now. good morning, everybody. welcome to "squawk box" here on cnbc. we are live from the nasdaq market site in times square. i'm becky quick along with joe kernen and andrew ross sorkin. yay, everybody's here. >> wow. we're really bland, and you are right there. >> sunshine. >> front and center. >> you guys are wearing the same thing. >> canary in the coal mine. >> here we go , here we go. we're going to take a look at the markets. there are strong advances across the board. s&p futures up by 22. the nasdaq up by 9 9. we'll see. we've got big earnings coming up

later today, including nvidia, which could set the tone for the markets. also the treasury yields has garnered so much attention. right now sitting at 2.3%. >> let's talk about some new rules that the fdi cy is planning to propose. it will be from mid-sized lenders on tuesday of next week. it will require banks with as little as $100 billion in assets to issue enough long-term debt to cover long-term losses if they ever fail. that i'll have to bolster their wind-down plans such as living wills, potentially making sale of a collapsed girl more attractive to buyers, all of this, of course, in the wake of the scb failure. of course, is this enough? will it help things if we do get into something where it ends up hitting regional banks later on.

in the short term it will cost everybody more. >> it seems contractionary. this morning i'm worried about it. china and europe is not better. >> you look at the numbers in europe. they were not great. >> terrible. >> we wanted rates to stay lower. >> not for the wrong reason. inflation stays high. you have federal spending. u.p.s., these guys -- pilots just got 40% increases. >> it's good for wages. >> i'm worried about stagflation. >> of course, it's inflationary, but if inflation is coming down

-- if the wages ultimate hi outpace the inflation, that's a win. >> if that happens, but the .2%, there's an article i was wandering through. this is the thought. do we do it quick, more painful, less into the economy? >> thurman is right. we need to move the goalpost 3%. we're not getting below 3. >> we could. it would be pretty painful. >> it would be for bad reasons. >> yeah. >> i don't know. maybe the recession is off the table now, but i don't know. >> except for the banks. >> that's true. >> the regional bank stocks have been pretty weak. they've fluctuated up and down. as you mentioneding the new regulations will be con contractionary to it. there are the high rates or the pain we saw back in the spring.

>> yeah. fed's still got work to do with the inflation. i don't know how long we can count on the u.s., but we've got all that federal spending. maybe that continues to spur demand app maybe we do save. >> you have other nations that are spending, too, as a result. china is supposedly spending $30 billion to try to bolster the chip we've done. >> if they only grow 3% from here on out, people have said china has been 35% of the growth at the globe that accounts for china. you can't count on them. let's get to an update on a story we told you about last month. amazon is demanding that some staffers move to a central hub to be with their team, and those who are unwilling to comply are being offered the option to find another job internally or resign. some employees s are choosing t

quit rather than uproot their family. cnbc spoke to annie palmer about that decision. she's going to join us with more details in the next hour. i do remember in the old days if you had a decent employer, i had kids, i knew them for a while and they'd be gone. that would be fairly normal where you had to move for a good job. did you see "the fablemans?" he had to move all over the place. >> chase the job. >> yeah. >> the quick family is from a lot of different places because they moved around. >> trust me, we did. indiana, ohio, new jersey. >> people said, i ain't moving and i'm working three days a week and you can tang this job and shove it. people are too soft now, i think. you're lucky to have a job. as i said yesterday -- >> people are lucky who don't have to chase the job, right? >> that would be --

>> that's a good thing. >> it is a -- >> you look at the employee market. >> it's an moe market right now more than an employer's market. >> some employers are pushing back. speaking of in-office policies getting stricter, goldman sachs is forcing their employees to work in the office five days a week. in a statement goldman's hr chief said there is flexibility when needed but that the company is reminding its employees of the existing policy. by contrast, citigroup and jpmorgan have been urging managers to enforce a three-day-a week guideline for many employees. they're expected to commute every day of the week to work. >> what? every day? where are the hubs? >> amazon?

>> yeah. in massachusetts? where do you have to go? tucson? >> they have big offices in a whole bunch of places. they even have an office in new york. >> where are they asking people to move? >> we'll have to ask. >> the sunbelt? >> it depends what you're talking about. that's the office group, people in office. seattle, new york, chicago. >> don't they have a nice facility out in long island? >> queens? >> yeah. >> annie palmer will be joining us. meantime let's talk about u.p.s. the workers have had their contract ratified, hopefully something great for the employees. they've ratified a five-year deal that includes big wage increases and an improvement in working conditions. it was passed by 86%. they averted what really could have been a massive and costly strike that could have affected

the entire country. part-time workers will make at least $21 an hour up from $15.15. full-time workers will average $75,000 in pay at the end of the five-year deal. >> can i say this is good news for workers who can't work from home. working from home is a benefit. if you don't get that, you should get one. you're showing up for it. >> it's a big number, but it's not bigger than what we saw with the pilots contract that came through, and this does set the stage for what you'll see with the autoworkers, and that's the next contract that is up with the uw. >> iffer ask everybody asks for $170,000 a year, that's a wage spiral. >> it could turn into that. at the same time i would say for the last 10 years, 20 years, we have been talking about wages being completely stagnant.

we've argued forever -- i'm not saying -- >> it's a fine line when it goes from staying above inflation to where it actually hi causes inflation and then you don't keep up. >> this is the question. the question is if the wages outpace the inflation, it works. >> it's nice when real wages grow, and that's only been happening for the last couple of months. it was happening before covey, and then covid messed everything up. >> supply chains. >> supply chains and everything el. i don't know. i don't know what to think of the next couple of years. i still worry that the fed -- you know, we did so much, stayed at zero for so long, i tonal know if we've felt sort of enough comeuppance. >> isn't that the point though? for all of this time, you would say that we were too low for too long, right?

>> this has nothing to do with it. >> not wages. >> no. inflation was too low too. growth was too low. >> low inflation is good. >> growth is too low. now inflation is high because we have this situation. >> growth isn't going up. inflation is going up. growth has stayed stagnant. that's the problem. that's what these guys have to deal with. >> you don't know what you got till it's gone. >> this inflation is good. we had 20 years of it. it's good. we don't have it now. when we come back, we're on the caughtdown to jackson hole. we're going to talk strategy 'he of jay powell's speech. let's take a look at tin withers and losers of the s&p 500. you're watching "squawk box" and this is cnbc. by the way, nvidia is on that list, too, up 1.5%.

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we're going to talk with an

economist and jack cafferty and jpmorgan asset management. jackson hole is front and centering jack, i know you just came back from there. veronica, what are you thinking? should they try to get to 2%? >> i think powell's job on friday when we hear him at 10:00 a.m. is not to rock the boat at all. i think the fed is pretty happy with the yields. they've had to be substantially more hawkish on the policy rate. i think the goal is to not rock the boat. >> is that going to be easy when the company is trying to parse every word? >> they're going to be talking neutral rate. i think that's probably pretty baked in that he'll say something along those line, but

i wouldn't expect a conclusion that neutral rates are higher and we need to heave rates at higher levels, but this deal for higher for longer sticks around. >> higher for longer and what does that mean for equities? >> it's certainly been putting a lot of pressure on the valuation side of issues, particularly for those more secular growth stocks which in some sense, we spent a decade and a half thinking a dollar of earnings, five years from now, ten years from now, we're really no different from a dollar today given that. now you can get something on cash and now you're starting to wondering you know, to what extent do we have more interest rate variability. so the future is a little less valuable. >> what are you telling people? >> it's harder to play the tales of the broader market. you're guessing the economy and

that's why i try not to do it. deep cyclicals need the ability to talk about 3, 4, 5% growth. i don't know that we necessarily go back to that terrific 2s, 2% real growth and inflation that lasted for a deancade and a hal. you want to be paying attention to earnings you can count on. i think trying to be more core-like rather than emphasizing the tales or running a barbell make ms.er sense today. >> do you consider the fab five of technology, the seven big guys that are out there, the five above a trillion dollars in market cap right now, do you consider that kind of core, or is that something where the valuations are getting a little richer? we're going to hear from nvidia tonight. it's valued at 5. it's more than a trillion. >> you could say what do you think of the market or the fab

five or magnificent seven. those two questions are unfortunate hi only one in the . it's been a story of ai. ai has been driving nvidia. it's been driving the amazon story. so three of the fab five line up right there. and to a lesser extent alphabet. the one who hasn't been driven so much has been apple. apple is becoming a services company. >> you would take them at the same valuation? >> i don't think you take them at the same valuation. i think what's interesting, as we think about this move to ai, you're seeing asset-light businesses becoming asset-heavier. you start thinking about appreciation levels. >> does that make their earnings less valuable? >> it means you wind up in a situation where they actually

have constant cash needs and they don't throw off owner earnings if you will. >> so not as much in terms of buybacks? >> i come back to i really like dividends because i like the consistency of that commitment that a dividend seems to promise. buyback activity, wonderful when it happens. it winds up making the highs higher. when management teams are very cautious on what might be happening. >> veronica, can you answer jack's question about whether we get back to 2 and 2? >> i think there are a lot of reasons we're not getting back to 2% inflation too soon. you probably would need a broader contraction to get there, something we would probably cause a recession. >> that's good news then. >> yeah. and we can still have that.

that's our base case for the first half of next year. there are a lot of republicans to think that inflation is higher now. things like the reshoring on goods production, we're starting to see some of that happen with this day that. that could mean inflation could be higher for longer. >> should we be okay with that? >> that is the big question. is the fed going to get back to 2% or will they be okay with 2%? are they okay with %? maybe. 3% to 4%ing probably not. that's where we look like we are right now. underlying inflation looks like in that 3% to 4% rate and that's probably still high. >> it's a number. >> it's all just numbers. >> 3's good. >> the one thing you would be listening for from jay powell on friday, i know you're thinking he's going to try not to say anything, but what are you going to be like?

