>> thank you, chris harvey >> i thought we had a big invisible eight-foot rabbit coming in. harvey but we don't final check on the markets we're down a little. make sure you join us tomorrow "squawk on the street" is coming up next. ♪ good wednesday morning, welcome to "squawk on the street," i'm carl quintanilla with jim cramer at post nine of the new york stock exchange. david faber has the morning off. pretty soggy premarket target, tjx, moving the retail earnings ball along, and the ten-year still elevated at 4.22%. cisco tonight. our road map begins with target. up sharply as an earnings beat offsets this sales miss and the lowered guidance regional banks looking to rebound after the comments on capital requirements and concerns about the china slowdown weighing on that country's stocks, including

jd.com, which did have strong results. let's begin with target. mixed results, lowered guidance, jim, negative comps, inventory down 17. there's something for everybody in this. >> there is. and when you speak to brian cornell, it's one thing. he's obviously disappointed in same store sales he does not like to miss that number i will tell you this when you see inventories down, that means there's no promotion coming up, so things will be okay forecast wasn't exactly what i wanted one of the things that brian did is he's just getting these incredible gross margins he knows what people want. they just don't want the big stuff, and remember, he's built this gigantic $30 billion private label business, which i just love, and we always go back and forth, because i shop there with my daughter, and i always, you know, comment on what it's like they've got the best clothing, but that's not where you're going to crush it with same store. so -- and food was okay.

ulta was very good cvs was very good. the starbucks and starbucks pickup, curbside, while you get your goods, very good. overall, i think this stock was down so much that it looked up to people. >> you know it's getting a lot of the buzz this morning off the call, these metrics on theft-related -- violent-related theft. 120% in the first five months. >> since 2018, the overall shrinkage at retail target has increased by nearly 100%, which is really staggering a lot of it, brian will say, is organized crime. the retail crime rings have increased by approximately 50% but it is the violent that is so disturbing now, just so people -- may hear shrinkage, they're wondering where it comes from. the crimes are gift cards and refund fraud, extensively. there's where you see a lot of what's going on. the stores have 120% increase in theft incidents involving violence brian has been leading the

federal cause to try to get it so that somehow, he doesn't have to become his -- his cashiers don't have to become policemen, because he won't let them. he cares more about the health ask safety when you speak to him, it comes up first, even before you talk about pilferage. and what can i say i think he's doing an incredible job in a situation where unless you're a total ollie' aficianado i have a personal shopper at tjx. he knows i'm a 31 waist, and he gets the stretch jeans i love. they're $14. i've seen them at $140 at full-price outfits i was talking to my colleague, jeff marks, this morning, from the club he's never been to tjx, which i find frightening >> he and david should get together >> david doesn't know what a tjx

is >> thinks it's an airport code >> true. yeah, i know like san antonio when you go, there's a snake at the register i swear, half the things you buy will be at the snake and always with a smile. >> that's where they get you >> by the way, underwear, if you go to macy's, you're crazy >> as for the price action on target, jim, it did pop 12% on the heels of the results jpmorgan, chris this morning says expect early squeeze and then fade as the '24 estimates still weigh too high >> i like that, and i'll tell you why. in the end, what matters is the forecast was lowered to $7 to $8, and believe me, cornell knows that i think not that he wouldn't expect a jump because of the yield, but i think that it can't be that high because of the forecast now, one thing i didn't talk about with him that i think we like to think about is amazon doesn't break out prime. but they had 375 million

packages they delivered on prime, so let me just say, you know, that's -- those are all -- those are things, well, that comes right out of target's high and also, amazon, if you go back to the quarter, they're now talking about these eight different regional areas, hubs where they keep things that are often asked for. i bought contact lens solution yesterday, the one they recommend. i order it in the morning, i get home, there it is. that's faster than i can get it at cvs because at cvs, i have to wait for someone with the key. >> goldman with a great note on ecom this morning, basically saying, we've moved past any kind of pull forward or weirdo bull whip from covid we're settling into a new period where the migration of dollars to ecom is sustainable >> what i thought was incredible is you get these weird ramifications. i had alan shaw last night, the ceo of norfolk southern, and i know they had the east palestine disaster, but they make three to four times on a package of -- for e-com as they would for anything else.

speed. amazon, by the way, so anxious to lower its footprint, sends a gigantic amount by train because they have 400 miles per gallon but i just think that you're absolutely right it's become the norm, and everybody has to get used to it, and the cfo was here and you asked him how did they do versus target i think he would say, crushed it not unlike the way messi destroyed us last night in philadelphia >> target digital, down 10.5 is not a number that you would like to see >> it's funny because brian was proud of digital, but i think he's proud of the fact that it's still working. they still have digital after -- i know not good look, amazon was an amazing quarter, and how quickly we forget how great it was, but they don't and this whole idea of having these skus, the units, so close to you, has changed everything f. you order something that's

strange, like i ordered a weird talcum powder. who knows when that's going to come but i ordered some t-shirts this morning, comfy fit, it's called. i bet you when i get home today, there will be eight of them. >> the nice thing is that you can see when it will show, and you can make a purchase decision based on that. >> not only that alexa, in the middle of listening to "rhapsody in the blue," she interrupts me and says, your solution is there i'm in the middle of gershwin. doesn't matter >> as for target, they are still wrestling with this cultural discussion about pride merchandise. they said the assortment and the reaction to it was a chance to pause and learn. >> pride is one of many heritage moments that are important to our guests and our team, and we'll continue to support these moments in the future as we navigate an ever-changing operating and social environment, we're committed to saying close to our guests and their expectations of target

specific to pride and heritage months, we're focused on building assortments that are celebratory and focused. being mindful of timing, placement, and presentation, leading the segmentation and leveraging our digital experience, and reconsidering the mix of own brands, national brands, and external partners within these assortments >> well, look, i'm not a political guy. i asked him point-blank whether it hurt the quarter, and he said, though and he's a straight shooter. i'm there on that. if he says it didn't hurt, then it didn't hurt you know what? i was struck by, when i spoke to cornell, how much -- i thought -- i was afraid he was going to retire. he has really identified what people want in america they want inexpensive, great style. they want inexpensive food he's keeping, by the way, the mission store open in san francisco. very dangerous area. he will not close it because the neighborhood needs it.

i'm saying he's a person of quality. and i bet he sacrificed some same-store sales for doing the right thing. i know in a capitalist system, we don't tend to believe that. i think cornell's different. i think he's a very sensitive ceo, and i like that you don't get a lot of people who are very thoughtful. i spoke to him during the pride period because we happened to go there for some pride issues and one of the things that i think is incredible is he got hurt from both sides. there were people who didn't like the pride stuff up front. >> that's the problem. >> and you know, it was a pox on both their houses or you can just say, he's extremely sensitive to everybody, but what he's really sensitive to is the people at the register and when the people at the register got blowback from the stuff being up front, he had to change, because he cares passionately that no one -- not one register person would be hurt. i saw tremendous stealing at the mission store. there was a breakout, a jailbreak. someone dropped some money at a register, asked for help, and then about 20 people left, ran out with food, cranberry juice i did apologize that i paid. not funny.

