good wednesday morning. welcome to another hour of "squawk on the street". i'm carl quintanilla with sarah eisen. vince reinhart with his reaction to the contrpi print. and news street puts its best foot forward initiating a b buy.

and have we reached peak pessimism on china? that's the question ruchir sharma is asking as wall street does cut its growth estimates for the country this year. topping the tape for us today, the august cpi print, and what it means for interest rates. our next guest worked for the fed for 24 years, thinks we'll see a pause at the central bank's september meeting, that's next week. but he says it's a coin toss as to whether we're completely done with rate hikes. joining us now is macro strategist, vincent reinhardt. good to see you. not so much for the market, 50/50 on november and december, ahead of the inflation report, out of the inflation report. i feel like if you're a hawk, this number sort of backs up your case, because it shows that we are susceptible to hotter than expected and stickier inflation, but if you're a dove, it backs up your case, because the trends continue to point to disinflation. so what do you do with it? >> that's the great thing about an economic report that runs 43 pages. you can always find something to

support your view. and the doves and the hawks are going to do exactly what you said. what are the doves emphasizing, patience. they're going to see some there are parts to the cpi that are cooling and that we can expect some more slowing in the really sticky initial stuff, the non-housing core services. and that's just going to feed through. the hawks are going to say, hey, there's still persistence in inflation, core inflation was actually up a bit this month, first time in a long time. if we don't react to that, your risk of getting those expectations of inflation, getting embedded. something for everybody. one thing that was clear, september's off the table. they never were going to act at the next -- at the upcoming meeting. they paired the meetings, they act at one, don't act at another. so they can average 12.5 basis

point hikes per meeting. the intentional slow aggression affirming. this was augz lways the pause meeting. >> i get that they don't want to harm the economy too much unnecessarily, especially with whatsoever has proven to be a soft landing, which was a tremendous feat, fit lasts, but what is the big risk in not hiking another time this year, with core still at more than double at where the target needs to be, and they can always just cut into next year? >> i think you've already gave the answer, right? the risk is persistent. that if inflation stays far enough above core, people will just become, you know, complacent with that. they'll expect that to be the average inflation rate, and it will therefore be much more difficult in the future to get inflation lower. so the hawk's argument is about

persistence. persistent inflation becomes embedded inflation expectations. inflation just becomes salient to households and firms. and that's costly for the economy over time. and their argument is, deal with it. at one level, it doesn't matter all that much, because the key part of this strategy isn't another quarter point, it's how long do you keep the funds rate at a firm level once you've hit that plateau. and if you raise it a quarter, then you don't have to keep it for as long as that high level. if you don't raise it another quarter, you'll have to keep it there a bit longer. the key message you'll hear from chair powell is, is the plateau that they're going to be willing to keep the funds rate at a high -- a firm level for a while. and that's the message they'll convey in all the other stuff that gets released at the fmoc

meeting, including the summer of economic projections. >> interesting. you know, the ceo of home depot is presenting today at the goldman conference, vince, and says, kudos to the fed. see if i can find the exact quote here. you have to hand it to them, roughly paraphrasing, for managing to bring inflation down as much as they have without tanking the economy. i wonder how long you think that kind of constructive feedback continues, at least from corporates? >> tell me what the unemployment rate is. tell me what earnings projections are. that's got to say something. look, big contrast, that other princeton graduate who was chairman of the federal reserve, than jay powell is paul volcker. and when he started raising rates to tame inflation, he was getting 2x x 4s in the mail fro builders saying, you use, we can't. there were tractors going around the fed building. the remarkable thing over the

last year and a half is how well it's turned out for jay powell. they've managed to reduce inflation a lot without tanking the economy, as you've said. the problem is the last mile's hard. getting back to goal and anchoring it there is going to probably require some pain. and when there's pain, there'll be complaints. >> that's what they said at jackson hole a year ago! >> yeah! >> yeah, so i was at jackson hole. my main takeaway was getting covid, but the other main -- yeah, i know! i avoided it for three years. but if you go through all of those airports required to go from the east coast to wyoming, it's kind of tough. the main takeaway is number one, they're sincere, they want 2% inflation. they read it as inflation, you know, is at goal.

