drivers looms large for the economy. it's tuesday, july 25th, and "squawk box" starts right now. good morning welcome to "squawk box" here on cnbc we are live from the nasdaq marketsite in times square i'm becky quick along with joe kernen, andrew is on assignment this morning all right, let's take a look at what's happening with the u.s. equities future. it looks like the dow is indicated off by five points but yesterday the dow was up by about half a percentage point, a gain of more than 180 points that was the 11th day in a row that we have seen the dow higher and that's the longest winning streak we've seen since all the way back to february of 2017

we'll see if it can continue that run today again right now, it just turned positive there you go in. the green, s&p futures up by 7, the nasdaq up by 65 and treasury markets, right now it looks like the ten-year is yielding 3.89% the two-year sitting at almost 4.9% 4.87 overnight in asia hong kong stocks jumped after china's government pledged support for its ailing property sector the politburo vowed to elevate stable employment to a strategic word in their goals. the hang seng up by 4.1% the shanghai up by 2% and the shenzhen composite. >> right out of the gate again yesterday. it was up triple digits. looks like it would accelerate up over 200 for awhile and closed up 183.

obviously for 11 days when it goes up every day it wants to go higher as sort of the entire narrative change maybe to a soft landing, maybe to those inflation numbers had a long-lasting effect that they were cooler. >> yeah. >> than people thought it's hard for people in this business to switch from being bearish and i've had conversations with at least ten of the people we have on constantly about how they're going to finally get out of their bearish stance and mike's doing it -- morgan stanley's mike wilson sending a mea culpa to clients throeing -- throwin the towel. somehow you got to get out of the position you were in when you're dead wrong. >> i think saying your wrong is the right way to do it. >> he says he's wrong but let's see, in a note he said, we were wrong, 2023 has been a story of

higher valuations than we expected amid falling inflation and cost cutting we still got, you know -- still got a picture of him from 15 years ago. he doesn't -- believe me, at this point he doesn't look like that after this most recent -- his team is shifting its price target to 4200 from a previous 3900 and we'll talk about this because that's very generous. number one, i like mike. he had good calls and anybody who does this for a living, there's just no way that it can be dong. i'd stay mostly bullish. i never am right about downturns but most of these guys that just stay bearish for a long time in the face of -- a lot of times they're telling you things that are right in front of your face and it's like, well, it's a recession, might be coming, well, you know, we may have earnings being below what they've been recently and it's like, we know all these things

now, his best case scenario was 39 -- he wasn't at 3900. when we were at 38 and 3900 -- >> i don't know what he's done lately. >> he might have but his bear case was 3000 on the s&p his bear case was 3000 on the s&p. maybe 3400 was his neutral and maybe -- so you're off by like 50% almost you're dead wrong. you're not just kind of wrong but trying to do it in the first place is insane. you can't do it. >> you even told tom lee, stop telling us what's going to happen. >> in a week but trying to do duration or direction or both at the same time -- >> it was crazy. >> it's totally impossible >> it is a fool's errand >> i would say, look, you can't even do 50% because you're going to mess that up. you're going to be wrong and then you're going to switch and then you'll be wrong so if you can win a batting title and you know -- i say this all the time, if you can hit .330, if you can

hit .330. >> in other words for people who don't follow baseball, be right one out of three times if i'm not blaming him. i don't like something -- do you stick to your guns too long? a lot of times -- trenor still sticking to his guns bianco, my client shouldn't care that i'm dead wrong because of the strength of my ideas. >> it's mardi gras to let that go there is a time where everybody says, okay and that's what mike wilson is doing. >> okay, he's still not going full bore. now it's 4200. is he going to have to -- he's going up sort of stepwise. if we keep -- i don't know if we keep going up from here, thank god i don't do this for a living, if we're at 4800 like tom lee thinks we might be, by the end of the year his 4200 will look dead wrong so still hanging on to that bearish outlook. >> probably thought his conviction of certain things that will happen

it's weird when you lay all these things out. who would have looked at covid and thought, okay, the market is going -- >> the government stimulus that gets put into things and what china is doing with government stimulus if all were things to be equal and if you didn't have outside environments working in, but, yeah, it's a ridiculously difficult job. >> yeah. and then we criticize people, lots of people who come on who never make a call, never make a macro call >> you're cautiously optimistic? >> or you're going to talk about which sectors, you're going to say if you do want to go in, here's what you should buy and we're going to interview all of our, you know, a lot of comme commentators, whomever, interviewing them about mike wilson when they were just as wrong as he was. >> who has the dumb job, the people coming up with this or us who talk to them >> we have the great job because we're able to sirt back and

pretend we know better. >> when clearly we don't >> i actually think i do, but monday morning quarterbacking. dow component dow inc. reported earnings of 75 cents beating estimates of 70. revenue came in higher than the 11.3 billion that analysts had expected on today's quock planner the fed kicking off a two-day policy meeting and we'll dig into the pockets for a rate hike in a few minutes. don't need to look any further than, you know, the futures, fed futures to see, what is it, 90, probably 90% >> it would shock me if it wasn't 90% do you know anybody who thinks they won't -- >> no. if we get another cool inflation number maybe we're done. >> the spin they put on it will it be hawkish and sound like another hike is coming or we'll wait and see what happens? >> i thought it was weird someone kept saying whenever powell talks he's dovish he's trying to be hawkish.

higher for longer, he said a few times. also some earnings of note we'll hear from some of the generals, used to be a big deal, general electric, general motors, not so much anymore. though ge has been on a bit of a roll headed higher but, remember, what was that, a 1 for 8 on reverse split so is it -- if might be $100 billion market cap. it was 600 billion at one point. it's 120 now, but when it was down, got as low as 48 good god so, down at 48, it was $60 billion company. it's back to 120 also after today's close alphabet, microsoft, visa and snap are all going to report. >> i like how you said snap. >> we always say it like that. when something goes wrong, you go snap. >> oh, snap. oh, snap the short squeeze appears back in vogue the number of stocks among the

top 3,000 u.s. companies with at least 20% of their outstanding shares sold short is hitting the upper end of the historical range. even exceeding what we saw during the meme craze according to new data according to data. among the most shorted, carvana, novavax, lucid and beyond meat all have more than 40% of their outstanding shares being sold short. people get more active on the short side. elon musk is using his platform, also known as x to explain x and the rebranding in a post last night he said that the twitter name made sense when it was just 140-character messages going back and forth like little birds tweeting and little bird logos but in the months to come they will add comprehensive communications in the ability to conduct your entire financial world and the

twitter name doesn't make sense in that context. a trademark attorney tells reuters it may be complicated legally because several other companies including meta and microsoft have intellectual property rights to the same letter microsoft has owned and "x expect trademark related to its xbox video game system since 2003 and meta owns a federal trademark registered in 2019 covering a blue and white letter "x." that's my bombers logo too and i think we had it before meta. >> this is for software and social media. >> this was blue and white, st. xavier in cincinnati were blue and white, doggone it. can you own an "x" can you own a letter >> probably not but if you can trademark it for certain things.

>> i like the way this goes like that it did look like batman too. >> there were some brand experts, i think on bloomberg there was a story saying that he's losing $420 billion in branding most don't think it's worth that much >> united airlines, was it american, whoever changed it for a day. >> in the blink of the eye >> venator was the worst verrazano bridge >> a lot of crazy names. "x" is not the worse. >> x is used for a lot of things. coming up the federal reserve kicking off a two-day policy meeting and we'll talk about the expectations for a rate hike after the break. then later, keep calling it

the summer of strikes from entertainment, airlines to a looming strike by u.p.s. delivery drivers call u.p.s. brown. think if yellow hit. if both had struck, how many more colors would there be >> it's bad news if it's your underwear. >> combination of brown, yeah, thanks for that. we'll dig into the labor unrest at 6:30. you're watching "squawk box" on cnbc 350,000 metal utensil scrapes in laboratory testing. 130 times longer-lasting than the competition. get free shipping at circulon.com (vo) while you may not be a pediatric surgeon volunteering your topiary talents at a children's hospital — your life is just as unique. your raymond james financial advisor gets to

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that time again, the fed kicking off its two-day policy meeting. it's expected, widely expected to deliver a 25 basis-point hike at its conclusion tomorrow joining us is megan graver, now the global co-head of debt capital markets at barclays. this is your -- this is what you do, megan. where are we, 80%? where are we for today, and what are the comments going to feel like and what about at the next meeting what are the prospects >> yeah, you know, it's about a 96% probability baked in here, so while i think you could argue we're operating in a backdrop where recent data has bought them more time to assess the impact of previous hikes, we've had ten hikes now, we think it's all but certain they will move forward with the 25-basis-point hike at tomorrow's meeting in line with the june statement

it's in line with the most recent dot plot and consistent with the fedspeak we heard prior to their blackout. i think while powell is likely to acknowledge that inflation is actually trending in the right direction, i think very quickly the focus in the q&a will shift to reinforce that their 2% inflation target is far from mission accomplished i mean, you've got a labor market that remains exceptionally tight and have nominal wages that are still high and supporting consumption and you got a healthy market that has bottomed out so a lot has to go right to reach a two handle on core pce in 2024 and so i think, you know, you'll see with two employment releases and two cpi prints before the september meeting an ability for him to retain option app ality zero upside to being much more prescriptive. >> think if they did go 25 today

and another 25, how far the ten-year is from where it really should be if this really believed that the fed was going to remain firm in its resolve, so are they counting on bond market participants to finally find religion, to finally buy into what the fed is telling them because they're just going to move it further and further away from reality. what's going to finally happen will the fed have to admit -- could they be wrong and come back to the ten-year or will the ten-year slowly gradually get up to 4.5 or 5%. >> i think we'll be more range bound. what's surprising is you look at sort of the 65% probability of a recession over the next year, which is where we were and was consensus at the start of the year, that number effectively hasn't budged. you know, i think what has changed is the timing and the magnitude, so we're pushed out from the first half to a late

q4, early q1 recession and there is an increasingly pervasive view that will be a more mild recession so if those expectations ultimately play out, i think that factors into the path of rates ahead and should a recession remain more elusive which is the baseline in our view yields may be -- as those cuts get pushed out further and the fed issen 0 hold for longer, i don't think that's baked into the market. and 150 basis points of cuts prior to january 2025, so i think you'd have to take a view that we're moving into a much more severe recession and sooner than the market is currently pricing in to actually see the ten-year rate rally that has become the overarching view of many market participants. >> meghan, is the fed like counting on a recession? have they got their heart set on a recession?