and i called him on it, and he said, what are we going to do? that store, we're committed to having it open wow. and it is organized crime in a lot of cases, and it's people who -- by the way, home depot, i thought, had better numbers on organized crime. they're doing a lot more tjx has the best antidote to organized crime. they have tons of undercover people, former police officers, $50 an hour for those who's listening. and i have a personal shopper at tjx who happens to be a -- >> believe me, i heard the 31 waistline. >> look, ayei've got an in i'm not kidding. you can get a personal shopper even use the guy who's trying to block theft. people just underrate tjx because they don't want to be caught dead there. fools. how do you think i made -- how do you think i got to where i am >> 85 cents on tjx beats by 7 cents.

revenue ahead. they do raise the full-year guide, jim, >> i don't know how much you go to home store. i go there for all my thanksgiving number but i thought the number was going to be terrible. it was negative comps last time. home goods, this time, positive plus four. one of the things that's great about home goods, let's say it's thanksgiving, you're three weeks before, already gone you have to go at halloween time for thanksgiving that's demand. that's great stuff >> all the retail news is sort of tying into what we got out of retail sales yesterday, jim, in the broad market atlanta fed, as you know, tracking five for q3 goldman ups their estimate by 0.7, saying there might have been some pull from amazon prime day, but this is accelerating. >> we need a rate hike i think that people who are freaked out that the ten-year's moving up, look, the ten-year's going to -- we're going to inflect the other way, because our economy's very strong. when you put up in housing, our housing numbers this morning,

we're building like 1.4 million over and over again, doug yearley has stressed we'll have 2 million buy. you're not going to get to where you want if you're worried about housing prices cresting. some may think they're strong. it's ridiculous. i saw a lot of people say permits are strong are you crazy? we were building two million houses in this country when we had half the number of people. wrong. >> there is some take -- there's a take out of b of a this morning that, for example, the southeast might be at risk of oversupply now in multifamily because that is where the construction is happening. >> i'm not a buyer of that that's norfolk southern's region, and norfolk southern would say that everything is booming. they have population explosion, but they also have a lot of housing. by the way, we -- the southeast is going to be the single biggest beneficiary of the -- from what i can tell so far -- maybe arizona, some -- of the numbers coming from the federal

government of infrastructure it's just going to boom. the -- by the way, they have no -- did you know that florida has no stone volker materials, they just are on fire down there and it's all for home building if you go to that area, i think you would say that we need rate hikes a couple times >> and is that why equity's getting suppressed here? >> i think so. there's still people who believe -- who are caught on the wrong side of this and thought that you should be short the -- they were in the 30-year and they've been completely wrong because the economy's very, very strong >> right >> very strong >> does the s&p necessarily need to defend the 50-day here as we close below yesterday, first time since march >> i want to cancel patience now, this is cribbing right from larry williams, great market historian. august is historically not that great a month. by the way, bob pisani had a

terrific piece this morning on frank's show where he talked about, remember, august, september, october, not great. but i just think that we're -- that we can hit pause here norfolk southern, down for, you know, ten straight days. that's just -- it's just not a great market right here. and a lot of people are worried about the strike, the ford, gm strike >> i assume you heard the uaw's president line about basically we're not going to take -- >> yeah. i mean -- >> and now we have some dates on authorization votes. >> yeah. having been a union member, who helped lead a wildcat strike, of course, which i was immediately fired, i would stress that -- it was a different year i would stress that there used t to be -- we forget, in the '70s, there were these union moves where we really went hard and boycotted jp stevens this guy is like when i was in the -- was in my union united, the people will never be

defeated, and there's a trotsky-like element >> they looked at what happened in the '70s because union membership was so high all these would react to energy but that's not the case today. >> i got to tell you, this guy is a throwback to the days when you were trying to figure out how much money you had in your strike fund to see whether you could outlast the companies. i know jim farley's beside himself. ceo of ford. i don't think people are ready for this the writers' strike is pretty strong, but i think this man doesn't care whether they shut down the autos for months. it's going to be a death match, claymation death match between s shawn fain -- now, mary barra is one tough person, but if you look at her conference call, she dismisses the union entirely as

being an issue farley doesn't feel that way and when fain ripped up the offer, that felt like the way the uaw used to be, which is that, we're going to target somebody and wipe them out if we have to. they want -- they want the unions -- they want -- unions want to get rid of the 401(k) and i.r.a. >> yep we're less than a month away from that contract expiration. >> that is the most important issue. a lot of people feel that biden's going to get directly involved what do they know? if there's anything we know about this administration, it's that we don't know what, biden's going to get involved and try to solve it i want to hear phil lebeau >> teamsters said, stay out. >> everyone thought when that u.p.s. deal was signed, it was going to be incredibly good news well, i got to tell you, if it's incredibly good news, then what the heck is u.p.s. doing at $172 >> let's get to rick santelli. busy morning for data. hey, rick. >> yes, carl, and it's not only

out. it's out and up, up and away 1% is our read on july industrial production. that is the second best read of the year outside of january when it was only a whisker better at 1.05%. so, with rounding, basically we're right there, and on utilization rates, well, a bit of a different story yes, it's better than expected at 79.3, but it's only the best going back a couple of months when it was 79.4 in may. this has been on the light side. as a matter of fact, in the rear view mirror, we have 78.9 and it now becomes 78.6 and that actually is the lowest read going all the way back to september of '21 so, yes, even though we bounced just a bit on utilization rates, a very small bounce at that, you see, though, that the production numbers being strung keeps rates to the upside. they've actually ticked a little bit higher at 422. we're basically just up a basis

point or two on the day, but you want to pay very close attention to whether we close above or below 4.25%. quk faor huge technical ct "sawon the street" will return after a short break this is dr. arnold t. petsworth, he's the owner of petsworth vetworld. business was steady, but then an influx of new four-legged friends changed everything. dr. petsworth welcomed these new patients. the only problem? more appointments meant he needed more space. that's when dr. petsworth turned to his american express business card, which offers flexible spending limits that adapt with his business. he used his card to furnish a new exam room, and everyone was happy. built for dr. petsworth business. built for your business. amex business. we earn your trust. maintain our financial strength and stability.

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take a look at cava swinging to a profit in its first quarterly report since the ipo next hour, we're going to talk to the ceo of the fmediterranea

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time for cramer's "mad dash" as we count down to the opening bell >> i usually don't go into this group because it's been very boring, but the pipeline group has heated up. not that long ago, we had one oak buying magellan midstream. today, we have a really huge deal energy transfer partners is spending $7 billion but buying a very, very good company, and this time, it's crestwood. crestwood has good assets in the middle of the country but it also has powder river basin, which is wyoming, and it has

markets which happens to be the end of pipe is next to the stadium at the link where we'll be soon, should be good. now, one of the things that i really like about this is that this is what individual investors have been in for a long time, because they're tax advantaged, these pipelines and this is a very tax advantaged deal with interest rates high, you tend not to want to own this group, but i know many, many people in energy transfer. this is kelsey warren. this thing looked like at one point they had taken down so much debt that it would be a disaster didn't happen. this group, and you can look at it there, usually kane anderson has an mlp etf that has been terrible but is now coming back. i urge people to think about this group as being a place to go if you want tax-free income return of capital when you sell it too the pipelines used to be one of the highest in the world and then people decided, we're not

building more pipelines in this country, but you got a change from a republican administration to -- to republican from democrat, look out because this is a federal energy regulatory commission which can be stacked with republicans, and this thing will go sky high. >> pretty active energy space today. oxy with this carbon capture deal >> yes, chevron, nice numbers. >> pioneer >> pioneer is a travel trust name and that's a company, by the way, that has done what you're supposed to do, which is spend less and find more oil it's no longer drill, baby, drill. it's the opposite. what it is is, drill and make money parfor shareholders i had coterra on yesterday scott sheffield, now the ceo but was on the call for pioneer. holy cow, do they have discipline that group is strong i want people to take a hard look at pioneer, pxd >> jpmorgan, overweight today. opening bell coming up in a few moments and you can catch us any

time anywhere, just listen and follow the "squawk on the street: opening bell" podcast.