and compared to the year before, it has been much less painful than they anticipated. a year ago, he had prepared markets, prepared the public for real, real pain. guess what, the unemployment rate was an at the same level in both sets of remarks a year part, but inflation a lot lower. thus far, it's worked. the problem, the last mile. getting inflation back to 2%. that's going to test the comity on the committee, do they all agree? they're beginning to disagree. because, look, they have a dual objective. maximum employment and stable prices. some of them are going to start worrying about influence. >> the truth is, they disagree and so do investors and so do economists, because nobody really knows how much the economy is weakened right now and will be weakened, and nobody really knows how sticky inflation is going to remain, if the economy does hold up, right,

vince? so how as an economist are you making forecasts for next year's gdp and unemployment and inflation? >> not quite sure why you listen to economists, because a year ago, everybody was assuredly saying, the recession is coming, the recession is coming. what you try to -- what you try to do is think about the big things. what's the fed doing? the fed is leaning into aggregate demand to bring it back to potential. what does that tell you? it tells you that real financial conditions are going to have to be tighter than average. the federal reserve funds rate in real terms, nominal rateless inflation is going to have to be higher. we're going to see estimates in the neutral or natural federal funds rate drift up. big picture, the fed is leaning one way. that says something about rates, higher for longer.

it says something about activity going below trend. it says something about inflation, modestly slowing. >> i guess. >> and that's the big one. how modest is the slowing? the longer it takes, the harder it will be on us. >> there's also, so many favo variables right now. there's this looming auto strike, 140,000 people going on strike, shutting down production. there's the student loan payments resumption in october, which some accounts looks to have already begun. there's a potential government shutdown. all of these things could have an impact. >> by the way, we just went down the checklist that hawks and doves go through, right? the hawks are saying, hey, look at those unions are bargaining tougher, wages will be going up. that's bad for inflation. the doeves are saying, hey, student loan debt overhang,

potential government shutdown, which is actually kind of likely. those are all going to be disruptions to the economy. and you're exactly right. the fmoc participants talk all over the map. they have different views of the economy. they have different views of their mission. but that actually is a feature, not a bug of the federal reserve process. it's designed to bring a diverse collection of opinions to make a monetary policy. we focus on the chair, chair powell, obviously, powerful, but he's got to bring a lot of people who sit around the table to agreement. that's why it sometimes looks clunky, sometimes it's hard to figure out what exactly their message is. upcoming meeting easy. they were always going to pass. november's the contest. so we've got to look at the forecast, you've got to listen to powell at the press conference, to see which way, how far they're leaning toward

restraining aggregate demand. >> vince, thank you for joining us. good to get your take. i wish one day, in my life, i could be invited in an fmoc meeting to hear that deliberation. but in the meantime, good to hear from you and others who have been there. thank you. >> thank you. meantime, tech titans including mark zuckerberg and su sundy pichai have been gathering. >> reporter: speaking of being invited inside the thing, they have closed the door and nobody is invited inside here at the russell senate office building, other than the tech titans, the ceos, and a couple of staffers. and the senators, as well. that's it. this is not going to be a matter of public record. this is going to be behind closed doors. we did see some staggering arrivals here this morning. we saw elon musk, mark zuckerberg, we saw sam altman of chatgpt fame. a whole host of tech ceos arriving here for this behind

closed door conversation with the senators. the idea here is to gather some input from the industry as to what really is at stake in the ai revolution and how the senate ought to consider approaching some legislation later on in the year, maybe next year at some point. so this is very early idea gathering. i did have a chance to talk to eric schmidt, the former ceo of google, as he was on his way in this morning. here's what he said. >> ai needs to be both promoted as well as regulated. >> and what do you think the reaction will be in the room? the senators are not as technically savvy as the rest of -- >> they're coming up to speed. this is what schumer is trying to do. >> what do you think the tech ceos will tell the senators? >> basically it's very powerful. and we have to get ready. >> you hear the message, ai is very powerful and we have to get ready. that is in theory what they're doing behind closed doors, but there has been some criticism, right? this is not a public forum, this is not the traditional run of show here on capitol hill.

