the times" does talk about strategic decisions they made opening up to celebrities early, managing to get oprah and tom brady and mariah carey on board, which is huge for overall usage and rosenblatt goes to $333. >> fully deploying the advantage of the instagram machinery in every way. makes a lot of sense to hit the ground running on that

we're focused so much on draining engagement away from twitter, i mean, in theory, if it saps a little bit from instagram where the ad engine is fully operational, that's not an outright positive, but they have a lot of house money to play with in terms of their own revenue. i do think it's interesting, though, to look at the stock there's a five-year. this ramp we've gotten, 144% year to date, takes it toward that $300 level, which capped it in 2020, and it's really where it went vertical to the downside at the beginning part of last year so, maybe a little bit of a tougher road ahead to get up to that $330 level. it was a $380 stock at the peak, went down to $90, gained 200 bucks off the low. it's taken credit for a lot of improvement on margins and obviously, you know, being able to harvest on the ad side. it's basically at its average valuation, though, of the last five years so, it's not super expensive it's just sort of kind of covered a long distance in a short period of time >> it's hard to see, at least in

the short run, how this c catalyzes an improvement to margins because they've said they're not going to do advertising on the platform right away they're going to wait for a critical mass to make it more attractive to advertisers. how do you model that moving forward? at what point in time do you start to see money generated >> you've shown that great chart, which t"the journal" had yesterday comparing ad revenue at meta versus ad revenue at twitter. it's not really a contest, and "the journal's" point was that gives them a big head start in packaging ad buys into threads >> the consensus revenue gain for meta this year and next is two to three times the peak annual revenue twitter ever had. they were already expected to grow at that pace, just to scale is not really a contest. it really is all about just sort

of level of engagement that kind of realtime, you know, kind of model of in the moment engagement so, we'll see. >> and those economies of scale, of course, are even more important if you get in a situation where the ad market material materially shrinks and people will start to gravitate more toward places they're familiar as opposed to, you know, somewhere that maybe looks like it's losing share of users and so forth >> right overall, pretty mixed picture in terms of sectors that are up or down watching interesting walmart lagging here, mike i wonder if jassy's comments about a cautious consumer, not to mention costco's comps, which were down a touch from the prior month, stock was down on the premarket, but u.s. at two, whereas canada was five. people are going to watch that >> a little bit of softness, maybe a little bit of concern in general about the grocery side of the business, and that's obviously much more of a

walmart-specific story walmart also, you can't forget, is a big staple stock, so it is kind of defensive. we might actually have a little bit -- a different complexion of the market today where you're kind of adding back some of that risk that we lost. small caps are leading to the upside big losers over the last two days, so we're having a little bit of a pendulum swing away from that real fear of racing higher yields, choking off growth, and undercutting the cyclical story, although as you mentioned, carl, the media stocks, two of the worst, paramount and warner discovery are cotwo of the downside leade in the early go. >> levi's down, shares dropping after the retailer slashed guidance on wholesale revenue. i believe we have a spot from chip burg, who spoke on "mad money.

>> we knew coming into this year, jim, that it was going to be a tale of two halves. we know the first half was going to be really, really challenging. we were up against really, really strong comps a year ago of plus 23%, and on a first half basis, we're flat versus that 23% base period. so, i would say that's reasonable in light of everything that is going on from a macroeconomic standpoint >> and you've got wells fargo cutting a price target here to $15 from $18 so, clearly, some significant challenges, at least under the surface, maybe, for consumers. i mean -- >> yeah. it's a tough category. it has been a tough category in general. so, yeah, not a great story in terms of overall consumer, but you know, levi's has not had a good run since its ipo four years ago, yet it's vastly outperformed the core. that shows you that part of

retail, apparel, has been very difficult, i think, to -- and the stocks are cheap to reflect, i think, kind of a very low-growth expectation out of it >> chip talked a lot about the consumers who make more than $100,000, let's say, are still pretty resilient in spending, but the wholesale model at the low end has been challenging getting traffic, pick-up intent at the likes of kohl's, for example. it reminds me of the other call that's making news this morning, citi on cedar fair, just talking about a potentially weak summer season at theme parks, which would, again, sort of lend itself to a narrative that was pinned on a weaker consumer, even its call on disney, at wells today, they cut numbers, still overweight, sill $147, but they're saying a lot of these debates about theme park attendance or certainly costs and streaming are not going to get settled until the september investor event >> you started to hear that out of the street, that maybe people are a bit too complacent about

the strength in theme parks because they're worried about everything besides theme parks within disney in terms of long-term structural issues. y i'm not sure how much you have to adjust expectations for disney, but cedar fair is a different story. the disney picture is kind of middling in terms of valuation the balance sheets, of course, not as strong as it was pre-fox deal you know, the big questions about pace of cable loss and then the reliability of the franchise box office story, which was, again, something that you could be comfortable with for years, and it seems like it's getting choppier at this point. so, it just, i think, a general sense of, no easy way out of those longer term challenges that the stock has probably built in a lot of that at this point. we can go back to the mid-20010 and see the stock at this level. it's not as if people are overexcited. it's just a, where to next certainly quality of the

franchise is relative to the direct competition, but how far does that get you? >> we should get a relatively new picture in terms of the state of the consumer a week from today is when the big banks start reporting. so, we'll get a sense of what they're doing with their savings, what they're doing with their deposits and how they're kind of moving them within the firms, outside the firms analysts are expecting it to be kind of similar to q1 in terms of deposit betas and noninterest-bearing deposit outflows, from a morgan stanley note out this morning, but quantitative tightening is expect to still have a very big impact on that liability side of the balance sheet. >> jim's been -- jim ruoughed u goldman yesterday on the nine, but on the other hand, there is a sort of notion that we always complain when we go into bank earnings season too hot in terms of markets and stocks. >> yeah. >> it would be nice not to do so, as much as we have in prior quarters >> they are bouncing 1% today, which i think just from a marketwide perspective, is a bit of relief, because the pressure