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leader in income, alternatives,and responsible investing. china stocks under some pressure amid worries surrounding the world's second largest economy. jd.com among the biggest decliners. a quarterly beat for the e-commerce giant ten cent, jim, three quarters of revenue growth but it's a miss you had some thoughts on china on twitter this morning. >> look, i want people to understand i have been negative on china and the chinese economy for a long time. km chinese currency now an issue. they just haven't been able to find a stimulation and they've got these trusts that are very big that are a lot of them are not able to pay out the distributions. the question is, it is a totalitarian government, so what can they do? they seem to avoid -- they can be keynesian, they could print money, but they're communists, they won't go keynes

their going to have to -- ultimately, they're going to have to pull back from the belt and road initiative, stop spending all this money overseas, bring it back and start rescuing some of these institutions if not, i think what they really need is a resolution trust, not unlike what we had in our country when we decided to put to bed a lot of things that were reckless if they do a trust in rtc, then i think that you could start saying, it looks okay here, but otherwise, i don't want to trust anything there i just don't trust it. >> the yield gap between u.s.-china, now the widest in about 16 years >> people are looking at that. looking at the yuan. there are -- they're the polar opposite of our economy. we can't stop our economy. it is not a runaway train but s certainly not going to be a soft landing or a hard landing. but china, they crashed years ago. if you remember, in 2015, you were here, i was here, and the market opened down a thousand. it was because of an errant comment by a very good fed official, don't need to mention

his name now, who just said, listen, we need to tighten, and you couldn't tighten because china was falling apart. here it is again this is a continuing theme china is falling apart how long we going to play that in the same breath, people tell us how powerful they are they're not powerful we have also starved them. the trump tariffs hurt them. we've really shut them down in terms of our high-end technology will they lash out or go the kissinger way? kissinger, who's 100, met with xi there's a tremendous fondness. >> kissinger over there. they need to sit down with kissinger to figure out a way to get with biden i think their only way to get growth is from, yes, henry kissinger. >> that sounds net constructive, i would say. >> kissinger has a plan for them they adore kissinger why not? kissinger figured out how to open their economy it bothers me tremendously that we just don't sit down with kissinger in our country and say, you just met with xi. where's the commonality? i know that you don't want a

war. graham allison taught at harvard at the same time that kissinger did. i had the good fortune of being there when they were teaching. these guys, i can't -- i mean, and professor moynihan, who became a senator, they were my professors and they were so much smarter than i am. at one point, i went to kissinger, and i said, i can't keep up with your mind >> did he have office hours? >> you try to go to office hours. these guys were -- i mean, they were titans. they are titans. graham allison's book about the coming war with china is certainly at odds with what kissinger wants. kissinger is the hope. and they are dismissing -- our country is dismissing it xi treated it like it was just old home week. they got to get kissinger to bridge the two countries he can do it >> we'll see i mean, definitely, you got blinken, yellen, raimondo. >> they're small potatoes versus kissinger. >> interesting there was a note out of goldman that hedge funds have been

selling china names, eight out of ten sessions. >> they have to. i think that china's pathetic right now. you have crony institutions that need to be taken over by the government and refinanced. now, remember, the government's -- they can do whatever they want one of the reasons why every time we're worried about them, like in 2015, 2015, they just said, okay, look, i don't know if anyone remembered, but the chinese are chartists, the government they follow charts i'm not kidding. no one thinks it's true, but i've done a lot of work on this, and they decided to draw a line in the sand and say, we're done. you're done selling. if you do sell, there could be implications now, implications in china, they do have a lot of white-collar, let's say, capital punishment. so, if they say, listen, everyone's done selling, and no one's going to redeem, you're not redeeming. there is a solution but it's not the kind of solution we do here. >> your other point this

morning, last thing on china, is that if we were really going to catch a cold from them, our ten-year would be at, you said, 3.75% or something >> we'd have a big fight to quality. a lot of people are saying the currency is going to cause a -- an asian selloff not unlike 1997 ing loo look, the currency is a mystery to me, but i know that people always forget it's a communist country with many more levers than we have because there are no elections >> speaking of asia, "journal" with this piece of e.l. today. earnings coming up on friday freight is trying to overhaul the asia supply line and reinvitingize the brand, jim another decline today. >> this is one i owned for years for my travel trust. one of the great executives of all time people are saying that -- by the way, they're not saying this quarter is any good. his plan was -- but they do have

chinese tourists going to korea and bringing back estee lauder products that had been one of -- that's actually a very important line for them he made a big bet on duty free he made a big bet on the opening of china he was wrong the idea that he may be in trouble, so to speak, with the stock down 34%, there's a tremendous love for what he has done for the company from the lauder family. the love -- anybody's love can end. he has to put a good face on that call. and i don't think he can i don't think he has the horses. >> the other name you might pair next to china is tesla down 20% from -- since earnings on july 19th versus 5% decline for the ndx, jim more price declines on the x and the s. >> when you try to stop the musk and blunt the chinese competitors because you've got very good low cost, you're going to crush your margins. he's basically said, listen, not

unlike the great rockefeller, who said, look, i will sell oil below everyone, and when i'm done, i'll have 100% of the market now, theodore roosevelt was not in favor of that, but i have to tell you, it's almost like musk has read the rockefeller playbook he can wipe out everybody, and at the time, that was considered to be antitrust in our country clayton. and it looks like he's going to get away with it in this country. he's unstoppable right now, but that's going to hurt the stock >> right i also wonder what you made of vin fest yesterday on the nice run at one point worth more than gm and ford. >> it's one of those things, i'm doing a piece on it tonight. this is the largest -- richest family in vietnam producing 3,000 vehicles in this car but only -- this country but only about 150 have registered, which tells me that the sales ratio is not that good. i'm being somewhat facetious there. this thing is a disaster it's the type of thing that gary

gensler is watching. he has to call and say, we have to end this process. it's blank check merger no one even knows how many shares there are they're being redeem right now it's a complete fiasco anyone who's playing it, i've got to tell you, i got a horse right here named paul revere >> one of frank lesser -- >> i played harry the horse in the great "guys and dolls" but that's because she said i could not play sky masterson >> you would have been a great nathan, passing out the whiskey. >> vin fast is not worth anywhere near that and those who are playing it don't understand it could be another getty. it's a shame this stuff is allowed. we are america after all, and that's not an american way to have a market. it makes people -- michael from jpmorgan did a fantastic piece talking about the incredible losses from spacs. it's -- michael is spot on it's wiped out a next generation of people, spacs, mediums, and

vinfast auto is worth probably $2.60. it's at $26.82 go ahead and buy it. you'll lose money. i'm offering a guarantee very rare in this business >> that's an aggressively bearish target >> it's only one million shares out there. i mean, it was obviously designed to be a short squeeze and they did it. but i mean, this company doesn't -- go to the website they do have some good-looking cars, but i got to tell you something ho chi minh, rolling over in his grave. >> we talked about target in the opening block. >> if tjx is only up $2, and they did everything, every line item, then target should be flat tjx was just incredible. i wish david were here right now. i mean, i think he would think that tjx is, i don't know, maybe a defense company.