usually hearings are open, all members of a committee get to ask questions. only four members, four senators, that is, participating in the questioning here. other senators will be able to attend, not on television. and some people have criticized this as sort of the mother of all lobbying meetings, as the tech industry itself is providing direct input to the senate, which will be writing some laws in the years to come that will affect how their businesses grow and how the economy grows, really. back to you guys. >> there is some offset by having some non-tech personnel in the room, we'll so how much that matters today, eamon. eamon javers on the hill, thank you. meanwhile, the holiday shopping season quickly approaching, but could stubborn inflation put some pressure on sales. we'll prbreak down the latest forecasts. >> plus, we'll break down vinmers and losers and a tough enroent for retail. we're back in a moment. dow's up 86. omatically adjusts to your spending earn 5% cash back on your top eligible spend category up to $500 spent each billing cycle

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and duckduckgo lets you browse like chrome, but it blocks cooi and creepy ads that follow youa from google and other companie. and there's no catch. it's fre. we make money from ads, but they don't follow you aroud join the millions of people taking back their privacy by downloading duckduckgo on all your devices today. i'm feeling pretty good about where the consumer is in the u.s. and encouraged by what happened with back-to-school as we reported at the end of the second quarter, back-to-school started off strong, and normally that means that holiday will be g good. so i feel pretty good about the back half and our position in. >> that's walmart's mcmillan at the goldman retail conference, optimistic about the consumer and retail as we get closer to the end of the year. that's kind of in contradiction to this deloitte report today, forecasting soft holiday sales,

thanks to a frugal consumer. the slowest anticipated growth in about five years. something courtney reagan is watching today. >> market watchers and economists continue to debate whether we're in the recession, moving there, in a soft landing? the first holiday sales forecast are kind of looking at that too. deloitte forecast holiday sales will grow between 4.5 and 4.6%. today's cpi ratings put it up with, maybe just keeping up with inflation. deloitte's economic forecaster announced that with this year's moderating prices, retail sales will grow more slowly. it might just outpace inflation. however, deloitte's vice chair says that the sharp rise in service spending is leveling off and spending on durable goods remains high. they're cautious, forecasting holiday sales will grow just 1%. there are still headwinds, still evaluated retail, higher wages, disposable income, along with higher stock prices could be useful tailwinds.

morning consult survey data shows more a quarter of americans started holiday shopping as of late august, and shopping those early deals aren't going to do so out of financial stress, but more likely to do so because they want to splurge, especially the gen-z shoppers, they shop a little bit now, a little bit later. it's not really about saving money. >> holiday shopping in august? >> i've actually already bought a couple of presents this year. >> um, you are, um, more on top of it than me. how accurate are these forecasts, given we're three and a half months out? >> that is so tricky. we're in this kind of gray period where no one really knows what's going to happen. and that's how i read a lot of the comments in these forecasts and even deeper into the pdfs and the results of the forecasts themselves, where there's a lot of, well, there's these headwinds, but these tailwinds, so it feels like they're pretty cautious and deloitte has a wide range, being as kind of going on the other way. it's kind of hard to say, but does seem like they're all fairly cautious, more so than what mcmillan sounded like

yesterday. >> certainly, we're not seeing seven handles like we saw last year. >> correct. >> for more insight into holiday, let's talk to jerry storch, former target vice chairman and toys "r" us. who's right? >> doug mcmillan's happy because walmart's doing great. they're winning in this economy. they posted the best numbers of anybody. they killed target, which is the big competitor. why? because they sell necessity, a lot of food, a lot of health and beauty care, et cetera, things people need. those are the only things people are buying as opposed to services. i've been pretty much on the same tune now for many months. if you look back over the last year, for 11 straight months, when you inflation adjust, sales of retail goods, they're actually negative. they cannot keep up with the pace of inflation. so what do you think, by the way, retail sales were up last report that came out for july? 3.2%.

