Transcripts For CNBC Squawk Box 20240714

Moment right now the dow is down by 33 points take a look at what happened to equity markets overnight in asia youll see that the nikkei was flat the hang seng was down by. 8 and the shanghai composite up by. 1 in europe theres active trading taking place in the markets. Youll see its a little bit of a mixed picture. Three major averages are weaker with the ftse down by. 5 . Italy and spain are seeing stocks higher and then finally check out the treasury market here in the United States. This has been the thing we started watching so closely yesterday. You did see an inversion of the yield curve with the ten year yield challenging the 2 year yield. Right nowits slightly above the 2year as it should be at least. That inverted slightly yesterday late in the session. Right now 10year is yielding 1. 581 the two year is yielding 1. 561 . Were getting close on that again. That and maybe this as well investors suffering a bit of whiplash this morning as President Trump changed his messaging on tax cuts and economic stimulus. Here are his comments over the past couple of days. Payroll tax is something that we think about and a lot of people would like to see that. Im not looking at a tax cut now. We dont need it we have a Strong Economy. A lot of people have been talking about indexing for many years and its something that i am certainly thinking about. Im not looking at doing indexing and i havent been seriously looking at it but certainly it is an option if i wanted to. The president wanted to shutdown the tax speculation frenzy in part because of the issue that he suggested that the economy was strong and there were questions about it President Trump talking on california over auto emission rules and auto makers are caught in the cross fire. The white house proposed easing, obama era economy fuel standards freezing them at 2020 levels through 2026 now auto makers called the obama regulation too strict and lobbied President Trump to change it but the roll back pushed by the Trump Administration was so extensive that Car Companies became worried it will set off a legal battle with california and could force them to manufacture cars under two different set of rules. The president said henry ford would be disappointed if he saw his modern day decendants wanting to build a far more expensive car. When this administrations alternative is no longer available california will squeeze them to a point of business ruin. The only reason california now talking to them is because the feds are giving the far better alternative which is much better for consumers. Ford responding say it supports the 150 state solution for fuel economy standards. Ford says its focused on acting to protect the environment while also protecting the affordability of cars and trucks so a lot going on in that debate but huge implications. Ford is saying they would support one. One. Is there one standard now so you were saying that like theyre ignoring we want a National Standard thats the biggest problem. Changed it in my mind for when theyre saying no were going to stick to the one we have or look, you want a National Standard but if it will switch from administration to administration, how do you do that when building plans over the longterm . I was struck. The president said Something Like the two would be rolling over in their graves if they like i think you just say they are rolling over would be if they are dead but they are dead. Its not they would be if they are, if theyre going to be rolling, theyre rolling because theyre already able to roll, are they not good point. Anyway. New developments you didnt see some of the movies i have seen. Developments in the u. S. China trade war this morning, the latest is from the china Commerce Ministry. A new statement. Its august 22nd today, the tariffs go on september 1st. We keep thinking they have been talked down its been a paired down list its a paired down list. And when and if they are levied on september 1st, china saying in part its going to have to retaliate if the u. S. Persists on its current course and any new tariff measures will lead to escalation comments came hours after President Trump made this statement. Somebody had to do it i am the chosen one. Somebody had to do it. So im taking on china im taking on china on trade and you know what, were winning really . Were going to do that stocks to watch today. L. Brands Second Quarter profit fell hit by a one time charge and continued weakness at victorias secret. Adjusted earnings beat forecasts but same store sales slipped by 1 sales of victorias secret dropping 7 that was worse than expected that stock you can see up then theres results from another retailer nordstrom reporting better than expected Second Quarter profit even as revenue missed they were able to cut cost and clear out more inventory nordstrom invested heavily in ecommerce Digital Sales rose by 4 although weaker sales in its Department Stores and Nordstrom Rack dragged down total revenues still the street was impressed by what they saw that it wasnt worse i guess stock was up by over 11 . Coming up, more retailers, much more on the retailers later. Thats what gave us that good session yesterday. And later a tariffproof company that could weather a prolonged trade war. First the fed effect on stocks and treasury yields. Well get you ready for the closely watched summit in jackson that starts today as we head to break. Heres a look at the biggest market winners and losers in the dow. We are watching the bond, the yield curve and the ten year and the two year briefly inverted again yesterday they got real close yesterday and a little over a basis points and last month that rate cut is part of a recalibration. And our coverage at jackson hole kicks off with Esther George and then over the next 48 hours, cnbc is going to bring you interviews with fed heads from philadelphia, dallas, st. Louis, and cleveland. Its all leading up to fed chair powells speech tomorrow and im not really sure. We see chaos unleashed from jackson hole. When the fed sort of takes this moment and uses it to issue a statement that surprises the market, a lot can happen. I think they were all out the night before knocking back a few. Dont you think . So anything could happen. Anything could happen. Maybe he can give us the heads up its the senior portfolio manager. Well get to you for some actual actionable stock ideas once it starts, hans, the cutting that it continues but actually they just said that it may have been a one off. You think that once they start they continue . From the notes, you think you think its a good idea since you didnt like the first cut. I didnt think that the first cut was necessary. We had achieved i thought what was a normal relationship between Interest Rates and inflation. Since 1987 there hasnt been an instance where the fed embarked upon a one and done type of cut. Its generally the beginning of more cuts to follow. So if you think of it as a mistake, then you think that the december hike was not a mistake . I dont think the december hike was a mistake i think they could have used if they wanted to help engineer it they could have done something with the Balance Sheet i thought they had achieved what normal would look like i didnt think they needed to do more but that last hike was relative to where inflation was. It was fine. I think it probably represented the end. It was fine as long as theyre not long stocks and i dont know, maybe youre not you saw it happen in december in the markets in hindsight since they came all the way back to new highs. It looked like that was one of the i think theres almost consensus that that was a mistake, the hike. You are just going to stay stubborn and say no it wasnt. It was the right thing to do yes i am. Really . Yeah. I think, what was effecting that, it was really more sentiment driven and the economy has remained in good shape earnings have gone from a much higher rate of growth and that had nothing to do with the Interest Rates and when you look at employment and the hard data and soft data, earnings, they all held in thats not the result of a rate hike in december that was Larger Forces already in place okay. So kevin, i dont know whether you want to micro analyze the fed or what youll talk about now. And in your view, there are opportunities to rebalance given the brock drop that we have. Your long but low volatility stocks in certain sectors. Sure. I think you do have to microanalyze the fed to some extent because its driving so much sentiment in the shortterm one of the things that was striking yesterday when you went through the minutes is the decent in the fed was something that we hadnt seen before and its interesting he wants to telegraph the Forward Guidance its not this one and done but what are we going to do and the delima they have is the others are saying its good you dont have to do anything right now. Can i bring up the point that these minutes were from six weeks ago and a lot could have changed over that period of time six weeks may not seem like a long time when this was steady but this has been anything but a steady six weeks. The economy has sort of continued to shug along. The economies look good ill give you that but when you look at things like the bond market, thats where right so i think the reason were microanalyzing the fed is were worried about the yield curve inversion. And you have about 22 minutes before a recession the fed to some extent is the sentiment indicator of the central bank of the world or so much higher than everybody else. On the stock side were seeing solid fundamentals we have this thesis that the consumer cycle is lagging the corporate cycle in a positive way. And especially on the low end consumer side which is seeing wage increases with higher disposable income as well. To get back to the question we still want to be overweight. Some of the more secular growing sectors Like Software and Consumer Discretionary low volatility stocks is a hedge. But if you look at utilities or staples its not a good place to play defense right now. How much defense are you playing . Are you saying theres no defense to be played were trying to play it as down the middle as we can. A big picture for example is growth in value. Were trying to say we want some growth sectors like in tech which upgrades fundamentals but want low volatility in select areas of Consumer Staples so i think making that beta tilt either way is fraught with risk right now for the remainder of the year. Hans, where do you think we end up well have more cuts but where will we end up and will there be will that avoid recession . There was never going to be a recession . What do you think . I think inevitably there will be a recession. You know what i mean . We all understand, thats a sentence. Will it be in the next 12 months the next 18 months or no. I dont think well see the next 12 or 18 months i do think this notion of the fed really struggling with the limits of monetary power and how to communicate that. Thats really what theyre struggling with and i think thats what were going to hear coming out of jackson ole. The old days when you werent really sure what greenspan was saying, was that is that better old days. Well, its interesting greenspan ushered in. The transparency. Well, transparency actually sort of was a dance partner to the market the market lead, the fed followed and prior to that you had these about faces where you had a one cut and then they reversed themselves shortly there after that hasnt been the case for over 30 years. Its a very different relationship between the fed and the Capital Markets now. So kevin, just to wrap things up, the other thing that we had talked about constantly is trade. And you expect that to change anything that you do over the next 6 to 12 months . It could get bad. I think it could get very bad. We have been trying to look for more Service Companies that provide services the administrations tact is one. Its been obviously telegraphed. Its not just a trade negotiation. Its a larger strategic relationship that extends the horizon of this. The position is the longer this goes on the stronger we get relative to china. Thats a risky gambet. If we do sputter and the trade negotiations break down then were in a bad place its a higher risk gamble. It may be why you start hearing potential for payroll tax cut down the road. Putting those things up on the shelf to pull off again is why the administration has been doing that. Keep looking. Im going to stop. I keep looking at it because theyre so close theyre a basis point and theyre going to move. The market is going to youll see it. Then what are you going to do about it were watching closely. Put the two year and the 10year all back like we had before. Oh my god is that less than a like 1. 5 basis points. Yeah. All right a little arrow system. When they invert. We should they like flip. We should just all hell should break loose if it happens. Break in, all kinds of animation, sound, people at home the inversion. All right thanks well see both of you again soon. When we come back, are your devices spying on you . Thats the topic of a new cnbc Investigation Called hiding in plain sight. Well bring you our findings right after this break im professional stylist calyann barnett, and i know that style starts from the ground up. For a lot of teens, shoes matter. The right kicks, make the outfit. Kids like to make a statement, they want that wow factor. And for parents, you want to pick shoes that theyre going to wear over and over again. So i put together some of my favorite kicks for the new school year. When it comes to back to school shopping, your year starts at dicks. All of them can be hacked and used to gain access to sensitive business data or cause damage thats the subject of a new cnbc investigative piece called hiding in plain ight evacuating. Founded the Cyber Security firm red balloon here in new york city. This is where the magic happens. The goal is to make imbedded devices more secure. And exposing flaws. 