good morning welcome to "squawk box" right here on cnbc we're live at the nasdaq market site in times square kelly evans is back for an encore performance becky is out today i it's nice to see you we have a lot going on the next three hours. u.s. equity futures looking positive 70 points up on the dow. stocks fell in yesterday's session. this after the fed minutes showed that central bankers are largely concerned that inflation would fail to pull back.

. if you bought it at four, that's the problem >> inflation wise, you're not necessarily down with inflation falling. you no he know what i'm saying >> you're going to make money because eventually they're going to come down. >> that's what i don't understand f you're telling me right now this isn't a good deal, you're telling me that i'm

going to be able to get the ten year. >> i'm telling you two things. you'll get your principal back and it is part of any diversified portfolio to have a large part in bonds where you know you'll get your principal back that's all i can guarantee you.- year. 2 years from now, if rates fall and inflation goes down, wake up at 3% and you lock in higher rates, they always make a mistake in the bond market. back here is what i was really thinking, i was asking experts about this this morning, we are getting into hazy territory because we are going cross discipline here. i'm looking at 4.4 and i'm

thinking isn't there a 4% rule for 401(k) retirement? at what point do we go to the territory where if you put a comfortable position into the 30 year, you can live off of that. >> there are things about this, and it really does make sense, but at some point we are getting to places don't >> the other thing -- >> you got 430, the $400 make every year on the $10,000 investment -- >> now you can get an appetizer. >> for the big return -- you can actually get a taxi from

downtown to uptown and have a problem. -- is mac on 10 grand -- >> there are people that say they're using treasury direct for the first time and they admit i'm not making a lot of money, but it feels good >> do you like shrimp cocktail? >> would you go for the dessert? that might seem like something you'd not be able to afford. >> we are shedding light on the decline in the s&p 500. scott rubin her or rubbing her, they told limburg that options tied to the s&p 500 with a maturity of less than 500 felt the decline by which it drop by 4.7% in an hour.

that's known as zero days till expiration and forces the marketmakers to buy stocks to keep the books balanced. on tuesday, the cost of the strike place of 44.40 spike from $.70 to nine dollars in a short span almost $100,000 billion dollars, you had with the initially sold for, citigroup earlier this week shows trading in the zero days expiration contract and it ballooned in popularity with xmi's. >> this is a new thing? >> not at all. if you are out of the money on

friday you get it at noon say they're closing at 1:00, they could be closing. and people to decide to do this and they had enough money to move this into the money, if you are 10 points out of the money in a cell program or by program, a 16 can go to 4. >> it is crickets out there. i don't know if you noticed the same thing, i'm around, did you think people are taking advantage of the thin volumes >> -- >> it's machine trading also. >> when they have the same opportunity and just go for it?

-- they would say we know our test and, i don't know, we have to ask them. >> the dog days are already over . >> what are the dog days? >> july third to august 11. >> why those days? >> the astrological sign. that's where dog days of august came from. >> even though it is cancer month? >> i don't need it. >> let's get an update on the wildfires in maui. hawaiian electric is speaking to structuring firms to address the financial and legal challenges according to a wall street journal report that says more customer lawsuits are expected in the coming week. the journal reported that hawaiian electric concluded in 2019 that it had to do far more to prevent powerlines from emitted's marks but is done little to address it. it's amazing how much attention is on california with the same problems.

officials are still investigating the cause of the blazes that ravaged historic seaside communities and killed at least 111 people. >> in the meantime, new york city has band access the tik tok on government funds unofficial devices. visited pose a security threat to technical networks with limited access the state owned phones with a few exceptions in the public relations field for marketing purposes. when you get a state like new york sign this and when is new york going to do it -- california go to do it? >> the doesn't seem like they are the ones not banning it? be like okay it's band on government devices, but nothing more galvanizing or flawed in terms of actually getting rid of it? >> what i can tell is whether it's a security threat or whether we are actually much more in line with the sort of -- the sort of theater around our

views -- >> the drone ports about putting all the inputs into your phone, if you have it on the app, it's collecting all the keystrokes. okay, i could see a problem. >> collecting your keystrokes when you are on tik-tok, not on everything. >> are you sure? >> i'm pretty sure. >> i believe they are moving this thing over single project houston i wonder if that is something that would actually suffice or if anybody -- >> that's been a lot of hoopla and not much substance. >> the content itself is corrupting youth. that's what they are talking about. >> oh, sure. -- >> i'm as addicted to reels and stories on instagram -- >> you are seeing aren't corrupted? how do you know you aren't being totally corrupted.

>> it's like sing try fentanyl, you will love it. >> i don't think the instagram algorithms are that good. >> the tik-tok one is that much better? >> thousands of times better -- >> but subversive -- subversive. >> on instagram it's another mommy real and on tik-tok it will be dozier >> they think they are undermining our youth from within. and then there's the data collection but there are people that know this is a multiyear plan. >> is a sense of all, they are trying to destabilize things. >> they are smart enough to do that. >> i'm not convinced.. >> the real thing i don't understand is why i'm an apple

fan. if everyone has such a problem with this thing, why isn't apple or google dozier >> it's too popular. >> you think someone would come to them and say we can't have this. >> you aren't worried about peeing off china? >> there's a whole circular issue. we'll talk about another story the wall street journal reporting that president biden will announce metal from germany in canada, they found steelmakers in the official antitrust -- they make up 44%. >> new tariffs >> if you sell a product in one

country at one price, you can then sell it at a materially cheaper price. >> in another country. you don't suddenly like something. >> other trying to undermine america? >> unrelated. >> but tariffs in general are a dislocation of -- >> you don't like tariffs either week >> i don't like them. >> you like the trump tariffs, that's why -- >> i didn't like them. >> but there must be some american makers of tin plate tariffs for tuna cans being harmed by this or presumably they would move ahead with this. mac this is anybody making tin cans in the united states would be hurt by those dumping in the u.s. >> i do know that was such an issue. >> coming up among the market catalysts, we have earnings, walmart, the full plan is less and we look into cisco's

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we have a lot going on. will tell you what is on deck. retail earnings that will not and coach pairing to to report next hour or so. we will keep our eyes on that and we have job claims do at 8:30 a.m. eastern time. >> i am back on a thursday. >> time to get another round of jobless claims. let's check out cisco shares, they beat estimates, but full your guidance, and a touch light. chuck robin said they gained three percentage points with the largest that working in the quarter so far. joining us now, we welcome carrie firestone, chair ceo of asset management and cnbc. >> we talk about cisco. >> what is there to say? what you think? >> cisco is on a come back and thank god for ai, because they can discuss ai a lot.

if you need brothers for ai, this is a comedy that had its heyday in the late 1990s and it did nothing for a decade and a half or two decades. so now they've got a whole new world, and i think chuck robbins pointed out on the call which wasn't well understood that the background really is growing and they got a lot of opportunities. >> just in ai. connect the dots a little bit for me, more demand for large, they need more routers. it's the chip plus routing the information. it's so much more. we aren't an owner of cisco, but i see the appeal for people that missed the big tech trade, they missed mega caps and some of the heavy movers, it is a place to go. and they're coming back and it looks pretty good. >> decades. >> it's with ge, market dominance at 600 billion. $200 billion today.

>> if the peak if you look at the 25 your start. >> what was the little phone? it was a little camera, a flip thing. it was the biggest fad for 2 years. everyone was going out of their brains about it and they said why were they in this business and they just want to get more data over the internet. >> early pioneers. >> when you used the word server, it's ridiculous now, and member it was john chambers, and i would ask him, can i get that in a pastel blue? so what color to the service come in? >> pastel blue would look good. >> deny server. right? >> i'm look at ge market now which is 123 -- so to cisco's credit, oracle charts are similar, if not all just the magnificent seven, some of the old tech names are finding a way to present themselves.

>> oracle and microsoft. >> is the market where if you haven't been one is mega accounts, it's a problem, but we need more participation, you can just have those leading the market indefinitely. that's what have to take a pause right now. >> nuan on, you are an asset man. >> you to buy bonds at some point. >> for diversity. >> for diversity. >> for 10 years. >> legal 30 years for a portion of your portfolio? >> we don't have any tenure bonds. >> right now we have three months, six months, one year bonds. >> you have to be kind of stuck with a fixed return. wouldn't a dividend stock, can be smart find the, that will increase the dividend overtime we >> the dividend yield is like. >> but it's goes up. >> is going up. if a chance of going up 15% per year, it will double in every 45 years. urine those bonds stuck at 4%.

>> you will get your principal back, but. >> what if she came on and said we would just talk but the 30 year bond. [ laughter ] >> i think there's an appeal if you can get 5% guaranteed for a few years, i think that's great. >> and you stuck 2 years now the stock market that might move away from you and you are reinvested into years. >> we don't have that much the bonsai. >> literally. >> she worked the whole portfolio and there. >> it depends on the comfort level. some people can't handle the tension. >> the can't handle the bond market or stock market? >> they can't handle it. >> there's people i know who very successfully bought bonds in the 80s and lived off of them for many years and did way better than everybody else out there. >> the lazy girl job, this is lazy girl job.

>> reporter: by zero bonds at mature far and 200 bucks, the bond market moves and they go from 200 to 350 in a year and i'm nothing if not. >> i want to hear more about them. >> in real life. >> here's a question for you, but say you were a little bit cautious on the market like some of us a little bit earlier this year and you recognize we've moved sharply with me. runs to to sing this now everyone on the street is piling in and bracing price targets. you start doing more, do you look at that and say hey maybe it's time to start hedging more? >> >> we are actually very positive on the market at the beginning of the year, we thought it was oversold and their buying stock last fall and entered the year pretty heavily invested in the stocks that we own, they moved up. >> does that surprise you?