if you exclude restaurants, it was 2%. a 3% forecast for the high consistent with the trend we've been in all along. and i actually don't see any reason for optimism. and i'm not a negative person. people will keep spending on restaurants and spend on concerts. but talking about retail goods, the trend has not been strong and there's no reason to believe it's going to be, as we get to the holidays. >> all right. i'll take the other side, just for a devil's advocate sake, because you have been very negative and missed the summer spurt that we did see in spending. i know a lot of it was driven by services and restaurants, but look, unemployment is still low. people -- it's still a tight labor market. people still have jobs, and they're earning more. those excess savings are running down, but what we hear from the banks, especially this week, we had a conference, is that deposits still look to be in better shape than they were pre-covid. with that kind of financial situation, the consumer holds in, doesn't it? >> fuirst of all, there was no summer spurt. if you look at it year over year compared to sales this year to

the sales during the same period last year, there was no summer spurt. it was still negative. >> the average beyonce ticket was $2,000, jerry. >> that's right! they're spending it on services. i said that! i'm giving you that. of course they're spending it on those things. we know that. but they're not spending it on things, especially discretionary products that drive holiday sales. we just didn't see it over the summer. you know, meanwhile, besides inflation, consumers are starting to have credit problems, credit card debt is up, interest rates are way up. there are so many people who want to buy another house but they can't afford to, they're stuck in a low-rate mortgage, look at the increase in the mortgage and say, can't do it! and on top of it all, you have student loan debt coming back and having to be repaid. just don't confuse inflation, the fact that people have to spend for rent, half to spend on health care, which is way up, with robust consumer sales, those are spending on necessities at an inflated price. you have to take inflation out of it when you look at it and look at it year over year.

don't worry about this silly, this month is up 0.2% versus last month. that's not what matters in the long-term. that's what deloitte is talking about with their 3%, by the way. >> interesting, we'll talk again, jerry, about how the retailers react to all of this and what plans looks like as we get closer to the season. appreciate it, good to see you. >> my pleasure, my pleasure. straight ahead, the highly anticipated arm ipo set to start trading tomorrow. we'll talk with one of the first analysts to initiate coverage. he said "buy." that came out today. >> and from jpmorgan to barclays, wall street firms have been cutting their outjlook for inthe st few weeks. are we at peak pessimism for that country? we'll hear a debate about that, next straight ahead. you are a rock star. rock stars. please! do you know what it takes to be a rock star? i've trashed hotel rooms in 43 countries. i was on the road since i was 16. i've done my share of bad things.

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is it possible to survey foot traffic across all of our locations? yeah! absolutely. with the advanced connectivity and intelligence of global secure networking from comcast business. it's not just possible. it's happening. european market mostly lower this morning after reacting to today's hotter than expected u.s. cpi number. and uk gdp falling by half a

percent in july, versus a 0.2% forecast. retail, the biggest loser over there. the stock 600 retail etf off earlier lows. some stories, inditex down. the consumer worries leading credit suisse to downgrade their outlook for europe and to not be fooled by cheap valuations. while price-to-earnings relative to the u.s. are at historic low, the set-up has only led europe to outperform the u.s. 25% of the time. also from the rate decision, that is tomorrow morning. it kind of looked like a toss up into this week, but i think the prevailing view is, carl, that they will hike, maybe one and done. this is it, because their economy has turned south faster and deeper so far than the u.s. and some of the latest economic numbers just backed that up. >> we haven't mentioned germany. their forecast maybe shrinking up to 0.3 for the full year.