100 of these devices can be compromised in some way. And inside almost everything that you can power up. And at every Financial Exchange power plant, air Traffic Control and almost every company in the world. This is probably the most important Cyber Security threat that we have today these control every single aspect that we do every single day. According to a report by Market Research firm, the Global Market is projected to be worth 214 billion by next year this is a small version of the air filtration system thats in a lab that the team is working with right now. This computer will allow that to happen. They hack devices inside the controller not only forcing the dirty air in the direction but ultimately shutting them down. That goes up in smoke. Thats awesome. It goes way beyond this demo the team recently uncovered major vulnerability in more than 100 devices made by sis coe. The largest manufacturer of equipment. According to red balloon, were talking about a potential attack that could sell for millions they let cisco know what they had found and the Company Published this critical advisory cisco turned down a request for an on camera interview instead releasing a statement saying in part, cisco is committed to transparency and is not aware of any malicious use of the vulnerability subscribed in this advisory fixes are available for half of the affected products. We wanted to find out what other Industry Leaders are doing to protect their imbedded devices and reached out to hp and huawei both companies were not part of red balloons findings hp is the largest manufacturer of printers which contain imbedded devices andy rhodes is the global head of hps commercial pc business we put this special code into the printer so that its always looking for malware and devices. Huawei did not agree to an interview or provide comment. And now back to cisco we asked to know if a device has been hacked. Cisco telling us an audit tool is not currently available and we recommend customers review the security adviser to assess the best way to protect the network and the bottom line is you have to protect action takeo protect your privacy whether its at work or at home all the devices can be attacked. Its amazing to see the white hat guys going in to see the vulnerabilities. Its great to do that and do you know how often this is happening that somebody is trying to take advantage of the vulnerabilities . We talked to red balloon about that and theyre saying its happening a lot more than we know. Its great that these guys are out there trying to hack in and instead of trying to sell it on the streets theyre calling up cisco and saying this is vulnerable. Whats the worst example of this so far . The targeting hack. No, if you remember that is the famous article a year ago in bloomberg magazine business week and its a million devices and apple came back and said that it wasnt and there was a big fight. I was just trying to understand, we hear these stories all the time and yet we dont i mean, what you dont know is sort of how far its ever gone. Listen to this too, you dont know how far its gone and red balloon did a demo for us, your office phone, your ip phone thats hooked to a network, that can be hacked to the point where theyre listening in to your conversation and you will have no idea that its happening. So a lot of people dont know that these devices have been hacked its not something thats actively being reported. Youre thinking about the situation where it was the Nuclear Power plant that was shutdown a situation on a grander scale where you could see something that would Effect Society at large. The other demo, its interesting that you bring that up in another demo, they showed us that these hackers can get into a computer monitor not attached to a computer but a monitor has a bunch of imbedded devices in there that can be hacked in many different ways they can change what youre seeing on a monitor. When red balloon calls up cisco and says we found this vulnerability, does cisco pay them do they expect cisco to pay them how do they make money i dont think they get paid through cisco. They have other clients they work for but cisco took the information and put out a release saying this is happening so that people know its a possibility. Well go head long into the internet of things well go head long into that and then worry about this later, right . Yeah. It seems to be whata lot of companies are doing. And consumers too thats what society has done. Right thinking about security after they make a cheap device like if you order something online, dont just pick the cheap device and my producer jenny always says, hey, do you really need that to monitor your job. I dont know. If your entire wellbeing and health is the internet, if your Autonomous Car is being driven with something hackable. Were staking a lot on this not being hackable. 100 . Thank you appreciate it very much. When we come back a lot more on squawk box President Trump says that apples tim cook is the kind of ceo that he likes. Well tell you why and well do that next. Plus tun usual care instructions for apples new credit card. Why you may not want to keep it in your wallet as we head to a break, a look at s ps 500 winners and losers were back in a minute announcer only fidelity offers four zero Expense Ratio index funds directly to investors. And we have zero account fees for brokerage accounts. At fidelity those zeros really add up. Maybe ill win saved by zero good morning, welcome back to squawk box right here on cnbc. Take a look at u. S. Equity futures at this hour right now we call it virtually flat marginally in the red. But everybody waiting or trying to seewhether there will be an inversion in two or ten year note the ten year note by the way 1. 58 for the two year at 1. 565 youre going to stop looking. Because santelli said a watched pot never boils. He said it has to close there. So thats the i can look again at 4 01. No, actually, you should watch now. Everybody at home should watch. I dont have to you can go back to sleep. All right time for the executive edge President Trumps message to executives do you know what it is its just call me. Call me maybe. The president says that apple ceo tim cook is a great executive at least in part because cook calls him on the telephone. He calls me whenever theres a problem hell call now the problem was at samsung, a good competitor wouldnt be paying tariffs and tim cook would i have to help him out shortterm with that problem and its a Great American company, samsung is in south korea, not fair. They were set to get hit with a 10 tariff until he included it. He said its higher lobbyists to call. He likes the relationship. Im going to call about my agent fees. Yeah. We cant write them off anymore. You got to work on the taxes. Serious. If you are a shareholder of apple, i would say that is a good move and you are a good ceo for calling and getting those taken off. I think trump is basically saying you have a problem call me directly. Maybe well call him on our idea yeah. Ten rounds max. You said seven. No, i said ten. You dont want to go seven. I dont know, that was olearys idea. Yeah, were going to you dont limit magazines. In new jersey right now, if you have a 15 if you have a 15 round magazine, its mandatory jail for like two or three years for something so if you did that okay. Then lets do it. All right im so on board with that. Youre going to say we have to get rid of semiautomatic weapons. Were not going to get rid of semiautomatic thats part of my deal with you. He wants know what your compromise is. Whats your compromise . Let me think. You have no compromise. Thats not true. Your compromise is we get rid of the second amendment. Thats not the compromise the compromise is well, i have to deal with background checks. We need to make this relevant to our business audience. We can talk about this later. Consumers getting their brand new apple credit cards are also getting detailed instructions for their care the white cards were coated in a matte finish and can be permanently discolored dont put your card in your leather pocket or jean pockets also avoid household cleaners and solvents to clean it with and a microfiber cloth i worry about putting your hotel card into credit cards because its something that will work. This is like the phone. The phone needs a case. Yeah. The phone needs a case. Your apple credit card. Everything they make is so beautiful that you always have to have a separate something which means its not it doesnt really work. Is your blackberry its not a blackberry. Do you have one anymore no, i havent had one for a long time. You held on. I held on for forever. I still type ridiculous things auto correct. Thats auto correct for you. I love my iphone. We have a lot more coming up on squawk box this morning the yield curve inverted again yesterday and treasury yields have been falling and is the bond market getting Recession Risk wrong well have that debate right after the break. And later full coverage from the jackson hole fed symposium well kick off coverage. Ua b og ed, youre watchin sqwkoxn cnbc through the at t network, edgetoedge intelligence gives you the power to see every corner of your growing business. From finding out whats selling best. To managing your fleet. To collaborating remotely with your teams. Giving you a nice big edge over your competition. Thats the power of edgetoedge intelligence. Lower carbs. Lower calories. Higher expectations. The light beer youve been waiting for has arrived. Doprevagen is the number oneild mempharmacistrecommendeding . Memory support brand. You can find it in the vitamin aisle in stores everywhere. Prevagen. Healthier brain. Better life. Welcome back to squawk box another recession warning with another brief inversion of the 10 and 2 year treasury yields. That happened yesterday for the second time since last week but were seeing mixed signals here bank of americas ceo yesterday on the health of the consumer. More importantly theyre spending more money. So in our Customer Base through this time, you know, august 5th, year to date, you have seen the amount spent by American Consumers at bank of america, 2 trillion its up 5. 9 from last year through the same period of time. So in 17, 18, youre up about 8. 5 18 to 19, up 5. 9 . Think about that as more spending by our consumers this year versus last year. Was the bond markets recession warning a false alarm . Joining us is chief Market Strategist at met life investment management. Michelle is also with us chief u. S. Economist what do we make of this . Does it have to close . Is it the close . Were splitting hairs because truthfully from our standpoint, its actually the three month to ten year treasury yield. Thats been the most accurate. Thats all the Academic Research on and of course thats been inverted for summer months theres a lot of focus on the twos to tens inversions. And it does have to persist. Dipping below for a day or two it doesnt necessarily equate to sending the signal all of that said however is were not seeing very flat and inverted yield curves and while they dont necessarily have 100 track record i do think suggest that Monetary Policy is probably a bit too tight and that there are, you know, there are risks out there in terms of the Economic Outlook that the fed and others need to take some heed of. Look away from the yield curve. Look away look more to the High Frequency data and figure out whats the chances youll be in a recession a year after you get an ism or Something Like that. When you look at that, the odds of recession are going up but theyre nowhere near 50 theyre rising from the low 20s and into the mid 20s the other thing about the yield curve inversion is theres the thought out there that the inversion itself causes the recession rather than predicts the recession. Thats something that we need to be careful of say that again. The curve inversion itself creates a recession. Banks pulled back on lending. Because we all get panicked we Start Talking about it. Theres some of that thats going on the were talking ourselves closer and closer to recession but why would you lend money further off the yield curve when you can lend shorter and thats really important because a lot of people make the point that we dont have to worry about the inverted yield curve right now is the reason that its inverting is very different than historically. You can understand why a recession followed but if youre saying if this school of thought is right that it isnt necessarily why you got there but just the existence of the yield curve that can be negative then for whatever reason it is how much do you look at historically when you look at inversions relative to Consumer Confidence, what has it been like given the numbers we have gotten from walmart and target and so many others you have what feels like a very strong consumer and yet were having this conversation at the same time. That speaks to what drew says were almost talking ourselves into a downturn. I dont think it had gotten in the past the focus that it does. So i dont think there was as much risk that it impacted confidence on