>> yeah. i don't think this is going to be as many fireworks as we had last jackson hole, but, yeah, i'm looking for some discussion that potentially neutral rates are higher, at least in the short term. we've been surprised at how resilient tesht has been. we're not as restrictive with the rauts as we thought. if it doesn't happen, maybe that's the bigger surprise. but, yeah, some idea we have more work to do on inflation, rates are at a restrictive level hopefully, and they're going to be there for a while. >> veronica, jack, i want to thank you both. coming up, a somewhat bizarre lawsuit, subsidiary of altria suing a similar outfit of altria. > d mi up the "closing bell," we'll tell you what to expect. "squawk box" will be right back. (hero fan) uh, yea. i have to watch my neighbors' nfl sunday ticket.

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welcome back to "squawk box." a bitter divorce. altria subsidiary injoy sues former altria subsidiary juul labs. altria bought e-cigarette subsidiary n joy. now they infringe upon what they bought, njoy. now they're calling for a ban of the import and sale.

strange bedfellows. >> i don't see it much. do you guys? >> what? >> vaping. >> i've seen it all over. i've seen it in restaurants, people in corners. oh, yeah. >> i don't ever see it anywhere. >> it's everywhere. it's sad. >> not in the nice parts. >> all over. the nice parts -- >> people are getting pushed on subways and living under scaffolds. ark invest kathy wood adding to her more than 4% stake in zoom and buying some dip. that's some dip. 400 after 66. two of ark's funds bought shares. it's trading low despite earnings and guide answer that did, in fact, beat expectations. coming up on the other side

of this, speaking of expectations, we've got expectations after tonight's debate. frank luntz is here to break it all down. take a look at yesterday's winners and losers. ♪ >> announcer: winner and losers is sponsored by state street global advisers. ♪ the biggest ideas inspire new ones. 30 years ago, state street created an etf that inspired the world to invest differently. it still does. what can you do with spy? ♪ ♪

back to "squawk box" live from the nasdaq and times square. today looks like yesterday. slowly eroded. it slowly eroded through the morning the premarket session, and then wasn't very good. down 170. but i think the nasdaq closed higher, barely. what's going on? is anybody going to watch it? >> i don't know. we're going to see. tonight is the first republican primary debate. it's taking place in milwaukee. current polling indicates former

president donald trump's popularity has surged ahead of others in the nomination and his ongoing legal challenges don't seem to be stopping that. meanwhile, his chosest contender, florida governor ron desantis has declined. the former president won't join the stage tonight, opting to skip the debate and maybe a poke in the eye to the folks at fox by releasing -- maybe tucker carlson is the poke in the eye, releasing a previously taped interview at the same time. >> they're both pokers, i'm pretty sure. >> joining us now is frank luntz, fil inc. pollster. will there be a lot of attention? not a lot of attention?

>> there will be a lot of attention. it's tonight. not labor day, thanksgiving day, january 1st. people started paying attention at this point. and there are people watching right now, your show, determining whether or not the governor of florida, ron desantis, deserved their money. for him he's got more to prove than anyone else p his numbers have been dropping every single week. the polling you show right there, he had 16% of the vote. a new low for him. there was a time earlier this year when he was at 30%. there are billionaires deciding is he worth their investment. he has the most to prove and the most to lose tonight. >> is this any -- go ahead. >> go ahead. second, ramaswamy. >> right. >> your numbers have him at 10%. a lot of voters don't know him. they're curious about him, and they're being driven toward giving him a chance, taking a

look. he's the ben carson of this time, herman cain of this election. no electoral experience or governing experiencing but people are paying attention because up to this point they've liked what they've heard and now they want to hear more. >> when you say ben carson and kind of put him in the herman cain camp, that sounds like you're writing him off. i don't think vivek is the same. he's got more substance. >> he's quite significant and people of policy are paying attention. he's taken a desidedly pro-trump view. what viewers know consider it seems to be -- i don't want to make an accusation without proof. there seems to be a level of cooperation between donald trump and vivek ramaswamy and he's figured out how to give trump voters a chance to give him a look, which the ores have not done. >> when you say or imply that's

some kind of connection between the two groups, is that because you think vivek would ultimately try to run as his vp or there's something else at play here? >> every candidate holds trump accountable in some way for something. can you see the numbers in front of you right now? he's at 10%. he's above the former vice president. whatever donald trump says, he ee been indicted, vivek seems to say that's okay, that he doesn't challenge him. he didn't criticize him. >> those articles have be written to take down desantis for trump and the debate notes show they're supposed to go after vivek. i don't know if any of that's true, but the scuttlebutt -- i

just want to know, who are they going to be attacking tonight. that's what they're all saying. when it comes down to it, that i own got to attack people that they're vying for the nomination with, don't you think? >> yes, i do. if they all pile on -- you've got chris christie right now. if they all pile on and his numbers go any further down, you're going to see money move from desantis. we haven't talked about tim scott from south carolina who's got the highest favorability and the lowest negative of any of the candidates and he's the one in iowa that seems to be moving. and tim scott, some are looking for a more positive message. in new hampshire it's governor chris christie who's getting attention. he's pulled into second place in

some of the new hampshire polling. this's a lot of investment from people who watch shows like this who try to figure it how to stop donald trump. you're going to see a lot of money move because of their moves tonight. >> are you surprised by the strength of the trump candidacy amid these indictments, amid all this sort of, i don't know if it's noise or more, and, therefore, the question is how does -- if you think that ice going to change, what would challenge that? >> that's one number that has shocked me more than any other. more trust donald trump than they trust their own friends and family when it. kols to issues of politics. 71% of the republican primary electoratelet that's mind-blowing, when you consider what he's gone through over the last three months. it's going to be very difficult

to dislodge them, and if it's going to happen, it's only going to happen because of these debates. it's a fascinating strategic decision on trump's part. >> what does it relate to? there are people watching, hearing you say that. you say it's mind-boggle. they're sitting at home saying that's mind-boggle. how could that be? >> trump is now seen -- that's the question. trump is now seen as the victim. he's now seen as being persecuted, not just prosecuted. that the level of anti-government, that he's been able to dominate and suggest to the republicans' agreement that this is a campaign against him to keep him from getting the nomination. i want to emphasize to viewers one thing. donald trump is the prohibitive

favorite. republicans have turned against him. democrats have turned against him. he's got a difficult road ahead of him. of all of the republicans, donald trump is the weakest. at the same moment that he's by far the strongest candidate in the primaries. >> that is the thinking you would think of. if you like the grand conspiracy theory, the more indictments come, the more popular he gets and the more unelectable in the general according to the people that would be doing it. i guess it could backfire. i don't know. tim scott could get -- supposedly larry ellison is expected to write him a big checking like eight figment th figures. in the past we had no idea until the first or second pry may and someone emerges. i can remember a few time when that happens. it can quickly coalesce. i don't know if we know.

then there's the jeb bush -- trump was like in last place. jeb bush and scott walker, scott walker. >> he collapsed. rick perry collapsed. i've seen is tell mates. i think this will be 50 million watchinging maybe a few more. they'll be paying attention to it and they're in the beginning of the decision-making process. tonight there's a much more. in the end republicans to not want joe biden p. republicans do want a replacement. but electability is less important. >> you mean democrats. >> yes. >> you said republicans. michelle is waiting in the wings, frank. that's what i'm hearing. that's going to happen. he can't back out now.

>> here comes the issue. joe biden will not be running as an 80-year-old. he's 86 years oil. you're not voting for him today. you're voting for him for after the election? democrats couldn't pass over the vice president, could they? that would be very difficult for those who would say it would be tough to pass over to michelle obama. >> ask the governor of california. he's launching for campaign not for pretty now but president four years from now. ask someone like cory booker or the governor of michigan, gretchen whitmer. this are a lot of people wait. the vice president right now has the highest un-faberable resume

suns dan quayle. harris is not a strong candidate. could they pass over her? absolutely. >> frank, we always appreciate your perspective. i hope we have an opportunity to talk very soon after the debate and ahead of the next one. >> this is the beginning, so this is the -- this is the beginning. >> this is it. >> we just did this. >> you're going to be seeing a lot more of frank. thanks, frank. appreciate it. >> the beginning of the end. >> here we go again. when we come back, we do have an update on writers strike. the studios releasing the details of the latest contract offer. that will be next. rm psintndwe'll be talking foerrede a ceo of united airline, oscar munoz. we've got that and much more. "squawk box" will be right back.

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welcome back. hold studios has released details of a new proposal to striking writers. ai-generated written content would not be considered literary material. the writers guild said the union

had failed to protect writers from existential threats. the union describes it as an effort to circumvent the negotiators and appeal to rank and file-with the effect they would turn on each other. they've on struc for 113 days now. >> do you watch "jeopardy!"? >> not lately. >> no, haven't in a while. years, really. >> ken is great. i'm not a big fan. it's going to be ken. if you're a ken jennings versus -- if you look at what goes on with twitter, there are many that like -- ken is off the charts, right? have we ever seen him? he's said some weird stuff. very weird stuff and almost got canceled from it. >> i'm rooting for faber. >> he's not coming back.

