release of the anticipated "dune" sequel because of the hollywood strikes. it is friday, august 25th, 2023 and "squawk box" begins right now. good morning. welcome to "squawk box" here on cnbc. i'm andrew ross sorkin along with joe kernen. just the boys this morning. becky is off. joe, we have a lot to do today. >> we do. the boys include liesman who is out there with his finger on the pulse. yesterday, i don't know what that was, andrew. you know, another day that looked like it would start out okay especially for the nasdaq. everything ended sharply lower. this rebound today, as you

mention right now, kind of anemic. it's cut to 60 points now. this is your thing. i'll take over when you get done. >> we will see what mr. liesman has to say about what mr. powell has to say. joe said relatively anemic. dow up 63. nasdaq off 3 points. s&p 500 is up 5 points. this comes after yesterday's nvidia rally that fizzled and the major averages closed lower. dow down 374 points or over 1%. the s&p fell by 1.3%. the nasdaq fell by 1.9%. nvidia reached a new high early in the session and gave back the gains to close higher by .10%. chip stocks like amd and intel declining during the session. we can show you those right now

as analysts saying they were falling further now behind nvidia. nvidia, joe, we have gone back and forth in the a.i. chip market battle. amazon and netflix did pull back. we also talked about boeing. boeing was a drag on the dow as well given what is going on with the 737. disney was down 3.9%. take a look at treasury yields. the conversation where mr. liesman is at jackson hole. we're at 5.043 for the 2-year treasury, joe. >> so much that you said that i wanted to look into as a comcast employee. i have always got it for disney. i do. i believe that is a multiyear

low, andrew. market cap down to $150. we saw when streaming and disney plus would take over the world and that stock was over 200. maybe not all the way up there. i think it was above 200. 190. it got there. >> pretty close. >> this is a new low. it is not netflix. there is a reason to talk about nvidia. words don't start with n. it's not a real word. it's n and v. n cannot proceed a v. they are allowed to do whatever they want. the other thing i would mention is the yield curve. i'm worried again.

you see the 2-year? >> we mentioned it. up over 5%. >> above 5%. the other one came down from where it was at 4.30%. now that is widening again. we will talk to liesman. i have questions about the average time between the beginning of tightening cycle and the recession. i think we have gone beyond the average time. >> okay. we have. >> is this time different because of all of the money we had from the pandemic that people were able to last longer? therefore, it didn't come and now we are saying it is not coming or is it pushed back a quarter or two? i think we're going to liesman right now. >> this is our moment. >> we are counting down to the speech at jackson hole scheduled for 10:05 a.m. steve liesman is there with the

preview. you have an idea? i'm tossing to you. you know what i mean, steve. does it take longer this time or is it definitely not going to happen? the recession? >> we e're still not out of the woods, joe with the inversion of the yield curve and recession or the beginning of the steepening and the downturn. there is still time for the yield curve inversion to be right, but it is getting late, i guess is what people have givew of the speech today. there is a 5-point decline in the inflation since the fed last gathers in the mountains. jay powell will not deliver a victory speech in jackson hole. powell may acknowledge the progress we had and talk about the possibility of a soft landing for the economy. he is holding on to the raising

rates or high level until the convincing evidence inflation is headed to the 2% target. i think this is an interesting comment from ian. we see no reason p to think powell is ready to give up on the inflation given the past couple years. the markets have embraced this. i want to show you the september probability of a hike at 20%. november is now at 50%. it is the option that the market is actually directly pricing in here. the other change we have here is markets backed off the expectation for cuts in 2024. they took it 65 basis points of rate cuts since mid-july. now it is useful to know here the frame of the debate of the fed. hawks on one side want to hike again. d doves don't want to cut, but they don't want to hike.

patrick harker is someone we spoke with yesterday. >> i'm in the camp of let the restrictive stance work for a while. let it play out for a while and that should bring inflation down. >> that's your dove right there. the guy who doesn't want to hike. powell could acknowledge the risks to the economy from tightening bank credit and the surge in rates. the tone at best for markets is going to be balanced, not dovish. the inflation victory dance, guys, if there is one, will have to wait until next year, joe. >> there is something about that back drop that i saw that you have is magnificent. powell makes a lot of speeches. every time the fed makes a move, he fields questions. i'm not sure -- does this have more, i don't know, weight than the average powell speech?

>> joe, that is a good question. i know one of the things at the fed board where they don't want to make jackson hole into more than it is. first of all, stuff has happened in august randomly that needed to be addressed. the other aspect of the importance of jackson hole is that for a couple months now, there has not been pa lot of fe speeches here. july and august are more quiet months for the fed. meanwhile, stuff in this august has happened with the big move in rates and we had the big range in the outlook for gdp in the third quarter. there is stuff on the table we need to hear from. the other thing is world central bankers are here and gathered and gathering to listen to jay powell. i think he probably feels as any fed chair needs to step up and spend time and reflect on what has happened in the last year.

what wi don't think, joe, jacksn hole is a deadline for the fed to decide what to do. one of the things i heard last night is we don't have to decide now. we have more data. probably give september a pass and come back in november and figure things out with inflation going our way and coming down and is the economy solid or is there any weakening in the quarter? maybe this is a moment to suggest the fed is on track to keep interest rates high because it doesn't feel flinflation i vanquished. >> steve, do the markets take that as a negative or a positive? >> let me ask you this question. if cnbc had an interview with

fed official and that fed official said we will wait and see -- would you expect the stock market to drop 200 points on the wait and see attitude? that is me saying i don't know where the market is and how it will react. i would not -- >> that is better than the u uncertainty of them raising. >> i think they will hold out and hold rates relatively high until they are convinced inflation is coming down. i don't think they are giving up the ghost on the 2% inflation target. they may spend more time getting there, but i don't think they will ever say until they hit it. one of these days, they may rethink the 2% target. >> it would all be better if we didn't have to link inflation with economic growth because i can still see how if we decided

the fed was done because the economy was definitely slowing and the job market was getting bad and people weren't buying houses -- if we got to the point and the market went up, that is a perverse thing anyway. eventually poor economic growth is bearish, eventually, isn't it? >> eventually. joe, with comments like that, my work is done here. you are now -- i'm the most sophisticated edge on the conversation here which is the point of innfinity and trying t understand what is happening which is we should not have falling inflation with strong economic growth. the philips growth with the tradeoff has been zero. it has literally been zero.

if you look at the chart then and now, inflation is down five percentage points. no change in the unemployment rate. you have the sacrifice rate which is what you give up to get inflation down which has been zero. really inside of that room there they don't get that. they are not quite sure how to proceed in the world of zero sacrifice ratio. you should have had a 4% or 4.5% handle on unemployment. it is not there. >> we can't fake success? we don't like it. >> shut up and take a compliment. >> august hasn't been great, but maybe the market had the great rally leading up to august because it sniffed out that scenario. >> maybe it will happen. i will tell you where the uncertainty is, joe. the 3% to 2% uncertainty. are we now approaching a place

where there is going to be a sacrifice ratio of bringing down that last percentage point of inflation? is there political tolerance for that? will you tank the economy for a percentage point of inflation? >> right. what is now election season because we had the first debate here. >> excellent point. >> thank you, steve. you are not alone, are you? >> i have an unbelievably great crew here, joe. >> i was thinking, look at that. you could -- >> takes a village. >> all right. >> takes a village. >> it's black now. it gets better. by the way, we were running video over you, steve. >> nordstrom. >> that was about nordstrom. ceo addressing the viral smash-and-grab at one of the company stores in los angeles.

we will show you and what was said at the conference. we are showing you video. we'll do that after the break. later, shares of amc are sliding after yesterday's close. preferred "ape" shares converted to common shares. we will dig into that story at 6:40. you don't want to miss it. you are watching "squawk box" and this is cnbc. >> announcer: this cnbc program is sponsored by truist securities. experience, expertise, execution.

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well come back to "squawk box." we are watching shares of nordstrom. it beat estimate of 34 cents. beating estimates of 3.7 billion for the year. despite the beat, nordstrom stuck with the full year outlook with caution. on the call, the ceo was asked about smash-and-grab theft. this is the topic in retail land at one of the stores in los angeles. a mob of 20 thieves swarming the store and grabbing armfuls of merchandise. valued at $60,000 to $100,000. the ceo said it is disturbing to all of us and losses from theft are at historical highs. theft is factored into the

company guidance and not higher than expected. i don't know what you make of that, joe. >> i think that success breeds success with this. there is probably planning going on to do this again of the if it can be done, i'm not sure what the answer is. >> it sounds like they are building it into the model. >> for society, i think we heard about it the other night in the debate. it will be a political talking point about law and order and blue cities and prosecutors and soros. you know, take your pick. you will hear about it. broken window that we're not addressing. no bail. letting people out. not enforcing laws. you know, it will become more

than something in the company income statement. don't you think it will continue? i think so. >> i don't think it is getting better. i don't see how it is getting better unless the laws are change or more aggressive enforcement. i don't know how do you it. >> how many people were there if you are splitting $100,000 for an afternoon of work, you would stake out another place, wouldn't you? >> i wouldn't, but others might. i hear you. >> yeah. yeah. maybe. not giving anyone any ideas. how things work. >> right. >> if there is no -- >> let's show shares of ulta beauty. they are slightly higher. they don't have the same type of problems. earnings of $6.02 per share beating estimates. revenue was higher than

expected. comp sales up 8%. company raising outlook and the ceo said the inventory shrink has been a headwind since may. fragrances have now been behind locked glass. the capital cost of doing that and changing the customer experience of being in the store. i find it at duane reade and you can't buy toothpaste. it is behind the glass half the time. it is crazy. >> you can't buy raizor blades. >> sometimes the branded version is behind the glass and the store version is not. >> it is a sorry state of affairs, i think, at this point.

cynics have made the point that you can get a decent pipe to smoke whatever it is ois. you can get that free from the vending machine. we have more coming up, joe. we will talk what you were mentioning. disney shares hitting the lowest level in more than three years. we will dig in the company challenges straight ahead and the new report about espn maybe in talks with amazon. we will talk about retail theft. the president of the partnership for new york city will join us in t nt heexhour kathryn wylde. all that and more as "squawk box" rolls on. >> announcer: this cnbc program sponsored by ibm. ibm. let's create.