>> now the european commission put a negative number on that forecast. and that's the problem. >> the china effect taking place. >> it solves inflation, that's tough. let's get a news update with our silvana thenao. >> vladimir putin and kim jong-un held hours of talks at a russian space port wednesday. after the talks ending, putin said the pair talked about the possibility of military cooperation. the kremlin says kim is on his way back to his isolated country on his private armored train. the iphone 12 is off the market in france. a watchdog agency in the country ordered apple to stop selling the model claiming testing showed it emits too much radiation. apple disputed the findings and said the device complies with radiation regulations. and he may no longer just ken. barbie's boyfriend recently popularized by ryan gosling in the "barbie" movie is a finalist for induction into the national

toy hall of fame. he has some steep competition, though. the games battleship and connect 4 as well as the bop-it and little tykes cozy coupe are on the list. winners will be selected in november. >> who knew that was a thing? the toy hall of fame. i guess that's major. thank you, silvana. arm's ipo a big focus and meile one firm already says buy, so others say be cautious. we'll have all the details and the data for you when we come right back. (sirens) [due at target in 5!] copy that. make a hard left down the alley. network's got you covered. [please confirm requesting back-up.] -changing route. -go. roadblock ahead. ...back up, back up... reverse! reverse!

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let's get a market flash on citi group, which is higher today on the back of a pretty big reorganization announcement. leslie picker with some details. leslie? >> yeah, sarah. investors seem to be encouraged by what they see here. but ceo jane frazier making a surprise appearance at a financials conference today, speaking alongside cfo mark mason. frazier commented on the reorganization that citi made this morning, calling it the, quote, most consequential change to how the firm will be organized and run in almost 20 years. citi is creating a direct link from each of the firm's five businesses, services to markets, banking, wealth, and personal banking to the ceo's office. it's also consolidating all markets outside the u.s. to one direct report. now, with this streamlining, there will be job cuts, i'm told, although citi has yet to

qua quantify those. >> hard, consequential, tough decisions here. they are not going to be universally popular within our bank. it's going to make some of our people very uncomfortable. and i am absolutely fine with that. i am confident that our strongest performers are going to be fully supportive of these moves and it is absolutely the right thing to do for our shareholders, so this is the right time to make this next step and we are fully getting into it. >> fraser said that by fourth quarter earnings, the firm will be reporting along those five segments for investors and they'll be able to share the exact cost savings that will come from the reorg, guys. >> hasn't been as much of a problem for citi year-to-date, but if you look longer term, the five-year chart against the bigger rivals really has

underperformed. why is that? >> yeah, a part of that is just the overall transformation. they've been divesting a lot of their international businesses, in order to kind of shore up and make sure that they're really focused on some of their key competencies. so, part of that transformation, you've got this restructuring, they're really just kind of trying to get their, you know, their house in order in order to really focus and drive better returns for shareholders. so we'll see if this transformation, which fraser calls the biggest in two decades, does the trick. investors certainly like the idea of it, up more than 2% today. but without real numbers understanding the cost of savings that are derived from this, as well as some key personnel that will be in important seats here, it's really tough to say at this point in time. >> all right. leslie, thank you. leslie picker. the soft bank back chip designer arms set to price shares after the close. it's expected to be a pol

blockbuster ipo. our deera bosa is here taking a look at some warnings for the retail investor. >> blockbuster ipos, these are widely known companies or brands, but people haven't been able to own a piece of them until that ipo day. in instacart was launched more a decade ago and brought grocery shopping online. arm is in 99% of all si smartphones. if history is any guide, retail investors should be beware the blockbuster ipo. seven of the biggest ten biggest listings, only two of them, airbnb and snowflake are up on their ipo price, which banker set before they start trading. there's a few reasons for this. one tech start-ups are staying private for longer. over the last decade, as interest rates approached zero,