>> no. i don't really think so. if you, we got four and half percent from the all-time peak. that sells, that felt a little rich. we sold from apple a couple months ago. for a while we didn't look smart that trade, you can look at the market and say the stocks of moved 50 the 200%, perhaps we should take some money off the table. if i had no money, what i put it into the tech trade and communication services? would i purchase meta-or salesforce this minute? not necessarily. but that doesn't mean they aren't great, but it can pause. 19 times earnings. >> what you do with new money? >> right now, you can get 20% to 5% in the money market. and there's an awful lot of names on the top. >> if you were to talk about the october load and like the

top 10% at least the top. >> >> if you said the market was going to do well, how many times a be here about the october load being -- >> well, let's think. >> ad nausea. >> one time i think i came on and said all you here if you're watching cnbc or other networks about the market is that it's going to go down. >> there are no other networks [ laughter ] >> 1213 strategist at the end of the year said there'd be a recession and the market was risky and you shouldn't touch it. market timing is not what i think anyone is good at, but it certainly was a time where stocks were trying to move in there are many stocks down 50%. is and that what you are supposed to do? >> it looks very smart market. but like you said with new money. >> new money, should look at the money market. >> you have plenty of time, by stocks, by dividends dose

looking for the lazy girl investment. >> we appreciate your. >> coming up on the other side of this, fall travel trends to watch, will get some real-time data hopper with bargain vacation out there in the destination with a premium. cisco ceo chuck robbins will be on the street in the 9 a.m. hour. that's an interview you don't want to miss. we will be right back. what if buildings could tell you how they could be more efficient? i'm listening. well, with ibm, you can use software to help you connect and analyze data— from hvacs to elevators to lights. what if we use ai-driven insights to pinpoint inefficiency? yep. and act on it. saving energy, money... ... and emissions. yup. that's a big one. now you've built something better for everyone.

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still feels high to me. every time i'm online trying to find a seat on something even domestically, it doesn't feel like it is really coming down to the extent it is, which is what you're saying the data suggests, how long will this be and how long are we talking about? >> we are seeing airfares dip to most regions of the world, domestic, international, short and long calls, mostly because of the demand that we see every year after the summer, travelers are hot on spring break vacation and summer vacation, but most of us go back to work and school at the end of august. september and october is not very popular. it incentivizes hotels and airlines to drop prices and we expect prices to remain low for the next eight weeks. >> are we talking week over week or year over year? meaning what was it like in the shoulder season last year?

>> prices for domestic are lower than prices these last year and compared to 2019, so domestic prices for the next two months will be the lowest they've been in about 4 to 5 years now the international flights as he said flights to europe and asia, still more expensive than last year but dropped relative to peaks in july. >> and is your sense of that continue? talk about thanksgiving when families run the country try to get together christmas time for family and domestic travel, families going to big vacations internationally. >> relative to prices today, airfare for thanks giving and christmas and end of year trends will be higher, but we expect them to remain in line with or slightly below 2019 levels. surprises will be advantageous for domestic travelers to the end of the year. international travelers, prices will remain high and they are cooling to europe which is great news because they are 20%

higher to last year. airfare to asia is a different story, we are 80% higher than pre-pandemic and we don't expect those to come down soon. >> why is that? >> capacity hasn't come back. we are still at 65% capacity compared the 2019 to asia so until we see more flights takeoff and passengers able to book, we won't see those prices come down substantially. >> would 24 look to you? >> especially for international travel, we've seen really strongly in the summer months, continued demand for long-haul trips to europe and asia even with high prices, flexibility is key. we see a really strong signal that travelers are privatizing having more looks ability to book travel and coming out of the pandemic, it's the trends we expect to continue into next year. >> tips and tricks for those in the know, are there certain days you are supposed to book travel, certain hours like

tuesday night at midnight or something where you can get better rates? is that true? >> unfortunate, it is not true. everyone wants the golden rule in an easy way to get a great deal, the reality is that prices are incredibly volatile and airlines are getting prices consulate, so the best time to book your specific trip or date destination won't be the same, it won't always be a tuesday at 6 a.m. or saturday at 2 a.m., the best way to get a good prices to use a price monitoring tool that is what we monitoring the price of your trip constantly and sending you notifications. >> that's what you do? >> that's the core of our business, we predict the future price to tell our customers when they should by, and we do the price monitoring and notify them when prices hit the low point. >> what about miles? for those of us that are cheap and never can use them -- >> i hear they are going away. >> and are they getting devalued, that's what's happening?

>> we see the market investing loyalty programs, what those look like might change of the next couple of years as travelers travel slightly differently planning more last minute, but i expect you will see loyalty and some sense and see how it might adapt. >> we appreciate it. >> they say if they pass the credit card -- it will go away? >> base pay 3% now, the abrupt the rival networks that are cheaper, but they won't come with any of these perks. >> that's because, that would actually be a great thing in certain ways for the country because the 3% michael the credit card tax, it's the tax on the system and if you could get rid of even one of the one percentage point off that tax though >> you may not get fraud protection. >> if you have fraud protection and lose other things, that's a different story. >> i don't know if it will pass. >> coming up, we will be joined

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good morning, welcome back live from the nasdaq market in times square, checking futures were up a little bit, that's not the story necessarily, we did have a couple of tough sessions already this week, august 10th has been great, kind of a pause and one that refreshes or one that shows that we got most of the gains for the year, nobody knows at this point, stock did and lower, it was after the release from the minutes from the july meeting suggesting that rate hikes might not be done quite yet. steve leachman has a details and for a while we've been saying all right, maybe one or two more, we see at 75 basis points in a whack, 3 to 4 times in a row so we were okay with just a couple more. is that starting to change? might be more than a couple suddenly? the tenure is really the story that we are all paying attention to. >> i think with tenure, it's

dancing to a slightly different tune. i see the kind of commendation of supply and demand, i think it is still maybe a 25 or not a 25, but here's what we know from the minutes after the hike by a quarter point in the july meeting, most fed officials thought more would be likely but a minority did emerge suggesting the case was maybe not so clear into participants thought they should have hiked at all at that meeting. so here's a flavor the back-and- forth on the one hand and other hand, minutes that we had, they said number that was to be achieved with goals have become more two-sided, but they went on to say most participants see significant risk inflation which could require further tightening of monetary policy. so the minutes were somewhat more balanced than recently, but it may be too early to sound the all clear signal on any rate hikes at all. you some of the minutia from the minutes, they said there

was progress on inflation and some setting up the job market staff backed off the recession call and they were all uncertain about the effects of tighter monetary policy and tighter bank credit conditions. there are signs of economic slowing, but they also saw considerable momentum in the economy. the trouble of all of this is that since the meeting economic data has come in stronger-than expected and this could be a key with the minute saying many thought you have to have a period of below trend growth to bring supply and demand back in the balance. moment the economy appears to be growing well above trend, maybe next week we will get a little clarity on what this surging economic growth means for fed policy which obviously you have two different things happening that the big fed summit next week you think powell is likely to talk, we have some interviews of fed officials and to me, the question is how to the square this idea above trend growth at

the moment but still declining inflation whether that necessitates additional rate hikes. >> inflation and economic growth is definitely related. it's all related, but it's just a little, i'm sure it's just a coincidence that the minute we decided a recession was off the table, the fed decided it had to do more. i know they aren't trying to cause a recession, but it is a pretty strong coincidence. and it has to do with a strong economic activity that it will cause inflation to be stickier than what we thought. i see how that works, but it isn't -- it's happening at the same time. with feel that what we wanted to do at the recession. we have to keep raising. >> and we do, which i wish they would. >> and i attenuate a bit of what you're saying. i don't think because of higher economic growth they decided it needs to do more, i think those >> it may be better to say because of higher economic growth, it raises the risk the

fed may need to do more and certainly the market is kind of trading a little bit with it, but i have to say there's only a 37 or 40% probability of another rate hike. the trouble is the economy is not operating according to the models and it may have to do a lot with this kind of weird post pandemic economy that where he had several orders of trend or above trend growth declining inflation. the question is is that coming from just clearing up supply chains? is there an effect of higher interest rates? and is there a lag? i think they're facing what they call high uncertainty, it is a more patient approach. i don't think it is a done dea . but as an investor, i think it has to be on the radar screen. >> the biggest fear is that the economy is so strong at some point with her so much spending

and if you read the lead editorial, there's a lot of spending that will continue 4.2 trillion on climate and infrastructure and by definition , when there is that much spending, you continue to have really strong economic activity which could be inflationary and that is what i worry about. it gets so inflationary that you have to orchestrate a hard landing to break the fever. because right now -- >> with interest rates where they are right now, -- but if we are going to six, eventually couple years from now in this upward trend like 70s or 80s type pitch, that would scare me. >> no, i think that's the right way to think about it, i agree with what you're saying, the fiscal side is pushing on the inflationary buttons. i think the inflation reduction act was not, things lot of

things that you may or may not have wanted, but i don't think it had a lot of inflation reduction and i think that's a bit of a misnomer but there were other offsets. what if we are having, what if we are importing deflation from china? what if you have this surge in productivity >> that could help a little bit. so it has always been a question for me and one of the things i will try to figure out in jackson hole is the extent to which the monetary policy authority want to be responding to the fiscal authority. had they done that earlier, we may not be in the pickle we are now. >> you will be on the lookout for a yeti. i asked for that graphic. >> don't they only come in the winter? >> in jackson hole -- you have spotted them on some of those real wilderness shops they have out there.

so get ready for that. >> i believe it might've been a bear, but if you want to think you saw a yeti, that's good for you. that's okay. he exists. you know he does. he is just a really good hider. >> coming up we have sector economics look at the industrials, where are they? leading or lagging? squawk box will be right back.

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welcome back to dispense addition of sector economics, one that is been an under performer versus the broader market over the course of the at least this year and even over the last 5 years or so. you can take a look at the s&p 500 the ticker sp why up 55% versus the 40% gain for the industrial sector in the industrial spider overall going all the way back for the last 5 years. what we have seen in the five- year span, some of the more

volatile names to the upside and downside happening to be in the key parts of market around transportation and travel and heavy equipment. united rentals and be use paid over the last 5 years so a measure of market volatility versus the s&p 500, united rentals comes in as one of the highest betas, more volatility versus the market in the s&p 500 at 1.9, american airlines and alaska both have one a half betas versus he s&p 500 which is a 1, so watch those types of names in terms of volatility. as for the least volatile ones, it's mostly defense contractors in that mix, but they've been volatile for the last couple of years, but for the up and downside, lockheed martin is 0.6 and 0.5, lines of the stress petition is like airlines for high volatility and defense contractors longer-term lower volatility. that's industrial sector economics this month. he right here beusofcae much more coming up after this break. one is to get do, we'll see you

after the break.