are they not going to be happy till they actually cause a slowdown wouldn't it be possible for inflation to cooperate and not do it that way by causing higher unemployment and a business slowdown wouldn't that be better? >> yeah, it is they might achieve that balance. i mean, patience might be the name of the game the economy is much more stable than anyone feared unless they overtighten, hard to fight this more rose-colored glass scenario of disinflation and steady u.s. growth i think they could be very willing to wait a long period of time, so just hike an additional two times here so one tomorrow and another hike in either september or november and wait for that to feed into the market so i don't think they need to be rash in their decision-making. they don't need to be preemptive

in making the call there's a lot of data ahead to gauge that view and how aggressive they need to be, so there's a lag effect that i think they clearly want to evaluate i don't think it's our baseline expectation that they send us into a deep recession. a mild one is still the baseline call, but i think it'll be manageable and not be quite as detrimental to the employment picture as some are hypothesizing. >> what do you think over the next five years, meghan? what's the right interest rate level historically because having been, you know, gotten in the business in the '80s and watching, everything, zero is low, i know that but we did go below it which is insane, negative interest rates but 2 and 3 sounds low it seems this does seem kind of like normalized. could we average this, where we are when the fed is finished, could we average that for the next five years? could it be above that do we go back down to much lower? people are waiting for cuts.

why do we need cuts when 5% of whatever is not really a ridiculous rate to charge on money? >> yeah, i mean, i think if you look at our deficit i think funding that in a higher rate environment is going to be problematic, so i do think we see cuts but will settle in the 2.5%, 3% mark as opposed to staying here >> that will just cause more -- >> over the near term probably a 10 to 20-point basis move versus the 60 you see if you go back to 1960, the average move on the ten-year note in the 6 and 12 months following the last hike i don't see we see that type of move given our starting point but you will see marginal improvement from here over five years, you know, that 2.5%, 3% mark over the medium term is probably the right number. >> maybe we need a governor on how much we spend. >> maybe we do. >> maybe we shouldn't allow them

to -- we shouldn't -- so it's easy to finance 33 trillion then we'd be at 43 trillion meghan graper, different subject and we need a different guest i think to talk about that, someone in washington. all right. thank you. >> thanks so much. general electric just reporting and phil lebeau has the numbers. good morning. >> good morning. take a look at shares of ge moving higher after reporting a beat on the top of the bottom line earning 68 cents a share in the second quarter well ahead of the consensus on the street which was 46 cents a share revenue almost a billion dollars better than expected coming in at 15.92 billion then the numbers within the numbers, all very strong, as was expected profit margin, 8.8%. free cash flow, 415 million and then when you look at the divisions within ge,ary -- aerospace up and the renewable

energy revenue division or division of renewable energy up 21% compared to last year. the guidance, they are increasing their earnings per share estimate for the year expecting to earn between 2.10 -- free cash range glowing. it was previously for 3.6 billion to 4.1 billion all in all, strong report from general electric we're going to be hearing from larry culp later on this morning on the earnings call and let you know what he has to say. i'm not surprised to see these numbers. we've been talking about it for some time, the momentum has been building there and that's reflected in these q2 results and the increased guidance back to you. >> phil, thanks. we'll see you later. >> 48 on the low >> yeah. >> 48. he's done it

my god, he's done it, maybe, culp. >> what a difference a year makes. >> culp was the guy, maybe, phil, after trying about six or seven other guys. >> a lot of heavy lifting they did and still more to do >> all right, when we come back, the irs is halting unannounced home visits for most taxpayers we've got the details right after this break plus, earnings season rolls on and bring you reports from gm and 3m in the next few minutes we hope. "squawk box" will be right back.

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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'm like, "why do i need salt? like, who is going to do that?" she literally would make me rip

open a pack of salt, pour it in my hand, and i would, like, lick my hand. sure enough, i would always be the kid not cramping, i would always be the kid energized, ready to go. fast forward 20 years and i go from eating salt out of my palm to a drinking lmnt. the irs announced that it has ended its controversial practice of unannounced visits

to homes or businesses from revenue officers for most taxpayers. revenue officers previously visited homes and businesses unannounced. >> oh, my god. >> a median unpaid balance was $110,000 they are different from revenue agents who actually conduct the audits the irs commissioner said that the change comes amid safety concerns from irs employees and taxpayers. it will now make initial contact via a mailed letter to schedule a visit. >> okay. >> we're worried about safety of the agent or the guy who shows up and says you owe me $110,000 and the taxpayer who you don't want them getting scammed. >> yeah, exactly revenue officers that's good to know. it's not your normal audit guy >> hi, i'm here. it's like -- >> this is after they've determined that you -- >> the scammers, one thing that especially -- >> you got a call. >> yeah, yeah, scary calls -- they do not call. so that's something you have to know you get a letter if you have a

problem. >> don't email either. >> the scammers will call and say someone will come to your house and do all that. so at least know that but i didn't know -- >> they could show up at your house. >> and, hi, how are you? >> we'd like a check for $110,000. >> if you owe and you're -- if you owe and -- supposedly it has something -- forget -- never mind you forget if you owe $110,000 -- we got to get to robert frank. he will have the story coming up in the 8:00 hour and he will tell us. >> those three letters are scary. and i told you, i was audited once -- >> i've been audited too. >> i made $45,000 but i used a moving -- i did move from l.a. back to -- >> i've been audited too. >> from marina del rey to fort lee. what i was thinking? new jersey

gm just reporting. phil joins us now. >> this is a beat on the top of the bottom line for general motors in the second quarter earning $1.91 a share, consensus $1.85. the street was at 42.6 billion the company is taking a charge of $792 million related to the chevy bolt recall. that's played out over the last year and a half. then you look at the numbers within the numbers for the second quarter free cash flow, 5.54 billion about 4 billion better than it was in the second quarter of last year. adjusted margin for the second quarter of 7.2% overall compared to 6.6% last year. the north american margin coming in at 8.6% compared to just 8% last year and the guidance is being raised by general motors, 2023 eps guidance is a big

increase from where it was, 6.35 to 7.35. with the adjusted guide, 12 to 14 billion is what the company expects to earn, previously they said 11 to13 billion was the expectation and the company is raising its guidance for automotive free cash flow in a range of 7 to $9 billion previously it was 5.5% to $7.5 billion capex, they're trimming it how much they'll spend between 11 and 12 billion compared to the previous guide of 11 to 13 billion and their target for cost cuts through the end of 2024, remember, they've been doing this for some time, it was supposed to be up to $2 billion, they've increased that by another billion. they now expect to cut up to $3 billion by the end of 2024 by the way, that will not include new job cuts that they have used in the past. that's not part of this and finally they expect to produce 100,000 evs in north america in

the second half of this year reiterating that target. lots to discuss with gm's ceo mary barra don't miss it later this morning on "squawk on the street." we will talk about not only these numbers which are way above expectations, i mean, they are killing it in terms of average transaction price of almost $52,000 a vehicle but it's the ev business and investments that are being made there and the fact that they are increasing their cost cuts as well as pulling back on capex, they're not going to say, i don't think they're going to say on the conference call that we expect things to slow down in the economy, but it's clear they are watching the cost side of the equation at general motors >> all right phil, looking at -- it's -- it's a weird business, $50 billion company, $54 billion company. >> yep. >> but one of the, you know, linchpins of the u.s. economy still, so it's weird it's been tough. a lot of debt. tough to -- it's a daunting

future, uncertain future. >> yeah, because of electric vehicles, joe, but you look at the ice business, people will say that's ultimately going to melt yes, someday it will but right now they are killing it when it comes to the ice business. that's a reflection on the consumer -- >> which makes it all the tougher had they start with union negotiations to say we're not doing well. >> correct that's one of the things we'll talk with mary barra about that contract is up in mid-september. >> their big -- the product mix of evs on one side and the big old suburbans on the other side still and the big pickup trucks so you got huge emitters, ice emitters and then on the other side you have a little percentage of evs, that's bizarre. >> that's part of the question, the growing portion -- >> we have have internal combustion engines in our country -- >> you don't have to drive a land yacht

>> taking those six kids to soccer. >> or a mini cooper. you do need them. >> that becomes the question as a lot of companies including gm make plans to say this is an all electric future, the question is are the customers going to follow and what happens with the union which has a lot of questions about all of these ev jobs? >> in the meantime, phil, you know, the ev percentage is like this and the percentage of pickups and suburbans is like this >> joe, you are correct but let me counter what you're saying with this -- one stat that you will say, wow. in california, in the second quarter, the model y, just the model y, more model ys were sold in california than everything that ford sold in the state. think about that you think about that that tells you where the market is in terms of evs. >> when i'm in my neighborhood literally, so it is tesla, tesla, tesla, something else, tesla, tesla, tesla, something else, tesla, tesla, tesla.

>> and gm and ford believe that they can ultimately -- they ultimately believe that they can be as good if not better than tesla when it comes to electric vehicles they're at the point where they have to show that and we'll talk to mary about that. >> ionics, is that an ev >> hyundai, yeah >> that's a cool-looking car h hyundai -- >> number two in ev sales for the first half of the year. >> that's how it works anecdotal evidence, thank you, phil. >> you bet. all right, 3m reporting as well let's take a look. overall, the company lost $12.35 a share. that was before adjustments. big part of that, actually all of it and then some was the impact of the public water system settlement that they had for the forever chemicals. this was known that was about 10.3.

there's another charge in that net cost for other significant litigation of 24 cents, other special items, a charge of 9 cents, if you back that out they earned $2.17 i don't know if that aapples to apples comparison with the 1.72 the street was expecting because we knew about some of these settlement, not all, so there could be noise i can tell you the adjusted revenue, $8 billion was better than the street was expecting. 7.866 was what the analyst's estimate was overall sales, 8.3 billion definitely you excluded the sales related to the announced exit of the pfas manufacturing on this. better than expected and the company is raising their full year outlook for adjusted earnings per share to 8.60 to $9.10. before 8.50 to $9 so an increase of 10 cents. the street was at $8.62. at the low end of that new, revised upward guidance, a couple of comments from mike roman, ceo, telling us they saw

strength in automotive, both in the oem and after-market and saw strength in highway infrastructure and personal safety when you exclude the expected line with disposable respirators. they do say that all of the things that they put in play, restructuring the company, strengthening their supply chain, they do say that's working, that's been helping them out as a result you can see that stock up right now by 2.3% >> and coming up, think about it if the strikes start affecting things that matter, no, i'm kidding. hollywood matters. especially -- that was a joke. but there are some serious things on the horizon for strikes. we have seen it with the actors and writers but now think about airlines, ports and a looming strike by u.p.s. delivery drivers. so that could hit home more than the other things and

we'll dig in at 6:30. >> 8 minutes ago

still to come, the summer of strikes could get a lot worse if u.p.s. and its delivery drivers

don't reach a contract deal by next week. we are going to talk about labor unrest next. later, katie stockton will join us to talk about what she's doing in the charts as the dow continues its winning streak, 11 days in a row, the longest streak we've seen ncfesie bruary of 2017. we'll be right back.