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welcome back. disney stock closing at the

lowest level in more than three years yesterday. $82.83. joining us with more on the company is barton crockett. the senior analyst here. i want to talk to you about the report and the information you saw about the prospect that disney is talking to amazon about a partnership around espn and what it could mean. where should we start? you want to start with the stock? a lot of people who own the stock are thinking is this going lower or is this going to turn? >> i think one thing or the other is going to happen with disney stock. they will find some solid footing under the business to support the stock or the pressure will build on the company to restructure and break up. i think the latter scenario, you

have an opportunity for value to be created from the levels and i don't think the management team wants that. i think they believe they can turn the business around so it doesn't get to that point. they had activists before in disney and they could return if things don't shape up. >> what do you think they need to do first? you heard bob iger talk openly about some partnership with espn and we can talk about what that looks like and if that is something you do with amazon or spinoff the lineal chanchannels. there is the hulu deal which will cost them catch to buyout the stake that comcast, parent company of this network, owns. how do you see that playing out and what would you do first? >> i think the team at disney wants to turn around the consolidated ship. i think that is difficult with all of the pressures on pay tv

and secular pressures which they acknowledged. in my mind, you know, the right structure is a breakup. the right structure, in my mind, is theme park and anchored equity. tv networks moved off into the structure where perhaps private equity with the traffic and challenge assets at low multiples would be interested and content library that is valuable and could be a great use to any number of tech platforms which i see as the gr gravitational center. popular sports and others will move to the platforms. >> let's stipulate one idea because it is an interesting one to try to understand what it means. you believe the theme parks

should be separated from the contest. a lot of folks thought it would be different. you can license content to the parks, but obviously, having mickey mouse is a central component. having that ip is a central component of the park business. >> correct. i'm not saying you lose mickey and disney at all. i think it is not complicated to set up the licensing deals inperpituity in separation. the tv assets declining from the rest of it and they knowledge the businesses are not core. then, the second is what happens with the content library? i do think that they do not want to lose that. i think they will lose the right to keep that if the business doesn't turn around and they don't take the necessary steps. i think over time content of the

quality and caliber and the pressure will build to marry the tech platforms. does that move to full separation? potentially. i think that process from here creates value for disney shareholders. >> barton, do you ascribe any of the stock market action in disney and new lows for lack of a better term, woke, broke business model? they have myriad problems at disney. you don't need to look for more problems to figure out what's going on at disney. we had a really low down in orlando attendances on a certain period in the summer. iger said it was hot. it was the same temperature last year and the year before that. florida wasn't overly hot. you look at target. no doubt, there's something

there. with bud light, there was something there. if desantis has taken some hits from people that are mad at what he did to disney, shouldn't some of the people that agree with desantis be part of the problem here or you say it has nothing to do with it? >> i'll not say there has been no political impact. i do believe our teweather technicals say weather is a headwind. you know, it's too bad that they have gotten themselves into that. >> it is not just with desantis. you know, snow white. seven magical creatures. i don't know. some other movies that were not well received because they were thought of as being -- comcast has been doing well. you look at walmart versus target.

it goes like this. a clear difference. i don't know. >> it's crazy because you are right. there are many companies that are in the political debate and disney ended up in it. you know, it comes from the top and that would have been iger and chapek and they haven't been able to navigate around it. here we are. this is the world in which we live in and we have to move with this. >> barton, we will run out of time. i want to ask about the espn of it all. the report that espn talking to amazon. we thought they were talking to some of the big leagues as well. what do you think of the partnership with them and what does it mean for the speculation about the potential big deal one day with apple? >> i think they are going through the process of floating. we are reading about verizon and now amazon. these are the people you expect

to discuss the process. the deal as outlined in the information is interesting. i don't think that is make or break for the stock. i think that price point for espn, you know -- >> that price point is $20 to $35 a month. do you think the averages opinion viewer will pay that? >> i don't think you will get the average viewer. you will get some viewers. i don't know it is enough to change the circumstance. you know, we'll see. i'm not sure that is the end story here. >> okay. barton, they're playing us out. have a good weekend. >> you, too. >> joe. thanks, . coming up, the countdown to the jackson hole fed jay powell's speech. we will talk to author judy shelton next over what she will hear from powell next at 10:00

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welcome back to "squawk box" here on cnbc. take a look at the futures right now as we get ready for the open. dow would open higher after the day yesterday, joe. dow opened up 105 points. nasdaq opening 22 points higher. the s&p 500 up 12 appoipoints.

this may be dependent on what we hear from jay powell. >> no doubt. it wasn't just yesterday, but every day with green in the morning. i don't know, as reality sets in through the session, it is made for a tough august. we are getting close to the end. i think we have a jobs report to talk about next week. in the latest "wall street journal" judy shelton dives into how she sees inflation fueling government growth. she is the senior fellow at the insur institute. your article, judy, sums up a lot of things that are i mplici or obvious. when you explain it, you really can connect dots. we just had liesman on. he talked about the sacrifice ratio has been zero. we haven't seen as you talk

about it last year that fed powell warned we would have to forcefully battle inflation and bring some pain, quote, bring some pain to households and businesses which is unfortunate when you say that. you read it out loud and it is like do you have to and maybe that hasn't happened and rates have come down. that teseems like the fed has n problem in verbalizingi it. >> i think so. i think we have given an enormous amount of power to the central bank to say you are allowed to inflict pain and you are allowed to cause households and businesses to do less well than they otherwise would because you are deliberately going impose restrictive rates. we give the fed the power to punish the private sector and the fed's model says that's what

you have to do to make up for the fiscal errors that are committed by a government that has no budget discipline. kind of a bad one-two punch from the government as far as private enterprise is concerned. >> we've talked about the unholy alliance with fiscal and monetary policy. you really can't do the fiscal or uncontrolled fiscal without the uncontrolled monetary. you talk about it being ena enablers. you had a great piece. he is almost an idol for supply side. all those who wish to stop government control should focus on monetary policy. that is where it starts. i understand how it works, judy, because there are good intentions on all the spending

we do. we are trying to narrow the income gap and provide the safety net. you do too much of that and you end up with inflation that hurts the people were you trying to help from the very start. >> that's true and it also gives the government the inside track on borrowing money because the treasury will always go to auction and they will pay whatever interest rate they have to to get the funds to pay for the deficit spending. the private sector faces real obstacles on the cost of capital and when it gets so high. the private sector has stark decisions to make about whether they can or cannot expand the business. maybe they have to cut back or let some of the hard working employees go. i think the danger in what with

he was talking about was increasing growth in government. the influence of government over the direction of the economy. you saw it in the inflation reduction act that the white house and the congressional democrats were able to justify the spending by saying ultimately it is going to lead to greater output. that's exactly what private sector activity tries to do. nobody goes and gets a loan because they think we are going to reduce the amount of output. they are trying to get money to finance to provide more goods or services. yet, through the restrictive rate of interest, that is precisely what the fed is trying to suppress. that kind of economic activity. i think you see where that's going because what is a barrier to the private sector is not a barrier to government. >> interesting. yeah. andrew. >> judy, the question i want to

ask you is a little bit of what we were talking to steve about at the beginning of this which is if powell says i'll wait and see -- some people would like him to wait and see, but it creates a sense of uncertainty. i think a lot of people would like him to say i'll never raise again, obviously. what do you think both the market thinks, but also how the fed thinks about the market in that regard? >> exactly, andrew. i think about those same issues because i'm waiting for the fed -- i think they should have paused two meetings ago. what they should be asking themselves is does their model actually work? he was promising the pain . we didn't get the pain. their model says we would have

had lower unemployment and higher growth if we hadn't raised interest rates so much to the point of restricting economic activity. one question i ask is at whose expense is that restrained growth? that is why i worry about the private sector. i think a big question should be for the people at the fed to ask themselves what if the model is not working the way we thought b because we didn't get the pai. that should tell us if inflation should tick up again and maybe we should say we have the suppressed economicactivity and we should go higher because that may not be the tradeoff at all. in that case, they would be contributing to reduced supply in the fate of demand. >> i know. maybe it was different this time. maybe it was all of the pent-up

demand and people who had stimulus money from the pandemic and it is taking longer. maybe it does work. >> right. >> that's what the fed would say we're on the right track. i think we should accept success. it came down without pain. let's stop or let's take a step back. maybe we'll hear that today. >> let's learn from it and understand the fiscal path of spending now by borrowing from the future and what you want the fed to pay banks not to make loans by raising the interest rates they pay to them. >> three hours away. we'll hear it. maybe he is watching. maybe we'll factor into the speech. maybe he is rewriting the speech, andrew. >> could be. when we come back, we have more coming up. we will look at amc. the preferred "ape" shares are

converted to common stock. we wl soilal talk to the head of the u.s. tennis association. you are watching "squawk box" on cnbc. we're coming right back.