average an inversion of the yield curve moves by on average its roughly a year. It could be as short as five months if you look at that 3 to 10 that Consumer Confidence is where it is. We have seen the consumption numbers that were seeing and were even having a discussion about a recession is extreme. And talking about extreme measures, payroll tax cut. Perhaps the biggest oddity out there and causing some fear, actually its not actually its not reducing risk in the market. The fed cutting is actually increasing the risk in the market and if you push yields low enough, consumers just say more because their retirement goals are still out there. If Interest Rates are going to stay low for longer, consumers actually dont spend more. They save more. Same thing actually happens in germany so that pattern is consistent across the world if you pus low consumers save more. When we return well take a look at shares of target it had the best day in 45 years after posting great Second Quarter earnings yesterday well talk tariff proof retailerwh we s encome back. Welcome back, everybody, retail earnings revealing a mixed picture of how tariffs are expected to impact the sectors stock. Taking a look at which areas are retail proof i think weve gotten a big dose of this over the last week when weve heard from some of the really big guys, whether that be lowes, home depot, target or walmart saying, yeah, we will be able weather it better than our competitors. Yes, absolutely when we look at our research ads, its definitive walmart and target and these names include companies that are offering Consumer Value and convenience and have consistently done well with economic slowdown. These are walmarts, target, home depo, lowes, eastern adidas and nike. We look at these companies because they have been able to grow in a time when a plot of retailers have been closing their doors. Walmarts and targets continue to expand their foot prints and attract more brand, targets said during their earnings call, our partnership we will i haves does significantly well in the backtoschool season and that was a line initially reserved for the Department Stores. You can see they are luring in those brands that were expected to go elsewhere. They usually are in the Department Stores in apparel. When i think of tariffproof retailers, i think automatically of the really big guys because they are more able to squeeze their suppliers and their vendors. Absolute will i they have deeper sourcing stronger qualities. The ability to move here and there and if somebody is able to move back to china and somewhere else,its going to be these guys absolutely walmart and target, a stronger sense of quality and more of a staple than discretionary categories. Its a low margin business. The one thing i would say, you mentioned a few names that catch me by surprise when you talk about the lululemon and smaller guys and past performs past performs is not a future of returns and i think back to like an under armour. Right. Which did incredibly well during the recession back to 28, 2009, they had insane quarters they were posting double digit gains every single quarter that doesnt necessarily mean you will do well absolutely. These companies have Business Models when you look at a roth and. The j. Max, they dont necessarily have a strong Online Presence in fact. Their whole Business Model is to lure the consume near the store and treasure hunt, something thats difficult to replicate online, same thing with ultrabeauty and sephora. You can book your service. You have to go into the store to get treatment done these have unique Business Models and are shielded there. And to your point about lululemon and addy sass and nike so, those are companies that we looked at that are extremely exposure to china because of the manufacturing and sourcing and their credit models and quality are coming from sustainable sources, which makes them stronger and less vulnerable. The lessernope names are the ones, especially paying attention to, just because the market may not have figured those out yet. We seen already walmart loes, home depot and target move incredibly higher after they say, yeah, were okay with this. Do you think those stocks will continue to move from here or has the market already figured out a lot . The market has already figured out a lot of this. Given the results theyve figured out over the last two weeks. But having said that, they are still the best positions going forward. Their omni channel is the future of retail and walmarts and targets do that very well using their real estate as an asset and the proximity to the consumer when other resources are closing the stores its definitely an underline for strength and cut costs when macys and others have shipping in the smaller niche as well, i want po point out the unique Business Models make them less vulnerable especially for nike and adidas, they offer a Consumer Shopping experience to make your own shoes, design them and creating a sense of Community Lululemon has done a great job in offering yoga, wellness, that helps bring them loyalty a whole if you line of lululemon pants. For jill. No, there is a whole new line it has different fabrics the five pockets correct its a great place and its where he is out in jackson hole. Hell be with us well be right back. Well be right back. We also have Solutions Like powerful wifi that gives your entire business more coverage and automatic internet backup that can keep your business running. And it all starts with our gigspeed network. So give us 10 minutes. If we cant offer you faster speed or better savings than your current internet service, well give you 300 dollars for your time. Call now to get your comcast business 10 minute advantage. Comcast business. Beyond fast. You should be mad at leaf blowers. [beep] you should be mad your neighbor always wants to hang out. And you should be mad your smart fridge is unnecessarily complicated. But youre not mad, because you have e trade which isnt complicated. Their tools make trading quicker and simpler. So you can take on the markets with confidence. Dont get mad. Get e trade and start trading today. Volley ahead u. S. Futures searching for a direction as the dow and s p lack to break a threeweek losing streak. Well break down what you need to watch in the days session. Central bankers head to the mountains as pressure on jay powell mounts. He raised the rates too fast, too furious. Kansas city president Esther George. Is facebook discriminating ahead of the 2020 election r, it cleans up the news feed. We will talk to john kyle as the second hour of squawk box begins right now [ music playing live from the beating heart of business, new york. This is squawk box. Good morning. Welcome back to squawk box here on cnbc im joe concern nokerr none aloh becky quick and Andrew Ross Sorkin we are here with lululemon , you look like bob kraft. Im not kraft he always wears the white collar. I do. Some people like, who else used to wear one all the time . Well, im trying to think back wall street gordon gecko. Yeah. It used to be he had he would swap smr you start with a blue collar and at some point when your collar was worn, youd go to the tailor and because the tailor could never match the color perfectly they would just put a white collar on then it became a look. I have to say it looks good for summer, very crisp listen guys, thats why im here am i right you do not own a pair of lululemon abc pants . I couldnt fit into a lululemon. Thats the point. Theyre abc, theyre antisqueezing no, man i dont wear pleats. You lead a horse to water i cant make you drink, jason. Stategis partners. The u. S. Equities are not worth talking about. The dow is down about 4, nasdaq down 12. S p indicated to open a little bit in the red there was some green earlier it got very close to another inversion between the two year and the 10 year and now i think were just waiting around to see what happens in jackson hole, mostly i agree lots going on, Steve Leishman will join us in a little bit he is hung over. With Esther George. Heres whats making headlines, after a big day for retailers yesterday, two more retailers are seeing their stocks rising, nordstrom and l brands saw revenue fall short of expectations nordstrom benefitted and despite an ongoing decline in sales of victoria secret. L. Brand maintained the fouryear earnings forecast. That was enough to see big pops. L. Brands up a more modest 2 and a third percent. President trumps latest corporate target is auto maker ford she upset ford is not backing an Administration Plan to roll back efficiency rules ford and auto makers reached an agreement to try and comply with californias stricter standards and todays economicalen dhar will include the labor departments initial jobless claims that comes at 8 30 eastern time we will get the latest leading economic indicators. So we will be watching for all of that. The Kansas City Fed hosting the annual jackson hole Economic Policy symposium which kicks off today and cnbc is there with full coverage. Steve leishman is there. He will join us with an interview with Kansas City Fed president. We will talk to all of it right here on squawk box. Ahead of that meeting, President Trump once again lashing out, though, at fed chair jay powell. Jay powell and the Federal Reserve have totally missed the call i was right and just about everybody admits that. I was right. He did quantitative tightening he shouldnt have done that he raised Interest Rates too fast, too furious and we have a normalized rate. You call it that and now we have to go the other direction. Well see if he does it. If he does it, you will see a rocket subpoena. We were going to have the rock on the show, instead, were getting romger altman. Joining us from jackson hole, roger altman, founder and former deputy secretary treasury. He could be one of the stars on fast and furious. Guest show jason jenner is also here hey, guys the comments you made yesterday and what kind of impact do you think they are having one way or the other . Well, i think its unfortunate to see the president bashing the central bank the way he is. As Larry Summers said on this network the other day, you know, thats the type of thing you see in places like venezuela and then as the wall street journal editorial page says this morning, its just creating too much uncertainty so, i dont think hes doing anyone any favors with that bashing. And i dont think actually that hes helping himself, but thats obviously not what he thinks do you think its having a real impact, though . I mean, to some degree, you could argue no, i dont that jay powell has been independent and has tried to remain as independent as he possibly can from the president and yet there is also the argument the Pressure Campaign is working in its own way . I dont think its having any impact, at least that i can discern on fed policy, itself. You have to give mr. Powell credit for consistency and by that i mean, running his own show in effect and not succumbing to this pressure. I havent seen evidence that he is and the reason that i, that the effect that i think it does have, andrew, is just on broader uncertainty. You know you see the president say, well, im thinking about a payroll tax cut. Then the next day, nah, maybe not. I just dont think that that type of lurching is positive for Investor Confidence or Consumer Confidence but well see how it all plays out. Jason, is roger right about that because there are some supporters, by the way, of the President Administration say, thats noise, the economy doesnt care, look at the stockmarket, look at this, look at that. Listen, i do tend to agree to the extent which especially with regard to china, have you on again, off again negotiations. Have you travel set up listen, i would say incorporate the courtroom these days there is no more courage in congress the tax cut was largely designed to spur Capital Spending, which would get you productivity you saw a big spurt in Capital Spending last year but its largely fallen by the wayside this year. I think its partly because there is, there are a lot of things going on within the administration that make it difficult to make those longterm plans. I think, personally, i think the president is right about the Federal Reserve, by the same token, i would tend to agree with mr. Altman, im not sure from a stylistic point of view this is the best way to achieve it i would argue the fed, i dont think its having any Material Impact i know as you know some of the people that are on the fed, i t think among all the institutions in washington, the feds try to do things as apolitically as possible its not perfect it is an organization, it does try to do the right thing. Pled me assure you. Go ahead let me assure you in Corporate Board rooms everyone is shaking their heads, scratching their heads and the president needs to be careful from his own point of view about Consumer Confidence twothirds of gdp is represented by Consumer Spending there is a lot of talk you guys have had a lot of talk about weakening capex. But the key to avoiding a recession is Consumer Spending and that gets to confidence and i dont have any evidence that the president s lurching to put it that way is having an effect on Consumer Confidence, but one has to be careful with that. Roger, take this inside the boardroom for a second, though because you made a comment about the president. Right now there is a huge debate we have it at this table every morning about the numbers were seeing from companies when it comes to Consumer Confidence, becky had a great interview with Brian