venture capital and private equity, they were essentially throwing money at start-ups at higher valuations, and in many cases, that pushed out profitability. by the time they finally hit public markets, their best growth days may have already been behind them. and retail investors wildfire si were simply getting the scraps. two, some of these ipos may have ipo'd at peak hype. rivian was not only wrapped up in the excitement over electric vehicles, but had two established companies, ford and amazon, buying and drumming up more excitement among retail investors. those two scenarios did play out against a very different economic backdrop, but may have lessons for the pair of blockbuster ipos that we are waiting on. arm is hoping to cash in on the latest hype cycle, generative ai, and lined up some of the biggest names in tech as potential cornerstone investors. it has targeted a $52 billion valuation and that gives it a

very large premium to chip makers, other chip makers in similar positions, even as its own revenue growth is slowing. instacart, this could be more interesting. it is already profitable and it is going public at just a quarter of its peak valuation, which implies that it is -- the company and its bankers are taking into account that slower growth and public valuation, compression, and we haven't seen one of these in a very, very long time. you think about the other big companies and they went public at or near those peak valuations in the private market. >> yeah, on cart, d., i think the big concern is flat orders in the first half, right? >> absolutely. but what i'm saying is its valuation kind of accounts for that. it's no longer a $39 billion company that's going, you know, public at that high valuation. plus, its ev multiple is less than that of door d.adash and u. it kind of tells you that maybe valuations have become a little more reasonable in this case.

arm, though, a very different scenario. softbank and massa san are trying to get as much as possible that makes sense, but it has to sell that ai story and those cornerstone investors could help. our next guest is hopping on the arm train early, initiating the stock with a buy at a 59 target above well the top owned of its 47 to 51 range. joining us is pierre ferragu. are we of the mind that there's a lot more runway on data center and ai? is that the theory? >> what's interesting about arm, it's an ai play, but it's very much from what's happening in the dar center today, where you see the deployments of these very large clips. arm has very, very good presence there. almost zero. arm is really the play that ai getting everywhere. and so what's happening today is

that arm is -- has been working for several years at introducing to their plans the next generation, the next. and it basically brings the bidding to inside, et cetera. and the rollout of arm is a major pricing power event for arm. because this new architecture adds a lot of value to that, and so that increases how much the charge. so what we'll see over the next five years is arm in very, very good gross, even out of marks like the san antonio markets and deliveries exist. but arm is going to grow very nicely. as ai gets into the smartphones, arm is one of the main beneficiaries if not the main beneficiary. >> d. mentioned the cornerstone investors and we'll be watching nvidia and samsung and intel and

alphabet. should that give investors a bigger sense of comfort? >> yes, when you think about arm, it's almost like a private industry standard. if you want to do a smartphone, you have to use arm. if you don't, you're really going to suffer, and you're never going to be successful. so arm is a very safe business from that perspective. it's default option. everybody is going to use arm. so the big risk for arm is really to see the clients growing less comfortable with this dependency, and considering arm, you know, as something that they would want to stop creating a alternative. that's really the most important long-term that you can think of in the business. and so seeing this players, like qualcomm, broadcom and others, taking a stake, even if it's a relatively small is to be an

extremely positive signal. the industry is telling you, we trust arm. arm is a standard. arm is doing the right job to give us a platform vehicle system we need to move forward. >> the other big risk investors talk about is china and the fact that it's china arm, it doesn't control, it's heavily dependent on that for revenues. china is a big question mark right now, geopolitically with the u.s. and then, and then just the cyclical pressures, right, pierre? it's not immune to end market weakness, especially in smartphones. we're not exactly at a high point in this smartphone cycle. >> exactly. and that's the reason why i'm like to calculate arm today into on the wave, because we are at a low point in smartphones. like, a really, really bad environment in smartphone is today, and so what you can expect from here is actually a typical recovery, that might be very slow, by the way. but it's going to be trending.