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evercore isi out with a new report on key takeaways from the second quarter earnings season, including the firm's top internet picks the top large cap names, uber, amazon, meta, and spotify and pinterest tops the small and midcap picks, followed by website builder wix.com and magnite. >> magnite >> joining us with more is mark ma haney, head of internet research >> my new favorite person. >> i'm not going to go there how many kids? >> i have ten children

>> that's so awesome isn't it don't get any -- >> i'm truly speechless. i'm speechless i am >> i wish -- honestly, i love it it is so great anyway, we're talking about stocks what do you think of what you just heard you agree? >> i hope so, yes. just wrote that. so, look, we just have gone through earnings season. multiples have come up a lot this year. we started this year with a big rally in megatech for good reasons because the stocks got so beaten down last year and the estimates got so beaten down we had some raeally great setups setups are more difficult now. fundamentals still haven't recovered. if you think about the three biggest parts of internet revenue, retail, advertising and cloud, those growth rates are all depressed. you want to be constructive on growth rates when they can recover. and then the third thing is we're finally starting to see margins improve. we have all these layoffs last year a bunch of other things that happened there, efficiencies, that amazon brought to its distribution center.

the good news for investors is you're at a point where revenue growth can start reaccelerating and margins are expanding. stocks work well in that environment. we stay tactically constructive on the secretarier >> in terms of macro, you don't worry about the minutes? >> we do the demand trends -- it shows up in the demand trends they're still soft amazon's online store retail growth this last quarter was 4%. like, that's depressed but you want to be constructive on the stock when valuation is reasonable and think you can go from depressed growth rates to normal growth rates. >> have you heard anyone say this whole a.i. phenomenon is setting up very similar to the late '90s. >> i have heard people say that. i just think it is fundamentally different this time. so, you know, you were around back then. >> different this time >> yes i shouldn't have said that i shouldn't have said that these businesses are a heck of a lot more profitable than they were back then there's more cash amongst the

large tech companies than there was market cap back then these are obviously highly profitable businesses and that's why the stocks, the megacap names have done so well this year this is going to be an enduring theme. you can look for the derivatives. the market has gloomed on to two of them. microsoft and nvidia i think there is more than that. aws, amazon's cloud business can be a multiyear beneficiary of the rollout of generative a.i. you'll see more companies roll out solutions, apps based on this there is going to be an infrastructure way to play that. amazon is one of those. >> nothing is overheated things don't have to be identical. history can rhyme and seems like there's been, you know, a lot of concentration in one small part of the market, the breadth isn't what it should be at this point. this is what you do. this is your sector. you're lucky you picked that sector. >> maybe i'm lucky i would make it a point if the market starts to recover, wouldn't you want it to start to recover with the highest quality

names out there and then get to the speculative names? if you look at big tech names, look at the balance sheets, the growth rates, the secular trends these are some of the best well run companies in the country those are the companies that should lead the rally. then we'll start shifting out. >> is there value there? >> i don't want to say value would you consider these value names or -- they're not -- there is nothing unloved about these names. >> they have become more mature and more value oriented or even garpy or value oriented. let me stick with one of my favorite names, meta very controversial name in the past for a lot of good reasons i understand that. but this is now trading at 15 times gap earnings for a company that is going to exit this year growing 20% year over year with margin expansion and they're buying a heck of a lot of stock. so this is almost like a 20% to 30% earnings grower trading at 15 times you don't normally see stocks trading at that much of a discount to the growth rate. i like meta as a stock it is our number three pick. >> mark ma haney, thanks

you work late at the office, i guess. do you go home ever? >> i spend a lot of time at home, yes. >> hold is the youngest? >> 12. >> and the oldest? >> 23. >> so 10 and 11 years? >> coming up -- when we come back, walmart set to report in the next few minutes we're going to bring you the numbers and instant reaction straight ahead ( ♪♪ ) ( sfx: people cheering ) ( sfx: stock exchange bell ringing )

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good morning futures higher as investors digest the fed minutes a look at what's moving markets coming up. walmart expected to report in just seconds. we'll bring you the numbers and instant reaction. parents, listen up, if you think your rent is too high, wait until you look at the bill for your kid's off campus apartment. that and more. the second hour of "squawk box" begins right now good morning welcome back to "squawk box" here on cnbc we're live at the nasdaq market site in times square i'm andrew ross sorkin with kelly evans hanging out with us for becky quick and joe kernen u.s. equity futures at this hour, we'll see if this turns or moves. we have a couple of big earnings reports about to hit plus, we got some data coming at

8:30 a.m. eastern time right now, 63 points higher on the dow. nasdaq higher as well, 20 points higher s&p 500 looking to open about 6 1/2 points higher. we have been talking about treasuries all morning after we heard from the fed and steve liesman earlier. ten-year note now at 4.308%. and seems like kelly everans is happy to buy the two-year. lazy girl investments. your phrase, not mine. i'm not saying that. let's take a look at -- >> quick side note on the ten-year, let's not forget the mortgage rate. we have not yet pierced 7.5% but if we're at 4.30%, we'll be close today. not slowing down the market. there is nothing to buy. shocking it hasn't been more of a headwind. >> let's skip the rest and go to walmart earnings i think they're hitting as we speak and that's why courtney reagan is sitting at the table staring intently -- >> i'm going to look up now, i promise. thank you very much. good to be here. walmart is reporting earnings of

1 abo $1.84 adjusted profit also beating out, that's a beat, which is what we saw with target yesterday. on revenues of $161.36 billion, that's above estimates so, that's opposite of what we heard from target. the retailer increasing full year guidance to $6.36 to $6.46. that's above the $6.28 street consensus. sales guidance also increasing again, that's the opposite of what we heard from target yesterday, with its forecast walmart's u.s. comparable sales coming in up 6.4%. street was looking for an increase of a little more than 4% they also say that trransactions and tickets increased. walmart's net digital sales growing 24% led by pickup and delivery ad business up 36% in the u.s. i talked to john david rainy who said the quarter was better than

expected across nearly all segments and while there was softness in general merchandise or discretionary goods like target noted, it improved at walmart. rainy said sales of general merchandise like electronics, sg single digits but up from the prior quarter. he said there is a little bit of a shift to cook from home with an interest in prepared meals and blenders and mixers. food prices are steady, while general merchandise is an area seeing deflation compared to last year. he said privately grocery sales are up 9% for the quarter. overall penetration of private label up 40 basis points year over year for total sales. private label does make up 20% of walmart's total u.s. sales. despite the increase in private label, raney said he continues to be surprised by consumers willingness to spend and said i honestly feel better than what we talked three months ago, adding i would describe the consumer as choiceful or discerning

they're spending but picking moments. we're seeing strength around seasonal events, holidays, and back to school and make sure to tune in to "squawk on the street" for my interview with john david rainey, walmart chief financial officer. >> courtney, stick around. joining us now, forester research analyst great to have you on the most notable surprise in your view? >> yeah, these numbers were just as courtney said, pretty strong. and there was almost no metric that really seemed soft. if anything, the top line revenue number was a little bit shy, softer than it had been in previous quarters which may such that the consumer is flatlining and getting saturated with all of the price hikes, particularly in sectors like grocery. to the degree that shoppers are buying at all, it appears to be they're absolutely buying and they're buying at walmart.

>> different product mix to some extent, different businesses necessarily. you see at target. do we know about shrinkage and other cultural issues? did that affect target in your view and it is not affecting walmart? >> right, right. we talked about that yesterday that there seemed to be at least the claim from the target management that this culture war issues were a big factor in some of their challenges. in walmart's case, they haven't stepped as much into that field at all to their credit, it is very difficult to do because there are often sectors of consumers that demand that consumers take a stand or that companies take a stand and walmart has been pretty resistantto taking side on a lot of those issues in a way that could adversely impact them shrink is impacting all of these merchants, but i haven't heard as much about the smash and grab

scenarios at walmart stores, so it is less likely to be an issue. and even overall shrink has been a factor in the retail industry for decades. and it tends to be a small, small single digit percent i'm not sure that it would really weigh into walmart's numbers in a quarter like this so that's not as big of a factor the bigger issue is they're so weighted in grocery and that is absolutely what consumers are spending in, that's what the cfo said that the shopper is buying is that they are cooking at home and they are purchasing those grocery items which are those consumables that -- before the prices are going up. >> i did have a chance to speak with the cfo we asked about shrink and wasn't called out in the release because he says, yes, we are seeing slightly elevated of shrink like other retailers and certainly in certain areas where the prosecution is low, the felony threshold is high, those are the areas where they are seeing the issues and agrees it is an industry wide problem.

but i guess what i'm curious about, especially with your expertise in e-commerce, walmart's u.s. e-commerce sales growing 24%, while target's fell 10.5%. as far as i know, that's the worst number we have seen from target since they have been reporting that metric. very strong for walmart. do you think that walmart is taking share online from target? >> oh, absolutely, courtney. because the average growth rate right now of e-commerce is in the low teens. so anybody that is growing higher than that is gaining share and walmart is outpacing the average growth of the market it is even gaining share, i would argue, from amazon, which in north america from our estimates is in that low teen number target, for whatever reason, is losing share, the numbers are negative it is unclear why because its execution has been pretty strong and it's done pretty well through the pandemic and it has set up a lot of those omni

channel strategies well to capture sales post pandemic. but it just hasn't closed the deals and i expect that a lot it has to do with assortment and the shopper choosing to purchase in other places. >> can you just talk a little bit more about whether the fed is, you know, why would the fed not watch walmart and just take it to the most granular level to see what to do next. what is it telling us, do you think, about the macro >> well, i think that what we're seeing is that there is still -- there is still resilience in consumer spend no question about that the shopper keeps spending and they have been spending at record high levels, even through the pandemic and certainly following the pandemic so, that suggests the economy is pretty strong. but i am worried about the sputtering consumer. there was a report from san francisco fed the other day that said that we have probably about another couple hundred billion dollars of excess savings left

over from the pandemic, and the consumer's probably going to spend through this in the next couple of months if that happens, and then you have all of the student loan payments having to restart again, what we have is potentially a pretty soft fall and q4, particularly for the mass merchants that are focusing on the average consumer and the consumer that is going to be most affected by those types of metrics. so, i'm sure that the team at walmart is doing the happy dance now as they should, but they should probably be a little cautiously optimistic for the rest of the year. >> what about inflation? the second derivative. they obviously, gasoline and everything else, it can help and hurt, i think, at walmart. what are you seeing? is it slowing? reaccelerating from what you can see here at walmart? >> from what we see, gas prices are down, so it will be interesting to see what the

sam's club gas numbers were. they should have gone -- they should be in a decent place given that energy prices are in a better place as far as consumers are concerned. food has been stubbornly high. and that's one of the biggest -- that is the biggest area of spend at walmart and that is the biggest area of concern for consumers right now. that doesn't seem to be letting go at all. so we need to wait and see what brand manufacturers and producers do with their food prices moving forward. i don't see how the consumer is going to sustain this, it will trade down or just purchase less in the future. >> right sucharita, thank you you good in. >> i always have more questions but i'm good. >> thanks, courtney. coming up, the rate on the ten-year note hitting levels not seen since 2007. minutes from the latest fed meeting pushing rates higher as investors weigh what's next. we're going to talk all about