on the banks yesterday was one of those things that had traders saying, okay, we now have to worry about this again we have to worry about the regionals going toward the lows again. it seems like we got some relief on that front, the index up 1%, but that doesn't get you out of the bigger picture fundamental questions about profitability levels and where we go from here >> you've got these massive capital requirements on top of what they already have coming down the pike, whether it's with the fdic, whether it's be basil 3, which is expected -- we're expecting some rules potentially as soon as a few weeks from now check c , which could also create a dent to capital levels and then of course what's going to happen with regard to the regional banks and the fed's final decision there will they have to be subject to more regulation, more stress testing, more capital as a buffer to prevent some of the sav events that we saw in march? all of that is still kind of working its way through the system, so there's just this overhang over banks right now that, you know, there's just no clarity, and i don't know if

earnings is going to be the catalyst that provides that clarity. >> regionals doing pretty well today. all 2% or better interesting news in autos today. wedbush on rivian, dan ives argues the story is finally coming around. morgan stanley's adam jonas upping targets on gm and ford, gm to 41 and ford to 16 on the yields of some of these sales numbers. the first half was pretty torrid >> absolutely, and it was about the pie getting bigger or at least bigger than expected so, it wasn't just about little market share back and forth between them it seems like, in aggregate, demand was strong. gm's numbers and their estimate for the annual sales pace has been a relief there. look at something like auto nation, you know, up 60% year to date, pretty much at a high, and if you look at, you know, again, it brings up the fed's slight conundrum, which is, the most rate sensitive parts of the

economy, autos and home builders, have been impervious, because the scarcity and the demand story has been overrunning what's the rate effect has been so far so, good news, i think, in general. i mean, we should remember autos are the biggest manufacturing product and consumer product in the overall economy. so, very interesting that it's not just about longer term declines we could play with the ev numbers and all the rest, whether they're making enough progress on the legacy automakers in that area, but right now, it seems like a little bit of a relief month if nothing else for the car company. >> how much of it do you think is just kind of a catch-up for so long, the supply was constrained for auts prices were so high. it was really difficult for consumers to get access to it so now they're in this situation where they're willing to pay higher financing in order to obtain a vehicle maybe they set aside some money they were going to buy two years ago, and now they've been able to take that chance. >> i think it's a humg ge part f

it supply's come back and it's been soaked up. we talked about the 4.4% annual wage growth. i mean, you know, traditionally, americans buy as much car as they can finance with the monthly payment they can afford. that's going to get the cars off the lot at some level, even if they're not going for the higher price. >> it's the supply on new that's taken the pressure off used, which is what we want to watch regarding cpi next week. >> completely. that's supposed to be a better story for cpi. what i do find interesting is, now, shelter rent is different story but it's these things like used cars which have a huge impact on cpi but that individuals don't buy that often. if you buy one every couple of years, it's a lot. so, i think that's also another reason why people are a little more comfortable on the inflation story. it feels as if it's not everything going up all the time, and you have to play catch-up >> whereas a high frequency purchases like food ais where w have seen relief >> and gas gasoline is the one thing people know the price of almost every

day and that's been certainly on a down swing >> oil certainly moderating. there was that piece about u.s. production, you know, on pace to be record levels despite efforts by saudis and some other exporters to try and crimp their supply in light of what's clearly, you know, raises in demand there >> i think we had ed morris of citi here yesterday talking about how the u.s. may set some records in single country, single-month production ever in the month of june. by the way, oil is on track for the second straight weekly loss. shell, warning about significantly tougher q2 earnings in gas. commerce bank did trim their targets for the year-end brent west texas, they go from $80 to $85. citi's point is that analysts generally overestimate the impact on supply >> right >> ukraine and out of pec.

>> it helps explain why we're still bsh w-- why a softish landing is still in play a lot of things have to go wrong at once, and one thing that's not really going against the economy right now is the energy bill relative to last year >> we did see how quickly that can change >> of course, absolutely >> and if there's any kind of shift in the geopolitical situation, you know, that can change really quickly. >> and china >> and china and the overall efficiencies, though, of the producers here in the united states does give some comfort in a way that maybe historically wasn't the case where, you know, these moves by saudis and the russians could have had a much more demonstrable effect on prices now the u.s. in its efficiency and producing and so forth is kind of able to run its own game >> yeah. it's good to be the marginal player on the fda, "squawk" did a great job covering the approval of the drug for biogen. stocks not responding well today.

>> it was kind of handicapped for, you know, a while beforehand, so i think a lot of it got into, you know, got into the stock. there is some talk about the way it's going to be labeled with some warnings and maybe uncertainties about exactly how much it's going to be prescribed because of that and pricing and all the rest of it so, i think a lot of the news was already in the stock and now it's about really figuring out exactly how it's going to penetrate the market once it's -- once it is out there >> isn't accessibility also a component here too if you're someone who lives in maybe a rural area or, you know, one not near somewhere that distributes this drug, it's -- what is it, twice a month that you have to get an injection there are side effects risks, logistics risks, accessibility risks, there's a waiting list, so it could be a little clunky for a while before it really becomes much more mainstream, especially as a treatment for the very, very large total addressable market that is alzheimer's. >> absolutely. >> and expensive too $26,000, something like that,

