2023, and "squawk box" begins right now. ♪ ja good morning. welcome to "squawk box" on cnbc. we're live in times square. i'm becky quick. joe and andrew are off today. if you want to take a look at what's happening with u.s. equity futures, you're going to see a modest decline. the nasdaq off by about 33 points. but all of this comes after another big day of gains for stocks yesterday. the dow was up by almost 300 points in yesterday's session. that was a gain of about 0.8%. s&p was up by nearly 1.5%.

the nasdaq was up by 1.75%. guys, this is when people were looking at the month of august, okay, not a great month, there's been a pullback, but watch what's been happening. you have back above 50-day moving averages, and if you thought you were going to get a pullback, that's changed. >> pretty true. it's more than half of the total peek to trough decline. you mentioned the 50-day moving average. everything lower about that yield. the reflex move was softer than expected. latest data from the j.o.l.t.s. report. we can have this very, very beneficial cooling of the market. yields come down, back into their old range. now, i do think again it makes sense, but the whole bad news is good news only gets you so far, and i don't think it was bad news. est enwants the pendulum to stop halfway from a super tight

market to a goldilocks moment. talk about big gainers, nvidia closed after the chipmaker announced a partnership with google that could expand ai. the nasdaq again up by about 1.75%. you can see this morning nvidia's off by about three-quarters of a percent, that's a drop of about $1.80. then the treasury yields mike was talking about. this was the big story. this is what moved yesterday. the 10-year right now is well below 4.2%. it's sitting at 1.25 and the -year is below and a little bit of change right there. >> exactly. it certainly took the edge off. 4.25 has been the number that people have been fixated on. they're saying, oh, we're not running away.

mortgage rates are not going to blast through higher than they are right now. it sort of addresses really the acute fears we've been dealing with for a while here. >> again, what you're looking at, 4. 5. we to have the jobs report, believe it or not, coming up on friday. that's going to be something to watch. >> adp, it would be interesting to see. gtp, probably a little less important. but to mike's point, bad news is good news. >> only in measures doses, exactly. box is cutting its guidance. the slowing economy is putting pressure on customers' it. t. bunts. that's been the team for some of these numbers. ambarella is also tumbling after the chipmaker said it expects third quarter estimates to be

well below estimates. they're seeing some weakness in end market demand. and shares of hp are falling. the company's being cautious on the fourth quarter as it deals with the slump in the pc market and sluggish demand in china. they say they to not see a recovery in chinahappening any time soon. the stock down almost 9% premarket. and shares of hp enterprise are slightly lower. beat estimates by 2 cents. revenue was in line. the company raised its full year outlook. it came in slightly below wall street's expectations. the company's ceo will be on later. pvh posts strong earnings and reiterates a 3% to 4%

revenue growth. it plans to improve revenue intorreys to have a more efficient supply chain. and apple is expected to announce a new version of the iphone, big surprise there. a switch to the usb-c charging port. we need another one. it could reportedly be made of titanium. that would be cool. apple's shares up 40% year to date. >> i just need the new camera. i'm two versions behind on the camera with two lenses instead of the three for the pro. >> will anyone be able to tell the difference? >> i finally notice it. i'm like, wait a minute. you took the same picture? yours looks better than mine. >> it's amazing that's become the edge of what people actually

notice as the feature of your phone. >> it's how you document your entire life and you save it on the apple cloud. >> pretty soon it will be 12 lenses. i ontario have one. soon it will be all. >> you've got to get it developed, sending it out. >> i thought i was cool with this. but i need the third that you need the better images so the ai can train on all of our faces. >> exactly. all right. in the meantime, a setback for burger king. a u.s. judge rejected a bid to dismiss a lawsuit claiming that it cheated hungry customers by making its whopper sandwich appear larmer than it actually is. the jump says the restaurant has to defend against the claim that its depick of whoppers on in-store menu boards misled customers amounting to a brech of con track. the photos portray the burgers with fwrenlts that, quote, overflow over the bun making it look like the burgers are 30%

larger and contain more than double the meat the chain serves. burger king says it wasn't required to deliver burgers that look exactly like the pictures. when is the last time you got something from a fast food place that looked like it did up on the screen. mcdonald's and wendy's have similar suits in court. it looks like a class-action lawsuit. >> you wonder how much the individual damage could possibly be. >> 2 cent 12 cents for you if y well enough to say this is what i deserve and this is what i got. yeah, come on. silly lawsuits. when we come back, two key data points on the agenda. your squawk planner is next. and later a key court ruling in favor of grayscale and its lawsuit against s.e.c. over the bitcoin etf. michael sonnenshein will join us

first on 8:00 a.m. on cnbc. this is a significant win for the company. we'll talk about that. the bitcoin off by 1.75. it was up shplonary this news. you're watching "squawk box" and this is cnbc.

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"closing bell." after the april quarter the company declined to raise full-year guidance despite better than expected earnings. the ceo said she remained cautious with the macro conditions keeping things open in terms of what may happen with the macro economy. is a busy morning for data. coming up at 8:15 a.m. we'll be getting adp private payrolls for august. they'll be gaining 200,000 private sector jobs. then at 8:30 eastern we get our second read from the gdp. joining us right now is amy wu silverman. she is head of derivative strategy at ibc cap at the markets and alnother guest. why don't we start with you. this is a big week for data. what are you expecting in what are the numbers we're watching?

what should we really be paying attention to? >> absolutely. good morning. thank you for having me. the two big readings this week, i think, will be number one by far the jobs report. we're looking for $175,000 on payrolls, 3.5% unemployment rate. that's flat, and 0.3% wage inflation. in terms of job losses, you have the shutdown of yellow. we get a slightly lower number, which would be welcome for the fed, right? on thursday we get gdp inflation. it could be a little more concerning from the fed's perspective. we also would get income and spending, and there we look for spending to significantly outpace. we saw that in retail sales for

july, utilities spending. so we think that the saving rate could fall quite significantly in july. >> amy, what is the options market telling you just in terms of what they're anticipating, what the realm of volatility is for these numbers this week? >>. >> so, look, becky, the options market has been remarkably low and remarkably sanguine. i think that part of this is just due to seasonality. obviously the numbers coming this week are critical and also just depends on how they fuel into what happens a few weeks from now. i will point to one thing, which is, you know, look, in the options market we've had a lot of exuberant sentiment both of the index level as well as specific mega cap tech stocks. what i will tell you, that exuberance, that demand for

call-offs has been waning, so i would point to the lack of positive sentiment we saw a few months ago heading into these numbers but not yet the full rising of the sentiment. >> how much of that is a reflection of the economy and what we think the fed is going to be doing? how much do you think that is a reflection of what we've run through already, the exuberance and technology up front? do we think a.i. has more room to run with this? >> if you look at the tea leaves option you would think, no, that momentum has been starting to wane. a few weeks ago people couldn't wait to jump into the pool. you get more positive momentum. position-wise arguably everyone is in the pool. the question is what do you to/from here at these levels. i will tell you the sentiment has turned not to the overbuying of call options but should we be hedging as we close into the end of the year. >> what's the answer? >> i think that, you know, look,

i think from a valuation perspective, it's something our own research nalls have argued about. they're nearing a point where they're limited upside to the market, not necessarily full downside. but when you look to the derivatives market, i think some of the best tactical trades remain still on the upside still given where we see upside targets are and using potentially the downside. >> what is the underlying pace of the economy right now? you mention we're going to to have strong slowing in consumer spending. we're in a bit of a hot streak for gdp indicators for this morning. evan is looking at the rate hike wes got in the last year and a half? where are we headed to? is it about going to 2% growth or are we still at the risk of something worse? >> it looks like at this year we could look at 2% on growth.

if you think about it compared to three months ago, it's pretty remarkable. they printed around 1%. we were looking for 1% in the second quarter, and instead the first quarter got revised up 2%. the second quarter came in at 2.4%. and now for the third quarter, we're tracking 2.8%. i know there are other measures from the atlanta fed that are giving you a significantly higher number. if anything, it looks like spending has accelerated a little bit. yes, the labor market has lost momentum. that is natural as you get closer to peak employment, but i think the point is we're still running around double of what would be the break even pace given the speed of population growth and so we're still putting downward pressure on the upward. >> how do you factor in china and the slowdown they see? is that something that's going to be contagious to us? >> the u.s. is typically well insulated from shots abroad. the u.s. doesn't really import

recessions. that's what history tells us. with china, we look at exposure to direct demand. we look at exposure in terms of exports to china. both of those are around 60, 70 basis points of gdp. even a large shock is coming out of china. i would not imagine it would take more than 0.1% off of the u.s. gdp. >> aditya and amy, thank you both. coming up, an update on hurricane idalia, upgraded to a category 4. and an exclusive interview with the ceo with cruise at 7:a.m. eastern. "squawk box" will be right back. o iconic landmarks,