what do you get from the morgan stanley client experience? listening more than talking, and a personalized plan ♪ to guide you through a changing world. ♪ 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.

this summer has been hot for organized labor. strikes have hit the media, entertainment and airline industries with u.p.s. workers in the next group -- being the next group of workers threatening to walk off the job. joining us for more is seth harris, he is a top former labor adviser to president biden he's currently a senior fellow at northeastern's bernice center for social change and scott lynncomb is with the cato institute. welcome. why don't we start with you, seth joe biden described himself as

the most pro-union president ever and there's a lot of turmoil. there have already been warnings and concerns about what happens not only with the strikes we just talked about but also when it comes to the autoworkers whose contract is up at the end of september and there have been messages coming from the uaw and other places saying, stay out of this don't get involved if all of these crippling strikes come, what do you think the white house will do? >> oh, i think the white house will not get involved. they already are involved in the discussions between the uaw and the automakers, they're trying to help both sides understand both what the stakes are and what the public policy options are that are available to them, but the white house is not going to intervene meaning they're not going to try to shut down the strikes. they're not going to try to get congress involved. this is a private matter for private parties, this is a private dispute resolution system that we have in

collective bargaining. the president very strongly supports collective bargaining and the labor movement and wants workers to have a voice in their futures and democracy can be ugly and this is workplace democracy. you know, these workers are exercising their worker power to improve the quality of their lives, raise wages, get better benefits, get rid of some unsafe and unhealthy working conditions and to protect their futures the president understands all that so he is going to monitor it he's going to encourage the parties to stay at the table and to negotiate, but ultimately it's going to be up to them to come to a resolution >> scott, is that a recipe for difficult views politically if all of these unions actually do go on strike when you're talking about an election only 14, 15 months down the road >> well, it certainly isn't going to be easy for the president because he's walking a tightrope. if you see a general strike at

u.p.s. you're talking almost 30% of total shipments in the united states every day tens of millions of packages the economic impact could total in the billions of dollars if you see a work stoppage and so for a president running on bidenomics and the economy that's a pretty tough pill to swallow. it's unlikely to see any direct intervention, instead it's more likely going to be working the phones behind the scene. >> okay, so what are the odds, do you think, seth, that working the lines behind the scenes trying to bring everyone together that it's successful? i mean, this was a president that did have to get a little involved when it came to the railroad strikers because it was seen as too important to the nation's economy which of these strikes would be too important to the nation's economy, the uaw, would it be the teamsters union when you start looking at yellow and some of the other discussions, what do you think >> well, the railroad strike was

different because there was a different law involved, and that law put the president right in the middle of the dispute. in these other industries, you don't have a law like that, so i'll offer some predictions but let me just say as soon as they come out of my mouth they'll probably be obsolete but my bet is that the teamsters will not strike and if they do strike it'll just be for a few days they are very close to a deal with u.p.s they've gotten some of the biggest thorniest issues out of the way. they got rid of the hated two-tier system. they've solved some heat hazard issues they've got rid forced overtime and those are issues where you understand what needs to be done to involve it. the uaw, i think there is a heightened risk of a strike. i think that there's a great deal of unhappiness among the members at the uaw about the two-tiered system that was put in place there we just heard a report on your

air that general motors is making money hand over fist. they're going to have to come forward with a very generous proposal to the uaw's members in order to avoid a strike there and, of course, we already have two strikes going on in hollywood right now. i think the studios absolutely blew it and misunderstood what the actors and writers wanted and the offers that they made were just chintzy, inadequate and will have to rethink what they're doing and figure out the competition in their industry, they're cutting each other's throats between the networks and streaming services and others, and they're going to have to give a fair deal to workers. workers are active now they are ready to strike corporate america will have to think differently about the way they deal with their workers >> hey, scott, i'll give the last word to you, what does this mean in terms of inflationary pressures and things that we will be watching when it comes to the fed and the broader economy on these issues? >> well, you know, as important

as these industries are, it's still critical to remember that we are still talking about a small sliver of the u.s. economy. you know, private sector unionization these days hit an all-time low in 2022 only 6% of the workforce, and eventhe billions we're talking about, while important to the a billions of dollars we are talking about, it's still a drop in the bucket in the $25 trillion economy i don't expect, even if we saw a short strike, i don't expect that to be a massive effect on the economy. little problems here and there, problems for certain areas, but overall i don't think it will really register much on the radar. >> thank you both. >> thank you >> my pleasure coming up, a flury of tech earnings begins later today. alphabet and microsoft reporting later this afternoon that's coming up next.

two big tech reports after the bell today microsoft and alphabet joining us with his expectations, paul meeks, wealth management portfolio manager, and for a bunch of appearances, a multitude of appearances, paul, you like these stocks and you like the companies but they certainly -- the stocks have already performed pretty well. are you, at this point, ready to start adding positions are taking a step back and waiting for a, maybe, better entry point? >> well, microsoft and alphabet, just because the momentum is so strong because of the a.i., i have added to that position, and i am waiting for what they say tonight and the go forward guidance, but no doubt these companies are awfully expensive

which requires them to keep going up with the stock prices that we not get just a steady but a accelerating diet of good news, particularly from a.i. we need to see that today. the numbers aren't so demanding for alphabet in tonight's report, but they are demanding for microsoft was the stock is so expensive >> in the weeds of microsoft, what do people that own it, analysts that follow it, what are the key points a.i., i understand that gets everybody excited but it's not the profit driver yet that it might be what is most important for microsoft to hit on all cylinders with which components >> the key with microsoft is -- i respectfully disagree a bit, joe, because -- >> you think it's a.i. >> they need to show what they

have done with a.i., because with the recent announcement of the co-pilot, all of the microsoft 365 subscribers, and you get a billion-dollar revenue a year, and people are starting to do the math and that's why it's so expensive. i think they need to delve into that today i think they also need to show that microsoft azure on the cloud side continues to grow the march quarter was 27, so still pretty robust but a little deceleration and then the other thing interesting about microsoft is they have a june fiscal year, so today they are probably going to give guidance for the next year, which is what companies typically do right now wall street is expecting for next year, the year end of june of 2024, to have an 11% revenue growth

the stock is not priced for that but much more. i think there could be a disappointment unless they come out in their guidance and jump the fiscal '24 number. that's what i am looking for >> i am glad alphabet was not as interesting for you to talk about, because we don't have time to talk about it, and i like when you say go forward guidance, when it's the guidance looking backwards. i am pretty good at that guidance going backwards i can nail it. thank you. >> thank you next on "squawk box" we will talk to tom lee.

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good morning the fed and earnings in focus this morning after the dow notched its 11th consecutive winning session. we will hear from tom lee about what investors should be thinking after the fed rate decision speaking of the fed, is the soft landing scenario on firm footing? the debate on that topic, coming up plus, a.i., a big focus for big tech we will preview tonight's big earnings the second hour of "squawk box" begins right now ♪

good morning and welcome back to "squawk box" here on cnbc live from the nasdaq market site in times square i am joe kernen, and andrew ross sorkin is off today. there are the futures right now. the nasdaq on a relative basis doing a little better. we have already gotten 3m, gm -- >> now we have verizon looking through the numbers now, and earlier than i was expected. they came in better than what the street was expecting the revenue came in at $32.6 billion. the street was looking for $32.4 billion. better on that line as well. some of the numbers we always watch on this, wireless retail, and new fios internet customers up 51,000. you have those numbers, too.

the big questions overhanging verizon right now, two big issues big debt we have been having for a long time with this company, figuring out how they are restructuring things, and then an article weeks ago raising questions about the legacy cables out there, the ones surrounded by lead and the new environmental questions raised about this, and this is an overhang for verizon and at&t, and if you are looking over the one year to date of verizon shares, if you look broader, you will see that stock down by about 23%, and that's compared to the s&p up about 15% at that time verizon has been one of the worst performers all of these questions still there, but on this report itself it looks like they came in with numbers better than anticipated. what is the stock trading at now? go back -- >> up a little bit

>> it's up about 1.5%. >> at&t, it's almost 15 today. >> yeah, it has come back and was down to a 30-year low, and now the stock is down 20% if you are looking -- yeah, down about 19%. a very difficult year for both companies. that was a difficult year they were having before "the wall street journal" story raised questions about what it would cost to get rid of some of the cables, and these are legacy cables and these are not the fiberoptic cables that are there. these are older legacy cables they inherited but it will be their responsibility one way or the other. they stopped using lead in the 1950s, and they are now responsible for them >> it was like coke and pepsi, and coke just coke and pepsi has

doritos, and they had all the great assets that randal stevenson built-up at least you could still be going to the academy awards, right? >> if they had not gotten rid of the content part of the business >> yeah, and look what david has to deal with here, you take it. no, you take it. it's like a hot potato now they are focusing on the core business and it's $14 time will tell >> it will >> they are in the middle of trying to prepare for the future in the 5g world and all that stuff as well. >> and there was an article that was very critical about what is happening with the companies, and then at the end he said i would not write them off, and he talked about t-mobile that came in and did invest, and the stocks performed well as a result, and at the end he said

don't write any of this off because now is the time where it's starting to pay off, and the stuff they invested in with the 5g -- >> yeah, and at&t may still invest >> yeah. let's get over to dom chu. he as a look at the premarket movers >> among the 3m share, 1.25% gain and the industrial giant behind post-it notes and scotch tape and adhesives. lending there to some of the positivity also out in this morning's trade, streaming audio and

podcast, spotify those shares are at over 100,000 shares now, and the company reported a lost of 1.55 euros, because it's a european company. there was concern for spotify here about profit margins amid rising costs on the positive side, though, we did see a boost in the number of subscriptions, the overall side of things and the premium subscription side. positivity and more emphasis on the down side there at 8%. and general electric, 45 shares of volume, and it was better than expected revenues and profits. and it was helped along for continued demand for travel, aircraft engines

becky, ge, 3m, and a lot of stuff going on i will be back in the next hour with more updates on these stocks >> i think we made it through most of the biggies for the morning. >> yeah, we have a lot coming up >> you do. thank you, dom look who is back tom lee is here. two weeks ago it was a monday and you made the call of 100 points on the s&p, on a softer inflation number and that happened last monday we had you in again to talk about it, and you said you were still bullish monday i just did the math, and eight straight days on the dow, and you were bullish on monday but you were not saying anything about the week, you were smart enough to stop on that, and you got credit for the six out of the 11 days. what did you see differently than people like mike wilson at

the beginning of the year? where were you at the beginning of the year, 4500? >> 4750. >> mike wilson is at 3900. the bear case was 32,000, and the guy at piper sandler it was a slam dunk for him what did you see that was different from these gentlemen >> the biggest difference is we were looking at the inflation internals and not inflation was on a guide path lower than the consensus, and we thought there was a good chance the fed could back off its fight against inflation and that would make it a 1982 moment because it's an inflation war. i think that was probably the central thing. the second is we had a lot more belief in corporate resilience many were given notice to prepare for the hiking cycle

i think the combination with supportstocks -- >> just overall, tom, just your approach to trying to decide how devious the market acts, and you can go back to jesse livermore it tries to do things to confound as many people as possible, and so not as many people are right going up or down, constantly we are all talking about a recession and lower corporate earnings and earnings have to come down and we are talking about these things nonstop, and people say we are going down another 20% when everybody on the street knows what's happening, can you just say it's probably not going to happen and it's already in the stock? if you have that job, why doesn't that inform you that you shouldn't go with the crowd? why can't they figure that ever? >> that's exactly right.