>> i like faber. >> i get so tired of watching. >> because it's at like 6:30 p.m.? >> no. because after doing this all day to try to come up with those -- and to frame it in the form of a question -- >> that is tricky. that's hard. coming up, nvidia is set to report. after the closing bell, we'll tell you what to expect. i can't do "wheel of fortune." > rsed all the lette. >>a reminder you can listen to us all the time on the cnbc app

watching heads-up. check out shares of footlocker.

that stock is down 19%. this feels a lot like what we heard from diks sporting goods yesterday. this is a different reason. it matched the street's estimatesle it's on revenue of share. this is just shy of expectations. the company is citing ongoing consumer softness from the drop. the real reason the stock is down is because they are pausing the dividend. they are suspending the dividend well they tried to continue with their plan. they are trying to soften but continue with their strategic

initiative. >> but the reason they are doing this is because business sucks so bad. it is about a 9% yield. in they will pay out the board's recently-approved payout but going forward they say they will use a capital allocation plan. mary dylan says they remain committed to their lace up plan that they introduced at the investor day in march. they are encouraged by the progress they are making against the strategic priorities, but what they are seeing is a softening. that is what we heard yesterday and that is what we heard from dick's sporting goods yesterday. this is very similar to what we saw with the reaction to dick's sporting goods saying this because of theft and shoplifting.

that is not what foot locker is saying, but they have suspended dividends while they try to figure out, because they want to make sure to continue to spend on these initiatives. you can say today they are down 1 1/4%. so i think at the end of the session it was down 25%. we will keep an eye on this very closely as we head towards the fed and the commentary that we will be hearing from jay powell on friday at jackson hole about what they see in the economy right now. >> we were talking about shrinkage, and who came up with that, mckenzie? what is wrong with that? it is more than just shrinkage! shrinkage doesn't describe what it is at all! >> now, shrinkage is less than the stuff that you came in with. but yes, shrinkage, nobody knows what it is. >> they are stealing. they are not shrinking the stuff. >> sometimes it is stuff that is broken in the shipping

process. especially when you are referring to some companies. >> that's my point. >> hard to say anything! >> nvidia shares are up. it is after the closing bell. we understand it is today. christine joins us now. it is today closing bell? isn't that amazing? >> let's talk about nvidia remaining one of the few that is seeing a dramatic bump in numbers from a.i. that is why there is so much emphasis placed on its datacenter number considering what contributes and revenues and the sought after a.i. chips we keep talking about. the number is expected to

double to more than 8 billion in q2 with some analysts calling for $15 billion in the coming quarter. the demand appears to be there, from microsoft to saudi arabia looking to snap up a.i. chips, but there is one major hurdle and that is the supply chain. although nvidia is looking at 50% growth rate with some of these a.i. chips, we could see weaker than expected guidance and limited near-term revenue upside. they say that the ability to guide above levels is, quote, highly unlikely and there are fears that china might be rush ordering in anticipation of export restrictions, adding more strain to the supply chain. so expect this to be not only impactful, but because of its influence on market psychology, since many of these s&p 500 gainers have come from a.i.

>> i haven't thought a lot about that issue. china trying to get more coming in? >> it is because of the export restrictions that were in place. >> that reminds you of the covid stuff, right? >> precisely. you would think we would learn after a year or so. the same thing with the supply hurdles. companies are possibly double ordering just in case they don't get their hands on these chips. then you have china trying to front run export restrictions coming from the united states. the answer to that is they will jump up 20% coming from china. not that china is restricting any amount. our next guest poses the question, is nvidia the new tesla? we have the beat writer from the wall street journal and a cnbc contributor . thank you for joining us.

there are great things about momentum stocks. if you get in early on one of those and you let it ride and you don't cut your profits, it is a beautiful thing. it is momentum combined with underlying fundamentals that are exciting. there is no doubt that nvidia with a.i. is a great story to tell. but we are talking about a company that was worth one quarter of $1 trillion. i don't want the whole market hinging -- it is the linchpin of the market. this seems dangerous. >> the stakes are high after the closing bell today, not just for nvidia but the entire market. this is the best performer in the entire s&p 500 this year. people are really piling onto this stock ahead of the earnings. the expectations are high. you see people piling to the options market and turning to

ultra-bullish trades. you are seeing analysts raise their prices on the stock as well to $1000. it is under $500 right now. so you are really seeing this nvidia thrive ahead of earnings. that is what a lot of us traders are reminded of. this is one of the most popular trades in the options market and it has become this entire casino of its own with momentum trading behind it. >> the expression nothing grows in the sky, tesla, for a car company, you would not think any car company could have a market cap like that. so you would not think this is possible and i guess that is why keeps happening again and

again. is there a possibility that there is hype around a.i. or not? >> look. everybody seems to be drinking the kool-aid this year. you see nvidia's blockbuster earnings in may that really kick started this frenzy. it contributed to more than 1/10 of the s&p 500 total returns through july, so it has really brought a lot of the market along with it and that poses risks as well. in july we have already seen stocks mired in one of the worst slumps since march. we are facing rising yields. a lot of people are questioning, has a.i. mania gone too far too fast? that is what makes these earnings results so important after the closing bell. it does seem that people are fearful of missing out. they want to play short-term gains in the stocks and that is

why they are turning to the options market and maybe buying shares ahead of earnings. that helps to explain the 8% shares on monday alone. it looks like the stock is up in premarket trading. some people are saying that if this is the next apple and if this thing continues and a.i. really does change our world, we don't want to miss out. >> thank you. squawkbox will be right back.

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good morning, and welcome back to squawkbox here on cnbc. we are live with becky quick and joe kiernan. this hour we have a whole bunch of things taking place. right now the dow looks like it could open up 47 points higher with nasdaq 57 points higher. to show you treasuries we will be hearing from jay powell later this week in jackson hole and we will see what happens. right now the 10 year is sitting at 4.25. >> let's get right over to frank holland. he is a look at some of the morning movers this morning. frank, good morning. >> we are talking about foot locker down big. you see shares are down 26%

right now. the real reason for this dramatic fall is the sneaker retailer splitting its dividend which sits at just under 7%. the ceo is saying that foot locker is preparing for the upcoming holiday season and really leaning into its lace up plan. we also have a double shot of an upgrade. morgan stanley has moved from underweight or overweight. you can see that shares are almost 10% higher. analysts cited rebounding spirit sales this summer in a tailwind from agave prices falling 25 to 50%. also, homebuilder toll brothers is moving higher, 32% above estimates.

it has also raised delivery guidance and they say they expect prices to continue to rise. you see shares are up 2%. the company also says that rising rates are a bit of a double-edged sword. it has kept resale inventory low but it has also affected affordability. becky, back over to you. all right, frank, thank you very much. we are looking at kohls which has just come in with this report. now the street estimate is for $.22. i don't think that this makes sense to do an apples to apples comparison here, because the revenue payment is roughly in line with expectations at $3.68 billion. sales were down by 5%. sales overall were down by 4.8%, but the company does go out of its way to say that it is not going to be cutting dividends and it will be managing its expenses tightly. they do say that cash flow

generation allowed them to reduce, but they are sticking with their dividend from foot locker earlier today. they're committed to maintaining the current dividend. inventory was down by 14%. they say they are reaffirming the full-year outlook for 2023 and are now looking for two dollars .10. the street was at $2.38. we will see how the streak is up right now. the feds' first speech in general, let's bring in jackie, the portfolio manager of investments. okay, so we have had a look at all these results. just about done. we have jay powell on friday. what is more important? both are important, but at this point what is your focus on, jackie? >> good morning, joe. thanks for having me again. my focus is on powell.

i think that this will be an important speech. i do not particularly expect him to change the narrative from the july press conference, which is that space will continue to be left for an additional hike. i think that you could see some movement from powell. what i would watch closely is that the market is still anticipating the first hike coming in march of '24. that is seven months away. we think that that remains too soon and too early, so i would expect them to maybe take a shot at talking out jawboning expectations to push out. i think at the last press conference you said no cuts in 24, so i would expect that narrative to maintain itself. in terms of retail sales, you know, the consumer came into '23 in excellent shape. we knew that. they came in with a ton of excess savings on their balance sheet and the capacity to spend and desire to spend.

they have really powered through the economy. they have powered this economy over the course of '23, and now here we are closer to the end of the third quarter and into the fourth quarter. the savings are starting to run out, and that is where you are starting to see some of these cracks across retail, whether it was dick's yesterday, some of the commentary from macy's, i heard you guys talking about foot locker. so we are seeing more consumers opting to pay for essentials and stables with credit cards. so we are not totally surprised by what we are starting to see in the consumer space. >> i don't think we have ever had a recession when everyone was expecting a recession and we all were and now we are not. does that mean it is possible now? if you look at china or europe or you look at the things you were just saying, is a recession off the table for 2024, would you say, jackie? >> we would say it is not off

the table for '24. we know the narrative has clearly shifted to this elusive soft landing. we are leaving space that that might be the outcome, but will think it is too soon to signal the all clear. because of the comments i made about the consumer being so strong, to expect a recession in '23 was always going to be a lift. if you look back over history going back to the '60s, the average time between the first fat hike and a recession commencing is about 22 months. we were not coming from neutral. we were coming from a highly -prominent place. so to expect it to be sooner than that average is unrealistic. so we are sort of in the second quarter, third quarter of '24 as when we might start to see recessionary signals. what side of soft landing do we land on? i think that that is still tbd,

but we do think that it is too soon to signal the all clear. the only thing i would say, joe, for your viewers, is the economy might slow down, but that does not necessarily mean it has to be a disaster for the market. people have gotten very excited because we are 18% off of the october highs, but if you pull out the aperture a little bit, from point to point we have not moved in two years. the s&p was at these levels in august of 21 and yet they are up 18%. so valuations are not super stressed. you could have a slowdown in the economy that would obviously hit sentiment we would have to think about, but probably speaking we do not think that the market is in a really stretched position. equities can still be invested and you just have to pick your stocks. here at putnam really focus on individual stock-picking, and that is what we advise people to do, are to pick stocks that can perform no matter what side of the soft landing we land on.

