blooming brands, you know why it's called blooming brands. >> blooming onion. >> we'll tell you why the timing of the release is raising questions this friday, august 18th, 2023, and "squawk box" begins right now. ♪ good morning, and welcome to "squawk box" here on cnbc live from the nasdaq market site in time square, i'm melissa lee along with joe kernen. and becky and andrew are off. >> if it was a thursday and you had two days ago, would you come back. >> i would come back if they tell me to come back. >> oh, you would. >> oh, yeah. >> but would you be happy. >> always happy to be here,

joseph. >> we're happy to have you here. >> always. >> people have things. it's summer. >> if they asked me next week, i would say no, i'm on vacation. even to spend time with you, i would turn that down. >> you know what, i take everything you say seriously, because it just makes me, right, i believe you. >> yeah. >> there's no reason to not believe me. >> it's not necessarily sarcasm. >> not necessarily. let's take a check on u.s. equity futures. joe mentioned towards the end of the session, we came off in the middle with the higher beyond yields, take a look at how we're set to open. look looking to lose 8 at the open, the dow looking to lose 49. after a day of declines. the dow fell 291 points on track for the worst week since march. the dow, s&p and nasdaq are down more than 2% of the week. for the dow, it's the first time it closed below its 50-day moving average since june.

check out the pullback in technology. we have been talking about this for some time. the declines are stark. apple, meta, microsoft, each more than 12% off the year's highs. meta's decline makes it the fifth of the magnificent seven to fall in correction territory. amazon and microsoft are above that. tesla is in bear territory. >> and bitcoin is a proxy for risk on, i guess we should not be that surprised that it finally succumbed. it was weird, they were starting to write the articles that it's suddenly less volatile than stocks. then yesterday it was like, i don't know, someone looked around like wily coyote when he's like, you know, chase sglg o -- chasing. >> over the cliff, he's fine and he realizes he's headed down to the bottom of the canyon. let's look at treasury yields, which could be worse, the ten-year, kind of stopped before it went surging through 4:30.

and then the two-year still below 5%. this remains to be seen what happens. does it indicate higher for longer? i don't know. maybe that's what some people are saying. no one is talking about more than 25 or 50 more hikes by the fed yet. >> right. >> but i'm not convinced i was thinking they should have been done. now i don't know. recently data points with the economy and the amount of money going into the system still for years to come with the ira and the infrastructure. maybe it's good, maybe it's bad. but it's going to be coming. that's going to be a lot of demand. how much inflation do higher mortgage rates engender. it seems like it cools things, but then again it makes things cost more when you buy a house. >> that's true. but then people just don't buy a house, which is how things slow. >> 20-year highs. >> right. >> the issue is that a lot of people, they're locked in, right. we have that locked in problem because a lot of debt is fixed.

they're not moving. so how does 7.2% on the 30-year, how does that actually translate? it affects new buyers right now, but for a lot of people in their homes, they're not feeling the higher interest rate. >> i was trying it figure out why people are so miserable about the economy, and the recent polls all show that. people are miserable. >> because how much are you paying for 12 eggs? how much are you pay for beef. a bag of doritos. >> if inflation rises sharply for a couple of years, like eggs, for example, then it starts rising less slowly. the rises of two years, are they still there? >> you're still paying more. then i looked at gas prices again, which are back to an average of i think 3.80 or so, and we hear a lot of bragging from the biden administration. it was $2.39 when he came in office.

quickly did the math, 60% higher on gas prices. >> and then the iras largely viewed as actually inflationary, despite the title. >> 1.24 trillion for renewable. maybe it will work, though, i don't know. >> stocks tumbled in asia. evergrande filed for chapter 15 protection in u.s. court late yesterday tas it pursues a debt restructuring plan, and contagion fears from china's real estate sector. it's weird. china could help us tame inflation with lower demand. >> because their economy stinks. >> yeah. we're still global. we're still pursuing a global trade agenda, don't we want the chinese consumer to buy all of our stuff? >> i don't understand how we can say the decline in the chinese economy is going to be good for us. at some point it's not good forfor us. when the chinese economy is

ar roaring, that helped us. why is the opposite not true on the downside. >> if you're used to watching the "today" show, which is a great thing to watch, and suddenly you tuned in and saw the logic of the things i talk about, you would be like i'm going to the "today" show. >> because it's so dismal? >> no, because everything that you think would happen would be a positive, you have to look at like, all of a sudden it's actually not a positive. we had a great jobs number. market's going to go down. many people are worried. nothing makes sense in the economic world. it is a dismal science, economics. hang seng closed today in bear market territory, down 20% from january's highs. that's obviously indicative of what's happening. and china's central bank stepped up the intervention from yuan, setting the midpoint at 7.2 against the u.s. dollar, more than a thousand basis points stronger than consensus estimates and the yuan fell to a

16-year low against the dollar on wednesday. european markets right now in the euro zones have been in a recession. i saw at least the natural gas stockpiles which are looking good. winter is coming. do you watch "game of thrones." winter is coming eventually. >> yeah. >> not ready yet. it's august. >> end of august, practically. >> end of august. we mentioned the top, the price of bitcoin tumbling about 9% keeping below $25,000 on binance. that comes amid a risk off trade on wall street and as u.s. interest rates hit multiyear highs, the price of ether dropping 11%, the s.e.c. is poised to allow the first exchange traded funds based on ether futures, so far the regulator has not allowed an etf based directly on cryptocurrency but in 2021 it allowed trading

in a fund that allowed bitcoin fut futures contracts. >> we're barely getting to ether futures etf. we're not even talking about a spot, the first one will be bitcoin, maybe. >> i mean, yeah, if there is one, it will be bitcoin first. >> maybe. this year. >> everybody thought it was this year. >> i did. i really did. >> do you think that now? no. >> you still do? >> i don't know, what's gensler's problem. i think it would help, and i also was listening to jay clayton, you hear when jay was here. oh, you weren't here. the fed -- three times this week, weren't you or just twice. kelly was on twice, and you were on twice. >> yes. >> okay. >> generic female anchor. do you remember jay clayton? >> no, just knowing anything that happened earlier in the week. >> that's true. >> i can talk about things in college and high school, though, i can remember -- >> so you're at that point. >> yeah. you'll see.

drug maker maker novartis, last sandoz accounted for operating profit. the division faces mounting pressures in the u.s. off patent drug sector. kelly was born in 1986. >> she's a young-in. she thinks, 4%, whoa, she thinks 4% is like, whoa. >> 4% for what? >> like an interest rate on a ten-year, i mean, if you can get 4 4%, just having seen the normal interest rate was 7, 8, 9%. >> right! and that still didn't stop stocks from being preferred in terms of building wealth long term. if you think you're going to build wealth with a 4%, 30-year. you might make money. we may go into a slow period

where some of these rates end up being good for part of your portfolio, the stable part that you want. but i think you really need to, as a young person, you noeed to get used to equities long term, don't you? >> of course, that's the only way you're going to beat inflation over the long-term. >> and build wealth. >> activist, starboard value has built a stake of more than 5%. outback steak house owner, blooming brands, according to a "wall street journal" report, it wasn't clear what change starboard might be pushing for. one of the restaurant chain's top five shareholders, in addition to outback, it owns italian grill, bone fish grill, and flemings steak house, and pushed for olive garden parent darden, up 240% since the proxy

win gave starboard full control of dardens board. >> i have been to an outback recently whren we traveled in te last couple of month sgls. >> did you have the onion? >> no. >> it's dipped in batter and deep fried. and they slice the onion, so it's maximum coverage, onion per batter ratio is one to one. more batter than onion. >> the onion is just a delivery system for the fried batter and salt. >> do you know the calorie count on that? >> i have no idea. >> i could give you a guess. >> what's one serving, though, a whole onion. >> they bring it and you share it, but it's probably 1,400, i would say at least. >> maybe 2,000. >> you can have one onion. >> you wonder why we have a

problem with, what's the latest, i'm trying to say, people in large bodies. individuals in large bodies is how you -- politically correct way to say that. used to be full figured. don't use the f word, don't use any f word. how about trump giving christie grief about being fat. how about that. do you believe that? does that seem smart? does that seem smart? >> no. >> glass house. watch out. >> let's get an update on the devastating wildfires in hawaii. maui's emergency management administrator has resigned a day after he defended the decision not to activate emergency sirens in response to the wildfires. he said the sirens are used for tsunamis, where they're trained to seek higher ground. higher ground would have been a dangerous decision. he said he was resigning for health reasons. hawaii's attorney general said

she will tap an independent investigator to review the state and local response to the wildfires. at least 111 people have died in the fires and the death toll is expected to rise as search dogs continue to comb the wreckage. >> along with the story is the bizarre vulture, i guess, this is the way the world works. people going in knowing how valuable that real estate is going to be and scavenging, trying to buy up -- and it will be back. >> they're looking at prohibiting outsiders from buying any property during this. >> it will be back, but you know that money talks and everything else walks. >> is that good or bad, five years from now, maui is totally rebuilt, and lahaina town is back, and it's a thriving tourist place, and this is what it looked like five years ago after the wildfires, and this is what happened with development. is that good or bad, that's what

i'm asking? >> it's good there's hope for the region, but what's lost is still lost. >> would you want to stop it completely from people who can go in and rebuild it in an unbelievable way, is that the right move? >> no, if you have local business owners, you protect them. >> i don't know what right way to do this is. it is some of the most valuable real estate on the planet. >> exactly. palo scheduling its earnings release on a friday afternoon. the big take aways from retail earnings week. the sector point to go losses as we head into friday's session. you're watching "squawk box" on cnbc. young lady who was, mid 30s, couple of kids, recently went through a divorce. she had a lot of questions when she came in. i watched my mother go through being a single mom. at the end of the day, my mom raised three children, including myself.