glad you are doing this. you will explain this? >> i am. >> $1 billion of the preferred equity units for amc of "ape" has shares trading lower. kristina partsinevelos is joining us now with more. you weren't a math major, but you get it? >> i find it fascinating. it is so smart financial than n engineering. apes are no more. all with the goal of 158 million outstanding amc shares. thursday, amc, conducted a

reverse stock split giving shareholders one share for every ten they held. why? with the effect of trying to boost the stock price ahead of the ape conversion that happens today. why does all of this engineering happen when you know the stock will drop and drop double digits? amc is strapped for cash with debt over $9 billion. they sold as much stock to retail investors. the #apefanfare helped them during covid and saved them from bankruptcy. the ceo is warning of liquidity issues and massive growing pile of debt. it created amc preferred equity units. ape. get it? voting rights and the successfully voted to convert back to common shares.

since the conversion is happening after the stock split today, one ape share equals one tenth of the common share today. there will be fewer total outstanding shares. now for the grand finale. since this is over, amc can issue up to 550 million additional shares without shareholder approval in order to pay down the debt. something it could not do before. >> there are different levels of equity and debt at a company. when you go through the pandemic and not only people could not go to theaters or make movies and you have no openings and the secular change to streaming and netflix and staying home. it is tough. there were questions about the existential threat to the movie

business. i think it will stay, but to do it it and some time equity owners have to take it on the chin to keep the company afloat and do what the company needs to do with the debt. i hope he is successful with it. i hope amc is there was obviously some losses, because stock has dropped dramatically. and there has been this roller coaster. two between both. people taking advantage of that. but overall, to your point, amc may do better with barbie and oppenheimer, but the debt pile is so big. i thought this was extremely

creative. >> blue beetle. now there might be another sort of low because it was a perfect storm. we will be right back.

the second installment of the dune movie series has been removed from the 2023 bob office lineup due to the writers strike in hollywood. cofounder and editor-in- chief. >> it's a cool name. this is a snapshot into the future. we have been worried their stuff in the can, and it wasn't affecting everyone, but this is dragging on. we are what you start seeing things like this. >> dune is staying in the can

until summer of 2024. it is done. they want the stars on the red carpet. if they can't get that because they are on strike, they are going to postpone the movie. >> we were just talking about amc. >> those of you who were skeptical about the impact, i do think -- one interesting twist, they try to supercharge retail trading. and it does feel like that era -- that particular era -- is over. pretty particular, i guess.

>> i remember that -- who walked out? this has happened, where the actors don't show up for a paris premier. it's interesting that that's enough to cause a delay, because you want the commotion on the front end, it is not in merchant. what about telluride next week? that going to be compromised, or not as good as normal? >> i think what you are seeing is the very old-fashioned movie industry. i guess in some ways, they tried to persuade that it's a technology industry and that the streaming platforms can exist independently of this unbelievably complicated system where we are having a lot of money on boulevards billboards to win an award at a film

festival in order to generate this sort of ineffable kind of buzz i will get people to theaters. and i think part of what we are seeing with this strike is a recognition of how important this whole, incredibly complex marketing machine is. >> how important do you think the marketing machine is, not just of the realm itself, but to the media ecosphere, given that people aren't writing about this thing. at one level, it's a marketing problem for hollywood, but i wonder if it's actually a problem for all of media. >> just look at the attractive list level of this show. the survey showed it was down 40% since the strike. i don't know. there's nothing i like less than the promotional interviews

with stars were repeating exactly the same things they've set on the last one and never say anything new. >> another big drop today just after this segment. that was an unsolicited shot. i really don't understand that one. they are going to play us out. mark thompson, cnn, what do you think the chances are? >> i think the chances are pretty good. since we recorded that, i think that's a really if serious possibility. he's incredibly well qualified for the job. >> but he's a tv guide. but it's a tough job. >> yeah. ano would want it? thk you. we will be right back.

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

good morning. smp futures rising ahead of the speaker jackson hall. what investors should expect. retailers waving the red flag on saft. what new york is doing to combat the program. new rules from the eu to make the internet safer. how it may impact major social media companies. this is all straight ahead as

the second hour begins right now. i'm joe kiernan. in anticipation of the big speech, s&p is now at triple digits. green across the board, but getting about a third of a loss yesterday with that big number and that big report. it's up a little bit today. and then at least for now, we have lamarr coming up. he's always got some interesting thoughts. we'll see what he has a say.

we have less than three hours and we are getting close. >> we are getting close, and a lot of people -- we got a look at this morning's free-market movers. >> happy friday as well. netflix moving higher after it up grade, more than 20% upside from the stocks trading right now. they are a bit cautious on valuation, but they favor the streaming giant and with netflix being position for a prolonged hollywood's trike. shares up almost 1% right now. shares of old her beauty sitting pretty following a better-than-expected q2 result, and the demand for premium cosmetics among higher income consumers really driving. foot traffic at stores grew every single month. shares of volta up 1 1/4%.

the buy now pay later company topping estimate in the fiscal fourth quarter after transactions surged 20% from a year ago. the firm says it expects to be profitable on an adjusted operating income basis this fiscal year, though shares of just 6.5%. >> all right, thanks, guys. everything on hold for the next three hours. this time last year, he delivered a short but stern speech saying they may have to help the economy to cool inflation. our next guest says this could potentially push the yield on the 10 year note down. the president of global strategies -- are the highs in at this point? >> believe the hype, joe.

around 4% is going to be the feeling. the reason is, it's not giving you a real positive rate of return. and at the same time, it is causing cracks in the economy. unemployment is very low. we have problems in commercial real estate. we are continuing to have issues at regional banks. all agencies have downgraded the u.s. banking system. these are issues that we need to be more concerned about. couple that with inflation, and it's been brought down significantly from one year ago in 2022. that's what explains what it needs to be. and when something breaks in the system, whether it's going

to be other financial execution problems coming from the commercial real estate side, then that again would cause the volume to come down quite sharply at that stage. so we are waiting for a time at which they are close to the peak. so i think not only people should be giving good returns over the next several months to come. >> so if you are a person that needs to have a certain part of the work folio, now is the time. >> now is the time. go more into fixed income, hybrid fixed income than you were before, and get the equity. that's correct. that's a signal we are getting, and hopefully that's a signal that will also come from chad powell later this morning.

>> when you are waiting for the lag to some extent on all the prior tightening, do you see anything definitive right now? what you expect to see something definitive? at this point, it almost seems like inflation was less transitory. i mean, it's come down now without the economy really floating. >> the economy has not slowed very much, inflation is come down, but i would not call that inflation transitive. looking at 2021, 2022, it did

inflation. that may not be the case. >> was with the bad ones. that was a stake in the heart back in the 80s. but we have to go to 21.5 percent at the time. do you think that they will say, you know, 2% -- they keep saying, that is to set in town. 2% inflation. you think they will want more on that then? you don't need to go any higher. with that leavitt were it could re-emerge if it gets down the

tube? >> i think there will be waffling, but the waffling has be done -- that is to say, you can't just say point seven or .3% is okay. that hurts the possibility of it even more than the transitory argument. what they can do is to pause and say, we really need to bring this out to two percent to look at the cumulative effect of the increases, and we would be back to it, and they never get back to it. that's the way to do it so that, in a sense, you agree that two or 3% is okay, but you are not what you say so if illicitly. >> we are going to end it there. are you going to watch, or just tough going on? >> it's very important to me. >> if anybody is watching, it

will be you. i will watch. or at least, i will read about it. thank you. >> thank you, joe. >> okay. coming up after this, we have multiple retailers talking about that during their earning call. that shay of the nrf calling out new york city earlier this week to fix the issue. it is all next be referred. before we go to break though, things look up. the dow about 123 points higher. the s&p 500 was open about 11 points higher. 2.5, three hours away before we hear from jake powell. coming right back.