Moynihan, banc of america. He seems to be optimistic about the state of the economy then were looking at the two or 10 year inverter, close to inverting. We have these larger questions of whether a recession is on hand whats the conversation inside the boardroom right now . Well, i would make two points trying to answer your question one is, i personally think and i hear that the risk of recession between now and the end of 2020 is less than 50 50 i personally would peg it at about 20 to 40 . Yes, we all see the inverted yield curve and yes historically we know what that has sometimes meant. But the consumer side of the economy is good and were also seeing another round of global aggressive global monetary easing so i think were not on track to recession between now and the end of 2020. But its a matter of confidence in so many respects and im the president. Not im not the president but one has to be sensitive to that. Roger i would ask quickly, from the Corporate Board perspective, i feel a company like ford is forced into the argument between the government and state of california about what regulations to follow ford, itself, has said they would love one National Standard but clearly this is different administrations battling with each other and the states versus the federal battleground and for something where you are trying to do things like build plants that make cars, those are longterm decisions. You cant follow the eb and flow of different administrations coming through well, i have to bite my tongue on that one, becky, because its a little bit like an alternate universe. So, as i understand it, ford is saying lets voluntarily stick to higher capex standards of the type california has promulgated. I dont think its that you got to play ball with california if theyre going to be allowed to set the rules in their state. You cant say im not selling any cars in california they are saying we are setting capex standards higher than the president wants the president is saying this a awful. Well, its very hard to disagree with ford and i sympathize with ford on this im not sure exactly what the president expects ford to do under these circumstances in terms of the california regulation also it is one of the large effort marks in the countries, one of the largest in the world i dont get it and i would support ford okay. We are going to leave the conversation there roger, we appreciate you getting up early out there in wyoming. Characteristically chilly, jackson hole its about 42 degrees on this set. So im doing my best thank you we appreciate it let us know if you pick up anything from all those fed heads over there all the best these you know, pick up any tips. Its gross got at little lice outbreak. Steve liesman will join us from that location in a bit. Wash your hands and fed president Esther George when we come back, the state of the American Worker, a new said shedding the dait state of the . I and the nation ahead check out the futures this morning. Markets on edge, waiting to see what jay powell is going to say tomorrow right now the dow futures are down by 10 points. The nasdaq off by 12 after the markets rallied yesterday. Well be right back. You are watching squawk box on cnbc cnbc kids like to make a statement, they want that wow factor. And for parents, you want to pick shoes that theyre going to wear over and over again. So i put together some of my favorite kicks for the new school year. When it comes to back to school shopping, your year starts at dicks. My first job is to care for derek. Everything i do is for him. When i moved to this apartment after six months, we need to connect with the world. I use the internet to keep him in the language, because thats the way to connect to my familys traditions. He has to know where he comes from. We need internet essentials. Theres no excuse to not get connected. 16 states now have reported 153 cases of serious vapingrelated respiratory illnesses in the last two months the cdc says all those stayss say they vapd and received nicotine or thc. They dont have one common device among the patients. They were admitted to hospital with difficulty breathing. Some reported chest paper, vomiting and fatigue shares offal altria have been under pressure the company took a 35 stake in juul labs last year. No one said what could go wrong. And calculation through the lung system . Thats what the former ftd commissioner said. In the first six periods with nicotine, then its mori dig lus. Its not get off nicotine thing. Let me figure out a way to deliver nicotine so i can get addicted does absolutely nothing good and this idea that i feel strongly about this. This idea that all people. I know im old the idea that some guy will kick a habit the two pack a day habit by going to cotton candy flavored juuls, its absurd, its sickening. The Growth Market for them are our kid. Theyre not adults i see people, like what are you doing . I mean, i know im square, but, man, but i dont get it you are square. I dont get it. And you are insulting our producer the guy because hes a big vapor. Millennials. Actually, hes not. He doesnt even have an excuse coming up, a new study from prudential about the state of the American Work force, the data what it says about the economy thats next. 7 30 eastern, Steve Leishmans interview, comments from jackson hole or central bankers. Thats straight ahead. Squawk box will be right back. People know aflac. Aflac but not when to use it. Do i use aflac when the kids get slime in the plumbing . No. Thats home owners insurance. Slime in my motorcycle. No. Thats motorcycle insurance. Slime everywhere . Ughhh nooo, theres no insurance for that. Do they help when i have bills Health Insurance doesnt cover . Yeah thats it aflac gross guys. Get help with expenses Health Insurance doesnt cover. Get to know us at aflac. Com now the answer to todays aflac trivia question. What was the first commodity to be rationed during world wore ii the answer rubber all right, the job market remains tight, the Unemployment Rate sits at 3. 7 . Now a new special report is shedding on the mindset of the American Worker. Joining us with details is the vice chair of prudential financial. Rob. Its great to see you. Good morning. So you guys have been studying workers and their mindset for the last couple of years . We have, yeah you spoke to how many about this oh, tens of thousands. Your biggest take away in what we would probably consider the workers market because of how tight unemployment is what if i look at that time report, the take away for me is the insight we got out of it is this narrative how the marketplace is myth ill call it that the American Worker has been pitted against technology if we implement technology, its going to cover the costs of American Workers, when you talk to American Workers, thats now how they View Technology theyre quite upbeat they recognize its good for the Revenue Growth of their companies. They recognize it enhances their own productivity when we looked at statistics, we said this is not the issue with the American Worker today. What is so when you dig deeper into that, what you see is their anxiety is not around technology their anxiety is around their skills do they have the skills relevant to the jobs they have and see in the future two interesting statistics one, 70 of workers today felt as if they had the skills they needed to do their jobs today. That means 30 of workers feel they dont have the skills to do the jobs today that climbs to over 50 when you move it forward. Do you think its a take this job and shove it market . I dont think its a stake i take this job and shove it if you look at the statistics out there 7 million available and unfilled jobs. Thats not a take this job and shove it this is a please we need help to fill these jobs. That sounds like a take this job and shove it. You are saying you dont like your job you can get a better one. Im sorry you meant it from an employer standpoint. If im a worker right now i should be good if asking for a lot of stuff i think thats right except if you are a worker today, you got to have the skills for the Jobs Available out there thats the difference. I need to take a job that can marry up with the skills i have. If i dont have those skills, i need to invest to get those skills. Are employers asking in light of the Business Roundtable this week saying its not going to be just the share shouholders and e will Pay Attention to the community and the workers. We are pleased with the workers roundtable. Its a way weve conducted our way in a long time the emphasis on the employee there i think is important it resonates with us the American Worker is our employee, frankly, its our customer as well so i think the answer is Many Companies are getting it not enough, if you look back at our survey, what employees have said is they look at the training theyve got frein their employer 30 of employees have not received training in the last year so there is a gap there still. Rob, its great to see you. Thank you for your time today. Thank you a lot more coming up on squawk. Fed officials discuss the issues facing the economy and Steve Liesman made that trip with an interview you dont want to miss esther gorge right after the break when squawk returns. Time for a futures check. Pressure mounting on fed chairman jay powell as bankers gather if jackson hole to discuss economic conditions. Right now dow futures up 43 points s p futures up 4andahalf. Nasdaq by 6. Lets head straight to Steve Liesman. He joins us with highlights of his interview with esther john we have missed you we know there is a lot of big news coming out of there. Reporter we got a lot of news we got to sit down with Kansas City Fed president Esther George shes the host at this meeting and every year we talked about whether she regretted. She said at the last meeting, i asked her whether or not she regretted disaccide regretted dissenting and not doing the cut. My sense was we added the xendation it wasnt required in my view. So im observing the Downside Risk so right now im really focused on what the Federal Reserve has to do to achieve its mandates. My view with this very low Unemployment Rate, with wages rising, with the inflation rate staying close to the feds target, i think were in a good place relative to the mandates we are asked to achieve. How is the economy relative to your forecast last year last year was a strong performance. I thought 20 fine would not be as strong. Still coming in around 2 so for my outlook, i think 2 growth still looks possible for the u. S. Is our risk tilted to the downside, if your opinion . I think they are tilted to the downside and i thought that for some time as you look at Global Growth weakening. As you look at the amount of uncertainty with some of these trade issues i think both of those are weighing on the outlook. Whether they begin to spill over today we see the effects on the real economy what is your outlook for trade . Is it an issue for uncertainty years to come, months to come, do you have hope it is resolved soon it does seem persistent at this stage it seems how it will be resolved so you have to take that as it comes in terms of watching for data, it signals its having an effect on the economy. Have you seen it yet . I think you probably see it in Business Investment we hear that from our own business contacts, which are trying to think about what the implications are for their particular business. It may cause them to pull back on some of their investments so i think we are beginning to see some of those effects there. Your business is heavy in agriculture and farming. So the ag community in my region has experienced low farm incomes for years now, some five years well ahead of these trade issues having markets disrupted particularly in the soy bean production area has been another leg down for the ag sector and so this puts pressure on an already difficult situation. Well be back at 8 30 with the second part of this interview where Esther George will talk about the issue of negative Interest Rates. This is one of several interviews from jackson hole the next couple days we will be talking to Patrick Harker and Robert Kaplan and jim bullard and lor retia meser and later on friday afternoon we will talk to mark carney, the Governor Bank of gland steve, in terms of what esther said, you think obviously you brought up the agriculture component of her district and how important that is there. Reporter right. Every day we are trying to figure out is there a recession around the curve, around the corner, is the inverted yield curvaling something . What would you say her response to that with the understanding that shes got a specialized pocket view of the economy in her district ro so, i mean she is not running for the hills so to speak because of the inverted yield curve. As you hear the next part, she sees different factors that might be influencing why the yield curve. I asked her, you are saying things are different this time she says, yes, things could be different. She talks about the large plans sheet. You have to hand it to Esther George, she has been consistent and she was a hawk in the Obama Administration and she is a hawk people have flipped where Interest Rates should b. She thought the prior rate of 2. 