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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, deere reporting earns of $10.20, better than the $8.20 the street was looking for. revenue topped estimates coming in at 15.2 billion, raising the profit outlook for the full year, citing strong demand, in this case, for large tractors. on today's squawk planner, after the cloetsing bell we'll t a rare earnings report from palo alto networks. the stock is down more than 18%. analysts are speculating that the company may have some news

they want to hide by picking friday afternoon. analyst dan ives called that decision a pr disaster and he had been a big fan of palo alto. joining us, stephanie link, cnbc contributor, great to see you. i think you're probably not in palo alto, but i want to get your take on a company announcing a friday night earnings release. it does seem a little suspect. >> yeah, it definitely does. and i wouldn't be surprised if it is weaker than expected, especially after the stock was down 25% on the day, but i do think, melissa, if palo alto is weak on the news, and it's been weak, post fortinet, both names are a buy. the addressable market is something like $280 billion between now and 2026.

that's a 16% cagr. these companies are growing top line, double digits, margins are expanding and if there's a pocket of weakness because of enterprise softness, which we know about, i think you want to take a look. >> that gets to the bigger issue, and what point, even companies that are growing but have high valuations at what point do higher rates get them, and should that factor in at this point in time? >> absolutely. higher rates for longer, certainly it's going to hurt long duration assets, that's technology, that's growth stocks in general. but i do think that the long term, you know, i kind of look at the total addressable markets, i think it's really important because long term, they do have the wind at their backs, and so you want to be patient. you certainly do not have to chase anything in terms of on the up side. i own, by the way, fortinet, and

when it was down 25% on the day, it hurt, but i was buying, and i continue to buy because, again, long term, i like the story very much. for fortinet is gaining market share. palo alto, if it were to pull back 10, 15%, you want to take a look for sure. >> stephanie, have you mentioned deere in the past? >> yeah. >> you have? >> i have, yes. i've owned it in the past, joe, as well as caterpillar. yeah, yeah. and i'm sorry that i sold deere, and i'll tell you why. i did. >> i know you talked about it. >> yeah. i know. and i like it very much. precision ag farming is really something that is amazing that's happening at that company. and what's happening is it's enabling the company to actually

includes their margins as a result. right? the more efficient crop, more efficient plantings, more efficiency for the farmers in general. therefore, they have been able to raise their margins for a long period of time, right. i mean, they think they can have sustainable margins in the double digits between now and the end of the decade because of this technology. so i sold it, i made money in it. the name i like, actually, joe, is cortiva, that one is a little less popular, for sure, but i like the whole space for sure. >> if you say big green tractor. >> yes. >> absolutely. >> that's a famous song by an artist who i don't think we're allowed to. i love jason aldean, he's had recent controversy. i don't know whether it's good or bad. that's the first song i sort of liked with country.

about 15 years ago. have you ever heard it, steph, big green tractor, it's about beer. >> i have. also kenny chesney, he thinks my tractor is sexy, he has a song out there too. >> tractors are sexy. >> i have learned a lot this morning so far. >> you have. >> thanks, stephanie, i'm glad you know what i'm talking about. it was a huge hit. huge. >> it was. >> maybe you can sing it. >> you want to take a ride on my big green tractor, maybe we'll do something after. >> that doesn't sound -- >> it's good, i'm going to play it for you on the break. >> we got to go. >> we're g to oing to break and playing it for you. 1950 calories in the blooming onion. >> just one day of calories. >> but the other 50 splurge on something else, you can have a piece of gum to get to 2,000. and we're also going to dig into the true cost of paying for college, and the best strategies for saving. and looking for financial aid. that's next, as we head to break. check out the shares, please, or

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college spending is on the rise, half of american families have a plan for how to pay for the cost of a four-year degree. senior personal finance correspondent sharon epperson joins us now with more. fraught with everything surrounding paying for college. maybe you don't need a way to pay for it. >> you do for many people. the average sticker price for college has been rising but most families, thankfully don't pay the full price. tuition, fees, room and board averaged around $23,000 at a four-year in state public university for the 2022, 2023

school year, that's according to the college board. out of state costs almost doubled that price, almost $40,000, and a private college averaged 53,000. now, that doesn't even include books, transportation and other expenses. . at some private universities the total cost of college is more than $80,000 a year. a new report from sally may finds the amount families spend on college education costs last year was about $28,000 on average. up 11% from the year before. now, families took out loans or borrowed money to cover about 21% of the costs. about 29% of college costs were covered by scholarships and grants. meanwhile, students and parents' income and savings covered about half of that. tapping 529 college savings plans, leveraging private scholarships and appealing for more financial aid are some of the ways that can help families pay for college costs. >> i'm going to ask you these questions but then i want to get

back to the other. it really is in today's world, knowing what finally happens with college loans and because the president is still not done trying to get around some of the things preventing him from doing that. and i would be mad, if i did all the things you're telling me right now to do, and cut back, and then suddenly, everything was forgiven. that's why it's such a controversial issue. and it's vote buying at best, too. >> but i think when you look at what has been forgiven so far, and the people that have been working in the public sector for 20 years, and they're seeing, you know, we have been paying as one person told me, i have been paying every year on my loans. i'm now getting my ph.d. but i just got a letter in the mail that said $50,000 of my loans is now going to be forgiven because i have been doing public sector work, working for nonprofits, in that area, because they have not gotten the return on investment

from the high cost of college in these types of jobs, that absolutely is essential. >> yeah, that's a very specific way of doing it. why is the rap that it's working people are paying for people's advanced degrees, you've heard that? >> i've heard that before, but i think everyone needs to really take a look at, again, the return on investment, the amount of money that we're talking about that people are spending on education, and the type of jobs that they're going to get afterward, and understanding that as you're going through school, if you drop a class or decide you're going to not finish right then, and you take out these loans, you still own that money. sticking with it and making sure you get a job that makes sense is very important. the other thing is there are other lower cost ways and free ways to get your education, whether that's getting help from an employer, whether that is making sure that you're looking at programs. a lot of nonprofit programs and for-profit programs that are looking for ways to help fund education that's not a college

degree but gives you the skills that you need to work as a software engineer or other things. >> we have to match skill sets. >> exactly. >> i said i was going to ask you the question, and then i didn't ask the question. do a lot of people use 529s? >> we talk about them all the time. what i found interesting in the sally may report is 30% of people are using 529 plans to pay for college, and the average amount is around $8,000 or so, but they're not taking full advantage of them, and not realizing they're not just for college. you can use, you know, up to $10,000 for k through 12 private education, home schooling, appren apprenticeships, vocational and trade schools. there's so many ways to use it, and starting next year, if you don't use your 529 money, you can roll it into a roth ira. there are a lot of different opportunities. >> i didn't know any of that, not surprising, but it's all useful. >> i knew that k through 12.

i didn't know you could roll it over to an ira. >> but i'm using it. >> there are some people that are super savers, they're like, now i have enough for them to go to grad school, but they don't want to go to grad school. oh, my gosh. >> good for them. >> roth ira. >> exactly. >> thank you. >> sthur. > sure. coming up, the push pull of hybrid work arrangements. as we head to break take a look at yesterday's s&p 500 winners and losers.

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good morning, and welcome back to "squawk box" here at the nasdaq market site. we are live, melissa is here. a look at the futures which are now down again, melissa. weren't they up a little. they're down. yesterday they were up all morning. day before, they were up all morning, premarket. >> and then rolled over. >> totally. >> we're down 2% across the board, everything this week.

a lot of it still reeling from the hawkish fed minutes, and just the really strong economic numbers we have seen. retail sales, every single one that comes in seems stronger. >> and the rise in rates. the nasdaq has seen steeper declines than the other indices. >> it's been a year since employers made a push for workers to head back to the office. introducing a new era of hybrid work. a new survey shows business leaders predominantly perceive remote work as having negative effects, particularly on workplace culture, communication, and training. now companies are introducing varied hybrid work policies and workers are adapting to this new way of working. joining us now is sidal kneely, harvard business school professor, and corn ferry vice chairman. i hope these two individuals really have opposing viewpoints. usually people are reasonable, and i guess we're looking at kind of a hybrid notion about

the fucture, in addition to wor. my first question to you is going to be, if you used to be an eight on remote work, are you coming down? has your zeal for that or your prospects for that being such an important part of the future, has that lessened at all, in recent months you have slowly heard a ground swell of saying, look, we got to get back to work, either from ceos or people in general. >> good morning, joe, it's great to see you. you know, my zeal is for data. it's not for remote work. it's not for hybrid work. it's for data, and i just look at data to say that office attendance has stabilized at about 30% below times that we had pre-pandemic, and hybrid work is what many companies are attempting to pursue.

and if you look at that and companies do have productivity challenges or concerns, but when you look the data closely, you also see that most companies have not changed, adapted, created new work models, in order for flexible work to succeed. a recent survey showed that 53% of employees found that their employers have neither created designs, support systems to make hybrid work successful. you can't cut and paste the p pre-pandemic work model into today's work model and expect it to be as effective. >> yeah, so the people that have the vested interests, they're dragging their feet, even though a lot of people would like to move into that. allen, a lot of times i can't figure out which side to come down on, so i do the ben franklin close.

it's like 13 to 12 on this. i mean, there's camaraderie at work. there's all the support staff in new york that needs people here. they have jobs they have to show up for. it would be nice if they could service the people coming in in new york. i think about, you know, commuting costs and child care, and so it's really split between is it about 13 to 12? i can come up with 13 really good things about it and 12 bad things about it? >> good question in terms of how you score this. covid did not cause remote work. remote work was caused by the fact that the pace of work was getting so frenetic, this was going to happen anyway. covid was a shock to the system, and made it a topic, made it possible, sent everybody home, and gave us the opportunity to rethink. so absolutely right, we have to be better at creating culture remotely. we have to be better at training and developing people remotely. all of that is true.