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u.s. commerce secretary gina raimondo in china. eunice yoon spoke with her. eunice? >> thank you. she's wrapped up her whirlwind trip and described it as productive. here in shanghai she visited several locations that were examples of u.s./china cooperation such as china disney land, an nyc campus, and boeing. i asked her about the concern she expressed among u.s. companies that china is just

uninvestable. she said businesses want to be here, they want to work with the chinese, but they're just feeling things are unpredictable. this is what she said. >> all of those regulations just make -- it's an unlevel playing field for the u.s. business. it's unpredictable. and so my message was there's a desire to do business, but we need predictability, due process, and a level playing field. >> reporter: i also asked her about cases like micron, intel, as well as china's export curves for metals important for semiconductors. i asked her about this as a possible chinese policy to retaliate against u.s. companies in response to her export controls, and this is what she said. >> i think that that retaliation, if it is retaliation, isn't good. like that isn't the way to build

confidence or attract u.s. foreign direct investment. >> reporter: and at the end of her trip, frank, she said that her main message is action speaks louder than words and she brought up she did believe a boeing deal would be a good action by the chinese to really build confidence among the community. >> those words, especially the uninvestable comment was pretty striking to me, pretty strong reaction. what has been the coverage of her trip, if anything, and her reaction in the chinese press and the chinese sort of social media sites? >>. >> reporter: the foreign ministry dodged the comment. they said the u.s. should do more to try to rebuild ties. but in terms of social media or

what's kind of catching attention at the shanghai disneyland park, she was caught being like -- hugging a young chinese girl who ran up to her, and that's starting to spill over onto social media. 's having a soft power impact on the public if not a more meaningful or significant impact with chinese officials. >> thank you. that's certainly what they're hoping forring is to have some of the buildup between biden and xi beinglile more friendly. >> thank you very much. in the meantime hurricane idalia is approaching the u.s. coast as a powerful category 4 storm. nbc's jay grey is in gainesville with the latest on this. jay, how are you doing? >> reporter: we're in a bit of a

break. what we're feeling is the outer bands. i just looked at the radar, and we've got another band on the way through in the next few minutes here, and once the storm gets closer to the shoreline, this will being much more constant. we'll have a heavier rain, hurricane-force rain. we should see some of the most severe effects rushing through this area. i don't know if you can see it behind me or hear it. that's been some traffic out this morning, which is baffling because this is a time where you need to be locked in and getting ready for this storm. you know, the university of florida is here. that's 50,000 students, a huge faculty. taking care of that situation is paramount and a lot of students have moved to higher ground. those who haven't, the time to evacuate has passed. it's time to lock in and get ready for this storm. as you talked about, growing in intensity as it makes its way

toward the coast and a major hurricane in an area that doesn't see major storms all that often. a lot of trees in the area. we expect them to be pulled town, power lines pulled down. hupp tread hundreds of power tre standing by. it's going to be rough for the next several hours. >> jay, what about on the coast? what kind of flooding are you talking about? that's been a huge problem with so many storms recently too. >> reporter: no, becky. you're absolutely right. what we're hearing from forecaster is this. this could be unprecedented. a wall of water to 15 feet high. that's over a story high of water pushing in as the storm pushed through. that's generated mostly by the wind. so as the wind continues to increase, it makes the level go up even higher, so that's going

to cause severe flooding in areas along the coast and low-lying areas. we ar going to see flooding here in the gainesville area without that surge. so just the rain alone is going to cause problems in low-heying areas here. but, yeah, the path of this storm and the areas along the coast, the hurricane center, has now said it could see unprecedented and catastrophic results that could look more like a tornado than a hurricane. so leveling a lot of what's there. it's a frightening forecast as this storm gets a little pit closer and it's moving and inching toward that coastline. we expect landfall in the next couple of hours, so we'll know a lot more then. >> where is larnldfall anticipated at this point? >> it still looks north of cedar key, perry? if there's any good new, it's not highly populated. but it's also just marsh and

swamp. there's nothing to slow this storm downle it's going to continue to maintain its strength as it moves into areas like gainesville. it's still going to be a very powerful storm. up the eastern seaboard to georgia, the carolinas, they're going to experience extreme conditions later in the day. >> well, jay, be careful. as you mentioned, there is some traffic still taking place behind you. i hope everybody takes care. and, jay, we're check in with you later. jay grey from nbc. coming up, pit coyne prices surging the last couple of days after a lawsuit. we'll talk about the potential impact on crypto prices and related stocks next. later grayscale ceo michael sonnenshine joins us. a look at s&p's final winners and losers when the

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welcome back to "squawk box" right here on cnbc. we're live from the nasdaq market sight at times square. take a look at futures this morning. dow futures picked up. barely but 5 points. s&p by 5. august is not looking like nearly the week that it was. >> you know, if that was it, not too painful at this point. the crypto community scoring a big win yesterday. the u.s. district court of appeals for the dc circuit ruled in fab of the firm grayscale in its lawsuit against the s.e.c. the regulator had rejected the company's application for a spot bitcoin etf. it could clear the way for grayscale spot bitcoin eft as well as others, which explains why they surged.

kristin smith, ceo of the blockchain association joins us now to put this all in context, kristin. i mean, on one hand it doesn't seem particularly difficult for the public to own bitcoin and other cryptocurrencies. why is this move significant and what is the advantage in your mind of a bitcoin etf? >> certainly a huge win not just for grayscale but the broader crypto community and a huge loss for the s.e.c. a huge embarrassment, i should say. bitcoin ets is good for a couple of reasons. it provides an easy regulated product for regulators who don't want to deal custody or those who have exposure to bitcoin. if you think about it, bitcoin is a lot like gold. there will only ever be 1 million bitcoin.

it provides a way for institutions and individuals to get access to owning bitcoin. we're very excited. it certainly doesn't mean it a is going to happen immediately, but it helps clear the way for the approval of hopefully not just one but many etf applications in the weeks and months ahead. >> now, the crux of this case and i guess a lot of the back and forth with the s.e.c. and the industry has been, the s.e.c. is essentially saying they didn't believe there was a way to safeguard against manipulation of the underlying bitcoin of the potential etf. they prefer the bitcoin futures. you still do have a situation where the top 2% or 3%, bitcoin owners own a tremendous percentage of it. maybe there has to be assurances this is a market that can be monitored properly. >> yeah. well, i think the applicants have made arguments to that case. i think what the court found

here is that it was arbitrary and capricious for the s.e.c. to grant the bitcoin futures applications but not the bitcoin spot applications. so the s.e.c. could come back and find other reasons why they don't want to approve those applications, but they can't use that reasoning because the bitcoin futures market is highly coordinated with the bitcoin spot market and so that justification doesn't work. so i think, you know, i think that these markets, there's a tremendous amount of information about these markets. if you look at the applications that are pending, that's different information sharing agreements that we think would help sort of ease that concern. but, you know, i think you have to realize that these products are registered as securities. we think that there are a lot of consumer protections built into

that and this should be one of the many ways that individual or a business can get some exposure to bitcoin. >> kristin, there was a lot of celebrating yesterday about this. the industry has portrayed him as kind of the enemy, sort of holding this industry back. to what extent has the industry been its own worst enemy? there were news that came prior to that that they filed something. there could be criminal investigations and the move on bitcoin itself has been fairly sub ta'ued. it's been down this morning. to what extent will the availability of a tf be able to overcome the messiness and ugliness that's already out there and can you bring big institutions back to bitcoin after all that's happened with ftx and binance? >> listen. i think institutions want to come back and they want a safe way to to it. we've certainly had a rough year, 18 months in the crypto

industry, so there's no denying that. but i think 99% of the people working in this business are good people and they want to do the right thing and they want to comply with the laws. i think what's interesting is over the past 10-plus year, the industry has made a good faith effort to lock at the law, the regulations, look at the case law, and figure out how this new say set class fits when that construct. what's interesting is the krit toe industry and the lawyers who work in the space have a lot of thoughts about how security laws amy and fgary gensler has a different interpretation of the laws. what we've seen with the case is that the s.e.c., just because they say something doesn't mean that their interpretation is correct. and when you push that to a test and push that to a court, what

we're fiending is judges are not agreeing with what the s.e.c. is saying. and so i think it's very validating for those of us in this space who are trying to do the right thing, who are trying to comply with necessary laws. it provies a lot of validation that we are looking at this correctly. i think moreover it points to the need for congress to get involved in setting up a broader regulatory framework. just because the crypto industry thinks they can analyze existing laws doesn't mean they have all of the protections we want to see, so we need congress to step in and play a role. that's why we're very hopeful that we've seen some legislation move through the house finances industry and they've tried to address some of those concerns. hopefully for policy makers sitting on capitol hill who have been relying on fwar gentzler o

save the day, they need to rely on that. >> arguably folks on all sides of this have wished for congress to actually clarify things on some level. kristin, thanks very much. appreciate the time this morning. >> great. thanks, mike. a programming note, we'll be speaking to grayscale ceo michael sonnenshein at 8:00 a.m. on cnbc. and tesla and a secret autopilot plan that allows drivers to keep their hams off the steering wheel for extended periods. and don't miss our interview with jeff greene billionaire investor. and a reminder to get your daily "squawk box" on squawk pod. listen any time. we'll be right back.

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welcome back. tesla is facing increased scrutiny from federal regulators over its autopilot system. they said yesterday in a letter that they had become aware of an autopilot configuration that would allow drivers to operate their vehicles for excepted periods without prompting drivers to put their hands on the steering wheel. they wrote this confidentially

for a response. this follows a secret setting that enables full-steering wheel mode. it's featured as elon mode but isn't the name of it. the shares up more than 100% year to date. >> did you see also in l.a. they just got approval for a tesla driver. 24-hour diner and movie? >> is that it? while you charge? >> that's a good idea. u it's tesla-themed. >> why would you put your car in elon mode? >> it could go anywhere any time. >> there's a complete mission at the company driven by him. he thinks the robo taxi is the only authentic. >> he's so unpredictable. i would have chosen a different

name. >> they didn't choose it. the engineers were goofing around. let's take look at shares of johnson & johnson this morning the company updating its guide answer for the tull full year after the separation from kenvue. it would be down $10.70 and $1060. the stock this morning off by three-quarters of a percent. when we come back from private quitting by workers to private cutting but employer, we'll talk about the latest trends in the labor market. and later we will talk to the ceo of the autonomous vehicle company cruise. it's an exclusive interview you rend y knt to miss. a mieroua can watch or listen to us any time on the

