since the crash of 1987. earnings back on the caller d calendar. caterpillar and uber reporting. it's tuesday, august 6th, 2024. "squawk box" begins right now. good morning. welcome to "squawk box" here on cnbc. we are live from the nasdaq market site in times square. i'm andrew ross sorkin along with joe kernen. becky's off today. call it a turn around tuesday so far this morning after yesterday's big selloff. take a look. joe mentioned earlier, u.s. futures are up a bit. dow up 79 appoinpoints. nasdaq up 70 points.

this followed the monday carnage with the dow losing more than 1,000 points. now down 5% over the last three sessions. the s&p 500 down 6% over the same time span. down more than 8% from its record high and nasdaq firmly in correction territory now down 13% from the all-time high. overnight, the big rebound is what we are seeing with the futures this morning in tokyo. the nikkei gaining 10%. that's the largest daily gain since october of 2008 after having its worst day since 1987. the day before, monday, the nikkei losing 12% and the crash in 1987. you remember, we had our own crash. >> i was watching. i was there. holding clients hands. not a great day and the earthquake a week later in los angeles. turn around in japan.

i don't know if i'd call it a turn around tuesday here necessarily. they modified my opening a little bit about it. they left that for you to read. up 80 points after losing 1,000. we'll see -- >> restabilizing. >> a stabilizing. a turn around tuesday in japan. if you rebound from down 12 to up 10. >> the whole thing, it seems like it was a carry trade that got unwound. the question is is it that or something else? the mechanics of the system seemed to work minus the online systems that seemed to fail. that's a different issue. >> what causes the carry trade to go away is the underlining problem that everybody is worried about? >> the underlining problem a confidence problem with the jobs and growth of the country's problem? >> we don't know what the front end of a recession looks like.

>> that's the question. >> i don't know if that's what this is. >> it may not be. >> it may not be or it might be. if it is, you want out. you know, warren, he doesn't like to sit around in stocks that go down. he just doesn't. he has a lot left, obviously, but that was a pretty -- i would say that's indicative of someone that doesn't feel -- >> i think the warren piece was a bigger piece than people were giving credit for in the u.s. >> if you believe he's still got it because he has been doing it so long. he can either hold a lot of equity or a lot of stock or loosen up and selling half your apple. >> i think he would say this, as he has gotten older, he is more and more and more conservative about things. that happened during the pandemic and everything else. >> it happens when you have

something to conserve. he has billions. $277 billion in cash to conserve. it has happen to other great hedge fund guys as they get older. they don't manage other people's money at that point. they have family stuff. they tell me i don't swing for the fences at all anymore. when you're i don'young, you ta chances. we never had to swing. >> for the fences. >> we're not, you know, there are times having been a stockbroker, there are times i am glad i wasn't -- >> swinging for the fences. >> there are times it is great and you go home on friday and you feel the world is ending. take a look at treasuries. that has also stabilized. 3

3.84% today. dipped below 3% on monday. the lowest level since june. we were watching the volatility index. that's what i wanted to mention this morning. we were talking to tom lee. you need to see that peak and turn around. at one point yesterday, it was well above 50. this morning, it is all the way back down to 33. you can see it on the chart. it was well above 50 on monday. that gets out of control at times and pendulum swings further than you think. did you see that? it was 56. >> mm-hmm. >> it more than doubled acknoand now back down to 33. take a look at gold. it is still higher. it was above that at one point. bitcoin also rebounded quite a bit after 47,000, i think, it hit as the print. it looked like it hit 48 on that chart. back to 55,000 now. up 4%. ether this morning back to 24.

that was well above 3,000 and came down hard. let's check on crude. it might be one of the best things to watch if you really want to know whether there's something going on. we had helima croft on yesterday. she was talking all about supply. the demand side is hard to gauge. china might be a problem, but she was talking about opec. >> do you think there is an escalation in the middle east? we haven't talked about that. >> the last time, nothing happened though. >> we have been expecting something. >> last time with the oil markets and october 7th and everything that happened after that. it wasn't much of a bounce. maybe it is more important what opec decides to do rather than some kind of disruption there. check this out. i think this is going to have a huge impact on alphabet and more broadly the rest of silicon

valley. shares of alphabet are up marginally. getting caught up in the selloff and more news late in the day. the federal judge ruling that google illegally held a monopoly in search and text advertising. the landmark case from the government filed in 2020. it alleged google kept the share of the general search markets by creating a feedback loop to sustain dominance. the court found google violated sherman ii of the act and violated the regulations. what we don't know is, effectively, how the judge will rule in terms of the remedy. is there a behavior remedy or a breakup remedy? what does it mean? we talked a long time about they paying apple enormous amount of

money to be the default search. do they say no mas. we cannot allow that anymore. >> google said the judge found it is the best search engine. >> i know! it is the best search engine. >> what court are we talking about and snoung. >> how long? >> of appeals. >> i don't know who appointed this judge. i don't know anything about him or how he's ruled before. is he a normal pro-business type person? is he someone who is maybe way left and doesn't like business or monopolies? it is weird to me that one guy or lady -- >> that's why there's a system. >> what's next?

at least one more and eventually you figure the supreme court. >> you could go to the supreme court. >> it will take a while. isn't it weird to you this is the way we do things. if one guy has an axe to grind, he can basically throw a wrench in the works of one of the greatest companies to ever come out of silicon valley? >> would you prefer to have a jury trial? >> maybe not. >> what are you recommending? >> i would take it to the next guy appointed by a republican. >> okay, hold on. if you are willing to concede that -- hold on. if you are willing to concede these judges are political, you should also be willing to concede i made arguments with the supreme court it is complicated and the fact the supreme court is now as stacked as it is -- >> i'm add mitting it is political. it should be the other side. i'm biassed in favor -- we

always are. i think leina khan is out of he mind. >> i think lina khan is trying to look at the anti-trust system in a way it is different from the last 30 years. not actually in the last 100 years. the question is whether -- >> she is a controversial figure. >> i don't dispute that. >> i don't know if it is good or bad for commerce in the united states. the same thing goes for this. i'm not sure -- i have -- i'm pre-disposed to think to let this fall where they may. we have great companies. let them operate. >> the government is fighting a, you know, yesterday's war. the truth is that now you have openai doing their own search product and perplexity. it appears they can emerge. it might be like everything a

fight that should have happened if it was going to happen, a long time ago. >> i think the supreme court making that point, the supreme court should have originalists interpreting the constitution. is this a constitutional case? can you go back for google? >> you are looking at the sherman act. >> you can't say that they're right or left. >> let me say this in the politics of it and i think you'll agree with this. i just want all of the courts, including the supreme court, to be even steven so people believe in the democracy and believe in the system. when they get too far out of whack, too far left or too far right. i think the country looks at the system and says this is broken. >> being an originaloriginalist. you are not left or right. just because you think these are social -- >> i would argue to you,

quote/unquote, originalists because they are looking at these things through a political prism. >> there are things in the constitution that social justice warriors think should be in the constitution that aren't. you can't put them in there. >> i don't disagree about that either. >> they are not left or night. >> no. in this group, it has been more right or left. it would be nice to be in the middle. >> then elect a president to put your people in. >> not my people. >> somebody's people. you are arguing on the side of something, i think. coming up, was the global selloff a wake-up call for investors? we'll get into that next. i just say thank god for mitch mcconnell. >> that's gross. it's terrible. >> thank god for mitch. everythie . good thing i had aflac.

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let's check the futures which are bouncing a little bit. 28 points. now 29 on the s&p after the selloff. there were 3% selloffs, give or take take, in the three major averages. nasdaq up over 100. it is hard to understand what to wish for here if you get a

strong bounce. it was much higher. these were all much- higher earlier in the pre-market session. joining us now with more on the markets is serat sethi. serat, with your style of investing, you are looking for places to stay invested to weather whatever storm is on the horizon. we don't know if it is a category one or category two. you are somewhat insulated from the macro. >> i do, joe, you don't know if you are in the front end of something or a short-term blip. we know the carry trade has unintended consequences. does that mean we will get another tornado? we don't know.

we have the momentum investors saying let's watch it. there are really good companies that got sold off that had nothing to do with the market being overvalued or an a.i. bubble. if you are a long-term investor, find the high quality investors and then look at the companies you could not buy before because of the valuations happen. joe, you and an i talked about this in the past. if the fed is going to cut rates, you can't hide in bonds. why not own really good companies that have cash flow and dividends that grow faster than inflation. i do think you will find opportunities as i call them fallen angels. if you are a long-term investor and over the years, you made money through this. it hasn't been over the last five or seven years. it has been proven over a long time. >> we were trying to figure out

a technical thing and people do the carry trade and they loved doing that and it gets unwound. what causes it? what is the actual cause of what happened? that's what i'm interested in. we stayed at zero for a long time, sarat. we talked about what the long-term consequences of pricing assets below where cash doesn't cost as much should because you get investment and all these things happen. then the fed feels the need to harness the inflation it engendered and they're restrictive. >> right. >> we need to know right now. maybe they were much more restrictive than we knew at the time. maybe inflation was supply side or pandemic related and maybe they killed the goose that laid the golden egg. maybe it's already too late. is that not possible? >> that definitely could be possible, but i do think you have a fed that is very aware of

inflation at this point and looking at price stability and what happened in japan. that is a function of a lot of leverage and latsrates being lo. the interesting thing is we cut rates which hurts japan. it is momentum cta as well. at the end of the day, if the fed is one step behind and they start cutting rates, you can actually get better price momentum here because certain stocks will do well, especially if interest rates go down, then the cost of borrowing comes downs and consumers feel better. maybe the bad data comes ands these are the options we get. the corrections as we go into 60% of earnings right now. i do think there will be quality. joe, what are you going to do? are you going to start buying bonds at this point? they will start maturing and rates will come down already. you have good opportunities to grow your capital. >> i could see a couple of

different scenarios. i could see where this is a blip. the markets have run up so much, they were obviously look for a reason to give back a little of the incredible two-year gains that we have seen, especially in the s&p. i can see it the other way, sarat. this is yesterday being a pre-shock of something. it causes the fed to do that interim 50 pointer within the next month. that's possible, right? >> completely. >> if this gets out of hand and we're in that period where october's coming -- if we got another couple days like yesterday, the fed might think we stayed too long. too high too long. >> yeah. the offset of that is you have people more nervous saying what did the fed miss. that's the reason you see it. no matter now, what is the fed seeing that we're not seeing? i would say this and you know me

long enough. i always say this. if you are outside your comfort zone, don't chase the market. if you are going to rebalance now or have extra capital you have been waiting for -- you know, i have extra capital. don't chasethe market. this could be the time to put the money to work. you will get better opportunities in certain stocks or sectors. don't chase it if you are outside your comfort szone. this could be a step down. we could be in a growth blip and buy when the market comes down. and the other thing is, some of these stocks have gone up so much, just rebalance some of the ones like warren buffett did. large positions that are too large, take those off the table and rebalance those. >> okay, sarat, it's been a while. >> good to see you, joe. coming up, remember about a

year ago when elon musk's "x" sign include the ire of residents in san francisco? well, those offices may soon be shut for good. we will tell you about that story in a moment. as we head to break, look at shares of tesla. "squawk box" is returning in just a moment.

