with the quain quarterly report and tropical storm hilary slamming california. we will take you there live. it is monday, august 21st, 2023. "squawk box" begins right now. good morning. welcome to "squawk box" here on cnbc live from the nasdaq market site in sdtimes square. i'm scott wapner alongside joe kernen and steve liesman. >> we have to come up with three names. three men and a baby? m manny, moe and jack.

>> we're peppy boys. three down weeks in a row for stocks. it looks like weget out of the gate in a positive way. dow would open higher by 133. the s&p is good for 21. still early with the nasdaq which has been beaten up is up 89. bond yields here come after declines of 2% last week for each of the major averages. treasury yields spis part of th story. 10-year treasury eased off last week, but still at 4.29. steve. >> the upper end of the range recently. 4.30. some people telling me 4.50 is not out of the question. a lighter touch from the china central bank. lowered the one-year prime rate by ten points. economists expected 15-point cut. the economists expected a 15-basis point rate cut to the

five-year prime rate. major indices in china were down across the board. palo alto here for liesmaniacs want to talk about the fed. palo alto. you must have been talking about this. >> it is odd they did the release on the summer friday in the afternoon. >> it wasn't a bad one. >> it was a good one. everybody thought it was a bad one. why would you do a release on a late august summer friday? it never happens. >> i like the way they did it. after the closing bell. it turned out much to do about nothing. palo alto guidance came in higher. the stock is up sharply this morning. i know this guy. big hitter. big, huge swing. did you play with him? >> no. >> he hits it far. address the buzz and he is a

good ceo. saying they want to give ample time for analysts to have one-on-one calls over the weekend ahead of the sales conference that began yesterday. that is what i was going to talk about with the fed. i thought they had gone too tfa. now i'm worried about this is just a stopping point at 4.2. now i'm worried it may turn into something. you know what i mean? >> the inflation rate at 4.2? >> no. the bonds may go to 6 eventually. if everyone is saying it is a great buy is if interest rates go down from here if we're near the top. 4.3% for ten years is not 7% which is what stocks average. nothing good about it. if rates go down from here, you can make money in the bond market. if they go up historically at 6%

or 7%, it is not the time to buy here. >> i talked to bond investors last week. >> they like it? >> they are nervous. the market never hits the fundamental rate on the first go. >> that's what i'm thinking. >> you know, one guy who does a lot of bonds said 5% is cheap to me. i might dabble in there. another guy said me and my clients, as long as i can get five and change on the shorshor short end, i cannot take the risk on the long end. >> you lock it in. >> let me go back to the first guy who was talking about the fundamentals. 2% yield. 4.30 is not crazy. it might be that is where we are. >> you might keep up with inflation. you won't build wealth. jeremy siegel is going to be on.

you won't build wealth. i'm here. you're here. they think long and hard about who will do each one. >> a committee meeting sdplchlt ri . >> it started with caplan. >> we have jared bernstein coming on. >> i am interviewing him. >> let's talk to him about it. >> i can run through the guest list right now. >> who is doing what, scott? >> another guy? >> joe is leading china. senator mike braun. >> china. is this a nightmare gone bad? >> a communist socialist gone bad. >> now a lot of debt. no one living -- you can buy a nice apartment if you want to live in one of the provinces.

>> i lived in moscow. i was comfortable with people trying to -- i don't know what they were trying to tdo. >> were you insinuating rates to get back on track that it is a three-hour show. the risk this week is that yields go up more because powell says something that's more hawkish in jackson hole? last year it was eight minutes. >> a sharp -- do you have the chart in the background? i want to show the fed funds last year to this year. last year going into jackson hole or just after, 3.55 funds rate by the end of the year. now we're up to 5.40. you see the drop in the middle. that is the silicon valley bank. i would say somewhere along the line p that is a success of powell. he was able to convince we are

going higher for longer. i don't know he has a need to convince the market of much this august ju august. just doesn't mean he has to make a major statement. he is in wait-and-see mode. i didn't make this chart. look at the inflation rate. inflation rate last time at jackson hole was 8%. it has come down 5% depending on how you look at it. he has that success there. the recession call is still out there. look at that. >> why doesn't he use jackson hole to declare victory before they snatch defeat from the jaws of it? >> because this is a good question and jason has a piece on the journal this morning. he doesn't want the market to

think they changed the inflation target. he this the fed's credibility is on the line. just because they are not hitting to doesn't mean they will change to 3. >> are on the way to 2? >> they are on the way to 2. the three-month annualized rate is down. i don't think he will declare victory. he may like the fact the higher rates are out there on the long end. that helps bring down -- the question i have going in and it is not like we have big questions, but are they ready to say the economy has operated well above trend for last year? now we will do a 3 or 4 this quarter? inflation has come down. are they ready to get rid of the model to run below potential? do we have to bring down growth? do we have to have the rate increase or am i chilling and

let the process play out? >> as a worrier, i can't believe after everything in the last ten years that you can bring inflation down and the economy doesn't have recession and we all live happily ever after. i wonder maybe we are replacing printing by the fed with the fiscal stimulus of. that will take time. sooner or later, a bigger reckoning is happening. >> the fine gymnast on the balance beam has done the landing part 11 times and stumbled six or seven. three or four times the gymnast has stuck the landing. you are right, i think, to bet against the landing. it looks like at the moment, joe, that we did that story -- >> i want to believe. >> i think it is good do be a little afraid. >> what they do on the balance beam i will never understand. >> never.

>> have you tried to get up on one of those things? they spin around. i cannot get up on it. the balance beam? no way. steve, take us to break. >> we go to break? >> we did none of the stories. >> you never go to break at 6:10. coming up, more on jay powell's speech at jackson hole. later, we take you live to southern california where tropical storm hilary is wreaking wre wre wreaking havoc. look, it's great that you use workday to transform your business. but it still doesn't make you a rock star. so unless you work with an actual rock star. hi, i'm ozwald.

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on this week's planner, several earnings reports of the we hear from toll brothers and macy's and dick's sportsing goos and we will hear from kohl's and dollar tree. we will have jobless claims and durable goods on thursday. we will have jay powell speaking at jackson hole on friday morning. we will have live coverage starting thursday morning from jackson hole. joining us for a look at the potential market catalyst in the week ahead is the stifel

economist. lindsey, i'll start with you. why don't you tell us your expectation for jackson hole and the chairman speech on friday? >> you talked earlier about the fed not wanting to declare victory because they have not reached the 2% goal. the fed has made progress restraining price pressures off earlier peaks. the intention was not to get inflation down 8% to 3%, but to get to the 2% target. i think the fed has reason to be confident and they are continuing to make improvements. as we saw in the july fmoc minutes before the latest hotter than expect ed inflation number, there was still a significant upside risk to inflation. i do think the chairman is going to emphasize the need for more work to be done and potentially resulting in a higher for longer

rate scenario. >> karen, is this an event as far as the stock market is concerned? is there only downside risk to the chairman talking hereand he will be hawkish and that is not possiblitive for the stock mark? >> it is not much of an event like last year where we were looking for guidance from powell. it will be subdued. we are looking for powell to give us guidance of progress with inflation. i don't think it will be as groundbreaking as last year. the market knows we have a way to go with inflation. it has stronger than normal economic data as of late. i think the fed chairman is only going to say what we already k know. >> karyn, are you advising the fed is going to stick the

landing here and it will come off the balance beam and stand up with its arms in the air and get 10s across the board here? are you concerned more like joe over the end here? >> i am concerned. that not an easy stick on that landing as you were discussing. if we do see a recession, it is not going to be severe. we wdo have buffers. we may see a mild recession. it is not off the table yet. it is very difficult to thread that needle and have a totally soft landing. we know monetary policy has a lag. we haven't seen the effects of what is going on with raising interest rates so much so quickly. therefore, i'm cautiously optimistic. >> lindsey, i want to ask the same question of you, but make it more geeky. what does the fed do as it brought down inflation as much

as it has last year and unemployment has been flat and gdp so far this quarter is running crazy. the last several quarters it has been above trend. that is not comported with the forecast or their view of the economy should work. >> it certainly hasn't. i think they under theestimated number of supports that were deployed during the unprecedented time in the pandemic and immediate aftermath that continued to artificially extend to the consumer and broader economy. i think the fed underestimated the timeline needed to see the intended effects of tighter monetary policy. that doesn't mean the weakness has been deferred. there is an expectation the recession in early 2023 and pushed out to 2024 which is the expectation for the downturn. that doesn't change the fed

focus and tighter monetary policy which is to raise rates and tap down investment and consumption and eventually see the slowdown in top-line growth resulting in benign inflation. the fed has achieved a good portion of the intention. getting us down from 8% to 4%. in order to reach that last 200 basis points and getting back to the 2% target, the fed will have to eventually tighten enough and reach that restrictive level and policy to slow growth enough in order to see that more benign price level. we will see the downturn. we pushed it down. >> karyn, it is scott. how at risk do you think stocks are here? >> some of the high flying names, we have a connecrrection

territory. we know this is a weak time for markets. when i look at earnings, it is hard to be bearish. we held our own in qq2. it is hard to be that bearish. companies are telling us they are resilient. the economy has been resilient. if we have a downturn, it will be mild. the china data is concerning. the guidance held its own in q2 and i'm optimistic we will have a good end to the year for the markets. >> lindsey, your story here is it is the government and government spending which is responsible for the strength of the economy and that runs out some time in 2024 and that's when the economy slows down? >> government stimulus was part of the artificial support. we have to look at what the consumer is relying on.

they had a tremendous amount of savings estimated over $2 trillion. we have drawn down a lot of that. consumers are turning to credit cards and taps into 401(k). the local stimulus or support coming down the pipeline. there is a number of temporary support to allow the consumer to remain resilient. when we look at the spending patterns unless the supports remain deficit, we resexpect th weakness to set in and eventually resulting in the benign pressure on the demand side allowing the fed to achieve the 2% goal. >> great discuss, lindsey and karyn. thanks very much. >> thank you. >> are they sticking around? we need diversity on our table.