>> when did putnam begin? >> 1937 we began. >> how much in management right now? >> about $170 billion. >> and you sleep okay? or not really? >> nobody does. we wake up and check the markets a lot. >> don't look at your screen! then your brain turns on and then you can't get back to sleep! do not do that! there is some weird thing, do you know that? >> the blue light. i do. i know that it hurts my sleep but i also know that makes me sleep easier just to know what's going on. >> all is clear. thank goodness, go back to bed. >> if you try that lavender chamomile oil? right here? it is a really nice smell. >> is like melatonin? >> melatonin makes me stay awake. melanin is really good!

you just have to read brave new world or doom or something. jackie, thank you. i think that is what they are mining in all those places, right? >> i don't member what was called. a deep dive into retail and issues hitting the sector for the quarter. some of the biggest aims. we will speak with the head of the national retail federation after this.

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shares of foot locker are sinking this morning. earnings matched expectations on revenue, but the real story is that the retailer is spending its dividend. they are seeing some softness in the consumer and mary dillon, the ceo, is saying she wants to stick to the plans they have told about the transformation they are planning there. as a result, they want to have money to do these projects, but because of the softening consumer and their desire to stick with a consumer that is pinched by an economy, that means maybe they don't want prices to go up too much, it is going to cut into their dividend. they will pay out the october dividend that the board has

approved. beyond that they say that it will be on a to be determined basis and as a result the stock is up by 28% right ow. other retailers like macy's and dick's sporting goods are pointing to stealing and theft as a major factor contributing to their bottom lines and eating into their bottom lines. this morning bank of america downgraded dick's sporting goods to neutral, saying that the margin of outlook for the retailer is a concern as consumers normalized spending on categories that are performed during covid-19, things like outdoor apparel and bicycles. joining us ight now is matt shea, president and ceo of the national retail federation. matt, we are trying to come through everything we are hearing from these retailers to figure out, a, what the consumer looks like and how the economy is doing, and b, how big of a problem theft, shrinkage, whether that be from organized crime or from shoplifting, things along those lines, what we start with what you think the consumer is doing

right now? >> becky, good morning. i think that if we do the step back, and i know that last week and this week the focus has been on earnings of individual retailers, so we will go to each individual company. but at a macro level, consumers are still in a very good place and are still spending. certainly things have changed. yes, depending on what you use as your standard of measurement for how much excess savings exists, they are spending that down, but there is still plenty of firepower on the sidelines for consumers. are they spending at the same way they did 12, 18, 24 months ago? they are not but they are still saving and moving into their essential categories and are prioritizing things for their families and their homes that they know they have to buy. they are moving away from some discretionary categories and when they are in discretionary categories they are really looking for value. they are trying to find the

right opportunity for themselves and their household and family. they have this whole experience of the service economy that has been taking a larger share of wallet with each increasing month. we saw goods really spike during covid and now we are seeing some settling and reversion to the mean. >> it might be that consumers are spending but that is the definition of a weaker consumer than we have dealt with before, especially when it has to do with retailers themselves. if you are spending on essentials, that is a very different picture. i hear your point about covid. one thing we have been hearing about with a lot of these retailers recently is that theft, shrinkage, all this is a much bigger problem and is eating into their bottom lines. it is an issue that you have taken up with retailers. where does it stand taxi? it seems like some retailers have it worse than others. as joe pointed out yesterday, there is the suspicion that this is kind of the new weather, where you blame things

on theft and the shoplifting problem. it is a big problem, but maybe not responsible for everything we are hearing with retailers. >> so just to finish that last comment about the strength of the consumer, to your point there is some moderating, certainly, in consumer behavior, but we are tracking this year at 4% growth at a macro level. in any year before covid that would have been an outstanding year. we got used 27, eight, 15% growth in 2021-22. so we are going back to pretty good performance at a macro level but it is certainly not the same level it was the past couple of years. with organized retail crime, our study, we have talked about this before, the study we released a couple months ago. $100 billion estimated in shrinkage. i think joe is right and we ought to call this what it is. it is stealing. it is hard to track, no question about that. but the one thing that has been pretty consistent throughout the past two weeks, from all

the conversations and earnings calls you have listened in on, it has been mentioned that shrink, theft, shoplifting and organized retail crime have become a theme that i think is consistent across many brands and many segments. this is not just people pulling this out of thin air. they are seeing this in real time, and you and joe had a conversation about whether this was getting to be like the weather, something everyone deals with. i think that there is an element of truth and accuracy to that, but it is also like the weather that in a sense this is out of retailers' control. they cannot control the weather. some of this they can control. if there aren't enough policemen and women on the job and we work very closely with them they do an outstanding job, but in many places they are understaffed. if prosecutors are not going to prosecute these crimes, if state legislatures and municipalities in cities have reclassified many of these as misdemeanors and not felonies,

they de-prioritize this. the key is keeping communities safe, keeping workers, associates, team members and consumers safe. we don't see it. you are used to it in manhattan. we see it in washington, d.c. some markets around the country people are used to seeing goods locked up and not on the shelves and hard to access. in many markets that is not the case. so this is like whether, like a hurricane. in some cities this hits hard and it hits badly. in a low margin business like retail if you are using high single digits, low single digits in shrink and you are on a 2%, 3% margin, you will be unprofitable in that store. as many ceos have said over the past two years, that means that stores don't have items for customers and that stores have to close. that hurts jobs and economic development, so what is a real issue. >> you have been personally aggressive and outspoken about these issues around shrinkage or maybe more directly theft. you hear it in some of the

earnings calls and the like. but it is rare when we see ceos be super outspoken and direct about this issue. i am curious why you think that is. >> well, you have heard some ceos say this in the last few weeks and you have had some say this for the last few quarters. i don't know that anyone is backing away from saying this. i do think that there are some competitive issues here, certainly, so we are not seeing retailers publicly disclosing on a city by city, z.i.p. code by z.i.p. code, store by store basis with how they are informing individual markets. >> are they competing for shrinkage? what would be the competitive issue with not being direct about what you are seeing, where the problem is, what city is not doing the job that you think they should be doing in terms of enforcing the law? when i say people being outspoken, you mean half the industry is been quite

outspoken. maybe not about certain cities. i think that when you actually get down to it on a corporate level, the outspokenness and directness about, you know, which city is a problem, which municipality is not doing their job, which police departments are not doing what they are supposed to be doing, where the law needs to be changed and in which areas? that is where you don't see the directives. >> i will give you two examples. one is in new york. mayor adams and the work that he is doing with his task force, there are many retailers and ceos and senior executives involved in that. the partnership for you new york has been very involved. the other issue is in the state of california and some repeal of proposition 47. that was the proposition that passed in 2014 that reclassified many of these property crimes as misdemeanors below $850 threshold. that, i think, in many ways, set the tone, at least in that state and in many cities in that state for a different approach to policing and criminalizing some of this

behavior. again, police forces are doing the absolute best they can. we work very closely with them. they are fabulous partners and they do everything they can with the resources they have got. but if prosecutors are not going to make this a priority and state legislatures have said we are going to reclassify these as misdemeanors, which literally means, andrew, we have got retailers, and this will make your point for you, because people have not disclosed all this, we have got retailers who have on video organized retail crime gangs coming in with a shopping list and literally looking at their phones on their shopping list, picking up the items they need, making sure they don't go over the threshold, and walking out the door. >> i just don't know why frankly the society hasn't gotten more -- >> so as an industry trade group that does this, there are problems with a company like

amazon that is a retailer but is also selling stuff from other places that we know is selling fenced material at times. it is not just amazon, but it would be facebook marketplace and a lot of different places where the home depot ceo complained that you could go online and see stuff that is exclusive to our store for sale. we know what has been stolen. because there is an online marketplace where you can sell this stuff, it creates more demand and a bigger place for these thieves to be able to steal this stuff. would you go so far as to say that amazon and ebay and anybody else who is doing it at this point needs to be held liable and responsible? if you walked into a home depot or walmart store and found stolen material, you would shut the store down. >> yes, of course. marketplaces should be held accountable and should be required to validate the sellers and the authenticity. you heard jeff -- courtney had a conversation with jeff yesterday and he was talking about marketplaces. that was one of the reasons we

were so proud to see the inform act passed. it requires marketplaces to provide greater disclosure about the identity of the sellers that are selling goods, the source of those goods, so that if you sell more than 200 items per year or more than $5000 worth of goods in a year, you have to have a higher reporting level to ensure that those goods are authentic and verifiable and coming from a legitimate source. so absolutely. the other piece of this, andrew was talking about what goes on in the stores in local municipalities where the theft occurs, but of course the other half of it is the marketplace in which these goods become convertible to cash. they are not any good if you have nowhere to fence them. marketplaces in the current age became, you know, the public square for fencing stolen goods, and i think you saw the company that operates and you mentioned several but there are many, many others,

marketplaces, they made a commitment to step up and make sure this gets handled the right way. it is in their best interest as well. so that is the beginning. another piece of this is passing the combating organized crime retail act which is pending in congress now with bipartisan support. that will make sure that federal authorities, the department of homeland security, the fbi, treasury and others coordinate with local, state law enforcement, municipalities, to provide the resources they need. so what is a real problem that is finally getting attention. it is a local problem with national consequences but it is really hurting many local communities and it is obviously tragically harming individuals and customers and associates and employees and i think it is a problem that is going to get addressed as we go forward because there is so much more awareness about it today. >> matt, thank you and i hope it does get more attention. we appreciate your time today. >> thanks, becky. let's check on shares of peloton right now because that company's stock just lost $.68 during the quarter, $.38 worth

than what was expected. it came ahead just ahead of estimates. they said the cost of the recall substantially exceeded. they now say that they do not expect to remain cash flow positive in the next two quarters. we will dig more into these numbers when we come back, but up nearly 26% on the back of that this morning. time now for today's aflac trivia question. when nvidia went public in 1999, what was the price? the answer, when cnbc squawkbox continues. so 's talking about the money aflac pays to help close that gap? gaaaaaaaaaaaap!!! aflac!