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we've talked about quiet quitting. now it's quiet cutting. joining us now, the author of next, the power of reinvention in life and work. a great book. i recommend it and a cnbc contributor. jo ann, great to see you. it seem like everything now, you put the word in front of it. quiet luxury, quiet quitting,

quiet cutting. what makes it different from cutting staff or trimming? >> great to see you. i wish i was with you in person. what we're seeing with this quiet cutting. for time in memorial we had bosses who were trying to squeeze people out. what's cutting is whether that is going to mask what we would normally see where companies are rolling out information about layoffs. and, you know, typically it is a great indicator for us to know where the economy is going. and quiet cutting is interesting. what my concern is about quiet cutting is what are the populations that it is going to hit. who are the people who are going to be hurt most disproportionately because a lot of what we're seeing with quiet cutting is you're reassigned or in some cases you're remote and told now you have to come in, and we know that for the past few years, the employer -- the employees have been in the

driver's seat. the employees have been able to really call the shots. but what that's done with remote work, hybrid work, we have seen that it has been really good for certain populations, particularly parents of young children, women, people of color, and will those groups be disproportionately hit by quiet cutting, which is trying to make their jobs less appealing to them. >> yeah, i also wonder, you know, during the pandemic, companies were just hoarding workers. just so hard to get labor. and i wonder to what extent quiet cutting is the result of companies not wanting to get rid of people for fear that it is going to be too hard to rehire them and how long will it take those scars from the pandemic of severe labor shortage to really heal while they do feel comfortable getting rid of costs they don't need? >> yeah, that's a really great point. i think, you know, we're now in this third year of every august we hear companies saying we're

going to go back to the office, it is going to go back to normal in september. right after labor day, we're all going to come back again and it is all going to go back to the way it was and we see companies that have been trying to do that, there has been huge, huge pushback. look at goldman sachs, we did away with summer fridays and said you have to be here five days a week. amazon, when it said people have to come back, employees started to quit, some employees were quitting. so i think this quiet cutting is a way to say, okay, we don't want to get into this situation again where it is so tight and we can't get employees, but on the other hand, we're in this sort of transitional period right now, where employees had all -- they had the upper hand. employees could call the shots. we had more hybrid, more remote, and now employers are trying to kind of grab back some of that power. and to hold on to those

employees, i would agree with you, there is some concern that, you know, if the labor market remains really tight, that they're not going to be able to hire or rehire the people they need. >> and, you know, when it comes to remote work, you and i and becky started at "the wall street journal" where there is an advantage of being in the newsroom, learning how the great editors and reporters sourced and broke news and had the conversations. isn't it, though, job specific and this whole blanket idea of getting everyone back to the office or keeping it remote, do you think eventually this will sort of lead to just industry by industry rules, what is appropriate, and also employee by employee appropriateness? is that how it is all going to end up? >> i agree. it is not just industry by industry. it is company by company, department by department that we're going to see. this is what we're finding. first of all, this five days a week that we're all going to go back to normal, that's over. let's just put a pin in it and

say it, it's done, right? these past three years of saying, it is all going to go back in september, that is over. but what we're seeing is some really interesting different kinds of ways of working have now emerged. so you probably saw smuckers, you were probably talking about smuckers which now says you can work anywhere in the world, you can be anywhere you want, but you have to be in the office for 22 separate weeks. as long as you pay your way, get to the office. so the rest of the time you can be remote from anywhere, which is a really interesting way, the employees like that. all state insurance sold their headquarters. they have 82% of their workers, i believe, right now are remote workers. that's been working for them. four day workweeks, a whole bunch of companies have tried four day workweeks. and the studies show that four-day workweeks, there has been studies in iceland, in the uk, there has been a global study, they all found the same

thing, which is that productivity is the same or higher, employees are happier, there is less stress and mental health improves among employees. so there is a whole variety of different variations and i think we're moving into a new era where companies and particular positions will be structured in a way that potentially makes a lot more sense. >> joanne, to me, it just does feel like this was a workers employment market and as it gets more to the employers job market, you're doing whatever the boss is doing. if the boss is in five days a week, you better be in five days a week. if the boss wants to sell the headquarters and says i'm working from home and you can too, that's the story. it feels like the pendulum is swinging. we may not go back to exactly where we were in 2019, but if the boss is in five days a week and layoffs are coming, you better be there too. >> this is a great point. i've been saying this all along.

i've been doing a lot of speaking and writing and researching on this topic. and frankly what we have seen because employees have had the upper hand, you know, we have been able to kind of really move what the work place looks like. but if there is a recession, if we have a real downturn, all bets are off, right? you need a job, you're going to do whatever your boss tells you to do. >> right. >> yeah. absolutely. >> we'll see whether this labor day brings labor back to the office. every year, you're right, we have this conversation. the data i don't think is going to change after this labor day. thank you for joining us. great to see you. >> you too. thanks. coming up, we're tracking hurricane idalia as it approaches florida's gulf coast as a powerful category 4 storm. we'll take you live to tampa straight ahead. and a programming note. don't miss an interview with democratic presidential nit idate robert f. kennedy jr. toghon "last call." "squawk box" will be right back.

♪ (upbeat music) ♪ ( ♪♪ ) constant contact's advanced automation lets you send the right message at the right time, every time. ( ♪♪ ) constant contact. helping the small stand tall. good morning. the end of the month rally in jeopardy as investors get ready for adp private payroll numbers. the futures so far are mixed.

you got some in the red, some in the green. political ads making a comeback on the social media platform formerly known as twitter. we'll look at the company's move, what it means for the 2024 election, and where elon musk stands on the race. and hurricane idalia churning in the gulf and set to make landfall as a category 4 hurricane in florida. a live report is straight ahead. the second hour of "squawk box" begins right now. good morning, everybody. welcome back to "squawk box" here on cnbc. we are live from the nasdaq market site in times square. i'm becky quick. we started a little bit in the red. you've seen the dow kind of pull up to this point. dow futures now indicated up by

14 points. s&p feautures off by two. the nasdaq down by 15. the last three sessions we have seen pretty strong gains for stocks. a lot of that related to what we have seen in the treasury market. yesterday, treasury yields took a hit, under some pretty significant pressure, pulling back to the lowest levels i think since about august 11. that came after the jolts report came out and showed that maybe inflation is pulling back a little bit and the jobs market is not quite as strong. that's seen as good news. it means maybe the fed won't have to raise again. in that sort of circular logic, you can look at things this morning, the ten-year is back below 4.2% to 4.15. also check out bitcoin prices, they're falling this morning after surging yesterday. a federal court ruled in favor of gray scale and the lawsuit against the s.e.c. over a bitcoin etf. and that was seen as pretty big news. not just for gray scale, but also for bitcoin. gray scale's ceo is going to be

joining us first on cnbc, coming up at 8:00 a.m. eastern time. >> time for the frank and frank show. let's get to frank holland, with a look at this morning's premarket movers. frank? >> robert, good morning. i was waiting for this moment. good morning. we got some movers this morning. hewlett packard enterprises moving lower after top and bottom line beats. they raised their earnings guidance, double digit revenue decline for its compute segment. that appears to be weighing on the stocks. shares are down almost 2% right now. and then coming up at 11:00, the ceo will be on "squawk on the street" for a first on cnbc interview, talking the quarter and much more. also the demand environment out there. looking at chips this morning. we got to talk about nvidia. you can see right now, it is lower in the premarket, down after closing at a record high yesterday, following news of a new a.i. partnership with google. nvidia, $1.2 trillion market cap

and checking chips this morning, we see amd down lower as well. taiwan semi flat. we have another earnings mover in, ambarella, 21% lower after disappointing earnings in guidance. a downgrade, moving its price target from 90 bucks to $65. and transports, my wheel house, citi naming fedex as the top pick in the transport sector. it has a buy rating with a $285 price target, 9% upside from where it is right here. fedex not moving too much right now. yesterday, announcing it is raising rates by 6% at the start of 2024. citi says it highlights fedex's pricing power and believes customer traffic from the u.s. -- u.p.s. contract talks and closer of yellow will support its earnings picture. you see here, this is the interesting part, fedex far outperforming its rival u.p.s. year to date. u.p.s. down 1% for the year. robert, back over to you. >> frank, thank you. quick question on fedex, you

mentioned the price increase of 6%. how much higher is that about in line with what they do annually? >> they do have a price increase annually. 6% is about what they had last year as well. technically 5.9%. but i don't know if it is always regularly scheduled. certainly depends on demand and over the last few years we have seen not only accelerated e-commerce demand, but more demand for what their specialty is, ltl trucking, the same area that yellow operated in. >> so expensive to ship anything. frank, thank you. our next guest says she expects the market volatility to continue into october. even though she remains positive on stocks for the full year. an area of the market she's concerned about, the banks. to tell us why and which stocks she currently likes, let's bring in mary ann bartel, chief invest strategist at sanctuary. great to see you. >> great to see you too. >> i guess there is one way of framing what we have been going

through here as incredibly strong market through july, things got a little bit ahead of themselves, excited sentiment, we got maybe valuations being stretched, normal seasonal pullback in august, and then with this little rebound 3.5% off the lows a week ago friday, you probably have some folks thinking that was -- that was all we had to worry about. do you agree? >> no, i don't think so. so i think we can be a little -- i'm calling it choppy. between now and october. and i think why we're getting this really nice rally is because markets did get very oversold on that pullback. you did have s&p down around 5%, nasdaq around 10%. nice oversold conditions, you know. as you said, you know, sentiment got bearish. now i think we're getting a little bit of a lift. but i'm still concerned because when we look at the intermediate indicators for the market, there is still overbought and starting to signal that we can have another correction.

or we're getting sell signals. as you pointed out, markets are expensive around 20 times as expensive if interest rates wind up backing up again. and if we wind up seeing that ten-year back up again, and go to 4.3, 4.5, possibly 5, we think that's going to put pressure on the markets. so, why do we remain constructive and positive? if we look at earnings, earnings for the quarter were great. and the best indicator of the direction of the market is estimate revisions. and we're seeing estimate revisions rise. so we do stay very constructive. we want to buy the pullback, but still think that the next couple of months could be a little choppy. >> yeah, for sure. even through this little bit of chop we had, the forward estimates of the s&p have continued to rise. credit markets have remained pretty calm in all this. we did hint that the banks were made a worry point for you. why is that? it seems a while since the banks

were actually a real reliable bellwether for the broader market. why does it concern you now? >> well, they're really trading even in the rally they're still trading very poorly and the highlight was we look at citi and the relative price, meaning we take citi stock price, compare it to the s&p 500 and that reached a record all time low. that is below the financial crisis of '08 and '09. that's not what you want to be seeing in the bank. so, you know, the regionals have been heavy, but some of the money center banks are also not trading very well. so, yes, they're cheap. so we're calling them value traps. this is not part of the market that we're ready to actually buy yet. >> and you say you want to buy the pullback ultimately as we get through this period. what parts of the market look like they're set up better? >> well, tech, i still think it is a leadership.