on china, i think you make a very strong point. china is more than 20% of arm's revenues. china -- arm doesn't have a direct access to china, they have to go through like a local, so i don't think that is a problem. if you're using arm in china today, if you are like a chip manufacturer, a huawei or anyone else, i can tell you that you're relying on arm. you cannot do business without arm today, so make sure that arm gets paid. at the end of the day, they need access to arm. they need access to arm's partners, like this. so there is no way arm can get out, china can get out of arm in the near-term, even in thefthe next few years. in the long run, of course, china wants to grow more independent from the west, and arm is the west. and so there is a question about, it's a very long run, is

the weight of arm's business coming down on it? and my view is that it is going to come down. but maybe china disappearing from arm over 20 years. that's the kind of pace, you know, in the worst case you would be thinking of. so losing 20 points of your revenue over 20 years means you have like a one-point head wind on your growth every year. so if you have like a healthy business, it's not a game changer, it's a head wind, but not a game changer. and what's for certain is that for business, we have strengths -- with the strengths of the ecosystem, there is no near-term downside like arm starts using -- china, sorry, starts using arm on short notice. that's not really possible. >> no, your long-term thesis, which i know you've talked about in recent days, the silicon wall going up is interesting to think about. and we'll talk about that, i'm sure, in the coming weeks. pierre, thanks for being frout front on it.

pierre ferragu. >> and on that note, cnbc will have full coverage of the arm ipo all day tomorrow. straight ahead, one area where inflation is not coming down, travel. we've got that story, next. back in two with stocks are maybe higher. also going strong is consumer discretionary, although tesla is a big part of the reason why. it's higher. utilities, technoly, hltogeah care, financials, communication services and consumer staples are all higher right now. we'll be right back. every day, businesses everywhere are asking: is it possible? with comcast business... it is. is it possible to use predictive monitoring to address operations issues? we can help with that. can we provide health care virtually anywhere? we can help with that, too. is it possible to survey foot traffic across all of our locations? yeah! absolutely. with the advanced connectivity and intelligence of global secure networking

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that's the value of ownership. as jet fuel prices are rising, we saw that in this morning's inflation reports, the cpi showing that it jumped this year from last, although down from last year. seema mody has a deeper look at where we stand on travel inflation, seema, which has been a big part of the recent worry and problem around services. >> it certainly has, sarah. the august inflation report showing a 5% increase in airfare and a 13% drop from last year. travel from hopper anticipating airfares to drop around 30% this fall from the summer peak, with domestic airfare averaging $211 round-trip down from $298. and international rates are expected to fall. round-trip from the u.s. to paris, london, and tokyo showing

right now down 25 to 40% in september and october, often called the shoulder season, as the industry ramps up capacity and also deals with a consumer that is becoming a bit more cost conscious. now, the cpi report also revealing lodging rates declined in august, although up year over year by 3%, led by big cities like new york, boston, and chicago as conference season picks back up. the analysts say the broader volatility in pricing just suggests that travel executives are still trying to find that balance of accommodating strong demand amid a less-certain economic backdrop. and while rising oil prices have become a big problem for the airlines, it's also a problem for big hotel operators that rely on drive-to consumers. the airlines are lagging the hotel stocks so far this year, carl. >> yeah, some of the airlines, five-month lows this morning on some of these warnings today. seema mody talking about some lodging. still to come, have we reached peak pessimism in china?

consensus points to a slowdown long-term, but what might investors expect short-term? we'll discuss that after a short break.