for the cost we'll watch to see what kind of policy moves they make in terms of coverage. what's going to feed the argument once again that we are in some kind of golden age regarding alzheimer's, cancer vaccines, mrna technology, i mean, good time to be around >> without a doubt i'm glad a lot of that's coming in sight yes although it's interesting, and this is a market prism, but medical tools and devices have been very weak as a category, and this is a growthy area it kind of travels along with some of the kind of tech-related areas of the market, and that's been falling away, and i have been just wondering if there's a sense out there that there's going to be either noninvasive-type solutions or something pressures on pricing longer term. it's going to cool it on the medical, on the lab equipment and testing and things like that, whether a.i. is all of a sudden going to obviate a lot of that that's just a thought in terms

of looking at that med tech struggle at this point they are expensive stocks. >> finally, on apple, this report that as they roll out the vision pro, obviously, a very high-priced product that's going to be a very slow, deliberate rollout. there's reports of appointment-only viewing stocks down a touch here this morning, but would be curious to see how they market something at this price point >> i think the price point has a lot to do with it. it sounds smart in theory, make it like the soho house of electronics. >> i was thinking the taylor swift tickets. >> honestly, that's probably more expensive to get a taylor swift ticket than a membership at soho. i don't know i didn't get either. but you know, make it exclusive. try and bring in the people who are real aficionados for these kind of newer, high-tech, more expensive products as opposed to making it something that just anyone can go out and buy. >> yeah, definitely building some scarcity or fomo rolling out in new york and l.a., for example, before they go to the rest of the country.

>> and the luxury of not having to -- not needing the money and not needing to make the product a huge thing all at once and, you know, just let people want it for a while >> yeah. >> yeah. classic apple second-strike advantage. as we go to break, let's watch bonds. we've gotten our data for the day and pretty much for the weweek as well. we'll watch how the bond market responds we did see some relief on the two-year, which did crack below 5% and is still there. dow down 60 points to finish up this week. we'll be right back. good night! hey corporate types. would you stop calling each other rock stars? you're a rock star. you are a rock star. no more calling co-workers rock stars. look, it's great that you use workday to transform your business. but it still doesn't make you a rock star. so unless you work with an actual rock star. hi, i'm ozwald.

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we mentioned earlier some pessimistic notes about theme parks but hotel travel holding in there this morning. airbnb was up 17 in june they did successfully win the delay of the new law in new york city requiring hosts to register and just a broad sense of ongoing travel demand remaining resilient globally as we get into the summer. s&p has gone green 4414 and the dow shaving its losses to less than 20 points.

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it's been a big week for auto sales and interesting developments in the ev mark. phil lebeau has details on that. good morning, phil. >> carl, take a look at shares of rivian another big day for

rivian up more than 9% and we're showing you this stock over the last three months. go back to april 25th, it's essentially doubled in terms of its price. the company reiterating guidance for building 50,000 vehicles, and keep in mind the r 1 t for the first half of this year, best selling pick-up in the country. it's the rivian r 1 t. the fourth best selling ev overall according to motor intelligence not surprising you have the model y and model 3 that are at the top of the list by a wide margin and then see the bolt ev which is being discontinued by general motors and rivian r 1 t. tesla still has over 60% market share according to motor intelligence for the first a half of this year. hyundai ahead of general motors but way, way behind tesla and as you take a look at gm and ford, one thing you continue to hear about from analysts and you hear about it from investors is,

where is the ramp up in production when is it going to happen and it's expected to happen some time in the next couple years. we know they put the plans in place, the capital has been allocated and will be spent in terms of building these plants they have six ev plants, slew of battery plants planned, but it's taking longer than people expected and reflecting a little bit in shares of gm and ford they have had a nice move higher over the last month, six weeks n terms of relative to where they've been, guys >> it was surprising when you said about rivian's truck the best selling ev truck overtaking, you know, the other models you know, what is the key driver of that? it's a higher price point, i believe, right >> it is a higher price point. look, they're executing right now. i went to the rivian plant, talked with rj, the founder and ceo, back after the last earnings result. totally different situation in central illinois, compared to a year or two years ago.

they've got a rhythm now, and they have hit their stride in terms of production. it's not just the pickup truck they have the suv and electric deliver van they build for amazon >> pretty fascinating, phil. we'll talk maybe more about gm and ford later today and this note about higher price targets. phil lebeau. when we come back more reaction to the jobs number and talk to the former fed vice chair and goldman's chief economist jan hatzius. don't go away.

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good friday morning. welcome to another hour of "squawk on the street. i'm carl quintanilla with leslie picker and mike santoli live at post nine of the new york stock exchange sara eisen is on assignment and david has the morning off. a rare miss, in fact, the first one in 15 months and stocks reacting to that all morning long, although down for the week, need about 35 points for the s&p to close higher. >> muted reaction but we're 30 minutes in, three big movers we are watching levi strauss sliding after slashing profit outlook for the

year following the latest quarterly results, reporting a steep drop off in wholesale revenue and soft sales in the u.s. shares down now about 6% wedbush raising its price target on rivian to $30 from $25, saying it continues to, quote, strongly believe in the riskp long-term story making this a table pounder at current levels the stock up more than 40% in july already, currently up about 10%, but still well below the $78 ipo price from a year ago. alibaba moving after china's group hit ant group with a $985 million fine for violating various regulations. that was a bit of uncertainty, cloud over that stock for some time, but shares up more than 6.5% right now meantime non-farm payroll up in june, slowest month of job creation since december of 2020.