our favorite pocket of the market has been semiconductors, followed by software and services. but i think semis are the clear leadership in this marketplace and as long as they continue to keep their long-term uptrends, i think that's a good sign that the markets remain in the secular bull market. not only do we think this is a good year, but we still think higher highs can come and we're not looking for any major top in the market until later this decade. >> yeah. interesting, yes, so secular bull market, maybe one that spends a very long period of time, let's say 12 or 15 years or something like that. do you actually feel as if 2024 is set up to be okay? you have the election year dynamics and then at some point presumably the fed stops hiking and we have to start worrying about what comes next. >> i think the key is going to be where do interest rates peak

out. and does the ten-year and 30-year still have to get to 5%? and they indicate in terms of their technicals that's a possibility. i would like to see rates get to their levels before we actually can determine where the markets are. but in general i think if people or investors buy today, over the next three to five years you're going to have positive gains in the portfolio. >> mary ann, thank you very much. good to see you. all right, still to come this morning, back to school is here. oh, boy. the president of american university talks a.i., tech and the classroom. the restart of loan repayments, and much more. and then an update for you on hurricane idalia, category 3 as it nears florida's coast. we'll get a live update of where things stand, what is happening right now. you can see pictures of fort myers, south of where the hurricane is coming ashore right about now.

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it is the start of the new year, and after the supreme court struck down president biden's student loan forgiveness program, millions of borrowers will have to resume making the payments for the first time in more than three years, starting in october. price of higher education has risen exponentially, costing some college students an average

of $53,000 a semester, i believe, that's a year, right? that's not a semester. that's a year. joining us right now is sylvia matthews berwell, the former health and human services secretary under president obama, and, madam secretary, mrs. president, thank you for being with us this morning. >> thank you so much. thank you for having me. >> let's start off by talking about college repayments for these loans. that is a big deal. we're anticipating it is going to cut into the ability of consumers to spend quite as much. but college education prices have gotten incredibly high. where do we stand right now because the loan forgiveness, my biggest problem with it is that it didn't put any of the onus back on universities to try to tamp down costs. it allows them to continue to spend at increased rates. what happens? >> i think this change that is going to occur in terms of

students you talked about the issue of what it means directly for students in terms of their cash flow because they'll start to pay, it is important to recognize that for many students this will be the first time because they will have graduated, so this is the first time. so there will be some transition. the universities themselves, for all of us, it continues to refocus everyone on the questions of value proposition and of affordability. and i think it also brings into focus, again, that question about student debt. as we think about that question of student debt, the work the administration has done and we have to think about this as a policy issue and bring in both the congress as well as the administration, you think about it, i i thinking about three important principles, one is those that are defrauding students, that is one of the most important things to take care of because that's something that leads to some of the debt. second is as you think about the students and the individuals, how do you think about it in terms of making sure that you're

freeing economic potential for them, and third, as a former director of the office of management and budget, i believe you have to think about the issues of fiscal responsibility. >> but i do believe there is something with the universities themselves. if you look at purdue university under mitch daniels, they have frozen tuition for a decade, they just signed off on freezing it for the 11th and 12th year so tuition all in, if you're looking at room and board, is actually less than you were paying back in 2012. how are they able to do that when other universities look at increases in price every year that almost always outstrip inflation. >> i think what we need to get to is as we focus on this question, focus on the question of the value proposition and thinking about the sector as a whole. and generally speaking, what we do is we talk about universities and think of them all as the same. and this gets to the question of affordability and value proposition for students to get to and i think your question is actually the right question, which is starting with the question of affordability, both

in healthcare and in education, that's where you need to do. affordability is related to the value proposition. what are you paying for what are you getting. and that's why you need to think as a sector as a whole, in different institutions there are different things that are offered. >> i guess. but it is hard to do this on a case by case basis unless you want to talk directly about american university and what you've done there, how much has your tuition gone up, what have you done to try to address affordability. if you look at the broader situation, the school, 200 grand in debt, lib weral arts degree, you may not have gotten the best value proposition for what you paid. >> i think the value proposition has to be recognized over an extended period of time. at american university, we're at a lower price pint. we had to try to work on those issues. and you work on those issues in two ways. in terms of the overall cost and that value proposition thinking through that and whether that's the work. i think everyone knows that

universities across the country for residential institutions, the support we need in mental health areas as well as the number of other areas that the president residential proposition offers, at unc and other places, the threats to those in jacksonville and safety, you think about this question of value proposition and then you think through the question of what you do in terms of financial aid. on both of those, deep focus on american university, our focus on people both our staff and faculty as well as students through the form of financial aid has been a deep focus and in the last year as we increased our financial aid and the percentage of what is called the discount rate, which is the amount that the overall price is discounted for those who have the most need. >> so just to clarify, has tuition gone down over that period or what students on average make? >> it has not gone down. we have not been at the rate of increase that other institutions have. and as you think about, you

think about the whole picture, that's why i say think about the entire sector, and you think about the value proposition and where you are in the market you're in. >> so i want to switch to a.i. my daughter started college this week. and the discussion among her and her friends is not so much about how to get a.i. to write their research papers, but more about how it is going to shape all the jobs they're going to later hopefully have. and to the extent that a lot of them are thinking about their majors and studies in terms of which jobs won't be disintermediated by a.i., how do you think schools and students should be thinking about the impending doom that a.i. is going to bring to so many occupations and what they should study as a result. >> first, i honor your daughter for the way she's thinking about it in terms of the conversations with her friends because i think her approach and i think you have to think about it in terms of the question of the opportunities as well as the

challenges. let's start with the students and what they're learning and how they're learning. and i think, first, in terms of what the students are learning, as well as how they learn has to be focused on in an a.i. world. and just as your daughter is thinking about what do i need to learn in a world where we don't even know the jobs that your daughter is going to have 20, 30 years from now. and so thinking about that in terms of what are those skills you need in a world that has that much change and then thinking about how a.i. is an opportunity. when we first got calculators, how we thought about the use of calculators in the classroom, i think we have to start thinking through what we think about a.i. the second place is in the research and scholarship that is done, very much relates to what we're going to be teaching those students. and here at american university, we gathered folks from nasa, gathered folks from the labor department, to think about how government is going to be using a.i. in different ways. we're actually -- we have some

of our scholarship has created database on state laws on a.i. in terms of how they're going to be using it. your scholarship needs to do it. the third area for schools and universities that you have to think about a.i. is, like other businesses and institutions, how does a.i. impact our work and our workforce? and what we do. how do we use a.i. to help students access what they need to access? how do we have a.i. help and support the work of our workforce? so i think for us it is about students and the learning, it is about research and it is about our faculty and staff and our workforce. >> just very quickly, if a student is using chatgpt to help write papers that they're turning in at american university right now, are they cheating? >> depends on how and what they're doing. in terms of finding facts or writing the papers. that's something you're right, that all institutions are having

a focus on in terms of what is plagiarism. which is not allowed in universities. and what is actually research. and that is something that is a difficult thing that we all need to focus on and i think what is important is we can't lose the forest through the trees. that's an important issue we need to work through, i think the impact of a.i. is so much broader in all three of those categories that we got to focus on those issues as well. >> sylvia, thank you very much. >> thank you. coming up, a live update from florida on hurricane idalia and the latest track information. futures now, a little bit mixed, getting stronger this morning. the dow pretty much flat. nasdaq down 24. before we head to break, time for today's aflac trivia question. according to the national retail federation, how much will families spend on back to school shoppinghis tyear? the answer when we come right back.

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welcome back to "squawk box." now the answer to today's aflac trivia question. according to the national retail federation, how much will families spend on back to school shopping this year? $890 for k through 12.

$1,367 for college students. i spent a lot less for my daughter. >> i underindexed it too. >> don't know how many kids. >> well, 2.2 kids, right? okay. still to come this morning, salesforce up 60% this year as one of the beneficiaries of the a.i. rally and out with results after the bell today as well. we'll talk more about big tech's run-up after this. cruise facing safety concerns as it rolls out to new cities across the country. we'll talk to the ceo in an exclusive interview you don't want to miss. stay tuned. iss g quk x"nd"sawbo a th icnbc.

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hurricane idalia expected to make landfall within the next hour. and has just been downgraded to a category 3 storm. nbc's marisa para joins us now with more from tampa. good morning. >> reporter: mike, good morning. so welcome from zone a, in tampa bay. what we're seeing right now is an example of why this is under

mandatory evacuation, it has been. this is an example of what happens when someone tries to drive through an evacuated area. this is the main area, main thorough fare through downtown tampa. that car right there, that's an example of someone who got stranded, actually needed to be rescued as the tampa bay waters have spilled on over on to the roads here. and this is the thing we're seeing across the area. it is not just here in tampa, we're seeing flooded roads in st. petersburg, clearwater beach, treasure island. something behind, tampa general hospital this is the region's only level one trauma center. people with the most serious injuries get taken there, it is only accessible by bridge. we were there this morning and we had to leave because the waters were raising to a level that we thought we ourselves, our crew, would get stuck there. so this is the main concern here in tampa. and the tampa bay area. it is not about the winds. we're seeing gusts probably maybe at most 50 miles per hour, maybe sustained winds a little

less than that. it wasn't about the winds, though. we knew that tampa bay was not going to be a direct hit with idalia. it was always the threat of the storm surge. exactly what we're seeing right now. the day is still young. there is still a lot of time for these waters to rise. so the other concern here, mike, as we wrap up, is it is not just the storm surge, we also have the threat with those outer bands, which keep crossing through here, adding more rain. there is also tornado risks. that's something not just here in tampa bay, not just the area in the direct path of idalia, she makes her way to make landfall, it is half the coast, half the state of florida is under tornado risk now, mike. right now, while things are looking good, we're not out of the woods, the day is still young. m mike? >> based on the current forecast, how long before we know, when will the storm surge -- when is it anticipated to peak? >> that's a great question.