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beating estimates of $.44. estimates of 3.7 billion, and on the analyst call, ceo eric nordstrom was asked about the smash and grab theft at one of the stores in los angeles caught on video that would show a mob of at least 20 thieves swarming the store and grabbing armfuls of merchandise

originally valued at $60- $100,000. in his words, it was disturbing to all of us, and losses from theft are at historical highs. however, he said theft is already factored into the company's guidance and was not higher than it acted, so not to worry. >> thanks, joe. a nice segue to the next segment, because retail is showing dramatic warnings about the increase in theft. national retail federation's ceo matt shay joins us this week discussed the difficulty in prosecuting these crimes. we ask, which cities or states needed a change in approach from the local authorities? >> one is in new york, and mayor adams, and the work he's doing with his task worse. there's many ceos and senior executives, the partnership new york is been very involved. lots of ceos involved there, which leads us this

conversation. joining us the partnership for -- good morning a, it's great to see you. as you saw, telling up new york as one of the 80s were this retail theft rob is a major issue, i am curious where you think new york -- or how you think new york is doing, and frankly, how you think the governor and everybody in albany is doing with this issue. >> we made a lot of progress in new york. the photos that you saw, the nordstrom in l.a., are something that we variance in the summer of 2020, but we really haven't had since the smash and grab. the shoplifting thing is now part of organized crime and an organization of online sales of goods and the fact that for a while, the streets were already empty, and you could get away with a lot. so we've been working with the new york date attorney general

with the district attorney's and obviously with mayor adams and the nypd, the f vi, and all the retailers have really come together to cooperate to make sure that we are doing everything possible. so for example, they are going after the fences, the folks were actually in luoyang local people to go in, you'll something, and then, again, organized crime. in addition, the d.a.s are aggregating these offense. you just get a theft. if you steal less han $1000 of goods in one visit. but those are coming back every day to seems to work, and it $800, $900 a , they are aggregating those defense is so this becomes a felony, and it's possible to put people in jail for it. >> that's where i was going to go with it, because this is as

much an economic issue as it is a political one. you heard during the gop debate, how much of this is a function of the perception of this ring a blue state issue, where the rules and regulations around what is a missed demeanor and a felony has shifted, it seems, over the last couple of years, and that that is one of the reasons that has led to this rise in crime around retail. >> i think there's a debate over that that is fair to have, and perhaps -- but to blame dale reform, to blame criminal justice reform for what is going on, i think it's just not accurate. what we are seeing is, we are seeing a much higher level of unresolved crime. crime stats are actually going down or proving, but people fear a sense of lawlessness in

the street. it has to do with patterns that started during the pandemic, rather it's dirt bikes writing down fifth avenue, where they lived this where there is random violence, unprovoked violence. people are assaulting someone not to rob them, but just to take out anger. him of this has to do with our laws or a mental health. we don't have the ability for involuntary treatment and confinement of people who are seriously mentally ill, for apple. so there are legal statutory problems both the governor and mayor are trying to address those, but that's only one part of the issue. >> is this a broken window issue? i'm curious what you think the responsibilities of a business should be. most of these shops have a retail policy where, if somebody goes in and matches and grabs, tries to take stuff, let them go, let them walk out.

try to keep everybody safe, and don't do anything about it. there are some people who think that is a must take, that there retail needs to become more aggressive. they have security guard there, should they actually use them? should that change the dynamic? >> the dynamic has changed. for the luxury stores in the bigger stores that were target during the pandemic, they have the resources to hire off-duty cops with uniform and with guns who can seriously be a serious defense. again, the safety of employees is very important, but the big stores have taken action. the bigger problem is for this mohler operators that don't have the resources to do that. but they have a close working relationship with the recinct and police in new york. we are definitely moving in the right direction. >> other big hot button issue in new york, but way is that a

hot button issue -- and that is immigration and what we are seeing in terms of illegal immigrants coming to new york. i think the number is now up to 2000 500 a week. there's efforts to put tents and housing and also some things together, but this is becoming what some people are talking about as a meaningful crisis in new york. the governor is now asking for help from president biden. big questions about whether these people should be able to work, whether that is in them wasn't element of this. how does this get solved? >> well, the federal government has to step in. number one, making sure that orders are sick here. the people that are coming in are not illegal. they are being allowed in by order patrol and it may be temporary, but they are coming in, they are not being detained at the border. they are basically being

shipped to cities around the country, including new york, which is had more than 100,000 and less than a year. 20% of them young children. so this is family. they are asylum-seekers. this process for getting a hilum application can read it and being able to get a work permit is very length. the bureaucracy is very difficult. the city has put together a major effort to try and asked the diet, but they really need the federal government is deaf in, and the governor yesterday joined mayor adams in calling on the white house to take action to support it. both in terms of funding, providing facilities, and work permit. >> but it appears -- thus far, it appears that this administration is unlikely at the moment to go along with this, because i think they don't want to look soft on this

issue. if new york continues to be the place where everybody comes, and now all of a sudden you can work, it's only going to increase the number of immigrants trying to come to this state, which i think is actually its own complication. it's a conundrum. what you do? >> well, new york is welcoming of immigrants. justin the restaurant industry, we have 10,000 vacant jobs that can't open for lunch because they can't get people to work. we have jobs in the agriculture industry. the problem is that people are coming in and it's a lengthy process, the bureaucracy involved to getting asylum status is very difficult, and they can't work. they are basically wards of the indians date. the city and state are spending billions of dollars to try and deal with this, and with very little help from the federal government, including patrolling the borders so that the low is not slowing down.

>> catherine, it does seem like an intractable issue, hopefully one that will be intractable driver. we appreciate all the work you're doing for the city and your efforts for joining us this morning. thank you. coming up, the eu's digital service does affect today, the new rules intended to make the internet a safer place. details coming up. we will be right back. aflac! seriously? now there's a hole in your defense; look at the size of that- gaaaaaaaaaaaap!!! is that a goat?! you talkin' about me? gaaaaaaaaaaaap!!! i think this goat is saying “gap.”

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take a look at shares of marble technologies. beaten by a penny. revenue is higher than the affected. they expected a i revenue growth to be stronger. $200 million for the quarter, accelerated from their. broader decline from this sector than in yesterday's session. matt murphy joins the game later today. that's what happened at 4:00 p.m. eastern. still to come, to howells messed on the need for consumer sentiment. were going to take a look at where they are spending money, and more companies pushing for in person work. amazon and pepsi board member cooper joining us for company culture and navigating this new

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ahead of the speech coming up in just a few hours, some of the nations against retailers are sending a warning about a

variety of things, but one that we really need to focus on is the warning about the consumer, and what it says about the economy and the feds. nordstrom says credit card delinquencies are now above pre- pandemic levels, and macy's was caught off guard. burlington stores say lower income shoppers are under significant economic pressure. for more on the tumor, we have a in your research analyst. a lot of the headline grabbing articles involves shrink. like nordstrom said, we have already factored this in for our results. when 's sporting goods blamed that for its result, people said, that sounds like a company that always lanes a bad quarter on the weather. is there an issue -- is the real issue of the rumors

getting strapped? >> is a conflict of issues. certainly it's up a lot from last year. and some in fences, it's an issue of timing. in some in fences, you think, wow. more stuff got: that we thought. are we going to call that violence issues in the store up 120%? but the consumer is also under pressure. we are seeing issues on the low end, on the high-end, so we are seeing a very volatile can tumor heading into the holidays. >> are we seeing it in the middle, then? >> that middle income consumer, unemployment -- you know, certainly watching student loans, maybe not quite as impactful. it seems to be a tumor that stays relatively strong.

it's that high-end potential of job loss, equity market, and it's up the middle. >> how would the fed interpret that scenario in your view? >> i'm sure they looking at a number of different indicators. they are looking at things like unemployment. it's just a very volatile consumer. it does seem while the incremental pressure, there are other issues like some of those interest rate that are now how impacting issuers of credit cards. that invariably leads to bad debt. but clearly, credit in the second quarter as being a negative headwind. >> walmart had a pretty good quarter. what is walmart saying? you got the whole target issue and the total outperformance of

walmart. it is maybe partly because of the cultural issues, or whatever it is. in terms of what we are focusing on with tumor, walmart doesn't really have the high- end. got the middle and in the low end, but still perform relatively well. >> they would tell you that there customers right down the middle. kind of middle income. but they have also noted recently that they are being a higher penetration of $100,000 and higher. they are actually getting a little bit of that that they haven't gotten in the past. they are clearly taking some share. the consumer wants value today. they want value in grocery, and they are getting mad at walmart. but i do think it supports the idea of middle, upper middle, is a safer sign for the tumor today. >> and target? >> as you pointed out, they have some culture issues during the second quarter.

our sense is that things are getting better there, but i would think it doesn't turn on a dime. >> tell me about with these delinquencies, is this something that banks should be paying attention to? are they singing the delinquencies? >> most retailers have a credit card that is tied to banks. they have a bank partner, and the bank partner is possible for helping with the underwriting process. at least from a retail perspective, these aren't retailers that are operating on themselves. they are working with these large financial petitions. the fact that they are being delinquent these, at the minimum, we are seeing normalization of credit back off. but we could be something worse as well. >> all right. thank you. we will watch with the fed say. maybe they will talk about the tumor for something there.