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now the answer to today's aflac trivia question. nvidia went public in 1999 at what price? the answer, $12.00 per share. goldman sachs is urging employees to work from the office five days per week.

bloomberg reports that some senior managers have grown frustrated by the reluctance of staff in non-revenue-producing groups to return to full-time. in a statement, goldman's r chief said there is flexibility when needed, but the company is reminding employees of the existing policy to be in the office five days per week. in the meantime, amazon is continuing their push to get employees back into the office, this after a memo telling staffers in july to relocate to amazon hubs. some employees are choosing to quit instead. good morning! what's going on here? >> yeah, so amazon is urging some corporate employees who are either currently working remotely or out of a smaller office somewhere else in the u.s. to move back to, what they are calling the central hubs, mostly in seattle, virginia and new york city.

>> i think part of the question was, where they promised something else earlier in terms of being able to do this forever and therefore made other plans? i think a lot of people when they hear a story like this are saying to themselves, is this unfair or is it not unfair? >> so some of these employees, they moved away during the pandemic because they felt that, you know, amazon is growing its presence in more areas than just these major urban areas, so they felt like, you know, i can report into an office in denver or boston or chicago, while others are saying, you know, i was hired in a remote role and was under the expectation that i could be remote, and now amazon is saying, you know, we would like for you to be in a major hub. >> what is the confidence level

that these folks who are quitting have in getting another job? is this just a sign of how tight the labor market is? >> that is a great question. i think some of these employees that are quitting rather than moving are taking a risk, essentially, because employers in and outside of tech have been laying off employees for the past year, and like you said, you know, the labor market remains in flux, so many of them acknowledged to me, i am leaving my job with the understanding that might not be able to scoop up another position right away, but i think that they are saying, you know, i would rather not uproot my family and that sort of thing by moving to another hub, so they would rather quit, essentially. >> fair enough. annie, we appreciate it. good reporting, thank you. >> thank you so much! was the ipo price at 12?

we could maybe do that is the trivia question. but i don't think it was 12. what is the word now? i think the price is split at $.40. so if it comes at an ipo of 12, just say that it came at 12 and it is now at four dollars, it has not showed an increase since 1999. that's what i mean. so, whatever. now's the time to see what america's largest 5g network can do for your business.

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welcome back to squawkbox. mortgage rates shot higher in the last week and that taint mortgage demand from homebuyers to the lowest level in 28 years. the average rate for a full week last week hit 7.31% according to the mortgage bankers association. we know that it is already higher now, moving higher this week and pushing closer to 7%. higher rates were down 20% week to week and were 30% lower than the same rate a year ago.

back then, rates were closer to 5.5%. now applications are also going nowhere, off 35% from a year ago. very few folks can benefit from a re-fire right now given that the vast majority of buyers have rates below 12%. if you want to take cash out, you are likely doing a second loan like a home-equity line of credit. one more note. the share of applications rose to 7.6%, the highest in five months. a.r.m. loans offer lower rates and buyers are clearly doing whatever they can to keep that monthly rate down. becky? >> diana, thank you very much. one bright spot in the retail industry right now, retailers are expected to open 1000 new stores this year at a time when inventory is at an all-time low. the price per square foot is the highest in a decade at $23

per square foot according to cbre. joining us right now to talk about the health of real estate is don peebles. don, it has been a very long time since we have had the opportunity to talk. what are you seeing right now? you are somebody who has been in real estate for a long time, but what diana just mentioned, with the low demand for mortgages right now because of prices going up, and what you are seeing in real estate writ large, just lay it out for us. >> sure. on the topic of single-family homes, for example, or residential property, two things are driving it. one, interest rates are extremely high now compared to where most americans who have purchased or refinanced a home in the last decade have very low interest rates. in addition to that, covid and these rising interest rates have constrained new development. so you have a combination of

those factors severely restricting supply. that is the biggest thing that is driving the market. people need a place to live, but major markets around the u.s. have significant housing shortages. where we are also seeing a big change in market is where we are in terms of commercial office space. there was a sense of optimism last year, the year before, that as covid were often people get back to their lives, that people would come back to work. there has been a lot of resistance to that. technology has enabled us to do a lot more remotely. so if you look at the top 10 u.s. markets in the country, 52% of the office space is vacant and unoccupied. one in five buildings are vacant and unoccupied, so the question is what do you do with that space? these markets are reliant upon people coming into the market

each day to go to work and then consuming products and services from the businesses in these locations, like manhattan, for example. so there is a big shift now, a big focus on whether we can convert a lot of this empty office space into residential use and address these severe inventory shortages in the marketplace. >> there is a story in the wall street journal today that says the good news is firms are signing new deals. leases are up, but oftentimes they are for fewer floors and less space than there had been before, significantly less space, and these are leases for up to 15 years. you are locking in this idea that people are going to need less space. what does that mean for commercial real estate overall? is it going to need help? will it be other people who come in and take over existing properties on some of these situations? what happens and how does this play out? >> all office buildings are not treated equally or created equally, so new office buildings in markets like new york city, los angeles are

doing relatively well. it is the second and third generation buildings that are devastated. these buildings are going to have a tough time coming back, so there will be alternative uses. you are right, the tenants and law firms and financial services firms and businesses as a whole are reducing the amount of space they are occupying or that they are leasing. one hidden thing is the federal government, only about 25% of federal government workforce is actually going to work in their offices in the washington, d.c. metro area. the federal government leases over 50 million square feet in that marketplace. those leases, while they are long-term, they are subject to annual prorations. you will see that washington, d.c. has significant headspace on commercial office space. >> so that might be good news for taxpayers who will not be showing out as much money for

this? >> yes, absolutely there will be, because the federal government is paying millions of dollars for office space it doesn't occupy. so it will ultimately have to cancel some of these leases and that is going to create greater difficulty for the washington, d.c. market that relies on it. but i think there is a great opportunity here. big buildings get repositioned and i think that we can start addressing the workforce housing challenges in major markets of the country. >> don, let me ask you one more thing we have been talking about today with big banks and midsize banks facing additional regulations in terms of what they will be allowed to loan, how much capital they have to have on hand. some of the big banks are saying i can put them in a position where they are not going to be able to do as much commercial real estate leasing. how does that play out, and is that a big problem? >> that has been happening for a while. i think it was development space where we occupied most of our business. the banks have been low- leverage and they have been less competitive, so what has

happened is the private credit market has stepped up over the last two to three years before covid and now they are stepping up. we discussed a development deal about two weeks ago and it was with a private credit lender. so i think that will affect bank earnings and i think that these banks, because 80+ percent of the commercial real estate loans are held by local and regional banks, i think that there will be some significant pain, because kicking the can down the road is not going to solve these problems with office space. these apartment buildings are also at risk because these industry caps are going to burn off and slots will burn off in about a year and we will also see a lot of that, too. >> a lot of ground to cover, don, and we thank you for being here today. up next we talk about

nvidia and a.i. squawkbox will be right back.