i come down, quite frankly, on hybrid, but i also have a caveat. early career people need time in an office with a leader that can help them. you don't have basic training in the army remotely. there is a reason why you bring people together to establish a foundation and get them ready for a career. so the people that are being hurt, if we could say people are being hurt by the lack of in-office intensity, is that early cohort of workers. by the way, when they go to work, if the boss isn't there, it's a joke. there's no reason for them to sit in an office and have remote meetings with their boss. we have to figure this out. we have to figure out how to do it, but hybrid is here to stay, and it was coming anyway. covid made it happen quickly. >> it's not just, though, the youngest cohort of workers, allen, who might be missing. not just that their boss is not there, but even the next level above them, oftentimes learning happens from other people on your team who may be the next

rung higher than you are, and so i'm just curious how you think about the longer term ramifications on the work force if there's not that infrastructure of people to learn from. even if the boss is in the office, that's not necessarily the person that that entry level worker is going to directly learn from. >> you're 100% right. the idea of learning, and vicariously learning is critically important, particularly as allen mentioned, those who are early in their careers, so the office presence is important for that, which is why hybrid on boarding, remote on boarding looks very different than an in-person company on boarding, so we need to get better at this on boarding, and we need to be systemic. how many times have people shown up in the office to be around people for the informal contact,

for the water cooler conversations and no one is around, it's not going to happen through serendipity, it can only happen if we're organized and structured and by the way, you can also learn through digital interactions as well. and one more thing i want to say is this modern work, hybrid work, that conversation cannot be separated with the emerging technologies like generative ai, chatgpt, bing, bard, when it comes to productivity and focused work, people want more of that, at home, using these tools in order to be much more productive. so organizations have to not only think about their hybrid models, they need to really think about their generative ai models. >> that's a good point. when we started this conversation, we weren't talking about ai. and it scares me. now i could see people saying, oh, yeah, you want to stay home. stay home. i got ai. i don't even need you at home.

you're softening, i can feel it this time. you're softening. my efforts are bearing fruit. you are softening on this whole thing, aren't you? >> listen. >> you coming around the mountain? >> no, ai is not ready to replace humans. humans and ai are going to replace humans without. >> i can tell, you're coming around, though. >> i think we need to be realistic, be modern, and get out of the 1950s mentality, and understand that we have so many more tools now. >> nothing wrong with the 50s. >> in our work force. >> nothing wrong with the '50s. a lot of great people were born in the '50s. some of my friends. >> beautiful thing, but it's 2023. >> any last word, al, we got to go? you good? >> i will tell you this next decade, it's all about human resources. more important than the technology people, hr is going

to drive this. >> all right. thank you, appreciate it. see you later, both of you. >> thank you, joe. coming up, news out this morning on two high profile ipos both expected next month. we've got the details when we come right back. has no idea she's sitting on a goldmine. well she doesn't know that if she owns a life insurance policy of $100,000 or more she can sell all or part of it to coventry for cash. even a term policy. even a term policy? even a term policy! find out if you're sitting on a goldmine. call coventry direct today at the number on your screen, or visit coventrydirect.com. 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, a fund that gives me access to... nasdaq 100 innovations like... wearable training optimization tech.

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welcome back to "squawk

box." ipo news here, soft bank owned chip maker arm has lined up 28 banks for its initial offering, according to a bloomberg reporting that the company is looking to raise 8 to $10 billion, the company is targeting september for the public market debut. and instacart is planning an initial public offering as soon as september. that's according to a bloomberg report that said the grocery delivery company could file plans with the s.e.c. as soon as next week. instacart, which previously considered a direct listing is now planning a traditional ipo on the nasdaq. coming up, big take aways from retail earnings next week, or retail earnings week. home depot, walmart, target, all down since reporting. we'll take a closer look at the consumer. that's next.

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billion, stock is down 2.5% on the back of that. >> it's been a busy week for retail. walmart and target, and the whole juxtaposition. wasn't home depot, wasn't that monday? >> that was tuesday morning. it feels like a year ago. but it was this week. it's funny, because the stock prices were not necessarily representative of the quarters themselves. there's really vast differences in retailers' performances. also internal ones as well. and getting these divergent outcomes. while the us consumer is showing willingness to spend, they are also discerning and what they are buying and where. even retailers with stronger quarters are using caution to describe expectations for the remainder of the year.

there is still weakness in discretionary goods, clothing, electronics, more expensive household goods like patio furniture. they continue to see lower sales in discretionary goods like those. while i did see sales improve in that area from last quarter, but still down year-over-year for the discretionary categories. homeowners are tackling smaller projects, deferring larger ones, and differing items over $1000. maybe it was a pull forward or something more. tapestry, noted softer trends among what it calls aspirational shoppers. however we have got off-price retailers, both of which sell primarily discretionary goods like apparel, shoes, home goods, and they put up stronger than expected results, increasing guidance for the year. inventories overall, much more of a control. that is leading to stronger margins. next week is packed. lowe's, macy's, abercrombie, dollar tree, ulta, and other

retailers. so if general consumer appetite for those goods is low right now, managing expenses and inventory coupled with planning we separate the winners from the losers when it comes to what we see in the quarters. and sort of the stock price a lot of that has to do with how much is sold off or how much they went up since they last reported. that seems to be the pattern we've been watching. >> what we've seen with target and walmart is it's not necessarily about fundamentals. there was much better business for the environment we are in right now, but the valuation was like 10 terms higher than target. >> exactly. going into those reports, walmart was up 5%. so once the news,, which was largely as expected for both as far as fundamentals went the opposite way. target went up a little. but the church compared to the

two are quite divergent. >> for more on the consumer, let's bring in sarah. is that the-- is that? yeah, i'm not stupid. yeah, i got it. i understand that. what do we know about the consumer after this week? >> the consumer is still very pressured for stable goods. as you were just hearing now, it's not shopping for discretionary items. we have a little different story in the first two weeks of august, traffic is down the highest we've seen since march and april, down 2% according to retail tracking systems. that has been a story, worse than we expected and not as good as we hoped obviously. but the consumer is still out

there. she is planning to shop online. she's taking her families to the stores, stores like walmart, results are very strong. their operations are in line. retailers like target doing the same thing to make sure they deliver goods to the consumer within the first couple hours or certainly within the first 24 hours. but we definitely have a softening of traffic. sales are slightly down as well, but they are a little more in line with july. the good news is the average transaction is actually higher than it was a year go. and also the conversion is higher than it was. >> i think retail is so nuanced. i think apparel retail should have its own, does home depot have, does that ceo have to be as talented as the ceo of, seriously. they put a bunch of tools and, but apparel, you've got to figure everything out, you have to stock the right stuff. you might get lemons you don't

sell, inventory, right? it's much harder. it should be, it should have its own apparel division. or retail. >> is a very complicated business, it's a roller coaster ride. as much as the consumer and economy changes, the impact to sales is absolute. it's quite large, you have everything from pajamas still selling to intimate apparel, which is selling, but then you have other categories and other sectors winning like beauty, health, and wellness, because men and parents need diapers and wipes, and companies show they had at her and stronger results digitally and for retail. some of those pieces we need, back to school uniforms, that was up as well. there is a lot of different parts within apparel, but it is a much more complicated industry and sector, rather within the

industry. >> what about what you might expect from what's to come next week, sandra? a lot of these discretionary companies, kohl's and nordstrom in gap. a lot of them have their own internal challenges while also fighting through a tough consumer environment. >> absolutely. it is definitely about you mentioned earlier, inventory management, having inventory is the name of the game right now, making sure we get out of 2023 into 2024 with the right amount of inventory to move forward. but also, it's about the assortment. it's very much about the merchant teams for these retailers regardless of what the product is. the merchant teams actually have, don't know if you can hear me still, they have greater responsibility to make sure that the product that's in the stores is the product the customer wants at the time. so this has been something that

every ceo, it's on their minds, every single fortune group is looking at every product and making sure they are turning productive inventory. >> we appreciate it, thank you. >> i am your go to. >> for years, brad eldridge was your favorite. you told me that. but you like kenny chesney. >> i like every country music singer. i'm not discerning. ux of new four-legged friends changed everything. dr. petsworth welcomed these new patients. the only problem? more appointments meant he needed more space. that's when dr. petsworth turned to his american express business card, which offers flexible spending limits that adapt with his business. he used his card to furnish a new exam room, and everyone was happy. built for dr. petsworth business. built for your business. amex business. i need it cool at night.

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good morning. wall street is set to hunker down after major averages dropped for the third straight day and the 10-year treasury yield at its highest. we will break down this morning's moves. if it's not hard enough to remember passwords you have to worry about ai hacking them. details coming right up. beijing considering countermeasures against president biden's executive order curtailing investment in chinese technology. mike gallagher as the second hour of squawk box continues 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, along with melissa, becky, and andrew are off. >> why aren't we allowed to play, legal reasons? we could probably get a knockoff version. >> we could sing it. >> i don't sing. >> us equity futures down about 55 points. nasdaq down 63. s&p 500, it's been a bad week, bad month. it's almost as if some of the folks threw in the towel, the market was bullish, it wasn't going any higher. diabolical purpose, seems like. at one point market style,

diabolical, to fool as many people as a can all the time to have as few people on board, but it seems counterintuitive. let's look at treasures, which have been the sticking point, the fly in the ointment, the wrench in the works. at that. it was above 4.30 for a while. it's above 4, the 10-year, that's something to watch. it was above 5% about a month and a half ago. they had a rough week. they had been in a pretty big upward trend, maybe it still is , and the risk off trade came back with a vengeance on crypto. it was almost 29,000 earlier in

the week or above 29,000 below 26 in certain exchanges yesterday. >> let's get a look at this morning's movers. good morning, melissa, good morning, joe. stock has been swinging between gains and losses. the maker of farm and construction equipment, raising its full-year profit forecast. 14% net growth for construction and forestry equipment, so deere shares are seeing some signs of life. on the earnings front you have shares of applied materials rising by about 2% to 3% at this point almost.