>> we have plenty of diversity. i have no hair. you have hair. >> you have the blue shirt. >> white shirts. >> blue trie. >> black tie. >> you want me to put my jacket on? >> i said, if you want to wear jackets, whatever you want to do. >> new tolerant joe. >> what am i going to do? look what i'm dealing with most days? coming up, a live report from beijing on china's central bank moves overnight. that is coming up at 6:30. first, we are tracking tropical storm hilary battering southern california this morning. we will take you live to our friend jane wells. >> jane's great. i wo e 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. the first time you made a sale online with godaddy

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tropical storm hilary battering southern california. jane wells is joining us live from palm springs. i have seen rain twice in my life. it's bizarre? >> reporter: joe, this creek is bone dry in august. this is the middle of fire season. nothing is normal this year. in palm springs, as we show you video trying to get through the flooded intersection yesterday, they got walloped. they get 5 inches in a year, but as california had the first tropical storm warning, there were all kinds watches. we had to drive around a massive boulder.

watch. friday, a farmer sent me this video as south of here they are trying get everything out of the ground before yesterday's rains with the tornado watches and whipping winds. in the valley, they grow most of the vegetables most of the americans eat in the winter. >> we are getting hit hard and working overtime running double shifts and asking employees to please work to prepare the ground and get things ready. >> reporter: disneyland closed early. sunday baseball games moved to saturday. the chargers still played at sofi yesterday and lost. hundreds of flights canceled and many schools closed today and we had a 5.1 earthquake in ojai. all things considered, it could have been worse.

>> that's the take. 5.1 is -- that's rocking and rolling. to really get your attention. a 6.0 is the weird scale. it is ten times as strong as a 5.0. >> reporter: it doesn't sound like they had much damage. a 5.0 will wake you up. once you get to 6.0, you will get destruction. >> we know the song it never rains in southern california. when was that? albert? >> reporter: i'm sure that was before my time. >> not before my time. okay. i'll let you have that, jane. i'll let you have that. barry manilow sang it, too. he covered it, i guess. the first one was 1973.

you were a glimmer in your mother's eye. >> >> rei remember the earthqua. sylmar. whittier was '87. >> you know why i remember 1987. right around the market crash. almost the same week. go figure. all right. jane wells, thank you. palm springs. you been? good place. >> i don't think i have. >> never been. >> golf. golf heaven. pga west. >> i'd like to go. >> madison club. l laquinta. it is an hour and a half west or east. coming up we take you live to china on the surprise

interest rate move overnight. eunice yoon joins us next. as we look to break, the winners and losers on the s&p 500. palo alto stock higher. much so this morning. up 12%. we're right back on "squawk box" after this. casey, richard raymond finch♪ (sfx: ping) (♪♪) ♪ please don't go ♪ ♪ please don't go.. ♪ ♪ please don't go ♪ ♪ please don't go ♪ ♪ don't goooooo! ♪ (♪♪) ♪ don't go away ♪ (♪♪) ♪ please don't go ♪ ♪ the thought of getting screened ♪ ♪ for colon cancer made me queasy. ♪ ♪ but now i've found a way that's right for me. ♪ ♪ feels more easy. ♪ ♪ my doc and i agreed. ♪ ♪ i pick the time. ♪ ♪ today's a good day. ♪ ♪ i screened with cologuard and did it my way! ♪

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good morning. welcome back to "squawk box" live from the nasdaq market site in times square. let's look at the futures. it doesn't look like most of the month p. it does actually. we have seen green in the morning to get a lot of it back. it happened a few times last w week. august was rough. the market hasn't done anything. new own pvernight, lighter toucr china central bank. eunic eunice yoon, there is a piece in the journal that blew my mind for the prospects for china maybe we'll talk about that at the end.

>> reporter: the central bank, as you said, lowered the key lending rate by ten-basis points when the market was expecting a 15-basis cut rate for the one-year prime rate. what surprised people here is the five-year lpr did not change at all. the expectation was it would be a bigger than normal move because that is the rate that mortgages are referenced upon. with the trouble in the property sector, there is expectation that the government would want to do something. that left investors puzzled. investors are caring about the real estate market because it drives china's growth and growth in the world. there are interesting numbers. real estate accounts for 25% of gdp. it is a massive storer of weth

f wealth for the middle class. that means you could see a direct hit on property values and wealth effect. in addition to that, the financial sector with 40% collateral held by banks. there may not be a lot of options to try to manage the crisis because of the concern about the run-up of debt. over xi jinping's time in office, it went up 297% just last year. you understand why the authorities are hesitant about the idea of throwing out sy stimulus to raise debt further. >> eunice, i asked whether xi's

move away from private sector and whether there was second guessing about that. it seemed to focus on something else. now you can't lead. a strong economy is like the basis for everything else he wants to do for china in the next five years. if you don't have that, it cuts you off at the knees. >> reporter: yeah. you know, it is interesting you say that because i think over decades, the communist party had been looking at the economy and said when you have a strong economy, you have security. security for the communist party. that has been one of the tenants we have seen where the businesses and american businesses would say at the end of the day, the government would push through the infrastructure project or do whatever is necessary to make sure the economy is strong here. now it just looks the definition

of national security is changing under president xi. it looks like different parts of the government, the economy is really important. for the national security folks, it looks like what their definition of national security takes precedence. >> thanks, eunice. let's bring in the former chairman for morgan stanley. you probably read the piece today, stephen. i wonder if you think it is overdone in the journal. for decades, china invested in factories and roads and sparked a period of growth and now the model is broken. many economists are saying what used to be 6% is now 2% to 3%. china could look like japan in the '90s when we thought japan

would be a global power forever. the real estate market busted. we had disinflation or deflation for almost 25 years. >> thanks, joe, for having me back. sorry for not wearing a white shirt like the rest of you. i think we go very fnto a japan box or into an autocrasy box. it accounts for 30% of the gdp. it has gone back and forth of emphasizing market based control. it doesn't know who it is right now. it does pose the risk of japanese-like concerns especially in the property

sector and interplay as eunice correctly pointed out with the enormous push of debt intensive growth. the government's policy actions don't really seem to be all that forceful or really have a grip on who china is and what it will take to resurrect that type of growth dynamism we have grown an k -- accustomed to for so long. >> there is a statement that they may never surpass the united states. 25-fold increase per capital gdp, but only now $12,000 which doesn't get them to a high-income country. japan is $42,000. united states is $76,000 per person. maybe 800 million people are out

of poverty, but they have a long way to go. will they stop that progress? >> you have the finger on the missing link of the story. the article focuses on the supply side of the chinese economy. the infrastructure and capacity and the roads and buildings and, of course, the housing. the missing piece is the demand side. the consumer and china still accounts for less than 40% of the gdp. that ratio has been stuck at a low level. the government now tells us they are focusing on stimulating consumer demand. honestly, they have been saying that for close to 15 years now. they recently put out a 21-point plan to stimulate consumption. it doesn't touch on the big

issue in my opinion which is excess precaprecautionary savin the aging population doesn't have the safety net it needs to feel secure about future spending. until the consumer piece comes in, that per capital comparison you eluded to will not converge on higher income norms. >> stephen, it's scott. nice to see you. if there ends up being a japan-like malaise as you discussed with joe and you think is somewhat of a possibility, what then does that mean for the global economy and most importantly here in the united states? >> well, scott, china, since the global financial crisis has accounted for 35% of the cumulative increase in world gdp. if you have the major engine of

global growth shifting to the lower pace, that means borrowing a new china or source of global dynamism and that means the world will grow slower. that is problematic, obviously, for us and other nations who have been heavily dependent on global growth to drive the economy. >> maybe not that big for the u.s. the other countries are bigger. stephen, you and i have known each other thalonger than we wo care to admit. china did not have to dismantle the state companies because it would let the private sector grow around it and over time, the state companies would be less. xi reversed that and support the state companies.

he did worse than that. he suppressed the private sector and really taken the shootine o that. do you think he might rethink his policies here and say that was the right way to go? >> that's a fair point, steve. i think xi jinping is a complex man. his primary focus is on the survival of the party and control of the party and dominant role of the party plays in shaping all aspects of the chinese society and system. for him to do a 180 on his shift back to supporting state-owned enterprises would really mean to the same thing as saying the core premise or philosophy in

driving the nation is wrong. i don't think he is prepared to do that right now and i think that's been a very significant shift and disappointing one in his tenure as leader. >> we got to go, i guess. now people think i could see two things. i could see him pulling back china and worrying domestically or getting more aggressive. there's no reason to think xi will become less popular. this isn't going to help. this means taiwan is a goner and south china sea and balloons and buying up farm land. does this make him more aggressive in that regard, steve? >> joe, like the u.s. and president biden, china is fixated on security. you have the two largest

countries in the world and two most powerful militaries in the world both paranoid about security. many of the issues that you just addressed become more contentious and more an important part of the conflict between these two nations. i wrote a book about it and i think that will be a lasting problem. >> great. the dooms day clock at 11:59.48. iran has a bomb. russia. we're screwed. ste ste stephen, thank you. >> thank you. >> it's monday. >> high note. >> yeah. end on that high note. >> we're goners. we're going to work on a reason for you to get up and get dressed this morning. >> turn on a tv. >> coming up, survey data shows economists are more confident that the fed can achieve a soft landing. i'm upbeat.

don't miss our economic adviser jared bernstein. something good on the calcalend. "squawk box" is coming right back.

confidence is kbgrowing tha the federal reserve can achieve a soft landing for the economy. nearly 70% of the economists think the fed will bring

inflation down without sparking a recession. one of the interesting parts of the survey was 36% think the inversion in the bond market signals recession in the next 1 12 to 18 months. that's a big departure from the conventional wisdom is recession is automatic. i was interested to see they are not on board with this. >> only half of what it was? >> the inversion? >> yes. >> now in the 70s. i didn't look this morning. >> what is this, scott? i stopped blocking people. >> it is much better. >> sometimes i like them to know. they are so obnoxious. >> i love the mute.