that's a really great question. we're hoping that the worst is behind us. but it is kind of hard to say. i've been asking some of the meteorologists around here, and my understanding is i guess it just depends how much rain we get. that depends on those bands, so i think it is just not going to be until later this evening that we have a clear sense of that. >> got it, marisa, thanks so much. nvidia shares coming off a record close yesterday adding to its 234% run this year. another a.i. play behind it, meta up 148% so far in 2023. alphabet gaining 53%, outperforming in the last month or so. and salesforce which reports earnings after the bell is up 60% this year. here to discuss the a.i. stock rally, what salesforce's results might tell us is paul meeks portfolio manager, a finance professor at the citadel. paul, good to see you this morning. we mentioned all those year to

date gains from some of the big companies exposed to the a.i. trend. a lot of that for some of them was just taking back the losses of last year. but right now as we look ahead to salesforce's numbers, how does that one look set up to you in terms of what the fundamental story is, whether this sort of a.i. opportunity is priced in or is it maybe overplayed? >> i think it might be overplayed as you mentioned. the stock is up 60%. and at least for the near term, the intermediate term, salesforce is a cost-cutting story. not a revenue acceleration story. remember activists came in, and pew pooh-poohed the company for so long, and so now what i need to see is 10% revenue growth, that's what analysts are expecting this quarter, this fiscal year, next year. i would like to see some more details about their a.i. offerings, but i don't think

they're going to be significant revenue contributors for some time. so the key is do they continue to rationalize costs, because when they reported the last quarter, their operating margin year to year went up 900 basis points to the high 20% range. and in the past, they were lucky to be plus or minus break even on gap results. so that's what i need to see. the company back in january announced that they're cutting 10% of the workforce. they took out their co-ceo and other senior executives, they rationalized their office space, so this story is somewhat driven by a.i., like others, but it is more driven by continued cost rationalization. >> a big theme for a lot of the cloud cvses vendors has customers trying to be more disciplined on their services. talk about optimization as the euphemism. what does it seem like that

means for salesforce at this point and more broadly for enterprise software? >> so salesforce probably doesn't get much of an a.i. pop in that regard because we need to see a second to third tier effect when we start to see a.i. in software applications. a.i. now is all about the picks and shovels, the semiconductor companies like nvidia and amd that are allowing the training of the large language models, the inference of those models, followed by the hyperscalers like amazon web services, microsoft azure. so i don't think that necessarily crm is a beneficiary just yet. again, they're further down the a.i. supply chain with their apps. i do want to see them talk more about that today. they won't be benefiting from either the semiconductor theme or the hyperscaler theme, which

are the 1-2 punch in a.i. for the time being. >> so much attention in the last week over nvidia, the blockbuster quarter, but then perhaps the lukewarm market response to it. do you have a read through on that? i look at it and say nvidia held on to the massive gains it had this year. not as if it was a pure sell on news response. what does that indicate to you. >> it does indicate to me that obviously this company is doing so well, 70% market share in a.i. chips and a.i. chips is the driver of all of a.i. right now and technology. you're right. we didn't have despite the beat in raise and it was another big beat and raise, we did not have a big pop. also the market was down that day. so the consolidated gains when the stock is already tripled this year, i think it is pretty good. and i actually think there is still upside in nvidia because its numbers were upsided so much. if you look at the pe ratio,

which is elevated, versus the growth rate, which is explosive, i probably would find other stocks and technology that are more expensive on that basis. i'm still a fan of nvidia. >> i guess the real question is, let's say you go beyond the next few quarters, what is the longer term sustainable spending rate? you have a near $1.2 trillion market cap. the customers are running furiously to build out their capacity. and i think the question is are people stockpiling, is this an artificial reading on the level of long-term demand? >> you worry about that with a semiconductor company of any stripe, right? the overordering and in the case of nvidia, we have amd coming. amd used to be a crappy company and now a well managed company. when they say they're going to drive their own chips, i believe they will. i believe the specs will be pretty good. you have to watch nvidia over

time. but i do think that their early runway and it is long and wide and i do think that they will be sold out of their chips as many as they can sell for quite a while at least through next year. >> i mentioned alphabet had been a recent outperformer. back to trading at a bit of a premium valuation to meta again. people feel as if it is finding its way not just with the a.i. opportunity, but even the broader kind of youtube and media strategy and they have had their next conference yesterday. what is your thought on google here? >> so i like the relationship that they forced with nvidia. it is power. but i also know that we'll continue to see alphabet do a pretty nice job of rationalizing their own costs. that was part of the theme at the beginning of the year, the year of efficiency. but the key here is that digital advertising has rebounded. and unless we have a recession

in 2024 that is long and deep, i think it is going to happen, but i think it is going to be short and shallow, the digital advertising market holds up, which is the legacy revenue driver for that company, i think they'll be okay and in the meantime, the stock is isn't egregiously valued. >> true enough. paul, good to catch up with you. thanks so much. >> yes, sir. >> coming up, political ads just in time, coming back to the company formerly known as twitter. we're going to discuss the move and elon musk's position on the 2024 election coming up next. and later, federal appeals court ruling to overturn the s.e.c.'s rejection of gray scale's application for a spot bitcoin etf. gray scale ceo michael sonnenshein will be our guest. "squawk box" will be right back. did i say chicken wrong? tired of people not listening to what you want? it's truffle season! ah that's okay... never enough truffles. how much are they? it's a lot.

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x, formerly known as twitter, saying it will allow political advertising on its platform. elon musk's social media site planning to expand its safety and election team ahead of the 2024 presidential election. the move marks a big shift for the platform, prior to musk's acquisition of twitter, the company had banned political advertising since 2019. joining us for more is teddy

sleeper, puck founding partner. great to see you. you're also the author of a new piece "let them eat vivek," which looks at the breakthrough candidate's donor hype in the wake of the first gop debate. teddy is a fellow reporter on the wealthy. it is great to see you. >> sure. >> behind this move in twitter/x's ability and willingness to take political advertising, will it work, will it chase away other advertisers that they're trying to bring back right now? >> you know, it really depends on the details. that's sort of a copout. i'm fascinated, i'll tell you, to see how elon musk enforces this policy. they said that, you know, they're going to allow all political ads, except those that undermine confidence in american elections. that's a judgment call as we all know. what elon musk thinks undermines confidence in american elections may be different of what you and

i think or what other companies might think. so i am utterly fascinated to see how this meets the road here. is elon musk going to iiing to censoring ads about the tech companies that go after hunter biden? these are hard decisions. and they are going to be in the hot seat. so welcome to the thunder dome. every decision they make will be under a microscope. >> linda will be in the hot seat. elon doesn't seem to feel any of this. it is interesting the qualification, if it undermines faith in the american election system, is trump back on the platform and active, do you think he will be active on x? >> well, look, the other day he did his first tweet in years. his first tweet since elon musk took over. there are contractual requirements with regard to truth social, but sometimes i

forget he's allowed on twitter these days. i'm sure people do -- other people do as well. i'm amazed he's been able to resist. he's been allowed now back ever since elon took over. and every day, you know, i have tweet notifications on for trump, that's a vestige of earlier era in my life and just even seeing the trump tweet come up, you wonder is this real, a hoax? i think he'll tweet at some point between now and the republican primary. i don't know how he can resist. >> i wonder to what extent twitter and social media is going to matter as much as the 2020 election, even the 2016 election. 2016, it seemed to be very powerful. 2020, maybe a little less. so what kind of impact do you think the political ads and just the political discourse will be on x as it relates to the election? >> every candidate has tried to create their own, you know,

earned media strategy and oftentimes that involves owned media. you're seeing vivek ramaswamy, its campaign has its own podcast. the fact is that elite conversation which matters still happens on twitter. it does not happen on facebook, does not happen on youtube. and the public square as maligned and imperfect as it is, i think it is still twitter.com. and i do not think that there will be a mass migration by elites to other platforms and if you're a campaign, you want to influence what reporters think, you go to twitter. and influencing reporters is not the goal necessarily entirely of campaigns, but it is a huge part of political discourse and i'm a buyer on twitter's relevance, maybe sadly, but i am. >> and you've done some great work on looking at where the donations from big donors, billionaires are going in sill convalley. sill convallicon valley is not

monolithic place. i saw larry ellison is giving a huge amount of money to tim scott. is this more about trying to have a connection to a potential trump white house, maybe those candidates as vps or what themes are you seeing with the big billionaire donors in silicon valley right now and who are the favorites? >> sure. i mean, larry ellison you mentioned, we reported here, puck made an eight figure contribution to the super pac, that should be public early this year. nikki haley has her supporters. but the donor community made a pretty not unanimous but disproportionate bet on ron desantis earlier this year and that bet is backfiring spectacularly. the sense i get from donors across the country right now as we approach labor day is just

pure despondence, despair. it is worth stating that trump was elected or began its rise eight years ago in 2015. i don't know any republican donors have sufficiently and convincingly figured out how to make a dent in this public approval. like, i know that's an obvious point because he's president of the united states. and he's the favorite this time. but the sense i get from donors who are smart people and capable is whether anything they do matters. so, like, i feel very ani anihilistic right now. >> it is interesting, to that point, big donors don't have a great track record of picking winners. they all rallied around jeb bush, on one side, hillary on the other. that didn't work. many candidates haven't worked out so well aside from desantis

in florida as governor. yet, you know, does money even make much of a difference anymore? aside from the fact they don't like any candidates? >> sure. >> still raise a lot? >> right. look at -- we have a story at puck about the rise in donor circles of vivek ramaswamy and this is a guy who is showing that by being online, and having a little bit of -- $15 million, not nothing, but it is not ron desantis level money, if you're online and present, it obviates the need for having a couple of sugar daddies behind you. you can be relevant by saying yes to every podcast appearance -- opportunity ever. and donors in that situation have followed the candidate rather than candidates following the donors. and i think vivek ramaswamy is somebody is going to have to reckon with whether they want to or not. >> is that something, your

advice, go to the beach and write it off for six months, is that something some of them have done? i've actually heard from a couple of people who canceled fund-raisers because they weren't getting ting responden come back and say, yes, they can come. >> this is the hardest quarter of the year to raise money in, whether in venture capital or politics. i think there are wealthy contributors who maybe haven't admitted it to themselves but know what they're doing is not working. it is an obvious point. the fact is that they could go to the beach because there needs to be -- what they're hoping for is this kind of donor k consolidation around a candidate or two and the first debate did not help on that front. there are lots of candidates who have credible cases to make about being the alternative to donald trump. and the more cases that are credible, the harder it is to consolidate.