let's bring in steve liesman to talk about that number and adp and a lot more. >> good morning, carl. i guess my take on this number is a little less steady. if you think about the trajectory of jobs it has been coming down, still slower, still remains strong at a highlevel at plus 200,000. we're bringing 100,000 in the work others in terms of population growth. 200,000 says we're running still relatively hot there's the number, it's a little harder to see, but go not next chart and the three-month average chart, you can see that three-month average coming down. it was north of 300,000 at the beginning of the year, and it's down now to say call it 244,000. there's what the fed is looking for, but as they've said in a lot of commentary, carl, it's not coming down as quickly as they would have hoped here so there's less pressure from the job market, but maybe not quite as much pressure as the

fed wants. >> steve, how much is the fed paying attention to just those non-farm payroll levels versus the wage growth? i mean, does it matter if wages are still rising in terms of the stickiness of inflation? >> it matters on the surface or in the go round that wages are still rising, but what the fed will want to see is productivity and whether or not that offsets the rise in wages. my idea is this, we put a lot of people to work in the past year. we've had a bunch of new immigrants into the country. we put them to work. i think that may have an effect in terms of productivity in the first year, somebody to work, not productive give them a year on the job and they will figure out a way to do their job better and more productively i think right now the wage gains are troublesome but perhaps over time, after we put all these people back to work, shifting people around -- there's been a massive churn, the great resignation, all kinds of

things, i think of it as the great reshuffle. people in new jobs, in new companies. over time we could see in addition to maybe this debate about work from home helping as well. >> steve, i think i saw that the prime age labor force participation rate in this latest report is the highest it's been since mid-2001 you've seen that supply response people in the workforce. i don't know how that feeds into that productivity idea, but it does suggest at some point you can almost have this mission accomplished moment where we did soak up the labor supply and it's a question of how much we can grow from here without it being, you know, further inflationary i guess. >> after mission accomplished, what they asked, what are you going to do for me next? there's a big question here as to whether or not, where the next chunk of labor of workers are going to come from we may be running out. we had i think a good influx of immigrants as the biden administration moved to normalize immigration close to

pandemic, at least the legal immigration side, but the legal immigration side normalized by the biden administration, and you have a huge outflow from the work force among retirees. that's where some wage pressure might come from, which is what would it take you guys, i'm asking you carl, mike, if you were about to retire f they said here's another chunk of money for you to stay in the workforce there could be wage inflation from that attempt to keep retirees or draw them back because one of the things we've seen people have retired, we haven't seen the flow back into the work force among retiree normally out there. >> yeah. i do know that, you know, the job changing dynamic you mentioned has been a driver of overall wage growth as well. that is when people tend to be able to maximize their earnings if they're willing to move around a little bit. >> one of the things we've seen now, adm pshgs is a good question, trying to understand the difference between adp and the government one place you might want to look is the difference in the leisure

and hospitality numbers. adp had a huge number for hiring for leisure and hospitality. the government had only 21,000 the adp number north of 200,000. differential there in the education and health services number one thing that adp has, the wage numbers, they're higher than the government wage increase numbers bus coming down for people staying in the job and people changing their job. >> interesting we have seen some of that moderation thanks very much joining us now is former fed vice chairman alan blinder, now a professor at princeton university alan, great to talk to you today on all this. you heard the conversation, i mean we are 2 1/2 years since we've had a sub-200,000 monthly job gain a pretty good record we're decelerating is this the glide path that we all and the fed should want to see, or should we worry about it getting too slow at some point >>, you know, i think this is a very status quo, kind of boring report that you can take what

you will out of it the hawks will take that jobs are still over 200,000 and wages are not -- wage increases are not decelerating they're kind of flatlining and, therefore, the fed needs to push interest rates higher. the doves can say, you know, job growth is slowing, as steve was just saying, and wage settlements, the average hourly earnings are not that much higher than they need to be in let me call it equilibrium with 2% inflation they're little higher and need to come down somewhat, but not grotesquely higher don't forget about the lags. >> yeah. >> you know, the fed fortunately, not forgetting about them and mentioning them everyone should keep that in mind we're not yet at the point where we should be seeing really major

affects of monetary policy on inflation, given the usual lags. >> i was going to ask you about that, how you are reading this idea of the elongated, perhaps, nature of this cycle, because we've had excess savings, the fact that we have 3.6% unemployment, you know, 16 months after the fed started tightening by 500 basis points, this idea that we haven't yet seen things like auto and home sales really get hit all that hard, although homes had an immediate response to higher mortgage rates do you think this is a normal cadence of those lags? >> i'm afraid it's not nothing has been normal in the pandemic and in response of the economy. the snapback from the pandemic you put your finger on the two, the fed i'm sure is watching like a bunch of hawks, pardon the pun, auto sales and home sales. that's where monetary policy when it tightens normally does

its work and the reason is hardly mysterious, those two things are sensitive. restaurant visits and hotel visits and buying shirts and shoes are not very interest sensitive if at all, they're not, but buying cars and houses is, and i think that's the big surprise in this cycle >> so with those countervailing forces, alan, you know, what is the fed do do they continue hiking from here if it's not really having much of an effect? >> i think they will i mean f , if i ran the world, would hold the pause on another meeting. you don't learn that much from june to july, and you didn't learn anything from this report really but i'm not running the show, and sentiment on the fed looks strongly aligned to be behind

not shooting interest rates up more, but inching interest rates up more, and i suspect that's what they will do. >> seems there's been resistance chair powell has not really wanted to kind of commit to any other sort of rhythm of hikes or waiting or pauses that the market gets comfortable with in other words, he doesn't want to do it every other meeting, doesn't want to show any kind of hand right there it seems very much at this point, you know, you want a little time to figure things out without necessarily leaning too hard in one direction, so i guess does that make sense we're four months out of the regional bank mini crisis, and i'm not sure if we're seeing any effects of that? that was one excuse to have pause. >> we are seeing loan volumes go down, the rate of growth go down quite a bit. we are seeing impact from that we're not really seeing impact from that yet on the macro

economy and just going back to what you said a moment ago, i don't think powell is trying wrong foot the markets or be mysterious he doesn't know himself. imagine if this report came in at 50,000 jobs and average hourly earnings dipped significantly, some meaningful number, that didn't happen, of course, but i think that would have stayed the fed's hand they would be watching to see if that was the beginning of what they think their monetary policy is ultimately going to do. now that didn't happen, but who knows what happens next month. he certainly doesn't want to commit to every meeting, every second meeting, skip two meetings and go one or anything like that. they truly are data dependent now. >> i was thinking back to your op-ed in the journal of january, titled "what if inflation suddenly dropped and no one notice?"