at our company we talk to our clients constantly, and that was pretty evidence. every time the market wobbles, our clients were ready to sell i think we are still in the position you described, where people are bear iish and ready o sell and nobody is embracing this as a bull market. >> so you got to somehow get yourself out of the pickle and say i was wrong, but with the mea culpa, his target is 200 it's just more of the same, right? >> yeah, the strategists year-evened target is on the down side, and so most professional markets think it

will go down >> you have been wrong more often by buying too bullish? that would be my problem, i am sure >> well, i have been covering markets for 30 years, so i have been wrong a lot >> on both sides >> yes i learned that being bearish was painful when i did wireless, my most famous short call was nextel, which did run up for a long time, and that imploded spr sprint >> is that why you are more optimistic because you have been burned by being bearish? >> well, it's probably good to be long most of the time >> yeah, i covered wireless when it went to $7 billion, and everybody called it a sector bubble for 14 years, and people are so negative about the future that we tilt more positive

>> it's always more fashionable to be negative and doomsday and black swans and all these things you can always do better you can be short and be right, but you can -- you have got to have the financial wherewithal jesse livermore killed -- >> i didn't write that >> you may not be able to last long to see that you will be right. when would you turn bearish? >> i think we would turn bearish if there's a recession because it's difficult for stocks to rise to a recession. eventually there will be a recovery, but in the timeframe people are saying 6 to 12 months we had two negative quarters of gdp last year, so in some ways we already had -- >> it was a rolling recession in different industries now we are back to trying to

figure out the discounting mechanism, so if a recession is not coming in 6 to 12, let's say it's coming in at 12 to 24, that would give us six months more of bullish action >> that's true unless the fed starts easing or inflationary pressures disappear because there's a lot of potential stimulus coming, and mortgage rates at a 3.7%, and the 30-year will be not 7%, and when that drops that would be a huge stimulus. >> that would make the recession shallow or -- >> it could stave off a recession, because the consumers -- >> we may not have a recession in the next two years? >> yeah, and companies that batten down the hatches -- >> your profession is like a seismologist, because it's hard to claim, okay, here is where

the next volcano will be that's like the bears that do it, and even when they are right like david johnston was, and he was the seismologist that said st. helen was going to blow, and he died in it because he had to get the calculations >> yeah. >> you can't win that's what i am trying to tell you, and you get the calls right and then you die anyway. >> congratulations >> yeah. >> bitcoin, that got you worried at all here? we had an actor on that -- >> i saw that. i did see it >> what did you think of that? >> you know, i think that there's a populist angle to what he was saying. >> he said a deep dive do you think he understands anything about it? >> i think if somebody did a deep dive and went around the world and talked to people using bitcoin because they don't have access to banking and they have

a different view of how useful crypto is. >> a huge part of the thesis was right, which there are a lot of fraudsters -- >> i didn't have a problem with that >> the ftx and cz -- >> bitcoin doesn't care about who owns it or who is trading it >> there's a lot of fraudsters around it, so you have to be careful. >> it's like first jersey securities or stratton oakmont is the underlying -- >> that's right. and 97% of stocks -- >> how many? >> 70% have gone to zero >> we can look at a list of stocks that have moved around up 100%, down 60%, blue chips >> that's right. capitalism just fails often. >> in the stories, it's always what somebody is willing to pay on any given day, especially for

nondividend stocks that's a different story tom, thank you >> thank you >> good to see you it's like a weekly thing now always looking forward to it when we come back, gm reporting just a short time ago, and raising its earning guidance for the year, and it's up about 1.1% we have reaction to the numbers and an out look to the auto numbers with former ford ceo, mark fields. that's next. we'll be right back. what if you could make analyzing a big bank's data... no big deal? go on... well, what if you partner with ibm and red hat, use a hybrid cloud solution to connect data across clouds, then analyze all that data with watson. okay, but this needs to meet our... security standards? yup. compliance standards? mm-hmm. so they get the insights they need...

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biojen reporting an adjusted, and revenue better than expected at $2.4 million. the company announced its cutting jobs to save costs as its alzheimer's drug launch gathers pace defense contractor, rtx also reported earnings per share coming in add an adjusted $1.29 a share, and revenue was $18.32

billion, and that beat expectations the backlog reached $185 billion in orders and the stock is off by 3.5%. we will look into that and get back to you in just a moment raytheon looking at a stock that is off 3.5%. general motors out with its second quarter earnings this morning, and that beat the expectations of 1.85 revenue beat expectations, too we want to break down the report with former ford president and ceo, mark fields mark is also a cnbc contributor. what do you think of the numbers? >> revenues were up about 25% versus last year, and their pricing held up really well. they beat on the top and bottom lines, and so the bottom line is

the pent-up demand is still there, and customers are still willing to pay for good product, so it was a very strong quarter for it >> a lot of people are wondering, though, what to make of the new ev brands, and how much demand is out there we are looking to look at ford and tesla. what are your feeling about where consumers are and whether more consumers will be brought in and if they can taeupmaintain pricing? >> we are at a make or break when it comes to evs, and you have a lot of new products for example, gm is launching their blazer and silverado ev, and so you know, even though we set a record for evs in the

second quarter, ev demand is not keeping up with production i think the most important launch for evs now in the industry is coming up in the second half of the year, which is the equinox, which is chevy's second best model competing in the highest volume segment, and they are targeting a $30,000 price range. you are taking the price issue off the table for consumers around evs, and so if gm is not successful in ramping up sales of that, not only is gm going to have a problem but the industry is going to have a problem it's interesting to see how that product is accepted in the marketplace. >> you sound skeptical, and i wonder if that makes you skeptical of the goals to be an all ev fleet by the year 2030. what do you think about that >> i am not skeptical from the transition from combustion engines to ev vehicles, and i am

bullish on it. it will happen slower than people expect. when you think of netflix, when they went from sending dvds home to actually streaming them to customers, there was a big issue around can that company and industry make that transition. i think they were successful, but the key there is they made lives easier for consumers right now with evs, for the most part you still have -- they are still more expensive than gas-powered vehicles, and that's going to be solved by the industry but secondly, it's the charging infrastructure if you are making life more difficult for consumers, they usually take the path of least resistance when it comes to tpha vehicles and making a big purchase like that it's going to happen but there's a mismatch right now among the industry and analyst as to how fast that will happen. >> so the other issue facing all

of the big three is what happens with the uaw you have their contract up at the end of the september and we have spent time talking about this this morning. we had a former labor under secretary with us this morning that said, look, they are going to have a hard time telling the union they can't pay all the demands when we just saw a report on cnbc that shows they are making money hand over fist? >> well, it starts with making sure you are having conversations during the entire contract period, not just when you have a contract coming up. clearly the oems, the automakers will have a difficult set of negotiations, and to the point you mentioned, becky, their profits have been very high, and there's a little labor renaissance, if you will, in the u.s. and the movement, and you have, importantly, a new leadership at the uaw that feels

they have a mandate to improve their salaries, get, you know, cost of living adjustments and improvements in health care. at the same time the automakers are facing, as i mentioned earlier with the evs, their margins are lower if they are even positive at this moment and that will be a big drag on the automakers that's why you see, for example, general motors, up there with the cost-saving objections 2 to $3 billion through next year, because i think they are looking forward and saying, hey, we have to get through the chasm of ev adoption, and so it's going to be a contentious set of negotiations, and at the end of the day the optics are there with all the profits the automakers have made over the last, you know, three or four years, there's a perception

amongst the rank and file, they will want to get their fair share and they will have to come up with a contract that will add costs to their productions, and that's why you are seeing gm up their production costs >> a lot of big issues still facing this industry thank you. let's bring up rtx again the company came out with better than expected earnings and raised guideance but the stock i still off by about 3%. this comes as they say there's a rare condition in the engines that needs inspection, and it's going to require accelerated fleet inspection the parent company, of course, is rtx of pratt & whitney and that's putting pressure on the shares we'll be back after a quick break.

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shares of pulty group are higher it beat expectations

the homebuilder beating on several metrics on closing, average closing prices and new orders, all of them topping expectations this is the latest homebuilder to come in with better than expected numbers after pulling back for the past three years, individual investors are pouring back into the housing market diana joins us with more >> joe, individual investors bought 18% of homes in june and that's up from 15% in may according to the realtors. this despite much higher mortgage rates now we spoke to one investor in the d.c. area that says things turned around quickly and the competition is heating up. >> it's aggressive on the buy side for investors, and we are also anticipating good resale after the renovations or after the build is complete. what could be selling for $500,000 today might be 3 to 5% more when we are ready to

resale >> and they buy some to rent and then flip, and he said renovation costs are high but supply chain issues eased up dramatically up from 8% the year before, and after years of falling, flipping profits are finally rising again from 21.1% in q4 of last year, to 22.5% in q1 data. it now appears to be easing. >> we are seeing a lot more liquidity on the debt side, and interest rates are still high, and loan originationamounts ar still high as well, but you are seeing some deals pencil >> of course, all-cash deal favored by investors are also a growing share of the market, joe. >> it's interesting. can i ask you a little different

question we were talking to tom lee -- >> please. >> tom lee said if interest rates and mortgage rates were to come down that could be a positive stimulus for the economy, and some people are writing in that the number of people that had to go to the higher rates isn't enough, really, if they were to come down soon, it wouldn't make that an incremental difference on the economy. are people still locked into the lower rates and there's not a whole new universe at the higher rates that would benefit from the lower? >> i think when you are talking about the buyer side he's right, but the benefit is on the sell side, this whole golden handcuff effect, where current homeowners are refusing to move anywhere because they have that 3% rate, and they don't want to go up to 7% the new home market is doing

great, as you saw from pulte >> it made me wonder if all of a sudden all of these people think, great, i finally get to move and that opens up supply. isn't it opening up to a lot more demand because everybody starts to move at that point, and it doesn't seem like it completely solves the supply problem because all the pent-up demand will be moving at the same time? >> remember, though, rates are not coming back down to 3% you are talking about rates coming off 7% and move into the low 6 or high 5 range. house something still incredibly expensive. we have seen home prices turn higher again, so affordability will quell some of what you are talking about. >> interesting the things will get moving again, so nobody -- what did you call them? the people that won't move, because they have golden handcuffs. >> yeah, golden handcuffs.