15,000 shares per volume. the company that makes semiconductor equipment, unexpected profits and revenues, upbeat forecast for the quarter. it's benefiting from shifts toward artificial intelligence, what else, and connective devices. they are seen as a possible leading indicator for the health of the semiconductor business. be some bullish signs there. and then we will end with an analyst note getting some attention this morning. at morgan stanley, led by adam jonas, they are getting an update on tesla down about 2% right now, half 1 million shares a volume. following yesterday's near 2% drop alongside the broader market decline. morgan stanley will wait rating and $250 price target, but they are noting the price cuts we have seen recently in china for ev's is raising questions about excess supply and slowing demand in that key ev market. now in related news, we also

just got in the past hour that chinese ev maker posting a record quarterly loss which is sending those shares lower. so check out tesla, xp ev, those things are on the move. i'll send things back over to you. >> thanks so much. let's bring in catherine, ceo wealth management, mellon. how do you view 4.3% on the 10 year, and if we stay at that level for longer? >> yeah, if you think about the market, we started this year

already for recession. as data came in and was stronger than expected, by may, the market said maybe we aren't going to have a recession. and you saw that leap forward in may, june, and july. now here we are in august, and the market is saying oh my gosh, we may not have a recession, and you are seeing that in the bond market with stock markets sold off, 4%, 5%, bond years sold higher with basis points, 430. so inflation is sticky, it sticks around a bit longer. we've had a great drop from 9% to 3.2. it's a little less straightforward. but ever basic case, because of the strength of the economy we can have a slowdown, we can have a correction in the market, and we can have a slowdown in the economy without going into recession, that remains our base case. >> is that how your position? >> yes. i would call our positioning in

our portfolios balanced. in other words, we were at our normal equity weight. we are overweight the us for a variety of reasons. and we are balanced when it comes to the bond market. we understand it's been a long time since the 10-year was at 4.3%. 15 years. i greeted her college graduates that joined our company on monday, 1000 of them. they were 7 years old last time the 10 year was at 4.3%. long time. our base case is it's good to be balanced in bonds, too. it's actually the time to take some duration. we have not done that in a long time, because rates have been so low. we think now is the time to take some duration, because then bonds behave like bonds.. >> unless the market continues

to sell off. they already have a paper loss. but it's like the same problem, we saw it in the banks. if you don't mark to market, you are feeling good about yourself, you would save there is an attractive alternative in bonds right now. you're confident enough at 4.3 is not going to be 6.2 in a year and a half? >> that's what we think. and when you look at industry fund flows they are not going to bonds, they are going to money market funds, they have reached yet another all-time high. >> they will be unusual. >> right. so we are pretty confident that rates are going to stay higher for longer, but our base case is that they do begin-- >> take money out of stocks and increase your bond on vocation.

>> we are neutral. >> and you are a wealth manager, so what you usually have, 40% bonds? >> every client is different, you could say 60% or so so it might be lower. but we are neutral on duration. we are taking duration. >> not corporate, talking government? >> i'm talking across the board. most of our clients who pay taxes, mutual duration. yes. >> and what is that, seven years? five to six? >> within equities, are there pockets where the evaluations are just too high given were interest rates are? are the further adjustments? we talked about down 12%,

semiconductors, that will be a test in the ai trade, what is your view? >> remains on the high side, we are about 19 versus 16 to 17, long-term average. i would remind everybody that we are investing in an economy, so where are we in the economy? and a lot has happened in the last three years. if we go back to before covid we actually had a very strong economy in this country. we were in the 11th year of an expansion, the longest since world war ii, and then we stimulated when covid hit. interest rates down to zero, $6 trillion of stimulus. where we are today, when you look at it, the consumer, 70% of the economy is stronger than they were back in 2020. their wealth has grown because the value of their homes, equity portfolios are up, they still have cash, 500 billion of that covid money hasn't been spent yet. and you look at companies, and they are stronger, too.

they have cash on their balance sheets, they took advantage of low rates to refinance. there's not going to be a lot of refinancing need, we think rates will be lower by then, so we have a very strong economy that we think will support the equity market, not without volatility, not without pullbacks, but think about this year, the market was up 20% at the end of july, we lost 4% or 5%. the normal correction is 14, 15% per year. we could have that this year and still have positive equity market. >> catherine, thank you. >> it coin percentage in your portfolio? >> we don't have a target evaluation through bitcoin. how ai can steal passwords with 95% accuracy by listening to keystrokes. the jump is having an the jump is having an inverse impact on ba cnkapital

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the-shelf laptop and a smart phone the team created a program, an ai program that was 95% accurate at recognizing passwords to just rehearse and is a software development engineer and a lead researcher on the study and joins us to explain what this means for the future of cyber security. it's kind of a diabolical, even to test for it was kind of diabolical. iphone microphone was used to listen to laptop keystrokes, and i see that ai was able to detect. are criminals as diabolical to figure this out, joshua? >> well, i think that's an interest in take to have on it. first off in terms of the ability to recognize passwords, or model itself predicted, recognized, the actual keys themselves with 95% accuracy. so if you apply that 95%

accuracy to something like a password, accuracy would go down with that small area of her getting bigger each time. we did chief 95 percent accuracy at recognizing individual keys with the sound produced. for testing something like this to see something like his is possible i think an important angle to look at this from is that if people with bad intentions discover that something like this is possible, that they can implement this in the real world it's in their best interest no one else on earth no one else know about it other than this people with bad intentions. in any other field of research you can pretty much guarantee of someone discovers they can do something big they will publish it, because people like publishing, and it gets them attention and funding and things like that. if people with bad intentions and cyber security get access to something like this they desperately don't want people to know this might be possible.

so coming at it as a researcher looking at this problem is more a case of do we think this is possible? if it is we need to promote a conversation around this, because essentially only the people who are looking at this from a purely academic angle are the ones who can bring this to the forefront of peoples attention. >> joshua? can you walk us through exactly what this entails? using the microphone on a smart phone, does the smart phone belong to the bad actor, or does the smart phone belong to the person whose password is being hacked and is somehow hijacked? is this all via zoom? is this done in person? what are the limitations? >> the two pieces of data we looked at in the published study , keystroke sounds coming from a laptop, with the phone placed next to it. and in this case we are just

recording the sounds on the phone itself. we haven't done anything to get into the phone. it would be the bad actor's property. somebody sitting next to you in a coffee shop with the phone discreetly next to them. it's discreet, you can keep recording by locking the screen as well. so that was one thing recording on phone the other thing was recorded via zoom calls, so recorded built in function on a zoom meeting and typing recorded through that. so yeah. the two vectors of attack we were looking at in this study are trying to classify keys from the sounds recorded on a phone next to the target's laptop as well as the built-in function with like a videoconferencing software. >> joshua? is there a simple fix to this? i've got this padded keyboard, i don't make sounds when i am typing, will that work? will it work these attempts, or if i get a really good manicure

? will i not make any clicking at all? >> we don't know what for certain makes the keys sound different. this was in the ai model we used-- >> so not the clicking, the time between clicks could indicate locations on the keyboard? >> so yeah, we have a good idea based on previous work in some of our results for positional location on the keyboard is probably the main indicator of the different sounds. if you think of a drum, if you hit different parts of a drum it makes different noises, near the edge, near the middle, so when you have this little plate with the plastic plate on top and these legs underneath to the desk where you hit makes a different noise, which might not sound different to you, it's not anything to do with fingers touching them or the fingernails pressing the keys. just to go back to your original question.

there are a bunch of different ways you can do that. the easiest way are things like fingerprints to put in passwords or facial recognition where you're not even typing anything. that doesn't remove the obstacle if someone is looking for documents you are typing at the library in the coffee shop or email. so passwords are what we focus on, but we will remove those for now. if you just wanted to try and make this harder as you are typing on your very soft keyboard, that's a great way of doing this. the more different types of keyboards we have out there the more general these would have to be to work successfully. so that's one thing. and typing style. everyone will type slightly differently. we proved a model like this can recognize it sounds from keys, but those sounds might change depending on ways people are typing or who is typing and things like that. >> so josh, i'm curious, what makes this doable because of ai? it seems like this would have

been doable prior to ai. >> sure. so we are not saying with this paper that ai is the only way of doing this. there has been research on this topic in the past, quite a good amount of research, but it's pretty far apart. very few of the papers use the same approaches multiple times in a row. we were the first paper to specifically look at laptop keyboards and apply ai models to the sounds that we were gathering. and machine learning had been used for this in the past, but maybe not to the same level we were using a hit. the main point we got out of that is that yes, there have been great results in the past on this. 91%, 93%, by using very much off the shelf kit with limited amount of data we were able to surpass those accuracy measurements using deep learning. it is proving deep learning is actually really good at this. >> r, joshua, thanks. thanks for that update, kind of

interesting. i'll be very quiet, because i have my phone right here. i wonder, right. >> wonder why, before we start the show. >> just in case. >> yet exec appeared coming up. it was once one of china's largest property developers. now, ever grant is seeking bankruptcy protection. will this cast a dark cloud over chinese economies? mike gallagher on countermeasures to the president's recent executive order. squawk box will be right back. time for today's public aflac quiz. which nfl player created what is known as the ickey shuffle? you talkin' about me?

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leslie joins us now with more. >> hey, mount particularly for regional banks, and of course that comes at a time when they really can't afford it. since the end of june, seven year yield has resulted in a 60 basis point hit aggregate capital ratios for the three dozen banks or so that are between 100 billion and $700 billion in assets. that's according to exclusive data we commissioned from goldman sachs. the move in the seven-year months to an estimated dent worth $12 billion to capital just in the last six weeks and a 10% impact gold value. more pronounced than largest banks because they manage securities portfolios

differently. higher rates have also been impacting the liability side of the balance sheet causing banks to pay out more for deposits or risk customers putting their funds in higher-yielding areas elsewhere. meanwhile banks are tightening vending standards which could, coupled with higher deposit rates, cut into margins as well, and of course the largest elephant of all in the bank industry is the prospect for additional regulation with looming capital requirements that are much higher than current levels particularly for that 100 billion to 700 billion range as well as loss absorbing rules also expected to come down the pike in the next month or so. altogether this helps explain why the carry is down. >> leslie, thanks. coming up, striking back, beijing is considering countermeasures against president biden's executive order curtailing us investment and chinese technology. congressman mike gallagher chair of the house select committee on china is going to join us next.

us mortgage rates climbing above 7%, the highest level now since 2002. with some economists saying rates could go as high as 8%. we'll get perspective from a top usg ecomt hoinonislater this hour. you are watching squawk box on cnbc. utters] ♪ [camera shutters] ♪ ♪ [camera shutters]

stocks in hong kong, dropping overnight. and that index is currently on track for its biggest weekly loss in two months. this comes as traders and investors wait for some stimulus measures to try to support the embattled real estate sector. eunice yoon joins us now. >> residents here are very worried about evergrande and all this negative news potentially impacting the prices of their properties, even in the big city, like beijing . today there was even more bad news when evergrande had filed for protection from creditors in a new york court.