>> yes rockets. >> rocket dyne tjx the banks, jim >> went to a tjx launch recently in cape canaveral. the banks, oh, carl, the government doesn't want you in the banks. they've decided anyone who buys the banks is an idiot, and they're really pulling it off. you know, i think that, boy, talk about another titan jpmorgan, the corner, right here where they had recently, like, the store selling like knickknacks, baseball shirts they closed that thing in a heartbeat, but jpmorgan, fitch is nothing jpmorgan is king the idea -- they're the strongest bank in the world. the strongest bank in the world, and the regulators are going nuts morgan stanley, my trust owns it i wish gorman weren't leaving. charlie scharf doing such a good job at wells fargo i know people who have been with him of late, and he's very buoyant, but it doesn't matter 3.2% yield, lot of capital, buying back a lot of stock, but you just have this cloud over

the group and no one wants to go there. i'm not going to go there. >> s&p outperforming kbw by 33%. >> oh my, that's a disaster. you look at yield, like, if you look at the yield for t, it yields 7.7, and key is considered a bank, but they did not have a good quarter. it was not a good quarter. a better quarter, i thought, was huntington bank shares, hbn. now, that is a 5.4% yield, and i would buy huntington bank, and then my favorite is first horizon, which got that takeover bid that was nixed 4.6% yield, still run by brian jordan and is in memphis where there is still tremendous -- his unit, he goes where the growth is and it's almost like you can overlay the states that he is in with the fastest-growing, best areas to do business so, i like first horizon very much >> every day brings another bullish note for nvidia. today, barclay's we're surprised the stock has not moved much over the last month. there's clearly some hesitation to buy a name up 200% this year.

we believe the stock will look cheap exiting earnings as the street moves to our $15 plus estimate next year >> a lot of people feel that the saudi orders, which are gigantic, are subterfuge and it's really chinese which are -- teach at the university that's getting the chips, the cards look, jensen told me, jensen huang, that they'll be able to meet demand by year-end. but the demand is off the charts so, i understand how people could say that i've liked nvidia since -- i liked nvidia since '15, '16, so i'm a card-carrying nvidiaian. i did say to traders, get out of the way. this is an investment stock. it's an investment there will be moments where there will be -- when you have a stock up 200% where someone's going to hit pause or say, i want to ring the register. but this has to do with the fact that they own a category he called it an iphone moment. he called it a moment like when there was win tel in the pc.

jensen is not given to hyperbole. he's saying these things because he sees that you can't do artificial intelligence without his cards. amd does not have anything near it now, cisco reports tonight cisco is saying, over and over again, look, we do have a lot of a.i., but they are going up with melonox, which is an acquisition that nvidia made that was tremendous speaking of acquisitions that didn't work, intel >> i was going to get to, from an nvidia to intel, yes. >> i don't know. >> there's a short line. >> pad -- pat -- his -- pat's -- pat's wife does great work in africa, and i supported her efforts. >> do you not believe this line about regulatory hurdles >> it is true. it's just that -- and look, the stock's doing better, and he's got a lot of plans to do better and mobile eye turned out to be a great acquisition that brian never talked about for whatever reason did great things there the semis are all going up intel is actually riding a wave

today. and look, pat is going to survive but it is -- it's nvidia up here. and then it's amd here and then intel here. >> it's funny, you were out on friday, but wolf did have this technical note suggesting that maybe you would consider going long intel, short nvidia >> well, just send me an invitation to your funeral >> okay, all right >> by the way, that is from the legendary -- that's jim fisk and he was the single biggest patron of delmonaco's, which has reopened >> interesting sort of brings us to cava, because we're going to talk to them this morning. >> i love jeffries they call it fiery second quarter beat the comps were incredible. what i think is most interesting about cava, you got to break down and go through the conference call. cava, people don't realize, is universally loved. this is mediterranean food my executive producer, regina, who is the authority on vege

vegetarianism, says, this is it. but they just opened in missouri they're opening in missouri and rhode island massachusetts, texas, georgia, colorado now, the great peter lynch once taught us, who's -- ran magellan fund, if you can find a company that has a good regional business, it may go national cava is that business. this is a terrific story lot of people didn't believe it because the ipo came at a period that's rough but -- and by the way, what, you have ron shank on today? i love ron but -- panera. but this cava has -- it is in sync with what the younger generation wants a lot of it, you have a lot of vegetarians, and call me a believer >> interesting retail sales restaurants and bars was up 1.4% on that print yesterday. all that said, jim, about eating out, there's still a lot of discussion about whether or not walmart will raise their guide when they report tomorrow. >> geez, you've got the most

conservative ceo in the world, doug mcmillon. i like him so much i wish he would talk more about what he's done for lots of countries around the world by buying their product instead of buying china of course, they'll say that they have a lot of american, but a lot of that's food the private label is crushing it the target private label is crushing it. will doug raise? he may just not raise for the sake of not raising, but i think his numbers are going to be very good you know who else has done that? costco, that's another company that's doing well in retail. costco up again today. i think walmart's going to print a great number, and i think that wall street is biased against walmart because they don't go there. biased against tjx because they don't go there and all i can say is they don't know what they are missing >> really? you think walmart's undercovered largest employer -- >> they don't go i will tell you that the school supply section of walmart is

lights out it's lights out. and i know people say, well, what is cramer talking about it's back to school. they've got the right stuff. by the way, if you're an artiste, believe it or not, walmart's fabulous my daughter's a baker. she gets a lot of ideas from them she uses fire fly to change the colors on her instagram. i think that walmart is the great american story because they have side-by-side their private label, which is, believe me, the exact same, and it is so inexpensive. the only thing i have told walmart over and over again, please get rid of the towers of really bad debbie's, oreos, because when you go by them, you can't help but take some by the way, m&ms has these new cold brewed centers. i don't know whether they can keep them but i'm sure walmart is going to have them. >> speaking of packaged, kdp, ubs ups to buy >> i'm so glad you brought that up >> they go to $42. >> bob gordon, who sold pinnacle

foods, is one of the great brand managers of all time i have been waiting for this breakout, and it's here. the earnings inflection is here. valuation, sells at 17 times earnings used to sell at 20 keurig is back and better than ever a lot of people nespresso is going to kill them you're not going to crush bob. he's a brand man through and through. that's bob that stock's a buy >> lot of considerations in there, whether it's eat at home or away or currencies. >> yeah. i mean, look, it's a hard company to understand where it fits they do -- they bought this company where you can make your sodas at home. it really isn't that great for instance, i still have ginger ale on my roof, my ceiling. i put it in. it didn't work but it's ginger ale. it's been ten years, and i think my kitchen still smells of ginger ale >> last one we'll touch on is ge health care. wells overweight 90. >> this thing is a straight shot

down trust owns it. we waited ten points to pull it back this is an alzheimer's play. what's going to happen with the biogen drug and the lilly drug is that the american community and medicare is going to say, you have to have a plaque build-up before we're going to give you the medicine because there's such demand for trying to stave off dementia. and how are you going to do it you need an mri. who's going to give you the mri? that piece says it's not going to happen until 2025 that's wrong it's 2024. how do i know this because of my work as the chief spokesperson for the american brain foundation, which i don't do idly. i was going to speak two hours about my problems with my brain, but they cut me short. that was a -- george carlin line >> carlin's the best >> he was amazing. by the way, speaking of health care, before we go, lilly, new high. >> come on boy >> you're talking 20% for the month to date. >> it will be the greatest selling drug of all time

stock is down today. they have the capacity to meet it they're building plants in north carolina, furiously. at the same time, the stock is a little bit parabolic, not unlike nvidia i like nvidia. i like lilly, and what happens is traders get in and say, wow, it's really hot. where you been where you been >> look at that. amazing chart. so, with that, we've got some gains, despite the soggy premarket. dow is up 178. check bonds as well. data this morning as we said, we did get that number on starts. industrial production. we'll get some atlanta fed inflation expectations and then, of course, this afternoon, 2:00 p.m. eastern, fomc minutes. don't go away.