the sense i get from major donors is the biggest threat to trump is the legal system, not the political system. and that's something donors have no control over, what happened in georgia, what happens in the mar-a-lago case, that's what major donors might be banking on, not their $5 million all right, the national hurricane center, breaking news, folks, saying hurricane idalia has made landfall near keaton beach, florida. this is a powerful category three storm with sustained winds of about 125 miles an hour. these are the pictures we're getting getting live now. and when we come back, safety

concerns as this vehicle makes its debut.

welcome back to "squawk box." it's been about three weeks since cruz that is developing autonomous rides was allowed to expand and then had to cut back its service. let's bring in the founder and

ceo of cruz. thanks for joining us this morning. we wanted to have you on to get perspective in terms of where things stand right now in terms of cruz's service in san francisco. >> thanks for having me. it's been an exciting year for us for sure, some ups and downs. but as you know, cruz is out there, this is a brand new thing, robo taxis. when you drive almost 5 million miles like we have, you'll see almost everything, including rare events. when we see something novel, our regulators see something novel, they're going to want to take a close look at that. we're working very closely with our regulators. but people need to know about their safety track record, especially relative to human drivers. s since we've been operating, we've seen a two-thirds reduction in collision. if you've got a family or kids, you're going to want them in

these robo taxis and not the alternative. >> kyle, you live out there. u you've heard the commentary. the head of the san francisco department said you guys are not ready for prime time. i mean, the public looks at that and they say these guys are not ready for a widespread expansion across the city. >> well, look, first of all, we love first responders, we work really closely with the fire department, police department and others. it's really important that they're able to do their jobs. that said, i think it's really easy for us to get caught up in the excitement and novelty of a.v.s. any time they do something different than a human driver would. but if we create a double standard or ignore the fact that humans are not very good drivers, i think we run the risk of getting people hurt. if you have robe o taxis and we talk about pulling them off the road or restricting them, we run

the risk of taking a step backwards in terms of road safety. you. >> guys announced you're going to start testing in washington, d.c. and the seattle area, and into nashville. how do you make a decision in terms of what city you want to start testing out and when do you make the decision, okay, we think that we can go even further than just testing our vehicles in this city? >> yeah, so we're in three cities operating commercially now. we're testing in 11 more and we'll go live commercial service on those in the not too distant future. this is the year when you see it going from an interesting pilot into one or two cities into hundreds and thousands of avs operations commercially. when we go to a new city, we fully expect that av system will work really well given we've run commercially already but we do an extra round of testing and validation in that new market.

but that we understand all the nuances and know how to interact with that community really well. we want to launch with new cities and not at them. >> kyle, one last question here. the ceo of general motors has been effusive in her optimism of what the earning potential is for cruz. 50 billion by 2030, a billion annually by 2025 yes it's had no impact or very little impact at general motors. not asking you to angs for general motors and their shareholders, what will it take to get the earnings potential of offic autonomous vehicles. >> you've got a product that people absolutely love. when we launch robo taxis in a city, people prefer it compared

to a ride hailed vehicle. we've proven we can scale is quickly to other cities. you can see the business potential ramping up and the cost structure is falling through the floor on the operating cost, and that means the cost per mile to serve customers is dropping. so you have people love it, demand off the charts, cost structure falling through the floor. those are all the ingredients to make a slam dunk in my opinion. >> kyle, thank you for joining us this morning. becky, i'll send it back to you. >> bill, thank you. l excellent interview. when we come back, the first read on employment from adp. up next, a key court ruling. gray scale's ceo will join us next. "squawk box" will be right back. ♪

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and grow. constant contact. helping the small stand tall. good morning. crypto currency losing a little bit of steam today but bitcoin and the others still higher from that legal win that should move asset manager gray scale closer to launching a bitcoin etf. we have the first interview in a

few moments with gratescale ceo. and we'll get the first look at august hiring with adp numbers. and hurricane idalia hits florida as a level 3 storm. the final hour of "squawk box" begins rightnow. good morning. welcome back to "squawk box" on cnbc. we're live in the nasdaq market site in times square. joe and andrew are off today. we've been watching the equity

futures. futures are in the red. dow has been back and forth, s&p indicated by by 3 and treasury yields much weaker than where we were 24 hours ago. right now the 10-year is at 4.15, the 2-year at 4.9%. news said the sec was wrong to deny gray scale permission to convert its bitcoin trust into an etf. michael, welcome. congratulations. this is a pretty big win for you. >> thank you very much. it's great to be here. >> what does this mean for gray scale now? >> well, this is more than a year-long process. last june they denied our

application, we immediately filed a lawsuit, went through briefs and oral arguments and to yesterday receive an opinion from the court that unanimously had three judges rule in our favor is a huge victory for us, for our investors, the crypto community and investors community as a whole. >> they called this arbitrary and capricious, based on the idea that the futures market and spot price were pretty closely linked and they should be allowed to go ahead. the sec said it does have the opportunity to appeal this either to a full slate of judges on a d.c. court. it could be an expensive fight to continue. >> today marks day one of the 45-day process where the sec can request a rehearing. we really have to be patient now and follow the federal rules of appellate procedure during that time period and ultimately the

court will issue a final mandate that will detail the operational next steps. >> which means what? >> in the interim during this 45-day period, our lawyers are working constructively, pro actively with the sec to pursue the next steps as expeditiously as possible. we have to make sure that the sec is not losing sight of the fact that there are nearly a million investors that own gbtc today and it would be a really missed opportunity and directly violate the sec's mandate. >> everything dpsgoes your way,w quickly could you get it up and run persian gulf. >> -- running? >> we have had a foundational disagreement with the sec. the foundation of making crypto

accessible through existing rules and regulations here in the u.s. we want to maintain that posture with the sec on a go-forward business. this is the first of many products that grayscale has. >> and what's the relationship like? you can describe it as a professional disagreement but everybody's spent a lot of time on both sides of this and it can lead to some contentious relationships. what would the sec like to see? what can you show them perhaps to sway them in your favor? >> i think we have to point back to the court order yesterday and the court order simply said we agree with you grayscale. we have demonstrated multiple times there's an inextricable tie between the two.

>> it's probably worth taking a moment to describe why it important to convert to an etf structure. you have this trust. it can trade away the value of the bitcoin in your portfolio that you have. so an etf would crack it perfect. what's the advantage above and beyond being able to own bitcoin directly? when it came to gold, i remember when they lost the spider gold trust. you had to own it physically, pay to store it, insure it. you have a digital asset. why is it important to have an etf and probably if you get yours, many others are creating fee compression problems. >> there's no question the etf wrapper is tried and true here in the u.s. it's used as access to gold, stocks, all different types of investments. when we think about the novelty of digital assets and the fact investors wasn't access to them,

the ability to gain access in a wrapper they know and sit alongside all their other investments, be made available for tax advantaged accounts, these are the type of things investors want, to mention the added protections. when they do convert to an etf, you guys will have me back on. if you have me back, i'll be the first to announce on "squawk box" what the new fee will be. >> how is it going to be regulated? how are you going to ensure investors the price of bitcoin will not subject to manipulation

or fraud? >> if you look at our court order yesterday and a lot of the arguments we've put forward in front of this process as well as the sec over the past many years, what exists is surveillance sharing between the cme where bitcoin's futures are traded and national security exchanges where we intend to list it as an etf. the surveillance is already in place and that applies to bitcoin futures as well as the bitcoin spot market. >> does it concern you at all that this is all happening, if it does move forward in the direction you expect, a tt a ti when the public excitement about crypto tends to have cooled a little bit? it seems like we're in this period of maybe a little bit less interest. >> i would actually respectfully disagree. i think coming out of this most recent crypto winter, the investment community has never been more serious that investors

crypto class is here to stay. you've seen a slew of filings for etherrian-based products as well. it's fair to say crypto is not going away. cri crypto has been to some of the best assets. >> but it's back to 2018 levels. >> it is lower but we did see consolidation during the winter. some of the major exchanges shut down but that's part of the maturation of what's, again, a very young industry. >> what do you think of the sam bankman-freed latest turn and twist? some players have gotten knocked out with good reason. >> that's really not a focus for us at grayscale. we are a regulated company that has always made use of existing rules and regs and other

products coming to market as as well. that's the compass by which i lead grayscale every day. >> this ruling is a smackdown to the sec. do you anticipate congress will have to step in to lay the rules of the road for this? >> well, we have been spending a lot of time in d.c. this year. crypto has really become a non-partisan issue in washington. the fact that you have multiple bills moving off of committee, now being reviewed by a larger swath of politicians is very, very encouraging from my seat and the fact that the knowledge, the awareness of crypto, the fact that every politician recognizes that crypto is something their constituents are involved in and that they need to act has actually spurred quite a bit of activity in washington. >> michael, thank you for your time today. >> thank you. great to be here. >> coming up, breaking jobs

data, the august adp payroll report is next when "squawk box" returns. the people who live and work there. because you call these communities home, and we do too. pnc bank.