the company says it is applied under chapter 15 which says that non-us companies undergoing a restructuring can be safeguarded from creditors might be looking to sue them or tie up their assets in the united states. have a grand says it was restructuring talks under way in hong kong, reddish virgin islands, and cayman islands. restructuring hearing set for september 20th. the news of this filing had hit stock prices in asia. people were really concerned. so evergrande clarified to the hong kong exchange this is a technical move saying the application is normal procedure for the offshore debt restructuring and does not involve bankruptcy petition. there is a lot of concern and sensitivity right now but the real estate sector, and ever

grant evergrande was hit by other news which is the optimistic property arm confirmed that chinese regulators are investigating it for what the call is a breach of disclosure rules and local media say suspected data manipulation. commercial sized development recently had been a target of reinvestment blackstone felt 93% in the first year due to uncertainty. and there has been a ton of op certainty these days. >> someday i would like to talk to you about all your anecdotal observations about things like that. we hear about empty buildings and stadiums, and everything else. and i know that you are not

always out in the country over there, but you must be able to confirm some of those things. must be weird to see the big structures that really don't have a lot going on. >> even in this, yeah, even in this property it's, here are a lot of empty apartments here. it's more on the outskirts of beijing, but there are a lot of empty apartments, and that is partial to the way people invest in properties here. they see them more as a way to put their money, because it's one of the few places where chinese have been able to traditionally park their cash. sometimes you will see properties that just don't have anybody living in them. but somebody does own them. so what i think is interesting here, this has been empty. a lot of the businesses aren't doing well. at partially is because of some of the issues that we have seen

in the real estate sector more broadly, and because people here are feeling poor. so they are not spending so much, and businesses aren't doing very well. >> eunice yoon, thank you. china slamming the biden administration high-tech in that country considering countermeasures. china's ministry of commerce is meeting with his missus to assess the impact. in washington, though, turning us, mike gallagher, chairman of the china select committee. china is already grousing. you urged the president to take measures, i didn't go far enough? what would you have liked for the eo to have done? >> first credit where credit is due. the executive order takes a step in the right direction, but if we want to stop feeling our own destruction i don't think it could be the last step. americans usually unwittingly are funding the people's

liberation army, paying for things like aircraft carriers, stealth fighter jets, artillery shells, and mass surveillance of the chinese people. i don't think any honest analysis shows, it gives the treasury department the lead, it gives treasury more oftentimes than the new jersey turnpike. the bulk of the national security threat and investment remain untouched by the executive order. collaborating with the pla or complicit in the human rights abuses where this tackles narrow subset of private investments. i think the bottom line from my perspective is that the ccp is an adversary. you don't have to defeat or deter an adversary by shoveling tens of millions into their

technology program. we have to ask ourselves if we want the pension fund, overall retirement health killings of american students the dependent on aircraft carriers, shells and fighter jets. i hope we tackle this from a congressional perspective, i hope we can legislate an enduring solution, across different administrations, and provide certainty to the financial business community may not want to go as aggressively in a direction i would go. i don't want to ping-pong back and forth between different presidencies in different executive orders. >> so you are going down the list. so you don't think endowments that universities should? tax-exempt in cities. he singled out blackrock. they can do anything right. >> i mean, there is obviously

blackrock is one of the biggest players in the game. and we are trying to understand how these entities, particularly on the passive side of things, why would they would have certain blacklisted companies and their index together. we will have to see where blackrock has also heard from hearing witnesses under oath that it offered funds that included contractors and other concerning companies. from our perspective we don't think blackrock should funnel american dollars into certain companies like this, and we need to close the loopholes, and at a minimum, insured americans are not unknowingly funding the chinese communist party. so again, that's what this investigation is about.

that's what our analysis of the executive order, it's about figuring out the best legislative approach to putting guardrails on outbound capital flows so we aren't funding our own destruction were funding egregious human rights abuses. it's difficult to put into practice. but that's why we are delivering deliberate investigation. >> seems difficult to put into practice. it's difficult to find with these companies are. if you take a look at a company like tencent, ccp has so-called special management shares in both these companies. does that mean these companies are enriching the hinese communist party? if so, would you go as far as saying people should not invest at all in companies like ali baba, or tencent.

>> i favor a sectoral approach. it proposes that by three coverage technologies. it is likely treasury will scope regulations to companies that operate in subcategories. it also has this provision about with a reference to certain end uses by these certain technologies. >> i guess i was referring, congressman, to your investigation into black rock into funneling american dollars into companies that fund the ccp. how do you define those kinds of companies as part of this investigation, are you trying to define those companies? >> yeah. >> it seems a lot of companies fall under that category. not just through blackrock and msci. >> we are trying to help

define what is the line. i always have a few simple principles in mind as we consider this question. first, don't fund chinese companies working for the people's liberation army. we don't want to be allowing us capital to fund military equipment, some of the things i referenced before. our investigation revealed that's happening, things designed to kill americans in a future conflict. companies implicated in forced labor and genocide in building ccp. i think republicans and democrats and capitol hill can agree on that. second, as a principal, consider all capital outflows to china public and private. and this is where the executive order falls short. it focuses on active investments like private equity but it exempts public markets like mutual funds, individual stocks. private market averages about

50% of us capital investment into china. we need to address the remaining 15%. think about sectors, not individual companies. that's the weakness, have all these lists, lists have loophole, we can't play whack-a- mole in cities to avoid restrictions. rather than case-by-case we should give investors unambiguous guidance over where they can and can't invest with a clear but short path to adjust. the problem in my opinion is urgent, and we can take a few years to try and figure this out. >> congressman, thank you. if you had to rank what would your ranking be? how would you list those three? >> every sunday, i'm always wearing the starr jersey.

we've been lucky in green bay to have amazing quarterbacks. this is the year, we will see if jordan love can continue the tradition. i'm optimistic about the packers chances during super bowl. >> what about the jets? >> i'm enjoying hard knocks, i will always love aaron rogers. we are talking nfc here. i'm all about the nfc north. i want to win the division, then we will see what happens. >> i want to come back. people mention you down the road. after a while. >> i'm too boring. >> 15 candidates. you know what that means. i was 20% is going to win, but we've got to go. we have brandon boyle, one of

your colleagues, coming in later. exactly. mortgage rates soaring to their highest level making it even harder for buyers to affordom hes. just how high rates could go. stay tuned.

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the national association of

realtors sounds the alarm. we could see 8% mortgage rates. our next guest says that is bad news for housing demand. joining us to talk about housing affordability is the housing wire lead analyst. great to have you with us. >> wonderful to be here. >> it sounds like a lot of things start to happen, even when mortgage rates are at 7.2%. people are less likely to buy because affordability is terrible at this point. i would imagine it also puts in a difficult position home builders, which have within buying down mortgages. it makes the venture more costly. >> the economy is doing well and because of that mortgage rates are rising. when mortgage rates got past of% last year, we had the biggest home sale crash ever in history. the builders have been very creative on pushing rates down, but that could only go so far. of course right now we're dealing with higher home prices

and higher mortgages rates. not much is going to change unless the mortgage rates start coming down. >> what are you forecasting in terms of mortgage rates? and, you know, this is -- we cite usually the average rate, but this is for people who have, what, average credit scores? plenty of americans are already seeing 8% when they are quoted when they go for a loan. >> you know, i'm a 10-year yield guy, so if the economy stays firm, bond yields can keep on rising higher. if the economy stays firm, rates could stay up here, but the bad side is nobody's moving, right? new listings data is trending at the lowest levels ever. so a lot of people are just waiting until mortgage rates come down a little bit lower to maybe do their transaction. so the higher the rates go, the lack of new listings data should stay with us. so it's a waiting game. you have to remember, the federal reserve is trying to help the economy by pushing

rates up, credit cards going up, car payments going up. the best hedge is your 30-year mortgage but your best hedge against the federal reserve was your 30-year fixed mortgage. a lot of people are sitting with very low home costs and inventory is too low to have any kind of major home price crash any time soon. >> so at what point, logan, do we need to -- i mean, you know, are we going to see a significant slowdown? you entioned, you know, way back when when we saw a jump in rates to 6% that we saw a crash. where is the crash now? is that going to happen? ultimately bad news is good news in a way. a crash can actually put more units on the market. >> here's the confusing part for a lot of people. housing costs are more expensive this year. however, home prices aren't crashing anymore. it's rare in america after 1996

to get existing home sales under 4 million. so we've killed the marginal home buyer. what is left are the prime home buyers left in america. home sales should be going lower but the velocity of the crash just isn't there yet. you're probably going to need much higher rates for something like that to occur, but we already crashed in sales last year. so i think that's the confusing part. it's more expensive to buy a home now than last year and home sales are pretty much stuck. we have over 156 million people working, 4 million monthly home sales isn't that much. in that context hopefully that explains why home sales aren't crashing anymore. >> what are rents doing in this environment? >> well, the growth rate of rents are slowing but, again, that's just the growth rate. rent inflation is still very high. it's just that in a lot of places you're starting to get more supply. that's good, a positive. hopefully all those apartments under construction comes on to

the market. the best way to deal with inflation is lower supply. so you're going to have choices for a lot of people where they need to be in shelter and more supply will cool down the growth rate of rents but it's not like a major rental deflation nationally. we rarely get rents going negative on a national basis post world war ii. so you alleviate some of the rent inflation, but we have to be realistic here. it's not like rents are dropping nationally in a very big way. >> right. logan, we're going to leave it there. thanks search for your time. we do appreciate it. >> coming up, what ceos are saying about the state of the economy, about hiring and how a.i. is changing businesses. boston consulting group global chair and ceo rich lesser is going to join us. check out the futures. they've gotten significantly worse after a pretty bad session

and lousy week and crummy month. other than that it's friday. check out the futures. we'll be right back.