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and they have top-tier talent and everything from pr to project management because this is how we work now. welcome back to "squawk box." elon musk closing down the x office in san francisco.

linda yaccarino saying the bay area employees will be relocated in the next coming weeks. musk will move the headquarters to texas citing a california law as what he called the final straw for leaving. musk had been at odds with the state over taxes and litigation. coming up, we have a few quarterly reports on the way. not quite straggleris quarterly reports on the way. not quite stragtragglers. we will have caterpillar and bring you the numbers and reaction when it reports. "squawk box" coming right back. >> announcer: executive edge is sponsored by at&t business. next level moments need the next level network. okay, team! oh, thank you so much i couldn't have done it without you. honestly, i don't do a whole lot here.

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we are waiting on vice president harris' pick of a running mate which is expected today. megan casella is here.

>> good morning, andrew. governor tim walls campaigned as a moderate. we were just talking through some of this. he endorsed a lot of progressive po policies. $1 billion for affordabille housing and free school meals and beyond economic policy. a progressive policy lablaborat. >> free college tuition. >> credits and ways to make it affordable. he is on the progressive side. josh shapiro of pennsylvania. he is more moderate. he is trying to slash corporate taxes and cut red tape. he has been friendly with the oil and gas industry as governor. when she is looking at this ticket, she is looking at who will help her electrielectorall.

shapiro would make her look more moderate and walz more progressive. >> if i could guarantee pennsylvania and give the perception i was moving to the center, which everyone thinks she should do. she said she would ban fracking. he didn't like. that he's on the record. for me, it would be an easy choice. i would not -- i wouldn't pick bernie's guy. i would not pick bernie's guy. >> if it is shapiro -- >> i'm not saying i like it. in fact, i worry because i think he would be more formidable than walz. >> right. you want comfortable. it's not like if shapiro was selected. >> no, no -- >> that's my point. >> i'm telling you the right

should fear shapiro more. if she does want to try to win, her past positions have been way too far left and out of mainstream. you can get the criticism she is a san francisco liberal. >> i understand you are not voting for her. >> i voted for jimmy carter. i voted for a democrat. once. i mean, jimmy carter once. this is not based on -- this is not like when i wanted joe biden to stay in. i'm honestly telling you if i -- >> now you are admitting -- >> that's the most poorly kept secret why everyone wanted joe biden to stay in. the most unpopular vice president in history and now all of a sudden she is a rock star? >> there was a lot of thinking

that shapiro moderates to the ticket. >> they never would have. >> i think they think that walz has endearing qualities. from the midwest. he grew up out there. >> former teacher. >> hunter and gun owner. he has done this from the common sense approach. he has the folksy way of speaking. people feels he shows up in a baseball cap might win folks over despite his record. >> i thought you would think moving to the center is bad for trump. >> i'm telling you -- i'm being honest with you. if you are kamala harris and you want a shot here and you really do want to win, she needs to move to the center. she wants to get rid of vice and ban fracking.

>> she does not want to do. she does not want to defund the police. >> she has said that in the past. you have seen the i videos. >> the problem is, the people slice and dice these videos. there are things that i absolutely agree. >> there's no -- >> clean those up. >> those are the things she believes in. a lot of people believe in those things. >> she's moved quite to the center. >> i haven't heard her say anything because she hasn't answered any questions. she hasn't done anything off teleprompter. >> that's not true. i interviewed her last year for an hour. >> she has been the nominee for 12 hourhours. in the race >> we have known her for 16 days and she hasn't done anything extemporaneously. we will see what she does on fra fracking. universal healthcare.

no more private insurance. it's all on the record. >> i agree. there are questions. when she changes her view and goes to the center, you will say she is a flip-flopper. >> it will be flip-flopping. "squawk box" will be right back.

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dow component caterpillar reporting results. $5.99 a share. that's above. it's up 1.5% so far an. this was driven by demand for larger excava-cavators and othe construction equipment. operating profit margin of 20.9% compared with the same period last year. let's get back to the markets.

joining must is sri kumar. good to have you this morning, sri, given everything's that's happened. >> thank you for having me. >> what would you say with the carry trade and japan going up? the fed likely not moving. do you think they should have? >> no, i don't think the fed should have moved in july and i don't think the fed should move in september. i think what happened over the past week with the developments in japan and the first rate increase in quite a long time, japanese interest rates have been too low and the japanese are the creditors to the rest of the world. when the interest rate went up, it made it more attractive for the japanese to take the money back. global investors, in turn, sold when the yen appreciate yd on t

higher interest rates. that's in japan. coming over to the united states, i think it carried over to here because of the expectation of high valuations in tech caused the tech drop yesterday. then you had the overall market taking flight over the possibility of the recession. now, the other thing to touch upon, joe, is what is happening on the recession side. an important development yesterday, momentarily, it happened for a few seconds, is the 2-10 yield curve came positive after being inverted for two long years. what it says to me is, yes, the risk of recession has increased and that is what is also showing up in the market correction last week. the fed should not have acted, joe, because yoi don't think th fed should act in response. the mandate --

>> the market moves because of the jobs number. >> the market moves because of the jobs number. what was wrong with the jobs number? healthy. 4.3% unemployment rate. not very high. wages are still rising significantly. inflation above the fed target. the fed has two mandates. keep up economic growth and bring down the inflation rate. both of them are in the process of happening. why do you need to change? >> because at this point, we're at 114,000 and suddenly all of the companies that were hiring look around and say it's always a loss of confidence. it is always something psychological. if they decide there may be a slowdown coming, i'm definitely not going to hire now and it becomes self fulfilling. the next job number could be under 100,000. who knows at this point? you see a lot of companies pulling their horns from hiring

quickly. >> that is definitely a possibility. let's go back to looking at the numbers and what it may signal. we had 114,000 or 115,000 jobs a few months ago. then it picked up and went up again closer to the 200,000 number. >> we don't know if that will happen again. >> that may help again. >> or it may not. >> or it may not. the thing is why do you need to move before? that shows a panicking fed. what will they do? increase interest rates again? >> i don't know. if they are now and if they stayed too long, as a lot of people said it. jeremy said they need to get back to where they should be. you think that's definitely not the case? >> i strongly disagree with the jeremy siegel position. the problem today started in 2020 and 2021. easing monetary policy accompanying the fiscal policy,

both coincided and chairman powell telling us he is not concerned about the fiscal policy stance. he will do what he will do on the monetary side. my economic theory education suggests that makes no sense at all. once you have done it, and you will cut interest rates to zero, and you are going to double the balance sheet from the level, which is what the fed did, you will have inflation. >> so, did they stay at zero too long and are they making the same mistake staying restrictive too long? >> once you stay too long, you make a series of mistakes. >> the die was cast. >> no perfect outcome. what i would suggest is hereafter, i suggest have a rules-based policy. data dependence makes no sense to me.

>> that's the last thing you have. >> you lose flexibility. >> i want you to lose flexibility. >> i understand you do. what happens in a true crisis? >> in a true crisis, you have -- if you not a taylor rule, you are looking at what is happening to employment and inflation and based on that, you move interest rates. so, it is responsive to economic conditions. however, you do not move to every single number to employment and inflation. the problem with being data dependence is the long lag that many of these effects have and you are not able to adjust to it. andrew, that's the basic problem with what we have. i call it forward confusion. ben bernancke said forward guidance gives you a better guidance to where the market is going and adjust. if you have wrong guidance, it

is the opposite. >> you don't want -- you can make the case that -- who doesn't want a rules-based system? i know judy shelton wants it and it drives liberals crazy. john taylor. you can just explain it to me? there are people even here, it drives them nuts. >> i have a solution. andrew may have one as well. let me tell you what it is that is wrong with rules based policy. none of you need to come to work every day. you can stay home. the computer will do your job because you have all of the information. >> a seat of the pants approach. it depends on who the fed chair is. one person can decide to ruin the economy or bolster. we have to go. they're playing us out. i need to understand. >> we'll talk more about it. sri, thank you. when we come back, more on "squawk."

we head back to paris after another exciting d in aythe olympics. carl quintanilla will join us there. returning in just a moment. dy fr whatever gets served up. dude, you gotta work on your trash talk. i'd rather work on saving for retirement. or college, since you like to get schooled. that's a pretty good burn, right? - [narrator] this is my coffee shop. we just moved into a bigger space, brought on another employee, and ordered new branded gear for the team. it was so easy. i just chose my products, added our logo, and placed my order. bring your own team together with custom gear. get started today at customink.com.

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welcome back. another exciting day at the olympics. straight to paris where carl quintanilla is and you have all of the latest. nice to see you, sir, in short sleeves no less. i like it. >> well, you know what it's like on the rooftop although we have a nice breeze going today. something i know you wanted last week when it was hotter than it is today. you're right. another businy one. 15 gold medal events including equestrian jumping and wrestling, the women's 200 meter and skateboarding. tributes to simone biles, as you

probably know by now, took silver in the floor exercise yesterday and finishes paris with four medals including, guys, three golds for individual all around, team, and the vault fi finals's here's a really great-looking chart. she now has 11 career medals. she is one of only six american women to reach that total in any sport and joins the likes of katie ledecky, dara torres and allyson felix. biles and chiles bowing down to rebeca andrade, the most decorated olympian from brazil and biles was asked how it came about. >> first, it was an all-black podium so that was super exciting and jordan was like, should we bow to her, absolutely. are we going to do it now. but that's why we did it.

she's such an excitement to watch and all the fans in the crowd always cheering for her so it just -- it was just the right t thing to do. >> what a remarkable way to exit she's games with that show of sportsmanship given everything biles has gone through the last two or three rounds but looking forward to today and later in the week things will get spicy with soccer and men's basketball and track and field so, again, we wish you guys -- one day we got to do this together, don't you this i? >> have you seen -- i know you watch a lot of films and you're a filmgoer. have you seen the simone biles doc? >> no, i have not. >> they're still filming, i understand. i think there's more to it that we'll see later. >> that's why i think these narratives, andrew, are so powerful this go-around. tokyo and beijing, we got robbed of that given the restrictions in a covid era and post-covid

era. now it's almost like we're trying to get even and embracing the story lines we haven't seen in half a decade. that's what makes this so exciting. >> i'm living vicariously through you. go to skateboarding. it's nearby. check it out. i just think it's so unique and different. >> i heard you saw everything almost here. >> i was popping around as much -- even -- i didn't tell you this. i went to versailles and saw dressage on the way -- >> you have a true bucket list. >> i wanted to see as much as i could because it's so spread out. >> you would stop by and not even really watch much of the event just to have -- >> we went to fencing for about 20 minute. >> we did. >> we hopped in another thing because you only have such little time because -- carl is working. people think this is some kind

of paris summer vacation. it is not. it is not. >> yeah. >> well, for you -- that's a different story. >> no, we were -- we were working but then we -- working for you is going to the different venues to make the check mark. >> carl -- >> are you going to do -- you go to dinner, right? you need some -- >> i'll be lucky to go to dinner. >> we've got some recommendations for you. >> we'll send you some recommendations. you can? go on the crepe crawl. that's what you need to do. that final place. >> you got to go to the home of surrealism, home of picasso and gertrude stein. you know you would love to hang -- >> no one loves this city as much as you do. >> i do. i love the french. >> we look forward to talking to you later. >> love them. >> i'm sure we'll be back. when we come back a lot more on "squawk" awaiting uber to report

quarterly results and will talk to the ceo, dara khosrowshahi ahead. do not go anywhere.