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the nasdaq even down pretty significantly in spite of nvidia and all that excitement about ai. and then today, the eu's new digital rules, the digitals services act goes into effect. what does it mean for the tech giants ? julia joins us now. >> the eu says that these rules are intended to make the internet a safer place. they are targeting companies with over 45 million users in the eu. that becomes alphabets, and

formerly twitter. the digital services act aims to prevent spread of illegal content along with election interference. they also tightened privacy regulations and also the targeting of ads to minors. by today, the companies that are covered need to and a risk assessment along with preventative measures they are going to take to mitigate those risks. the company will face an independent audit next year. and next month, they walked to sherry trans report, and users of these platforms will have to report infractions. once something is reported, the companies are then held liable, and violations could bring massive multimillion dollar fines. 2024 could be punctuated by areas of asked changes, negotiations, and possibly lost between u.s. tech and the eu.

we welcome the ambition for greater trans parents the, accountability, and user empowerment in the heart of regulations like the dsa. now, i want to see what kind of ripple effect this has here in the u.s., or efforts of stalled. that's what protect these platforms from liabilities for content that is shared on them. the first big test will be the slovakian election that is coming up at the end of next month, where the european commission will be watching very close the, particularly around anything that can seem like election interference. >> is that coming up already, julia? i mean, tell me time is not flying by. is that next month? >> it is indeed next month. the thing you have to remember here is the eu contains so many

different countries, and what they want to make sure that each of these massive companies have the policies and procedures in place and people that are based in those countries is a language were monitoring to make sure that there isn't either massively offense of content. you need to make sure you have enough people who are speaking slovakian and monitoring to make sure there is an manipulation. >> you can just plug it into ai. >> they are using a lot of ai. they are using a lot of ai to help monitor this stuff. the thing that is interesting is that they now have to identify if content has been manipulated by ai. of course, going into this big presidential race, there's a lot of concern that all of these platforms have to identify the video that is going viral on their forms is effectively the same. >> you think we end up with the same things here in the eu, is the eu leading the way on one

thing? they certainly don't lead the way on the technology self. maybe just a regulation of the technology. >> the eu has absolutely led the way when it comes to privacy regulations. this was the privacy regulation that came out of the eu, much more stringent. there's been a lot of talk about privacy regulation in the u.s., and even a big push for privacy regulation from both sides of the aisle. but we really have not seen that here in the u.s.. what is effectively happened, the eu takes a dance, and all the u.s. based companies then follow. in many cases, they adopt the same policies from the eu, even when it comes to what is going on here's date site. i would say yes, they are leading the way. that's why we can he not only what the companies do here, but do we see egulations? >> you are right. the eu can lead on regulations, just not on the innovation.

great. thanks, julia. lucas matson. except for that guy. >> a fictional startup is the only thing i can, but. >> what about spotify? you may say that spotify is already getting that. bottom five. >> that's the kind of thing that gives you the music you like? all right. >> thank you. >> coming up, we are going to talk to the armour head of hr at goldman sacs and how employees navigate the new normal when it comes to being at the office. listen on your favorite podcast app and listen any time.

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bridgett is here. she has no clue that i'm here. she has no clue who's in the helmet. are you ready? -i'm ready! alright. xfinity rewards creates experiences big and small, and once-in-a-lifetime. there is a growing disconnect between remote workers and their companies. 20% of workers felt a connection purpose to their organization, down from 32% last year and the lowest level since the pandemic again. a big push to make workers return five days a week. they are resigning rather than relocating to the office hub.

she is also the cofounder of the coaching programs for individuals. good morning to you. i am still curious how you are thinking about your former boss at goldman's trying to get everybody back five days. others are trying to do four days, others are trying to do tree days. what is it by? is it by who the manager is? what's a way to think about it? >> good morning. i decided pacifically that i wanted to join you in person and because in person matters. it matters to me, and the people that i met with just coming into this video, and those interactions really matter. you highlighted in the opening credits that there are a number of different approaches for mandating a lip this and i say that that people come into the office five days a week to -- the other scenario where hybrid is okay other time any time.

my view is that is very important for people to engage in person with humans. but we also, as humans, have learned that a tremendous amount of productivity work and engagement can take lace remotely. i am very, very soon of the hybrid model. but in order to do that, i think it is very critical to really unders and what it means to create a truly inclusive hybrid work place. on that front, who is doing it right? is there a grading sample of a company that has get it out? >> i would ask people who work in organizations whether they believe it is working out. and why do i start there? because this is all about the employees asked.. they work in a place where they feel like the organization has really invest it in them and invest it in creating an

environment where everyone can thrive? organizations that are doing it right understand the flexibility matters to people, but that they also have the structure. imagine this -- completely hybrid, you can come in when you want and when you don't want. as a manager, that is somewhat challenging navigate. but if to fully engage when you're there, it's really going to make a difference with your people, you're creating experiences with them where everyone will thrive. >> what does that mean? can that be done in two days a week? one day a week? is it done three, four days a week? could it be done quarterly? there's a lot of folks trying to do this in different ways. >> yes. the answer is, yes, all of those can work but the reality is you've got really think about what it means if you're only coming together in person one day a week. let's also take as a backdrop

that we're talking about a percentage of the population. so many people in america actually don't have the opportunity to say, you know what, i want to work from home one day a week or two days a week. therefore, we all operate in an ecosystem of human beings that work. we have to be cognizant of the fact that we operate in that context. so if you are in an environment, as i would suggest, where you are asking people it come in three days a week, be very clear about the why. if you're going to ask, what does that mean? it means when people are in the office three days a week that they have an experience that actually reflects the why. the why is often commented or mentioned as it's better innovation, collaboration, relationship building. okay. what are you doing as an organization to ensure that that's happening for everyone in the organization and how are you connecting that back to those that are not in the office two

days a week to ensure that they, too, are included in the overall framework of excellence. >> he's pretty predictable, is he not, andrew? you've seen the show. let's say there -- let's do the counterfactual, no pandemic. never happened. would we be here? and maybe more than the pandemic, just technology has enabled this. you're in front of a computer. why does it matter where you're sitting? i guess both things have added to where we are. >> right. well, let's go back ten years, like not right before the pandemic. i would say then in my professional experience i was running with my incredible colleagues, an hr organization and i come from a sales and trading environment that quite frankly looked like this, lots of screens, lots of data, et cetera. in the early days folks would ask me how do you feel about remote working? that wasn't a year before the pandemic, that was probably a

decade ago. my response was i'm open to it. me personally i like to work in the office. that's what i know, that's what i do. it kind of sent ripples through the organization because there were many people extraordinary in the organization who had started working from home. i then thought, well, let me see how it works, practically whether it makes sense and i was a leader at goldman sachs at the time and i started working from home one day a week. and you know what, it was incredibly productive. i was focused, i saved myself three hours a day, but i also still very much enjoyed and got a lot out of going into the office. so this is not a new phenomenon. what has happened as a result of the trauma and necessity of covid, we all fast forwarded in a significant way and learned how to get things done virtually. it had impact on the way we worked, on the wave health care

was provided. things happened so quickly that would have probably happened eventually but instead happened immediately. and we can't go back. we can't forget that. it par it's part of the culture of work now. >> use goldman sachs as an example. it's not to critique that firm or pick on them or anything else. historically one of the things that's so interesting is especially senior management has actually never been in the office five days a week. never. you know, david soloman spends an enormous amount of time out of the office, visiting clients and other things. when we keep talking trying to get back to in office, that's

the 75% we're talking about. are we trying to solve for the time i'm going to bump into the senior manager who happens to be back in the office that day because they happen to be back in town? am i trying to sell it for myself to have that interaction? am i trying to sell it for them to come back to the office so they can have that interaction? what are we doing here? and i think underneath it if you really talk to people, especially at the junior level and then senior level, that's a huge component of the dynamic. >> well, earlier in my comments we talked about whether one day, three days, five days, not at all was really the key question. and certainly you have to think about the framework in which you're operating. but i think, andrew, what you're suggesting is very important here, that really what's most important is the experience that people have when they are in the office.

if you are client facing, quite frankly you shouldn't spend all of your time in the office. and if you are someone who is coming to the workplace today, you should be engaging and understanding what that real interaction is like. what are people out seeing clients doing? they're meeting with them, they're understanding, they're communicating, ideally they're listening more than talking. that's an experience that's very important. when you're starting your career, it is really important for you to have those experiences, but they don't drop out of the sky. you have to be as a leader and as a manager very intentional about creating those engagements. the fly by manager walking by and not communicating is actually not what represents why you need to be in the office. the stop, the conversation, a leader asking you, hey, we're working on this project together, what do you think? i looked at the work that you did, really interesting.

let me give you some feedback. let's talk about what's great but let's talk about ways to enhance it. those are things that certainly could happen virtually but i believe in my experiences having that lens of doing that in person really matters because that's what humans do. they interact and we all have to learn how to do that, particularly when you're starting out in your career. >> elithdith, very much appreci. thank you very much for the interaction. joe? >> coming up, investors awaiting fed chair jay powell's speech at jackson hole this morning. we'll talk to roger ferguson for a look at what he's expecting. plus, the u.s. open kicking off on monday. the ceo of the u.s. tennis association joins us aadhe of that first match. "squawk box" will be right back.