impression given consensus at the time, but i wonder now how you would approach such a project? >> it has flat looipds at that point it had dropped tremendously about the previous six months some of that went away in data revisions for pce, not for cpi, but inflation has really been pretty flat. if you squint at the data very carefully, you can see a downward trend, but it's not much at this rate, of course, if the current rate of decline of inflation would continue, it will take a long time to get to 2% so the fed is not content with the behavior of inflation. >> for sure. and we're going to get more on that next week always good to talk to you thanks so much. >> thank you bye now. as we head to a break, our road map for the rest of the hour

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welcome back keeping an eye on biogen, an alzheimer's antibody treatment leqembi receiving fda approval the first alzheimer's treatment to do so marking a milestone for broader medicare coverage. shares down about 0.7% right now. joining us is piper sandler's christopher wray mond who has an overweight rating and $360 price target on biogen thank you for being here curious, kind of are you surprised by the market reaction today? >> for today's action, not really this approval, this full approval or traditional approval, as the fda is calling it now, and cms decision, was pretty wildly expected this is more of a near term sell the news phenomena. >> what do you think demand will look like now that it received the fda approval how is that factoring into your price target there >> yeah. so i mean there's controversy on this i think folks that look at the

warning label, for example, the new label has a black box which i think is a surprise to folks, and it's somewhat onerous, you know, administration protocol, if you will, folks that look that would argue that doesn't, you know, argue a strong commercial uptake, but we've done an extensive amount of survey work, pretty interesting, the majority of alzheimer's specialists, about 80%, view this as a major advance in the treatment of alzheimer's we asked docs upon traditional or full approval, what's your uptake going to look like, and it's pretty robust about 85% said they would prescribe this drug within a year, assuming cms reimburses and there's a full approval. we're thinking folks will be surprised on the upside. >> so do you think that -- you know, the serious risk for our viewers, brain swelling and bleeding, so you believe that,

you know, patients themselves will see these risks being outweighed by the ultimate benefit of the treatment, which does slow the degradation resulting from alzheimer's >> 100%. yo i mean the risk of not treating is severe. it's a debilitating disease, it's catastrophic. anybody that has a family member that has gone through this knows that i think the calculus that any patient and any physician will make, yes, this is not just taking a pill and forgetting about it there's stuff involved at the end of the day, you're avoiding what's a near certain death sentence or a certain death sentence really. >> where does this leave us bigger picture with regard to alzheimer's treatments, whether it's this lane of approach at treatments or others is this sort of an opening to a whole class of similar treatments and where does it leave the other approaches >> yeah. well, no, this is -- there are

others in development, for example, lily has a drug which had, you know, trailblazer study that was published recently or at least top line, so there are other approaches that are coming i would say this is, you know, the first foray into a real truly disease modifying treatment. our view is even with the lily drug being on the market it looks like leqembi is best in class for now, at least for the modeling, the future that we can model. >> what about accessibility? you know, in order to get treatment, as you mentioned, it's no just kind of take a pill and forget about it. do you think that the supply and the supply of caregivers who are able to give this treatment, will match the demand that's out there, at least in the short run? >> yeah. so there's a couple things that are involved here or barriers. one is the monitoring requirements mri at regular intervals before

treatment and then regular intervals after treatment is a thing, and that has definitely been highlighted as a barrier among physicians the other thing is the access to infusion capacity, and interestingly enough, we did some work on this and asked in about 70 or 75% physicians say they have enough access to infusion chairs. you know, this is something administered iv every other week that's also somewhat involved. but 70 or 75% of docs say they have access to that infusion capacity now to handle the demand upon full approval. >> wow well you've done a lot of work on it, and it's a step in the right direction for this debilitating disease we appreciate all your work and we appreciate you coming on today. thank you very much. still to come this morning, top executives at binance leaving the company amid rising

regulatory and legal concern we have the late oast than and what's -- latest on that and what's happened to their market share in the u.s laggards on the week, nike down about 4% along with some casinos, some housing, horton included dow down 32. we're back in 2.

binance, the world's largest crypto exchange by market cap. let's get to all of that with kate rooney who has the latest good morning, kate. >> good morning. a group of senior executives are quittingannot binance. binance's general counsel, chief strategy officer and svp for xl compliance and the chief business officer one tweeting he was leaving on good terms, another saying it's personal reasons, note worthy guys, these were mostly high-level employees dealing with regulators as binance fights lawsuits from the sec and cftc i spoke to a source close to the situation at the company who says that those departures were

a direct response to the ceo's handling of some of those recent investigations i mentioned this person described the mood right now at binance as doom and gloom and that direction of the company feels rudderless binance did not immediately respond to a request for comment but ceo changpeng zhao, cz, tweeting more fuds about departures yes, he says there's a turnover at every company but the reasons dreamed up by the news are completely wrong, as he put it in june the sec charged binance with security violations and accused it of mishandling customer funds and illegally operating in the u.s the ftc sued binance for violating commodities laws back to you. >> kate, where does this place binance within the overall kind of ecosystem of exchanges, intermediaries, under pressure, had these huge volumes what's happened to theactual