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at average risk, not high risk. false positive and negative results may occur. ask your provider for cologuard. ♪ i did it my way ♪ uber just reporting now, earnings coming in at 47 cents a share, 16 cents better than expectation on revenue of $10.7 billion. now, that's also ahead of estimates. the ride-sharing company reporting bookings of 39 -- close to $40 billion, also better than the analyst estimate on average. looking ahead to the third quarter uber seeing bookings in the range of 40.25 billion to 41.75 billion. now, that part is below wall

street's estimates of $41.18 billion and so we're going to see where the stock moves. we're also going to get to talk about all of this with uber's ceo dara khosrowshahi that is going to happen in 15 minutes from now. apple shares ticking higher. this after a double-digit decline yesterday. joining us is walter piecyk. mr. apple, he knows everything apple. i'm curious what you first thought when you saw what warren buffer fete did over the weekend. >> when anyone who is well-known or other portfolio managers, the stocks tend to overreact. sometimes these guys who have been extremely successful do get things wrong from time to time. but then when, you know, the stock started selling off and then you had the news of the lawsuit with google, then you just say, well, the guy remains

kind of on top in calling things, you know, at the right time, i guess. we'll see the next couple of months and how they play out. >> okay, so let's move to google and then i want to move to the stock itself. but the google decision yesterday, you think portends what for apple insofar as apple pays an enormous or i should say google pays an enormous fee to apple every year to be the default search engine. >> at least 20 billion. who knows what the growth rate is in the services sector and had good guidance for that segment this quarter. i don't know what the costs are associated when google pays you $20 billion to be the default search engine. there can't be many costs other than someone collecting the wire, so, you know in terms of profitability, doing 100 billion in net income and have a 16% tax

rate, that's a pretty big chunk but you know stuff like this takes years to kind of hash out, google is obviously going to fight it. you know, it's going to go to the next layer here in terms of what is the exact remedy in dealing with this and then there's going to be challenges on that, so it'll take a while but you can't ignore it. it's a meaningful thing. i heard you guys talking earlier about the politics of it but, i mean, i think j.d. vance has talked pretty aglgressively in terms of his views so politics i think can play some role over time, but, you know, it kind of feels like it's inevitable that something is going to happen to threaten this $20 billion services revenue thumb for apple. >> let's flip the board around. what do you think the fair value of this company is at this point of the ball game? >> i mean, i thought it was

lower a couple of weeks ago. the services guidance which really wasn't talked about on the earnings call, i mean, they're talking about maintaining 14% growth there for a very big business. it's a $100 billion line item. what it doesis help the overall company grow now at 5%. i mean, if you look at 5 percentage points service is now 3.5 of those 5 percentage points of growth. if you have 5% growth for a company that's perceived as low risk and provides incremental upside then you can maybe justify at least the 3% free cash flow yield, the 31 earnings multiple so i kind of -- i feel like we're there in terms of the full value. where i could be wrong is if ai turns out to, in fact, drive, i think you had a guest on yesterday who said the biggest super cycle which seems to be set every year and that could give you additional upside.

go ahead. >> that was my question. do you believe that we are about to go through a super cycle based on ai and apple intelligence in the phones come this fall? we discussed yesterday the rollout of that ai even the product in the software isn't going to come necessarily all at one time when the new phone rolls out itself. >> well, that's the new narrative, andrew. it was supposed to happen this year, then it will be next year. feels like it's always next year in terms of the impact to the replacement cycle. the operators are still in this country at least sell most of the phones to the end consumer. there's no sign that this is impacting the replacement cycle. i signed up as a developer. the latest development or latest release of ios 18 and have been using the intelligent series, not that much better, the photos are not that up better. there's a lot of work that will be done between now and when this is formally released. i just don't see it for this

year and even for next year having some big impact in terms of creating this megacycle. what the narrative, though, is going to be, well, and, you know, lightshed we're huge believers in the potential and the promise of ai, so apple is in a very unique position to be a primary beneficiary so it's accurate to say this could take a couple of years. it's always going to be the excuse. if earnings don't deliver it's next quarter, next year, still the guys there for ai and that is something that helps to sustain the valuation, you'll always have those believers for good reason, they've established a great brand that people will believe that they will ultimately be the primary beneficiaries of ai. >> well, we got to leave it there and appreciate your time this morning. thank you. >> thanks, andrew. >> great to see you. >> a little after 7:00. i'm joe kernen along with andrew

ross sorkin. the biden administration announciing it plans to award s hynix $450 million as part of the chips act and towards a plant in indiana. a federal judge ruling that google's search business is a monopoly. the court taking issue with google paying billions of dollars to become the default searchoption on many devices including the iphone. analysts say it's likely the judge will say google can no longer pay for that top placement. openai co-founder john shul man is joining anthropic. a weak jobs report sell-off and sparking concerns that the fed is behind the curve and steve liesman on how the fed is likely to respond. good morning to you. >> good morning. my reporting suggests the 50 basis rate cut is a real

possibility in september but depends on the data, however an emergency rate cut is unlikely unless there's series consideration, a major meltdown in financial markets that gums up the system. not the losses, it would be the inon ability of it and that's way the market is priced. emergency cut is more of an art than science. think of more like 10 to 20 and yesterday was 20 to 30 so that probability is down. 50 base point is around 80% and mary daly last night made clear the fed would act but said it would do in ray more measured way than markets are pricing in. >> my message to you is as we have been doing, the federal reserve, the fomc is prepared to do what the economy needs when we are clear what that is. and there's many more pieces of

information that come out between now and when we next meet. >> market is reducing interest rates down to 4.1 by the beginning of next year. that's 1.2 percentage points and 3% through 2025 but here's the problem for the fed. if it enacts all of those cuts prior to 2026, that is 240 or so basis points and will be above its own estimate of neutral so along with providing any stimulus to the economy if that ends up what is needed and that places it behind the curve. of course, the market is providing some of that stimulus right now in anticipation of the fed acting so the fed is going to need to both cut and support the market's outlooks for additional cuts in the months ahead. what the fed is unlikely to do respond to market losses from carry trades or overvaluations in the tech sector, andrew. >> okay, steve, were you surprised at how the market

reacted yesterday and how the market is reacting today? i mean, i don't know if we should say today is a turnaround? do you think there's stability. we also talked about -- now that there will be a wait and see on what happens in september, if your reporting sort of permeates, if you will, into the marketplace, how much work does that do in terms of what we see in the market, how the market reacts? >> you know, andrew, it's a hard question to answer, because of what i was just talking about, which is that if the fed comes all the way down to 3, it's still neutral, so on the one hand the market reaction looked kind of hysterical. on the other hand, all the market was saying is, hey, guys, you're too restrictive right now. you've been too restrictive. you should have been cutting and need to get back down to neutral as quickly as you can. remember, 3 is theoretically not imparting stimulus to the economy. 3.1. so you're 240 or so over that

point, so it's interesting to think, yeah, the market looked like it was very aggressive yesterday. on the other hand theoretically it wasn't that aggressive. >> okay, steve liesman, thank you, sir. coming up we're going to go through uber's results with the ceo, dara khosrowshahi and former s.e.c. chair jay clayton says investors need more than what the fed alone can give them. he'll join us in a few minutes. "squawk box" will be right back.

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welcome back to "squawk box." uber out with its second quarter results beating on both the top and bottom lines.

uber coming in above mobility estimates but a little bit shy of expectations on delivery as then i want to talk about the guidance and joining us is dara khosrowshahi. how are you? >> great to be here, thanks. >> we've been watching the markets, obviously, but a lot of questions about the consumer, about growth in this country, you are perhaps one of the better barometers of all of this so let's talk about this past quarter but let's also talk about where you think things are headed. >> well, andrew, i think our results that were incredibly strong speak for themselves and had greece bookings of $40 billion up 21% to year on year which is very similar to what we had last quarter. chips growing 21% as well, ebitda of $5.7 billion up over 70% on a year over year basis and translated into free cash flow of $1.7 billion so the company is really hitting on all

cylinders and what we see for the consumer is the consumer remains strong, especially in terms of their demand for our services. past the pandemic the consumer spend continues to be growing in higher rates than consumers spend on retail, and that's absolutely showing in uber in terms of our performance now and our performance going forward and we've also looked at, you know, different income cohorts of consumers as well, for example, lower income cohorts of consumers are actually growing their spend faster on our marketplace than higher income cohorts, as well. even when we dig to see are there early signs of weakness, we don't see any as of now although we're always on our toes. >> do you think of yourself as a barometer of what's happening in this country and the globe or do you think that you're living on

an island and it's an idiosyncratic island and we shouldn't take too much away from it except to say that it's working for uber? >> well, with 30 million trips a day it's a pretty big island, but i would say that we've consistently proven that we can grow faster than the category so i think that's something to take into account. we're the largest player. we have the best technical capabilities and will do better than the overall marketplace and think there are certain elements of uber that are countercyclical. we get more drivers on the platinumf -- platform. they earn $17.9 billion up over 20% on a year-over-year base and eta has come down, prices come down and merchants for eats are offering 70% more in terms of merchant funded offer so we're a channel that can push demand

when business is needed or individuals like our drivers need to make some extra cash. >> tell us what's going on on the each fund. one of the things that people complain about and don't complain about just uber or door -- how expensive getting food delivered to you, especially if you're a single person or even a two-person couple. makes a lot of sense to get food brought to you maybe when you have four or five people but given all of the additional fees, i would have thought that would be one of the first places when you thought the economy would be challenged that you'd start to see it. >> andrew, delivery has been a habit that turned out to be much more sticky whether you're ordering for yourself or ordering for a family. but we are very much investing in lowering prices. our membership, for example, uber one membership which gets you no delivery fees for delivery for uber eats, gets you cash back on mobility, those

member ranks are at an all-time high, over 50% of volumes on delivery come from members and don't pay any delivery fees and we continue to increase that percentage. at the same time we're encouraging restaurants to offer more deals on uber eats, as well and bringing uber one to students for just $4.99 a month they can become members and hopefully when they grow up and become professionals they can continue the uber habit going forward so we do continue to invest in affordability and showing up in volumes, volumes in uber eats are up 17% similar to last quarter and we're gaining category position in every single one of our top ten markets on a year on year basis. >> fate has been somewhat challenged. what's going on there? >> yeah, freight has been challenged by the same weakness you see in retail to some extent coming out of the pandemic. the hangover is not over.