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good morning. futures continue to be in the green. depending on jackson hole, we're approaching the final opening bell of the week and jay

powell's speech. stocks got hit hard yesterday as investors prepare for what's going to be coming out of the fed chair's mouth in jackson hole. he does seem to say some things that maybe he wouldn't say at the normal fomc meeting. it's a big meeting for people. everybody's there, including steve liesman. and we'll speak with former fed vice chair roger ferguson and jared weinstein and can the u.s. and china resolve their differences, especially when it comes to big tech? we'll take you live to beijing ahead of this weekend's visit by the commerce secretary. the final hour of "squawk box" begins right now.

good morning. welcome back to "squawk box" right here on cnbc. i'm andrew ross sorkin, along with joe kernen. becky is off today. a big day ahead of jay powell's speech. what do we got about an hour and a half to go, two hours to go before we start to hear from him, joe? >> we have a countdown clock. we built it. if we built it, it should come. we may put that up in a second. it wasn't down to tenths of a second or hundredths of a second. if you can't get that kind of clarity on it -- where's my countdown? >> there it is! there it is! we do have seconds. >> so it's not at 10 a.m. eastern time. it looks like based on that it would be like -- >> 10:04. >> 10:04-05 would be the beginning. is that because somebody has to

introduce him? starts at 10, there's like a four, five-minute introduction? >> probably. >> they could have started the intro at the top of the hour. i would have appreciated right at the top of the hour. it's all good. >> think about tv time. and take a look where the market is, dow down 123 points, nasdaq up 22 points, s&p 500 up about 11 1/2 points. treasury yields, this is interesting, we discussed this earlier, the 2-year note sitting over 5%, the 10-year note at 4.239. a couple other big stories. m maui county in hawaii suing the hawaii electric company. county attorneys saying the utility left power lines energized despite a fire warning from the national weather

survey. they are suspending dividends to shore up their cash for post-storm repairs. warner brothers discovery saying that dune part two will be moving from this year to next year. that's when they'll launch it. it will premiere later on and a new godzilla movie will be bumped until later. the availability of actors is seen as the reason. most have been in the can. how do you promote these things if the actors can't get out there on the road and promote them on programs and the like. >> and among retailers, first is gap, released underwhelming third quarter guidance and shares of nordstrom have been falling after the company stuck with its previous full-year

outlook signaling caution about the coming months ahead, joe. >> you're a creative guy, andrew. how do you refresh godzilla? he's fought king kong. that was weird those guys were ever in the same area to have the fight. do you make another remake because of the cgi for godzilla? you could tell the original one was a little plastic thing. it didn't even -- >> come up with some other back story. >> you need a back story. you need like a plot. you need some relationship between the protagonists, i guess. >> that's what you have to figure out. >> political backdrop or something. suddenly i'm interested. i didn't think i was. but can you do it -- >> now you need to see it. they'll make that part cool but it's the other part -- it's always about the characters.

>> if jason can come back 12 times, i think godzilla can come back one more time. but look at the success with something new like barbie. it's better to do that than to try to keep beating a dead godzilla, i think. >> but by the way, now you'll see barbie, i think there will be multiple ken shows. you. >> think there will be a ken spinoff? >> why not? >> i guess they can. >> let's get to cnn's own ken doll, mike santolli. you're as handsome as ken, mike. >> thank you and my job is just chart. that's what they tell me anyway. pretty ugly close on the s&p 500 yesterday. it did keep the index in this very sort of sloppy trading range. we tried to rally back to the 50, the average didn't get there, about 5% from the intra

day high so very apprehensive. also of course we didn't get a big broad buying rush after the nvidia news. that seemed to put people on some edge. remember we broke above 4200. that was perceived as the ceiling beforehand. that was basically late may on the back of that previous nvidia quarter which really dazzled everybody. we're still holding above that. getting some oversold sentiment a little bit so we'll see if some of that comes together once we get clarity and get beyond jackson hole. take a look at the equal weighted version of the s&p 500. it never quite got above the february 2nd high. it had a big, broad rally in january. as you remember, a lot of low priced stocks, very, very inclusive rally. here you see basically this august mover stopped at the exact same point. you're still in this up trend, still up 17% from the lows but

nothing much on a broad basis. you did see a broadening out of the market there in the final couple of months before the market did hit its latest peak. with jackson hole, inflation expectations a big part of the conversation, real yields. look at the 10-year treasury protected yields. it's pushing 2%. this is what you get on top of whatever cpi is the next ten years, well above the levels back in 2018 and '19, which did give the socket an issue. you have the 10-year nominal yield, it shows you that 2.3 is what the market is suggesting is going to be inflation over the next decade. that's not too bad, not too far from target but real yields do restrain the economy and require better growth for markets to handle it. we'll see if powell addresses that in any direct way today. >> if you were powell, mike,

would you say, hey, 2, 3 is pretty good and we're feeling pretty good about that or we're not done till we're done? they have to talk tough because it sends the wrong signal. >> i would say nothing explicit about changing the target or declaring victory but acknowledge progress while saying we still have to maintain vigilance. however, how he characterizes the level of rates right now, whether they're where they need to be to get inflation down, that's a big question. do they really believe that this hot streak we have in the economy at the moment is something that's going to be sustained or are we getting a little bit of front loaded activity? also he's talking about structural changes. what do we make that unemployment stayed at 3.9% and we had cpi come down to 3%. >> talking movies, where the hell is godzilla when he's not

finally attacking, like tokyo or something? i think king kong was on skull island. do you know where he is when he's not -- >> does he have just like an island retreat? some kind of a cave? >> does he swim? how does he get to? >> not to get grim about it, andrew was paccing about the back story of godzilla, the back story of godzilla is oppenheimer. it was coming after what japan went through at the end of world war ii. >> oh my god. >> i'm not sure they thought it through really. >> that is definitely added. that extends the story, mike. i knew i could count on you. programming note, don't miss a cnbc special tonight with you back tonight santoli with mike and it kicks off at 6 p.m. eastern time. is that every friday, andrew?

i think maybe it is. >> i think they're doing it. i think it's a big deal. >> that sweet summer schedule. that's nice. awesome. maybe we can get that. what do you think, sorkin? >> we got to talk to some people. >> we have room for you tonight. show up. >> okay. investors around the world are waiting from this morning's remarks from fed chair jay powell. joining us, roger ferguson. can we just do 2 1/2? can we move it for inflation? we're there. can't we just say that's pretty good? >> i think we can say it's pretty good but i think they are going to continue to say the target is 2% for reasons you've already pointed out. as soon as you let go of that target, the market will become a little unanchored and

expectations will be hard to manage. we're aiming for 2% and there's somewhere to go. >> i heard a new term called -- what steve called it is it the sacrifice ratio or something and it's what we give up to get inflation down in terms of economic growth. and steve said it's been zero. should we embrace that and that's great that inflation's come down and we haven't seen unemployment go up or is that a problem for the fed that they -- in the back of their mind they might, you know, think that they still need to raise unemployment by a half of a point or a point or whatever? >> i think -- look, i think at the end of the day it's a bit of a conundrum for the fed, which is almost everyone is betraying with this notion that unemployment has to rise if you bring inflation now. however, that has really come under pressure for quite a period of time. i'm thinking they're hoping to

get what one might describe as an immaculate disinflation without having to raise the unemployment rate too much and to date they've managed to succeed at that. so i think it's a fingered crossed. let hope that the old relationships are not holding, that there are new relationships that allowed the fed to bring inplace down without crunching of the employment picture. everyone wants to have full employment if possible while having inflation under control. >> is a recession already in the cards? we've taken that off the table at least in the near term, but have they done -- what they've done so far, will that cause back-to-back quarters of negative gdp growth or just maybe a bit of a slowdown. >> well, as you know, there had been a great deal of recession talk earlier, most forecasters now are backing away from that. i think the expectation is that a soft landing or a softish landing seems more likely than

not, but certainly that involves a period of what they call below trend growth. so i would describe it as probably a rocky kind of landing, may not necessarily be a technical recession but certainly growth will have to continue slow a bit and given how much the they've raised rates and the market has raised rates. >> given that we're coming into a presidential election given the fall of 2024, when you talk about a rocky landing, when does that landing happen and how do you think that impacts the thinking of the american public about how good or bad the actual economy is? >> that's one of the interesting dilemmas here. the discussion of recession or slowing keeps getting pushed out so now most people are thinking of a softish or maybe a kind of rocky kind of landing. looking into the first part of next year, i think that will force a number of conversations where there will be a lot of cross currents and the economy. if we're lucky, inflation will

be under control so there will no longer be a household topic. if they're lucky the unemployment rate will not skyrocket and so people will be able to talk about a strong labor market average hour live earnings are continuing to go up. that would be helpful. so it's going to be potentially a mixed story when it comes to the economy and the election year, with both parties having something that they can point to as a strength or weakness of the other side. so we'll see how that plays out. >> one of our early yes guests who watches this very cloly says the highs are in on the 10-year, 4.3% or 4.32, whatever. i'm not going to ask you to bet but if i were going to put money down, what would you tell me do? do you think the rates go down or those are the high? >> i think there's the possibility that the rates go a little higher.

it looks as though there's continued strong momentum in the economy. there's an increasing information that if we're lucky we'll get inflation under control and that allows rates for the 10-year to continue to rise just a little bit. so i wouldn't get overly excited about it but i don't necessarily think we've seen the absolute tippy to top here of rates going higher. >> it's hard to call those things, especially when you're talking about 20 to 30 basis points to be the high. you're in jackson hole. >> you've noticed the background. i'm in jackson hole, it's a beautiful day. >> it's not a green screen. you're not home. >> no. >> did you see jay powell? did you run into him? did you guys hang out? >> actually we've had some

social ingt actions and it's always a pleasure to be here. >> oh, you have. okay. i'm not going to ask you. bottom line, did he say anything? a wink and a nod? nothing? >> he said, "hello, roger, nice to see you." >> i'd say the same thing. thanks. >> coming up, a friday focus on sports business, equal pay for athletes. we'll speak with the ceo of the u.s. tennis association as the best in that sport get ready for the u.s. open at the billie jean king national tennis center and jared bernstein. don't go anywhere.