>> you think they are still engaged. >> i think i would have 6,000 more followers if i hadn't blocked people. >> what's mute?

welcome back, x, the platform formerly known as twitter may soon look different for some users. on friday, elon musk said the company would eliminate the block feature except tr direct messages. that has long been seen as a safety feature that allows people to make sure that hateful content ask harassment doesn't show up in their feed in response to their posts. users will be able to use the mute feature, which prevents you from being able to see the

undesired responses. meta's threads will soon be launching a web version of the app, which could help it compete with the app. jo welcome this morning. >> thank you. first things first, i mean, we're talking about, you know, this new thing with threads and the block feature potentially going away. musk himself is in japan for the first time in some nine years, which nobody's talking about, although i guess we're trying to figure out what the real purpose of that is. >> japan has been a pretty twitter/x centric society in a while now. musk has interest in knowing what the japanese want out of the platform. in terms of this blocking feature issue, we've got no reason to think this isn't what musk would like to see on the platform. we've got a real reason to be skeptical that it will happen. apple and google require some kind of blocking feature to

exist for the app to be in their stores. we know the guy has spent 20 billion in smoke since he brought twitterer/x. it's going to be hard for the new ceo to do her job if there aren't any eyeballs. i think there's some real question marks about whether this is going to happen or not. >> you think this is on the medium sized to long list of m muski, an, if you want to call it that, bettweets that may not resemble full reality, i don't know how to put it. >> it could be the feature version of the cage match, let's say. we know that elon musk would love to do the cage match. is it going to happen, that's not necessarily the same thing. i think that he wants to signal this is a place for free speech. he doesn't want any soft treatment of people on the platform. on the other hand, there's real issues when you've got the auschwitz museum saying it needs

the blocking feature to make sure that its account isn't overrun with anti-semitic responses anytime it puts out a tweet. the holocaust is settled history and if these folks can't be on the platform free of harassment, then it cascades from there. it becomes a very difficult situation. >> so after threads launches, you know, obviously there's all this hype about the tremendous number of users that go there, and then it sort of drops off. and now we're reporting on this new web version this morning. does that change the game, and if it does to what degree? >> it could do. so meta has had a great run this year in terms of blocking their competitors, first through threads which we saw had that huge uptick as people connected their instagram accounts to threads and fred in the masses from twitter. they also released their open source model llama, the ai model which made it difficult for

their competitors like open ai and google to keep a huge march in that ai race. but at the same time, i don't know, have you been using threads? i signed up for an account, and i haven't really been on there recently. it will help if there's a web version. it gives people more ways to access the platform. gives a bit more flexibility, it's recognition that meta built this on the run, and now they're catching up and giving you the full service treatment they probably always wanted to give you. but it doesn't mean you're going to find threads exciting. that's another big open question. >> ryan appreciates ryan heath of "axios." futures pointing to a higher open, at least right now. we'll show you the biggest vemors next. and jared bernstein will join us live. "squawk box" coming right back. build and maintain financial strength and stability. deliver solutions that meet complex needs.

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good morning, investors, no, no, wait a minute. good morning. investors facing a week of tests for the markets, from -- huh? worked anyway. >> good morning, involves. >> good morning, vietnam. from nvidia results to fed chair jay powell's speech at the annual central bank fishing symposium in jackson hole for some, the futures this morning are indicated higher, and from the -- do not try to play golf. >> my wife told me i could either fish or golf.

>> can't do both. >> from the nation's power grid to the future of energy, the company, the southern company, chris speaking of golf, the company's ceo is involved with the pga, we'll talk about that as a side thing, but he's not -- southern company was georgia power for years and years. he's in studio. talk about the pressing issues facing america's aging infrastructure, just built a nuclear plant, first one in 25 years. >> all right. >> huh? yeah. and tropical storm hilary makes landfall out west dropping torrential rain, the latest on the storm's track and the impact on businesses there as the second hour of "squawk box" begins right now. ♪ >> he got it -- good morning,

investors, and welcome back to "squawk box" here on cnbc. there was a period. that one actually was -- >> i think it totally works anyway. >> it does. >> have you -- you know what you could do? >> good afternoon, investors. a whole new thing at noon, right? isn't it 12:01 when you -- >> 12:00, i mean. >> yeah, that's right. >> unless they throw it to me late. 12:01. >> like we always do. we're live from the nasdaq market site in times square. i don't like that three shot, but what are we going to do? i mean, it's fine, just in today's world, you know, it's a little bit too much tes toast r -- testosterone. and there's you, you don't help. i'm joe kernen along with scott wapner and u.s. equity futures indicated up not triple digits and trceasuries made the move.

i think we're at about -- there's a ten-year at 2.296. what was the high, 435 or something? >> last week, right? >> yeah, that the two-year hasn't just summerrged up to 5. something. >> i do want to tell you, joe, i met a golfer. >> you did, uh-huh. >> somebody who i'm sure you revere. >> i can't tell you that it was an off the record comment this person made to me who said he likes fly fishing way more than golf. that was off the record. >> why can't you reveal the golfer and just not the message. >> because he asked -- a famous golfer. >> can you give me an idea? >> i can't, i can't. >> what's his age. what's his approximate age? >> he's older. >> so he's like one of the legendary golfers. >> and i think it would be bad for his business to know he likes fly fishing. >> he has a business.

>> i just gave that away. >> let's keep talking about this storm, tropical storm hilary drenched southern california from the coast to inland mountains and deserts last night prompting rescues from swollen r rivers. millions are racing from more flooding and mudslides even as the storm moves north and weakens. hilary dropped half an average year's worth of rain on including palm springs, which saw nearly 3 inches of rain last night. the los angeles unified school district said all campuses would be closed today and san diego schools postponed the first day of classes until tomorrow. let's getlet to frank holla >> how are you guys doing? palo alto moving higher after a strong eps guidance, that dan ives from wedbush initially called head scratching and had some investors worried.

shares fell about 17% in august before the report, and enhe the after the report, positive reaction, with revenue outlook and outlook for the full year below estimates. positive results from the street from td koun with an outperform rating. shares are up more than 12%. nvidia moving higher ahead of its earnings after the bell on wednesday and several bull calls this morning. baird calling it the top pick in chips. that's a more than 75% upside for the chip maker that's already moved 200% higher this year, but fell into correction territory last week with four other magnificent seven stocks. shares of nvidia up more than 2% right now. and this one's pretty interesting, napco security dropping more than 30% after saying it made financial reporting mistakes in the first three quarters of fiscal 2023. they said those errors led to an overstatement of inventory, an

understatement of cost of goods s sold. napco makes wireless communication devices for security and fire alarm systems. shares are down more than 30% in the premarket. >> all right, frapnk appreciate it. joining us now the chairman and ceo of strategas. a baird company. jason, i guess we are going to start where joe was talking about earlier which is the rise in yields. how much of a challenge is it for stocks right now? >> for the magnificent seven, i would argue it probably doesn't matter at all. i wouldn't short those stocks if you put a gun to my head because they're generating a ton of cash. the problem is that my opinion -- if you look at the russell 2000, there's about 40% of the companies in that index that haven't had a profit in the last 12 months. there are pockets of the market that have been built on the kindness of strangers, that have

been built on free money. so for the lower quality companies back up in long-term interest rates, it's hard to deny that it makes a difference. for the leadership i'm not sure it makes much of a difference because these guys generate so much cash. they actually benefit from higher interest rates. >> you went from the big 7 to -- what about all that space in between? >> and then i mean, it's a cliche, but then you're going to have to be an old fashioned stock picker and see which company is managed well. a lot of companies have tdone a good job of terming out their debt, unlike uncle, sam which we can talk about. 60% of our debt matures in the next three years. a lot of companies are better able to deal with that that are able to manage themselves well. there have been an awful lot of companies built on the free money we've seen. >> let's do the fed and then we'll do the fiscal side. you know, joe thinks that powell

will hang out a mission accomplished sign in jackson hole. >> that's what i'm worried about. >> victory. >> yeah, how'd that work? >> i'm -- if you're asking me what my view is, especially with long-term interest rates backing up, that's also going to -- that actually helps -- >> that's helpful. i would be careful about the mission accomplished idea, and the reason being is that my -- one of my partners our chief economist looked at 2,000 years of history, to the extent you could find that history of inflationary periods and what we found in all but 15% of the times, inflation tends to come in waves, and there are reasons for that, and i would say that's especially true when you have large government spending, a lot of government spending is indexed to inflation, especially

if you have unionization, you get a wage price spiral, and so there are things that are automatic ways in which the inflation can compound on itself, and i think that's -- there is an element of truth in that right now. i wouldn't put out the victory sign, the mission accomplished sign, but certainly he should be slowing it down as he is. but they should also say they're -- >> have you moved a lot of money into the fixed income? do you do those things? >> i have not, and listen, i've been -- you know, you and i have talked about this, i've been more kacautious, but i haven't sold a lot of stocks. i've just been more cautious about what i own. you're getting something in the order of 5% short-term money. >> people are saying you should do long-term, which is -- i don't know. >> well, government, the federal government should be -- two weeks ago, janet yellen issued $850 billion worth of bills at 5%, when she could have issued $850 billion worth of ten-year

treasuries at 4. why i have no idea. that makes no -- >> i don't want to -- please explain it to me. >> that doesn't make any sense to me. >> a couple of things are happening, one is because of the debt ceiling, the percentage of bills compared to the total was drawn down compared to average. they're issuing bills right thousand to get it back up to that 15 to 20% average. the other thing that -- >> why? >> i'll tell you why because over the history of time that i've been covered, which is a couple decades right now, the treasury does not want to game the market. the treasury wants to be a reliable provider of securities and not play the curve. so over time what it's going to do, what it says it's going to do, what each under secretary of the treasury has told me is that we will do in regular proportions. we're not going to go at a time of low interest rates and term out our debt so we're seen as a reliable partner in the market.