. good morning. more of the same. futures pointing to more losses. looks now it looks like a friday limp to the finish line with major averages all down for the week. the dow on pace for its worst week in five months. and hit hard in the last really 24 hours, crypto currency, also bond prices will do a deep rise into the rise of u.s. rates. and are ipos back? instacard apparently planning a public offering as soon as next month while british chip designer reportedly lines up more than two dozen banks for a deal of its own. the details ahead as the final hour of "squawk box" begins right now.

good morning. welcome to "squawk box" here on cnbc. we're live at the nasdaq market site in time square. becky and andrew are off on this friday morning. pleasure to be here on a down day it looks like for the u.s. opening markets. worsened throughout the morning. the s&p looks to lose about 22 at the open. and the dow closed the low for that level looking to lose 141 at the open, the nasdaq down by 111 right now. treasury yields has been a key component of the declines in equity markets. 10-year fairly stable, the 2-year note at 4.910%.

>> and china seeks bankruptcy protection. jefrgrand is the world's most indebted property developer. it defaulted one other time in 2021. it announced an offshore debt restructuring program back in march. and instacart is planning to go public as soon as next month and may file plans with the sec as soon as next week. that's according to a bloomberg report which also said instacart is planning to list on the nasdaq. they were out looking at an ipo last year but ended up delaying this play. and this morning's key earnings reports, this one from heavy equipment equipment deere. they raised their full-year profit forecast but now the shares had been up quite a bit. now they're done. it reversed over fears for future demand for agricultural

commit and that could be what's pressuring the shares this morning. >> let's get back to the broader markets here with under 90 minutes to go before the opening bell on wall street. mike santoli joins us now. >> it has been, melissa. a lot of moves across asset classes. we have a bid in treasuries today. usually higher yields as they eventually by treasuries. it has been a pretty pronounced seas seasonal breakdowns in the s&p. it has sort of broken that up trend we had in place since late march after the regional bank stress and things like that. that doesn't tell you much of anything except we have lost momentum and broken below some key trend levels. we also in march broke that trend line from the october

trend. it's not to say it's game over. some washed out breadth readings. here is the s&p relative to the long treasuries, tlt. last year we were tracking well. why? yields were going up because mostly it was an inflation scare along with a very aggressive fed chasing inflation numbers in a hard way. a lot of the higher bond yields and weakness in treasuries, therefore, is about a sense that the economy is stronger. it's real yields going up. it's not an inflation scare. these two can come together and over long periods of time they don't match up. it is worth noting that stocks are well outperformed bonds on a year-to-year basis. apple relative to the s&p, now a big underperformer. it's about 12-plus percent off of its ties.

3/4% of it is apple itself. can you at times have the overall market not get blasted. it a tough way to try to make progress for the s&p list. >> last time i was co-anchoring with you, we start poking fun at the magnificent 7 because they haven't been too magnificent. i'm looking at nvidia. it's down 13% from its recent high at the end of july and it seems like that's going to be a real key test. in the face of higher rates, can these stocks still deliver on raised expectations and what the stock reaction would be to that? >> i do think there's a case to be made that nvidia is kind of the last branch a lot of folks are holding on to, just in terms of the long-term secular growth story. it's a concentration of all the enthusiasm that got the market higher or a lot of it in the first half.

i think the stakes are relatively high. the stock has been up so much that 13% really doesn't make a dent. if corrections don't end until they pretty much take out all the favorites, then i guess we can sort of like set that out on the table for next week, see how it plays out. >> thanks, mike santoli. do not miss mike and josh brown on a cnbc special taking stock. >> let's talk more about the markets. yesterday the dow closed below its 50-day moving average for the first time since the beginning of june. at the same time some key market drivers have been having a rough go of it. apple's down more than 11%. the worst performer in the dow. tesla is down close to 20%. joining us to talk about key levels he watching, mark newton, global head of tech strategy. in the past, mark, when you see the real horses of an advance

pull back a little, it's not surprising but it can preset further problems. what's is say about overall the technicals for the market? >> thanks, joe. yeah, we have seen a little bit of damage in the near term performance of the leaders so to speak but you really haven't seen it in stocks like nvidia just yet. as melissa mentioned, apple and nvidia are down 12% from their peaks but really no substantial longer term damage that would warrant investors would want to avoid these stocks. most of these have had substantial runs off the lows. look, the market has changed in recent days and it had been very orderly. we started to see a little bit of a pick up in the decline. however, there are a lot of reasons to suspect we are close to bottoming. not that this is a decline. it's just going to continue over

a couple months. i would argue federal yields are getting up to very close to levels that they peak out and that would go against the common narrative that ackerman and others have said. we've not broken out above last october, the 30 year or 10 year. technology as a sector has not really broken down. if you look at equal waited tech versus equal waited s&p, we've had a little bit of pullback but it's more been discretionary, financials and materials that have lost ground. text to its credit has held up fairly well. i think that's important. i third is that sentiment has really started to back off the last two weeks. we had optimistic levels in late july. that has certainly retreated. as mike santoli commented on earlier, all these sentiment stages and oversold conditions are very close to materializing, getting close to levels that we saw back in march. so i think we have a week or two.

i think jackson hole really could be a pivotal event in regards to yields. we see yields start to turn down sharply, that should be a big positive for equities. >> mike mentioned that nvidia is down a little, but you really look at the advance and check some of the other ones you were talking about. apple, 2.7 trillion. nvidia is now a trillion. do you worry about the law of large numbers? is nvidia going to be 2 trillion? >> yeah, look, i think nvidia likely gets up near to 500. it's tough for me to say, you know, my skill set isn't about saying these stocks are going to double after the move that they've had. i thinkthat trends remain very much in place and nvidia has certainly shocked a lot of people that wildly underestimated how it would do. i don't know that -- technically i think you have to say the same thing. you have to use a different playbook with stocks like

nvidia. that isn't doesn't mean you sell it here. it hasn't broken up trends. i own nvidia. i think the stock goes higher. i think it's in a lot better shape than a lot of those other forces we've opibeen talking ab. >> the nasdaq is at the same levels -- it's gone nowhere as an average for like three years i think almost, right, mark? >> well, look, we've had a pretty substantial move off the loaves. a lot of that has been carried by the magnitude seven but the broader market really started to, you know, widen out. we saw a lot since may. investors have recognized that we did see a lot of shore covering in july. institutional investors have been slowly trying to participate, but this has been a shot across the bough i think in the last couple weeks and people have gotten a little bit kout

o caught off guard. my own thinking is fang and/or nasdaq will continue. this is peaking. i think it rolls over in the next two weeks until the end of the year. if yields start to roll over, that's going to be very, very good for technology. >> in your view, will we see new highs in the snasdaq and s&p in the next six to 12 months? >> it's what i would call what started last october so this minor pullback has been three weeks. it's certainly caught some people off guard. it hasn't shown much deterioration in the larger technical structure with regards to just broader trends. we've seen just a little bit of a pullback. icy s&p gets back to 4600.

my on target for the year is 4700. i think the near term, 4300 to 4230 likely can provide support for this recent pullback. i don't really see the reason why we need to go down to as many people are saying, you know, 3,200 or so. i think that's really not in the cards for this year or next. >> and if you're wrong on interest rates, will that change your view on all these other things? >> look, if it gets up above 450, you know, certainly that's going to spook the market. we saw signs of that when it got before 4%. i look for sentiment and the mark indicators. some are starting to show the yields are getting close to peaking. we need to see rates roll over and the economic data's been resilient. so is the housing data. that caused rates to stream up. the up side will be limited for yields in the near term.

it's going to be worth buying treasuries and thinking that yields fall back. >> okay being good. good to have you on for your analysis. >> have a good day. >> coming up, a pulse check on corporate leaders and how they are feeling about the economy, inflation, a.i. and what more. ceo rich lesser will join us here. and the fed gathering in jackson, wyoming. we'll hear what wall street is looking to hear. stay tedun. "squawk box" is coming back right after this quick break. and, with our best price guarantee, if you find a lower price, we'll match it. with value like that, it's never been easier to sport your style.

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this is the way. you really went all out didn't you? um, it's called commitment. could you turn down the volume? here, you can try. get way more into what your into when you stream on the xfinity 10g network. welcome back to "squawk box." the future right now, further weakness for the last day of the week. you never know. 4:00's a long way off. i wouldn't count on things being very green but who knows. look at the nasdaq down 121 points. it's not yield. crypto currency, there's definitely the perception that the feds might be higher for longer. crypto thrives when the fed prints and the fed doesn't look

like it's going to be printing any time soon. >> our next guest regularly advises ceos, board directors and industries around the world. he brings everything from the economy to a.i. rich lesser is the global chair of boston consulting group. rich, good morning to you. thanks for joining us here. >> good morning, melissa. >> what's the general take from ceos? things are great right now but they're not certain about the future. >> first of all, i think the optimism is what we're seeing to. 80% have a positive sentiment for the near and future. if you go back a year, there was enormous certainty and modest change and year later, i think we have modest change around

enormous uncertainty. the mass of uncertainty around the war in russia. it's not that we don't have uncertainty, you talk about it all the time, we do, but that's come to more moderate levels. and at the exact same time the amount of change in the economy, the amount of change in a.i. and what that's doing and how business leaders are thinking about it and what's happening in climate. we're a year into the climate bill and the investments occurring there. i think this idea of consumers having this huge amount of cash that the government helped support is dissipating. right now you earn the growth through innovation and better value delivery to customers. you're not just going to be able to have the pricing freedom. we saw that even in recent reports last week. that pressure innovation, underlying technology change, massive investment in the economy, i think that change is really seeping in deeply amidst

the backdrop of the uncertainty people have been worrying about. >> one question is whether or not we need to tamp it down in order to bring inflation under control? what do you see in ceo's mentality in terms of hiring? are they looking to cost cut and looking for potential efficiencies or building the workforce? >> there is a focus on resilience and productivity right now. partly because the pricing power that companies had through the whole covid crisis i think is much less now. you need to drive performance through productivity. on the flip side, we never saw the layoffs, the preemptive layoffs in the face of headlines around inplacflation and the se. in general, i think most companies are recognizing in a world of rapid change, your workforce is your key asset and