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welcome back to "squawk box." the u.s. open tennis tournament beginning on monday out in queens. this year marks the 50th anniversary of prize money for male and female players at the event. joining us is the ceo of the united states tennis association. lou, it's great to see you this morning. i see you right there on the court. it's an exciting thing for new york, for the united states, for tennis. it's a big deal but there's always been a question about the

business, the business of tennis. and i want to get to that because after the open last year, i remember a lot of question marks about how do you remake tennis to make it more fair, how do you both equalize pay but deal with the pay not just at the top level but the bottom level. how have things changed? where are we? >> andrew, first, thank you for the opportunity to be here. if you have the camera angle just right, you'll see venus williams practicing right behind us. there's been no greater champion for the quality and development of our sport than venus. this is a milestone event for us. this is the 50th anniversary of equal prize money here at the u.s. open. that is a decision that impacted not just tennis, it impacted society at large and to think about 50 years, that fight is still happening today in many professions, certainly in sports and to have the opportunity to celebrate billy jean king and

the ugusga's leadership and i'm excited about it. it's the fourth most popular sport in terms of fandom but we don't rank fourth in terms of economic value. you wouldn't know that here at the u.s. open but if you look over the course of the year and around the globe, there's still a lot of growth opportunity, which also translating to pay for the great athletes that participate in our game. >> you just said it, you wouldn't know it when you're there because you're can feel it. it's electric. and the number of people and the money that's being spent in that stadium behind you is a remarkable thing to behold. what do you think happens after the tournament, after the open, after the various tournaments? what is it that has to happen for tennis to, quote unquote, scale in a way that it hasn't yet? >> tennis has an enormous fan base around the globe.

we have some challenges around the sport because of a global series of events. it's difficult for fans to follow the season over the course of the year given all the time zone changes and the like. i think there are some more opportunities for us to have the best players in the world competing against each other more frequently and more regularly, the tour itself, both tours, the women and men's tours can be a bit confusing at times with the various levels of play. and you know tennis is best when men and women are presented together on an equal platform. it's not the case throughout the year and many of the other successful events, indian wells, cincinnati event that was just played last week as well. >> is it considered too elite? it's expensive. the boxes and seats that you're standing in front of cost -- you cannot get out of there without spending hundreds, if not

thousands of dollars a shot, right? >> yeah, look, at the premium end there is no question that we deliver incredible experiences for corporate guests, sponsors, those, but we make an effort -- again, our mission is to promote the game and make sure that anyone that could be inspired to want to play has the opportunity to do so. so you will see throughout this stadium very inexpensively priced tickets starting at $30. we could sell them for a lot more. we don't because we want access to be guaranteed. we open six days. venus is playing behind us, the players practice, legend and stars exhibitions, they're all free to the public. we expect this year to have well over 100,000 fans, maybe as many as 150,000 fans and they have the opportunity to sit in the front row and get up close with

the biggest stars in the sport. that is intentional because our mission is to inspire anyone who might want to pick up a racket. >> how much of your business is the tv licensing piece, the espn piece of it all, versus those folks who are in the stadium, the concessions, the food, the sponsors, all of that? >> sure. so we're very fortunate in that our revenue base is fairly evenly distributed. tv revenue is certainly important but right now our tickets and hospitality are probably our largest line of business. it's not just espn but we have global rights holders all across the and food and beverage emerge not quite so much. we have a divorce sort of array

of revenue that supports this event and we like that construction. >> lou, it's great to see you. you're on one of the most special events i think in the country, one of the great things i always enjoy seeing. so appreciate it and i'll be watching. >> we look forward to having you out here and thanks for the opportunity. >> thanks. joe? >> yeah, think about that. the same as the wimbledon and cincinnati finals. they were split, you know. djokovic is the best ever, don't you think, mentally? and that guy at wimbledon, did you see that? and in cincinnati, a couple of tie-breaks, which is now supposedly a great tournament. i've never been to cincinnati. great tournament. maybe that's what we're destined to see. we can own hope. i just heard from brad gilbert, too. he's going to be there. >> you know, he's toching coco

now. >> you got to get him on the broadcast again. >> i know. and i've seen a kls that she is peaking right now nap could be exciting. coming up, we'll get into the u.s. commerce secretary's goal for her trip to china. we don't have her but we have someone to talk about it. stay tuned. we'll be right back. neighbors'. (josh allen) it's not your best plan. but you know what is? myplan from verizon. switch now and they'll give you nfl sunday ticket from youtubetv, on them. (hero fan) this plan is amazing! (josh allen) another amazing plan, backing away from here very slowly. (fan #1) that was josh allen. (fan #2) mmhm. (vo) football season is here. get nfl sunday ticket from youtubetv on us. a $449 value. plus, get a free samsung galaxy z flip5. only on verizon.

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amazon has spoken with disney about helping in the

development of a streaming version of espn. that's according to something called the information, which also said amazon could take a minority stake in espn. the report said disney and espn are still working on a pricing strategy for the streaming service, though espn has looked at a range of 20 to $35 a month. back in july, ceo bob iger said he company wants to keep espn but look for strategic partners for the business. we've reached out to disney and amazon for comment. >> okay. coming up, joe, when we get back, council of economic advisers chair jared bernstein will join us live from the jackson hole fed symposium out west. next we'll talk about what the u.s. hopes to get out of the commercial secretary's visit to

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welcome back to "squawk box." u.s. commence secretary gina raimondo heading to china

picked. and eunice yoon joins us. >> commerce second gina raimondo will arrive in beijing. the expectation is she'll want to drive home the biden administration's message that recent curves by the u.s. is not meant to decouple or hold back china's commercial. the secretary of ministry said that it hoped to see, quote, practical cooperation and that's been fueling speculation that there could at the end of this trip be some sort of a working group on export controls.

state media have also been describing the invite by her counterpart as a show by chinese will. i spoke with executives with both the business groups in beijing, as well as in shanghai, and most people say that they're really hoping that this visit is going to improve the communication between the two governments but also that it would bring some clarity and transparency around the future direction of policy on foreign investment on both sides. andrew? >> eunice, help us understand this piece of it. we just had the republican debate in the united states on wednesday night where china was really considered almost like enemy number one. you often hear similar rhetoric from the administration and democrats and we saw janet yellen and others who have a softer approach. which of those approaches do the

chinese government look at and say this is what's really happening? >> well, that's one of the reasons why the chinese government often says, as well as the state media, often says that the u.s. is insincere in its approach. because whenever we hear about one of these visits, at the same time the biden administration will announce some other restriction or in this case some discussion about sanctions for tibetan schools and for officials. so from the chinese perspective, it just looks like the u.s. is insincere. how, the biden administration has expressed a lot of interest in having increased engagement with the chinese and especially toward the end of the year potentially president biden and president xi jinping at a most senior level.

>> thank you. joe? >> thank you, andrew. joining us more to talk more about the commerce secretary's goals when she heads to china, wendy cutler. she served as acting deputy trade representative under president obama. she's now vice president of the asia society. do you envy the commercial secr commerce secretary or envy any of us trying to thread this needle? >> and the secretary will have a challenge of threading this needle because on one hand she's responsible for trade promotions, improving commercial relations and trying to get chi china to address business concerns but on the other hand, she's responsible for export controls and we all know these controls continue to be rolled out. so she will have a balancing act to perform in beijing. she's skillful. i think if anyone can pull it

off, she can, but i don't envy her. >> i would think maybe china would be more conciliatory given some of the news that's come out recently with the sort of the domestic issues. i'm starting to think they might really need us or might need the west. >> exactly. the chinese economy is being hit by all sides. they need investment now to help improve the economic situation and, frankly, u.s. companies are leaving china. one of the reasons they're leaving is because of the uncertain business environment and the tough business environment. and so if secretary raimondo can succeed in addressing some of the complaints, maybe it would be in beijing's interest to do so and therefore attract and keep, retain, some of these investments that seem to be

leaving. >> do you think that the domestic problems with china make them more aggressive on the world stage in non-economic matters or less aggressive? should we be more concerned now with what president xi has to do, for example, with taiwan or the south china sea or whatever? balloons? >> on balance my view is that xi jinping is going to be focused on domestic concerns now and finding ways to turn around the economy. with respect to taiwan, i think with the taiwan election coming in january, he will, you know, not be aggressive on that front. and remember, he's planning a trip to the united states in november, so over between now and november i suspect we may see i don't want to say a thaw in the relations but at least stabilization in the relationship and the desire by

both presidents to announce some kind of tangible outcomes. >> is the boom -- i mean, i don't know what you dated back, 800 million people brought out of poverty. is that over? and what would that mean if that boom suddenly is not 6 or 7% but if it's gdp growth at 2 or 3% from a low base, only 12,000 or 13,000 is the average gdp now. they're not a high-income country yet, wendy. >> exactly. and typically when countries economically start to slow down, they're high er up on the per capita income index, but what i think will happen is that this is going to have an enormous impact on the global economy because remember, china has been an important driver of economic

activity globally and it's helped to lift the world out of some of the economic downturns. and this -- will china be able to do that anymore? less and less. >> i'm just -- i would like to look at things as half full because we have for years hoped that engagement with china would eventually cause the ccp to become, i don't know, kinder and gentler and not, you know, that we wouldn't point fingers at what's happening there in terms of human rights and personal freedom and everything else. are we missing that? that that could be the eventual outcome of this or am i being naive again, that the birds got to fly and fish got to swim and you can't change the ccp? >> well, i don't see in the immediate term that happening, but that said, chinese typically

are pragmatic and particularly now with the economy being experiencing difficulties ranging from the property sector to youth unemployment to low consumer demand, they have a real interest in working with the united states on the economic front and that's what the raimondo visit will be a test to see how serious the chinese are on that front. >> we could go forward together into the future and -- but you look at what works, the look at the political discourse now on how we're viewing china and it's probably worse now among certain factions in this country than it's been in the past 20 years or 30 years, ever since nixon almost. >> we're not heading for any

cum-bya movement. >> you're pragmatic, too. >> we'll need to be realistic here. >> all right. all right. pie in the sky. i don't know. it's friday. i'm in a good mood. thanks. appreciate it. >> thank you. >> coming up after this, we're going to talk to white house onic council chair jared bernstein live in jackson hole. look at that beautiful shot of jackson hole. "squawk box" returns in just a moment. grow and thrive. we're proud to call these places home too. they're where we put down roots,