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box. ten-year u.s. treasury notes yield this morning hit a 15-year high, which threatens so many -- this is like the benchmark for the whole economy. it is going to sent mortgage rates to maybe 7.5% within a day or so. banks, shocking they're not down more premarket anyway. a lot of concern on wall street about the potential fallout across all of the industries stocks, bonds, housing markets joining us is matt hornbach. good to see you. do you think that everyone is too sanguine about this? it is odd how complacent a reaction we're seeing. >> yeah, thanks very much for having me on the program look, i think we are in a summer low, a period of time, we are seeing governments continue to issue securities as they do month to month, week to week and the buyers are on vacation i think that's the easiest explanation for what we're seeing happening in the market today. there is a lot of bond supply coming to market and once we make our way past labor day, corporates are going to be issuing more and more. there is going to be a lot of

supply for investors to take down the good news is people tend to go back to work after labor day. so we should see more demand. >> i don't know. maybe you're right maybe you're right and this is just a little bit of a quirk, but i feel like these technical traders always talk about, you know, moves that are -- when you start talking about now we're at around 4.3% on the ten-year, 4.42% on the 30-year, you don't think the significances we're able to trade up here and it took us 15 years to get no this point >> it is certainly notable that yields have risen this much. but it is also understandable given what we have just come through. i mean, we're dealing with still elevated inflation, relative to the past 15, 20 years. and central banks have responded by tightening monetary policy pretty aggressively. and that's one of the things that came through in the minutes that -- from the fomc yesterday, they still think inflation is tie

too high it is not totally surprising that interest rates are higher than what we're seeing. >> now he seems to me like everything is totally fine so the economy -- 4.3% rates, 7.5% mortgage rate, you know, and it is no big deal, you know? this is just normal. there is not going to be any kind of shoe to drop or anything. >> matt, is there a number where the duration risk rears its ugly -- is anyone not prepared with their what they're holding, they're marking it at maturity, so they're fine. is there anyone where, you know, we need to start worrying about smaller banks? >> joe, the time to worry was really last year when the prices of bonds were falling precipitously. and i do think investors took it on the chin last year, pretty hard, in fact. so, but at this point, you know, the -- with yields higher than significantly higher than they were last year, the duration risk in the market is actually a little bit lower today than it was a year ago because yields are higher

that's some funky bond math i won't get into, but effectively the bond market, of course, is risky. there is duration risk similar in the equity market a lot of duration risk in the asset classes. but the fact that yields are higher does, i think, offer some cushion for investors looking to put money to do work in the bond market today >> it certainly does all right, so let me kind of back up for a second, matt where do you think then, you know, if some of this is exacerbated by thin summer trading, you fast-forward to december, what does the world look like? and where do you think the best investment opportunities are right now? >> yeah, well, i mean, we think the fed is done hiking that's a call from our chief u.s. economist alan zehntner we think they're done. we think they can focus on the level of real monetary policy restriction in the economy, which should be going up in other words, policy should become more restrictive as inflation comes down

and we do think that inflation will continue to fall into the end of the year. our forecasts for core pce inflation, which is the metric the fed really focuses on is much lower than what the fed has. so -- >> they're saying they need to cut rates if that's going to happen they don't want to necessarily keep tightening, but maybe they do. >> at some point next year, we think they will be cutting rates. the investment opportunity to your question is really about putting money to work in the sectors of the bond market that are going to react most to those rate cuts. we think that's the intermediate sector of the yield curve at this point, around the five-year maturity point. >> good system at morgan so, if this, like, blows up, what did ellen say it is good to be able to do that how do you feel about ellen's call -- what did you say ellen's call was, we're not going to -- >> that we're done hiking. the fed done hiking rates. >> if they're done hiking rates, you'll be, like, hey, ellen, i

don't make all these -- it is good to be able to spread it around, like diversify the risk at morgan. so you really think that -- >> we have a very collaborative culture and there are certain things that we have a different perspective on in this case, we're very much aligned. i think -- >> you agree >> yeah. >> really? okay that -- >> are they higher for longer? >> the economy is so strong that maybe we're all -- were you around for 8% and 9% that used to be normal for interest rates on the ten-year i guess, never going back there? >> i was born in '76 my first memory was "star wars." we'll leave that for another conversation >> i had my first grandchild not really a joke >> soon. >> oh, god >> matt, thank you very much, this morning, we appreciate it

>> yeah. steps along the way before that, i hope. higher rents not just hitting adults, college campuses are seeing soaring rent. diana olick has that story next. and futures right now indicated that up about 75 points. pretty good session so far looked that way yesterday and look what happened we'll be right back. time now for today's aflac trivia question. what company created the color "swamp holly orange" to use as the official color for yellow trucking the answer when cnbc's "squawk box" contiesnu aflac! seriously? now there's a hole in your defense; look at the size of that- gaaaaaaaaaaaap!!! is that a goat?! you talkin' about me? gaaaaaaaaaaaap!!! i think this goat is saying “gap.” must be talking about the expenses health insurance doesn't cover. so who's talking about the money aflac pays to help close that gap? gaaaaaaaaaaaap!!! aflac! aflac! gaaaaaaaaaaaap!!! it's about to go down, baby! aflac! aflac! stop that goat! get help with expenses health insurance doesn't cover

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now the answer to today's aflac trivia question. which company created the color "swamp holly orange" to use as the official color for yellow trucking the answer, dupont >> swamp holly orange. as college students head back to school, parents are holding on to their wallets, especially when it comes to off campus housing costs. diana olick is here with more. diana, with the tuition prices, what are we talking when you throw room and board in now, over $100,000 a year for some of these places >> well, we're talking about not the dormitories, but the off

campus housing so while you may have heart apartment rents overall are cooling off, this type is doing just the opposite. off campus housing that is student housing apartments, not dorms, but apartments, specifically for students by developers like american campus communities, gray star and landmark, student housing rent growth depending on the region of the country is anywhere from two times to ten times the multifamily rent growth, that's according to cbre, up from 7% year over year in the northeast to nearly 13% in the southwest the ceo of landmark says it is all about supply and demand. >> if you look at the top 200 or so universities in the country, which are the universities in which we target, you know, you see very stable enrollment growth at the same time, there is only a limited amount of land that is close to the universities that can be developed there are significant barriers to entry the net result of this has been very consistent and stable cash flows over a long period of time >> one more barrier to entry

right now is the cost of capital, for investors who are looking to get in on that growth, there are no longer any publicly traded student housing reits. american campus was acquired by black stone last year. but both landmark and acc are part of bread, blackn nonlisted reit. >> it has been such an incredible investment, i don't want to diminish that. 20 years ago, we said how can the costs keep going up and they keep going up. is there anything that can mitigate this going forward? >> more supply, actually you look at -- you were saying the difference between dormitories and off campus housing, a lot of buildings, high end buildings that students want to be in, they're very close to campus and have all kinds of amenities like the infinity pools and the granite countertops, et cetera, they need more of those they need them to be slightly cheaper. and the issue is a lot of zoning restrictions and a lot of land restrictions so the developers say if they can pencil in more, if they can

put more supply in there, then the costs will come down at this point, they just don't have that ability. >> yeah. so it is interesting basically it is -- would you say the supply coming online is the biggest threat, not threat, maybe relief, to apartments and to rents there and off campus housing is just not -- it is not going to see that kind of supply growth >> no, i mean, look, in the multifamily region, we have seen a lot of supply, especially record supply coming on to the market this year for general apartments that's why you're seeing rents easing when you want to be right by campus, and you want to be in the desired locations and there is not enough there, that's the reason why the rents are going up so high and colleges themselves would like to build more dormitories some are contracting with some of these developers to build dormitories that they then lease back to the universities, which then they use for student housing. >> is it -- i don't know if it is the larger story, but the bigger piece of this, what you're talking about, an explanation for one of the reasons that higher education

costs so much money in terms of total costs and what you have is this sort of unique market dynamic about off campus costs, which are going up, which therefore gives latitude and room to universities for their on campus costs to go up, and it creates this sort of terrible, terrible spiral? >> yeah, look. the cost of college right now, i got two kids in college. you don't have to ask me it is incredible the amount of gains every year we see going up when it comes to tuition, room and board, and then off campus housing. i had a son in off campus housing in one of those buildings, he then moved to a house with a bunch of guys because it was so expensive. it was slightly cheaper, but even that house, where he's living with eight guys and it is not beautiful is still costing quite a bit. >> but the conundrum is the infinity pool that is going on off campus is forcing the universities to think we need an infinity pool too because kids

want an infinity pool and they need -- >> i haven't seen that in a dormitory. >> not infinity pool, but trust me -- >> by the time -- >> things like that are coming because they think they have to compete. >> i hate it. >> you want the market to compete in certain ways, but not like this. diana, thank you coming up, kicking the can, speaker kevin mccarthy floating the idea of a months long funding package, a government shutdown at the end of next month. we'll get the latest on d.c.'s spending showdown with jake sherman. inside the creator economy why tiktok's highest paid earners are expanding into the food and beverage sector don't miss our interview with marc damelio "squawk box" returns after this.