upscaling them is huge. and hiring people today with the idea you'll just hire people tomorrow is not building the organization they're going to need. i don't hear much talk at all about big layoffs or things in the face of so many negative headlines you would think you might hear much more of. >> the "journal" had a piece earlier this week, "the wall street journal." they like the private sector. a lot of spending is being directed by the government into favored industries. it doesn't have a great history in the past and the private sector guys that have money on the line sometimes might not do something industrial policy. >> what i would say about this is a lot of -- i think the ira

and what's happening in climate -- >> $1.2 trillion on something that may or may not pay off. >> it was originally 400 billion and now no one knows. i've seen 800 to 1.2. >> you think that's a good idea? >> we need to massively for global competitiveness, we'll need massive investment. what the u.s. is doing and i hear it all around the world, it's become a race to the top. >> that's 1.2 trillion that won't be spent on fossil fools. >> it won't be fossil fuels. >> whatever it is but it won't be fossil fuels and we'll need them for the next 20 years. >> there's a lot of capital going into fossil fuels. some would argue too much. we're building a it 21st century

infrastructure at the pace the world is going to need. we see what's going on. the things that people sometimes forget is the trajectory we're on is twice as bad as what we experienced this summer. sometimes people think this is really bad. >> experience in the united states and we're measuring these temperature increases in hundredths of a degree celsius. what we're experiencing locally, you think that's indicative of -- >> carbon dioxide in the the atmosphere has gone from -- >> it's gone from .028% to .04% and it's been at levels hundreds

more than that -- >> it's going to rise 2.4 degrees. we're 1.2 plus right now. and it's the warmest year that we've measured. >> since 1979. that's when they started having the ability -- >> and the ability to go back in history. there's no evidence there's been a warmer year over a century. >> a century? >> i agree with you, a precise measurement. >> we're in a 4 billion-year-old planet. >> i totally agree. what caused all the cycles in the past? much larger deltas. >> but not in this time frame. and frankly we're trying to support 8 billion people on this planet and have food and agriculture that works and have people -- >> the greening of the earth is providing more agriculture. >> you think most people -- joe, do you think most people would look at the current trajectory and you tell them it's going to be twice as hot, twice as hot in

the south or -- >> there's nothing -- that is not in the cards necessarily empirically. >> well, it is empirically. >> no, it isn't. >> all the models say we'll have twice as much ghe increases. >> can i just insert -- i don't think that you expected to have this conversation. >> not at all. >> but, i mean, to his point, do you have this kind of conversation with others about getting 100% on board at all behind these efforts, especially in an environment when there is such an uncertainty and ceos might have to rationalize spending? >> i think ceos are recognizing they're going to need to invest in multiple ways. a.i. is top of mind for most ceos in the u.s. and pull to the regenerative and predictive a.i. in a regenerative framework.

that's a huge opportunity and a place to build competitive advantage. in the industrial sector, i think most cos are recognizing the tail winds in the global economy with trillions year after year going to carbonized solutions. forget even the planet. if you want to win in business, you're going to do it by getting ahead with climate friendly products and services. i think they see it and the question is how you talk about it because there's a lot of pressure to frame it in the context of it's building your business. >> do you think -- even though it's co2, when we call it carbon, it sounds dirtier. >> co2 and methane. >> carbon dioxide is a clear, odorless, colorless -- >> right, that absorbs sunlight. >> so does water vapor and it's

clouds, 99%. these are trace levels of co2. you go from .028 to .04 that's one additional co2 molecule. in a volcano recently, i don't know what that does. human contributions to co2 are climbing as well. >>. >> joe, i love to debate the science of this with you. >> i don't think he'd love that. >> the key point of what ceos are dealing with right now is you've got this enormous opportunity with technology, we focus on a.i. but quantum is not so far behind, material science. you have a massive amount of government investment going in to decarbonize the planet and businesses are realizing that's how they'll build competitive advantage in the future. if you put those two together

combined with an economy that isn't easy and isn't as bad as inflation or recessionist people predicted, i think we'll have a more confident outlook to how you invest and build advantage in the future. that's increasingly the mood among cos, despite the continued pressure of interest rates and others. >> thank you, rich. >> really? >> i don't know. i'm optimistic. we're going to be fine. >> i am, too. >> is a key auto market stalling out? we'll take you live to the west coast where robert frank is checking in from the biggest classic car auction of the year. robert, what do you have coming up for us? >> it's the super bowl of super cars, the woodstock of wheels, the biggest collectors in the rolling in to monterey this weekend to buy cars like this one, a $2 llmiion car. we'll tell you why the car market is flashing some warning

signs coming up after the break.

after sizzling growth during the pandemic, the classic car market is at risk of stalling out. robert frank joins us live from the west coast with that story. look at you. that's west coasty. >> yeah, west coasty, joe when in the west coast. this weekend in monterey more than 800 cars expected to roll off the auction block, a total

of about $420 million. that would be 10% less than last year. in fact, the classic car market seeing a decline in values this year so far of about 7%. that would make it the worst performing collectible asset class next to say, art, which is up 12%. >> in 2023 the market has flattened out a bit. we couldn't keep that steep trajectory that we've had previously of price increases and cars going up 30 to 40% of year. it's returned to what i would say is more of a normal sustainable growth. >> the most expensive car up for sale this weekend is a 1967 ferrari racer. that car is expected to fetch over $40 million. guys, the big change that we're seeing in monterey this year is this generational shift where the baby booms are are selling a lot of their collections and there's this new wave of collectors that just wants

different cars. we're moving away from this 1957 corvette you see here. that's about $350,000. more like this car. this is a 1990 ferrari f40 expected to sell for about $3 million. these younger collectors love the 80s and 90s car. one of every six cars coming up for sales this weekend are ferraris we'll talk about the ferrari values and stock price with an exclusive interview of the ceo of ferrari, benedetto vigna. that's tonight, guys. >> did you do a call on that $60 million car? did you see it? >> we are going to talk about that a little later. that was announced last night. that's not going to be auctioned this weekend. it will be auctioned november in new york. that's a 250 gto that will most likely become the most expensive ferrari ever auctioned at 60, could be even $70 million.

>> wow. that's mind boggling, robert. thank you. look forward to it. >> coming up, september is two weeks away and that means we're going to start hearing a lot more about a potential government shutdown. of a after a break, we'll talk with pennsylvania congressman brendan boyle. stay tuned. you're watching "squawk box" on cnbc. conquer hair thinning... ...and fall in love with your hair all over again. only from nature's bounty. you got this. let's go. gobble gobble. i've seen bigger legs on a turkey! rude. who are you? i'm an investor in a fund that helps advance innovative sports tech like this smart fitness mirror. i'm also mr. leg day...1989! anyone can become an agent of innovation with invesco qqq,

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welcome back to "squawk box" here on cnbc. we are at or close to the worst levels of the morning. the s&p looking to lose about 29 at the hope, the nasdaq down 134 points and the dow looking to lose 183. a key part of this is the move in treasury yields. we're watching that very closely this morning. looks like we had a little bit of a tick higher in the 10-year yield. 4.263 is the level right now. by my eye on my chart the 10-year hit 427 briefly. >> i like it, it's creative. >> i'll listen closely.

>> stop, stop us if you've heard this one before. it's true, right? money to fund the government is going to run out on september 30th. that means you're going to start hearing more about wheeling and dealing and talks of a possible shutdown. that was pretty good, right? >> pretty convincing. i stopped. >> no, not my reading but the way it was written. >> it's clever. >> speaker of the house kevin mccarthy reportedly told house republicans that he thinks congress will have to pass a short-term funding bill but the level of such a bill remains unknown. joining us is the ranking member of the house budget committee. it did get some positive reception from some democrats, congressman, charles schumer, chuck schumer, senator schumer said it might be something but the devil is in the details whether enough democrats would be supporting this. what do you think is going to happen? >> i think that what will happen

in 2023 is what happened in 2020, 2021 and 2022 and that is there won't be a government shutdown, there will be a short-term continuing resolution that as long as is ct's clean a there's nothing snuck in there it will probably buy us time until december and i'm hopeful we'll avoid a government shutdown. what happened in june to resolve the debt ceiling issue that we talked about a lot early whier this earlier this year, when you saw legislation that two-thirds of republicans and 80% of democrats voted for, it shows there is a real willingness in the middle broadly defined, even though a lot of attention tends to go to the extremes. >> there was an infrastructure bill that was passed and that took support from both sides. it can be done, congressman. but that doesn't say there aren't some significant

differences and we can point fingers at how we got here in terms of debt to gdp, but it is a little bit frightening right now. i'm not sure how you think we should address it, but we've seen numbers that by 2050, we could be at 180% debt to gdp and we won't be able to spend money on anything other than paying interest. >> when you're talking about the long term, there's a certain phoniness to this debate in that what you're talking about is a legitimate issue. the long-term jet projections are a serious matter and need to be tackled. when i talk about the phoniness of this debate, a lot of times politicians in washington will only be talking about what's called nondefense discretionary, which is about 12% of our budget and it's over really what we're going to be spending next year. nothing we do on that will in any way make a significant dent to our long-term debt

projections. >> right. but we're at 130 now or 133 or something. so it's not way off in the future, that it's starting to maybe eat in to what we're able to do. and social security -- and if we can't -- if the amount of the pie shrinks on the discretionary side of things and democrats and republicans both want to do a lot. there's a lot of problems we want to solve. if it's all spent servicing the debt, that doesn't help anyone. >> so service on the debt is a rising portion. i mean, it's right now in the mid to high single-digit range. the reason why it's been going up more than anything is because of the increase in interest rates. what i would say, though, is that for all the nay sayers and doomsday types, this has been a pretty bad year for them. at every turn this economy has been getting better and bart and the overall economic picture has

been getting better. i am confident that we will be able to come together and solve our long-term debt issues. ross perot based his entire 1992 presidential campaign on how the debt was going to drive us into disaster in about ten years. well, within ten years the major debate was what to do with the surplus. we can get back to that. >> there are people that would say it was a republican who said it but the last fiscally responsible president we had was bill clinton, was the last time that we had someone who did get things in order. i do have one question for you because i've seens the rolloutf the term bidenomics and why do you think it's not resonating? i think it's one out of three at this point approve of president biden's handling of the economy. do you think they're not --

they're not -- they don't know what they're feeling? they don't know how good they have it? or are there true issues with chick life, with 8% possibly mortgage rates and with inflation, which has come down but it doesn't reverse the two years of really high inflation they had. i mean, people feel something that makes them very pessimistic about the economy right now. >> so first, joe, i would never -- i would never begin to tell people that what they're genuinely feeling is somehow not true. i think that would be arrogant. what i would say, though, is if you look back to other recoveries, whether it was a decade ago or even the early 1990s coming out of that '92 recession, there has historically been about a six to nine-month lag between things getting better and people finally reflecting that they're

feeling it. there's also this really interesting wrinkle in the polling that shows even for people who think the economy isn't getting better, when you ask them about their own life and their own sucircumstances, they reply it is getting better. i do think you'll see the polling increase over the next several months. when you look at all the oecd countries, the united states of america in terms of unemployment and the inflation rate, we are leading right now the rest of the major economies. >> hopefully we always will. i think we've been growing faster than europe typically, for 40 or 50 years. let's just hope we're not on a trajectory in terms of private to public sector investment that our future growth does get dampened. you like everything we've done, the like the tips act --