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led by travelers cisco is the second worst performer behind intel we'll talk to chuck robbins tomorrow at 9:00 a.m. eastern time, join us for that back in a moment

it's time for jim and stop trading. >> you may remember, the supreme song where there was a line that says flo she don't know. turns out that flo does know in all of the progressive ads, progressive had an incredible quarter, driving all the insurers up. i prefer chubb, they're mine but i have done a lot of stock progressive is moving up travelers, this groub has been hot, when you look at the headline numbers progressive doesn't look so good but people love the insurers as the financials people don't want fin tech, square, paypal, they don't want the banks. so they gravitated towards the insurers with good numbers, if you want to graduate, graduate

to chubb >> flo is an actor. >> i'm promising my wife, the dish comes down because it's the most hideous thing i have on the 1790 house the dish. >> we're getting into football season >> sunday night, wildcard weekend, yes, peacock. >> see you tonight "mad money" 6:00 p.m cava cava rising sincgog ble inpuic in june. we'll talk to the ceo in the next hour. so i called innovation refunds. their team of independent tax attorneys will work with your cpa to determine if your company is eligible. [whip sound] take the first step to see if your small business qualifies. the first time you made a sale online with godaddy was also the first time you heard of a town named dinosaur, colorado. we just got an order from dinosaur, colorado. start an easy to build, powerful website for free

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cfo. mvp. built for cynthia's business. built for your business. amex business. good wednesday morning welcome to another hour of "squawk on the street" i'm sara eisen with carl quintanilla. we are live from post nine of the stock exchange david has the morning off. look at the tentative rally in the early action with the s&p 500 up 3 points or so after closing below the 50 day moving average. nasdaq bearing the brunt down .2, while the dow rallies 113

points here are movers we're watching shares of cava headed higher but losing gains the restaurant chain swinging to a profit in the first report since going public since june. shares are up 100% tjx in the green beating estimates with same store sales up 6% driven by strong sales in apparel and home good. >> and target, revenue missing estimates for the first time since 2021 but it was a beat on profits. and the stock is up almost 6% off the highs of the morning but a lot to dig into carl when it comes to the reaction and what we learned from target this morning. first, as far as the reaction, you might ask why is it up when they lowered guidance, saw weaker traffic first of all there was a lot of negative sentiment around target and it was a crowded short so what you're seeing could be a

squeeze on the bottom line beat and second of all, they were able to draw a line in the weakness and sales they were seeing i spoke to the cfo of target about the results. four factors he pointed to when it comes to the weakness in sales, number one something they've been talking about for a while, inflation is impacting consumer demand and discretionary categories he said it was more pronounced as we moved through the quarter. guest response to the pride collection we know what happened in june. that was a factor here impacting the weakness in quarter. intense promotions to move the inventory, what they've been doing the last year and there was a biggest share of spend for consumers as they have to buy the basics and that weighed on sales. here's the hopeful sign he said, june was the trough, july was better than june and it's early august, ten days into the quarter but pleased to see

august start stronger than july. so that was a signal that perhaps things are looking better carl, i really dug into the pride issues because, of course, the comparison we have is bud light and nobody wants to see that repeated again for target. and he said they're not able to isolate that as a demand factor because so many other factors were at work they weren't able to pull out what that meant but the implication is things have stabilized because july is better than june and august better than july he said as far as takeaways we're looking to learn from our guests but we're listening and learning we'll be reflecting on the placement, for instance, in stores going forward when it comes to things like pride month and balancing the partnerships it's big but as good as i got when it comes to digging into that issue but for those looking for a sign that things have turned, perhaps they were encouraged by the results as the buy sides were

more like negative 5% comps. which is what we got. >> jim said the pride controversy was not the culprit for the negative comps interesting in the last hour, j.p. morgan said fade the squeeze, the midpoint of guidance on operating margin at 4 clnt 6 is below the street at 5. 5 and until they come in line unlikely you'll see them sustained. >> he had a negative catalyst going into the stock on the quarter. it's interesting to see what walmart reports and how the stock trades tomorrow. it's a different story, more index to groceries and basics and the street loves it and the stock has had a higher valuation of price going into the quarter target was down about 20%, still down year-to-date with the move today. and the guidance, a lot of talk about what they're seeing, lowering guidance, never a good

thing. the cfo said the trends we saw in july were in line with the may single digit decline in comps they're looking for. it's a cautious environment. they're more exposed to things like home and electronics and that category slowness he said is top of mind and he's watchful of student loan impacts students have to repay loans starting in the fall that's where the position of caution comes in here. >> it rimes with the depot saying comps were edging back in july and comes with trend wise from retail sales yesterday were consumers feeling confident, expectations reigned >> i told you to watch the atlanta fed, moves from 4.1 to 5. that is an economy that is booming which nobody expected. the caveat is we're still early in the cycle to make predictions for third quarter because we

just had the second quarter numbers but so far the numbers coming in this pretty good and raises the question whether in this environment we can see inflation moving down to the fed's 2% target. this is what the market has liked but talking about cuts in 2024, have we seen enough for disinflation to continue moving down in a straight line? wages are high, labor market is still tight, unemployment rate is not going up, companies are still doing well all of these factors, consumer spending has cooled but not falling off a cliff. none of that jives with the idea that inflation gets crushed. >> unless your productivity and you're counting on that to come to the rescue. work week is cut, payout falls, corn today at a two-year low shelters on the run. >> shelter is the key. >> we know commodities have done

the heavy lifting on the disinflation and goods prices. the next wave we have to see is shelter and some of the services do the work if we want to see disinflation go down in a straight line. >> that's why minutes this afternoon are interesting. >> 2:00 minutes from the last fed meeting. want to bring in mike sa santoli this morning we're trying to figure out is this the start of something bigger >> everything bigger starts like this it does feel as if we need to have more of a scare to settle things out but the market has been navigating the exact narrative shift you've been describing from a position of being very overbought into august, having sentiment be excessive, reaching a new valuation high for the s cycle. so all those things are digested at the same time, we're going

slow steady comfortable slow down in the company where yields have peaked and the fed is just about done where acceleration where it's a higher for longer rate and the fed has to stay on alert. so all that, 3 or 4% down in the s&p 500 is really modest at this point. you have the seasonal headwinds that are going to be an issue. and i think, too, we have to be careful about buying into whatever the latest version of where the economy is going because you know, you're talking about are we going to have enough help on inflation by the first quarter to actually be thinking about the fed cutting i don't know, five minonths agoe thought it was march, five months from now is january a lot can happen in a few months to change the backdrop i think the market is in the controlled pull back for now, probably wait to get more oversold in the short term for