that's what they've told me. if that's the right thing to do -- >> there's a word i can't say of television that i'm thinking. >> it's cable. >> i say go for it. >> and worry about it after. >> closer to. >> just call it a -- >> it's nonsense. we have 50% of our debt, we have $32 trillion in debt, 50% of it matures in the next three years. the weighted average coupon is 2.5. a year from now, our interest expense is going to be more than our defense budget. this is the time. you know, to the extent to which the yield curve because of quantitative easing has been manipulated for the past four years, there's a reason in my opinion the fiscal side should follow suit. this is the time to do it. >> i think the late great sam zo broke the grlass ceiling there. he didn't say a dog, he actually used -- >> he used the real -- >> can you give us two seconds,

two minutes about the stock market right now? are there places where you like? >> we don't have two minutes. >> i'll give it 30 seconds. >> the place that i'm most excited -- >> i'm being like, you know tissue. >> we don't have two minutes. like the fed. >> print time. who cares. mmt. >> now you're taking his time. >> we had two minutes, you killed it. >> i think energy is one of the more interesting parts of the market now. i still do. technically there's more companies above the 200 ta moving average in the energy sector on a percentage basis than there are in the technology sector. the magnificent 7, that's a whole other deal, but i think that's one place you're getting a lot of cash flow. >> dividends. >> better share repurchases. >> and for the first time in my lifetime, energy companies are good stewards of shareholder capit capital. i mean, usually these guys are

put on earth to punch holes through the ground. that's been my experience until the last couple of years, now they're actually saying gee, we want to return money to the shareholders. >> so in my opinion, that's one place investors can look to find some real value. >> good place to stop. >> the music's starting. that means -- thank you for that. >> play us out, johnny sf, go, s you. >> now it's me. talk about bernstein. we got chris womack coming up. white house counsel of economic chair jared bernstein, people are setting their dvrs. we'll talk bidenomics, inflation and much -- up next, the nation's power grid being put to the test from heat waves and power outages to deadly wildfires. but more interesting is the nuclear power angle.

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>> i played the -- >> chris womack is here. >> they spent the entire break talking about golf. >> because we were in a fox hole together at pebble beach and it's like -- >> i also talked about about of course -- >> nuclear power making a comeback, southern company's new nuclear plant is now online. joining us now on his first tv interview is ceo chris womack, a southern company chief executive, long-time georgia power chief. >> he's a young guy. he's a great guy. >> he's still involved. >> he's got a lot of life ahead. he's doing some work with impo and a lot of cyber work he's continued to do. he's still very enfwajd. >> you get to talk with nuclear with us today. >> i do. it's exciting. >> it is exciting. >> is it the first one in 25 years that's opened? >> 30 plus years. 30 years, and so, you know, we brought our first unit online on july 31st, and so we're excited the plant's running very well,

performing very well, and then just yesterday we completed fuel load on unit 4, and so just -- i think just a wonderful opportunity, wonderful s celebration for the company that shows we can do hard things. this has not been an easy journey, but we've persisted. we've been relentless in moving forward. i think the company, the state, the country is going to be real proud that we finished this project. as we make this transition to a carbon free economy, nuclear has got to be a part. >> there's no other way. >> we can't do it. >> we're excited about the renewable activity we'ring it. we just got 2,100 megawatts of renewables in georgia, 2,100 megawatts in alabama. we're making the transition. we used to have some 66 coal plants. now down to 15. so we're making the transition, but we can't support this economy without a nuclear power. >> if you were to say zero hydrocarbons of any kind, how

much of the fwridgrid could you power? >> zero hydrocarbons? >> don't you have to power the grid for georgia power? >> there's no question. >> using the other stuff, whatever you want to call it. >> like i said, if you look at our -- >> you can't do it. >> so how much nuclear do we need? how long does it take? you can't even get a permit for this? >> that's the exciting thing about completing this project. it shows we can do this. >> how long did it take? >> it took some 13, 14 years. >> and the next one? >> right now you're looking at different technologies, some small modulary actors. we're excited about that. we talked to the government about it. we see some companies looking to move in that direction, so once again, i think the work that we've done at southern, at georgia power with these units says we can do this, but also i think more importantly it demonstrates that for this economy we have to have nuclear power going forward. so we got to take advantage of this opportunity. >> if it seems so obvious to you

as you say it is and to you, joe, how do you convince more people that it's as obvious of the future as you suggest and see it. >> it's hard. i mean, it's hard, and yeah, it's complex, and so one of the things we talk a lot about are solutions and not getting wrapped up in i think a lot of these illogical and political divides. yes, it's hard, and so we've got to have partners. the government's got to be a big partner. there's got to be a consortium in the industry. we all come and try to do this together, we can get it done. it takes a lot of hard work, if you focus on solutions, not the politics, not the ideology. >> you've got to talk about the politics at least a little because the green lobby was totally anti-nuclear. are they coming around at all? look what happened in europe. they got rid of all their -- >> there is some progress there,

but our thing is it's about the solutions. i mean, we need -- we need this to support this economy. i mean, we're proud of the economy in the southeast, in georgia, 3.2 unemployment rate, alabama, 2.1% unemployment rate. i mean, economy that's doing very well. i mean, we see opportunities for economic expansion. that's good for our business. >> did we miss a chance -- we're going to have jerry bernstein on. 1.2 trillion is now the number that's going to be spent on renewables. is any of that nuclear? >> i don't think so. but i think the opportunity, once again, is that we've demonstrated we can do this, and even with renewables, you've got to have firm power underneath the renewables when the sun doesn't shine and the wind doesn't blow. we're going to do other things, battery storage, we're going to use hydrogen, we're going to pursue other technology. we got a grant award for direct air capture. as we all move toward net zero, there's got to be new technologies that will have to occur to make sure we can achieve net zero and nuclear's

got to be a major part of that. >> it's expensive. >> yeah, it's not cheap. i mean, and yeah, but i think at the owend of the day, our produ is still cost competitive, still cost efficient, still in the money for us and our customers in georgia. >> chris, can you talk about what percent do you think your demand is going to increase oaf t over the next ten years, and can you break down what the source of meeting that new demand will be? >> if you listen to conversations about economic expansion, conversations about electrify occasion, from data centers, from additional computing power, you hear guesses of two times in terms of what will happen, what will be needed going forward to power this economy, so you move up nuclear about 20, 25%, natural gas, we got it working with carbon capture for natural gas, other renewables, and so yeah, i

mean, that's kind of how that mix is going to work out. i think as we go forward. but we know there's going to be a growing need for electricity as we go forward to support this economy. >> can we glean anything from southern company's results about economic activity in the -- because it was all about weather this past quarter, wasn't it? >> yeah, we've had kind of the mildest year, i think 129 years. we've not had the heat wave that we've seen in texas and other places. weather has been incredibly mild. >> i was just down there for two weeks ago, it was 115 degrees every day. you know where i am. >> i know where you are. s s >> yeah, no, it's been a mild year. we see some heat coming in this week, but the thing is we've got to be prepared for whatever conditions occur. we think about our friends out in california now surviving through hurricane hilary, and what that means, so yeah, we've seen these extreme weather conditions. we've got to be prepared from a

reliability but also a resilient standpoint to make sure we serve our customers. >> what is fanning do? is he still on the atlantic fed? >> no, he's not on the fed. >> are you going to go on there? >> there's no plans at this time to do that. >> tom is still fully engaged. he's a dear friend and a wonderful mentor and friend of mine for many, many years. >> don't we need to give him a second to talk about why he's up here in new york? >> yes, yes, yes. >> sorry about that. >> steve, thank you very much. >> i'm not going to bring up golf. >> i have to recuse myself. >> cliche -- >> 30 seconds, there's a reason he's in new york, a little promo, it's okay. it's good corporate charity. >> we've been the sponsor of payne stewart award after his untimely death. today we get to ring the bell with gary koch who's been awarded the 2023 payne stewart award recipient. wonderful guy, had a wonderful

career on the pga tour, stellar broadcasting career. >> one of the best. >> and then he's had this deep engage the with the first tee program in tampa and just really put all his effort and energy there helping kids from diverse communities use golf to enjoy golf but also to focus on core values to help them in a bigger part of life, which kind of aligns to us at southern company in terms of our values, focus on safety, focus on integrity, intentional inclusion, and superior performance. so there's great alignment between southern company and golf, and we're excited about what we're doing this week with the true championship in atlanta. so we've got a great field coming to atlanta. so it's a good time. >> there are a few things that happened in georgia that involve golf. >> there are a lot of good things that happened in atlanta about golf. >> how about the frederica boys, brian harmon, lucas glover. >> have you seen how well lucas has been playing?

>> nobody wins two straight. >> what lucas has done with that long putter that has changed his game. >> total plausible deniability. >> i'm going to get the blame for this. >> it's great to have you on. i've been asking you to get here, and i hear you played my course without me. that's all right. >> next time. >> thank you. >> all right, coming up, u.s. companies with exposure to china are on wall street's radar, a look at some of the companies in focus both here and in beijing. pee.p dil ming umeca exns next . squawk's ceo call is sponsored by truist securities, experience expertise, execution.