4 or so that the fed was int right place. She didnt think we ought to cut. She saw no reason to add a combination i think its also fair to say when we sat here last year, i asked her, what was going to be gdp . She says i see it slowing from 3 to 2 that was her outlook for rates so she really forecast it correctly. And she doesnt see really a disappointmentmentin current economic level of activity at 2 thats what she forecast steve, its jason listen, is her concern that excessive monetary easing leads to malinvestment or yes clearly that seems to be greater than her worry perhaps that. Reporter right you are seeing 16 trillion in negative debt and almost a market failure. You are more worried about the Financial Markets if you dont ease, trying to balance those two things out clearly, she is him cog down still on the idea that it creates distortions . Reporter well, you know, jason, where you sit kind of determines where you stand its worth remembering, you know, Esther George came up through banking supervision. She has been very strong on these issues recently gave a speech about how stress testing and the countercyclical capital buffer, they were not raising capital during good times, which was the intention of doddfrank. She seems to want the banks to raise more capital right now so its pretty interesting shes pretty hard on the Financial Stability side and i guess, jason, in this world of easing Monetary Policy, its good to have at least one person who is concerned about the downside i know thats not the prevailing wisdom ive think you are right. There are Financial Stability concerns, if the fed disappoint given how a rubber band the market is stretched to expect additional easing. But she comes down on the side of being concerned about the Financial Stability aspect of having too loose Monetary Policy and shes been there all along. Steve, yesterday, we spoke with Brian Moynihan who talked about this time it could be different when it comes to that inverted yield curve he pointed to the negative Interest Rates you see and he said, look that can explain a lot of it. He also didnt shoot down the idea of talking about the potential for some of these extreme pressure e measures. Further rate cuts from the fed the payroll tax cut. He said, look, what you have to do is try and make sure the consumer doesnt lose steam, because thats whats Holding Things up right now. Reporter you know, becky, i woke up this morning i was starting to read all stuff thats been out there. I think whats interesting is the Economics Community has a freight sort of book on what to do what they dont have the great book on is when to do it yeah. Its very hard to know when to pull the trigger and, of course, there is the old saw of you know when have you limited bullets, so, right now we have a pretty strong consumer we have Global Economic weakness that seems to be affecting our Manufacturing Sector but its a little unclear, our cnbc rapid update continues to show a Third Quarter running at 2 and all the evidence is out there. I know people can debate this, is that the economic potential of the u. S. Economy is 2 . Now, i guess you can look at stuff like this 48 indices, some of the transportation indices and say, oh my god, you can look at the yield curve and say we are in recession if you use them now and you are wrong, i guess there is limited Downside Risk. Rather you want those bullets for when you really have a problem. Steve, thank you. We will see you in just a little bit. Obviously, this is an incredibly important time what you are covering is what the markets are watching well see you soon. Coming up, stocks ahead of the opening bell later, does facebook discriminate against conservatives . A republicanled report finds the company has work trusting conservatives. Details are rahtstig ahead facebook anyway, squawk box will be right back welcome back, everybody, shares of Dicks Sporting Goods are higher on the premarket trading. They beat the top and bottom line and raised the outlook. It also reported a 3. 2 Comp Store Sales increase that is well above the 1 analysts had been predicting as a result you can see that stock up thats a big mover. You can see the stock thats not a great chart there if you go back a little bit, its moved around but its coming back strong and remember not to get back to the issue of guns we are talking about taking that stance they did it twice there are only a couple of that sold it the second time. He went on all the morning shows. Lets get to dom chu, who is looking at the mornings market. We Work Together lets stay there lets not endorse the virtue signaling. Anyway, good morning, dom. Good morning, we can come toke lets talk about the retailers you talk about dicks the interesting party with the consumer, massive targets trading way above statistical norms. Now its up on roughly 25,000 shares premarket. So analysts at city have now upgradesed target from a boo etoo a target neutral the price goes from 130 to a prior 80 they say it is painful to move a stock in one day like yesterday to the upside. They like a slew of things, including better sales growth trevenltdz theyre off mall positioning for locations and leadership and sell to examiners across all kind of platforms next up, shares of wayfair, this is the Online Furniture retailer helping the cause. Analysts upgrade from a buy to a hold its a valuation call here they think they trade to a discount so getting help there. Then well end on Slack Technologies up on premarket volume as well thanks, so some initiations of the software company, thats a mouthful, including some at mkm. Those analysts say its a buy initiated with a 40 price target they lack among other things the compelling Value Proposition for that product for a lot of corporate products on productivity andrew, three in the green, two of them speaking specifically to that consumer theme. Back over to you guys. Okay. Separately follow up from the protests in hong kong. Quantus airways say they have fallen a 10 hit by all the unrest the Airline Ready to cut its capacity by 7 on hong kong flights by switching to smaller aircraft the companys ceo telling cnbc he expects the drops in bookings to be short term. New developments in the u. S. China trade war this morning. Chinas Commerce Ministry out with a new statement as they prepare starting september 1st china saying in part that it will have to retaliate if the u. S. Persists on the current course and then p an new tariff measures lead to escalation. Those comments come hours after President Trump made this statement. Somebody had to do it i am the chosen one. Somebody had to do it. So im taking on china im taking on china on trade and you know what, were winning coming up, art laffer will join us about trade, taxes and the economy. Also, why people dont trust facebook they claim the social network suppresses rightleaning views well talk about that and the mounting pressure on the company to change its practices. In the meantime, check out practices. D the dow is picking up green. Dow futures up by almost 70 points s p up 7. 5 the nasdaq up by 15. Squawk box will be rightac bk. Amid concerns about social medias political bias, facebook asked republican senator john kyle to conduct a study on why conservatives feel targeted about being picked the results are out this week. One of the concerns from respondents is facebooks algorithm. But conservatives arent the only ones worried about it joining us now with the bias built into these platforms, the founder and managing partner at heroic ventures. So what can you tell us michael about what we will find out or just in general what is the actual state of whether these algorithms, you know, in fact do target conservatives good morning. Well, you got to love the crowded political moment were in no matter how much power you have, you are addicted to something. Conservatives and people to the left agreed there is something wrong with an algorithm. First of all what is ap algorithm an algorithm is a computer instructions that tell the computer how to react. Like data. Humans are fallable. 90 , 95 of a company like a facebook or google, especially in Silicon Valley are not left, but remember im by dfa a new york jewish liberal guy who became a little more liberal over time. If people are of a certain political bend, its possible they are biased against conse e conservati conservatives. The concept is actually 10 or 15yearsold in the literature and discussion and the industry and academia and people who are civil rights activists who oppose algorithms being used by courts in deciding sentencing for convicts because theyre biased against poor people or african americans, for example, are very much in agreement with in this case john kyles report that there are algorithms that might be suspect for being biassed in this case lets say conservatives. So a lot of good proposals have been out there, have been for a while to do third Party Algorithm audits algorithms are powerful valuable private companies that the companies understandably do not want to publish. You can imagine a government or for profit government, for profit, algorithm review by a a third party audit. So i think the truth is invisible. It is findable in the case of facebook but it will be hard to get at because you have to have people who are qualified to understand the algorithms you have to understand how to get access to the algorithms and keep pace with how they have changed. Probably every month every quarter. As facebook and other Enterprises Continue to improve the technologies to keep up with the market it feels like casablanca im shocked that 95 may have algorithms that might be leaning a certain way. I dont even find it that its no worse than a lot of main stream media newspapers where each and every da i the editors talk about how they will trade, they dont hide behind the algorithms let me ask you, michael, the beard went s. That as you became less liberal the last time you were on you were way out there you were way out you want to know a real story . Last night literally for you that is the truth i shaved last night. Last night i shaved. There was a lot of beard i tell you what. We dont have to be cynical about this whether on the right or the left, we have all go rhythms, we there are algorithms. We can speculate a lot of people can agree efrom the left and the right why is everyone claiming to be a victim of something so strong than focusing on what they can do by the way, there are professors who have speculated. One from harvard, that facebook could decide an election and no one would ever find out. Thats how powerful Fees Companies r. To be sure, we should be looking at whats inside these algorithms. Im not on facebook so i dont know. So i follow Kevin Mccarthy you know, the majority leader. Minority. Yeah. On twitter why did twitter suggest i follow the squad every day . That i dont for me thats, i dont see how i go from Kevin Mccarthy to where they think i should be following aoc . If i can understand how twitter is still in business, if i can understand how twitter makes its decisions, i think i might be a billionaire much faster. When you shaved for me or for the show fought for me for your viewers and all of the great people at cnbc squad you meant for me. You know, joe, after i was on the show last time, someone tweeted to to me whats with you and joe and the bromance i didnt know that what i definitely shaved for you guys i think its nice i think its nice. Its a new look i like the frames. A whole new look i liked you before. I like you after it had nothing to do with it. I want to go, michael, i have a different question, which there is a huge effort, it appears to be taking place in washington around the idea of should facebook be broken up should Companies Grow . Would that solve any of these issues thats a very, very good question i think there are issues of monopolistic behavior and monopolistic buying and selling behavior that could be addressed through a breakout that could be taking the question very seriously. I think if you are trying to clear the path for innovation and you are clearing the path for creative instruction that weird mechanism of capitalism that is so valuable to society over the medium and longer term, then i think a breakup discussion should be taken very seriously. My worry is if any of this discussion is actually a political discussion meaning, i think that either there should be a conversation about breaking these companies up because, because and you can have the view or not, that it is either a legal or illegal monopoly and there is a competition issue, or we can say that there is a political problem, meaning that these algorithms are being bent one way or another for political purposes i worry whats happening here is its all getting conflated i wish that policy discussions were not so politicized in our current moment i think we can agree so many are today. In fact, it seems to be politicization is the weapon of choice, whether are you on the left or the right and that moment that temperature is rising so i agree with you, there is a high risk of a politicalization of this very important policy discussion and a lot of the important discussion gets lost in the sauce animosity, hysteria, twitterization of what should be a sober and intelligent process. So, yeah, we are there look, i am a democrat. In the democratic debates very recently, we had the notion that the New York Times had engaged in a form of White Supremacy by publishing a headline that characterized a speech by trump or remarks by trump in a certain way. We are in a moment is frothing with insanity and politicization in my perspective. So i share with you there is a fear, a risk here, that important sober policy Value Creation commercerelated capitalism related enabling policy discussions can be politicized. I agree with that risk and i think it is a shame. We can do better, for sure we are better than