buyers to feel cleaver after you break the 50 day average get the nothing can bring the market down psychology. >> i think in the minutes what's most interesting to look for, hoping for a more dovish view, want the market to rally, there's the outstanding question of bank credit and what that does for the economy the more they talk about that, the more dovish it is. the more they talk about lag defects in general that we've done a lot and still need to see the impacts of that. these are things we need to look for in the minutes because what we get from powell is more of that i think than what we've got kashkari for instance which is we have a long way to go and we're not satisfied with the inflation we've seen. >> the message you're getting, which is even if we keep rates about 5% and inflation comes down, we're restrictive, the

neutral rate is lower, we can keep rates here or lower them and still be restraining the economy, it doesn't have to be in response to outright economic weakness the magical soft landing gdp never went below 2% in any quarter. in '96, which was the year after the soft landing was so-called executed about 4% gdp. a different time obviously but it tells you that, you know, it doesn't necessarily mean you have to bring the car to a halt and then restart it again in order to actually execute this thing. >> i am curious what you mean by a little bit more oversold i think back to jeff degraph's discussion a couple fridays ago, 4,300 which was a successful june test. >> yes, a few percent down from here you want to get more stocks looking -- you know, like very few stocks above their 50 and 20

day moving averages. you want to see the put call ratios get more extreme and people hedge up a little bit more right now in the middle zones, markets no longer looking frothty in the up stretch. the s&p got here in june, two months that's onstructive i think what's going on seasonably and internally you lost the momentum and on a tactical basis if you have people say i'm going to buy it here it's going to be because it looks like people panicked out a b bit. >> mike, thanks. mona, where do you see august ending up and whether or not this so-called loss of momentum could be longer lasting? >> i think mike summed it up when we said controlled pullback that's what we're seeing thus far. and we are down 3 to 4% on the s&p 500 since the end of july. but the nasdaq and that

magnificent 7 are down more, 5 to 6%. when we look at valuations it's interesting to know the nasdaq magnificent seven still 25 times next year but the rest, 493 about 16 1/2 times so more reasonable from a valuation perspective thinking about a broadening out from market participation what we would say on average when the s&p runs 15% plus we tend to get an 8% pull back from from there there's a range around that and perhaps some of the higher flyers will correct more and the rest of the market may not correct as much. but generally speaking we would expect, after such a strong run, some period of consolidation, some profit taking and we think some caution is probably prudent here as we're headed into august and september, which are notoriously volatile months. that being said as we think about the underpinnings, the fundamentals of the market, a lot of it is intact.

they have priced in inflation trends, a fed that can step to the sidelines and of course an economy holding up better than expected when we look to 2024 we would expect th ex expect the earnings picture to reflect that and the fed told us they would like to move back to a more neutral level so rate cuts may be on the horizon as well. we're being more cautious in the near term, though. >> what seems reasonable for '23? s&p earnings in the 220, 230 range with a cut in the second quarter? >> it does feel like earnings this year looks like they're going to be flattish we probably will see a rebound in q4 but 2024 estimates have ranged between 7 to 12% so something more in line with historical average after flattish year is reasonable. if you are looking at parts of

the market that can experience some valuation expansion you have better -- there's an opportunity for a return profile there that looks fairly reasonable in terms of rate cuts, harder to handicap here i think more credible, markets are pushing out rate cuts until may of next year so mid next year rather than early next year. we think that's a good and comfortable place to be as the fed is reluctant to declare mission accomplished on inflation they hwant a two handl before thinking of cuts. core inflation should start to trend better here. the offset, of course, will be does a strong economy create some sort of rebound in the commodity market, of course, as well. >> that could be an offset too as gas prices are on the rise. >> bottom line, can tech rally with yields at the elevated levels and the economy continuing to perform well and

data better than expected? >>. >> we think tech in the near term may take a breather but not to say the rest of the market can't pick up some of the slacks we think one of the themes should be in your portfolio a broadening of market anticipation, a.i. is at the early phases of a long term bull market but fully valued here, if you get get better opportunities, a good place still but a balance with cyclical parts of the market, international could become more favorable as well. and think about your bond portfolio, we think still over the next six, eight months could be really interesting here locking in better yields and you have the opportunity for price appreciation as well mona we'll see what we get out of minutes today, obviously, in jackson hole. thanks, see you soon. >> thank you. as we head to break. here is the road map for the rest of the hour more on target and how to play retail from here with one

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cava is a big story today. shares giving up earlier gains after the company swung to a profit in their first quarterly results since going pick

cava's ceo, brett schulman joins us in a first on cnbc interview. brett, good morning, welcome. >> good morning. thanks for having me. >> first, what drove these strong results, double digit comps not a lot of retailers and restaurants can put that up right now. >> well, sara we saw strong traffic in the uarter, continued momentum in what we've seen over recent quarters and reflective of the broad acceptance of mediterranean as we create and define the next cultural cuisine category with mediterranean. >> i think the question and maybe this is what's behind some of the weakness with the first half so strong, i think sales rising 23% why are you more cautious on second half comps, predicting they're going to moderate >> we're mindful of the headwinds building facing our

guests whether that's the increase in gas prices, the utility bills, student debt loan repayment waiting in in the wings and you have a fed posture that's looking to temper growth to make sure they tamp out any reigniting of inflation so we wanted to take that into consideration as we give our future forward looking forecast. >> there's the inflation issue that affects all restaurants, what does cost input look like right now and how much are you planning to pass to the consumer for the rest of the year have we peaked >> we've seen cost pressures stay steady, benign in recent quarters and we try to put forward a great value proposition for our guests so year over year tracking about a 4% price increase. we want to make cava accessible to all of our guests no matter what economic headwinds they're facing outside of their experience with us. >> i wonder how you think about

the food concept in the trajectory of restaurants and the history of restaurants sometimes being volatile trend wise and why this should be more lasting than say others that were as specific as mediterranean. >> we say this is a way of eating and living that's been around 4,000 years or so this is food very diverse in the broad appeal we're operating in 24 states today. operating in in the cities and the suburbs and in small towns and we've had the ability to appeal to both gender diversity, ethnic diversity, as well as income diversity we've seen it over the course of the 12 year history just gets us excited to bring cava across the country as we're able to meet so many refpreferences, dietary restrictions, if you eat vegetarian or just wants spicy

lamb meat balls and feta, everyone can come to cava and be satisfied. >> how big do you think it can be i'm not saying it's going to compete with pizza and burgers what's the upside on that? >> as you see our country getting more diverse, pallets are getting more diverse seeking newer, more interesting flavors and you think about the health and wellness trends people want to eat better but not make sacrifices or compromises do it. that's where we come in. we're a taste in health unite and think about the fast casual segment as a whole continuing to grow as it hits the needs of a modern consumer on the go, want convenience but quality as well and that's what we're able to deliver on >> you heard the chipotle comps that's what the market is trying to figure out. by one metric in terms of growing store units they grew

from 300 to 1100 in seven years and 2,000 units in another five years. can you grow that fast >> we set a target of 1,000 restaurants by 2032. we're targeting 15% plus annual unit growth from here on out so we're excited about the opportunity how this is resonating in 24 states already across the country and looking to bring it to the 24 plus we don't already currently operate in. >> just from a macro perspective. are you taking share from others or seeing consumers prioritizing eating out at fast casual restaurants? >> i think if you look at the food away from home trends versus at home, food away from home continues to increase versus food at home and the fast casual category again growing as a category so, you know, there's everyone out there seeking or fighting for stomach share we're trying

to put the best offering forward and continuing to see momentum build as we do that. >> thank you, brett, for joining us. >> thanks for having me. >> brett schulman, who is the ceo of cava. still to come this morning, more on one stock adding to big gains on the year and what crypto has to do with it details after the break. vix back below 16 and the ten year below 4. 2.