the freight train continues to execute really well in a very, very difficult market, the fact is right now, post-covid, a lot of truckers came into the marketplace, marketplace prices came down and those marketplace prices have not adjusted yet. we're watching carefully but in the meantime, our team continues to bring technology to essentially connect shippers with truckers on a direct basis kind of the next gen freight company, we're very confident of the prospects there but right now it's a tough environment. >> look out 1 months from now, we all don't know where the federal reserve is going to be. we don't know who is going to be in the white house. how certain are you or how confident are you in the guidance right now? >> well, you've got to -- anyone who tries to predict 12 months forward, especially in an environment that is uncertain as now to some extent i think is kidding themselves. what we can be certain of, uber has been able to perform in all

markets, post-covid we made adjustments very quickly, the uber eats business exploded. now the rides business and uber eats are continuing to grow as well and there is this counter cyclical quality to our business which is the cost of supply can move up or down and can move down in weak markets which allows our core 70s will get better in an uncertain environment for us. >> we got to let you go. before i do, i got to ask, tony west, brother-in-law of kamala harris, he's taking a leave of absence to go help her. do you expect him to come back if she becomes president. >> i certainly hope so. tony is an incredible asset to uber. he's taking a leave of absence. i think he'll be an incredible asset for his sister-in-law and we expect to see him back here when his job is done and we very

much look forward to that. we'll miss him for the next couple of months. >> dara, we appreciate you joining us right after you reported earnings and look forward to seeing you again soon hopefully in person. >> thank you. up next we'll talk about the possibility of an intra -- inter -- something between meetings with the fed and don't want to call it an emergency rate cut and a hot topic of fed independence with former s.e.c. chairman jay clayton, futures have improved. back up 250 points on the dow and the nasdaq up 175. s&p chiming in as llwe. out you. honestly, i don't do a whole lot here. i'm really just here for the at&t internet, it's super-fast so, any pre-launch concerns? what if nobody buys them? that's mean or, what if everybody buys them? oh, i hadn't thought of that that's probably not gonna happen can we handle that kind of traffic?

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joining us to discuss the recent market volatility let's welcome jay clayton, now a cnbc contributor. where do you want to start? when you come in, we always have, like, a kind of a buffet of things. i don't know if there is a sneeze tray. i don't buffets without sneeze trays or sneeze shield.

>> fair enough. >> the last three days, what have you said, oh, my god, i need to talk about with this joe and andrew? anything? >> market function yesterday. >> it wasn't great, was it? >> i think it worked. given that you had clearly a ton of forced selling, people were selling because -- >> margin calls. >> because they had margin calls and had to fund things and with that globally, the market functioned well. i think that that is -- that is good news. what else is good news? our g-sibs. what we worried about, clearly this was nothing to them. they can handle market volatility like this. you know, you talk to, you know, the largest banks, this was not a problem for them. you know, so those are very good things. one thing that we're hearing this morning, hearing on this program is the fed, you know, people are saying what should

the fed be doing? my takeaway is, thank goodness we have an independent fed, right? you have all of these different pushes and pulls and the like and in a political season whe'r less than 100 days away from an election -- >> why even the possibility of it not being independent and we were just talking about that, why not have a rules-based fed instead of someone who could be swayed, someone who flies by the seat of the pants. someone thinks greenspan was this, janet yellen was this, bernanke was this. we wouldn't -- it wouldn't have to be dependent on one person leading 12 others around. >> i don't think it's one person. i think jay powell, chair powell -- >> it's a consensus. >> -- does a pretty good job. maybe they follow along because they find a pretty good spot. why not have a rule?

>> yeah. >> because the world changes. the financial world is complex. why have a rule when you have disciplined fiscal spending as opposed to -- >> they stayed at zero and completely enabled the fiscal spending. >> but now they've responded. >> and we're in the middle of responding and we don't know how -- >> i'm going to defend the fed here. we're all looking to the fed to deal with this situation with the very blunt tool of interest rates when we have, you know, unprecedented fiscal spending, right? we have unprecedented supply shots. we have volatility around the world. we have europe, which is -- >> you think we would have unprecedented fiscal spending -- their place is whatever -- they shouldn't try to cut off the spigot. >> i think, unfortunately, you know, they're in reactionary mode as it goes to fiscal s

spending. >> can we -- let's talk about -- we can talk about google. my point was, it's just weird and i don't know, we're finding out who appointed the judge. i'm not going to say one way or the other that's political, but it's one person that's deciding on -- i don't know -- but then there's also -- >> you go to the appeals court. >> what about this? you think google is really good at what it does. >> i'll start with that. when it's not -- when it's not the browser that comes up, i switch to it because my experience is it's just better, so, okay, and that's something that the judge has to deal with. the fact that consumers may just like this. what i thought -- i thought was good about the opinion, i perused it quickly, the judge did explain the thinking. >> right. >> in a pretty clear way. i think in these types of

situations what does the judge owe the parties and what do they owe the appellate court. >> as much of a balanced view so the public can react, the appellate court can look at it. >> is it a good or bad precedent for our tech industry which is the best in the world? >> i am all in on tech. i'm all in on tech. all in on america. one of our greatest advantages and have to be careful. >> light touch. >> here's my question, my question is are they fighting yesterday's war, which is to say that google has been the freedom annapolis, you know, search engine in the world but now we're talking about perplexability and openai and alwa all of a sudden microsoft is making a new run at making bing, you know, a meaningful player. i don't know if any of them will

succeed but if you look over 10, 20, 30 years at the top ten companies in america, in terms of market cap and revenue, they do switch. >> they switch. >> they switch and that's something to be said about competition. >> innovation is a much better response than the government to these types of situations. >> still having said that -- >> it's absolutely clear. >> having said that, look -- >> and people would argue, oh, but the government needs to be there to foster innovation. back to joe's point, light touch, forward looking? >> the complicated part. if i'm apple i say to myself i should be able to sell parts of my screen to whoever i want. >> 100%. >> okay. in this case they sell it to google. because they sold it to google, google has an because they sold for a lot of money, by the way, not everybody has -- can afford the screen space, if you will, so the capital, if you will, all of a sudden has competitive value. >> yeah. >> so they get on this screen and there's a feedback loop and

that's the part that i think we haven't thought through from a competitive perspective. >> i don't think this is that new. what brand does macy's put in the storefront window? >> absolutely. no, no, but here's the question. what product do you know that gets put in the macy's window and the product gets better because it's in the window, so the reason that the google -- >> i know the network effects. >> because more people are using it and, therefore, it can train effectively better to actually send people to the right place in a way, frankly, that some of these others can't. >> so -- >> that's interesting? >> is apple supposed to say, i'm sorry, i can't put you on because it's too good a deal? >> i've always defended apple's right to do that but then the question is does google not have the right to pay the money? it's a very interesting sort of philosophical but now it's a very practical issue. if you're into antitrust, this one actually is closer to me in

terms of, like, thinking through the sort of unique dynamics at play than some of the others. >> i get it because -- and when you are in a government position like that, high impact is something you always have to look at and, sure, it's a greater impact but what does the consumer want? >> then the question is what's the remedy? do you believe in behavioral remedies. >> i love the search engine because it's so darned good and it is because so many use it. >> do you believe in behavioral remedies meaning that somehow the government oversees the company as a result of a ruling like this if they would continue to lose in an appeals court or subscribe to the philosophy you need to break things up or split things off to serve the greater good. >> so, back to what you asked, we have this ai revolution that is forecast. that's where the government should be looking. are people somehow taking what they have today and in the next step using their power today to

segregate, wall off -- >> i would take the opposite say and say right now ai is so early still -- still in the game that i want all of these guys to be sprinting as far as they can and the second that i put up a hurdle in front of them in any way, i'm slowing down -- >> that's what i'm saying. let's look at that market. we've had this is conversation. i think it's fantastic that in america we have four companies that are throwing tons of capital and sprinting at this and i should be really happy about it. i'd be worried if it was one company. >> hmm. hmm. you're very woke. >> are you worried that they're all the -- >> i'm woke. am i woke today? >> woke can be good. woke can be eyes open. can be eyes open. so don't -- >> we'll use that in a commercial for vice president harris. >> yeah, exactly. >> woke can be a good thing for

you. i don't want you to take it wrong. >> no. hey. whatever you want to dacall. >> as long as i call you. okay, thank you. >> when we come back we'll have more on "squawk box." a number of stocks on the move as wall street tries to bounce back from the s&p's worst day in two years, then the next hour, former atlanta fed president dennis lockhart will join us and talk about the fed's rate edamt. mh re as "squawk box" rolls on. this is our future, ma. godaddy airo. creates a logo, website, even social posts... in minutes! -how? -a.i. (impressed) ay i like it! who wants to come see the future?! get your business online in minutes with godaddy airo

futures, 258 now on the dow, almost 200 on the nasdaq. not bad on the s&p. let's get to dominique chiu. he dom chu. you would be able to do the quarter by july. let the books do all the accounting. here we are in august. let's get going. the olympics. >> you know what might help? maybe in the coming years we'll see ai be able to do all these quarterly reports for these cfos and everybody else. all right, so, joe, andrew, we

start with a dow component, caterpillar but shoes up 4%. probably good for 80 or soy points on the dow futures at this point. after the construction and mining equipment giant reported a beatfor both profits and revenues but those overall revenues were still lower year on year due to lower sales volume and saw modest growth in energy and transportation division and helped offset bigger declines in terms of resource industry parts so caterpillar shares up 4% on balance. up about 19% over the last year. now, you got palintir. those shares are up 10% off extended hours highs, at one point up around 20% after yesterday's closing bell. the company reported its largest ever quarterly profit. it also raised annual revenue forecast and they've been trying to beef up their corporate business and revenue grew by 33% this quarter. they get a lot of their business from the government contract side of thing then we'll end

with a check on the chipmakesers up after significant losses after yesterday's global market sell-off. nvidia up 3%. it was down 6% yesterday. intel also climbing following a 30% decline after earnings last week. amd, broadcom, qualcomm, all up roughly 1.5% to 2%. it will be a little bit of good news for chip investors and traders who have seen steep losses so, joe, semiconductor stocks mod bounceback. send things over to you. >> tensions in the middle east and -- are rising. impacting oil prices this morning, s&p global's vice chair dan yergin will join us. "squawk box" coming right back.