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welcome back to "squawk box." we're awaiting the payroll report. the dow indicated up by 16 points, the nasdaq was was big outperformer yesterday, showing a light loss of seven points. steve liesman has the data. hi, steve. >> good morning. 170,000 adp estimating that private payrolls in the u.s. in the month of august rose by 177,000. it gives an estimate of 200,000. as you remember, adp is only doing the private sector. there's an estimate that government jobs on friday will show a stronger number here. so this is the lowest number since march 2023 with goods doing 23,000, services 154,000,

there's a non-farm payroll estimate of 170,000, which is government and private sector. small business coming down a bit. it had been quite strong at 18,000, medium business at 79,000 and large businesses reversing in decline over the past several month, now up 83,000. the job growth was spread across business size and several sectors chiming in here, education health services, a tricky time with measuring this with back to school and not back to school, trade utilities up 45,000, leisure and hospitality in the triple digits over 100 very often now 30,000. maybe they've reached some ef qu equilibrium. the big news could be the change in jobs, wages up 5.9%, the

slowest base of growth since october 2021 and job changers up 9.5%. that is always higher and that's the slowest since 2021. mike, that goes along with some of the softer employment data we've had from jolts and the other places in the past few days. so definitely cooling in the job market, but, hey, 177,000 in a normal prepandemic month is a pretty good month. >> moderating tightness but not too worrisome. stay with us. let's bring in the chief economist at adp. great to have you. what do the numbers tell you specifically right here? you did have an upward revision for july. still seems healthy levels but maybe not quite as tight a job market. >> that's right. we've gone from exceptional to sustainable. you can see that, as steve points out in the numbers that is a typical post-pandemic month. it's a month i've been waiting for personally for a long time

that showed that we are going back to a more sustainable case of hiring and then where we're seeing the wage growth is also starting to moderate. we saw wage growth peaked in march '22. it's been coming down at a pretty good clip after moving s sideways. for those concerned that wages are going to push up inflation, we've gotten good news on the moderation. >> for sure. yesterday we had that jolts report that indicated a pretty big decline, enlisted job openings and and a decline in the voluntary quit rate. are you confident that employers are still going to be willing to hold on to employees if the economy slows further. i guess the big question is are we going to be able to see

things, cool off in the near term or employers still feel they're coming out of a labor scarcity situation? >> certainly we've seen the turnover come down significantly. i think that's a game changer for the market because there was so much replacement hiring being done that businesses,especially small businesses couldn't grow their head count, they were just replacing head count several months because of the job market that was so tight. now going forward i think whatever number you see is more sustainable. so even though it's smaller, it might be more solid and stronger. now, if there is a downtu turn,e could see pull back in hiring. the large firm hiring is starting to step up again and you see with the latest initial jobless claims, which is pointing to how strongly employers are holding on to their employees, it's still good

news in terms of layoffs. so all in all, i think this is a pretty solid report. it's the kind of report that you'd expect this long sense of really deep downturn in the labor market. >> steve. >> i wonder if you could help investors out there understand how to think about adp. you guys have been doing pretty good or pretty well at least relative to the bls until the past several months june and july where you guys were way over the number there. should we think of this as a more real number than the bls? how should i think about this in terms of predicting actual or portraying actual job growth in the country? >> sure. the ner is an independent estimate based on about 25 million workers and adp payroll. it's a private sector view of the labor market. it's not meant to forecast the

bls numbers on friday and that's a departure from the history of the nar, which was a forecast measure. so this is a one-year anniversary for the new methodology so i should highlight that. and it was based on the observation that was well documented in academic research that adp had the scale in terms of the granularity and the side of the data to produce its own estimate of the private sector. so to your question, these two indicators should move in trend but they will vary for any particular month. i think what you'll see in both estimates is a slowdown in the monthly pace of employment because of where we are postrecovery in the pandemic. >> steve, i won't ask you to be a market procrastinator and anything out where things are or should be but you are an expert on the fed. is this a cinderella number from

the fed perspective . >> i was going to ask the same question. there's a piece from pantheon that indicates that the labor market is cooling faster than powell at the fed is giving it credit for. it's an interesting idea that you have this cooling going on and powell acknowledged some of the easing in the labor market but said there's more work to do. this 5.9% wage growth is really not too bad depending where you are on productivity and overall inflation, but really you're getting back down, i'm looking at a number here, you're back down to almost a 2021 level. it's coming down. the fed wants to see it release pressure. i think we'll have to watch the friday jobs report. by the way, hats off to powell on one thing. he's the one who said we could

bring down job openings without bringing up the unemployment rate. so far so good on that. we have made a lot of progress in bringing down job openings, which should relieve pressure on the labor market and you see the wage component coming down with that. we see if the wage component in the bls report is also showing that kind of relief. >> thank you, steve. and thank you, nila as well. >> coming up, a special interview on the state of real estate with billionaire investors jeff green. stay tuned. you're watching "squawk box" on cnbc.

today is the 93rd birthday of the oracle of omaha. fellow billionaire bill gates has just posted this video birthday message featuring stills of buffett and the two over the years. 93 years young. so happy birthday to wren ar buffett. when we come back, a new look at the second quarter gdp. that's next. back after a quick break. avoid the wait by scheduling for you... ...or the whole crew. or if you prefer to just pop in? do you. and if you wanna even tack on a covid-19 vaccine

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welcome back to "squawk box." markets a little bit higher than they were a little while ago. the s&p 500 slightly positive, dow with a 29-point gain and nasdaq also positive. private sector indicated 10-year

note down a few ticks in yield at this point. you see it down about 4.14 or so, 2-year note did back off a little bit on the adp numbers as well. it's now at about 4.907, got to 4.89. it was about 5.10 just a couple days ago. rick santelli standing by with those gdp numbers. good morning, rick. >> good orning. not only do we have gdp, we have the trade balance. gdp, it's our second time around the block. we're looking for 2.4 confirmation. we lose 0.3, mike, 2.1. 2.4 was much greater than we expected first time around. consumption was 1.7. our last look was 1.6. we lose a tenth there, we were

expecting it to increase by a tenth. the pricing index may be the most important aspect. if we look at the headline, 2%. the high water mark was 9% q2, that went back to 1981. what's interesting about 2% is that we continue to move lower, 2% actually is the lowest bevil since the second quarter of 2020 when it was minus 1.3. now, if we look at core price index, 3.7, 0.1 than our last look. so it dropped .3. and in q2 of '21, it went back to 1983. we see that we move from around a 414 to a 411 and we see that the pre-opening equities

markets, almost doubled in dow futures. so we can see the pricing index moving down really has an effect still. the trade balance has the deficit at minus 91.2 billion, minus 91.2 billion, that's the biggest deficit going back to april of this year. wholesale inventories down 110, a little less than expected. retail inventories, that's a july number, up 0.3, about half of what we expected and about half of what's in the rear view mirror. we'll continue to monitor post-adp jobs because at the end of the week we have the big jobs report. maybe nothing could be more important after that very weak jolt yesterday. i guess the best way to summarize this is the core pce, quarter over quarter at 3.7 is finally getting down into a territory that is close to half of that high water mark and we

see the general price index at 2% is really quite stellar considering it started out at 9% not that long ago, q2 of 22. so what, a year ago? finally we want to monitor how all of this is going to figure into the growing supply as interest rates continue to be firm but we're about 12 basis points down from a very key technical level, pay very close attention to 4 1/4. make santelli, it's all yours. >> a pretty familiar theme, cooling but not cold is the tone of the day there. >> yeah. mike, i can tell you that a lot of talk in jackson hole about where the right potential level is at gdp. so how do you benchmark this 2.1% number? many people think you have the gdp potential at 1.8 so still running a bit above potential. and that's important because the

fed has told us they believe a period of below potential growth is needed to bring down inflation. hey, what's not to like in this report. a little bit slower, still above potential. some of the inflation came down just a tick. i'm interested in how this could affect those very robust gdp reports or gdp forecasts for the third quarter, which are running, you know, depends how you look at it between 4 and even 6%. my guess is this comes down a little bit. depends how the vls apportions the weakness. in other words, was june a little bit slower and therefore the take-off point was a little bit lower in that regard? the corporate profits were down a lot less than they were in the prior quarter, down about $10 billion. what was the number there? 121 billion. it will be revised again and we're looking at gross domestic income, which had been negative and now is positive, 0.5.

some people like to look at a supplemental number put out by the bea, which is an average between gross domestic product and gross domestic income, that's running at positive 1.3%. overall a little bit cooler but still above potential and we'll see, mike, this great question that stands in front of us now, which is can the economy reduce inflation? can inflation come down if we're still running above potential? you have the higher commodity prices in the month of august that are going to feed into at least the headline of the inflation reports we get. we'll see if it also feeds into the core. >> yeah, i mean, that's really been the story of this year, certainly in market terms, which is inflation coming down faster t than growth has weakened. powell saying we could have job market coming down and loosening of the labor market without a

down labor market and you still have calls saying this is not inconsistent with us going down toward a zero job growth at some month in the future and this is going to be the process as we figure out exactly what the impact of the tightening campaign has been. >> i think people need to realize and i think you're kind of hitting on it there, mike, just because the recession probabilities have gone down, they haven't gone away. they're still out there, still elevated. in our last cnbc fed survey, they're down below 50% for the first time. a running rate is around 20, 30%. a big story is though lags, high interest rate affecting auto purchases and mortgage rates and business expansion and borrowing, you're seeing business expenses for yields and interest rates also climbing up and of course some people are looking into that as a way to make some money in terms of

higher grade credit with still high interest rates so that's been out there as an investment opportunity in this world. you have to look at the whole picture and there's still risk the economy needs to digest these higher interest rates and still could be difficult times ahead. >> absolutely. looks good for now, steve. thanks very much. >> warner brothers discovery making it official. it has named mark thompson the chairman and ceo of cnn worldwide. thompson is the former director general of the bbc and former ceo of "the new york times." he will report to warner brothers discovery ceo david zaslav. it will be effective october 9th and it looks like tom sop will be responsible not only for the business operations but the general content and will be the editor in chief of cnn as well. had we come back, we'll talk real estate, the health and challenges in commercial and residential properties. and investor jeff green will

join us. he made hundreds of millions betting against the last housing bubble so what does he see right now? the nasdaq up 6 out of the past seven sessions. and it has seen some pretty significant advancement as you ay. see here, up almost 5% st tuned. you're watching "squawk box" and this is cnbc.