this. I many is the old verdict i kind of do do we, what did you like a guy with a beard sounding like a capitalist, joe. You dont have a monitor. Weve got you up there you look good. You got a preference you like a guy with a beard and long hair. We got it were there right now. You cant see it you cant see it, michael we got both versions you have the old me and the new me on the every . Yes right now. Yes. Yes, we do [ music playing good morning, squawk box. Good morning. Okay. What about next time if its three months, do you have time to bring it back lets hope its not three months, but, boy. Bringing sexy back. This grows fast does it yeah. This grows fast its an advantage i dont think i have anyway, michael, thank you. Well see you later okay. When we come back, pressure mounting now on fed jay powell is he right or are investors calming out his mistakes we will discuss the fed, the possibility of more tax cuts the nations deficit all of that with art laffer after the break and back to jackson home Steve Liesman is there the continuation of his interview with ehestr george there is news being made here. Its all next on squawk box. Lower calories. Higher expectations. The light beer youve been waiting for has arrived. The light beer youve been waiting for they give us excellent customer otservice, every time. E. Our 18 year old was in an accident. Usaa took care of her car rental, and getting her car towed. All i had to take care of was making sure that my daughter was ok. If i met another veteran, and they were with another insurance company, i would tell them, you need to join usaa because they have better rates, and better service. Were the gomez family. Were the rivera family. Were the kirby family, and we are usaa members for life. Get your Auto Insurance quote today. The stimulus debate. Payroll tax is something we think about. Im not looking at a tax cut now. We dont need it does the u. S. Need a financial shot in the arm . And what could it do to the deficit . The center of the economic universe we will take you live to jackson hole as top bankers try to get a handle on the wobbling world markets. And does we work work . The companys ipo is in hand key details arent we will debate whether the stock is worth your money as it goes public as the final hour of squawk box begins now. [ music playing live from the most powerful city in the world, new york. This is squawk box. Both yield curves on the two year and the 10 year good morning, welcome back to squawk box. Here on cnbc live from the Nasdaq Market site in times square futures are up, im telling you, theyre now up the ten year is back over 1. 6 and the two years now, i just noticed 1. 5. Im joe kerr nokernon and becky quick and Andrew Ross Sorkin the futures are upticking. 73 now on the dow. The nasdaq on the 19, s p up treasure yields this morning after yesterdays brief ten year and twoyear inversion, bond yields have ticked up this morning from kansas city president Esther George that we brought you right here that the recent fed cut was, you say it was required at this point. Even though shes fairly been hawkish for a long time. Probably still more hawkish than her counterparts. Dissented there it is, 158 as i said and 161. Earlier, we were right around 1. 57 or 1. 56 so those backed up right now higher fields are good for the stockmarket at this point in time its not always the case but in this case it is lets get you caught up on some of the stories investors are talking about today. China is vowing to hit back if the u. S. Imposes new tariffs on the country. A spokesperson told supporters that despite President Trumps decision to delay some levees, china would be forced to retaliate if it faces new u. S. Tariffs which are due to go in place starting september 1st currently that is billions of imports said to be taxed though, notably, not key consumer goods, things like cell phones and laptops, President Trump is taking aim at auto maker ford hes upset the car company is not backing his administration to roll back fuel efficiency rules. Ford and three auto makers have reached standards set by the state of california. A big retail mover to tell you about this morning, Dicks Sporting Goods out with Second Quarter earnings that beat expectations on the top and bottom line. Same store sales and dicks raised the fullyear forecast. Stock is up better tan 12 recession fears creep nook the market some are looking to walk for help on tax issues so far, President Trump has been anything but clear about what he is considering emoon javers joins us with the latest eamon javers joins us. They floated a payroll tax cut, tax gains and the president talking about both of those. We end up without either of those. Heres the head snapping week from the president on taxes. Take a look. Payroll tax is something that we think about and a lot of people would like to see that. Im not looking at a tax cut now. We dont need it we have a Strong Economy a lot of people have been talking about indexing for many years. And its something that i am certainly thinking about. Im not looking at doing indexing and i havent been seriously looking at it. Certainly it is an option if i wanted to. So what happens here is the big question why the 180 from the president at least on tone in terms of taxes . On tuesday he seemed open and on wednesday he shut it down. What i am told at the white house when i asked this, is that the president on tuesday was ruminating outloud when reporters asked him about tax cuts he liked the idea generally. She talking act it with advisors and doesnt have anything specific in play right now he set all that on tuesday the white house felt the media took it too far and went running ahead with speculation what type of a tax plan the white house was working on and therefore when staffers briefed the president in the oval Office Yesterday when he went out to talk to reporters on the south lawn there they told him, look. There is aof of speculation. Certainly he did that we started with a lot of tax speculation at the beginning of the week, we end with the white house saying there is no tax cut plan happening right now. I asked the president directly, are you saying there is no tax cut you are working on right now . He said, thats right . No rumors on any spending cut plans as we head to a trillion dollars every year for the next 15 years no rumors there id like to hear some of those rumors the politics of this are tough. When you do a tax cut with a trillion dollar deficit, there are republicans from capitol hill who still feel strongly about the deficit. Eamon, they calculated with the most recent deficit deal they went out ten years. Its like mindboggling. Its mindboggling. Its bigger than it has been in our lifetime, anyway revenues were flat this year even up a little so its not that its spending i asked Dick Mulvaney about this the acting white house chief of staff at an event a couple months ago, why is it you guys arent cutting the spending he said, look, we looked at this a found there is no political appetite in washington to cut spending this is a guy that came in as a tea party guy, very antispending, now hes the chief of staff at the white house. There is not enough political appetite in washington we cant get the votes for spending cuts. Think of the votes apart from the administration either. I dont think President Trump is signaling that either. Thats why theyre not going to do it its mr. Illy possible so why even try is his point. His point is the only way out of the deficit problem we got is Economic Growth. Thats sort of throwing in the towel on spending cuts which is surprising for me to hear from a tea party congressman. Eamon, thank you. Good to see you. Right now for a look at what new tax cuts could mean, lets welcome art laffer, the foreman adviser to reckon and President Trump. He is also the author of the trump tax cuts and the coauthor of the book trumpanomics art is the chairman of Laffer Associates what do you think, deficits a trillion dollars and beyond starting next year is that a big concern . The thing thats amazing me, becky, how people are lending money with no Interest Rates whatsoever f. I can borrow without paying interest or pay the money bark id borrow as much as i could, too, if you look at the the gdp its lower than it was in 1982. You know its amazing whats been happening here. I mean, and i dont know, ive never seen anything like it in the u. S. History now, there was a period from 1942 to 1951 with the accord where our Interest Payments were very, very, very low because the fed underwrote all federal deficits, which its doing now its done. You got a similar period but this is completely new, from my experience. Which means what, art is that its not a problem to have these deficits or that things could shift at any moment and it becomes a big problem well, if it can shift at any moment, it becomes a huge problem. There is no problem from these deficits when you have Interest Rates 1. 6 on the 10 year the expense of the interest on the National Debt is a share of gdp or anything is extremely low. There is no penalty. Government is paying for it. Dont you think at this point in the economic cycle, given where employment even is in this country, all good things that what we should be doing is reducing the debt, not increasing it. I completely agree with you i think joe was completely correct on saying the government spend secretary way, way out of control. As Dick Mulvaney as you report as you said there is no appetite for it in washington whatsoever. No one even talks about it i mean entitlements. When you pay people not to work. When you pa i people for no production you will get people not working. If you want something, stop paying people not to work. North carolina did it. They dropped the Unemployment Rate dramatically, increased job growth phenomenally. Does that make you rethink the tax cuts no. There the two sides of every coin, which is to say sure we can we douse costs and its shocking we havent in certain cases, given that we havent, when you tack about being fiscally responsible, you then say to yourself, okay, then there is this other side of the ledger we got to deal with let me say, andrew, in all honesty from my standpoint, if we taxed everyone 20 every time they came into the office they got a bill not a check that would be no revenues whatsoever i this city tax cuts that were done in 2017 in december, i think they will increase revenues over time theyll increeks Economic Growth over time. I think they have been doing a fine job right now i think its a wonderful thing we did we need to broaden the tax base and lower tax rates. We went from way above the highest country in the rates in the corporations to about the middle of the pack a little above the middle of the pack we have 100 expensing, which is greatest we got rid of the mandate, all sorts of things i think are very helpful to the economy increasing taxes on more people whats that when you say broadening the tax space what do you mean by that i mean taxing everyone at the same rate. Jerry browns flat tax was the perfect way to go. Get rid of all federal tacks two, taxes, one in business net vau sales if you call it value added one on personal gross income have a flat rate tax of 13 from the first dollar to the last dollar that does it for taxes. Thats more than revenue neutral. Youd have a perfect tact system there. You can get the Economic Growth you need in this country for the long, long hall. Jason trener here i was wondering if i could switch gears at the moment and talk about the Business Roundtables letter earlier this week. I know. Shifting from a shareholder model to a stake holder model. I think i know what you are going to say, but id love to hear your thoughts on it well, i think it would be the wrong thing to say if i actually believed what they signed. They dont believe what they signed i think every time they file their 10q they will look at stock price and what happened to shares what happened to profits. I dont think they will look at other stuff, to be honest to you. I think its pandering to the general public they do that from time to time when they feel publish pressure. Noel freedman, he is correct thats what theyre there for. As long as they behave the laws and are correct in their behavior, thats what they should be doing. All right should we cut taxes . You know i think tax reform is the right thing to do i think the more towards, yeah, we want to get those high rates down, the base things, we want to get rid of the deductions, exemptions, exclusionles, a low rate broad based flat tax just the way jerry brown proposed in 1992 thats where we want to go, a low base broad based flat tax and be done with tax revenue you see what the rhetoric is around the country right now i do. We have been through this a few times. Ki remember before reagan. I remember we wanted to dabble in a lot of entitlements in expanding government and there was a sort of a reversion back to what i thought ushered in a great period and here we are again, do you think this is followed by a reversion back to Something Else or i mean a lot of young people want to go hog wild down the slippery slope to entitlements and really towards socialism. I know that were not supposed to use socialism as a bad word were supposedly conflateing it. Just talking about entitlement programs doesnt mean you go all the way to socialism there is definitely an appetite for a lot more free stuff among all young people when did they decide its fought such a good idea, when they have to pay for it . Im very, were in the very