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how should we think about nvidia? >> the largest is thai want and semiconductors. there are a lot of questions we have to ask, like what exactly is going on there. the wait time on the chips at this point i think is something like 40 weeks. you have companies complaining of these very, very long wait times to get these things and there is of course major geo political risk around taiwan. you just had china conduct war games around taiwan over the past few days ahead of the presidential election there. there are a lot of questions around these gpu chip shortages, which i think are sort of being very underdiscussed in the markets. so big questions there quite honestly. it obviously been an incredible story, incredible run-up. i stated on this program in february that i was very bullish nvidia.

i think they are the key player here but we have to ask the questions when the nasdaq is effectively carried by a company that is dependent on taiwan for their key component. >> is there any other company you see on the make in this space where you think realistically in, i don't know what you think it is, 12 months, 24 months, 36 months, longer that you think is going to give this company a run for its money. >> you know, it's early days. there are some companies in the private markets that have new approaches, oand there are different approaches. you're going to see more domestic production of these chips. all of that is going to take two to three years to ramp up and get to skill. in theinterim we are going to have a major shortage of these gpus which is going to cause to

a deflation of this a.i. bubble we've been in. >> you just referred to it as a bubble, the a.i. bubble. do you think this whole thing is a bubble, that it's all overstated? i was talking to a ceo last week who said we've been playing with open a.i. and new microsoft products and a bunch of things out there. day-to-day use case, still limited. >> yeah, i mean, i definitely think it's a bubble. two things can be true. there can be a tremendous tail wind ahead of us with an.i., which i do strongly believe and the value capture can be quite limited. if you liook historically, ther have been probably, andrew a million or so a.i. products that

have launched in these past few quarters and still today, august of 2023, the only a.i. products are oki, and others and i think we are at a stage where the hype is way ahead of the sort of revenue capture, revenue generation and i do continue to believe that the majority of the value here is going to be captured here by the big tech. you have the top tene enterpris and the top ten with $50 billion in cash. we're going to see lots of mandates with integrated a.i. for the every day investor, i think we're firmly in bubble

territory. >> you think in terms of investing, the bigger opportunities are the big sass companies, the big enterprises and if that's a case, are they undervalued today? >> arguably. arguably they might be. i do think this is the type of enabling technology that makes the big guys get bigger and that raises a whole host of regulatory questions down the line but you are seeing the companies moving quickly to leverage a.i. get a lot of productivity gains. given the capital intensive nature of this sort of space, given the need for these chips, how expensive these gpus are, the big guys with cash on the balance sheet are going to capture a lot of the balance sheet. no question that a.i. will capture how we work and live over ten to 20 years but the

sector is definitely jove heated today. >> is this the nature of capturing more value or defending value, which is to say are these big companies going to be demonstrably adding serious revenue and profits as a function of this or are they effectively going to be defending the tur of that they already own? >> well, it might be some combination of both. i think the specific thing that'sing if to happen is lots of jobs are going to go away. lots of jobs at these big companies are going to go away, a.i. more generally is going to destroy lots of jobs over the next few years and it's new job democr categories will be created and lot go away and that will make the companies less profitable overtime and have less people working there. >> jeff, appreciate speaking to you today.

we'll see where nvidia lands and i'm sure we'll be talking very, very soon. >> you might be right. your time might come for uba. >> now you're coming around to it. >> i'm not coming around to it. but i'm i don't know what the hell else we're going to do. if a certain am of people are so productive and you remember wally, big fat people just -- people in large bodies flying around the playing video games eating. >> on ozempic. >> coming up, why joe lavorgna says a recession is still on the way. and the travel demand is still on the way. and oscar munoz, his take on airline and how they're handling

it. "squawk box" will be right back. f your small business qualifies.

good morning. retail earnings light on the american consumer. we'll have results from kohl's,

f foot locker and more. and nvidia ahead of its second quarter live results. we'll talk about it. businesses struggling to get wokke wokkers back. "squawk box" begins right now. don't eat the yellow snow. welcome to "squawk box." i'm joe kernen long with becky quick and andrew ross sorkin.

>> we're thinking about do not alter your brain. >> the whole conversation about ozempic. the whole world ten years from now -- >> i hope not. >> we're up 150 earlier. we're up 50 points now. and treasury yields usually if you see some weakness in the free market, yields have risen but they haven't so much today. 4.34 on the 10-year we hit yesterday. just a note just to show you if you talk about a -- if you don't do the split adjusted ipo price, nvidia is up 38 times from 12. if you go to the splits, it's up

1,162 times. if you want to describe a new nvidia, it was at -- think of 1,162 times your investment. you're a millionaire. >> we have running confe conversations. >> google's ipo price is 80. >> that's why a company like berkshire hathaway trades above 100,000 because it never splits. it is another big morning for retail results. that's another story we've been talking about not just today, yesterday, last couple of weeks. telling us a lot about what's happening with the consumer right now. frank holland joins us live. what else should we be paying attention to? >> one of our big stories this

morning, footlocker, cutting four-year estimates. share now down more than 31%. this is likely due to the sneaker retailer extending its diff dividend. the ceo mary diller saying they're going to redesign and close hundreds of underperforming stores. shares down almost 32% now. moving on, we're going to continue with this retail theme. abercrombie and fitch, same-store sales for all the company brands, that increased by 13% but the abercrombie flagship stores saw a rise up

14%. kohl's up as well, up almost 2%, not as big as the other ones. a big earnings beat here, a profit, 136% higher than the estimates. the retailer reaffirmed guidance. same-store sales below expected. and peloton really plummeting. the shares are down 27%. peloton says subscriptions fell 29% quarter to quarter due to a sea sea seasonal slow down. shares down 27%. back to you. >> peloton also saying it's no longer going to include

pause-connected fitness subscriptions. if you start stripping out people who have paused their subscriptions who may not come back, that may change those numbers. >> pandemic darling, a lot of people working out at home during the pandemic. a lot of people want to be out to do anything, including their workout. >> those are words i'll never say. i do it but i hate it of time. i hate exercise. 151 on peloton. try to get back into the mentality of what we were thinking to be able to get this stock down. >> you can do that with all of the pandemic darling. >> it still doesn't explain it. we thought it was going to grow. >> are there any other trees that are growing to the moon right now? >> that's what i wonder about. apple did go through the roof. it's almost to the moon right

now. it's through the sky. nvidia is doing it, too, and it better perform tonight or we might have hell to pay. wall street has gotten more optimistic that the u.s. can dodge a recession but the fed and its plans remain. wild card investors were expecting a clear picture when jay powell talks out in jackson hole. we'll have complete coverage of the gathering tomorrow and friday. let's bring in joe lavorgna. i said earlier, you never get a recession when everyone is expecting one and you do get one when people aren't expecting one. so once we took it off the table, maybe that allows one to happen. you think that's true. >> yes, we could add it back. recession is set to be a nonlinear event. in the last deep recession,

'08/'09 people were thinking recession was going to come sometime in '07. but that was getting ready for it in '06. we were going through '08, the economy grew almost 2.5% in the second quarter of '08. had lehman not failed, that would have been a more mild recession, if a recession even occurred compared to 2001. these things can take a while. the problem i have right now is the yield curve is still very inverted. >> not as much, though. >> not as much but that's what typically happens when the recession comes is the scurve then starts -- has risen. all of the inertia and momentum is pointing to the down side. so, yes, recession to me is still going to come. when you look at the yield curve

and indicators, we are still in a position that it's plausible. >> there's also a lot of strong things. every time we get an economic number, whether it's retail sales on the first friday of the month or wage gain, any of those things, they're all terrific -- >> yes and now. four of the last six times, the initial gdp print right before the economy went to recession is over 3%. you look at previous inflationary figures. the best job number we had or one of the best we had was july '81, right before the economy turned down. what we're seeing in the labor market, claims are up. not a lot but they are up. payrolls are slowing, the revisions are downward. one or two months of soft reading can quickly change that

narrative. >> so it can happen gradually and then all at once. >> all at once. >> what are we going to see? what will you see? >> the unemployment rate troughed at 3.4 and every time going back, the unemployment rate has risen 50 basis points from its low. you've either been in recession or recession will be coming. >> what month will that be? >> i don't know. i wish i knew. i don't know. >> when is the labor rates? >> i don't know. >> next friday. >> is it next friday in. >> we'll get the adp next week? something to look forward it in. >> yeah, something to look forward to. the thing that i come back to is monetary policy, what's happening with real interest rates, yield curve, lending. all of these things are going to

work to break even. >> it's the week after that. but i don't think if we do it if it's september 1st. >> it can be accept 1st. >> they can release it on september 1st? >> they've done it before ? >> we should know if it's september 1st. >> just because it hasn't happened doesn't mean it won't happen and the conditions for it to happen are right for tr to occur. >> it is september 1st. that's nutty. >> jay powell buys flexibility. the funds rate is 5.5%, the market thinks they may mike again possibly, taken out a lot of easing, he can sit back, relax, adopt a flexibility or data approach.

>> are they going too far. >> hold on a second. the fed added 400 billion in liquidity with s & b. that was a paj from the covid and financial crisis play book. to their credit that dea lot to paper over some of these problems but as your other guest, peebles was saying later, there are a lot of issues below the surface and these rates when you can earn 5% plus in the treasury market, look at the equity risk premium. it's significantly negative. it didn't mean stocks can't continue to go up. eventually that cap and liquidity will move i think in the short end. >> and so does inflation stay too high and we get a recession recession? >> core cpi, you take up

shelter, up 2.6% over the past year and 3% over the few months. this notion that somehow inflation is going to stay here i think are wrong and if we have a recession, we have never had one where inflation didn't fall when you've had a recession. >> all right, joe. damn you're sure of yourself. >> why the rate going to definitely get weaker? >> in aggregate if you look at the amount of supply coming up for zpillow and others, will likely be negative. >> and one of wall street's biggest companies and the latest of people showing up in rs.peon you are watching "squawk box"

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welcome back to "squawk box." and goldman sachs requiring

works are to return to in-office. some workers balking. we've learned some amazon workers are quitting rather than to report to a hub location to be with the rest of their team. >> good morning, jason. we've all been figuring out where the future of work will be. were we all heading back to a five-day week or do you think this is a four-day week week? what's happening there? >> it's time to face reality, we're getting back to a five-day week because that's the reality. that's what we had before covid and companies are coming from the perspective of this.