welcome back to "squawk box. want to get to dom chu with a look at this morning's premarket movers dom? >> andrew, if you look, first of all, we'll start with the earnings headliner of the morning. walmart, the big earnings headliner, member of the dow jones industrial average is up about 1.25%. just over a quarter million shares of trading volume

premarket after america's biggest traditional retailer and biggest private sector employer reported better than expected profits and revenues driven in part by growth in its grocery and e-commerce channels. walmart raised its full year forecast for key sales and profitability metrics as well. on balance, it is off its premarket highs, but still up 1.25%. also on the earnings front, shares of cisco systems up about 2% on 40,000 shares of volume after the computer networking equipment giant and dow component as well also came in with better than expected report for profits and sales. cisco is also getting a boost in sentiment as it tilts more towards artificial intelligence focused data center products the company says it already received sizable orders for a.i.-related products from large cloud computing oriented customers. so up 2% and we'll end on technology as well, analyst call on adobe systems, that stock is up roughly 1.5%, around 30,000 shares of volume right now helped along by analysts at b of

a who upped that stock to a buy from a neutral they raised the target price to 630 bucks. it was 575 they cited things like adoby's emergence as a leader in a.i., when it comes to software geared toward generative a.i. products. adobe systems continuing the big trend, up 56% so far this year back over to you. >> impressive, thank you very much. markets are look for direction after the july minutes yesterday. here with more insight, give us some direction, david bailen, city global wealth chief investment officer good to have you here. welcome. a lot of people saying the minutes were hawkish was that your read >> that is my read that's why the bond market is reacting the way it is, but the bond market is also presenting us with an incredible opportunity because the minutes are looking backwards and when we look ahead to 2024, we'll see inflation fall substantially and you rarely get an opportunity to buy bonds with these kinds of real yields in them. >> they are walking right into -- >> i'm well aware of that, yes,

indeed >> isn't low inflation already priced into the market it wouldn't -- do you think that the ten-year yield is where it is because it thinks the cpi is 5% instead of 3% next year? >> i think we look at where the cpi is going to be next year, it will be -- by the end of 2024, 2.5% to 3%. >> where do you think the market is. >> the market stays around 4% based where we are right now what is clear is that the last remaining part of inflation, related to real estate is what will come down next year mortgage rates are unusually high. >> but everybody knows that. we have seen the data, right so that's my question, my question is why -- what i'm trying to figure out, why are bond yields so high, right are there just enough people in the market who don't, you know, believe that it is going to go that direction >> that's exactly right. i think that's the huge debate a whole bunch of people that believe inflation is going to be persistent and simply embedded into the economy and when you look at a -- the other thing i would also say is there is a huge amount of cash on the

sidelines. the average ultra high net worth investor has 25% of their money in cash, taking the short-term view, they're piling into notes, piling into short duration treasuries and not looking at where else they can move their money. it is one of the biggest calls we have right now, like i say to people, you can get 5% for six months or 6% for five years, which should you do? >> where do you get 6% for five years? >> corporate bond markets, not the treasury markets people should be moving out in duration right now to intermediate or longer bonds to do that, you believe inflation will normalize. >>for everybody else, they're probably saying, well, treasury market is a good proxy i'll take that, maybe i get 4.5, not quite, instead of 6. >> right and, again, i just don't see a whole lot of people buying intermediate and long duration bonds. that's what's taking place so, it really is a debate on inflation. and i think the data is

unequivocal with the exception of real estate, you know, which is going to be the lagging impact, you'll have lower inlags. >> a lot of money left to spend. the government does, on infrastructure did you see manufacturing, factory construction up like 100%. >> right. >> they're giving away money to people to subsidize industries we're just getting started with this you don't think that keeps -- we're also investing in things that are going to be more expensive, like chips built here will be more expensive renewable energy, $1.2 trillion we're spending on that that's all going to be more expensive. >> right so there is no question, if you look at covid spending, government spending on infrastructure, inflation reduction act, all of that, and the lagging impact of what took place from covid to now, there is no doubt we're going to be doing that there are parts of the economy that are structurally deflationary, right? all of the stuff with green energy is actually now becoming

very real, able to produce energy at lower costs, that's going to keep the costs of energy down, you're seeing real wages, real wages are actually up >> 85 and renewable energy isn't cheap. it is more expensive. >> renewable energy, per unit of kilowatt power is being produced at well under the price of oil today. you're seeing an enormous shift. >> we just don't use it 100% of the time. >> of course not but these things are 20-year shifts and the larger issue, when you look at the components of the economy, you saw walmart, inventories are coming down. they were very, very high. manufacturing levels in the united states are below average right now. >> goods is deflating, but without a slow -- do you expect the labor market to be a lot worse off next year than this year how do you get to 2%, 3% without wages basically running at that level? >> that's where they're ultimately going to end up running to that's what we're heading to look at the interest rates and you look at how resilient hiring has been, no question, it exceeded expectations. everyone was told there would be

a recession, it hasn't occurred. and in a sense now what i worry about is complacency everyone is, like, sure, it is not going to happen and it becomes more vulnerable. the lagging impact associated with rates this high, take almost two years, right, to knock in the fed when it reaches peak rates holds them there for an average of 7 months, just coming to peak rates. as we look to 24, you'll have moderating demand on employment, ultimately going to have major sectors of the economy going down with inflation rate 1% to 2% some parts will be higher. we are absolutely headed down and that's one of the reasons why we love bonds at this point. and obviously some stocks that have the growth potential that you've seen. >> real quickly, we have what would the stocks be that you also like here. >> there are areas that are -- so, for example, all of the small and medium-sized industrials, manufacturing stocks that are cheap at 14 times earnings -- >> despite the slowing economy >> next year will be the recovery year, very tepid

recovery year from where we are. earnings are down year over year by 6%. this was the first sequential growth quarter as we going to to 2024, that is going to be a moderate growth year, but we're going to have an earnings recovery due to the circumstances we have got. >> earnings recovery macro slowing, wages slowing listen, i'll try to put it all together you know i like your conclusion. i'm not going to -- >> this is why people have to have a balanced portfolio and not keep so much cash. they're looking at all of these details and they're not taking a look at the overall trend, which is good for bonds and good for stocks. >> david bailin, thank you for your time. appreciate it. coming up, a pharma partnership. blue shield of california transitioning its 4.8 million members to mark cuban's cost plus drugs and amazon pharmacy. we're going to tell you how the move can save you money on prescriptions. that's next. get the best of "squawk box" in our daily podcast. follow squawk pod on your favorite podcast app and listen anytime. stay tuned

pair of industry disruptors, and bertha coombs joins us with

more hey, bertha. >> hey, joe. blue shield of california is looking to make drugs more affordable for its 4.8 million members. signing with mark cuban's cost plus drug company, the 20-month-old online pharmacy which sells drugs at 15% over wholesale and amazon pharmacy, which just this week launched $35 insulin. blue shield's ceo paul markovich says the transition will start in 2025. >> i expect we're going to -- when this ramps up completely, we're going to be saving $500 million a year if this were to be applied across the country, the savings could reach easily $100 billion. >> this is just a second health insurer to sign with cost plus i asked mark cuban how hard it has been to win them over and he told me there are a lot of bad habits they need to break, but payers now realize the cost plus

has made the price of medications transparent, with doctors and patients seeing what prices should be and the industry will have to adjust still, in addition to cost plus, amazon blue, blue shield will continue to use cvs for specialty drugs. because that's an area where you still need to have that scale. >> how big a deal is mark cuban's business becoming? >> he says that they're growing at about 20% a month but this is a tough business to disrupt because you've got the big players, they have the scale, and they can get -- >> do they see him now, though, as a -- as a unique and genuine competitor or do they think this is some kind of side show? >> i think they don't yet. he's not as big a threat yet but you have insurers that are still on their contracts, so maybe as their contracts come due. and likely the blues and the smaller players might turn to them certainly, you know, cvs health isn't going to

they have a -- >> benefit management. that's united healthcare isn't going to he's never going to get the big three, but he does say that we're talking with all of them >> if you try to go to a pharmacy, it is crowded a lot of times. >> it is >> takes time. allot some time. people like to talk to their pharmacists about their prescriptions. >> it is not just talk >> that's the question didn't you write that question >> people do like to talk to pharmacists. for the pharmacists, they have to often call and get reauthorization, so it takes a lot. it takes a while one thing amazon has that ability online to be able to talk to people, but they also have the ability for you to pick up your prescription at a physical pharmacy as does cuban, they actually partnered with a few individual pharmacies, trying to grow that network. so you can still go in and see a pharmacist but when you have complex

things, you know, my late mom had a lot of issues in terms of hypertension, copd, it was really helpful to be able to talk to the pharmacist when she had all these different drugs that might interact. >> so just so i'm understanding this, basically the existing system controls 80% of the pharmacy locations and cost plus and some of the others -- you have to do mail order? and so -- but is he right that those middle market players are thriving if we all just did the cost plus model, would we need medicare drug negotiations? how much of the high cost of prescription drugs is because of this old system and what would the people behind the old system say about why we need it >> that is the huge point of contention in the business now, kelly. you got people in washington actually, there are a number of bills, whether they'll ever make it to the floor for a vote is another question a number of bills, bipartisan, trying to get at the middle men, the pharmacy benefit managers, the drug payers say we have to raise our prices, because we're going to get such big discounts

from the pbms. they're the problem. and the pharmacy benefit managers and everybody else points to the drugmakers raising their prices twice a year. >> why do we need the pbms why can't it all be direct >> the scale of it, you need to have people negotiating and being able to basically, you know, do the logistics on it but there are a lot of questions about whether or not that model is going to continue they argue that they provide a service in that they will get a big discount from a drugmaker. for example, right now, the glp-1s, the weight loss drugs, as you look forward to next year and get lilly coming online, they might be able to play off lilly's drug against novo nordisk's drugs and get a discount, making them preferred in the formulary and then that discount, they say, helps to smooth out the premiums for everyone, depending on how an employer wants to -- >> this is why i love competition.

let's see. i don't know. >> that's their argument this is a huge area of contention right now and one that is getting a lot of scrutiny from regulators, from lawmakers, and from businesses as well. >> fascinating >> thanks, bertha. bertha coombs. coming up, house speaker kevin mccarthy floating a stopgap measure to keep the government funded past september. yes, it is this again. and chuck schumer apparently likes it we'll talk about the rare unity and if it can last after the break. quick glance at futures. we're holding on to gains. the s&p by 11, the dow by 45, walmart rallying after the strong earnings report "squawk box" will be right back. power e*trade's easy-to-use tools make complex trading less complicated. custom scans help you find new trading opportunities, while an earnings tool helps you plan your trades and stay on top of the market. e*trade from morgan stanley.

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nice footwork. and man, you're lucky,eone who watching live sportsion. never used to be this easy. now you can stream all your games like it's nothing. yes! that's what i'm talking about. [ cheers ] running up and down that field looks tough. it's a pitch. get way more into what you're into when you stream on the xfinity 10g network.