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god some news on coin base today. let's get to dominic chu with details. >>ing it is coin base moving higher after the crypto currency exchange operator said it got approval from the nfa to become a registered futures the expectations is that we could see those futures trading contracts tied to bitcoin and either soon on coinbase. it's under pressure stemming from the regulatory scrutiny

the s.e.c. sued them in june saying it was operating illegally because it failed to register as an exchange. the stock has fallen 30% from the july highs but still doubled from the lows we saw check out bitcoin prices, trading at a tight range though gradually drifted lower from the midsummer highs. just around the 29,000 mark but well within the mark so keep an eye on the bitcoin prices the vast majority of trading resolving around the derivative of prices around bitcoin and either sara, back to you. >> not getting a ton of help from that news, up 2%. but maybe the run up to that is part of the story there. thank you. just about an hour into the trading day and stocks are mixed. s&p is a little bit higher nasdaq still under pressure after a tough day yesterday. let's get to bob pisani.

>> tjx is helping retail elsewhere, about even on the advanced decline line not getting a lot of help from the old market leadership. bank stocks not doing much down six of seven trading sessions for the kbe, the bank etf. tech floundering trying to find a direction as well. where are we right now >> we're only about 3% off the recent highs maybe it's the fact we're down nine out of the last 11 sessions that's a bit of a problem. that creates the sense of the fact we're in the downward slope here the leadership isn't there there isn't any. the old leadership of tech has been lagging the entire quarter. the new leadership which were banks and energy stocks they're not doing anything coming off their old leadership in the last few weeks. defensive stocks aren't taking up the slack and interest rates are getting hurt by the rising rates and that's the prevailing

paradigm right now the timing is poor of this kind of modest correction even just a 3% look where we're at? earnings season is over. we're in a news vacuum right here, the volume is light, volatility is muted. it doesn't necessarily indicate that the market is in bad shape but we're in a bad period for the market right now again look where we're at here, the earnings are over, in in a period where the earnings situation is not doing anything. the news flow is very light. we're in the weak period from august to october for stocks and the market is richly valued here the problem here is we are obsessing over the yield problem. that's what's going on here. we have the fed minutes today. we have this vacuum of news we'll obsess about jackson hole and what the fed is going to do for the next week. we need to get past it get to september where we can worry about bigger issues. i think deflation is going to be

a big issue in september that's going to be the big topic. we'll get past the whole jackson hole obsession we have the next week or so. >> the market is struggling to figure out whether good news with the economy is good news or bad news good news because it means we're not going in a recession, or is it bad news because it means the fed is going to have more trouble fighting inflation and the first cut gets pushed out? feels like we waiver every day. >> we do. >> on that question. >> i am in the camp that good news is good news. i think the fact the retail sales were strong, i don't care if you put it on amazon prime day or not it's great news the consumer is still spending i'm in the good news is good news camp. i want the consumer to stay strong don't want it to overheat necessarily. but i have no problem saying spending is strong. >> it's great if it doesn't keep inflation pressures rising, sticky we don't know if there's enough work done there.

>> i'm not freaked out at 4.1% on a ten year yield. i don't freak out. i think people are kidding themselves thinking the 10 year is going back to 2%, 3% or 30 year mortgage rates are going back to 3% they're not. no indication that's going to happen the world we were in a couple years ago was the unusual world let's get back to a more normal world we were in i think we can handle higher rates. >> that was the matrix, not this. >> right. >> thanks, bob pisani. let's get an update with bertha coombs. >> patrick wilmot w-- president biden will travel to hawaii next week the white house said the president and first lady will leave monday and meet with first responders and survivors north korea finally confirms that the soldier who ran willingly across the border last month is in the country.

pyongyang claimed that private travis king came -- officials tell the associated press there's no way to verify those claims and that the pentagon is working to bring him home. and soccer star lionel messi propelled his team from the bottom of the league into the cup final defeating the philadelphia union last night, 4-1, to advance to saturday's championship messi has nine goals in just six games with the team. sometimes it pays to pay up for those superstars >> it would have been more surprising if he had not done that bertha, thank you. as we head to break check out the biggest gainers on the s&p 500, earnings helping

progressive and the insurance stocks as well target rising after the bottom line beat. top line miss low erred guidance, up 4%. and tjx with 6st% ore sales doubled what was expected. "squawk on the street" will be right back my cpa told me i wouldn't qualify for the erc tax refund, so i called innovation refunds. their team of independent tax attorneys will work with your cpa to determine if your company is eligible. [whip sound] take the first step to see if your small business qualifies.

retailers, as you know reporting, didn't beat expectations, sales were short company cutting the full year forecast earlier on the call this morning, brian cornell addressed the consumer. >> the frequency and discretionary categories is driven by multiple cross currents affecting the u.s. consumer these include the impact of inflation in frequency categories

causing them to absorb a higher portion of consumer budgets. in addition, consumers are choosing to increase spending on services like leisure travel, entertainment and food away from home putting pressure on discretionary products and finally the rollback of government efforts to support consumers in the pandemic including stimulus payments, enhanced child scare tax credits and the suspension of student loan payments present a headwind consumers continue to manage bill kirk was on the call, he has a hold on price target 156 great to have you. some of the head scratching this morning was why the stock popped premarket is that the margin beat or kitchen sink element what did you make of it. >> it was a surprise, the open of the hour sara touched on it well, expectations were low. this is one of the first times we've seen a full year eps expectations going in below what

they had previously guided so people were already in the they have to guide down area people were already in the comparable store sales are going to be weak so what you're seeing a little bit, it having already reflected some of those concerns over the last three months target is down 22% before today the market is up, walmart is up. a lot of this was priced in already. >> i mean, bill, i talked to the cfo about the results and we talked a lot -- well, i asked a lot about the pride issues they didn't share that much, they can't, obviously, but said they could not isolate that factor for june because there were a lot of other pressures like consumer discretionary weakness making food and beverage tickets higher. the fact that august looks better than june, how much of a

relief is that with any potential brand, damage, harm as a result of the boycotts and backlash. >> i think you can draw a little line and try to quantify this. may to june was 4 percentage points worse for comparable store sales and the food and beverage inflation, discretionary spending they didn't change that much may to june i think that's the majority of it in july you're right you see the customers coming back it's harder to boycott a retailer because they can offer convenience. for some people target is the easiest best place to shop and that makes it more difficult to have the passion to go and boycott something. the more extreme version is bud light, bud light doesn't offer convenience, plenty of substitute products for bud light so on a brand boycotts can be larger than on a retailer if you step back, the comparable store sales. even if it has stabilized still

running at negative 5% that is a level year over year level that we haven't seen since the recessionary period, that was about negative 3, the margins though they got better year over year, they're about 5% and even in the recession about 7% so you have here almost a recessionary performance quarter without a big change in consumer spending without almost you know, to some degree the recession. so we remain a little concerned. we think some of this comparable sales decline and the boycott actually sticks so that's why we're maintaining our neutral stance. >> on the consumer, coming out of retail sales yesterday, there's this growing view that the consumer is taking real wage gains and moderating inflation and turning it into spending seeing numbers looking at 3 to 4% consumption for the quarter are you that aggressive? >> not quite that aggressive but

i think the point that's impacted target is most is the spending is shifted. this isn't a new story but during covid, they were the ideal retailer one, they were obviously open and two had the assortment of peers that weren't allowed to be open so they had a base level of sales that exist in that type of environment where obviously even if consumer spending increases they're not in that environment. so they give back over time. we see it with the most loyal customers they have a loyalty program called circle but also their red card, a debit card, credit card program, 5% off in the store, 2% gas savings and that's declined every quarter since before covid used to be 24% of sales down to now like 18 >> do you think they're getting credit for the improvement in profitability? the efficiency savings they're not doing layoffs.