if i pay you every two weeks to come into the office, you come into the office. and if you don't like it, take your ball and go where else because there are thousands of employees looking to get your position. >> what do you think about the amazon example, which is a real one, there are folks saying take this job and shove it, i want to do it from home or a couple days a week from home and welcome to the world of technology that might work. >> here's what i say to them, go. if you want to take your ball and run with it, go. the days of covid where we were able to work remotely are gone. and companies are in a much different position today than they were two years ago. two years ago they were begging employees, they were offering greater incentives and greater pay because they were having a hard time just hiring employees. now there are so many potential employees in the market that employers feel more comfortable in telling people it time to

come back to work and they understand because i hear this from executives all the time, we understand they put these mandates into place, we're going to lose some people. there are so many talented people in the market that if we lose those folks and we replace them with less than people leaving out the door are commanding. >> two years ago there was an argument that if you wanted to cop capture talent and get diverse talent and find people in cities -- not in new york city and other places where maybe the cost of living was lower that this was going to help the country because the big cities weren't necessarily going to be the winners, people were going to be spread all over. do you think all that is a fallacy? >> i don't think it's a fallacy. i think it's thinking that it possibly the way the workforce is going to go within the next five to ten years. i think there's a lot of merit in it but the rally is this,

that people just need to work. we were talking about looking at diverse talent and looking at world talent or places outside the big cities, it more from the perspective of employers were having such a hard time getting people in the door. now that there's so much valuable talent, that line of thinking is more futuristic than it is present. the reality is that people are looking for work, employers are looking it hire people. >> why is there so much available talent? i'm looking at the employment numbers and they don't look particularly worse than they were, frankly, two years ago. you look at the uaw contract on ups workers who are going to be there five years and if you're five years in, you're going to be paid $170,000 a year. when people say they don't think we're in a tight labor market, independent not suhr what they're talking about. >> i think it comes back to the perspective that we're looking at employers that pay people more than $50,000 to $100,000

than they wanted to the first place. and those people have been laid off. even though the market is not locking how it looked in the pandemic error, we still have available talent because employers have decided they can actually get the work from five people in two people. so there are people out there, they're just looking for work. >> let me ask you a management question, jason. some people would argue that going to an office or being in one physical place i don't want to say is archaic but does not recognize any new technology that has come up in the last 50 years, right? it's a very old school this evening. we'd all go to an office because that's where it was the only way you could really communicate. in the past several years, we learned how to communicate and

do other things in different ways. you're not arguing for hybrid work. you're arguing for five days in the office work. >> i think the greatest lesson that we immediate to embody is the fact that we are still old school. i don't care what the technology looks like, i don't care how remote people can be in terms of doing the work. we're old school from the perspective that in order to build a culture, you need to be face to face. your manager needs to get to know you, you need to get to know your managers and your co-workers. we can only do that to an extent virtually. i think the key to work today and i'm not talking what it going to look like 10 to 15 years now, the key to work today is getting employees back in the office. >> you keep saying that today is somehow different from ten years from now. ten years from now you're going to be an advocate for hybrid work and today you're not? this is the part i'm less clear about. >> it a great's a great message.

here's what i continue to hear from people over and offever ag, especially from leaders. remote work works to an extent but we need to get people back in the office. there are so many broken relationships in terms of employees not feeling very you'd by their company and employees feeling that employees don't feel valued with them. >> i don't disagree with you but what i'm trying to understand is you're advocating -- i would argue to you that that can happen in the context of hybrid work, meaning people who are in for three or four days a week, they get to know their colleagues and i know a lot of people who say they become more productive because they take that fifth day and find themselves doing whatever the writing piece is or puitting th presentation together and they're doing that at home and

both think it's more productive but then other managers say, no, no, no, i want to be able to see where people are sitting and that's the better way. it seems you're in the latter camp. >> i'm in the latter camp because i think it works. in hybrid industries, to doesn't work as well. it was the summer where employees could demand and dictate where they were going to work. i think what we're seeing today is that the power is more from the perspective of the companies than it was even two years ago and when you see a company like goldman saying we want people to come into the office five days a week, they're saying that because they feel like that's what works. i've seen it in my consulting work that that works better, but if you happen to work in an industry where you can do hybrid work, make it work for you. i just happen to be an advocate that working in the office five

days a week is what is good for business. >> you at the office right now, jason? >> no, unfortunately i'm in a hotel room but i'll be in the office in about an hour. >> nice to see you, jason. >> he wanted to catch you at home, jason. he wanted to bust him at his house. >> i'm just saying people think they can't work from a hotel. >> this has nothing to do with your own situation. >> no. >> okay. >> but i know people. >> i know that. you think you'd be more productive in a nice house somewhere. >> away from you, right? >> the hybrid nature of work where you can be with them and see them is very valuable. but if you're a coder or programmer or writer or something like that, often times i know a lot of people, including myself who find that part of the work process can be more productive if you can be

away. but this goes to the other issue, which is in a world where we all move to an open floor plan, this is prepandemic, there are less people that would say it's not as productive.

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coming up, did airlines respond to surging demaemand wi too many extra seats?

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all in all it's been a pretty rough summer for airlines and investors. things might be about to get worse. hey, phil. >> joe, we're talking about the fall travel season, which is typically the slowest time of the year or one of the slowest times of the year for the airlines, talking about between labor day and thanksgiving, a period where in the past they would rely on corporate travel but that hasn't come back to the degree that it was before the pandemic. nonetheless, look at the capacity that the airlines continue to add. this has some analyst as little bit worried. domestically, we're up almost 5% the number of seats september through november compared to 2019, up another point and a half percentage-wise for international flights. if you're looking at where the seats are being added, among the largest airlines, it's generally about the same as 2019 for

american, delta and united but it's spirit, frontier, that's the biggest percentage-wise increased capacity for the fall season. look at this chart. it's taken a long time to get here, guys. you especially, joe, pay attention to this. we're seeing more people screened by the tsa on a daily basis since the pandemic. it may be that 2019 was greater but right now we're on pace to see more people flying than in 2019. look at american, delta, united and southwest. s arca airline index has fallen below its 50-day moving average, down eight, nine days in a row. this is a rough time for the airline investors. you have to look through this period into next fall and then into next year.

guys, when you're looking at the fall, there are a lot of people who believe they've added too much capacity and they need to get some discipline here. >> i mean, think how difficult it is to balance that, though, and adding seats, you don't just -- you move a table in a restaurant, you know, just add a table. hey, move that over a little bit, we'll squeeze it. i just don't envy any manager in that business, and i don't know if i'd cast aspersions on them for messing it up a little. and planes pretty darn full, phil? >> they are. you know how this switches very quickly. we're starting to see some of the airfares come down relative to where they were in the spring and early last year. that's an indication there's maybe too much capacity in the system. that's the concern of analyst. once you get too many capacity, well, it's going to take time to

soak it up and this could be a third quarter where investors come back and say, wait a second, where are the good times? >> but someday people are going to say i did what i'm going to do and with inflation i'm going to save it and maybe not do -- i'm no longer jonesing from the pandemic and i've done it and, you're right, it can turn on a dime, phil. all right, thank you. >> joining us for more on this and other recent airline stories like pay negotiations, cnbc contributor joining us, oscar, if you were an airline ceo, would you be adding capacity at this point? >> good times are coming. i'm telling you, everywhere you go. so the combination of still pent-up demand for leisure travel, this hybrid work aspect

is still having people travel for business/leisure. i don't remember what they're calling it now. and honestly the return-to-work mode, everywhere i go, people are going back to this four-day thing so business travel is coming up and the demand is off the charts. really because any limiting thing domestically, it is the supply and i just heard phil talk about the ultra low cost, like 80% came from the bigs and so there's a little bit of divergence. investors, we try hard and when we get margins and peak revenues, they don't think those can last. so i think the form and the

function for the rest of the year is simple. those that deliver on their promises, the stocks, you know, the stocks are on sale right now to some degree. so i would note the divergence between the bigs and the low-cost carrier differential. that is a big difference right now. demand continues to be robust. >> you think there's still enough demand there that you would add capacity in. >> i'll tell you, if i'm a big, yes. there's a huge demand for it. if i'm mostly a domestic carrier, i think that has become a little comoditized, where t

they're trying to feed the bear with more supply, that product is going to be under pressure and i would worry about that. from the large network carriers, the more people you can carry to your portals to go international, that is big business for them. again, it's the tale of two worlds. >> and profitability, as you've mentioned, 80% of the profits have come from the big carriers but the big carriers have some bigger costs headed their way, too. we just saw american airlines renegotiate with its pilots. i think they're getting a 21% raise immediately, 47% through 2027. they've sthad thiaid that this to eat into their profitability and delta and others are lining up looking for the same sort of deal. is it tough to make a profit given those increases or are the increases what you'd be giving

out to because you need the keep the pilots there? >> i think last time i was on with you there was concern about people going on strike and i very blatantly said it's not going to happen. there's a kabooki dance when you do the negotiations but the money on the table and the value created for pilots is a good one. it's an endless cycle in our business. it's another thing that worries investors. but, you know, you can't fly a plane without pilots. they're very talented individuals and they keep us very safe of course. the costs will increase, the product offerings, the premium, the international, all of that becomes part of the strategy to generate enough revenue to offset those growing costs and to keep everyone flying self. >> you mentioned safety being that huge issue. the "new york times" has said that there's something like

several close calls every week lately, if you've been watching this summer. is that more than you're used to? is that more than we realize had been going on and what's causing it in. >> you know, i don't know those facts of whether it's happened all the time. i think close call, the definition, is one that you can make a bit more of those issues. and this is so important for all the listeners. i mean, the airline industry is incredibly safe today. the issues that you're seeing there and you were pointing out in that article was faa staffing and training and to a degree a point i've made repeatedly on your show about monetizing air traffic control systems, which again improve the safety of this. so there's an faa reauthorization book coming up and i think it's important that the faa get those folks and hire those folks.