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an abundance of negative news surrounding china, seema mody joining us with more. >> good morning, scott, ceos this earnings season have been quick to point out the challenges they're facing in china. intel's ceo pat gelsinger saying the china market hasn't come back as strongly as people would have expected overall. city citi group calling china

the biggest disappointment. caterpillar expecting sales in china to be below its typical 5, 10% range, and the thing here is that it hasn't been all bad news. consumer facing names like walmart seeing china sales in the second quarter increase 22% year-over-year led by strength from sam's club and e-commerce. that's not convincing, though, strategists at evercore isi who over the weekend warned clients that as the economic back tdrop worsens, s&p 500 companies and more than 20% revenue exposure in china could be at risk of seeing investors scale back their holdings. they point to names like intel and tesla. street now awaiting results from nvidia, which like many semiconductor companies does business in china and that upcoming brick summit later this week in johannesburg where president xi is set to attend and the economy will no doubt come up in conversation. >> seema, appreciate that. joseph. still to come, the council

of economic advisers chair jared bernstein on the fed and a lot more. the future this is morning as you can see are in the green, but triple digit on the dow. 'lseif iwel e t lasts. "squawk box" will be right back. s the us, you'll find pnc bank. helping businesses both large and small, communities and the people who live and work there grow and thrive. we're proud to call these places home too. they're where we put down roots, and where together, we work to help move everyone's financial goals forward. pnc bank.

in washington news, a recent poll shows only 36% of americans approve of president biden's

handling of the economy. i didn't write this, jared, and i know what you're going to see. i don't even need you. jared bernstein. >> you need me. >> when you ask them specific things, though, there's a different story. they like this. they like that and they like this. i don't know if i even need you here, jared. >> come on. >> but 36 -- >> we need each other. >> i tell you what i think it is, jared. inflation is -- the rate of change is coming down but stuff people bought two or three years ago because of the initial increases, things are still expensive. they might be blowing up less, and wage growth only recently has started keeping pace with that. people still feel like they're behind. i think that's got to be it. i don't think you can deny it. it's probably not a good idea to deny that people are feeling that. >> so let me unpack a lot of what you said, and i am going to agree with you on this angle of when you get down and you drill down to what we're actually

doing as opposed to these kind of more abstract 40,000 feet up questions. 70% -- 76% of people support the infrastructure law issue the bipartisan infrastructure law, and that's obviously to repair highways they drive on. broadband internet they use, clean water they tri. 72% support the chips act. that's not only critical to strengthening supply chains, u two-thirds support the inflation reduction act. some of the statistics i think you're citing are get ago little bit stale. university of michigan sentiment is at its highest level since october of '21. consumer confidence, highest level since july of '21. some of these hithings are starting to move in the right direction. the reason for that is something else you said, real wage gains. i think you make a fair point in terms of how people feel about disinflation, which is less

pleasing than deflation. when you have real wage gains, essential ly your consumption basket becomes more affordable, so that's also moving in the right direction. >> jared, there's a lot of talk about china today, we're going to continue to talk about it. and some of it just at least made me think a little bit about what we're doing in the united states in terms of stimulus, the positives for it, and the negatives for it, and you know in china the debt is so high now that they may be you beushering extended period of lower growth because of debt service. near-term, the economy it looks like we're dodging the recession bullet at this point maybe. hopefully. but will is quite a bit of stimulus still in the system from what you talked about, the infrastructure, the ira, the chips act. it makes the fed's job maybe even harder and may end up causing them to go higher than

they would have normally had to go if there wasn't so much fiscal spending. do you worry about that? >> well, i think here we don't have to speculate. we can actually look at how much fiscal impulse there is in the economy. and remember, the key thing here in terms of growth and the fed and all the things you're talking about, stimulus, fiscal impulse, which is the change, the delta in the primary deficit, and if you look at, you know, brookings has a measure of this, which you can point and click to, their fiscal impulse measure. it's just been about zero. of course it was through the roof during the pandemic, and it kn kneade needed to be to get families and businesses to the other side of the crisis, set up one of the strongest labor markets we've seen, unemployment below 4% for a year and a half now. it's an interesting comparison with china. one of the problems you see there that's less talked about, the debt overhang i think you're accurately describing, but also the household sector that really

isn't capable of coming in and providing the kind of consumer spending they need right now. that's because there's been large disinvestment in that sector, and even some suppression of consumer accumulation there. you know, in our economy, we obviously have a strong consumer and we have a 68% consumer spending gdp. if we have a tight labor market with the tailwind of rising real wage gains helping consumers keep things going, you're going to get numbers like the retail sales we saw last week. somewhat of a virtuous cycle going on here and with inflation easing down two-thirds from its peak, now we're talking about real wage gains. again, i think that's more positive news for the fly wheel pushing this expansion forward. >> philosophically, there's always been a debate about whether the government should direct investment into favored industries.

where i'm going with this, we just had chris womack, southern company, they just started a nuclear plant they've been working on for 13, 14 years. the 1.2 trillion in the ira for renewable energy, i think it's risen to that, it's a lot of money, i don't think any of that is nuclear. that might be part of the issue. are you sure the government knows how to spend and subsidize 1.2 trillion better than the private sector, which might be -- >> wait a sec. >> go ahead. >> the 1.2 trillion includes the private sector just to be clear. that's including some of the contributions -- >> but the government's picking the vindustries, though, and it may not be the right industries that the private sector would pick if it wasn't government directed. >> right. there's two points there. so one is that i think it's a mistake to conclude that we've

never done industrial policy up until this moment. in fact, the history of not just this country but every economy is very much pfilled with lots f industrial policy. it's alexander hamilton with manufacturers back in the beginning of our country. but then if you turn to the tax code, i think the problem that we have, we've argued about this over the years, is that we were doing industrial policy in a way that was pretty -- you know, not particularly thoughtful. whoever had the best lobbyist got the best tax break. that's not the way this president wants to proceed. with bidenomics growing the economy from the middle up and bottom up, we're reversing decades of disinvestment in key sectors including manufacturing. and again, people recognize that this is very important not only for replacing some of the hollowing out that occurred during globalization when places lost factories that really made their towns and therein, we see hundreds of billions of dollars

coming in from the sideline to help, to help rebuild this sector in areas of clean energy production and semiconductors, two areas where the market very clearly produces what we need to achieve both resilient supply chains and our national security goals. so those seem to us and to most americans like smart investments. and by the way, part of that group are investors who as we start ed this part of the conversation are quite excited about these actions. >> jared, can you tell the bond market that the fiscal impulse is zero? you guys have surprised the bond market almost every time the treasury has opened its mouth with a higher than expected amount of bond sales that are out there, the testify sit numbers seem like they keep going up. is that a problem that you guys feel you need to address? are you getting concerned about the level of interest rates out there and the amount that the

government's going to have to dedicate to interest payments? >> well, first of all, there's a lot of things that are moving the bond market and right now, and certainly expectations of growth coming in stronger is something that is in the mix. and look, when we get a retail sales number, when we have unemployment below 4% per year and a half, when you're starting to see some of the high frequency gdp calls here for 23 to be significantly above trend, those kind of thing also get reflected in the bond market. i'm pretty sure you'd agree with me on that point. >> he was just shaking his head. i don't think he does, jared. >> i had a -- >> you don't think the bond market is -- >> hang on, jared, some of the movement in the bond market has been linked to higher than expected growth. >> that's exactly what i said. >> but some of it has also been linked to higher than expected issuance. >> yes. >> you ignored that part. >> that's exactly where i was going next. >> okay. >> if you look at what we've

tried to do with our budget, it has significant deficit reduction in it because we recognize that we need to -- we need to get that fiscal consolidation moving in the right direction, but we can't do that part by ourselves. so we have 2.5 trillion in deficit reduction in our budget. we can get that kind of thing moving tomorrow. if you actually look at the deficit reduction we've achieved this far, a trillion since the president got here and another trillion in the debt ceiling agreement, which was overwhelmingly bipartisan. we're very much aware that the fiscal outlook needs to be dealt with and we're doing our best to do so, but we can't do that by ourselves. i think you know that. >> hey, jared, it's scott. good morning. it's nice to see you. it's pretty telling as we talk about gdp and the gdp now from the atlanta fed at 5.8, which was stunning, obviously to

everybody, any president who had numbers like that, a 5.8 gdp, wages where they are, unemployment rates low, consumers are strong, they're keeping the train on the track and, you know going at a pretty good clip, and yet, the polling numbers as we talked at the outset are just 36%. it's a dramatic disconnect, obviously, but it also points to the fact that inflation is driving the train and as long as inflation remains -- even if it remains where it is, it's still sticky. how do you compete against that narrative? because otherwise you could build a case that said, you know what? the economy's pretty good, but the people don't care because they're tired of paying higher prais prices and they think the president is at least in part, to blame. >> look, i hear where you're coming from, asnd i get this question all the time, but i feel like that line of questioning is starting to get a little bit stale, and the reason i say that --

>> how? >> i'm going to explain. the reason i say that is you've got to get into some of the guts of what these polls are telling us. i understand the approval rating and i think that invokes a level of political tribalism that has a lot to do with things other than how the economy is doing. from my perspective, look at the university of michigan's sentiment, the highest level since october of '21. it's been coming up. same thing with consumer confidence. job satisfaction is at a 36-year high. the consumer board satisfaction survey is the highest level it's been since they started tracking that in '87. you talk about inflation, inflation expectations are down in the university of michigan survey, so i think if you get under the hood, you look at some of the more recent trends. we're beginning to see particularly -- and i think it is disinflation, i think it's the fact that inflation went

from 9 to 3%, is registering with folks and especially when it starts generates real wage gains. i think the remarkable thing in this economy that you didn't mention is we got all that inflation reduction without giving up anything thus far on the unemployment rate for aficionados of the phillips curve, that's a zero sacrifice ratio. and that's a strategy to get real wages going up, maintain tight labor market with easing inflation, real wage gains. that's precisely what we're seeing, and it's starting -- it's starting to show up in some of these poll numbers. >> all right, jared, i like you better on the lawn, you know, but guys always mowing the lawn or the leaf blowers, is that why you're inside today? >> no, it's more that it's kind of early, we do this at 8:00, i'm on the lawn. >> okay, all right, jared bernstein, thanks. see you. >> thank you. uaw members will vote this week on whether to authorize a strike when their contract pis. exrethe latest on where talks s. that is straight ahead.

coming up, we're going to talk markets, the fed and more with wharton professor and market historian jeremy seagle. get the best of "squawk box" on squawk pod. listen anytime. stay tuned. an investor in a fund that helps advance innovative sports tech like this smart fitness mirror.

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today. i remember being on aau trips, high school games. my mom would always say, "you need to fuel the body and you need salt." i would always be the kid not cramping, ready to go. fast forward 20 years and i go from eating salt out of my palm to drinking lmnt.

. welcome back. we are monitoring the shares of goldman sachs, which you can see are up about 1%. the "financial times" reporting that the bank is considering the sale of the personal financial management operations that it bought four years ago and bought the investment advisory business from united capital, that it acquired back in 2019.