flow through that channel? >> so binance is still by far the biggest. we saw ftx go away overnight at the end of last year binance still operates and controls about 50% of global trading volume, which sounds like a lot, but down from 60% at the beginning of this year it still dominates globally but in the u.s. facing soe so many headwinds that the trading volumes have dried up. it presents opportunities for coinbase and some of the more established players fidelity and blackrock with etfs, if more established main stream wall street players want to start getting a piece of the pie here t there's plenty of opportunity because of what's happening and some of the pressure from regulators on the pure play crypto companies, not to mention a lot of these companies have lost access to banking they had some of their banking relationships pulled, and i'm told that's still happening behind the scenes at this point. >> that's what's fascinating is

when we first got the notion we might see draining of liquidity, all the bitcoin bears were saying just wait to see what's going to happen to the price, but that didn't count on larry fink calling it -- it's going to revolutionize finance. >> it's ironic, carl, right, this entire industry was really made to sort of stick it to the man. it was at a time when occupy wall street was going and it was supposed to be this sort of asset class and this currency that was supposed to be completely divorced from traditional finance. the thing that's really keeping it propped up here and seemingly saving the price at least is folks like larry fink and some of the more established players coming in to really actually partake in this when it really was meant to be the opposite when it was actually created a bit of irony here, but, yeah, absolutely helping the price in terms of some of those etfs and d fidelity and blackrock getting in. >> the industry is constantly changing thank you very much. still to come, goldman's

chief economist jan hatzius breaks down to you jobs report, thsme allest gain since 2020 we're back in 2. your shipping manager left to “find themself.” leaving you lost. you need to hire. i need indeed. indeed you do. indeed instant match instantly delivers quality candidates matching your job description. visit indeed.com/hire i remember being on aau trips, high school games.

my mom would always say, "you need to fuel the body and you need salt." i would always be the kid not cramping, ready to go. fast forward 20 years and i go from eating salt out of my palm to drinking lmnt.

♪ welcome back to "squawk on the street." i'm contessa brewer with your cnbc news update the united states is getting some heat about a possible plan to send controversial cluster munitions to ukraine today's two senior government officials in germany said berlin opposes the move cluster munitions can kill indiscriminately over a large area and they're widely banned across the world. a new york city double-decker tour bus collided

with a city bus last night sending 18 people to the hospital first responders said they had difficulty even getting people out of the double-decker bus because of damage from the crash and they actually had to take out their ladders and ropes to get some of those passengers down they say none of the injuries are life threatening. and earth's average temperature set a new unofficial record thursday for the third time just this week. the data from the university of maine climate reanalyzer tool which federal agencies say can't be confirmed, but scientists consider all of this a troubling sign of climate change across the globe. carl >> contessa, thanks so much. checking in on the markets about an hour into trading on this friday, bulls still managing to get the s&p to hover just above 4400. the dow down about 60 points the jobs number the big story, hiring did slow more than expected in june joining us at post nine is goldman sachs chief economist jan hatzius to talk about his reaction to the number welcome back. >> it's very good to be here

thank you. slowing slowly is the theme we wrestle with. >> yes i think it's slowing gradually as far as employment growth is concerned slowed more than expected, but that's the trend however with an unemployment rate that is very close to the 3.5% level we've seen well over a year at this point his report to see seems consistent with a soft landing in the labor market. >> does it make you worry about labor supply topping out >> no. i think labor demand is decelerating, so to me this looks like it's consistent with a gradual kind of stabilization in the unemployment rate below 4% with signs of inflation decelerating admittedly in this report average hourly earnings growth

was somewhat stronger, but i think if you look at all the indicators, we're still on track for gradual inflation slow down. >> wages growing fast enough to make a hike in july legitimate >> i think a hike in july is very, very likely, just given the signals that we've seen and the fact that economy is still pretty solid. second quarter gdp is tracking, you know, above 2% this report, while a little weaker than expected, still showing more than 200,000 new jobs decline in the unemployment rate all of that i think points to another move given what they've said september, i think, is less likely because they've effectively told us that they've moved to a once every other meeting, so november then is going to be a discussion again and i think that's a live meeting, but that's going to depend on the data. >> what do you think in the data would make them stop hiking altogether slowing slowly, is that enough

>> yes, i think it will be enough it won't be enough for july. i think it will be enough if you go beyond that and if things gradually decelerate what they want to see is the funds rate at a sufficiently restrictive level where they can then hold it and watch inflation come down much closer to their target but that's a question of timing. for them to change their plan, their likely plan of hiking in the near term at the july meeting, you would have to see something more dramatic and we're not seeing that. >> where do you come down on this idea of the lag effects for the broad economy at this point? it seems as if people who have been really anticipating a recession to be imminent and all these x factors, elongated this process, but we still have leading indicators where they are. the yield curve, it's still firmly inverted. what does it say to you? >> i think the lag between rate

hikes or monetary policy tightening and the maximum impact on economic growth isn't that long. by our system and, frankly, this is consistent with the academic evidence we've looked at, it's only about two quarters, two to three quarters maybe i think the biggest drag from the very rapid 75 basis points per meeting moves of 2022, the biggest drag is behind us. you can see it very clearly in the housing market i mean, housing in the second half of last year subtracted almost 1.5 percentage points from real gdp growth, but now housing is clearly stabilizing and there's a discussion whether we see a rebound that we'll need to see whether that materializes. we're certainly not seeing the sort of declines and the sort of drag on growth that we had late last year. >> you can see the overall markets too, the peak effect by your work was last fall. >> yeah. >> essentially and october is when risk assets bottomed. is that okay, though