be we have so many new people. the people that control the air and monitor knows issues say it's an important part. yes, it's an issue. is it a bigger issue than before. i don't necessarily have an opinion on that. but the cause of it and solution of it is in our government eaves hands. >> i assumed when you were running united you would get reports, i would hope, directly of these close calls. would you get these close call reports? >> absolutely. >> how frequently did they come? was this something happening every day, every other day from your pilots with these notes attached to them that, you know, i read that article. some of those notes were pretty scary notes. >> you know, i have to say in my time i can't remember probably two or three over the course of that time where i was advised of something that happened and so

we have -- there may have been systems out there that i wasn't aware of but it wasn't anywhere it reached our level of things. again, it is a growing issue primarily because of the staffing levels and the training of the faa. the industry is safe. it's always been safe. so i would not take that for granted, but at the same time, again, as the article point out, it does happen and to the degree that it happens, the severity to your question, i know that i personally didn't get -- i don't remember a lot of these and of course i would remember this, right? that's something to be taken incredibly seriously. >> hey, oscar, thank you for joining us today. we appreciate your time. >> thanks, everybody. talk to you soon. >> coming up, hedge fund manager kyle bass will join us with a conversation on china and the ever-present danger in thaiwan.

u.s. commerce department says they will visit china next week and look for areas of cooperation and also the challenges faced by u.s. businesses. semiconductors is a big point of contention. bloomberg reported that wah-way

is setting up. we'll start with the journal piece earlier this week that it says that the china model that for 40 years raised gdp by 25 times, that it's now broken and that we aren't going to get 6%, that is a pipe dream and that they'll be lucky to get 3% from here on out. do you think that xi's backtracking on a lot of private sector initiatives? did that cause this or was it in a response because he knew this was coming? >> good to be here, joe. i think china is moving towards more of a party-based system, which is typical of communist parties if you follow the history of communist parties. they're allocating resources to state-owned enterprises, moving away from a market-based approach and moving to a

party-based approach than they have been in the past. they've severed all corporate and mackerel level data to the west. if what you're trying to do is grow an economic relationship with the west, you don't do the things that xi jinping is doing. that's why it's so worrisome. >> he still needs 800 million people brought out of poverty, but the gdp per person is still under $13,000. why would he think that he can get to where he wants to go not doing it economically? what does he want? he wants to do it militarily? >> again, it's hard for us to think about what xi really wants. the financial markets are means to his end. hose very much a madman luike putin is. he want to reacquire the chinese separatists and the new

counterespionage law and he's raiding companies like bain capital and the mints group it's making the working environment for westerners in china impossible. i think that's what remondo will talk about. things just continue to deteriorate and this decoupling is more xi's doing than it is the west's doing. xi's been his own enemy. >> i've seen maybe thai want by 2050 gets reacquired. you have a shorter time frame. you actually said maybe next year? >> yeah. if you really listen to xi jinping's speeches, forget about reading the press, read what he says. quite literally from 2017, his told you that his life's mission

is their reunification of china of taiwan and his life would have been an abject failure if he doesn't achieve that mission. whether it answer '23, '24, '25 or '27, it's not 2050. xi is 50 years old. it reminds me of the halifaxes and chambers going into world war ii. hit already had taken holland and belgium and i'm sure the china apologists and think tanks that received money from corporate interests that do business in china will be saying that up until the very end. i think it's important to take a very objective view of what he's saying and then look at what he's doing on shore. and i think the writing is on the great wall. it's all there. >> the slower growth that we're now anticipating and i don't

know whether it's going to be internal problems in china, we've been thinking that was going to happen for decades and they keep a pretty tight leash on the citizenry, so what happens if 3% is the best the country can best the country do and the efforts to get gdp, i mean, i think japan's 45,000 per person. so, they're at 12,000. what if that stops? what does it mean for the west and for us, and what does it mean internally for china? >> it's tough to look at things with such broad measures. when you look at the architecture of the chinese population, you note that there's still almost a billion chinese living in rural areas, living a much different life than those living in the urban areas. and so, of the 1.35 billion people or however many people are there now, you've got a little less than a billion that are rural, and you've got close to 400 million that have been

really brought out of poverty and live in the urban areas. so, looking at a broad number like a gdp per capita is a little misleading, in my opinion. it's very barbell over there. i think that this quote -- the chinese economic miracle, we're on a financial channel. we're here to talk about whether you should be buying chinese stocks or not. joe, you mentioned that their gdp has grown exponentially in 40 years. in the last 15 years, china's gdp has grown 505%, and if you invested your money in their primary index, 15 years ago, you're down 31% in 15 years in an economy that's grown its gdp 500%. the u.s. has grown our economy, in the same 15-year period, 70%, and our market is up 315%, including dividends and the s&p, and we have the rule of law. we have trust. we have corporate, let's say,

oversight. we have regulatory oversight. china is the wild west, and guess where the money's going? all the profits are going to management and the party. it's not going to westerners. at some point in time, the westerners are going to realize that investing in china is just a terrible idea. >> all right, kyle. the china conversation. we could have you on every day to talk about it, but thank you. >> pleasure. >> rangers got it going, don't they? quite an offense. >> yeah. yes. >> all right. see you later. when we come back, we're going to take a closer look at this morning's retail earnings and tell you what you need to know ahead of the opening bell on wall street. stay tuned. you're watching "squawk box" on cnbc and the futures continue to get widdled away.

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welcome back to "squawk box." a little more than half an hour away to the opening bell on wall street. we're tracking retail earnings this morning from the likes of foot locker, kohl's, and others. joining us for her take on the markets, chairman, ceo, and cofounder of asset management. she's also a cnbc contributor. we do have foot locker, which

you can see there is off in a very, very big way this morning, 31% off. peloton, by the way, off about 30% as well this morning. we'll be hearing from nvidia later and of course, later this week, we hear from the fed. mix all that together, carrie. what are you thinking? >> hi, andrew. obviously, we're not seeing great strength from the consumer with these reports, and we have up until a few days ago been thinking that the consumer was reasonably strong, although target had had a tougher time earlier in the year. things started to look better. the gdp number seems to be strong. there's a lot of mixed signals here, and it feels as if we're in this post-covid world that the market has to grapple with, and we could have years where some indicators show a lot of strength, and other indicators show weakness. we hear that there's a variant, people start to worry about maybe they planned a trip, instead of going to buy sporting goods or leisure clothes.

so, i can't say that we read a whole lot into these numbers, because by and large, earnings for the quarter were decent, and the market follows earnings, and if we start to see good numbers from nvidia and can have salesforce with good numbers, there could be another resumption of -- >> what's your expectation? is your expectation that we continue this way, or your expectation is that things temper? >> well, i think that we've been trading back and forth. we're 8% below the all-time high. the market fell off 5% from its recent high. it's trying to struggle back a little bit. and it's bouncing around. we're going to wait and hear what powell says. he's probably not going to say much. what nvidia says. we're in a real -- i say it's a digestion period after we were up 20% from the s&p for the year at one point, and now, we're really just settling into where actually we might see the rest of the year.

but we're not expecting any major decline. there seem to be buyers that come into the market whenever we're -- we have a -- >> are you expecting that things are better by the end of the year, flat, down? i mean, if -- by the way, if it's flat or down, you might as well say, i'm going to take the rest of the year off? >> thank you. i'll mention that around here. it feels to us that we could have a few months where there's choppiness and perhaps at the end of the year picks up again, particularly if inflation continues to moderate. the inflation numbers on the rent side were looking better. on the labor side, we're starting to see some changes where wages are not strengthening. they're starting to fall in some cases, and there are more people who are able to find jobs. so, there's a cost pressure that companies will feel relief about. and earnings will benefit from that. >> what do you expect to hear from jay powell? >> i would say, nothing special. i think he's going to say we're watching the numbers, we're data

driven, we've come a long way, we're not at 2% yet. he's going to give us more of that sort of fed speak where people parse every single word, but he's not going to say we're raising rates right now or we're not going to lower rates right now. we've made a lot of progress is what we expect to hear and we're not quite there yet. >> okay. >> you're very diplomatic. >> carrie firestone, are you a peloton user? >> you bet. >> would you own the stock? >> oh, man, anybody who's owned the stock is really going to -- made a mistake for years now. i like the bike. i can tell you all my favorite instructors but i wouldn't be buying the stock here. >> carrie firestone, thank you. appreciate it. let's take a final check on the markets as we get ready to hand things off to "squawk on the street." the futures this morning, still in the green, but just barely. we started the morning up significantly higher. i think the dow was up by about 150.

s&p futures were up. right now, the s&p is up by about four. dow futures up by ten, nasdaq up by 26. we're going to be watching earnings after the bell, especially nvidia, after the close today to get determination on all of this. yields this morning have not been stronger than what we've seen the last several sessions. ten-year's at 4.28%. folks, that does it for us today. we'll be back here tomorrow. we'll see you then. right now, it's time for "squawk on the street." good wednesday 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. futures steady but we got a bunch of movers, especially in consumer, as foot locker and peloton get crushed on results. meantime, in europe, dollar getting a bounce. our road map begins with a retail reckoning. foot locker is the latest to