>> uaw members will vote to authorize a strike when their contract expires. the union representing about 150,000 members and the big automakers are building up supply ahead of the september 15th deadline. hey, phil. >> hey, scott. for the uaw, we're about three weeks away from when we finally see whether or not there's going to be a strike or work stoppage of some sort. everybody expects it in detroit and in the auto industry. for the big three, this means building up their inventory. this is the day supply calculation as of the end of july. look at stellantis. it's been known they've been cranking up production. they know what's coming. by the way, normal day supply in a normal market non-strike is 65 to 75 days. jd power has its own

calculationing showing the levels of inventory is only at 36 days, half of where it was four years ago when the uaw had a strike at general motors which lasted about 40 days. this all comes down to hourly cost. if you are the big three and the hourly costs were your labor on the line is $63 to $67 and then to tesla and that's really the focus here. the big three are transitioning into more ev production in the future, everybody knows that and it takes fewer workers to build. and the uaw president said yesterday at a rally in detroit they do not expect to extend this contract beyond september 14th, which they often do when these contract talks come up. we being looking at some type of

a work stoppage come september 15th. we talk about a strike from the uaw. what if the big three, one of them, says you know what, fine. you want to have somebody go on strike at an engine plant, we're locking you out, everybody, all 40 or 45,000 of you are locked out. that would send a message and it's not far fetched with the inventory levels that some of the big three have right now. >> phil, appreciate it very much. let's bring in mark fields, the former ford motor company president and ceo. it's nice to see you, a cnbc contributor as well. you heard, i presume, phil's report. are you expecting a strike? >> i think there's a much higher probability this go around in contract talks than in the past for the things that phil mentioned. you got a couple of things going on here. you got a newly reconstituted union that was still recovering from corruption charges.

you have a new leader who has been using very bellicose language, calling the auto theautomakers the true enemy of the uaw. he's setting expectations very high for his union members and you have the automakers going through this once in a century changeover to propulsion systems which have higher costs and lower margins right now. it's a set up for a very contentious set of discussions. >> sean fain tactics are different as well, the uaw, you know this better than anybody, would traditionally not lay out the hand on the table and say ante up here. they're telling the auto makers, the big three, what we want, come meet us. this is different, isn't it in. >> it's very different. and the new leader, he's never

led an association before. he's basically led plant level discussions. he's ripping a page, he's kind of distancing from the past of the uaw leadership because of the corruption issues. it was very mysterious. they used to elect the president via delegates versus direct election. he was elected directly and he's very transparent to his union members as to what the expectations are. that may paint him into a corner. he might get expectations so high that it might be very difficult when he brings a contract back for the rank and file to ratify it. so, you know, he's plat the same toke n, he feels he ha

a mandate. he was only elected by 500 votes out of 45,000 union members. as a past member said, it's easy to get them out to strike but it takes a leader to get them back. we'll see what kind of leader he is. >> we're talking about strikes almost of week in various industries and you just had this strike averted with ups. but the fact that they got what their workers feel is a pretty good deal and only emboldened the uaw. >> the uaw always felt they were the benchmark. they're looking at the ups agreement that needs to be ratified. they're looking at things like

caterpillar and john deere agreements from last year. the difference is those businesses are primarily b to b type of businesses. and in the case of ups and fedex, it's almost an oligopoly. this is the only industry that hasn't consolidated that you'd expect an industry to. so the consumer has many, many choices. if they decide to win the battle but lose the war, that means less workers for them and their business model, the union business model is members because members pay dues and that allows the union to operate. wages don't really matter much if you don't have job. that's what he'll ve thao balance. >> that's mark fields joining

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good morning. futures pointing at gains ahead of the opening bell. major averages all coming off a losing week. it was the dow's worst week

since back in march. and a big week for the markets. awaiting a highly anticipated speech from jay powell, earnings from nvidia and a rash of new economic data. and hilary, the tropical storm, slams the west coast with rain and flooding, the first tropical storm to hit california in more than eight decades. we'll get an on-the-ground update on the storm and hear what it means for california business as the final hour of "squawk box" begins right now. good morning and welcome back to "squawk box" here on cnbc, live from the nasdaq market site in times square i'm joe kernen along with scott

wapner and steve liesman. guys, you're a short-timer. you'll be out of here later today. >> i didn't know that until i went to go make a reservation. >> from newark? >> that's pretty convenient. >> which means i'll miss the denver airport. >> with the crazed statue with one eye. >> and game time hasn't even started. >> and a dodgers fan. >> unbelievable pictures because of the tropical storm/hurricane. unbelievable. >> chevez ravine. >> yeah, some of the pictures. amazing. >> more rain than they get in ten years. >> i was hoping you would read

off the top again "good morning investors." >> it's like my "good morning vietnam." might be like a robin williams thing. >> the dow up 133. we'll see if that holds. they had trouble holding last week whenever it was green in the morning. and treasury yields are on everybody's mind. that's why you're going to jackson hole. >> it's secondary to what i'm doing. >> the national hurricane center downgrading hilary to a post tropical storm but they are warning of likely flooding. it became the first tropical storm to hit southern california in the u.s. in some 84 years. rain and debris washed out roadways and some cars were left stranded.

more than a dozen people had to be rescued from one homeless encampment. we'll get a live report from jane wells in just a few moments. >> goldman sachs is looking to sell part of its business, the personal financial management, and it is about $29 billion worth of assets. goldman bought the business for $750 million back in 2019 and part of -- i don't know, goldman is really good at some things. maybe this wasn't what they should have been trying to do. >> they're making money or just unloading it. >> we'll have complete coverage of the fed summit. joining us is jeremy siegel.

good morning, professor. >> good morning, steve. >> so let's start off with where the economy is now and, jeremy, you have an idea here about what's going on with productivity that, i don't know, i don't think people are thinking enough about this. we've had a couple lousy quarters and then we had a couple really good quarters. do you think we're really having a productivity surge in this economy? >> yeah. the last border was outside the pandemic, the best for quarter for productivity in over six years. the st. louis fed is way up there, others are not that high. given modest growth in hours and in payroll, it looks like another third quarter boone in productivity. this is really saving jay powell. this is the best news. i mean, that's how you can have strong gdp growth without

pressure on the labor market and really without pressure on inflation. you know, that's the golden magic over here. so i think that that's really playing into what we see in the economy. and, by the way, why yields are going up also. real gdp growth and real yields. i'd like to comment you guys had a great discussion at 6:00 when you opened at real returns and the tips going to 2%, is that a way you should now invest in for wealth. let me mention, 2% a year, it's good. it's the biggest in decades. however, 2% after inflation a year takes 36 years to double your money. at a 20 pe, which you also mentioned, which is right, that's a 5% earnings yield in stocks, the general s&p 500,

that takes 14 years to double your money. >> okay, all right. >> how do you double your money in bonds, you've multiplied your money by five times in stocks. people tell me, oh my goodness, bonds are as good as stocks. no way for long run wealth creation. >> let's unpack that, professor. i think that's important. it's kind of against my thinking on this -- >> you'd like to like bonds but you can't make that case. >> i'm going to try. >> nobody has ever built wealth. >> professor, i can see this five juicy percent two-year note and i put my money in there at the end of the period, i'm going to get 5% and that's going to be 3 percentage points higher than the inflation rate and i'm going to be really happy. you're telling me i'm going be to unhappy because i would have been better off putting my money

in stocks. >> first of all, in two years, anything can happen. we know that. the stock market could go down 10, 20%. i'm talking about building longer term wealth. i'm saying particularly if you're young, you're building a retirement account, you're thinking about your retirement, that's what really counts. you know, 2% is only attractive compared to earlier. by the way, when tips came out in 1997, they were 3 1/2 and they went above . even though 2 is certainly better than it was 10 years ago and five years and so on, it isn't all that great compared to history and well below stocks. the average is 6 1/2 and i'm giving a conservative 5% return.

you might be happy with bonds, you might not be happy with bonds. >> if rates go down, you have nowhere to go, you're stuck with your stupid 5%. if rates go up, i guess you can reinvest a little and get 6%. but if you don't want to buy nvidia and make whatever or the magnificent seven or something really sexy, you can buy really good companies that have a yield of like 2 or 3% and they raise their dividend every year for 15% so suddenly the dividend is up to your 5% in a couple of years and you got the capitol. unless you need a stable part of your portfolio that you know you're going to get a return on. if it's not corporate, if it's not treasuries, then you got to worry about getting your money back anyway. >> professor, can you handicap this weekend? >> i am putting a portion into

the -- >> you are? >> if you put ten grand in, i told kelly this last week, this is on a longer term, it went from 4 to 4 and a quarter. if you take your wife out, you can get an appetizer after a year. because of $400 you get on ten grand, it's $425. come on. this is a stock market channel. >> that doesn't mean people should only invest in stocks? >> i know but it kind of does. >> can you handicap this week? where is policy going and what does that mean for the stock market? >> very honestly, steve, and you follow it so closely, since the three and a half weeks, i guess it is since the last press conference, i don't think a lot has happened that changes the outlook. i think he's going to stay we're

not -- i think he's he's going to stay very data dependent. we still have a full month load of data announcements coming out before the september 20th meeting so he's going to stress that data dependency. i think there will be kind of a slightly hawkish tilt because, you know, we're not down to that target. honestly, if you want the truth, the higher real yields and the high are interest rates are working in his direction towards tightening policy without raising the fed fund rate. >> but here's the thing. if he follows what you talked about at the beginning of the conversation, that productivity is higher, we can have stronger growth, lower inflation and lower unemployment rate, would you tell him he should not be hiking anymore and should think

about cutting? >> absolutely. i would be on the alert and i would say you don't need to hike anymore. you have tightening since the last meeting and when we take a look at all the other indicators. >> up know, break even between the tips and the 10-year, which is one of their favorite indicators of what the 10-year inflation is going to be, it's 2.3%. that's not 2.0 but, my goodness, take a look at what the market is looking at longer term and seeing those trends. i don't think that's threatening. listen, the sector is uninverting. do you want to uninvert it more? yes, you will. >> professor, always a pleasure to talk to you. >> thank you very much, steve. >> coming up, china in focus. we're going to talk about that

country's property and overall economic problems and the potential risk to u.s. investors. indiana senator mike braun will join us but next the war over tipping comes to the windy city. we're going to speak to the chicago restaurant owner worried about a campaign pushing to change the way the wait staff gets paid. don't go anywhere. much more "squawk box" after a moment. tired of people not listening to what you want? it's truffle season! ah that's okay... never enough truffles. how much are they? it's a lot. oh okay - i'm good, that - it's like a priceless piece of art. enjoy. or when they sell you what they want? yeah. the more we understand you, the better we can help you. that's what u.s. bank is for. huge relief. yeah... ♪ (fan #1) there ya go! that's what i'm talkin' about! (josh allen) is this your plan to watch the game today? (hero fan) uh, yea. i have to watch my neighbors' nfl sunday ticket. (josh allen) it's not your best plan. but you know what is? myplan from verizon. switch now