>> interesting >> that leads to a constipated market >> exactly coming up this morning, is it a soft landing in the cards is that what we are facing here? we are going to have both sides of the debate next stay tuned you are watching "squawk box," and this is cnbc build and maintain financial strength and stability. deliver solutions that meet complex needs. do right by customers, clients, and policyholders, always. repeat daily for over one hundred and seventy years. massmutual. partnering with financial professionals, benefits brokers, and institutions. ♪

of a u.s. recession in the next 12 months falling, it looks like, and the stock market already priced in a soft landing and that's according to the latest cnbc analyst, and it's funny how we go to recession, recession, recession to soft landing and we're all on the same page, and now maybe we should be worried, steve >> yeah, they are expecting a hike this week and they expect it will be the last one in the cycle. let's go through the numbers 90% say the fed will hike in july, but around 80% still see the fed on hold in september and november the peak rate is 5.48%, call it

5.5. the fed is on hold until around march when the chance of a cut gets more firmly built in, you can see a year from now in june of 2024. meanwhile the sentiment around the chance of recession shifting more towards the soft landing we have been talking about. it's falling below 50%, well below the peak of 60% in november it's elevated above the normal range, around 25%. not all is well. and mark zandi writing in, inflation is receding and the fed is near the end of its rate hikes. and then 42% of respondents say there's a 50% probability or higher of a soft landing and 58% say it's less than a 50% probability, so they are kind of that in little limbo range there. the group is generally bearish

on stocks, and keep that in mind when they say they see a soft landing already priced into equities 30% say prices already have a soft landing built into their prices, but 47% saying stocks are overpriced even if there's a soft landing these guys are pretty good on interest rates, and good on the fed and less good when it comes to their stock predictions >> yep all right. that's all important info, steve, just to figure out exactly where we stand we have beater bookfar, as well as the famous allen sinai. thank you both for joining us. i introduced you first, peter. is it in the cards for a soft landing?

could the feds just nail it after all that excess for ten years, can we really do it and orchestrate like a 10 off the balance beam >> i think it's highly unlikely. it's not a surprise that i think that this is a very difficult thing to maneuver. the hard soft landing is deeper than that. what happens if you have a soft lapding but it's prolonged this session, and it's modest but prolonged, so when you get a deep recession or hard landing, you get a deep snapback. i will use the word pernicious, because it's harmful in a subtle way, because we have the u.s. economy having to adjust to the higher cost of capital the private sector and the economy right now outside of the best credits have a cost capital of 8 to 12%. that's double or more of what we have been used to for the 15 years lead into 2022

it doesn't affect everybody all at once. this will take multiple years for debt to reprice, and that's what chips away at economic activity >> what do you think, allen? what are your thoughts on the same subject >> it's the same as it has been for a long time, we had massive demand and stimulus out of monetary fiscal policy, and the pent-up demands at the end of the pandemic, that's still stretch into the future. the rate hikes -- rate hikes historically don't give us a recession all alone, and the economy is resistant to them and it takes all the other bad stuff that happens because of the rates, like the risks at 30%, and the risks go inting into the banking system, and for the first time ever i have to give the reserve some pluses here, and they have been bad, but some pluses here on what they are

doing, and they are toning down the pace of increases. that's the right thing to do is space it out and do fewer of them i do think we will have two hikes, but i am not worried about interest rates because the economy and earnings -- the earnings have a lot of price-level help we are going to hit new highs if we do that before the end of the year >> steve >> joe i just want to push back gently against my friend, peter, on the financial channel here, which i think is probably the big worry. peter, what i have seen is the debt is sort of termed out and there's time for corporate america, corporations to adjust. there will be defaults and there will be a credit cycle, but just because that happens doesn't

mean it's a calamity i think the real danger that worries me is michael barr and the fed tightening up lending and capital standards at a time when the banks are going through this problem i agree you identified the big challenge, but it's not clear to me that's what leads to a recession. >> you are right, we do have that terming out i saw a saw a statistic from b america, only 10% have repriced yet, and the cost of capital today versus the loans that will be coming due for a lot of companies, that's going to be a big adjustment yes, there's time to prepare for that, but when you interest expense as a percent of your debt goes from 8 or 9 to 3 or 4,

that will be a lot of cash flow. yes, we could still get a soft landing, but i am worried about something where we will see anemic growth for a long period of time rather than the hard or soft landing type of debate. it will be drawn out it will take many years to sort of have the u.s. economy acclimate to the new rate world. >> interesting allen, at this point, down the road for a recession, your prediction of one year, two year, three years, no recession at all what do you think happened >> i think some day we will have one, and it will be after the election president biden has been there for 50 years, and it's the economy, stupid. the federal government is spending a lot more money in a lot of ways, and the economy is transforming to a tech know centric economy.

the gdp data on the business side, 6.2% of gdp, and residential construction is 2.8% of real gdp, and construction is very sensitive is all this spending on the a.i., and the apps, and look at inindividualious results look around you in new york, boston, everywhere in this country, small towns, big towns, look at what is going on in construction look at the labor market you can't have a recession with a fully employed, happy on the economy and happy on jobs, but not happy with the way our country is going that's why they are unhappy. but it's good out there.

it's good out there. doesn't feel anything like a recession is coming. it's a long time away. >> thank you both. steve, we do forget that, for people that thought a recession was around the corner with the job market, it's hard to imagine and would be the first time ever thank you. microsoft and google parent company, alphabet, reporting, and we will discuss that after the break. top-rated drivers and irons from callaway, taylormade, titleist and ping. tour balls from your favorite brands. and the most dapper styles from travismathew and walter hagen to calia and lady hagen. you handsome devil. select the best golf shoes like footjoy, nike and more. and get back on the course with one-hour pick up. look good and play great with gear from dick's sporting goods. ♪♪ at morgan stanley, old school hard work meets bold new thinking.

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welcome back, everybody.

microsoft reports its fourth quarter numbers today. last quarter, ai was mentioned 45 times on that earnings call joining us right now with more on the ai landscape and what to expect is jeff louis he's the founder of bedrock capital. bedrock counts open ai, plaid, and bitcoin in its portfolio lots of other names as well, but jeff, we want to talk to you specifically about ai, because you were an investor in open ai long before chatgpt came along so what did you see there and what did you think with that microsoft investment >> absolutely. well, becky, we did invest back in 2021, when folks said it was somewhat of a crazy science project or, you know, sort of half pseudonym profit company or something like that. what we saw back then in addition to an incredible behemoth with sam altman and the team that he assembled was a shot at being the foundational model, the core infrastructure

play for ai. so our bet was that they would be the core infrastructural model. and we believe that the chatgpt launch and everything that's happened since, the speed at which they've been shipping products since sort of validated that core thesis we're delighted to be investors and quite excited about how things are going there >> compare what you're hearing now with this ai craze with what we've seen in the past, whether that comes with cryptocurrency or dotcom and all of the things we saw at the turn of the last century. >> i feel very lucky to have lived through the what i believe are now three great bubbles in technology so the dotcom bubble, i was a young sort of high schooler and entering college there was a core truth with that bubble, which was that the internet would fundamentally transform society, but, you know, that the only ways to make money from that core truth,

retr retrospectively if you were investing in the core markets in '97, you would have wanted to buy amazon or ebay, not much else back in that publ and the crypto bubble of sort of the 2015 to maybe 2021 or 2022 there was a core truth there, becky, there was a core truth of that decentralized world enabled by cryptocurrency, i think, would be a better world. but at the same time, despite all of those icos and nfts and everything that launched, really,d bitcoin and etheorem seem to be the two things that have really endured. and today, we are living through a massive ai bubble. the question is what are the one, two, oar three names that of on the other side of this are going to capture the overwhelming majority of the value. there's money to be made on the way up, but ultimately the bubble does pop at some point.

>> talk really quickly about a couple of other companies that you think have similar prospects or good prospects, like open ai. >> i think there are several, you know, the public really doesn't have access to that many i would say if you're in the public markets today, what you want to be investing in are big tech incumbents that are effectively integrating ai very rapidly into their offering. obviously, among the record as being very bullish is microsoft, on this program back in february, i suggested your viewers take a look at nvidia. that one still, even though it's rallied 150% plus to date, i think there's a lot of room for that to run there. true core infrastructure and really the incumbents that have distribution into businesses, into companies everything from oracle, all the way on down, i think a lot of these last wave companies are going to really be able to benefit from ai. and then in the private market, there are three areas where we as sort of private market

investors see a lot of activity. one is obviously foundational models open ai does have some competitors there, whether it's an anthropic, depth ai, that's an interesting space. we'll see who wins there's a big question around is open source the idea that there's closed models versus open source models open ai would be a closed source type play. there's things like stability ai that are open source i'm a little bit skeptical about that one, but they have grown very quickly so that's one sector there's ai hardware infrastructure we think nvidia will be the major winner there, but there are challengers to nvidia in the private markets like celestial ai, light matter, which are working on building chips. and then there is this crazy wave among venture capitalists around sort of ai chat bot applications you have everything from inflection ai valued at $4 become you have character ai, which is

growing quite quickly. just focused on letting folks have conversations with historical figures and sort of scan celebrity figures so there are lots -- lots of investing, lots of activities, a lot of these are going end to up being acquired or go to the public markets and, you know, many of them are going to end up being props. so i think folks need to be very cautious >> we'll talk more about the caution the next time we have you, jeff. there is also some hearings that are being held tomorrow. that's reason for caution, but jeff, thank you for your time. >> thanks, good to be here >> coming up, katie stockton with a look at the technicals, plus, former cea chairman jason furman on what kind of grades he's giving on chatgpt, and this week's fed meeting, why he says the markets are more euphoric than they should be. we'll be right back.