the fed has this new financial conditions index is that saying a similar thing are they going to be worried about that getting too easy? >> the fed's financial conditions impulse or index that they just unveiled is still showing a drag, though a smaller drag, gradually declining drag through 2023 that's very consistent with our own financial conditions index and the impulse that we can estimate from that index that's correct also showing a sharp decline in the amount of drag in 2023 is it okay i think it depends on whether we see ongoing disinflation if there is gradual disinflation then it is okay and consistent with stable rates somewhere in the mid 5s which is what we're headed towards. >> so you got to be feeling good about the recession odds you went back to 25. is 25 the lowest you think you

would go >> well, the average probability over the entire cycle is 15%, right. recession once every seven years or so. i think we're still in an environment, though, where the likelihood of shocks, whether that's still from something post-pandemic to anticipate, something geopolitical, et cetera is probably somewhat higher than it has been historically i wouldn't rule out a further downward revision, but at the moment we're comfortable with 25% probability of a recession starting in the next 12 months. >> and then i know it's short term, but this move on the 2-year above 5 in the wake of adp, did that feel ephemeral to you or is that material in your view >> adp once again turned out to be ephemeral it has, obviously, not had a great track record in predicting bls, labor department, payroll

surprises, it so seemed very out of line. we didn't make changes to our forecasts on the back of the adp surprise, and yeah, the bond market move was partially driven by it. >> it's going to be fun next week as well and maybe talk to you then have a great weekend thank you. >> thank you so much speaking of the fed and the jobs number, next hour don't miss our exclusive with chicago's fed president austan goolsb aeet 11:30 a.m. eastern time stay with us

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a new report out from cnbc says meta's threads platform has hit 50 million sign-ups. this comes day after the launch of the twitter competitor. our next guest says while threads could offer billions of dollars in ad revenue the near term opportunity will be, quote, immaterial as meta focuses on audience building over monetization joining us now is justin patterson, key bank senior analyst who has an overweight rating on meta with a $335 price

target thanks for being here. so, eventually they will be able to monetize this is that your take? if so, when is that, and do you incorporate that into your modeling at this point >> eventually yes. if you look at the history of facebook product rollouts, focused on audience building before monetization, it gets hundreds of millions of users, billions of users, before you turn on that ad model. right now it's a product that's a tremendous amount of success day one, 50 million sign-ups in 24 hours is very impressive, but it's still early innings we have to see engagement buildup. frequency, time spent on the site, before meta really turns towards monetizing this. when we look at our model, don't really have anything in there for the next two years if this ramps up faster than we think it could be a factor. >> what's the usual ramp up time if we look at previous meta products as a case study >> it varies

so the big challenge i think actually the better reference point suggests a look at twitter, which, you know, peaked at roughly 37 million daily active users in the u.s. and had north of 200 million internationally. so if you look at that, that was about $5 million business before acquired by elon musk. with meta the goal to expand the audience and make this product much easier to use than twitter so you can turn night a much bigger product over time compare this to say instagram or facebook, which are easier to use, very different products today. >> wondering how you're viewing meta, the stock, and how it's position heard after this massive rebound we've had? pointing out 300 the price at which it really fell hard from back at the beginning of last year it struggled to spend much time above that seems like the margin stories have been well embraced. measures of hedge fund popularity have it as one of the

concentrated holdings. what's left right here as we get the multiple back to around its average of the last few years? >> yeah. that's a great question. right now you have had the combination of positive revisions and multiple expansion. we still think there's a little bit of room on the multiple that this should trade around 20 times, but i think the bigger delta right now is, there's still a top line story here from an ad product cycle. you have reelz ramping, click to message growing on the whatsapp side and this a.i. product advantage plus that's helped address some of the privacy challenges after apple's platform changes i roll all of that together, this is still one of the few internet assets, large gap internet assets, that have double-digit growth, and if you layer that together we think there's close to 1677 in earnings which gets us to our $335 stock price

>> is that true kind of regardless of the broader economic picture we talked earlier last hour just about meta's share of the advertising market relative to twitter. and the economies of scale having all the products with the critical massive user bases you were talking about earlier that is essentially recession proof in a way >> i stop short of saying recession proof in there if you look at how the internet has behaved over the past two years or so, you've really seen a lot more macro sensitivity and even in 2008 and 2009, you did actually google search slow pretty precipitously and all these businesses are much more traded than they were back in the '08- '09 frame where we see advantages for meta and other stocks you have the micro level product cycles you have meta really ramping up

reelz monetization, which is a pretty big headwind last year that flips to a positive later this year. you're not going to have that being a net drag on the business the a.i. product cycle in some cases driving better results than what existed in the preapple platform change world and then you have the emerging whatsapp side of the business which provides a net new revenue stream in there. stack that up, you have a little less cyclicality here than other assets >> interesting justin, thank you so much. clearly early days, but definitely getting a lot of interest in this app appreciate it. >> thank you let's turn to the overall impact on advertising dollars. our next guest's company works with twitter and meta to provide fortune 500 advertiser tools joining us at post nine this morning mark zegorski. >> great being here. >> what is interest like now in threads? >> we've heard a lot of buzz from advertisers they're always looking for

alternatives and new places to spend, particularly to find reach in new ways and reach new folks. >> we're in an environment where capacity is okay >> yeah. >> there's not too much at the moment there's been so much fragmentation in the space so many of these large mega social companies are going into each other's lanes you've got rooenlz and youtube shorts to go after tiktok. tiktok now launching a commerce business to go after amazon. amazon now building a content production facility to go after netflix. so there's so much crossover right now, that there's lots of opportunities abound. >> you make the point that splinterization in social, kind of echos what television has done over the past 15, 20 years. is that a positive >> i think it's really interesting. like all media repeats itself over time, right you think everything is so knew, but if you think about what's happening in social right now,