they're trying to boost growth we did see that come through this quarter it's overshadowed by the sales cadence but margins, profitability, the fact they continue to project that kind of improvement, does that make it enticing at all? >> it helps. still below ideal levels but if you take the amount they kind of beat expectations in the second quarter, their guidance, they still lowered it, right. so they are implying the second half maybe was less than they originally expected because 2q was better than expectations and now you you're saying you're going to do worse than you thought a couple months ago. i wonder longer term if you have this rapid of a change in comparable store sales if if it doesn't turn into an excess inventory problem. you were planning for more sales. they say inventory is clean and fine, target says that but if the sales don't materialize or turn around do you have excess

inventory and then have to discount a little bit to move it >> the curse of retailing, i guess, bill. it's difficult to keep that train moving bill kirk. still to come, another tough day for chinese tech as housing prices decline in that country d flion fears continue we'll go to beijing for the latest after a short break

we mentioned chinese tech before the break, it's on the move today 10 cent with a surge in profits but results still fall short of expectations, the tech giant said cost cutting measures began paying off china's largest retailer also in the red despite a beat on the top and bottom lines the company said its results were driven by a focus on pushing lower priced products to attract customers. so much going on over there it's

hard to keep track. >> chinese currency at a nine-month low, that's a signal of confidence since it's highly managed. and new data shows home prices fell in july adding concerns around the real estate sector. despite that, country garden said it is continuing construction as bloomberg reports the nfallout could be fr reaching e eunice yoon has been digging in and has more for us. >> reporter: i was here at a country garden's construction site and there were sales people there saying it will make good on its promise to deliver homes. the real estate industry continues to deteriorate today we had data out that

showed home prices in july fell nationally by the most this year, 0.2% from last month it's also worse in smaller cities, which is where country garden has been expanding. now country garden is seen of representative of some of the broader industry's problems which has a potential knock on effect in the overall chinese economy. however, in terms of direct exposure by foreign investors, capital economics a research firm has been doing analysis there and found direct exposure was small. capital economics said foreign investors have pulled back from the chinese property sector over the past few years and a run of defaults has further limited exposures. blackrock potentially having exposure there there are still, of course, worries that there could be a

spillover effect in the financial sector and the overall hit to the economy, which is just struggling at the moment. guys >> is the overall view that the measures we've seen, the piecemeal measures from the chinese government and central bank are too small not enough there's not an appetite for more because the market has really not rallied off of them. >> reporter: yeah, that's right. i think that the way you describe it is accurate. this is a piecemeal approach it looks as though the authorities are trying to figure out what they can do that wouldn't necessarily build on the debt issues they have and the concerns they have about their own finances not only at a national level but also at a local level. so that, you know, you have this kind of piecemeal approach but there are so many investors who feel and just regular people here who feel that the approach

just didn't enough to really stabilize and boost confidence. >> eunice, i'm looking at a note from citi that just crossed we compared china's situation with japan's in the early '90s and argue that china is from japanification, we think the monetary and fiscal policies look too restrained. that's one view, but that's what you want to hear a global strategist say about your economy. >> absolutely, there are so many people who have been making the comparison between china and japan. there are a lot of similarities where you saw a problematic financial industry also other issues, demographic problems that the countries face there is one big difference, though, and that is that china could potentially be hitting this level at a much lower income point for the population. and that's one of the big

concerns here, that china could be heading into an area that really is going to be very difficult for the government to be able to pull ofut of. >> eunice, thank you very much for that reporting on country garden and some of the deeper problems there eunice yuan in beijing coming up at 11:00 on "squawk on the street," more on the consumer with the founder and head of panera bread, ron shaich find out where he sees opportunities next it all kicks off in just ten minutes. we're up 88 points on the dow. s&p holding on to some small inwhthe nasdaq is down about 0.2% don't go anywhere. ore than a trading platform. it's an entire trading experience. with innovation that lets you customize interfaces, charts and orders to your style of trading. personalized education to expand your perspective. and a dedicated trade desk of expert-level support. that will push you to be even better. and just might change how you trade—forever.

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investors looking for clues on the fed's next moves will get some in the next few hours steve liesman has details. >> minutes from the last meeting set to hit the tape at a time where there's much debate about the policy the market is weary of near-term hikes, but pricing in cuts next year, all while the market puzzle as over how the fed will react to stronger-than-expected economic growth and data that we've had. markets putting only a 35% chance on a hike, but it's on

their mind and then you get into january and what that chart is now showing you is probabilities of cuts, even while fed officials have forecast one more hike this year then the story flips markets by may putting a 67% probability on at least one quarter-point cut. over at mizuho, it's likely to be detailed in the minutes of the july fmoc meeting, emphasizing how the committee is conflicted on the way forward. at citi, minutes may reveal the leading edge of a debate about the appropriateness of keeping policy rates evaluated, even as job growth and inflation have recently cooled. all that's true. that's one set of problems and good arguments for the doves they want to hold or even cut rates, yet the hawks have gotten more supportive of recent economic data, showing how r resilient the economy has been not running moreau potential, which has intensified since the last meeting the debate over policy between

the hawks and the doves, they actually have intensified since the last meeting guys >> i wonder if we get any signal, steve about the collective willingness to keep tightening because it's hard to figure out, based on the chatter from the various fed members, kashkari, who's a voter this year, feels like he would do another hike. bowman's a governor, would do another hike but it's not clear what the consensus is right now >> sarah, you have to attach a word to your sentence now. new world. do you mean nominal tightening or real tightening right? because nominal tightening is raising rates. i think that's what you were talking about. but there's also this idea of real tightening, which as inflation comes down, if they keep the nominal rate the same, the fed on a real basis gets tighter. i think there's some support for nominal tightening i think there's not necessarily -- sorry, nominal cutting. i don't think there's support, by the way, for real cutting >> yeah. i was going nominal, just old-school interest rate hikes

but the real -- the real tighter policy feels like everybody is in favor of, keeping rates evaluated for a while here >> i think that's right. the trouble we have, real quickly, is that as time goes by, the dpricing in of those cus gets nearer and it becomes a reality for the market so we're watching with our left eye, the possibility of hikes and watching with our right eye the coming closer of the time we've got to start thinking about, are those cuts going to be real? >> yeah. >> we're going to need -- that's going to be difficult. steve, thanks. steve liesman. a quick programming note as we close out the hour a few hours away from cisco results. chairman and ceo chuck roibins mbs moown us to break down those nuertorr in the 9:00 a.m. hour. squawk on the street continues after this

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good morning i'm sara eisen with carl quintanilla live from the floor of the new york stock exchange panera's ron shaich weighing in on those results >> bratt ramamurti joins us as the landmark inflation reduction act turns one