good morning 11 now 11 in a row. the dow officially on its longest winning streak in more than six years that streak, a microcosm of this year's overall rally for stocks, that's now prompting one celebrated strategist to issue a

mea culpa. had to eventually. can't just stomp your feet and say i'm right. and earnings season kicks into high gear results out from three dow components, plus several industry bellwethers as the final hour of "squawk box" begins right now good morning, everybody. welcome back to "squawk box," right here on cnbc we're live from the nasdaq market site in times square. i'm becky quick along with joe kernan andrew's off today he'll be back tomorrow he's actually on assignment. let's look at what's been happening with the u.s. equity futures at this hour you'll see right now some green arrows across the board. once again, you can see if dow can hang on for 12 days in a row, but right now, futures indicated up by 22 s&p futures up by 7. the nasdaq indicated up by 65. if you're watching the treasury market, it looks like yields are

slightly higher this morning the ten-year is at about 3.9%. the two-year, almost up 4.9% so still trading in tandem there, moving up and down with a hundred basis points, basically, between them let's get a start right now on the hour with earnings and get over to dominic chu. he's been taking a look at some of the biggest pre-market movers . dom, good morning again. >> nearly 300 companies on the s&p reporting results this morning. we have microsoft and alphabet after the closing bell but this morning, some of the early highlights include shares of 3m, which are up around 2%. over 3,500 shares of volume. the industrial giant known for everything from scotch tape to posters. raised its full-year profit guidance and affirmed revenue guidance as well powering that kind of dow move higher up about 2% also, shares of general electric up around 3.5%, just over 200,000 shares of volume right now. the soon-to-be separative industrial conglomerate reported better than expected profits and revenues and raised its

full-year forecast for both profits and free cash flow, helped along by amongst other things, continued strength and demand for aerospace and aviation-related parts and services ge shares up about nearly 4% then on the housing front, there's pulte group, it's up around 7,000 shares of volume after the home builder beat profit and revenue forecasts thanks to continued strong demand for new homes enough so, by the way, that pulte was able to raise prices, which has been boosting profit margins at pulte so pulte shares continuing that big stretch higher, up 75% year-to-date and we'll end on shares of general motors, up around 1.5% over half a million shares of volume at this point the automaker beat profit and revenue estimates and raised its full-year guidance for a second time this year and announced bigger cost-cutting targets as well so those gm shares, up about 1%. and by the way, you'll want to tune into "squawk on the street" in the next hour, when general motors ceo mary barra sits down for a cnbc exclusive interview,

must watch on this day for the auto industry. joe, i'll send things back over to you guys. >> dom, thanks morgan stanley market analyst, mike wilson issuing a mea culpa in a note to clients saying he's been too pessimistic on stocks joining us now to talk markets from a technical perspective, katie stockton, fair lead strategies founder and managing partner and a cnbc contributor you definitely get cut more slack, katie, because you're a trend follower and a technical analyst. as far as mike wilson, he's still -- i mean, 4,200 -- we're at 45 and change, but if you were him and you had been -- if your bearish case was 3,000, which he was still talking about on the s&p, maybe his average was 34 or 3,500 and his bullish case was 3,800 you've got to say, "i was wrong. so we'll start at 4,200. so when he finally changes it to

4,900, it won't look so crazy. you can't go from 3,200 to 4,900. >> right the revision is appropriate, it seems, just based on where we've come from. >> based on him keeping his job and his career and being able to say, i have value in what my forecasts are. >> i think mike's great. i have to say, so, when we see breakout os cur, it allows us to ratchet those support levels higher and creates a new normal for the market now for the s&p 500, with the breakout that we saw back in may, the new support is, we are looking at not only the 50-day mean average as an initial level, but former resistance, which is now around 4065 >> it's somewhat helpful in hindsight, but if you are following everything going on with mike wilson or following the trends you're not in, it's nice to have an explanation for why, you know, you felt like it wasn't a good time to go in, but it doesn't -- it doesn't help you with your strategy to do things, does it?

what should we do now? buy north buy? >> sometimes it's just momentum, right? >> do we buy into this momentum? >> it doesn't needs to have an explanation, it's just market sentiment that's driving it. >> but recommending what people do with their money -- >> of course >> is why we watch and why they want to take advice. >> we're still bullish right now. >> when did you turn bullish >> back in may when the s&p 500 broke out remember, we talked about a target of 4510 >> it wasn't going to go much further. >> 4510 was our objective and we're passed that. we're at the place where we have the s&p 500 facing resistance around 4,600 we see some minor signs of upset exhaustion as we get into a lot of earnings flow and what have you, but we're still recommending that our clients hold on to their equity positions. we're not any longer recommending that they add exposure and we say that because we are seeing less in the way of positive technical catalysts

we saw a lot of breakouts between may and just recently. but they're starting to quiet down a bit, and earnings season so far it's fine, but it's not generating more of those breakouts. >> so, we're getting close to the end, what was the level in may on the s&p >> it was 4155 if you recall that was the resistance level. it was based on our cloud model, which i think we've become somewhat known for in terms of a threshold and a trend-following device so that cloud model, which was at 4155 now shows support. it's a bit lower at 4065 >> but we were thinking it was the high end of the range at 4,200. and that it was -- >> that's before the breakout. >> so the break out -- what was the number when you saw it was an actual -- >> around mid-may, around 4155 >> we still weren't at 4200 then and that's -- so the 4200, yeah, that might have been an older level, i'm not sure, or a rounded level, but it was when

we broke out above that 4155 threshold. >> and you expect the bond market to sell off again >> so, in terms of the treasury yields, i mean, we do think they'll come in here a bit near-term farther from their recent highs, that includes ten-year yields, two-year yields, and at the same time, we're looking for treasuries to rebound within their trading range. so a trade range is in place >> the bonds themselves to rebound? >> the bonds themselves to rebound. >> will we go back above 4% and well above 4%? >> i think eventually, yes, but not in the near-term if indicators still point lower we've been talking about this as a corrective year following the secular shift higher that we saw proceeding this consolidation. so we think the consolidation will continue based on our indicators, but that it will ultimately yield a higher low and higher yields. >> if the fed goes another, if they go 25 tomorrow, let's say, and what if they did two more.

wouldn't the ten-year just be way out of whack for where the fed is at that point how does that reconcile itself >> yeah, i mean, ultimately, you would think that it would create a breakout, right, in yields >> yields would go up. so you would have an eventual 4 1/2 on the ten-year. >> if we were to see the 434 resistance level cleared, the next resistance is about 5.25. >> 5.25. >> i don't think it's a near-term concern, if you want to call it that, but i think it is something that we have to, you know, sort of put our sights on, perhaps later next year. i do think it's realistic based on the chart itself, and yet, in the near-term, they still do point lower. >> and then the two-year would be going up as well, but probably not as much so might get close to one another, and then the world looks kind of normal >> and it would narrow that gap would narrow a bit. >> can you tell anything with gold or whether there's a recession on the horizon

look at the jobs market. how do wave recession with the jobs market still so tight >> you know, that's not my area. >> i know, but do you see anything that would indicate -- copper or anything in -- >> you know, coppers, metals, commodities, they're all pointing higher right now, still. gold had a corrective phase that it's now advancing from. we think that advance will continue copper cleared our threshold, the cloud-based resistance we talked about last time we see crude oil now above its 200-day moving average we are looking for higher commodity prices, but not dramatically so, because the resistance -- secondary resistance levels are not off. >> so the eventual -- you're not a tom -- i don't know if you know tom, he says 48 or maybe 5,000, new highs for the s&p >> this year >> is it possible? >> i think it's unlikely i think it would be very brief but the 4,600 level seems surmountable to me it's not a major resistance. and the secondary and final resistance is at the highs, it's

4810 or 20 in that range so we're not looking for a big breakout to new highs. we do think that much longer term, this is probably a trading range environment. and because of that, when we see overbought sell signals, we want to react to them we don't have them yet, but certainly they could be triggered in the near-term by some big megacap disaster. >> well, you're on that side with not new highs tom lee says we're definitely going to new highs sometime this year >> fair to say >> katie, thank you. >> thank you when we come back, we'll go inside verizon's second quarter results in the top analyst and ask him about the potential downside for big telecom stocks in the wake of the "wall street journal's" lead cable investigation. and then later, former white house council of economic advisers chair jason furman joins us on the latest fed meeting that kicks off today as we head to a break, another earnings mover this morning. spotify falling hard after sales came in light of what the street was expecting. that stock initially rose on

higher user numbers, but you can see it's turned around quite a bit. that stock right now, off by 6.25%. stay tuned you're watching "squawk box" and this is cnbc

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shares of verizon higher in the premarket. stock up by about 1.8% after the telecom giant reported second quarter earnings a little bit earlier this morning the numbers beat street expectations, sales came in a little light joining us right now for a deeper look inside the results is peter spino, who is wolf research senior analyst. what's your takeaway on this what's your take on the results overall. >> we like the results telecom is a popular subject, and there are a couple of new trends at verizon over the last two quarters that we like. one is spending less money on upgrading consumers' phones and the other is a stabilized churn rate, so that customers who canceled their service are starting to -- it's no longer trending against verizon >> so is this the time that there is really a payoff for the investments the companies have made to this point

>> that's a great question the whole industry that has spent over $120 billion in 2020 and 2023 to date on 5g it's spectrum, antennas and labor. those investments are starting to taper off, and we're cautiously optimistic about telecom stocks, because we thin the chance to have less capex and pay down debt at these low valuations is a nice equity opportunity. >> how come the stock is down by something like 23%, if you're looking over the last full year. this is a year-to-date, which shows it down 11.8%. if you piull it out and see a full one year, it's down by 22%, when the stock market and s&p is up by 15%. >> it's been so bad. and this positivity you're hearing from me about verizon is incipient. over the last year, verizon has had two different consumer

segment ceos it's lost absolute and relative market share of post-paid phone, and it has had really, really high level of debt the stock or the company is over three times levered in the wake of this 5g investment cycle. and so there's a lot of uncertainty about the company, and there's uncertainty about the industry the cable industry is growing hand over fist in mobile >> there's also uncertainty about the led-sheathed cables that "the wall street journal" brought up about two or three weeks ago, about three weeks ago, they had an article digging into it and everybody in the industry have been trying to figure out what the remediation costs would be, what the liability issues might be. what's your take on that >> well, we all have to be intellectually honest that it's almost nobody's expertise in the range of outcomes is wide, but the way we're thinking about it is that as you alluded to, we break the cost down into two buckets. one is probably class action, and the other is probably

remediation. i mean, for class action, let's start with our opinion that i suppose a lot of people agree with that any technicians that were exposed to lead and not cared for appropriately deserve an apology in dollars. and we expect that to come, but we expect the number of people on that list will be measured in the hundreds or the thousands, not the tens of thousands. and as far as consumer harm goes, with all of the appropriate compassion for anybody hurt by this, telecom infrastructure is not in locations that touch many people and so we think the majority of leakage will not have caused harm and in cases where there was harm, it should be really, really hard for attorneys to prove causcausality, on remedia, the cost is reportedly in the $5 to $15 million per mile range,

and it may cost billions, and it could take years there's nobody trained to do this, so the net present value of the liability may be much smaller than the absolute face value of the liability >> i hear what you're doing and how you're trying to get through this a lot of people are doing the same thing, but with all due respect for the people who were hurt by this, but good luck approving it this is going to be something that it's a bit of a morass for these companies to deal with for some time to company, right? i mean, these are legacy networks, i get it most of these cables were put in before anybody running these companies were even born but it's a big issue and it's a serious one and it's one that nobody really knew was out there >> you summarized it well. the problem won't go away soon and it will be an overhang on these stocks within the group, it's interesting to note that verizon fell as much from point to point, before the news to yesterday, as at&t, despite