you have paid and free you've got free wheeling and moderated. like in tv we had cable and we had over the air, right. every advertiser and consumer can find what's right for them, and i think that's really cool how much overlap is there in terms of advertising is it a zero sum game, an advertiser on twitter will not advertise on threads and advertising becomes available or will they try to find consumers where they are >> yeah. i think there's room for all of these players, and the reason why is because consumers will make a choice at some level, right. if you're an advertiser, you're a colgate or unilever, you're selling soap to everybody, toothpaste to everybody, right you want to find everybody some people will be using twitter, some people will be using threads. to get everybody, you need to buy everything. >> la lot has been made of meta' expertise in honing their ad algorithms and revenue per user as a result.

is there anything about the this text-based public facing, news driven environment, that is going to mitigate the profitability? in other words, it's going to mute advertising revenue per user the way twitter was always lower, just by the nature of that content >> i think it's too early to make that call, but the one thing that is interesting about threads is the feeling i'm getting from the first just few days of it, it has a more facebook feel than it does a twitter feel, and i think that's good for advertisers it creates that more personal relationship, as opposed to a news blaster we'll see how it evolves over time but there's an opportunity for advertisers to use those. >> there's a sense among some users, say instagram, that quality of the ad they're getting, even if the ad load is heavy, we'll always think it's too heavy, is pretty good. it's giving you stuff you genuinely find interesting is that a common view you think? >> absolutely. i think, you know, the types of

entire action from the social platform are different on the instagram type platforms, it's a very personal type relationship and that means the ads are going to be much more personal. >> there's this narrative that threads is a less toxic place in terms of social media, especially relative to twitter i'm not sure if that's the tha. what does that mean for the potential for advertising as well >> you're right, it is early days we'll see how it evolves over time twitter has done a really good job reasoning if on brand safety, bringing in linda yaccarino, they're looking at creating an environment that's safety all of these environments are social environments. at some level, it's what people say. how moderated or unmoderated will really determine how advertisers feel about it over time. >> meta has been through crucibles to inform that view over time. >> it has. >> thanks. interesting. it's crazy days right now on

social thanks for the guidance. we're watching costco, down 1.5%, one of the biggest drops on the s&p the wholesale club so you second monthly drop biggest drop since april of 2020 they're blaming the drop in gas prices for the decline gas prices plunged 24% from levels last june you take out gas, same store sales up three, up only two in the u.s. i remember being on aau trips, high school games. my mom would always say, "you need to fuel the body and you need salt." i would always be the kid not cramping, ready to go. fast forward 20 years and i go from eating salt out of my palm to drinking lmnt.

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the smh etf is up. kristina partsinevelos has been tracking the action and joins us with more on what it might mean for chip names in the second half. >> the biggest question we have of a lot of our guests is in the second half, if you have the chips that power ai, will it keep up their blistering pace? you mentioned the smh. let's talk about the sox chip index, that's up 40% driven by nvidia and marvell but wall street is divided on where they can go in the second half. ubs expected 10% to 15% drop in stocks suggesting the positivity is already priced in not everyone agrees.

listen in. >> we think the wind is moving in -- as a tailwind in nvidia's direction and i think it will work from there. the stock -- i think it will be a situation where analysts will be chasing the stock as the year unfolds. >> one thing for certain, the updates for ai will be costly and come at the expense of server storage impacting a name like amd's cpu business. wedbush worries about competition. there are signs for stabilization, with intel raising the midpoint of q2 outlook. my crone expects normal levels by end of year but sometimes you have to hit bottom first competitor samsung expects it's lowest q2 profit in four years, raising questions about the speed of that memory recovery in the second half of this year concerns also remain around auto and analog chipmakers. this comes as we see weaker ev

from china and rile a recent bank of america found texas instruments and advanced micron are among the shortest pcs slowly coming back but memory and auto chips could take a while. guys >> what about the overhang with regard to geopolitics? you have second yellen in china trying to, you know, warm that ice a little bit what's your expectation there for the second half of the year? >> the commentary from companies all are saying there's going to be no immediate impact i want to raise a few alarms nvidia said their data center business comes specifically from china, 20% to 25%. how can you say there's no impact ai will offset some of that but only to a certain extent, concerning when china's trade advisers said this is just the beginning. i'm paraphrasing. >> indeed. we're watching for more signals on that front.

thanks kristina partsinevelos pretty stead action. s&p is down a point. mixed bag of sector performance. energy will take the lead this morning, up 1% don't go away. you know doug, ever since switching to workday you've been a real rock star. rock star? what do you know about rock stars? billy idol? i mean where's the skin-tight leather? my shoes are leather. where's the unnecessary zippers? that thing! billy, rock star is just how doug feels when he uses workday. thanks, rory. i'll show you rock star! be a finance and hr rock star. workday. for a changing world. billy idol just stole your golf cart!

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good friday morning. i'm carl quintanilla with courtney reagan. setting at again da today, chicago fed president austan goolsbee live at 11:30 we'll talk about today's jobs number. group one automotive ceo darrell cunningham is also with us he'll talk about u.s. auto sales as they surge in the first half on strong demand. and torsten slok is here. let's get a check on stocks, mix with the dow jones industrial down 0.1% the s&p 500 marginally positive, similarly for the nasdaq. meantime, the jobs number, of course, story number one. definitely in focus, coming in lighter than expected. our next guest says while economic data and inflation are slowing down, still not there yet and the fed will continue to step on the brakes until they get what they want