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welcome back. have we reached peak pessimism on china? that's the title of a new "financial times" piece by our next guest saying a financial crisis scenario is more probable for china than a big bounceback. rockefeller international chairman rashir sharma. what is your argument around the

pessimism in china, which has been backed up by the data? >> exactly. it's getting a bit more difficult to stay that way, quite frankly, because some of us have been in china for quite a while, had the conversation for the last few years. at that point in time there was a lot of pushback. even a couple years ago a lot of money on wall street was besotted by chinese and was fully invested in there. things have changed dramatically in the last few months. and now i get a feeling lots of people who are bearish and you read the front pages of all the newspapers these days, so much bearish takes on china. and the question i ask, if it's in the news, is it in the price? i think it's getting more difficult to remain bearish on china when everyone is so bearish, and yet there is the probability that there's one last leg down remaining like we

were in america in august of 2008 just before you got a final flushing out. it's a very difficult and tricky call to make at this point in time. for people like us who have been bearish on china, you're starting to ask the question that isn't already in the price now. >> but you've stopped short of saying we would buy? >> yeah. as i said, i keep debating this, august of 2008. having said that we are nibbling in some stuff in china. you see some of the stuff happening beneath the surface. look at what's happening as far as evs are concerned. you have some of the ev companies in china that are doing really well. and china is emerging as the largest exporter of evs and cars in general. and some of the technology you have in china is still quite credible and still quite strong.

so we are nibbling in china for the first time. to completely disengage at this stage when everyone is still bearish, could be risky and yet to go full in is also a bit difficult given the fact the property market prices hasn't resolved itself. >> yeah, your "ft" piece yesterday, which i read, my take system away was the danger it could be dramatic on the down side, you pop out the age population, the debt burden, the strange way government is reacting to entrepreneurialism. why are you not more wore krid ab worried about something bad happening, some kind of shock? >> even if china follows the path of japan in the 1990s, which i think is the consensus view now, japan is powerful, just three years after the bubble burst in 1993, the

japanese stock market went up 1,500%, accelerated from nearly zero to 3%. you can have those pretty strong comebacks when pessimism gets negative. i think that's where i'm coming from which is that i've been a bear in china, but it's getting more difficult to stay that way unless you're willing to say that china is going to have a full fledged crisis. >> all right, ruchir. thank you very much for joining us. it's an interesting thought because there is a lot of negative pessimism out there. ruchir sharma, rockefeller international. we have birkenstock filing to go public here t n.atheyc details after the break. stop cag each other rock stars? you're a rock star. you are a rock star. no more calling co-workers rock stars. look, it's great that you use workday to transform your business. but it still doesn't make you a rock star.

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combine birk -- the ticker -- and stock and a footwear company that could attract different retailers. birkenstock financials were not disclosed but the last six months revenue is up 19% while

profits dropped 45%. back in 2021 birkenstock sold a majority stake to an lvmh-backed private equity firm that will control a majority of the stock. among the risks, knockoffs sold on amazon and facebook. birkenstock quit amazon. remember, they were saying they weren't doing enough to stop the counterfeiting. in barbie, this really is interesting because birkenstock i think has had a revival, and "barbie" hit this because it's been a symbol of a real-life woman in the movie. she put on the birken stocks when she becomes a real-life person. at one point she had to decide between the barbie land shoes or the birkenstock.

women are more comfortable, they don't have to wear the high heels so it's made it trendy. >> "barbie" streams this week on max. ebit margins close to 30%. >> and the other thing is this is a brand that traces its roots back to the 1700s and does collaborations with high-end designers that have worked and become expensive. i could go on shoes for a long time. we're nearing the end of the hour. ken griffin, news out of citadel, laying out a new road map for his future philanthropic given, saying he wants to illustrate how he thinks about giving and his partner organizations put his money to work.

one of the biggest dounors in te country. >> working through cpi, still around 4475. the vix below 14. if not tomorrow's data then next week. >> ppi and the fed meeting tomorrow. >> let's get to courtney reagan in for the judge. thank you, carl and sara. welcome to the "the halftime report." i am courtney reagan in for scott wapner. the road ahead for investors following a hotter than expected inflation report. we are just one week away from the fed's next rate decision. does today's cpi print change anything? apple shares slide again today. standing by to debate all of it. joining us is steve weiss, joe terranova and kari firestone. a quick check on the market at noon eastern. losing a little bit of steam