verizon's independent phone network, their copper telephone network is a fraction of the size of at&t's and it's much smaller in proportion to their wireless business, that generates all of their cash flow there may be a company-specific opportunity there. >> okay. peter, thank you >> thank you >> the thing that, you know, the people that were harmed, the thing that they have going for them are the lawyers, though it doesn't matter how much of a long shot it is -- >> you know, i saw -- >> -- they will be there like loc locusts. >> look, i saw something last week, i was reading in "usa today," there's some class action lawsuit that -- i want to say a&w had to settle for some ridiculous amount of money for all the people they harmed by claiming that they had naturally aged vanilla in their cream soda, because that's what it said on it, and it was like $10 million or some ridiculous

settlement by anybody who was ever wronged by that how much of that goes to consumers? zero and the idea that you were harmed by this -- >> it's funny, we can make fun of the bar, we can make fun of the bar and we know that they -- they're like -- they really are, we know what they're going to do and we make jokes about -- >> look, lead poisoning is a different scenario than saying i drank vanilla that wasn't aged naturally. >> but when you need a lawyer, they're very important to get justice for people that would never get justice. >> and lead poisoning is a very different scenario than these frivolous -- >> and it probably is -- >> it gives them a bad name. >> remember the guy we had on for the industry, he was smiling the whole time, we had on. but it's probably in remote areas, most of the times, and it was in a small number of -- >> most of thecables are encased, but we're talking about

66,000 miles in the case of one company. >> i can imagine in areas of the city where the paint's peeling and lead -- >> and that's what a environmental defense fund scientist said, too, lead in the water pipes, because they made water pipes out of lead, encased it in lead and lead paint. but it's just -- debilitating costs that come from lead -- >> a real big proponent for the bar and the lawyers. that's my point for attorneys, day do a lot of really important things i want to go on the record and say that, okay >> okay. coming up, the controversial practice of the irs just ended i love the irs, too. homeowners and businesses will probably be pleased at this one. robert frank fils us in when we return

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there's always been a chance, apparently, that a knock on your front door could be someone from the irs coming to collect. that's much less likely to be the case now there are some things i didn't realize. the normal audit guy isn't going to break down your door. but if they know you owe money, they might come. >> if they knock down your door, your german shepherds would eat them for a snack so irs commissioner danny werfel announcing an end to unannounced home visits by irs agents. the irs currently makes tens of thousands of visits unannounced

to taxpayer homes and companies every year it's typically for collecting large liens of over $100,000 when the taxpayer has refused to answer any calls or letters. now, it will only visit a home in criminal cases, that's to serve a subpoena or seize assets being secretly transferred so if someone comes to your home and claims that they're an irs agent, it's most likely a scam the change comes amid republican criticism of irs visits including a raid on a montana gun shot and a visit to jeff gundlach the change came amid irs agents worried about their own safety as well as the growth in scams of people pretending to be irs agents the irs will replace these visits with scheduled meetings as well as letters >> how do they schedule a meeting if they can't call you or email you >> they'll send you a letter, they'll call, they'll leave a note, maybe, i don't know. but congress last month clauwed

back $20 billion of the $80 million they had committed to giving the irs to improve taxpayer services and enforcement. that's the issue, if you can't reach anyone, whether you're trying to collect or even schedule a meeting, for years you've sent notes, you've made calls, previously, they would come to your house and now, unless it's truly a criminal like narcotic situation or cyber crime, they're not going to do it >> that's very weird, because i would have thought all along that if you owed $100,000 and you weren't answering, that's a criminal case and i can't believe they would just keep begging and then finally show up they don't send the police or something? >> or do they garnish your wages? >> there are electronic ways and there are ways to put a lien on some piece of property -- >> but it's not criminal if it's three years and you've owed $100,000 for three years, it's not a crime >> but the penalties keep climbing, and what they'll eventually take from you is more and more how do i know it's an actual irs

agent trying to contact me if someone called and said they were an irs agent, i would hang up on them >> or the email. it would be the actual email address. more letters and correspondent on official correspondence or -- >> they're making, on returns, if there's the slightest thing, a little discrepancy between new jersey and new york on the state side, they find, you know, $300 that you've underpay or overpaid so i can't believe that they're -- >> and now that they're getting all of this money, most of it will go toward improving the ai components, the electronic, the digital components that will be even better at finding discrepancies between all of the data that they're collected on a taxpayer and the data that the taxpayer submits >> but there's people that let's say owe $500,000, and they're avoiding the irs and they're not answering letters. >> yes, yes. >> there are people that go for years owing millions of dollars -- >> that's not a criminal -- you don't send the -- >> it might be when they eventually get you >> and pay put a lean on your

property or they'll seize an asset and that -- >> but there are people really just like trying to -- >> there are people that don't pay their taxes, joe, for a long time millions of dollars. >> millions of dollars >> i would worried about going jail >> and they'll publish that information publicly and try to shame people >> can't you go to jail if you don't pay your taxes >> if the sum is large enough and they've given you opportunities to do it typically there's a tax court you go through for a process, if you're objecting or fighting a certain claim by the irs but yeah, at a certain point, you've got to pay or they'll take your stuff. >> i thought you went to jail. i didn't think you could just hide out and not answer the door we're not home >> now they won't even come to your door. >> all right, thanks, robert still to come this morning, only a little over 24 hours until the fed's next rate decision we will run down the key factors that central banks are weighing this time around as we speak with former council of economic advisers chair, jason furman

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all right, welcome back, everybody. this is "squawk box. this is cnbc and it looks like we are in the

green just barely for the dow futures, if the dow were to finish in the green today, that would be 12 days in a row. already, we're at 11 days and that's the longest winning streak we've seen since february of 2017. barely holding in there at the moment still an hour to go to the opening bell and beyond. s&p futures up by 3, the nasdaq up by 50 and getting you caught up on this morning's key earnings, 3m beating revenue forecast and raising its earnings per share guidance mike roman telling cnbc that they're working on the personal safety divisions, and weakness on consumer retail and china and that stock right now up by about 2.6% and then there's general motors, scoring top and bottom-line beats for the second quarter and raising its earnings per share guidance that stock only up by about 2 cents. we've seen those early gains for the shares erode we'll see what happens a little later through the session. general electric also topping earnings and revenue estimates

and raising its annual profit forecast you can see that stock up by 3.8% so a big jump. and dow beating the street's expectations and profit estimates. take a look at shares of dow right now. off by about 45 cents. joe? >> thanks, becky the question facing the fed as it kicks off its latest meeting today, what will central bankers do if inflation remains stubborn and how will they react if there's a recession? steve liesman joins us now with the answers from the new cnbc fed survey steve? >> hey, good morning, joe. you've got to gain out the fed it's an important exercise for investors. try to figure out what the central bank is going to do under the conventional wisdom, but under different scenarios like higher inflation or a recession. and we asked our respondents to the cnbc fed sur vey to do just that the outlook for the terminal rate of 5.48%, that would happen in september that's essentially one more, maybe one more hike from here, 25 basis points. end the year at 539, about where

they'll be and then, you have cuts built in for 2024, a little bit more than the fed itself has built in. but what if the u.s. inflation rate falls or hits that 3% level and maintains that level what should the fed do 13% say raise rates, 71% keep rates at the current level above 5%, 16% saying cut rates below 5% and if it's a modest or mild recession with inflation still above the 2% target, what should the fed do then? 52% expect the fed to lower rates. 39% say reduce the balance balance sheet runoff, and 1% say stop the balance sheet runoff. so not real conviction there that the fed has the back of the markets in the recession mark visitner, chief economist writes, if we get a soft landing, the fed will likely have to push interest rates higher if the economy slips into recession, they will only be able to cut rates grudgingly and modestly john donaldson, director of

fixed income at haverford trust company says, one of our strongest convictions is that we believe the fed will not lower rates as soon as the market expects. we do not see any cuts in the first half of 2024, perhaps slightly longer. so there are two ways for the fed to approach inflation above target passively by keeping rates at what it thinks the a restrictive enough level, or actively, which is to keep pushing up rates. right now, most think the fed will be a little bit more patient, joe, and take the passive approach, assuming it's reached a restrictive level with the funds rate >> we had someone on the other day talking about how much money is left in the infrastructure bill and the ira, and it's going to keep command pretty strong. it's kind of, i mean, it makes morgan stanley, sonfeld sent me this thing that said that bidenomics is the greatest thing ever, because it's responsible for greater gdp. well, yeah, we know that, that you can spend a lot of money and

juice gdp, but the problem is that the fed is left with a situation like this, if inflation stays high and then if interest rates stay high, the money that you spent costs more to service the debt and i mean, these are all things we know. if you could just do it, we would spend money hand over fist all the time and get 8% gdp. but there are pipers that need to be paid, aren't there >> joe, as far as i can tell, all of your economics are 100% correct there. that is right. it was robert kaplan, the former dallas fed president, who said that and he thinks that essentially, the fed is not really taking a count for all of the fiscal spending that's coming down the pike i have sort of long maintained that the biden administration could have done itself a lot of good by getting on the train of trying to reduce fiscal spending, to keep the inflation rate down. if that is -- if every survey we do, joe, the number one issue out there for the american public -- it reminds me a little bit of the obama administration, which was so focused on health

care amid the great financial crisis i mean, we could argue about what more they could have done or should have done. but it's a bit like taking your eye off the ball i will tell you the other side of that story, which you know, joe, they would argue that they have inflation reduction happening later, as they expand certain things >> that's the other side of the story. but the point is, right now, i would suggest that higher fiscal sp spending, at least according to the all-american survey, is that this fiscal spending is part of the inflation problem and i don't think there's much argument against that. >> the athletes are never wrong. we know that these guys, you know, it matters. thanks, steve liesman. >> baa dumdum. joining us right now to talk about the latest decision of the fed is jason furman. he served as the chairman of the counsel of economic advisers under president obama and a professor at harvard's kennedy school of government okay, jason, i'm going to guess

you're in the camp that they raise rates, but then what >> then, they don't know there's going to be two cpi reports before the september meeting. so at best, what we're going to get on wednesday is a little bit of conditional guidance, understanding their reaction function a better. and in particular, how patient they're going to be about, you know, those rates. >> so, if they don't know and i guess we don't know until we get more data, what's your guess as to what has to happen? because you've been saying for a long time, they probably need to raise more aggressively. are you getting to the point where you think they've done enough and you're willing to be patient and wait and see yourself >> i would like to see them do a little bit more. first of all, there's the fiscal expansion that joe and steve were just talking about. there's also basically a financial expansion going on that great stock market that you were talking about, that's going to support demand in the economy, as well

so there's a lot of stimulus, a lot of things pushing the economy up i think they might need to do more in order to, you know, really, really lock in their goal >> a lot of people, a lot of economists have, steve was talking about this earlier this morning, have recently changed their views, saying that a soft landing is much more likely. would you put yourself in that camp >> i think it's more likely, but maybe something like 30% and do i want to make policy on 30%? no by the way, even if i thought it was 60%, i think the fed has to deal with the risk it has to worry about that tail risk that we have inflation of 3.5, 4, 4.5% going forward some of what we've seen lately is just good luck. you're not going to see energy prices falling 18% a year as they've fallen for the last year >> but some of what we've seen have been improvements in the supply chain and those are real might be why you would see, say, auto prices come down.