beginning of a growth period in the u. S. It remind mess very much of reagan in his first term you know we had all those problems there, all of a sudden we got the Economic Growth starting if 83. It was spectacular i think the same thing is true with donald trump and this administration i think we will have a lovely growth period. But all redistribution reduces output whenever you pay people not the work and tax people who do work, ive got to tell you, econ1, you will get less people working, period free goods is giving people for not working. Its a pure and simple redistribution if anyone thinks that will lead to further growth, they have to read town one. It doesnt work. You cant tax sorry you made the most unwoke person that weve ever had on i think. Im up there, too. Are you so, so not woke. You are so unwoke you dont know you are unwoke you are not embarrassed by how unwoke you are. I dont know what unwoke is whatever unwoke is, is you. I is one. You are what can i tell you in the dictionary under unwoke anyway art laffer. Thank you, team. You guys look like you were are having a lot of fun. I would have shaved my beard if i have one we have fun we have to laugh with whats going on in this country. Its a riot i brushed my teeth for you, becky. Thank you very much thats awesome. Thats funny. Anyway, thank you. Bye coming up, will we work work . What about hauwei ord wawa wawa. Silly wabbit. Investors are dealing with shared office space. Questions remain about weworks structure. Is the Company Worth your money when it goes public . Well try to answer your question when squawk box returns. Returor breaking new ground . This is the time to get an exceptional offer on the mercedes of your midsummer dreams at the mercedesbenz summer event, going on now. Lease the gla 250 su for just 329 a month with credit toward your first months payment at the mercedesbenz summer event. Mercedesbenz. The best or nothing. , welcome back to squawk box. We were having a public day by a. A lot of companies financials, should you invest in the market. We will bring in the dan morgan senior vp and performance manager at snynovus trust have you been through this is1 this is not like most s 1s whats your take no, its incredibly complicated. For starters, this is different than a lot of startup ipos. You have a Holding Company and another Holding Company on top of it. The graphs and charts look weird. There is weird stuff in there. I wrote this yesterday they are feeds willy complicated and will bother investors. They have to clean it up when they do their amernded filing right after labor day. Dan, cleared up how there are some of the pages that talk about the relationships and things that happen in the past that frankly cant be cleaned up but do raise lots of red flags. I think they have to explain it for example, there is a big, its not that bag in the frame of wework. The 5. 9 newman payment the founder received from the company in exchange for the trademark we before it changed its name to the we company. Which is its specific company that i have to come up with why and pay it back. Thats stupid list in the long list of stupid things i heard coming out of this sitting in there, the argument that i have heard from somebody is he trademarked it when he thought wework would be one of lots of companies hed create eventually the value grew because of the value brand he had to pay it back. There were taksim politics its stupid, they should be explicit on why it happened. Leasing buildings from the company he owns. How is this not self healing that one im not as negative about. The argument they make which isnt a bad argument it was four billings and they got 550 at this point they were early in the companys life at the time wework was having a hard time getting leases from commercial building holders, because it was a new company and nobody thought they were good credit dan, the other dan in this case, there a positive case to be made here on the operators of the business yeah, its a tough situation, you are talking about some of the scrutiny going on involved with the founder of the company and were in a different environment right now. Right. Because we know whats going on with the federal trade commission on Companies Like google and facebook. If you flip it over and look at some of the valuations that are out there in regards to wework, they will be coming out roughly 25 times sales, which is pretty high, if you compare it to lets say a lyft or an uber, that came out about 11 or eight times sales. Again, this company is not profitable you know, it will be very interesting to see how this company can navigate through lets say a more difficult economic environment kind of matching their lease obligations with their Member Community leases so, to answer your question, andrew, it is hard to find something in here that really stoondz out thats a Huge Positive other than the fact that theyve had tremendous Revenue Growth right. Theyve doubled their revenues up 105 in fiscal 2017 obviously, they got the growth on the top line. Its getting through some sort of path to go. When you look at the numbers, do you say theyre better, that theyre stickier numbers now that theyre focusing on the enterprise as opposed to the random freelancer, besides effectively real estate as a service, which effectively is the model theyve built . Yeah. Theyve added some Technology Companies through acquisitions this, they use a term that sound Like Software is a service right . Right it sounds like salesforce in reality andrew their average commitment towards a lease is 15 years and their average Member Community or Enterprise Customer commitment lease is 15 months. So how do you max that out if the economy turn itself down thats the real challenge for them, i think. Even though theyve put some fancy terms on what theyre doing and so forth, its still a model that isnt overly complicated. There is a uk Company Called iwg who is doing the same thing that theyre doing. So you know it will just be interesting to see how the street embraces this, whether its a Real Estate Company or Technology Company gentleman, i have a question more broadly which is to say how much juice is left for the average guy . Im looking here, amazon went public with a mark valuation of 400 million netflix went public with a market valuation of 300 million. This was a long time ago by the same token, one wonders to the extent to which companies are staying private a lot longer than they become public, does this make a lot of sense for the lets say average individual investor to buy into this . I think from my perspective, two things, first, we dont know the price yet, we dont know the size of the float. Thats been the issue with niece megaunicorn ipos we seen, going back to last year drop bock, et cetera a lot of that has been stuffed out by the private markets there is no doubt about that we got to run, dan, i apologize, dan and dan, thank you for this conversation. Thank you i imagine we will have a lot more of it throughout september as we get ready for this ipo let me ask one question before we go, is there any chance you think this doesnt happen at all . No no outside of some massive market crash, you know what he had last week you get a bunch of that, no, i think its going forward. Thank you, guys. All right. When we return, we will take you back to jackson hole, the center of the economic universe this week and wale hear once again from Kansas City Fed president Esther George. The questions on the table from the u. S. Central bank when squawk box returns to introducing products faster. To managing website inventory. And network bandwidth. Giving you a nice big edge over your competition. Thats the power of edgetoedge intelligence. They have businesses to grow customers to care for lives to get home to they use stamps. Com print discounted postage for any letter any package any time right from your computer all the Amazing Services of the post office only cheaper get our special tv offer a 4week trial plus postage and a digital scale go to stamps. Com tv and never go to the post office again coming up, we return, breaking news on jobless claims. New numbers moments away those are up first when squawk returns. Stay with us were coming right back. Welcome back to squawk box. Rick santelli here breaking news, 209,000 thats this weeks initial jobless claims number. That is down from 221,000 so minus 12,000 minus signs is always good with claims and on continuing claims, we also moved down from a slightly revised 1. 28 million to 1. 674 million. Now, of course, these are all good numbers if you are monitoring jobs in the employment picture of course, initial claims, continuing claims really have been quite well behaved if not better than that for quite a while. So the information we garner from there isnt necessarily shocking of course, it does underscore, we will Pay Attention to the next jobs number and of course the ecb meeting and fed meeting. Especially after the minutes yesterday, we seen Interest Rates have riz an bit. All this inversion of the curve i want to be on record thinking and saying i think its a bit silly. Look at negative rates if you have a question about why our curve is inverted. Cor this, boone yields are minus 61 points thats a oneweek interday high andrew, back to you. Thank you, rick, for that i want to get back out to jackson hole, wyoming. Central bankers are talking Monetary Policy after we heard from the host city fed president Esther George last hour. Bond yields ticked up. George says the latest fed cut wasnt required. Steve liesman now joins with us more steve. Reporter yeah, andrew. And i think were going to be listening to a whole bunch of fed speakers here to see, are they intune to where the marks is calling for rate cuts Esther George clearly not. Heres the second part of the interview where i began talking to her, one thing, why are u. S. Interest rates higher than the rest in the world. Second, what does shethink of the 16 trillion dollars of negative Interest Rates around the world . Its incredible, i think. It is part i think of an experiment that were watching to see whether negative Interest Rates will have the stimulative effect that Central Banks are looking for. Could the United States have negative Interest Rates . I would never say never i dont see it for the u. S. Right now. Remember, we already have low Interest Rates at 0 right now if you think about where inflation is and where the current federal funds rate is. So policy is not tight in my view in the United States and i think as the economy grows, i dont see a scenario for that right now. What kind of signal are you getting from the yield curve being flat and briefly having inverted on the 210 . So, we all know what the history is on inverted yield curves and the concern that they portend a recession coming i think i look at that very carefully to try to understand why are we seeing that but in the context of a Global Economy that is weighening i think that could explain a part of it i think the feds have a large Balance Sheet that could be putting downward pressure on the lower term rates so ill keep watching that for sure i dont yet see the signal that suggests its time to get worried about a downturn why are United States Interest Rates so much higher than europe where theyre zero i think if you look at the underlying performance of those other commission, you will see the u. S. Is performing better than, for example, europe and other parts of the world and that accounts for why we have higher Interest Rates. Do you worry that were too far above other major developed countries . I dont tend to think of it this way i tend to think that those rates in the u. S. Are reflecting the underlying xi here the Interest Rates and other countries likewise are reflecting that to address that issue really requires otsd policies in those countries, whether its fiscal or monetary to really affect that growth reporter all those issues are going to be discussed here at the actual conference when it begins this evening. The title is challenges of Monetary Policy. You can imagine there is more than a couple around the world, the big issue being the divergent Interest Rates around the world. We have a chance to talk to other Federal Reserve officials. We have Robert Kaplan this afternoon at 3 00 eastern time tomorrow back here on squawk, were talking to James Bullard and loretta messter. A chief economist also in squawk on the street and mark carney 5 30 p. M. Eastern time. The outgoing governor of the bank of england. Thats our favorite shot of you out there leaseman, you know, you know that. Reporter its the only good one of me. I need these big mountains behind me to make me look good. You remember what we did that one year, i dont know if we still have it, we can dig that out. We had bigfoot every once in a while, turn around, hes never been cited. Those are doctored videos usually. Thats a place where he can definitely more likely in times square, joe, than here thats not a real big foot. Hes next to elmo. Theyre dating which is weird we have 18 elk, joe we saw a pass yesterday. So we have we do have some wild life out here thats different from the wild life you are used to back in new york, joe. I am so not used to wild life in new york as you know. Talk to sorkin over here hes out every night anyway. Reporter out every night well, meaning, sources i think, right schmoozing, meetings, i have things going on especially know you do reporter can i just ask jace an question . I see jason still there. Yeah. I know we got to move on. Jason what happens here . You