just about two hours from today's opening bell and joining us is joe amato, chief investor at newberger investment group. what did you think of yesterday. >> i thought it would be a run-of-the-mill tuesday and talk about the olympics on a quiet summer morning and quite a market over the last couple of days and clearly violent unwind

of a lot of positioning over the course of the last couple of days. we still think the underlying fundamentals of economy are sound, although signs of weakening clearly so i think you're going to continue to see a bit of chop as this unwind continues. it doesn't unwind in a day, right? it takes a bit of time. >> we've been talking about what that looks like. some happening in japan. that seems to be a huge component and part of this. are you thinking to yourself when clients call as i'm sure they did yesterday either should i be selling or more importantly i have cash on the sideline. should we be buying? you're telling them what. >> i think your point on cash is important. we think that the fed's going to move rapidly over the course of the next six months or so. the market is pricing in, roughly, what, 120 or so basis points of reduction in the fed fund rate so those earning 5% in cash will start to earn a lot less than that, so starting to put money to work as you see

this rate cut cycle begin. you see inflation coming down. it may not necessarily get to the target level but clearly it's come down so i think you want to start to put money to work. >> we keep talking about august and what it portends for october, they're super anxious. >> a long way off. >> if you think there will be chop between now and then, some might sit on their hands. >> i think you take advantage of these opportunities that get presented to you, so if you think about japan, we've been bullish on japan. when you see that kind of decline, granted it was up 10% overnight but think yap is a long-term attractive market. there's a lot of important secular changes going on in japan as companies drive higher level of shareholder return and take advantage of it. many clients told us when talking about japan, oh, we miss that. right? it's been the best performing equity market in the last three years then you have an

opportunity that came about over the course of the last couple of days to put money to work and investor for a longer term. >> how do you think about bonds right now? >> we think that the sort of fair value for the ten-year is still around that 4.25 level so when i walked in, 3.85 or so so we think rates will move up a little bit and shortened duration in the context of our fixed income portfolios but if you look at long-term inflation expectations, real rates, term premium, we think around 4.25 for the ten-year is fair value. >> how much should we like or not the banks right now and the reason i was thinking about the banks, just i mean they're not even in the mortgage business anymore but there is commercial real estate and big questions as to what's going on there. >> financial sector is changed a lot over the course of 20 years, the 2007/'08 period is embedded in our memory bank, particularly

us. >> yes. >> the soundness of the financial system is clearly improved over the course of that period of time so i think the banks, you know, in an economy if you go back to the comment i made around the foundation of the economy being relatively sound there's some cracks. if you look at quarterly earnings out some of the consumer companies they talked about, you know, some concerns about consumer spending particularly at the lower end but nonetheless, i think the system is sound, and the economy is there so from a credit standpoint it should be okay. >> what about if your clients call and you say do i still want own nvidia or not? that's the hardest part about the whole situation. >> these stocks have moved an enormous amount. oh, my god, nvidia is down 6%. it was up 100% still just this year so these are amazing high-quality companies that have delivered extraordinary returns over the course of the last number of years. we think there's going to be a broadening out and start to move

into a rate cut cycle. that will be important so the narrowness of the market leadership that we've seen which is a concern of ours and a concern of a lot of folks we think you want to broaden out and have more exposure to sick -- cyclicals and lower capsizes that are underperformed. >> joe, we have to leave it there. >> that joe, okay. yeah. i thought you were -- >> bringing you -- >> just saying -- co-miss rating with him we'll have to leave it there. >> we are going to leave it there. >> that's fine. let me tell you what's coming up, andrew. class offerings at universities around the country could look a little different this fall. that story is ne.xt "squawk box" will be right back.

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and students' demands for more hirable talents are driving schools to revamp courses and schools going so far as to emphasize that all undergraduates get a taste of the tech teaching them how to use in a given field as well as its failings and potentially unethical applications. more than half the law school students now up for classes on ai, according to the american bar association. and that trend seems to be spreading to' other specialty schools as well. >> so could you use ai to write your ai dissertation for your degree? >> if you could learn to do the prompting. >> would that be enough to earn you the degree? using ai to cheat. >> now we're saying it's a cheating. there was a time using a calculator was cheating.

how do you feel about spell-check? how do you feel about grammarly? >> spell-check always spells things wrong for me. did you see our -- >> i did. i don't think we need to mention that. coming up. middle east tension rippling through energy markets. dan jurgen of s&p global joining us right after the break. and later, the black swan author nassim tleb will joius tn o help break down the markets, the whiplash of the last few days. we're coming right back with all of it right after this. [window slamming] woman: [gasps] [dog barking] ♪ woman: [screams] ♪ [explosion] [explosion] ♪ [lock clicks shut] at pgim, finding opportunity in fixed income today, helps secure tomorrow. our time-tested fixed income suite,

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oil prices climbing this morning, pairing yesterday's losses, as concern that an escalating middle east conflict could hit supplies. joining us is dan jurgen, s&p global vice chairman and author of the book, "the new map: energy, climate, and the clash of nations." it's all 50/50 supply/demand, dan. sometimes does one or the other become more important, and what now is really the lever for controlling prices. >> i think right now, it is, in fact, demand. you know, there's recession fears, which you've just seen in the general financial markets, and it's quite striking that oil

markets so far, is not preemptively pricing in the risk of what seems to be a very imminent conflict. and saudi arabia has just told all of its citizens sleave lebanon, iran has told its pirates to leave air space. there's some sense of a disruption of supplies yet. >> did opec's mentality change and their plans? do you think they're going to amend or change any of the things that they decided to do, either based on the demand or what happens in the middle east, in the conflict. >> yeah, well, you know, next in october, they're supposed to start raising supply, and they just reiterated that they're supposed to do that, but they said, of course, they completely reserve the right to not do that if market conditions change, and

clearly, among all of those countries in the middle east, including the oil producers, there's a terrible fear that -- of war that would be bigger than what we have seen so far, involving hezbollah and israel. >> why did -- after october 7th, and everything -- you know, everything we've seen. and it's been a wide conflict already, not as wide as what we're talking about, obviously, if it's not just iran proxies, but why wasn't there more of an affect then? was that offset by weakening demand? >> i think it's been demand. i think the market -- the market participants have gotten out, you know, accustomed to no longer reacting before something happens. the other thing, joe, that i think is really important, and maybe we're going to hear about in a presidential campaign is the shale revolution. the western hemisphere now produces more oil than the middle east, and the number one source, of course, is the united

states. and i think that has been a great stabilizer. if we were still in 40, 60% of our oil, you could be sure that the price would be a lot higher than it is today. >> can you give us an idea of what it says about whether the globe is slowing more than people thought? or even whether the united states is, whether china is, whether europe is? can we glean anything from what we're seeing in oil about -- are we on the cusp of a recession in this country? >> well, i think if you look -- one of the things we look at carefully is chinese oil imports. china has been basically about half of the total growth in oil demand. and we were quite struck in the first half of this year, chinese oil demand, the imports were lower than they, you know, have been, which kind of breaks the trend. i think the other thing is, i was just looking at the s&p pmis, and there is a more mixed

picture, because it shows manufacturing weakening in the u.s., and services strong. so -- but you know, as you know, and you've been talking about for the last few days, is that this kind of mentality and fear of recession is there, and that's going to affect commodity prices. >> yeah, psychologically. and it's a self-fulfilling at times, and a virtuous cycle or whatever it is. all right, dan. i don't know. it's been kind of boring, you know. oil, normally -- >> that may be famous last words, you know, since we seem to be maybe only hours away from something we haven't seen before in the middle east. >> well, i don't want that, obviously. none of us want that to happen. but i like 30 to 150. i like that range. and crazy, we saw -- we saw -- you know, i want to get paid to take some oil. i've got some tanks built into my backyard. remember when you could actually make money, you know, getting a delivery.

yeah. >> during covid, you know, the discussion you see now, people forget what that price collapse looked like. and the lasting impact, the caution that that put in. >> exactly. all right, i wish that would happen with gold. i'm ready to take all you got. thank you, thanks, dan jurgen. meantime, it is just past 8:00 a.m. -- actually, it's one minute until 8:00 a.m. on the east coast here. 1:00 p.m. or 2:00 p.m. in paris for those who are over there. 2:00 p.m. this is "squawk box" on cnbc, of course. i'm andrew ross sorkin. joe kernan is in the house. becky is off today and so many things going on as we watch where the markets are headed after a big and wild day, down yesterday. things seem to have gotten better today. we'll talk about that in just a minute. dow component caterpillar beating on the earnings and

revenue expectations in the second quarter. those results driven by demand for cat's excavators and construction equipment. that stock up over 4% on the back of that news. also ride-hailing giant uber topping profit and revenue estimates. the midpoint of the company's third quarter adjust earnings range falling just above what analysts were forecasting. and here's what company ceo dar khosrowshahi told us. >> the consumer remains strong especially in terms of their demand for our services. past the pandemic, the consumer spend on services continues to be growing at higher rates than consumer spend on retail. and that's absolutely showing in uber. >> and a federal judge dealing a blow to google, ruling the company has illegal held a m monopoly in skpernlg text advertising. the case was held back in 2020 and google says it plans to

appeal. >> futures this morning are getting back at least part of yesterday's losses. you can see the dow, about 212 points now. nasdaq, up about 160. and i guess, i want to look at treasuries really quickly, and then we'll get to dom chu. treasury yields backed up a little, as well, 384 now. you know what, dom, at least the nasdaq didn't -- some days, you see it return to the lows from the previous day, and so far, that hasn't happened. because the nasdaq improved throughout yesterday's session, and it wasn't nearly as bad as it looked early on. and now it's up today. so -- >> i mean, joe, so the idea here is, i think there's a good amount of muscle memory from folks over the course of the last several, you know, i wouldn't say several years. since the pandemic lows. we've seen these attempts to move the market lower, past that kind of 10% correction mark. and we've seen bids come in.