then you've got a potential for a strike at turhe uaw, and i do' know what that would do >> some of it's real, absolutely that's why i have a better feeling about a soft landing that's why my overall sense about inflation has fallen from 4.5 to 3.5 i think the fed meneeds to get 3. i don't think they need to do a whole lot better than that there's real things, good things, but you don't need to make policy by hoping for the best and planning for the best you want to plan for the worst and hope for the best. and the worst is that this recession is more stubborn than some would believe >> that's why you've heard them talk about rates staying higher for long but markets don't believe that they don't think the fed will be higher for longer. i've heard people like barry sternlicht talk about this idea

that, look, everybody thinks all of these problems in commercial real estate, if you can just hang on to 2025, you're going to be okay, because rates are going to be a lot lower at that point. and then you can refinance all of these deals that don't make sense, where rates are today >> yeah, look, the stock market thinking that that'll never be a recession again in this country, and you have the bond market thinking that the fed is going to cut rates could those two things be true simultaneously of course, they could, if we have this wonderful soft landing. but, you need a lot of things to line up right for that to happen and, you know, what we know in economies is some things can go wrong. is it a recession, is it persistent inflation i don't know what it is, but i'm worried about the lack of nervousness out there at the current moment >> meaning that you think the markets are a lot more euphoric, a lot stronger than they probably should be >> yeah. look, on inflation, we had one

really great print a couple of prints in a row that were improvements under the hood in important ways, but under the hood and, you know, prior to that, the inflation was surprisingly high so, yes, step back, have some perspective on don't overreact to, you know, one or two data points and yes, we may well get there, but history says, when you get to a certain inflation rate, you can certainly end up half a point higher later half a point lower if we go half a point up from where we are now, that's going to be a tough thing to manage. >> jason, arlier, i guess last week, we had maya bod nnick on. she was a student of yours last year, a harvard student who conducted an experiment where she used chatgpt to write a bunch of essays for her classes, including yours. she wrote about it and it kind of took off and went viral what are you going to do differently with chatgpt out there, with knowing that students are using these things. how are you changing her

courses. i think she got a "b" or b-minus in your class using chatgpt. what do you do as a professor? >> i'm thrilled that maya did her experiment over the summer rather than doing it during the school year. but it depends on your class, for my class, the essays weren't that important it's a nice thing to have, but for us, the in-class tests are the main way in which we assess students, the main thing we want them studying for. and we just decided, rather than have an essay, wondering what fraction of students are cheating, we just drop the essay entirely i don't think other classes will have that luxury but being more creative. but it's hard. >> is it a roiling debate right now at places like harvard >> oh, yeah. >> it's got to be a big issue for so many places >> they've formed all sorts of

committees and gotten all sorts of communication, and a number of rules that have been put in place. most of it is at the discretion of the instructor. some people are definitely moving things in-person away from the chatgpt so that they can't do this work for you >> reporter: brave new world jason, thank you great to see you and we'll talk to you soon >> okay, see you up next, oil prices heading higher crude and gasoline hitting levels not seen in months. should drivers be prepared for p?re pain at the pum talk about that when "squawk box" comes right back. ( ♪♪ ) ( ♪♪ ) can't stop adding stuff to your cart? get the bank of america customized cash rewards card, choose the online shopping category and earn 3% cash back.

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welcome back to "squawk box," the dow futures, just below the flat line right now, off by just over 5 the index has been up for 11 straight sessions. that is its longest winning streak in more than six years and we'll see what happens today. >> this morning's crude oil trading is -- we'll take a quick look we haven't checked it much this morning, but it has been able to hold 70 and in fact, 75. it's 78 and change in yesterday's session, wti saw its highest close in three months both wt rks i and brent settled above their 200-day moving average for the first time in over a year. later this week, we'll get quarterly results from exxonmobil and chevron joining us now to talk about all of this, rebecca bab bonn, private wealth senior energy trader, is it as simple as everything else we've been talking about today, rebecca no recession, soft landing,

demand stays strong? >> so i wish it were that simple that's certainly an important part of the equalt for crude oil right now, but there's a whole other side of the equation that's equally important, and that's the supply side and what's working for crude or has been working for crude over the last several weeks is, we've had supply come off the market we've had russia start to actually make good on the promises of cutting their production we've had saudi arabia's 1 million barrel voluntary cut start to ripple through the and materialize in the market. and we've had u.s. production, which has been really strong for the first half of the year start to decelerate, rig count is down 15%, year over year. it's an important number, and u.s. production is now going to start to kind of moderate. and we really need that supply side of the equation, just as much as the demand side to hold true for crude to continue to rally. so two parts to that answer, i

guess. >> long-term, what are we using? what's the global usage of oil how many million barrels per day is it right now? and where will it be next year and a year after i'm just wondering how you factor -- how you calculate these things for your forecasts. >> yes, forecast >> right now global demand is around 101 million barrels it is expected this year the growth is expected to be 1.6 to 2 million barrels over last year next year growth is expected to moderate a little bit because obviously the china reopen trade isn't going to be as pronounced. however, global growth is expected there's consensus number, a wide range, to increase by about million barrels. so looking at 102, 102.5 that's the range we're looking at in global oil demand. even though we're slowing, there is expected to be continued

growth in oil demand well into the late 2020s and where it peaks out is the topic du jour of where does it start to peter off? does it happen in 2030, 2035 that's an important conversation just as these big oil companies have to make these long-term investments. right now we're over 100 million barrels. it's going to accelerate this year and into next >> it's even harder to go out five years i guess but when the opec secretary-general said 105, people said he's talking his book but we probably will get to 105 at some point in the future? >> i don't think that's certainly possible i don't think he's necessarily being overoptimistic or talking his book most people think that's a reasonable number. again, that really depends on what happens with the energy transition, how quickly this uptick of evs starts to take

hold >> how do we power them? how do we power them, rebecca? i hope the wind keeps blowing, but we do need a grid. it all points back to either natural gas or some type of hydrocarbon. >> i don't disagree. i think natural gas is going to play a huge role in that that's part of the story as well the transition is obviously under way and will dampen the growth of fossil fuels it doesn't necessarily eliminate it i thip that's why you're seeing the majors, if you look at chevron and exxon, they're looking at energy transition adjacent projects. they're not necessarily saying we're going to go into wind and solar. they're saying we're going to go into lithium mining, into carbon capture. we're not saying necessarily the fossil fuel story is over. we're going to learn to use our technology to mitigate emissions or develop technologies -- >> really haven't moved the

needle -- jeff curry, one of your colleagues or another person in the business, 82% of worldwide energy is still hydrocarbons, and $5 trillion ago or 15 years ago it was 82% we're still 82%. >> those are real numbers, and he's right it's not going to be as quick or easy as anyone thought or hopes for. i think that's why i think when i look at energy equities and crude oil, it really is a sustained story over the next 3-5 years of strength. >> -- >> 81.5, 81.2? something below? that's a big leap of faith to think we're going to do it in ten years. big leap of faith. i hope exxon and chevron don't blow all their money on the adjacent things. i hope they do some of the things they're good at as well.

>> i don't think they're abandoning ship on that. i think they will. i think what they're thinking about is how they somewhat diversify and capture the bigger and growing opportunities. >> rebecca, thank you. >> thank you so much >> i'm scared. coming up, we've got what to watch in the trading day ahead don't worry, they're still investing lots futures up across the board barely nasdaq is the biesggt, up by about 51 points. stay tuned you're watching "squawk box. this is cnbc become an aunty. book a flight. stay 4 nights. meet the baby. make the baby cry. give the baby back. fly home. silver tier in a single trip. join one key and move up tiers fast.

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we're just a few hours away from the kickoff of today's fed meetingment let's talk rates and the bond market with noel core rum who is manager at investment fixed income it's the first mandatory question i think i know what your answer will be. you think they'll raise tomorrow >> that's exactly it it's priced in at the market i don't think a lot is going to come out of tomorrow because we don't expect the fed to communicate much they communicated in the last economic projection that they do expect another hike. the timing, of course, is up to

the data really after tomorrow we'll be watching the data very closely to see what the fed is going to do i think they're going to say that same message, we remain data dependent. >> this is the longest break after this meeting it's going to be the longest break until the next meeting we have a big empty pause, nothing that happens in august, except for the jackson hole meeting. some people think that could be the place where jay powell really lays out the next strategy for what the next move of the fed is going to look like-how much longer these rates will last, how long he sees higher rates what are you looking for it's weird at this point because every single person has the same thing, okay, we're going to raise tomorrow and then we will wait and see so that leaves room for the element of surprise. what would surprise you? >> for sure. i think the jackson hole is probably a better forum because the presser tomorrow i think is going to be sticking -- the data has justified the hike at this

point. so jackson hole is probably a little bit better forum to watch for some of those surprising for what we're thinking, we expect rates to be higher for longer and kind of to be -- the fed again has priced in one more hike into their economic projections. that's going to be up to the data it really comes down to the data what we're actually seeing and what we expect is a slowdown in growth inflation is not going to come down to the 2% mandate which means as long as we don't see a significant downturn in growth, the fed will be happy to keep rates higher for longer. >> noel, thank you good to see you today. a final check at the markets. one more look at this. futures are pretty interesting they've been hanging around, trying to decide which direction to go. right now in the green dow futures up by 5, nasdaq up by about 50. gotten help from earnings which have been coming in better than

anticipated. guidance raised by a lot of companies. we are in the thick of earnings season we want to take one more look at where the treasury market stands. looks like the ten-year is at 3.9% two-year just below 4.9. we'll be back here tomorrow. make sure you join us for that right now it's time for "squawk on the street. ♪ good tuesday morning everybody. welcome to "squawk on the street." i'm david faber. that's jim cramer. he thinks he's on espn it's actually cnbc >> you are such a bad guy. >> carl has the morning off which, of course, he can already tell let's get a look at futures this morning. of course, you heard rebecca talk about it. dow, it looks like it may open down, but the nasdaq is one of th