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welcome back to "squawk box." the countdown is on in just a little more than an hour from now. we'll hear from federal reserve chair jay powell. that's where we find our economics reporter steve liesman who is there and he joins us with a very special guest. steve. >> yeah, thanks very much, andrew. you know, people might be hoping that powell throws the dove some bird seed but i don't know that that's going to happen today because i think the most likely thing is he sticks to his guns and essentially ends up maintaining flexibility to hike or hold rates at the current level. this is probably not going to be

a surprise to at least the folks who trade in the fed funds futures markets. if you look at their probabilities right now, they got a 20% probability for september but 50% for november, right on the even-odds line right there for a hike. so i think when we listen to powell today, the best you might get from him is saying we're at or near a restrictive level. the stock market needs help from the bomnd market, the bond markt needs help from the federal reserve or from the fiscal side of thing. i want to bring in jared bernstein, the chair of the economic advisers. we were kind of trading notes here before we came on air about what we heard in the room last night. this issue of the sacrifice ratio, which is how it is -- we brought down inflation by 5 percentage points at least on the headline, not so much on the service side -- >> i'd say 6 but go ahead.

9-3. >> fair enough. but we haven't had an increase in the unemployment. >> right. >> the way economists worry about things, that's a problem. >> boy, is that a good problem to have. >> explain why that's a problem, though. >> obviously from joe biden's perspective, that's anything but a problem, it's something he's been striving for is to maintain the labor market making real progress against inflation. that's been happening. we call that a very low sacrifice ratio. so look, the economic model, the phillips curve or sacrifice ratio model is very much based on the demand side of the economy. and i don't think this is that big a head scratcher. i wouldn't call this disinflation immaculate as some have. we're seeing a renormalization of the supply side of the economy. that renormalization has its

fr fingerprints all over the disinflation we've seen thus far. >> that's the question, did we get out of this without having to sacrifice anything or is that sacrifice yet to come? >> that is unknowable but i would say that's the question bubble hanging over this lodge. i probably had a dozen conversations and that was a question that came up in almost every one of them. i can tell you from the white house perspective, we're doing all we can to maintain the gains that we've had while continuing to make progress against inflation. and, look, you mentioned fiscal. many of our policies are geared towards kind of coming up and making sure that we have enough economic activity in this economy going forward as the fiscal stimulus from the pandemic era responses fades. that would be ira, chips -- >> i'm cutting you off here. i get all that. but tell that idea that you guys are being fiscally responsible to the bond market, which

freaked out in the last month because of all this issuance coming down and no sense at all of any fiscal -- >> i think that conflates to two things. one is the very near term question, how do we get inflation back to where we need it to be without sacrificing de that side of the equation. while over the longer term, plotting a path toward deficit reduction and fiscal consolidation. so the latter is what you're asking about. that really gets to our budget where we have 2.5 trillion in deficit reduction, that's on top of the trillion in deficit reduction that came out of the debt ceiling agreement which was on overwhelmingly bipartisan agreement. that was a good ending to a very tough story. but in the near term, what i'm saying is that as -- as the labor market stays tight. >> right. >> as the spending on the infrastructure -- on the inflation reduction act comes into place, particularly in the manufacturing sector, standing up domestic semiconductors, domestic clean energy production

that's helping to sustain demand going forward, and over the longer term our fiscal consolidation comes out of our budget, who of course means very serious political work. >> doesn't deficit reduction include higher taxes that aren't going to be enacted by congress? >> well, look, that is a prediction that, you know, probably a lot of people would make. i would say that many people, i don't know about you, but many people, including in conversations i've had here, many people thought joe biden wasn't going to be able to legislate half of the stuff that he's already been able to get over the goal line. i would never count him out when it comes to pulling legislative rabbits out of hats. but yes, he is very much invested in a fair tax code and part of that means higher taxes above 400,000. >> let me just be -- i don't know, like a household person here, like a regular person, which is if you're planning on spending "x," and getting "y" revenue and you're not going to get "y" revenue does that mean you're not going to spend "x,"

you're going to keep spending even if you don't get the revenue to back it up? >> that is an important question. i think exactly the right question for this dynamic because, you know, one of those sides has to give. in our budget we do both. we cut spending. actually, that's been kind of overlooked. but particularly on health care there's low-hanging fruit. and by the way, some of that is already in the system. the inflation reduction act cuts spending particularly through giving medicare, and biden again managed to legislate, which is the ability to negotiate for lower drug prices. that's huge. it's a huge pressure point in the budget. and then yes, fairness in the tax code. i don't want the lose the thread here, which is that we are in this remarkable economic moment where we've had so much inflation -- so much disinflation while maintaining an extremely tight labor market. that's what we're going to hear about today. >> i hear you on there's certain remarkable things about the moment. but when we look at the polls of

how people feel about the economy they feel fairly lousy about the economy, and that's because price levels are up and not going back down. how do you address that? how do you make people feel that the economy is better when, in fact, in many cases their wages are not equal to the rising prices? >> well, on the last part i'd probably hit you with a little bit of a fact check which is that real wages have been going up. >> last several months. i would not disagree. >> that's really important. >> okay. >> it is a fundamental question, and i think a pretty straightforward answer is that we've got to keep pushing against inflation. there'sdisflinflation and deflation. we've had significant disinflation going from north of 9% on the cpi to three, two, when last seen but that means prices are rising more slowly. people want to see deflation. we've seen some deflation. we have to keep working on that, at the same time with real wages growing, that's going to make a positive difference in people's attitudes going forward.

that's my hypothesis. >> jared, we'll keep the conversation and the debate going. >> steve, thank you. we appreciate that. andrew, these guys are so fixated on that conversation, i think it misses entirely, if we can -- i mean, that -- to me, that just is clear. >> wow. >> that -- did you notice? see, they're so intent on talking, you know -- >> i missed the whole thing. >> you know what this illustrates. that actually did not happen. this is fake news. that actually -- that was actually -- we put that in there. that actually didn't happen. but you would never know, would you? >> i thought i'd missed it. i thought i had missed it. you got me there. >> i had to do it, i'm sorry. we will be right back on that note.

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welcome back to "squawk box." bears outnumbering bulls in the latest installment of retail investor survey. joining us for more, is jj can han, ceo of -- hour away from what we're going to hear from jay powell, get his sentiment

survey, personal sentiment survey. what are we seeing on this, and how is it affecting retail investors? >> andrew, yeah i guess his survey probably matters more than any other one, right? but, you know, it's interesting. a couple of the things you said about bearishness. looking at the overall indices where we have started to see bearishness, particularly last couple weeks, is in things like spy, spx, so the broad based indices that our clients are trading, q is pretty neutral. as you expect the individual names, apple, microsoft, tesla, et cetera, seeing bullish activity. the one that's really interesting to me, andrew, is google. google is seeing a 52% lift in trading over the last week, and at the same time very bullish activity. so we're measuring that not only by what we're seeing in the stock, but also with the options positions overall, and on the other end of the scale, the two names that really catch -- caught my attention this week and you guys have talked so much

about retail and theft, et cetera, this week, but two of the names that we've seen pop up there, one being costco, which we did see, you know, a down this week, but we saw a 92% lift in trading there, andrew, and it's not just this week that people are trading, but over the next three weeks as we head to the september expiration. so that's very interesting to me, and the other one, lululemon. so big lift in activity, big lift in bearish activity in those two names. >> jj, we've got 20 seconds. tell me this, bitcoin is at $26,000 right now, come down from 30. is that about the fed? is it tech? what is that? >> i think it's a bit about the fed, i think it's a bit about regulation, to be honest with you, and this is the most price driven instrument there is. if it gets back above 30 i would expect a lot of people to come rushing back in. but this 25 to 30,000 area is a no man's land for bitcoin. you don't see the volumes there either. >> jj, we appreciate it, have a

great weekend, my friend. >> you too andrew, thanks, buddy. >> same to my, my friend, joseph kernen, what a week it's been and we've got a lot to see at 10:00. we're both getting our popcorn out. >> 162, up 162, we'll see what happens based on his comments. so it should be interesting. >> yeah, okay, "squawk on the street" begins right now. ♪ good friday morning, welcome to "squawk on the street," i'm carl quintanilla with courtney reagan, mike santoli of the new york stock exchange. the wait is almost over. powell's speech at jackson hole over an hour away. futures supportive after the bulls dropped the ball, the dow's worst performance since march. a lot of earnings sneaking under the gate. road map begins with powell's inflation pitch, investors closely watching the rate policy tea leaves at jackson hole. plus, retail's