what we are seeing right now is at least a little bit of this idea that folks are like, you know what, we've seen a market pullback, which is decent in the nasdaq composite. now's the time maybe to get in, because we didn't get in when things were going crazy and nvidia and the ai trade were taking off. yes, it is some stability right now. let's see if it holds. but as you guys have been highlighting, there are data points. and even san francisco fed president mary daly highlighted some of those dynamics about a possible weakening in the labor market. we'll see whether or not there's a bid. anyway, we have some individual names that are moving on earnings from a fundamental standpoint as well past the broader macro markets. let's right now check on shares of kenvue. this is the maker of consumer brands like tylenol and listerine, band-aid band-aids. it was split off from johnson & johnson just last year. it reported a beat on profits and revenues for the quarter. those results were boosted by productivity gains and higher pricing efforts and the companies did affirm, re-affirm,

whatever you want to say, its full-year sales outlook. those sales and everything else are still in place. the stock is still down 19% over the past of the last few months. then we have planet fitness, those shares are much higher. they were up about 7% 10 to 15 minutes ago. they posted a beat on the top and bottom lines, and planet fitness did also see sales growth at existing gym locations. the company also opened 18 new locations for gymnasiums during the quarter. we'll cap things off with an analyst call getting some attention this morning. that's crowd ststrike. they're catching a bid thanks to piper sandler, which is upgrading from an overweight. they lowered from 290 to 310. they think that ultimately the effects of the company caused a software glitch that led that massive i.t. outage will be a shorter term phenomenon and they

have created a an attractive level. for more on that, head over to cnbc.com/pro, subscribers get more details and analysis, andrew, on those analyst calls. i'll send things back over to you. >> meantime, take a look at shares of csx, moving higher this morning. the railroad operator beating second quarter profit estimates. the company getting a boost from high shipment volumes and pricing, even as margins fell from a year ago. that stock up about 2% on the back of that news. a quick programming note, the company's ceo will be on "squawk on the street." that's going to happen at 10:30 a.m. eastern time. lucid says its biggest shareholder, saudi arabia's public investment fund, will provide the ev maker with up to $1.5 billion in cash. the deal comes as lucid looks to start production of its new gravity suv later this year. the sovereign wealth fund has a roughly 60% stake liucid.

we'll talk big tech, banks, and the fed and how investors should be thinking about each of them in the wake of this sell-off. stay tuned. you're watching "squawk box" and this is cnbc.

welcome back to "squawk box." joining us on the set to daub the market sell-off is nassim taleb, the author of "the black swan." it's great to see you. we're all trying to understand whether what we saw yesterday was the beginning of a black swan or not? >> okay, so, first, yesterday, i got this call from my business partner, mark spitsnagel, 25 years, and he said, this, a black swan. and first of all, the probability of not having a down

3% day, the probability of not having one is -- 1.3% of the time, and almost most years the majority of years have a 3% down day. but it is a black swan. >> and the nikkei, though, the nikkei down 12. >> the nikkei is a different situation. let me finish. what's a black swan? a very large impactful deviation that was not large nor particularly impactful and two completely outside the realm of expectation. this is the absence of the 3% or more drop. >> what does this portend in your mind? are you anxious at all or should we be worried? >> we have to be worried about a bunch of things. we have to be worried, but -- now, let's talk about the nikkei.

we have japan. >> they did zbrooert policy, near zero interest rate policy, and then they had the quantitative easing. 30 years of near zero interest rates, okay? and a lot of people who thought that this method would help things stabilize thought they were vindicated. and now they realize, once you raise rates, you have to pay back for all your sins. 30 years of sins you have to pay for. really, there's no such things as free money. you cannot cure a structure or a problem with a monetary policy, no more than you can cure cancer with a painkiller, you see? it's a painkiller you've got to put at some point. it's going to wear off. so this is -- we have a problem and that problem is debt. the first time we got on cnbc,

we were talking about debt 15 years ago. the problem is debt and let's see where it matters. japan has a lot of debt, no growth. and of course, a population problem, an aging problem, which worsens it. so you have europe, less debt, no growth. last 15 years, sideways. that's a problem. the u.s., a little bit more, depending on the country. some growth, okay? and china, debt, a lot of growth. >> slow down in both cases. >> slow down, still ahead -- so here the worst case, of course, is japan. you don't want to be japan. so it will drag us, of course, we're all connected. japan may be less connected than europe to us, the economy, less

impactful. but still, we have a problem, but now we have to worry about the debt. the debt, how can it cripple us? once you have to start raising rates, you have to start paying bills, now you're paying interest on interest, and what percentage of the budget is debt servicing? it's growing >> could be the lion's share. so that's scary. >> it is scary. >> as long as this hangs over us, we've got a problem. and this is going to cause turmoil. there'll be winners, there'll be losers, but that's a source of fragility in the system that is like staring at us, and people don't talk about it. >> so what would you do about that? let's say you're the head of the federal reserve. you're jay powell. what do you do? >> the thing is, it's not just jay powell. he has a monetary policy on his hands. he can't do anything else, okay? that's his monetary policy.

so we have a -- you need to balance the budget, okay? got to find ways to balance the budget. it's not his job. and the problem is, every time you have, you know, people run for -- they talk about balanced budget. and guess what? we're going away from balanced budget. the republicans create deficits, the democrats create deficits. that's a problem. >> everybody says growth is the answer -- >> sorry? >> everybody says growth is the only way out. how about ai? how about technology? >> that's in the future, ai, okay? that's like -- >> are you a believer? the other thing we've watched is nvidia stock and apple stock and google stock. everybody has gotten hit, in the past couple of days, where there's, you know, goldman sachs came out with a report suggesting that maybe we are in some kind of ai bubble? >> the thing is, there's a difficulty here. let me tell you the difficulty. people talk about nvidia, all right? and it is, you know, they say, well, look how well it's doing.

a lot of the rally in the s&p is caused by that stock. a little more than a third of rallies come from the stock. and it's -- but -- i don't know if you have a basement where you dump your old computers, but go look at the brands. the first portable computer was osborn. and it went bankrupt, okay? the first google -- the first engine, we had alta vista. >> forgot that. >> in the cemetery of ideas. so we have a situation here where people focus on a company -- so ai will win. it may outgrowth, i don't know. you can't really speculate. but ai, definitely is -- but let me tell you, it's not necessarily those companies are doing ai today that will win. >> how will we know when the reckoning that we're not doing

with debt becomes a problem? that's why people worry about things that happened yesterday. you know how dogs can tell when there's an earthquake that's coming on. aren't there pre-shocks or something? how do we know this isn't the beginning of something yesterday? how do you know we're not at the front -- you just don't think so? >> first of all, you have to treat the situation as a -- you can't say -- you can't really -- you've got to say, the risk is there at all times. >> i would like to have people get out. >> and what happens is a catalyst, okay? what happens just a catalyst. and catalyst is not a cause, all right? so the -- you will -- you need days like yesterday to trigger a bigger one. >> right. >> but the problem is not drop in the market. the problem is the structure of what we have. okay? people -- everyone knows we have a lot of debt, and nobody is doing anything about it. and it's accumulating. now about 120, 130% of gdp is starting to be a problem.

>> yeah! >> by the way, i have something i want to mention. >> you're going to -- >> i want to talk about bitcoin. >> don't look at me. don't point at me! >> a speculative thing. and at one point, bitcoin proved once again that it's not a hedge against your ss melting. >> it's just a speculative asset. >> it's a speculative asset that seems to -- just like behave, you know, like high-priced real estate in manhattan, for it to attract the stock market. >> that may be true, but you're losing your ass from when you told me it was useless at $30,000. >> i'm saying it's useless, doesn't mean -- doesn't mean i didn't invest in. there are a lot of things i didn't invest in. >> i want you to short it, instead of just talking, i want you to short it or buy it. do one or the other? >> that's exactly the kind of false dichotomy that you're

causing. i'm telling you, it's an asset that's crazy. enough crazy people to drive it up. >> what do you think will happen long-term? >> i have no idea. >> i have no idea. it's a speculative asset. it's not useful in a system to have assets that go from $10,000 to $60,000, when you're looking for price stability. >> but that's an underlying company that actually produces something that makes a product. this is not that? >> on any given day, whatever it's worth is totally ephemeral. >> let me tell you the problem with bitcoin people -- >> nvidia went from $6 to $400. >> it's revolutionizing the world. >> who knows if bitcoin is doing that. >> but it's not. >> but there are people who think it is. >> how so? it's become a speculative asset. that's what it is. the product is being a speculative asset. >> it has a function until use in terms of what constitutes --

like actual money. >> that's exactly -- that's exactly what you're getting wrong. it's approving that the -- it can be anything, but it's not a currency. and it's not a hedge, all right? so treat it as a -- listen, a lot of people buy expensive paintings. >> what are the characteristics, for example, of gold? it's immutable, cross-cultural, it's a limited supply. there are all of these different things -- it has a lot of those charac characteristics. >> gold has a property that bitcoin doesn't -- >> what, to make jewelry? >> as you said, there's one property. it's that -- if you put -- okay, i have a gold chain. if you put it on the ground for 10,000 years, it will still be gold. bitcoin, if the -- you know, the players in bitcoin -- >> right, if you unplug the servers. >> you can still have it. you don't need a server. >> no, but it has to be maintained, okay? and this is complicated

>> the entire world is based on something being plugged in at this point. >> but gold isn't. gold is not. >> and gold held its value -- it was stable, up until the hunt, until '73, when -- >> but gold is stable -- it's worth about what -- it's worth, like a suit. it's worth a good suit, apparently. over the years, you can buy a good suit of clothes for whatever gold cost. >> okay, the idea of taking the story of gold -- >> no, the characteristics -- there are about six or seven characteristics that bitcoin shares with gold. and -- >> the argument is not -- i'm arguing -- >> on the old days, if you lived on an island -- if you did an hour of work, you did one thing, and somebody else did another thing, you need a way to keep track of your work. it's a distributed ledger, that does that -- >> it looks like we're not going to go anywhere -- >> you can use shells -- >> well, the world is

actually -- you're kind of -- the world is coming around. >> how many bitcoins have you used to buy your newspaper and your coffee -- >> okay, now you're using the use cases. now you've moved from -- >> i'm saying, it's approving not to be a currency, and it doesn't have the same attributes of gold. i'm not complaining. a lot of people like crazy stuff, okay? >> it's different -- it's not a pet rock. >> don't make it -- >> it's just not. >> well, in hindsight, we'll see. up to this point, you don't admit that you've miscalculated on bitcoin? you still think you're right? i know people who hated it at 5,000 and still think they're right. i myself told you -- >> is it going to zero? >> no. >> it should based on -- >> if it will go 1 million, it will still be a speculative item. >> that's brave. short it if it's going to 0, buy

it if it's going to is million. >> this is a debate that will continue, nassim, thank you for coming in this morning. we're coming right back hear on "squawk box" after ts.hi you'll find them in cities, towns and suburbs all across america. millions of americans who have medicare and medicaid but may be missing benefits they could really use. extra benefits they may be eligible to receive at no extra cost. and if you have medicare and medicaid, you may be able to get extra benefits, too, through a humana medicare advantage dual-eligible special needs plan. call now to see if there's a plan in your area and to see if you qualify. all of these plans include doctor, hospital and prescription drug coverage. plus, something really special, the humana healthy options allowance. your allowance.