>> i do. >> go ahead. >> real quick if i could, i just wanted to make a point on the question of bipartisanship and what we can do in terms of policy makers in d.c. my republican counterpart, the chairman of budget committee and i as ranking member began this summer the beginning of a process to look at ways that we can dramatically improve our budget process in washington, d.c. he and i both agreed that the current budget process that congress -- it came in the budget act of 1974. it has rarely worked on time, even the fact that we're discussing now whether or not there will be a government shutdown. there are things we can do process-wise to reform this and and that way the private sector isn't always having to worry about and wonder if that and mao

that affects their business plan for the next fiscal year. >> mike gallagher gave me a thumbs up, like you should get together with him, some type of bipartisan -- >> the good news is the bipartisanship part of this job does happen more than people realize. the challenge, right, is that a few of the hot topics, hot button issues on which there really isn't any compromise, they tend to get something like 98, 99% of the attention. but, you know, on certain foreign policy matter, bipartisan infrastructure bill you mentioned before, what we did to avert the debt ceiling, there are a number of things that i can point to that are generally bipartisan. they just don't tend to get noticed. >> congressman, good to have you on today. i appreciate it. >> thank you, joe. >> we'll see you.

>> coming up, the rapid increase in bong yeed yields. stay tuned, we're live at the nasdaq market site in times square. rock star? what do you know about rock stars? billy idol? i mean where's the skin-tight leather? my shoes are leather. where's the unnecessary zippers? that thing! billy, rock star is just how doug feels when he uses workday. thanks, rory. i'll show you rock star! be a finance and hr rock star. workday. for a changing world. billy idol just stole your golf cart! pano ai chooses t-mobile for business for 5g solutions...

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steve, good morning. >> good morning, melissa. the recent sharp increase in bond yields mostly pegged to the fitch downgrade on august 1 and massive supply coming from the treasury. top fixed income managers i've spoken to said there's a lot more at play here and it's not clear the move is over yet and that could mean more pressure on stocks. what we call the laundry list here, the fitch downgrades, the massive new supply coming but also better economic data and strains in foreign flows, including chinese and japanese flows, which is to say the problems on the supply and the demand side of the bond market, they're working to the. i talked to rick leader from black rock he told me there is a perfect storm of treasury. banks selling assets, the boj easing off year control and the normal buyers not be there such

as the buyers and obviously the fed doing quantitative tightening. at times it links up with better data, sometimes it doesn't. stronger retail sales number on july 18th, that led economists to upgrade third quarter growth. the day after the fitch downgrade and the announcement of new supply from the treasury. they cooled after cooler payroll. after the inflation report a little not expected there. one bond investor i spoke to, he manages a whole lot of this stuff, he said current 10 year yields are actually in the range of normal. you take a 2% or 2.5% inflation rate, add on a 2% real yield and you're at 4 1/2, 4 and a quarter. he couldn't rule out that 5% could be their nows are riether

doesn't see stability until the fed starts cutting and makes clear that it's done. and as joe was just talking with the congressman there, i would a by addressing the supply side deficit. melissa? >> well, let's put that aside, steve. >> we can't solve that in the time we have. >> but going back to some of the other factors that's pushing yields higher, when it comes to china and japan, selling and japan specifically because of what it's doing with monetary policy, it seems those forces don't go away, so is there a sort of -- i don't want to say structural but you know this longer-lasting upward pressure potentially on yields or at least a floor because of that force? >> right. so, the way it was best described to me, melissa, is you got this big thing here, which is the supply, and then you have

a series of marginal things that are on the demand side that kind of add up to putting additional pressure. the yield curve control makes it hard to borrow in yen and buy u.s. paper. there's also the issue of what's happening with the value of the yen, putting some pressure on japanese portfolio managers and their dollar-based holdings. the other long-term interesting thing here, melissa, is the idea of trade flows out of china which are, as you know, they're lessening, so over time, china doesn't have that -- those dollars to recycle back into u.s. assets. now, those trade flows are going elsewhere. the question is, are those countries that are receiving it, do they have the same intention of putting that money back into u.s. treasury? that's a long-term thing. again, it's a marginal thing, but all of this could be solved at least partially. fed steps up and says, hey, we're done here, and that's kind of an all-clear signal that i can go in and buy that ten-year, because right now, i mean, one

of the fund managers i talked to said he can get 6% in commercial paper on really good names. why would you do that? why would you go into the ten-year when you get those kind of yields on the short end? >> good point. steve, thanks. >> pleasure. coming up, we'll get you ready for the final trading day of the week. the futures off their lows, maybe, just fractionally, but still down. as a reminder, we head to break, you can get the best of squak b "squawk box" daily. follow squawk pod and listen any time. we'll be right bk.ac my cpa told me i wouldn't qualify for the erc tax refund, so i called innovation refunds. their team of independent tax attorneys will work with your cpa to determine if your company is eligible. [whip sound] take the first step to see if your small business qualifies.

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and welcome back to "squawk box." softbank-owned chip maker arm holdings has lined up 28 banks to underwrite its public offering the bloomberg report says the company is looking to raise 8 to $10 billion in what would be the year's biggest ipo. company is targeting september for its public market debut. >> little more than half an hour to the opening bell on wall street. joining us now on the markets, michael lanzberg. michael, great to have you with us.

how do you view this rise in bond yields? seems like whenever bond yields tick higher, ten-year in particular, we see a head wwind for stocks. is that something that you continue to be concerned about, or do you know the ten-year is going to see its peak soon? >> i think the ten-year can go a little higher. typically the bond market is always going to lead the stock market and i think we've expected the fed to continue to raise rates. i don't see a reason why it doesn't continue to go higher. i'm not saying it's going to be 6 or 7% but i think we're starting to see a little bit of pain in the equity markets. but i think that could continue for a little while as rates push higher and they're more competitive for people's dollars. >> you're recommending investors cycle out of tech. we've seen that cycling out of the biggest tech companies already with microsoft down 15% or so from its peaks. apple down about 10%. where do you put that money? >> it's typically a process that we do. obviously, last year, tech down so much. made a lot of sense to add that

to it in january and conversely, july. we took money off the table in some of those bigger names, nvidia, amazon. we're going to look for the ones that are growing earnings. this earnings season has not been great. i think we're down 8% year over year in s&p 500 earnings but there are companies that are growing earnings. united health group, mcdonald's, diaggio and lockheed martin. we're looking for the names that are growing aerearnings that haven't had the multiple expansion that tech has had. those seven names are up, i think, on average, 80-some percent. it makes sense to take money off the table. not to get out of tech, but when a name like nvidia goes from 4% of a portfolio to 9% or 10%, it makes sense to cut it back. >> you like mcdonald's, for instance, which is trading at about 24 times forward. meta is trading at 21 times forward. some people might say, that's a sort of an interesting choice to make, to choose mcdonald's over meta.

>> yeah, and again, i think that's a valid point. meta's actually probably the one that's not crazily multiple-wise in this environment, but part of it is the fact that meta's had such a big move. we want to rebalance and trim back. if meta is 3% of our portfolio, it got to almost 6%, we're going to take it back a little bit. doesn't mean i don't like meta, but when you have had a big move like that and you haven't had a move like that in mcdonald's, it makes sense for us to trim a little bit back. at the end of the day, we're in the risk management business and when the stock has more than doubled like meta has in six months, we thought it made sense to take some of that money off the table, allocate to something that is high-quality growth, just a little bit more defensive. >> you're also recommending that people look abroad. india, brazil, japan, and i'm wondering how you factor in what's going on in china, whether it be failing to make payments, evergrande's bankruptcy reorganization, all these different factors hitting the chinese economy. >> we actually would be short china.

china is not an area that we like. we think they're entering an industrial recession. >> no spillover into latin america, india, and japan? >> we like japan. for example, japan just had a 6% gdp increase and we see india having some forward momentum as well. and they're not fighting federal -- central bank that's raising rates. that's one of the big issues that we see, and there are some spots in brazil that are going to have good quarters and not have the specter of raising rates into their face, which is tough. it's tough for the u.s. economy at some point here to continue to move higher when rates have been pushed so high. we saw 20-year highs yesterday in the 30-year mortgage. >> right. >> it's going to affect the economy in the united states, and you're not having that problem in some of these other overseas markets. >> michael, thanks. have a great weekend. >> you too, melissa. >> all right, final check on the markets. i mean, for today. hopefully it's not -- >> not final, like forever. >> i know. it sounds so final. we're down 165 points now.

>> you never know. that's why you should value and treasure every day that you have. >> you know what? i have -- there's been things that have happened recently. that's so true, melissa. thank you for being here. hug your kids. i guess you can hug your husband too. i like your kids, though. i like your husband. i'm kidding. make sure you join us next week. "squawk on the street" coming up right now. ♪ good friday morning, welcome to "squawk on the street," i'm carl quintanilla with sara eisen, mike santoli at the new york stock exchange. bulls may look forward to putting this tough week to bed. futures down, s&p set for three weeks lower, longest streak since february, even with this slight bid in bonds. got some options expiration today. our road map begins with the markets, extending this week's losses after major indexes closing closing below thei