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when you stream on the xfinity 10g network. a fight over restaurant wages and tipping flairing up in chicago with implications for the labor force and the culinary experience. activists want to end the windy city's tipped wage system under which some restaurants are allowed to pay servers less than minimum wage. some restaurant owners are getting nervous that rule changes would force them to hike prices or lay off staff. joining us is co-owner of chicago's 50-50 restaurant group. scott, good morning. how are you this morning and what are the prospect of this

passing? >> the mayor has tied it to the budget. >> why is it such a big deal to you if this actually happened? it happened in california and it was many, many years ago. obviously they're getting by, i guess. what's the big problem here. >> california's barely getting by. it's not a great place to open up a restaurant. 62%, that's going to be the increase to labor. and with the pandemic, it's just really not a great time to start upending an entire restaurant industry in chicago based on political rhetoric and that's really what it feels like. >> so an employee says, you know what, i just want to be paid the 15.80 per hour rather than have to rely on the generosity of a customer who just may not tip well. what's the problem with that?

>> well, the reality is that the restaurant is making sure in covering up to the 15.80 and i would suggest that probably 90 to 95% of the tipped employees in chicago are making well above $20. in fact, the illinois restaurant association offered the administration that we would guarantee tipped employees made at least $20 an hour. that was rejected, which sort of tells me that this really isn't about wages. and, you know, further where i get nervous is that this is going to bring a lot of restaurants into what's called the service charge model. in a service charge model, unfortunately a lot of the people that the administration is trying to help are actually going to be hurt. they'd probably make far left. in the service charge it's considered [ inaudible ]. ultimately it could go toward kitchen benefits or towards anything. so i don't think that the city

of chicago's mayor really understands exactly what he's doing right now with these changes and all we're really asking is sit back, let us identify what we're trying to do here, who we really want to help and let's try to find something in the middle. >> would you consider raising your men you've prices if this happened? >> you know, we've been raising menu prices and that's been one of the biggest challenges during inflation is the price is up, up, up. we've actually started to bring them down. because we're just talking chicago, not the entire state, when people want to look at our menu prices and also see those guys are expensive, i'm going to go eat in the suburbs or go venture to another state, it really isn't a good look for us. additionally, everybody knows you can order for less money by picking up your food. it's not just a one-stop shop. i think most people know when

they dine out they're expected to leave a gratuity. >> how is business generally speaking? you have 13 brands. give us a read on how business is when we've been talking a lot these days about how seemingly strong the consumer has been and maybe that's thinning out at least someone but what's your view? >> you know what i'm seeing right now is in the neighborhood restaurants, specifically the ones where they're family dependent, foot traffic is down. downtown in the chicago loop, especially where businesses are trying to get their people back to work, we're seeing a lot of corporate spending. tuesdays, wednesdays, thursdays you think is boone time. ultimately my group is running

flat from last year. we're above in the corporate private events world and down in other areas. >> thanks for joining us this morning. scott weiner. >> when we come back, jane wells still live on the ground looking at how the persistent problem of not enough water in an area may have just gotten flipped on its head. jane, what do you have coming up? >> reporter: joe, this is weird here in august. we look at what happens when a tropical storm hits a state that's used to wildfires and earthquakes and, yeah, we had one of those, too, and what it could mean for the availability of broccoli and spinach this winter.

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tropical storm hilary slamming into southern california. we're following the impact from flooding to farming and beyond. jane wells joining us now with more. jane. >> reporter: hi, scott. yeah, we're used to floods, we're used to high winds, we're not used to both at the same time, especially in august. this creek is supposed to be dry but i'm here in palm springs, which is one of many cities and areas that saw record rainfall, nearly three inches here in a play that maybe sees five inches in an entire year.

this massive boulder came tumbling down on interstate 8. last friday one farmer sent me a photo of sprinklers trying to keep his hjalapeno crops cool knowing the rains were coming. the farmers don't have crop insurance and the farmers are concerned that they won't dry out in time. many are on a strict schedule. >> depending on the moisture coming out of the sky, we have to wait. it pushes the date back and forces you to do work you've already done. >> there was a 5.1 earthquake in southern california. many schools will remain closed. school is in session here. the airlines will have to recover from all the cancelled flights. it was just a really dramatic

day, scott. more -- more -- i don't know, chaos than catastrophic. it was really weird. >> we were talking earlier, these pictures coming out of parts of los angeles, including dodger stadium, which is already, as you know because you've been there so many times for us and otherwise, a lower lying area in part of los angeles. i'm just imagining what other pictures are going to emerge that are just startling to see. >> yeah, that dodger stadium -- the storm didn't go where they thought it would go. it ended up veering over compton and los angeles. and compton is still up higher than downtown. but i've seen those photos. it was just -- fortunately no loss of life that we know of here in the united states. one person died in tijuana. just a weird, weird day. and all the crazy people who

still went down to the l.a. river, wihich you shouldn't do because you're going to fall in and all that, no loss of life as far as we know. >> that's jane wells out in palm springs. >> coming up, indiana senator mike braun joins us for a wide ranging conversation on economics and inflation and the esenyear report card on pridt biden's inflation report card. "squawk box" is coming right back. 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. uh, how long are you... i'm done. i'm okay. power e*trade's award-winning

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it's what they live to do... trinet serves small and medium sized businesses... so they can do more of what matters. benefits. payroll. compliance. trinet. people matter. welcome back to "squawk box." futures starting the week out at least at this moment in the green. been a couple of rough weeks in stocks because in part treasury yields have been elevated. let's look at the treasury curve as well. the 10-year this morning is at 4.30. eight it's a touch higher. and crypto, bitcoin is down about one third of 1%. >> news out of china this morning the country's central bank cut it 10-year bench rate

and left its 5-year rate unchanged. china is dealing with a slumping real estate sector and it's locked in a battle with the u.s. over access to advanced artificial intelligence and computer chips. joining us is senator mike braun of indiana. he serves on multiple committees, including the budget and appropriations committees. i was stunned to read the journal piece this morning about how far things have fallen in china. i can't help but wonder what it means for us more than -- i care about china. i would like their people eventually to come up to the same standard of living maybe as the rest of the world but they're nowhere near it and the

gdp there is $12,000. a 25-fold increase. we're at 76,000. i thought they were going to pass us. they made a wrong turn somewhere. >> well, per capita is one thing and then your economy is another. the world gdp about 100 trillion, we're around 25 trillion, china's about 14, eu maybe 22 or 23. that is a lot of the world's economy. you see places like india and think that has just eclipsed maybe japan. but all of this with china, they realized communism wasn't going to be a way to build an economy and they became state capitalists. and the more you try to direct the market centrally, that is what they're grappling with. i think they are savers but they've been huge borrowers as well and that is kind of

surprising. even getting close i think to where japan might be. we're headed that direction. there's a lot of complication out there but china picked the low-hanging fruit and they're kind of reflectioning back to their political system. i think it will hurt them economically. >> you alluded to -- we're directing quite a bit in the last couple years, are we not, government-directed investment? so far most people -- i mean, if you hear about bidenomics, we had jared bernstein saying this is a huge success for the government directing investment. look at the economy, the soft landing. we were able to raise rates and keep unemployment very, very low. >> i'd say be careful. he leans that way. i debated that bernie sanders, deficit financing, couumulative debt don't make any difference

anymore. we by nature have become a consumer driven economy. we now through the government side of it are borrowing. we're not financing it the tough way, which is raising fees or taxes. heck, nobody in dch.c. wants to talk about that. when i got there 30 years ago, 18 trillion in debt, now we're 40 trillion. 42 trillion in five years and 52 in ten. start taking the new financing costs and i asked a bunch of reporter of 1% of 30 trillion would be. none of them could come up with that figure. if you start calculating the cost of debt, the trust fund

goes broke in five years, and social security in eight or nine. >> and i've asked people about, you know, what is the way out and by 2050 i think we're at almost 200% debt to gdp. they say, well, we need to grow. we're not doing anything to stimulate growth so that's not going to happen. that's what we would need. so it sets up for a very pessimistic view on what the prospects are for us being able to deal with that. we're not going to be able to deal with that because we're not going to be able to grow. >> you look at the federal government being at 27% of our gdp, consumer spending just under 70, we're negative on exports/imports. when it comes to should the government be producing that,

they should get their act together on the basic things we need to do, defend our country, infrastructure and reform entitlements? it can't even do that. and business investment becomes a smaller part of it. we've made it to where it's been easy for us to borrow and spend, not to say that we don't need to do things to help the economy in general. we never raised revenues more than roughly 18% of our gdp. we've traditionally spent at 20%, regardless of the tax rate, high or low, we get into our government about 18% of our gdp. so the facts are there. don't go deeper into the hole. try to realign it to where you're doing a little more business investment. that lowers cost in the long run but not through government. >> we can either talk about what china, what this mabs of their

approach to the world. if things go south in china, it could be even worse i would think. we've got balloons flying over here and taiwan in the cross hairs or we at that and the big elephant in the room is not going to show. what's going to happen? you're a republican. what do you say playing out between now and the election? >> well, i don't think you could have written a novel more complicated more when trump came on the sen, he represented half the people fed up with business in dchlkts c. we do need term limits and a balanced budget amendment. the other side of the i'll, the political enterprises, but they're running it into the ditch financially. we, owned, generally don't want to do anything on policy and play defense by doing things

through the courts. i'd love to see what was happening precovid extrapolated into the future and i think a lot of people out there know that trump did it but they wonder how that works out politically. i don't think what biden is selling is working. that takes us deeper into the hole. referring back to china real quick. when their population starts to tank, their economic woes even get worse. >> just seems like a perfect storm for republicans if, you know, if an individual is going to get the nomination but can't win the general. do you think he could win the general, president trump? >> well, if he makes it through and he does, i think the democrats and the enterprisers would be the reason for it. and what was happening precovid. he he can and stick with that,

people out there know that it worked then and they wonder who would make it work. that's where we're at. >> so you're at this point assuming that former president trump is going to be the nominee? >> i think whatever they try politically through the indictments and so forth, that strengthens him, not weakens him. >> they probably want to do that because they think that biden can beat him. >> i think they are calculating it that way and and i think the american public might be a little smarter than that. because they can't sell th sell their economics and spain they don't like politics, the way it was done by donald trump. >> why don't you get guys like that to run for president? it's definitely a glass house.