. welcome back to "squawk box" this morning house leader kevin mccarthy and senate majority leader chuck schumer are discussing the idea of a month-long funding package to avoid a shutdown next month what do you think the chances are that this is the path? >> let me start with this. i do think, andrew, between now and the end of the year the government will shut down. maybe january, maybe february if you want to stretch it out a little bit what's that? >> in '24 you're saying, january, february? >> could be '23 or '24 we'll have to see how it shakes out. i understand schumer and

mccarthy agree on a short-term stopgap because they're not going to finish their work in six weeks but the reality is if mccarthy has to load up that stopgap, with spending cuts, you hear the republicans calling for the border wall, the department of justice, the fbi, schumer is not going to agree to that can mccarthy put a bill on the floor without those things i'm not entirely sure he'll be able to do that. you could see, i would say 60/40 chance of a shutdown at the end of september >> can you layer in this presidential election into this? how much does that even factor does it factor in how both parties want to play this issue in terms of government funding, in terms of these cuts and how the public is supposed to think about all this >> a couple layers to think about here number one, the layer of how house and senate republicans are going to act vis-a-vis funding

when you consider trump being on trial in four different places they've already said they want to cut money again to d.o.j., fbi, local assistance to prosecutors such as fulton county where trump is obviously under indictment so there's that layer. number two, house lawmakers tend to look at the immediate political issue in front of them, which is their reelection, and they don't always do that, quite frankly. >> actually, go back for one second you think that those two things are intertwined meaning their personal election prospects but then you would think that defunding the fbi and other law enforcement agencies in relation to the trump indictments, they think that's good, that would ultimately be good for their election prospects >> no. the house republican conference is largely controlled by the right. we know that that's been the story for the last 10 or 15 years.

so they controlled the agenda. remember, there are 18 republicans in districts that joe biden won. in no way, shape or form is shutting down the government or causing chaos a good thing for their reelection and in term keeping their eyes on the house of representatives they don't have their eyes on the prize in the larger sense. lawmakers don't think of how their behavior will impact the presidential election and to the extent they do, the right wing saying my constituents in the deep red districts want me to defend the fbi, they don't mind a government shutdown if it over the border wall or protecting trump. so that is very difficult to reconcile. the 18 house republicans in these biden districts do not benefit from anything but middle of the road legislating. we seen very little of that this congress >> i'm going back to the presidential election only because i think we've been watching just various candidates

either emerge or seem to fall. desantis was on our air earlier this week, brian sullivan had a fascinating interview with him where do you think he really is in all of this given the indictments, plural, this all shakes out? and does it shake out in the next couple months or do you think this plays out much longer than that? >> much longer than that i was talking to a smart house republican the other day who basically said desantis' play has to stay in the race in case trump gets convicted or is unable to run for some other reason, he gets put in jail for violating the terms some judge puts on him. andrew, we know for a fact that donald trump in every single poll is at 50%, just below 50%, above 50%, 30 or 40 points ahead of ron desantis. i don't know how he overcomes that and i simply don't see any path for any other candidate

besides donald trump i know there's this fantasy that somehow the tide is going to turn i don't think we've ever seen the tide turn 30 points absent some sort of external event like convicting donald trump or him ending up in jail for some reason >> play money ball with us since we're here on b"squawk box. in terms of fund-raising and money, has what we've seen happen in the last couple weeks with trump changed the ability for the other candidates to raise money or has it actually made it harder >> it's probably made it a little bit easier but i'll say something controversial just to get rise out of people there's a lot of stupid money in republican politics, meaning there's a lot of people who dump millions of dollars into candidates who had no chance we've seen newt gingrich raise money. in this era where one rich private equity person or any

rich person could dump millions into a super pac, that candidate stays afloat because of that there is no argument really -- there's a little argument, very little argument -- that there's a smart investment opportunity with ron desantis. just looking at the publicly available data, there's not a ton of evidence that ron desantis has a chance of coming back period. so, listen, i do think that there is the people who are making long-term bets that trump will be convicted or put in jail otherwise unable to run and that's allowing desantis and others to raise money. not a great bet. >> jake, we got to run we appreciate it talk to you soon thank you. >> still ahead, from social media to the supermarket, tiktok's highest paid creators are launch, de-milo foods with their new array of snacks hitting the shelves this fall. we'll ask the patriarch of the

family why he's ingog into the food and beverage sector next. "squawk box" will be right back.

good morning futures pointing to some gains at the opening bell.

stocks have hit the skids lately the dow now on pace for its worst week in over a month playing a part in today's premarket game is walmart. we're going to tell you all about the second quarter profit and revenue beat that's pushing the shares higher this morning and the patriotarch of tiktok's first family we have an interview with the father, mark d'amelio will be with us as the final 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'm joe kernen along with andrew and becky is off today

we have stalled out the gains we saw from the october lows, stalled out in august, which maybe not surprising it is kind of slow but sometimes you see some big moves when not all the major players are in part of it are treasuries, getting interesting with the 10-year right around 4.3%, 4.298 and the 2-year 4.95. maybe we're almost finished with the near term -- short-term rate increases but maybe there aren't any cuts coming? what did goldman say, second quarter? >> yeah. the market already has them priced in. gains with walmart, shares up about 3% last check. they raised their forecast, dom.

pretty good given all the headwinds. >> definitely. but we're losing a little bit of steam here the big earnings driver is what's happening with walmart. remember the dow jones industrial average, dow component part of the story. 1% gains as kelly points out, it was up more earlier on the sessions, about 400,000 shares of premarket volumes so far, america's biggest grocer and biggest private sector employer. it expects better-than-expected profits. it's driven by grocery and e-commercial walmart raised its forecast. so overall it's generally positive but we're losing a little bit of steam as well. on the retail earnings front this morning, we have shares of tap i tapestry after the parent company of brands like coach,

kate spade, in a deal with michael coors, capri holdings. it also gave guidance that was viewed as below consensus as well so tapestry shares feeling pressure and we end with hawaii electric, down 18% this morning, bringing its total year-to-date declines of 72% as the hawaiian electric utility faces continued speculation of any potential liability it may face in the aftermath of the maui wildfires. there's a wall street journal report saying they have engaged some restructuring experts to help them through this process we'll see what happens there >> a very quick turn of event. thanks a programming note on wall part don't miss an interview with

walmart's cfo, john david rainey coming up later this morning >> blue shield of california becoming the second to sign with mark cuban's online pharmacy they sell medications for 15% over wholesale pricing it's been around for less than two years and blue shield ceo telling cnbc he expects the switch will save $500 million a year cuban saying there are a lot of bad habits they need to break but payors realize they've made the prices transparent they will continue to use cvs for specialty drugs. take a look at the other big health care players this morning, all down. cvs taking it mostly on the chin there, the biggest loser at a

little over 5% off right now. >> the existing pharma model has brought this upon itself to some extent looking around for defendants of the existing model and one of the arguments is if you did away with the pbms entirely, maybe the pharmas would be happy the lack of transparency, the rebate issues going on for years. >> and cvs bought them -- >> because they were supposed to get rid of -- >> investment bankers went wild. >> the idea is if the pbms are extracting something from that customer, they're going to vertically integrate -- >> and it's going to be better for the customer but never is. >> right, nothing changed. >> certain times you can't even tell what the price of something is it's so convoluted with all the middle men and drug places blame the middleman. >> this is a mail order

business they might struggle with that aspect of it, not going into the pharmacy and talking to somebody but i think these price moves premarket are warranted because this does feel like a big shake-up very interesting to watch what mark cuban does here >> if it's down 5% just on this news, you have to believe something's really happening i don't know if it is yet. it may take much longer. >> you know institutions better than anybody there's a sense of once one person does it, it may clear the way. >> others may try. >> no one wants to be the first but once the first one goes, it can start to pick up momentum, unless someone has a bad experience >> it should be the best experience in town you can take a pill rather than being in the hospital, it's better if you can manage it at home >> and it convenient when it shows up at your house

>> investment sentiment has swi switched to abject fear and loathing i don't know if that's good or bad. as soon as everyone stopped feeling better about the market, the market stopped going up. >> that's typically how it works, joe there is tremendous skepticism around the ability of risk assets to continue to move higher our view is that stocks still look a lot better than bond. they think this is great trade, the risks around stocks versus 4% in the bag. i think the opportunity is high locking in low rates for the next ten years here's our view -- i think rates

could move higher. we're in an environment where the demand for treasury has evaporated and buyers have switched to sellers, china, japan, global demand for treasuries has shifted from hot to cold. when you look at stocks, what's interesting is they're doing all the right things what makes me happy about the private sectors and corporate and consumers is we all learned our lesson in 2008 and 2009 that floating rates is bad and that's great today is consumer and corporate balance sheets are still very healthy given the amount of inflation we've had to shoulder, et cetera. i don't know it's one of those environments that we're looking at in 2008 and 2009 and bracing for the end of the world and it's actually a very different setup today >> i guess you've been watching the show

we keep having that discussion about 4% for ten years versus, i don't know, if you got a good company with a dividend and it's growing at x amount per year, then you got all the potential up side of the company, you know, being well managed and run effectively and increases that gets you to the 4% >> savita, where can i get a 4% yield and i'm not going to get -- >> you don't have to get it now. >> i don't want verizon. >> buy a 2.5% yield now and it goes up 15% a year, over the next ten years, that dividend yield will be up double digits and you also get the appreciation the best you're going to get on the 10-year is your principle back, probably eaten away by inflation -- >> and taxes >> and taxes >> i like it we're very like-minded this morning. to your point, i think can you actually get higher free cash

flow from energy companies if you look at energy versus tips everyone is worried about inflation protected income energy versus tips, the free cash difference is nine percentage point so i think that we're in an environment where there are still dirt cheap stocks that aren't necessarily discounting a healthier environment, meanwhile all the economists on wall street have dialed back their recession forecast, or most of them have, and we're looking at consumer spending still strong pockets, you know, landscapers are starting to weaken it mostly in services where we can't spend money on travel because we're going back to school i think we're in a pretty good spot and there are not enough people hearing about how good the the but getting us up to 4 1/2, 5%. >> you're not going to build

well at 4% nobody's ever built wealth in anything other than the stock market ron baron messaged me -- >> that's totally fair >> you'll get your money back, maybe not eaten away by inflation. >> here's the xle, 3.7% dividend yield. the past five years it's gone from 70 to 87, the price it's okay, you know, but -- >> nobody's ever gotten rich in investing in just getting your principal back >> it's not a get rich thing. >> so you put it under a mattress, you do even worse but you do a little better in your ten-year, 4%, but people come all these people who are smart enough -- you don't even have to

be that smart when the market goes from 1,900 in '81 to 35,000 you just have to be in it. to win it you got to be in it. >> i think you got to be in it and in the right sufficient. i don't like the cap weighted stuff here the equal benchmark is better. the equal weighted benchmark has outperformed the cap weighted. there's something going on in the stock market, a broadening out, that not all the companies are going to go to zero and up just want to own seven tech companies. there is a strong reason to own a broader market portfolio today. i think the other important factor that we've noticed during earning season is that you've had companies tell us that they're spending on efficiency and they're actually starting to

reap some of those benefits. if you look at productivity, it jumped in the second quarter labor efficiency, companies are dealing with high wage pressure but they're doing the right thing. they're thinking about how to get leaner, how to get more efficient. and longer term what we've found is that investors are willing to pay a much higher multiple for companies focused on efficiency than companies that are just earning money from buying back their shares so i think we're in a great spot right now. i actually feel more positive on corporate america than i have in years because companies are thinking about how to handle a higher hurdle rate and they're doing the right things they're cutting costs, they're getting efficient, they're thinking about where they can use a.i. i don't think a.i. is a panacea but it's part of a larger efficiency story that makes me more bullish where i see the risks is u.s.