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nvidia, tesla, and amazon, the three worst-performing of the magnificent seven over the last three trading sessions. all down between 11 and 13%. only meta is positive since last thursday, when the most recent selling bout started. joining us now on what he's watching in the tech sector, ray wong, constellation research principle analyst. good morning, again. good to see you, ray. would you buy everything right now, on a pullback, or buy nothing? >> well, i was going to wait to see what was going on with some other data points wi, to see if were in full panic mode or if we

were going to come back. we had a pullback, people were coming back to their senses and realized one data point wasn't going to trigger everyone into an over correction. it's a good time to look into this. there are a few stocks that are actually winning in ai and nvidia, of course, is still going to be there. we've got to wait until august 28th to figure out how they're going to -- what their forecasts for q3 are going to be. but more importantly, they're still going to be one of the winners. you mentioned amazon. that will be interesting to watch in the long run, because we're seeing if the retail sector does come down and there's pullback in terms of consumer spending, i would be worried about amazon. but there are some interesting things. we are seeing people make money in ai, and uber, for example, yesterday, said, look, better price matching, better ride batching. our improvements have improved their abilities to get more profitability. and meta has done something great with their open models. what it's actually allowing them to do is open source their mlms,

but improve their precision targeting for ad growth. meta is great stock in that regard. and nvidia is a good one in terms of what you've mentioned. . >> so, ray, when we go through periods like this that, you know, in this case, maybe it was based on a carry trade or a currency fluctuations, do you just ignore it? do you just focus on what you know about each one of the companies individually, or worry, well, the multiple is kind of rich, depending on what happens in the macro world, everything could be marked down. how do you do it? do you just look for opportunities to get long and what you like? >> right now, it's really about opportunities to get long on the ai revolution. and you have to figure out which companies will make money in ai. a simple example, adobe is making money on ai, selling ai software. microsoft, we'll see how they do well in terms of what apps they're selling. oracle has done a great job, palantir is a company that's been in the space.

c3 has been in the space. we want to see who has the revenue growth. it comes down to the forecast of what's out there. it is individual stocks. but the macro was a bigger issue. that notion of debt that was being discussed earlier is true. china is in serious trouble. it's a market with lower population growth and the debt bubble, they're going to be in a tough spot. they're going to look like japan in 20 years, and japan got crushed, but mmt doesn't work. so a u.s. jobs number that's just one data point isn't something that's going tyke down the u.s. market. but the sentiment was pretty bad yesterday. zp >> it really was. ray wong, thank you. we'll avitlee there. coming up, some breaking economic data. "squawk" is coming right back. like your workplace benefits and retirement savings. presentation looks great. thanks! thanks! voya provides tools that help you make the right investment and benefit choices so you can reach today's financial goals. that one! and look forward, to a more confident future.

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it's piled high with tender beef that's slow cooked and smothered in tangy memphis style barbecue sauce. it's no fuss, no muss. just tons of flavor. the best barbecue beef is only a togo's. try one today. welcome back to "squawk box." rick santelli here live at cme hq with the prbreaking news of e morning. expected a number in the 72.5 billion area, minus $73.1 billion. that's definitely significantly lower than our last look, and that was notable. this is second quarter, as well, of course. so was last month, and last

month was the biggest negative deficit going back to october of '22. they just suddenly revised it from 75.1 billion, with a minus sign of 75.0. that doesn't change the history there. the reason i bring it up is that it subtracted quite a bit from gdp. we have cooling exhort ing impo obvious reasons, think yesterday. although it's a consumer demand story, not necessarily an asian story. and the exports may be an asian story. we are seeing cooling exports. the issue is that we're seeing exports cool more than imports last month. that's the dynamic that might have changed here. i don't have all the intr intricacies, but we want to pay very close attention to that. we're exporting fewer plains, cars, industrial supplies. the globe seems to be slowing. we're not slowing as fast as everyone else. and if you look at interest rates right now, we're at 393 for a two-year, which is up one. and it was down into the 360s from an intraday basis.

we're actually seeing rates on the long end a little bit more firm. 382, almost 383, up 3.5 basis points in 10s. we have a three-year note auction today. 3s and 30s to follow respectively. and i do think that the focus will refocus on some of these auctions, with all the variables being some of the obvious ones. we seem to be doing more t-bills than coupons, which has has a whole story tied into it itself. if interest rates continue to go down, maybe that will be a good choice. we'll have to wait and see. it does juice the economy a little bit. and with respect to yesterday, i'll just leave it at, i thought the biggest driver yesterday was the asian carry trade. i don't think that chapter is over yet. i do think that the u.s. has a fair share of issues and comeuppance from all the years of keeping rates too low, but i think yesterday was more of a one-off in terms of its dramatic effect on the u.s., and i think that's evident by where the vix

and the japanese markets have traded today. andrew, back you. >> okay, rick, thank you for that. i want to go strait to steve liesman with this has thoughts on the data. >> yeah, i like the idea that exports were up a little bit, the world has been kind of weak, and whether or not there's going to be some help from the world. andrew, i want to have a little olympic economic data fund. did you know that the olympics, eventually, not this month, maybe next month, the month after, they show up in the economic data. did you know that? >> i did not. is this like a taylor swift situation? >> it's a little bit similar. do you know how it shows up? >> tell me how! >> as an import of intellectual property, a service. so there's the olympics. you see those bumps there? >> yeah. >> those bumps are the payments that comcast makes to the international olympic committee. very rare for a corporate data to show up in the overall macro

data, but there it is. it happens in february and once in a while in august or july. not really clear -- i don't know if that spike is something related to the pandemic at the end there, but it's a kind of regular basis, it shows up. we're importing the olympics from the ioc, and then it's kind of an interesting lesson here. what do we do with it? well, we repackage it and make money at it. make an added profit from that importation. so there it is. this is the one contribution, the economics debate has to our olympic coverage, andrew, right there. >> there it is, steve. >> now, luckily -- i would just point one other thing out, which is that we export a lot more, two to one, three to one, as a nation, in terms of our export of intellectual property, when we sell our shows overseas and that kind of stuff, that's an export. this is an import of the property. >> steve, thank you for that.

and thank you for the education on the olympics. this is not something that was on our radar. so now we know. now we know. meantime, i want to talk more about the economy and the fed, and what central bankers are watching in light of last friday's weak jobs report, and new recession fears. yesterday, chicago fed president austin goolsbee told us that he and his colleagues would react to signs of weakness in the economy. joining us right now is former atlanta fed president, denis lockhart, a professor at georgia tech. it's great to see you this morning. and i just laid it out there. what do you think the fed is going to do come september, if not before? >> i doubt they're going to do anything before, but i think it's probably very probable -- it's probably very probable -- it's very probable that they will move in september. there's more data to come between now and the meeting. and who knows, we could see confusing data coming in. in situations that are iffy,

often the leadership of the chair really matters. so i would be watching the jackson hole speech to see if there's any indication of which direction jay powell's leaning. >> and how aggressive do you think he will actually be in september? >> you know, i think the preferred mode is 25 basis points. that's really the default mode of the fed. 50 basis points is not completely off the table, i think. i think there's some chance of that, but that would imply catch-up that i don't believe the committee thinks they're having to do at the moment. so, you know, my best guess at this time, subject to the data coming in, that are consistent of what we've seen, is that 25 basis points move in september. >> and how do you think about the rest of the year, calendar

year, that is, and maybe into 25? the reason i ask is, we had somebody on earlier from newburgher berman, who suggested that he thought it was possible that the fed, maybe they don't cut aggressively, 50 basis points in september, but that there'll be more cuts on the table over the coming six months than maybe the market's anticipating right now. >> well, you always have to kind of frame this as, what are the data going tell the committee about the evolution of the economy? so if you have a crystal ball that can look to december, then maybe you can make some prediction as to how the cuts will unfold. the default mode is 25 basis points a meeting. i wouldn't totally rule out that they decide to go every other meeting, but at the moment, it looks like the weakening is strong enough, strong enough weakening, that they would go 25 basis points in november and

december. >> and when you -- i don't know if you got a chance to hear austin goolsbee on the show yesterday, he said, if the numbers are the numbers, we will react. how behind do you think the fed has been? have they been too reactive? >> well, they're dealing with an economy that i think has been char characterized correctly as somewhat unique coming out of the covid period with unusual combinations of data, for example, rising unemployment, at the same time with healthy job creation, up until at least last friday. so, you know, i think they are, by necessity, in a little bit more of a reactive mode, because there are surprises that come through. you know, having said that, they're trying to stay very steady, i think, and deliberate, and sober about this.

so that's another reason why i think the default mode of 25 basis points is probably what they'll do in september. >> and then, i wanted to ask you, i don't know if you saw, there was a story about a research report, neuroroe roubini and another researcher put together saying they believe that the treasury department was effectively trying to manipulate the treasury market in a way that only they could, because they thought the fed wasn't -- they were almost acting against the fed's interest. did you see that? i was curious about your view about it? >> i didn't see the article. you know, i hesitate to comment at all, because i just -- i don't know the gist of the argument. you know -- >> fair enough. it's always great to talk you, especially given neemtzs. one last piece. when you think about this carry trade coming undone in japan, how much should we be focused on what's happening in europe with

interest rates, what's happening in japan with interest rates and how much is that ultimately even get thought about in the room when jay powell will have to make the ultimate decision in september? >> well, my experience over ten years at the fed, the great majority of comments are about the domestic economy. and the international influences on the u.s. domestic economy are mentioned, there are reports on them, and so forth, but we tend to not to dwell on that, because the u.s. economy is such a mammoth engine in and of itself, that sometimes these foreign influences just are secondary. they're minor compared to what's going on with the consumer and the u.s. you know, i think we have to keep an eye on the wiring of the global financial system and we saw a little bit of evidence yesterday with japan unwinding some of their carry trade

positions. it can have an influence on markets, and markets can have an influence on the domestic economy. but, again, from my experience, it's reported, but not necessarily discussed very thoroughly. >> dennis, we will leafve it there. >> did you see this article? >> no. >> roubini saying effectively that janet yellen is selling too much short-term paper, and by doing that it's lowering the supply of long-term interest rates, preventing long-term interest rates from going up. she rejects that. but it was interesting -- >> i mean, we know that that's one of the biggest criticisms druckenmiller and others made, that we didn't go long when we could have, right? we didn't sell the 100-year -- >> right -- no, no, now they're arguing she's selling too much short-term paper and doing it purposefully try impact the rate. >> right. >> it's an interesting argument. she rejects it.