>> it smarts. i got a little on top. i stretch it as much as i can. >> i don't know. it's just the strangest period in time, though. but i like to come to you because you're from indiana and that's the real tristate area is indiana, kentucky and ohio. i don't know what they're talking about back here, this tristate thing. it's not connecticut or anything like that. >> it's in the actual world. >> and sadly we only got about three or four of us. so generally that's a depiction and i've been able to see things fairly clearly. politically and especially in building a business, we need a different dynamic in d.c. >> if it wasn't donald trump,

let's say that -- like 91 counts. let's say it's not him. who would you like it to be? >> i this i clearly a guy that is different that espouses a lot of what trump did would be vivek ramaswamy because you're going to have to have somebody that has a business background, is entrepreneurial. that's the only chance we turn the biggest business around in the world so we not borrowing from our kids and grandkids. i think that's why he's resonating. >> went to my high school. salt of the earth. senator, thank you. >> you're welcome. >> good to have you on. >> coming up, chart master katie stockton helps us understand the latest move in the averages and the leslie picker will join us of evidence of grown shoots out

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in every delicious serving, you've got the green light. better starts with breyers. i get it. you do? do tell. no, don't. no, let's not. you're not up a hundred points. >> it weakened a little bit when yields started to go up.

>> wheile we were talking to th senator -- >> the long end went above 4.30. the market is very sensitive right now. a follow-up to friday's results of palo alto net woshs. t networks. the stock is up sharply this morning. the ceo addressed the buzz around the schedule saying they wanted to give ample time to analysts to have one-on-one calls with analysts over the weekend ahead of the company's conference over the weekend. >> we didn't talk about the most important stock in the entire stock market this week. >> comcast? >> nvidia. >> besides comcast. >> nvidia reports earnings this

week. after what's happened in tech? >> what's the expectation? >> well, i mean, they blew everybody out of the water last time with their unbelievable guidance. now, i mean, the bar has got to be pretty high, although the stocks come in, it's a trillion dollar market cap. it still matters a lot. >> what did jason say to us this morning about the big seven? he said he would buy them -- >> he said they would short them. >> he said they're immune to the rising rates. and it's the smaller stocks -- >> you need this number to be good to keep the narrative in tact of a.i. is the future of everything and that's why these stocks have done as amazingly well as they have. >> i'll say i'll be a little bit cautious about making big --

>> what the nasdaq has already done in august, which is it's been a pretty big loser, you are don't really want to have nvidia post a bad result. >> that's right. >> because then you may have a bigger problem in terms aof a bigger problem to worry about. >> nvidia is not apple yet. >> well, i almost think that you could make the case that given what tech has done that right now it's arguably more important because the stock is such -- has had such a remarkable run. >> are you saying nvidia has replaced apple as the

bellwether? >> i think apple matters, too, and i don't think the market can stabilize until apple -- i think it matters right now. >> when does nvidia come out? >> wednesday. >> i just think it's cool that we can talk about companies com. over in europe, they're going to start busting our stones again. they're just so jealous over there. they love to regulate our companies because they don't have any. >> you're referring to the front page story on "the journal," is it? >> no, it just -- bitter, party of one. yeah. all the innovation is happening here. so, they come after us. that's the only way they can compete. commentary is flashing at the bottom of my screen. that happens a lot. >> it does. do they even have to flash it anymore? >> they've done that before. they used to flash "commentary." like, this is not cnbc talking. >> those comments are joe

kernan's only. it's been an exceedingly quiet year for deal-making on wall street, but investors are starting to see signs of life. >> deal-making green shoots appear to be popping up all over in the last week and m&a, you've got a bidding war for u.s. steel and activism. you've got starboard engaged in bloomin' brands and in ipos, instacart and arm are gearing up. this is welcome news for a market that's been effectively dormant for a year and a half now. north american mergers and acquisitions came in at $960 billion during the first six months of the year. that's about 16% below the pre-pandemic first half average. and ipos don't really fare any better, despite well publicized debuts by cava and kenvue, u.s.-listed ipos are raking in about a tenth each quarter than they did in 2001, which was a near-term peak, according to kpmg. and while the engines appearing to turning back on, it's not

quite full speed ahead yet. bankers and other sources i have been talking with, a lot of companies are in wait and see mode right now. they want to assess larger ipos and get more comfortable doing deals in this regulatory environment. regulation has been front and center for potential deal makers. they want to look at that before really doing anything major. but as the prospect of a recession seems kind of further and further away, you can expect to see a little more activity than we've gotten used as some of the c-suite executives, they didn't want to do a deal if there was a recession or a hard landing right around the corner. >> leslie, thank you. leslie picker. up next, we'll get you ready for the monday morning opening bell on wall street. top technical alanyst katie stockton joins us. stay tuned. good luck. td ameritrade, this is anna. hi anna, this position is all over the place, help! hey professor, subscriptions are down but that's only

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(warehouse ambience) introducing togo's new french dip sandwiches featuring fresh artisan bread piled high with tender roast beef, smothered with melty provolone cheese and served with hot au jus for dipping. try the roast beef or pastrami french dips today only at togo's the futures are up, but they're not up like they were, and the major averages are having a tough august. the dow just had its worst week since march. joining us now, katie stockton from fair lead strategies and a cnbc contributor. maybe we should talk about bonds instead and yields and what

those are indicating to you, because they seem to be the dog in the stock market seems to be the tail right now. >> they've really accelerated to the upside, such that the ten-year yields are now up into resistance at 4.34%. it would be a natural place for a pullback or some digestion, and -- >> indigestion. >> yeah. exactly. when we look at treasury bond benchmarks like tlt, for example, to me, it still feels like it's range-bound, that that support will hold for some time, and yet, eventually, like if we do see ten-year yields clear that 4.34%, the next resistance on the chart, which is the best way we have to understand upside, is about 5.25%. and that wouldn't be a near-term objective. that reaction i get all the time. >> wow. >> check, please. >> right. but from -- i just -- i was so used to 7% and 8%. i'm not afraid of that eventually. >> a lot of people are. >> i know they are, but companies did just fine with yields like that. >> but that would be a shock to

the system. >> i think it would be. we're seeing some deterioration in equities, but it's not really that meaningful yet. so, to me, i think we see this corrective phase as just that, a corrective phase, something that should yield a buying opportunity. it comes at a very normal sort of seasonal time for this kind of volatility. >> but -- >> and you know, the long-term momentum has gradually shifted to the upside this year, so i think we'll at least have an opportunity to take advantage of that sometime during q4, even if it's not long-lived. >> what about the momentum in mega cap and potentially losing that? it's obviously been edgy the past couple of weeks. now we have nvidia looming. how do you see all of that? >> that has the potential, obviously, to set the tone near term. what we have seen behind the nasdaq 100, which, of course, is driven by the megacaps, is a loss of intermediate term momentum, not just short-term momentum, so the gauge that we track had been positive since about mid-november, and it just flipped negative last week.

so, we publicized that because it is significant, and it tells us that the corrective phase should be more than just a couple three-week event, something that would be more in the sort of six to eight-week range, so it gives us a sense of time frame around the corrective phase, but we've come so far and not so fast but for so long that it would be only natural to see this kind of action. >> i don't know which to talk about, but we always do the s&p. so, the 3,600 october lows or whatever they were, those, we aren't talking about anymore. what's the first solid support underneath the s&p right now? >> we're referencing for the s&p 500 former resistance from february, in part, which is around 4,195. just shy of 4,200 and i think a lot of people have that 4,200 level in mind, and because of that, in a way, it could become self-fulfilling as support. that's what we use to gain downside risk but it's really a set-up in our indicators that we

use to cue the re-entry point. the indicators are still pointing lower, and there's a still a good deal of room to not short-term oversold territory. we're already there now today. >> they're noncorrelated bitcoin is totally correlated. y you thought 25 was pretty good support. >> 25,200 was former resistance. below that, i don't want to say the bottom drops out for bitcoin, but the next support is below 21,000, so to me, that would be a setback, and i would suggest that risk appetite is really, really not there. it's not a one for one correlation, but it does give you a sense of how people are feeling, and look at china too. sh shanghai composite is near its lowest level of the year. >> katie stockton, monday, good to have you on. most mondays, i think. final check on the markets, which, not much to talk about at this point. they've backed off from triple-digit gains but the

nasdaq's up 65. the ten-year got up to 4.3% and that's sort of what cast a pall on markets. i thought it was a good show. >> i enjoyed it too. >> i enjoyed both of you gentlemen jacketless. that was okay, right? you got through it. you going to put one on? >> rest of the day, yeah. >> i'll consider it. >> "squawk on the street" is next. ♪ good monday morning, welcome to "squawk on the street," i'm carl quintanilla with jim cramer, david faber at post nine of the new york stock exchange. bulls trying to keep friday's modest gains going. very big week, nvidia, housing data, yields still a little spicy this morning. our road map begins with the market's three-week pullback. s&p's on track for the worth month since september of