treasury the u.s. sovereign debt just got downgraded >> the best you're going to do is get your money back i've been on a stock market show for 30 years but i think kelly is going to work at a bank >> brandon at twitter has my back >> let's go, brandon >> you can get capital appreciation on bonds when rates decline. >> we got to go. >> if rates decline. >> you can, if rates go down >> i know, i kw,no i'm out of my depth. >> we'll be right back >> thank you with just one capsule a day of advanced hair complex. conquer hair thinning... ...and fall in love with your hair all over again. only from nature's bounty. this thing, it's making me get an ice bath again. what do you mean? these straps are mind-blowing! they collect hundreds of data points like hrv and rem sleep, so you know all you need for recovery. and you are? i'm an investor...in invesco qqq,

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helping the small stand tall. nice footwork. man, you're lucky, watching live sports never used to be this easy. now you can stream all your games like it's nothing. yes! that's what i'm talking about. [ cheers ] running up and down that field looks tough. it's a pitch. get way more into what you're into when you stream on the xfinity 10g network. nice footwork. man, you're lucky, watching live sports never used to be this easy. now you can stream all your games like it's nothing.

yes! that's what i'm talking about. [ cheers ] running up and down that field looks tough. it's a pitch. get way more into what you're into when you stream on the xfinity 10g network. welcome back to "squawk box. we're going to talk about the crater economy, people producing their own product, content and having success doing it. today we'll focus on the d'amelio, they've secured a $5 million investment from fifth growth fund and it will drive the company's expansion into food and beverages joining us is the founder and co-founder of the brand. it's great to see you, sir let's talk about what's

happening in the greater economy and specifically the food space. i remember watching "mr. beast." he's in the burger business across the country, never even had to open an actual burger store to do it does it effectively at ghost kitchens how does what you're doing work and let's sort of talk about how far you think this whole world can go >> hey, andrew, good to see you, man. last time i was here, we talked about launches d'amelio brands and footwear, and just got back from vegas and opened up a bunch of retailers and that's been very successful. now we started a brand, launching it in october, with a global retailer called be happy snacks we're really excited about that and it the first time i'm talking about it >> so what does that business look like? >> you know, that -- right now where we did footwear, we went

direct to consumer this business is going to be working with retailers across the globe and bringing it directly to your local store and selling be happy snacks through places you're familiar with every day. >> and will they be branded de-milo? how will it be branded >> we're calling it be happy snacks my daughter has a song called be happy and it kind of sparked us to come up with that brand name. so it will be called be happy snacks >> terms of the marketing, is all the marketing effectively happening through your social media channels is that the entirety it have do you have to shift as these things build out and grow? what does it look like >> we definitely has learned a lot. my background is selling to retail that's what i did prior to all this craziness that's happened with my family

i think one thing i would say to all the creators out there, your following doesn't equate to customers. you really have to do the work and we've learned that part of the work is working with retail and making sure that people, as it relates to footwear, people could touch and feel and pride try get it on rather than thinking they'll come to you and push a button and shop it's not always the case >> having a massive following doesn't necessarily translate. do you have to think about what that customer and even what the followers now look like? are you having to get moe re granular on focusing on a consistent audience? >> absolutely. especially you got to think about your product category. footwear, women's footwear that we're selling is an intimate purchase and you have to make sure --

there's a sizing, use, all kinds of things. we've had someone come to our web site 73 times before they made a purchase. we have to know our customer we do think selling whole sale, working with retailers is one of the ways we'll be able to at a retail location. >> mark, huf had such incredible success. how much was the rise of the demillo family yours >> this is it when i started feeling most comfortable when we first started going on tiktok and social media i'll be quite honest, i felt like a fish out of water and i grew up in new york city and i had my own brand --

>> were you resistant to their sort of, you know, we all as parent are trying to figure out whether or not to even let the kids have the phone. did you watch it passively or nervously or the second they all posted were you all in >> i think fo an older guy, i monitored it and i was definitely open to it. when charlie was coming in my room every day and aid, woman it's just been a crazy foreign experience and now it's coming full circle where we're actually having a blast running a business together. >> assume cool >> final question, how far can the brand go you're doing clothing, you're now -- clothing and the shoes. if you're hitting here at the table. >> there's tons of companies

that have a bunch of different brands what i'm trying to do really is just giving my daughter and her family options to do things and and i say it all the time, influencers set themselves in a hamster wheel and just creating something that they can decide what they want to do with it, whether they want to run it or sell it but we're having a lot of fun along the way >> one more for you. >> go ahead. >> my one more is the quick sugar high of somin versus doing it yourself and the investment of it and hoping it's going to work out on the other end instead of just taking the cash and running. i assume there's times when someone comes to you with a huge number and they might even now be in the space that you're

trying to invest in to turn into your own business. >> we've been very lucky we started this when i was fairly successful in my business we never had to take an opportunity that just didn't feel right and charlie and dibsy both will come to me when an opportunity presents sfl, oot and one of our first deals early on as a family that we had together, we hassed on because it just didn't feel right for us >> mark, thank you it's always to. coming up, we're going to dig into walmart's second quarter earnings but first, you can get the best of "squawk box" on a daily podcast called squawk pod. we're coming right back. one prawn. very good. did i say chicken wrong?

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welcome back to "squawk box. futures right now have turned negative at least in the dow we still have the nasdaq up about 57 points as you can see. the s&p up 11 and change i guess we're not going to look at the yields. the numbers coming in a second we'll talk to rick santelli in

the meantime >> let's talk about our favorite company, shall we? former is it our former favorite company or is it our favorite company -- >> we'll always have paris >> and bed, bath & beyond. and buy buy baby is getting a new lease on life. >> i had no idea you guys had this affinity. >> we like to go on rainy weekends and just browse >> both of you did this? >> together. we go to like the vaporizeor section. >> is this from a movie i haven't seen >> nope. just the movie that we would make that no one would seeor une >> have you ever been in a bed bath >> i have. >> many times. >> to buy a keurig >> i love bed bath >> they have no baths. or beds. that's why they went belly up.

>> meantime, the chief marketing officer of the baby goods retailer dream on me says the owners of his organization plan to reopen 11 stores in the northeast. they bought bye-bye baby's intellectual property at an auction. i think, joe, we missed out on buying the i.p >> that would have done it >> rick santelli has the numbers in chicago >> yes, we are awaiting of course the release of continuing claims if you look at continuing claims in particular, we've had one, two, three in a row under 1.7 million. we want to pay attention to that dynamic. i do see a philly fed hitting the wires. we looking for minus 10. it came out at 12. 12 doesn't sound good but there's something neat here. we had 11 nesitive 12 breaks th,

13 or 14 negative ones in a and is the highest number since april last year, 239,000 on initial claims, spot on with expectations and at least for the moment 9,000 less than our last look at 248,000, but that may get revised. 227,000 was the last week in august i do like to point out we haven't been over 250, a psychological area to be sure, since made june. and on continuing i have to say that if you folks 1,716,000, you have to be fast to read these

headlines. that's a little bit higher than the 1.7 million that was expected and a little hyper than 1.864 million in the rear view mirror and it does break the consecutive run for three months in a row if you look, we're still moving a little bit higher. we were at 428 we're at 429 now of course i have to point out that last night was a very important day if you're a trader in the fixed income space. a clo bo and owl ask knight 4.25 and change we're hovering just below 4.3. anybody throughout as a technician understands we'll have to see where it goes on friday to make our next guest i

what 30 years haven't done it yet. their high was also on the 24th of october last year at .438 granted we are higher than that now but we haven't closed above it back to you. >> okay, rickster. thank you for that i want to go to the professor, steve liesman joins us with his take on this data news >> the only thing i add to the jobless claim numbers is there's some discussion as to the yellow bankruptcy created something of a surge. it came in spot on i don't know if rick saw this, but i have here that they revised up a little bit to 250 the prior week so claims are actually done. and maybe the fun who might have lost work because of the bankruptcy and working its way

of the system. we want to okay knowledge whether and it's a sign of continuing demand out there. worried some sign in the philly fed number of the prices paid index cenking back up above 20 and the employment index was and the number itself was strong it defies explanation that now we have perhaps a broadening of the sector >> don't miss cnbc's coverage of next week's federal reserve summit steve is headed out west, live from jackson hole, wyoming that is next thursday and friday and, you know, steve puts on the

western clothes. >> he does >> maybe a hat >> some waders >> he's got places where he could keep a bunch of lures. >> a lot of plaid not that he. >> we talked about this issue with him he said it's a lot harder getting the fisher in than it used to be coming up, michael ferguson helps us make nssee of the rates and if they will go up again you're watching "squawk box" on cnbc the biggest ideas inspire new ones. 30 years ago, state street created an etf that inspired the world to invest differently.