>> people are still establishing that guy, nouriel, after -- >> yeah. he's -- you know, he's still in the business. >> amazing. coming up, we're going to talk big banks and what the market volatility and falling rates could mean for them. first, as we head to break, another check on the shares of uber. the company topping earnings and revenue expectations for the second quarter. last hour, dara khosrowshahi told us that uber has been studying a different income cohort. >> for example, lower income cohorts of consumers, they're actually growing their spend faster on our marketplace than higher-income cohorts of consumers as well. even when we dig to see, are there any early signs of weakness, we don't see any early signs of weakness as of now, although we're always on our toes. ats. my restaurants, my tattoo shop... and i also have a non-profit. but no matter what business i'm in... my network and my tech need to keep up. thank you, verizon business. (kevin) now our businesses get fast and reliable internet

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welcome back to "squawk box." we're taking a look at some of the big banks and how they're trading this morning. those names getting hit in a big way in yesterday's sell-off. take a look at this. citi and morgan stanley down roughly 4% each. jpmorgan, dgoldman sachs, bank f america, as well as morgan stanley were all down more 2%. don't miss an exclusive interview with jamie dimon tomorrow at 1:00 p.m. eastern time on "the exchange," joe. >> let's talk more about the banks and the recent sell-off. joining us now, mccrae sykes. we've -- as time has gone on, we were just talking to rick santelli and others, mccrae. we're looking at this as now sort of as a carry trade unwind, not necessarily anything that onerous about the u.s. economy. and i guess the banking sector. is that what you think?

>> two weeks ago, we were here, talking about how great the banks were doing, reporting season, capitalization, buybacks, et cetera. so they were all doing pretty well. good feedback. fast forward now, we're talking about fed hikes, emergency meetings, recession -- >> fed cuts. >> fed cuts. and so i don't think that even though the stocks have sold off, i don't think the fundamentals have changed in two weeks. >> no. >> they haven't, no. >> and there was a little bit of a perfect storm, too, over the weekend with buffet selling some of those securities. you know, he still owns $35 billion worth of bank of america. a lot of other financials, as well. so, you know, that gets included in the mix. but i stand today. i like wells fargo, a couple of weeks ago. you know, now it's a little bit cheaper. 1.2 times forward tangible book value. and i believe in kind of the american tail wind of prosperity. and i think they'll do well. so it's another opportunity to buy. >> you don't think at this point, that the labor market is weaker than we're aware, or that

it could worsen more quickly than we think? you don't -- that's not in the cards? >> we look at stocks on a bottoms up basis, and i don't really get into the weeds in terms of the economy. >> so not macro. >> we follow that and look at rates and so on, but in terms of analyzing one particular data point from jobs is not totally important to the work we do. what i would say, though, is that just the feedback we've gotten from the banks in terms of the trajectory, they're also reserved for higher employment of 5% by the end of the year. there are some expectations of that movement in unemployment rates. not terribly unanticipated. as far as credit and all of that concerns go. >> so at this point, in terms of consumer credit or, i don't know, loans, none of that is signaling a worse slowdown than what the fed has tried orchestrate, a soft landing? >> yeah, i think that's correct. just given the trajectory and

feedback we've gotten in july as well. >> and just to talk about that, this lower ten-year rate over the last couple of days, you've started to see the mortgage rates come in, 6.25 yesterday. so that secretly will be an injection of good opportunity for the housing market, and that's a benefit to the banks as well that are owning asf or mbf securities. that will help book values, help refinancing and the whole housing market. >> do you think that the ten-year, it can be almost, like, things can get out of hand and it can go further down -- i'm talking about the yield, and it's more of a psychological -- pause, we take that seriously. when you see money rush in through the ten-year, you really do start to question everything. you think about everything else. is it possible that that gives a false signal? >> absolutely. i think if we just look at the expectations for rate cuts, january 1st, you know, the forward curve was five to six

rates cuts for '24. by may, it was one cut. >> now we're back to fife or six. >> within two weeks. so i mean, predicting all of this stuff is really difficult. but i will say that with inflation, sub-3%, fed funds rate at 5 from our perspective on a longer-term basis you'll think that -- the yield curve will eventually normalize and that will be good for banks. >> back to 25 in september and another at a before the end of the year, is that all we get, would you bet on that? i'm not going to ask you to stake your life on it. i wouldn't stake it on anything for -- >> no. >> is that it, 50 basis points this year, that's it? >> i think the longer-term trend is definitely down. when we get that, maybe it's important to some people. i don't think it really is important to jp morgan's earnings over the next few months, four months. so i think the trend is good. i think inflation is good. and ultimately, that will be good. >> your favorite is wells fargo

still? >> correct. >> but jp morgan, just in terms of book value, is too expensive or you buy that, buy all of them, buy a basket? >> on a price to value basis wells fargo is a great opportunity. jp morgan trading over two times book, great execution, well positioned for the fundamental growth in the economy. but, a little more valuable at this point for the -- even janney diamond has talked about -- >> buffett -- i don't think what he's thinking but if bank of america is going up it makes no sense to sell it, does it? >> a number of reasons they're selling. you know, he talked about at the may meeting, you know, wanting to get -- >> a long time, though. >> potentially higher corporate tax rates and they have huge embedded gains in the stocks. so perhaps there's some probably legacy planning for the other managers as well. so, you know, maybe not be a priority. there could be a number of reasons he's selli. ha y.koung we're going to go, i guess,

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it's piled high with tender beef that's slow cooked and smothered in tangy memphis style barbecue sauce. it's no fuss, no muss. just tons of flavor. the best barbecue beef is only a togo's. try one today. welcome back, we're more than a half an hour to the opening bell. joining us is liz young thomas. good morning to you. >> good morning. >> heck of a day yesterday.

>> sure was. >> see whether today is a heck of a day too. what are you seeing, what are you thinking? and how is the service working? some other folks were actually really having some problems. >> there were a lot of problems yesterday which happens on days when you have a lot of activity that nobody's prepared for. >> we've got to fix that at some point. >> yes, yes, as far as i know we didn't have any problems. but what i would say about yesterday, it's difficult in this kind of period because there's so much uncertainty. you have to focus on what you do you know? we know in the short term markets tend to overshoot both on the up and the down. what's looking like is happening today is that we overshot yesterday on the down. usually that gets exacerbated by lgos, probably some of that happened, we had a lot of unwinding that was going on. but the other thing i would say is that something i feel pretty certain about is you don't have events like that yesterday and just dust yourself off and pretend it never happened. nothing's been resolved yet. we still have issues with the

yen. i don't think that's over. we still have economic uncertainty. i don't think that's over. it's going to be a long time until we hear from the fed in a scheduled way. if we hear from them before i think that would be good but i don't see there being any real reason for an emergency move from them right now. >> how do you think about the seven stocks that basically make up the majority of what you see in the s&p, and by the way, nvidia, apple, amazon, and everybody else. >> so, coming into this, first of all, the other thing to remember is although days like yesterday can feel really scary, the headlines are very scary, japan went zero to bear market in three days. all that very terrifying, the swings in the treasury market that shouldn't happen. coming into this it was from a really high level and we'll really only down about 8% in the s&p, that's nothing compared to a normal correction. we still have room to go. and that high level was achieved by mostly those seven stocks, so when you hit the skids and you hit volatility, a lot of the

stuff that has most of the gains and is the most lick quid is the easiest to sell, the first to go. it feels the most pain on the downside. that's okay too. we needed a little bit of a right sizing in what's driving the market. >> you want to weigh in on this crypto debate we've been having on this day? >> what's the debate? >> the bedate was that it's not correlated to anything at this point. or correlated exactly to the nasdaq. >> in this environment it has been correlated to the nasdaq because it's trading like a risk asset. if the japanese yen thing continues crypto will save us because it will be uncorrelated to currency volatility, that's possible. the rise we saw early in 2024 has already been that piece. so, this yen thing is not new. this has been going on for a while. >> every time there's something terrible happens in the world, in the markets.

>> yeah. >> someone tries to assassinate the former president, what happens, gold goes up, and bitcoin acts as if it's nvidia. >> so -- and this is my speculation, my opinion, i don't have necessarily proof of this. i would suspect that many of the investors who are heavy in crypto, there's an overlap with the investors who are heavy in tech, heavy in headline makers. >> seems like. >> when everybody in that basket gets nervous, you have indiscriminate selling and you see all of the risk assets in that basket go down. i think that's what's happening right now, that's what happened yesterday, and what's been building for the last week or so. >> what are you smiling about? >> i mean, you know, gold basically where it was 10, 15 years ago. >> that's true, too. >> it goes up $30. >> isn't going down. >> bitcoin was 4,000. >> value. >> bitcoin was 4,000 and went up to 75,000. when it goes -- when people who

don't like bitcoin took a victory lap when it fell back down to 17,000. and falls to 50, take another victory lap. if it keeps doing this, being the best performing asset for one year, five year, ten years and 15 years, sooner or later the store valley arguments is not going to be true. >> i sort of agree with that. but then you have to assume that everybody's going to sit in it for five years, ten years, 15 years. >> they haven't so far. >> you don't know about holdlers? >> i know very well, but because of the volatility we see that tells me people don't stick around entirely. if it is a store valley you don't want to see that kind of volatility in an asset class that's expected to be a store value. >> i don't know any -- do you think stocks are a store value? >> no, not -- no. >> i don't either. >> i think they're grown to volatility. >> volatility. >> but they do something. >> well, that -- see, then you change the rules of the game again because there are people that think that bitcoin does

something too. what would it take for you to finally say, wow, that's amazing asset? >> i don't know, i don't know, i hope it's not too late. the day you tell me you love me. jo joe -- >> oh, i've got seven seconds. >> and you're going to use them too. >> give it over to our friends on "squawk on the street." >> that's next, enjoy. good tuesday morning, welcome to "squawk on the street," i'm david faber with jim cramer, live from the new york stock exchange, karl quintanilla is in paris. trading one-half hour from now, very different picture this morning than it was 24 hours ago, but frankly a bit of a muted rally at this point, our road map begins, of course, as you might expect with the markets after that major selloff yesterday,