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welcome back to "squawk box," the futures right now still in the green after that softer adp report and mild revision down on gdp, dow up 34, nasdaq up about 22. >> and u.s. commerce secretary gina raimondo wrapping up a visit to china and highlighted several examples of china cooperation, touring china's disneyland and a boeing facility. here's what the secretary said. all of those regulations just make -- it's an ub level playing field for u.s. business. it's unpredictable and so my message was there's a desire to do business but we need predictability, due process and a level playing field. >> overall raimondo described

her china trip as productive. she said a boeing deal would build confidence with the u.s. business community. our next guest is one of the giants in florida real estate, not to mention a big set of holdings in l.a. and new york. we've been posting a lot on that sector from describe high interest rates from reluctance of employees to return to their office. joining us now the billionaire investors jeff green. it's great to see you. welcome. >> good morning, robert. >> you were famous for predicting the housing crash in 2008, you bet against that, made a lot of money from that trade. i want to talk about commercial real estate. you have a lot of commercial real estate, especially in florida, you have a couple of towers, over 200,000 square feet that's going to come online. what do you have think the commercial real estate market looks like not just in florida but nationwide? >> those towers are over a million square feet. just the office space alone is

200,000 square feet. i think office space globally will go through a change. people have adapted to a different workstyle where they can use zoom and teams and other methods to get the same amount or more work done than they did going to an office. and couple that with the fact that we've just had an economy will trillions and trillions of dollars injected into it, which has really caused a lot more demand than we would normally have for office space. now that's being pulled back and that coupled with the way people work is going to cause a contraction shun in demand. >> and how bad will that con traction be? i was talking to a family office who said they had been offered a couple of big trophy office buildings in manhattan but they said the prices weren't low enough for them to bite yet. how bad is it going to get with commercial real estate and where

are we in terps of the cycle of discounting or maybe even opportunities? >> i think we're just in the first inning of this correction, robert. i hate to say it but i mean, basically, you have to understand that at the end of the pandemic, which wasn't that long ago, there was an extra 2.1 trillion in people's savings account. that's extra. in march it was $ $500 billion. as that disappears and evaporates from people's bank accounts, that's going to be a lot less money for people to spend, that means demand more retail, office and they'll get whacked. i understand it's warren buffett's birthday, happy birthday, warren, but i can quote warren and one of the greatest things he ever said i heard was always better to buy a great company at a fair price

than a fair property at a great price. so those properties probably hasn't come down a lot and probably won't come down a lot. they need to buy sometimes world class assets when they come down a little bit. when it comes to the b and c reports, the worst is yet to come. >> we've seen discounts of 10, are we're going to see discounts of 15%? what does it look like in terms of the bottom for this market? >> in some of these buildings where there were no tenants, i think there's going to be no bids. i went back in and was buying some of the subprime mortgage-backed securities and getting 22 and 30% yields on conservative assumptions. the same thing will happen in the retail and commercial

sectors. there will be office buildings with no tenants where the brand enough buildings in palm beach will get the tenants with great amenities and some of the older buildings won't have any tenants at all. if there's no tenants for a long period of time, that paper will be worth nothing. but for repurposing the buildings, there will be value there. hold on to your cash and get ready. my guess is in the next 12 to 24 months you're going to see some extraordinary opportunities to buy. >> is that what you've been doing, jeff, in the 12 months leading up to, this hoarding cash, getting ready for some of those things? >> yes. we get calls. if somebody offers us a strategic asset next to something already owned but otherwise the door is closed as far as buying other properties. you can see things are still very good in the economy. look at the numbers today.

employment numbers are good. why wouldn't they be? there's trillions still sloshing around from this irresponsible fed and congress that just, you know, had reckless fiscal and monetary policy and we're still living off of them. we will be for a little while longer. at some point the well will run dry and that's when you'll see reopportunities. >> and i'm surprised, yef, to hear you say you think residential will get whacked as well. you have over 8,500 residential units between l.a., new york, florida, new england. one of your properties in manhattan just rented for $125,000 a month. a month. and we have record rents here in manhattan because there's no inventory on the sale side. what's going to bring the residential side down? why are you pessimistic about residential real estate? >> manhattan is a unique place.

if they need an apartment, the guy who paid $125,000 a month for the apartment in the building you were showing on the screen is in the crypto world so they have easy money they're spending. but in the real world for most americans, what's happened is the wages have gone up a lot because we've had a booming economy. in palm beach -- our chefs were making $16, $18 an hour before the pandemic. after the pandemic they were making $26 an hour with signing bonuses. well, all of that happened because of the trillions and trillions of dollars that was going into the economy. as that goes away, you're going to have unemployment, you're going to have people making less money and these higher rents. the other this evening that's happened certainly in florida, which is where we have the biggest position, i'm the biggest believer in west palm beach and palm beach county where i'm probably the biggest investor but i can tell you the

demand we've seen is a direct function of what happened during the pandemic. as everyone knows, the feeder cities to south florida, new york, boston, philadelphia, washington, d.c., those cities had to close down during the pandemic because people have to ride subways and live close together in high rise buildings. so people from those cities were going to go to florida, a lot of them. what happened was anyone who was going to go to florida into the 2022, '23, '24, '25, '26. >> they said i can't go to work in boston anyway, i can get my work done on zoom or whatever. you can sell your home outside of boston or in greenwich at a high price, move to south florida -- >> you think that migration is over between the northeast and florida or certainly is largely done? >> absolutely. because people could take it,

sell the house in greenwich and buy a home in west palm beach. now they have to sell the one in palm beach and buy one for 7% loan. we're very overbuilt. if you driveoverbuilt. we're overbuilt. if you drive around, you will see apartment buildings going up like crazy. a lot of developmenters, when we saw the growth in the pandemic, that's over, too. >> do you think the growth is over, too? >> the stocks, just like real estate. they are all individual. there are some great companies that you want to own forever. and some are overvalued. in general, if we go for a big economic slowdown, the market will drop. most of the market believes we'll have no recession or a hallow recession.

it's possible, with high interest rates hitting the housing and construction worlds, with the fed pulling back and the q.t., and much higher cap tripled, you can see a major recession happen. if you do, of course the stock market is going to get whacked. that's the issue. and the issue with the market, we're debating this over and over again this summer. what about labor? you look at the numbers today. we have a huge demographic problem in this country. we have a restricter populous-driven immigration policy and the lowest birthrate in history. that does not provide workers and it doesn't provide consumers going forward. that's a long-term major problem we have in this country. the stock market will look at this and say where will we get the new consumers to grow the companies? you could have a slowing stock market. >> just to wrap up, you did find a way to bet against the

residual housing market, through the mortgage-backed securities. is there any way, or is it attractive to bet against commercial right now? >> right now, it's hard to. if i had to guess, you know, we're just in the first or second inning of the slowdown. i think as things start to really unravel, and some of the buildings get into trouble, you're going to see lenders and commercial cmbsp securities out to bid and there will be zero bidders. and the bidder that comes in will bid 10 or 20 cents on the dollar. and will pick up a decent asset. >> great to get your perspective. thank you for joining us. >> thank you. >> good interview, robert. very worthwhile. we're going to talk about what to watch ahead of the opening bell on wall street. as we head to a break, you can join us for the delivering alpha investors summit, on september

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benefits. payroll. compliance. trinet. people matter. hurricane idalia making landfall in florida, with maximum sustained winds about 125 miles per hour. that came in florida's big bend region, where the peninsula merges into the panhandle. it is not accustomed to the worst weather the state sees. the state center called this an unprecedented event, that pass through the bay abutting the big bend. the storm could have tides of 15 feet in some areas. a half hour to go before the opening bell on wall street. joining us is the senior analyst at cain, anderson and rudnick.

what do you think? we're out of summer and it has been anything but dull, anything but quiet. >> yeah. it's been all over the place in terms of expectations. we got into a forecasty place this quarter. and people started to realize that everything was not that great. and a lot of it has to do with the fed. and people lose track of the fact that the fed's mandate are to employment and inflation. it's not to the stock market. the stock market is more like an overbearing mother-in-law. you have to pay attention to a certain expenalty. you don't really have to do everything. as much as everyone wants rates cut in the near term, it's not everybody. the fed wants the maximum amount to maneuver if we have a prolonged recession. >> we got jolts yesterday. adp today.

maybe this is like a goldie locks perspective. things are cooling off but not cratering. >> it's what you're hoping for. we want the balance to be driven because there's fewer openings. we're not getting outright job cuts. yesterday's report goes a long way towards that. what's interesting, is i think of the conference calls we listened to last quarter, so many people talked about the wage pressures. and the market has digested that and accepted that. and a lot of the hiring manager, they worked hard to employee the people they employed. they don't want to let them go. demand is still okay. when a toddler bugs you about a toy for weeks, and they get it and they pretend it's a greatest toy ever. they're not going to let go of

it, right? people are going to hold on to employees longer than they usually do, because it was so hard to get them in the first place. >> which means what? that means that we're going to continue with a relatively strong job market? and it's going to be, to a certain extent, employees' market? >> what we don't know is it's more a function of demand. companies can hold on to workers if demand stays in line with where it's been. if we start to see actual declines in demand, that's where people will start pulling back and starting to let people go. i think you first see job openings continue to close in. but then, eventually, if you see demand really fall off a cliff, it can. we've seen thathappen. you see recessions. the quarter of growth is positive and is good. it can turn quickly. it's hard to have nice, smooth economic models. >> julie, thank you.

let's take a final check on the markets. the futures are higher. turned into that direction as we got adp. that was 177,000. that was weaker than expected. not too much. they were looking for 200,000 jobs number. you hear steve and others talking about that being the cinderella number. the nasdaq up by 20. want to thank robert and mike for being here today. good to be with you guys. >> we'll see you back here tomorrow. now, "squawk on the street." >> good wednesday morning. welcome to "squawk on the street." bulls trying to make it four-straight gains after yesterday's action. best day for the s&p, inssince early june, on more signals the market is equalizing. it's about a three-week low. our road map begins with economic data. job growth slowing sharply in