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talked a lot about jackson hole and a lot about the fed let's continue because according to minutes from the last month's federal reserve meeting, fed officials still see up side risks to inflation they say more rate hikes could be necessary to tame rising prices roger ferguson joins us now, former fed vice chair and cnbc contributor. roger, that was the headline that was the takeaway. i couldn't help, i was reminded

of the late, great prince. there were a couple of doves that were crying a little bit and i heard that, too. i'm wondering -- i think it's good because nobody knows everything and it's good that not everybody is there just to nod in agreement what do you think the doves see that maybe the rest of the fmc, they don't see what do you think they're looking at >> well, first i think you're right to point out that while the headline was pretty hawkish, there were a range of views that came through i think the contrarian point of view is there's been quite a bit of tightening already in the system, there's still some uncertainty about credit tightening coming forward and maybe it's time just to take a pause to let all of this work its way out. there are a couple places where that kind of sentiment came in around the risks being a little bit more balanced and not all on the inflation side i think that's what the doves

are seeing >> the 10-year might do some of the work for the fed at this point. that could cause, i don't know, the housing market, mortgage rates. a lot of things are pegged to that so maybe they don't need to take short rates higher and the two-year seems to be indicating that maybe there aren't too many near term hikes. we're back to where we were. all along we've been saying for six months, roger, one or two more and one more, we're still stuck on that. >> we're stuck on it because the minutes themselves say while inflation comes down, it's still very much above the 2% target and the fed said in the minutes that -- i think they used the word confident, that inflation is clearly on the path towards 2% the reason we're continuing to get these hikes is inflation is

still high and, as we've seen recently, there continues to be in a positive sense more momentum in the economy but that feeds through to what they're worried about. so there may be a pause in september depending very much what the data points are >> roger, nobody can ever see that far into the future the thing that scares me, i guess, is maybe we're under -- i've always been thinking that inflation would take care of itself after the supply chain issues went away i guess robert kaplan got me thinking about how much more money we really do have to spend with all these programs. and because now the narrative is there's not going to be a recession or at least it's going to be a soft landing, what scares me is on the down side, we could have to go much higher, like back the rates i was used to my entire life, whether it's

6 6, 7, 8% they didn't cut off the stock market back then, we did fine with 7 1/2, 8% notes, roger. do you have see that as a possibility that the fed has to keep going and going and going for the fever to break >> i wouldn't say going and going and going. i would say two things, though first, the experience of the last decade or more, two decades are very, very low, interest rates are certainly an anomaly, it was not normal for money to be free. secondly, we do continue to see these imbalances in the labor market i think that's one of the things that's going to drive them to be open to going further. i think the way i would think about this, joe, is certainly one more and the possibility depending how the data come in of more than that. and the market has got to get its head around that concept the reason i think the market was surprised is an expectation that the fed is almost done.

the fed itself kept saying it's not just inflation has come down, it's the level that is still too high and a level that is clearly on a trajectory of 2% that suggests to me the possibility of more working to done going, going, going, don't know. i think it's too early for the market to say, well, the fed is done or even too early to say one and done i think it's very data dependent and there's a lot of forward momentum here. >> if you try to paint a picture of a stock market that under performs on a secular level for five years, let's say, there have been some guys and gals that think we could be below historical years and rates of returns on the stock market and not get -- not necessarily making new highs that we're used to that's a scenario that i could see would cause financial assets not to perform well for five

years, if we're just underestimating getting all the way back to those higher levels if we need to. i hope not, like you otherwise are there geniuses and they stuck the landing no recession, interest rates go back down, stock market goes up and we live happily ever after has that ever happened, roger? >> it has rarely happened. let's hope it happens this time. i would caution a soft landing doesn't mean rates are coming down any time soon, higher for longer has always got to be a mantra >> thanks, roger good to have you on, as always we'll be right back. we're always saying that we'll be right back.

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welcome back to squawk walmart revenue estimates. the real taitail really had stronger quarter, beating expectations for revenue, comp the earnings conference is under way. i just turned it down. mcmillan said jobs, wages and pockets of disinflation but rising energy prices, resuming stude student loan payments, as well as excess savings or headwinds

and the forecast going forward is cautiously optimistic >> one thing that's better is the run rate in the previous quarter and when back-to-school started and when that is strong, it bodes well with halloween and christmas. i do think consumables in walmart will go up >> private rates in grocery increased 9% and there is evidence of purchasers eating more at home based on the food they're buying and appliances. i will have more coming up on "squawk on the street. this quarter looks like it's painting a bit of a different picture. softness in some of the discretionary categories but improved at walmart. >> what do you have see as the distinction between the two companies in. >> everybody points to mix as

the big reason obviously walmart has much more grocery stores than target does. that increases frequency and their sales mix is vastly different. but also the online component is starkly different with walmart's online sales up 7% and target down 10 1/2% perhaps that's part of it. it does look like maybe they're taking share they also said they had more walmart-plus signups in the quarter than previously. maybe there is value that consumers are starting to see there and using it as grocery but then again for other things. it's more -- we are definitely still trying to ask that question a lot and tease it out. is walmart picking up share or are consumers spending less on the staff target sells or -- >> do we have to say docuug

mcmillan is amazing? she's he's under the radar but he's so good about this >> she's doing very well >> we think of the got to admit. >> you got it in there >> you want to disagree with me on that? no, but doug mcmillon. >> absolutely. >> he's so young >> and he knows the business inside and out served as an hourly associate. it's pretty amazing. >> the only thing i wonder -- so, obviously, they benefitted from some of the people who moved from target, dissatisfaction, what have you, but are they able to convert that customer and keep them? is that opportunity the kind of thing that wins you a lifelong customer or come a year from now when this is a distant memory, if it is, will they lose that and face a harder -- i'm just curious. >> such a good question. they started to see this higher-income consumer come in, i think, when things started to

get tough with inflation, and it seems like they've held on them so far the big question is, can they convert them into buying those higher margin categories, the home and apparel they've done better, so maybe they are holding on to them. >> jamie dimon >> that's true >> mike cavanagh >> keep going. >> why are you shaking -- >> shameless >> for more on walmart's quarter, let's bring in michael lassar, who's been listening to the earnings call as well. why did the shares turn negative was it a little bit of caution around the outlook that courtney was talking about? >> good morning, kelly i don't think it was that. i think the expectation was pretty high heading into the spring walmart's had a really good run. the stock has had a really good run over the last several months it's a well owned name by institutional investors, and i think the combination of high expectations, a premium valuation, are leading to the share price action today

still, the stock is set up very well while trying to remain objective. i would concur with some of the comments -- >> you don't have to remain objective. >> with the strength of the management team and how the com company's being led because they're really hitting on all cylinders. >> your trying to avoid a "great quarter, guys" vibe. the forecast is pretty good. i don't know what do we even talk about from here i guess the question is, can they keep taking share >> that's the key question are they going to double down on some of the things that are working? also keep in mind that they are seeing some benefits that probably are temporary, such as anti-obesity medications doing really well. that added likely about 150 to 200 basis points to its same-store sales growth in the quarter. things like ozempic.

that's going to fade as we get into next year, but it still has a lot of profit drivers that they can use as tools to reinvest back in the business, and this is a stock that you're going to want to own for the long-term as it continues to execute against its strategy >> what did you just say about ozempic? >> they sold around $2 billion worth of prescriptions for anti-obesity prescriptions in the quarter so that's a meaningful driver of their recent performance >> wow >> it is i believe that the cfo, john david rainey, when he was talking about that, also talked, michael, about how the margins are not particularly good for that, although the sales are is that right? >> super good point, courtney. that's exactly right they might fill a scrip for 750 to $1,000 and earn 5 to $10 gross profit they will renegotiate some of those relationships and improve the profitability of those over time >> they just want people in the store. they might get $5 on ozempic, but they want to get the $50 on

the milk and the seasonal categories or whatever courtney, thank you. michael, thank you as well coming up, we're going to get you ready for the trading day, which is coming up at 9:30. the futureris ght now back in the green. they were negative >> it's all walmart. except the hours that you're sleeping. so why do we leave so much untapped potential on the table? this is a next level bed, for a next level you. my circadian rhythm is kicking your circadian rhythms butt! it's not a competition. i know, but i'm still winning! so, it is a competition. save 50% on the sleep number limited edition smart bed. plus, free home delivery when you add a base. shop now only at sleep number. (fan #1) there ya go! that's what i'm talkin' about! (josh allen) is this your plan to watch the game today? (hero fan) uh, yea. i have to watch my neighbors' nfl sunday ticket. (josh allen) it's not your best plan. but you know what is? myplan from verizon. switch now and they'll give you nfl sunday ticket from youtubetv, on them. (hero fan) this plan is amazing!

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we are just over half an hour to the opening bell on wall street joining us now to talk markets, the declines we've seen lately

is julie biel, research analyst at kayne anderson rudnick. it's been tough out there. we got a little bit of green this morning, but i don't know i don't know between where the fed may be going and just about everything else, are you in the buy, buy, buy category, or would you be holding your powder? or in the bond business like kelly evans? >> you know, we live in the hold, hold, hold at kayne. our average hold period is five years, and i make maybe one or two trades a quarter our positioning is always the same because we really pretty deeply believe it's hard to predict what's going on. we were all wrong about this recession that never showed up so, i think that taught us that it doesn't really pay to be defensive or value or growth it's really better to just own very good quality businesses that can do well regardless of the economic conditions. >> you have a take on what the fed's going to do at this point? >> you know, i think it's important to kind of bear in

mind how higher interest rates really filter through the economy. it's important because you need to be thoughtful in terms of, are you stocks that you own overvalued relative to where interest rates are and it's interesting to me how strong the economy -- the stock market has been despite having very attractive yields for investors, and i think people are just -- there's a lot of fomo and a lot of people feeling forced that they have to participate in this market but there's not a lot of conviction. you look at earnings, and any company that even was so-so, the stock sells off immediately, and so people are really nervous about any kind of cracks >> what did you think of walmart's earnings we keep talking about walmart versus target. operations, operationally, and the mix out of walmart versus sort of where we are across the board in terms of the economy. >> yeah, i mean, i think a lot -- if you look at anything in retail, before coming out of the pandemic, any retailer did well because we were just so desperate to spend money

and now, people are really just kind of choosey about where they're going to spend money because inflation has taken a lot of wind out of their sails i think it's a function of the level of execution you see stores in the same categories, dollar tree, dollar general, and they have complete divergence in how things are going in terms of their traffic, and it's just a function of how well you're executing to bring your consumer into the store and it's as you guys were talking about, walmart is just executing extremely well both in the store and on line-up, and target just isn't. >> julie, thank you. appreciate it. >> thanks. >> i think about advance auto parts versus auto zone there have been a lot of these -- >> divergent situations. >> trucking firms going -- by the way, the philly fed, i think that has something to do walmart's turned around and gone agree premarket but the philly fed came in at plus 12, highest rating since 2022, and pretty good gauge of overall ism, gauge of the overall market, so for those who want to argue things are bottoming and the worst is

behind us, there you go. give you that data point this morning. >> put it all together, shake it up, and that's what you get. 78 points on the in nasdaq the dow indicated up 55 points or so. the s&p indicated up 16. it's august, but things are happening that are important a lot of it in the bond market most people are on my side today. most of the people we had. >> you know, i heard something a little different >> make sure you join us >> what did andrew hear? we got to go >> every strategist we had on said, buy stocks and julie. join us tomorrow "squawk on the street" is next ♪ good thursday morning, and welcome to "squawk on the street," i'm sara eisen with jim cramer live from post nine at the new york stock exchange. carl and david have the morning off. take a look at futures this morning. it's really the bond market that's in focus, and we're seeing a little mini-bounce this morning. >> a mini-bounce >> we're still down for th