asked me a big question in the last hour, you know does the fed need to meet does powell need to meet the expectations of the market as you see it for the market and over time. My own opinion is the fed should ease, not because its going to stimulate Economic Growth its largely going to prevent the dollar from getting too strong because were not in a closed system and have you 16 trillion worth of negative yielding debt. I feel very strongly that lower Interest Rates globally or continuing to use Monetary Policy, this is my opinion, is creating malinvestment, its creating lot of distortions in the market it kind of goes back to this idea when all you have is a hammer, everything looks like a name the moneytary policy, i would say the amount of monetary debt is screaming, youve exhausted the usefulness of Monetary Policy europe needs fiscal regulatory policy. Reporter right. I acknowledge the trade is slowing the u. S. Economy down and the Global Economy down. Its working across purposes i dont know if there is any discussion there, steve. But the idea that if you push Interest Rates more negative in europe thats going to have some sort of stimulus i dont see that what do you think . Reporter i just want to go back to the first question, which i this i is something im really interested in here. Which is, i dont know that Esther George represents the majority of the federal committee. I do know thigh had two dissents i know the minutes yesterday suggested that the group of those who opposed the rate cut was larger so, you have on the one hand a fed chairman who has the market on one side calling for a lot of rate cuts. I guess there is three priced in or at least twoandahalf for the rest of the year you know, a committee thats not maybe all the way there. They were sort of into this recalibration idea or midcycle adjustment i think the friday morning speech by the chair is going to be very interesting and very closely watched to how we switch that difference, trying to meet Market Expectations but fought get ahead of his committee thats not on board. I think a big question, i dont know if joe wants to pipe in on this its a 2 vs. A 3 growth. We get down to 2 growth a lot of the fed says you know what, were where we ought to be the political side says 2 is not good enough. We can the better. If we run it, we are running it below where we can be. That is not a concept the Federal Reserve has bought into. You taught me to be happy with 2. 4 reporter 2. 4 is a great number. I wouldnt take a victory lap. I understand the aging population i like productivity. I like the notion that we dont understand everything positive thats happening productivity wise. Reporter right. Im hoping thats where we can get a little more juice and nobody knows, thats something i heard earlier, steve and hope springs eternal you said Esther George forecasts 2 thats exactly where we are. Lets wait and see im not sure thats as low im hoping we can do there were some surprises recently with consumer and earnings im hoping those things get ratcheted up where is the atlanta fed 2. 2 or 2. 3 not that they know. Reporter theyre in there. Ive said from the very beginning, joe, if the tax cuts had the ability of adding 3 to. 5 to gdp, remember its a 20 trillion economy that would be a huge victory. I mean, the problem for the president right is that 2. 3 is not a very good political number to sell. Right. Remember i say we will have 2. 3 growth 3, you need the whole number politically to sell it you dont know how to do a moose call or elk call, do you is there a way you can actually call no, i dont no if you think you are going to get me on television here, joe, doing a moose call, i would soon eshow you how i do a fly rod than a moose call. Wait a minute reporter thats live thats right now behind us a couple elk right there see if you can get their attention, im serious see if you can reporter i dont know, i dont have the elk call down, yet. Why go out there if you cant show the beauty of jackson home, by the way reporter it is beautiful they can have that meeting down the street. Reporter can we go wide on that to show the context of the great field . And by the way, a plug to the wonderful few people up here at Jackson Lake Lodge that run this place. Thats so cool. Reporter we can sort of see where we are and the context its too far away. Reporter theres the mountains. Unless you got a megaphone. Reporter you can see where they are an unbelievable spot you do it. Id like to switch one here, do delivering out there anyway, we will keep talking all those people. Thats a great move by our cameraman mike over there, a shout out to him. I did not see big foot. But he doesnt, big foot does not, is so afraid, very camera shy. Reporter 44th street, joe, 46th street i think they saw him. 48th maybe Holding Hands well mo, weird couple anyway, coming up, key Technical Levels thanks, you need to watch as volatility returns to the markets this summer. He was naked, both of them big foot and elmo. Anaystyw, ay tuned you are watching squawk box. And welcome back to squawk box, shares up, tesla, they are rising right now on a report that volkswagon ceo is interested in a stake. Phil lebeau joins us from chicago. Phil reporter there are interesting stories floating reports in germany so this is a bit of secondhand news, its curious how much this will impact tesla shares first off with a report out of germany, citing those who are close to volkswagon and ceo that he might have an interest in taking a stake in tesla. The thought being that he would like to have access or greater access to some of the Software Expertise and battery expertise of tesla having said that, guys, this is somebody who is not named. Its not somebody who is with the company according to this report out of germany that ive seen so far. Its essentially, well, Herbert Diess would be interested and thats a long way from happening. You have problems with the porsche family, they have major ownership say within volkswagon and whether or not they would be interested in volkswagon buying a stake and tesla remains to be seen there is a report out of germany, the germany magazine which says that Bailey Gifford which is out of the uk, the second largest investor in tesla suggests that executives believe that elan music it would be better for tesla if elon musk was not ceo running the operations daytoday. Having said that, guys, dont expect that to happen any time soon that suggestion may be out there. Elon musk is running this company he has not given up daytoday control he believes he is the vision for the future of this company ill layout a path where tesla is headed. Whether its the model y, the pickup truck, whether its the semi, expansion in china and tesla will continue to march to the drum pete of elon musk whatever you think of him daytoday as a ceo and Bailey Gifford in this article apparently suggests perhaps the company would be better run if somebody else was operating as ceo overseeing the daytoday operations at tesla with muck at the operation in some fashion. Guys, you know how this works. This is elon musk company. Okay. Phil, thank you. No doubt about that. Were going to shift gears i dont have to think about it its just, here to tell us why she is still bullish and how investors can benefit from recent market moves, katie stockton, founder and managing partner at fair lead strategies. I was thinking aunt when i was listening. I can do both and come up one believable second signatugues af i was thinking about the slight weird news tidbits that have been moving markets around the past month i wonder whether you hear those as a technician, thats just totally noise maybe you look at it in hindsight to say maybe it causes that. Does it matter how you are judging the internals of the equity marks. I definitely care and it is noise and what we can do to manage through that noise is indicators that move it. I look at average based tools. That can smooth the trends out even on a very shortterm basis. So i see that noise as something that we ignore to the sense its not perfecting the prevailing trends i was thinking it would be hard to be a technician when you got all your ducks in a row for why something is happening the president tweets something, whoa, you cant do that. Its going exactly like i thought until you did that there is no way you can anticipate that. I cant predict that, of course, it doesnt tend to impact the charts in a longerterm fashion. There are indicators still remain pretty balanced throughout that noise. Since last time we got another scare. What do you calculate it at 8 id say 7 or so in the s p 500. You said it was healthy, you like it . I like overly bearish. Quickly just like at that june low. By what measures are you looking at in terms of sentiment . Primarily the cnn fear and greed index, which is quite good at both highs and lows who does that what did you say who . Cnn but they self they ramp that up themselves how can you possibly its a transactional gauge of sentiment. Thats what matters to me more so than the investor polls, which can be pretty sensitive into declines. We did get that sentiment extreme. We did so without a big breakdown. The s p managed to hold up above support. The breakdowns that we saw in the individual stock level were really concentrated and lagging sectors like energy or retail. So the losers kept losing, and the leaders managed to hold up pretty well. Weve been through the tariff wars again how far away are we from new highs again . Well, about 3. 5 , right which, do you have a feeling were going to look back and say, oh, my god, here we are at new highs again, even in the middle of a tariff war i think its a nearterm forecast for the s p 500 just in the past couple days weve seen shortterm momentum improve off that retest of shortterm support so we have broadbased moving average bisignals. Thats around the world. We have them in china, in europe, even though its lagged. What do you make of some of the more cyclical sectors like semis or housing where people are worried about a recession on the one hand, and yet you see semis making new alltime highs on a relative and absolute basis . The chart is very similar to the s p 500. You can translate that bullish view to those sectors. Semis for one have much more room to that final resistance on their chart. If you look at Something Like smh. To me, thats compelling in terms of potential outperformance a little beta to that sector and tech still continues to be the established leader last time i ask you about the ten year too i think you did talk about a down a yield downside objective that sounded ridiculous i think we went through it it melted at the time, right. So the support now is at the 2012, 2016 lows, which are just below about 1. 4. We have started to see signs of downside exhaustion from our countertrend measures. I feel it im exhausted covering it. The way we talk about it or the chart . Its not because of you its not us its not you, but the momentum has certainly lessened on the downside for treasury yields in the same vein, were seeing that on tlt and other benchmarks i dont know which chart id look at first to try and figure out your s p chart i might try to look at that chart. Everything is certainly tied in it would make sense to see those defensive sectors start to underperform doesnt mean they go down dramatically in a stronger tape. But anything thats more Interest Rate sensitiveas we get stabilization in treasury yields, you get a little sector rotation that would foster a bullish view can i ask about gold . Just hold on a second okay, sorry its your show is he a client . He is like milking you how do you get clients i can share my research no, dont share it, but how do you get new clients, and whats your fee schedule because this is ridiculous i do have a subscription model. Ive never seen him so engaged or interested. Its all free. Its true why dont you sign up are you in the book . Not in the book not in a telephone book im just trying to get as much info as possible. All right, go ahead ask your question. Its obviously lost some shortterm momentum. That was very natural based on how far it had gone and how steep the up trend was looking for the pullback into the 1400 range and revisiting it for a buying opportunity or you could watch squawk box. Shes on a lot, jason. I followed pretty closely. Theres times when i get nervous or wake up in the middle of the night or something i do feel a little better to have someone elses new highs. A good hand holder. You are youre a pretty good hand holder thank you. Okay. Meantime, down to the New York Stock Exchange where jim cramer joins us now jim, how are you i am good how about you . Im good. Are you feeling any better this morning . About the market . Yes, sir. Well, i mean, i think that yesterday was a really interesting day because of what happened in lows, which was really amazing after the close, what happened in nordstrom, which wasnt that bad. Were getting obviously target just keeps going higher. This morning we got dicks dicks is just im going to call this a superb, superb quarter. Theres going to be a lot of good stuff coming out in the conference call. I really like the tone of what the company is doing in terms of, yes, i think its important. You know, they took out guns in a lot of stores. It did not hurt them there is a lot of momentum to the stock. I think its too cheap they bought back a ton of stock here so i like a lot of things that i hear now, i cant be as bullish because of the tweet issue that you guys talked about. Its just very hard. The president s the chosen one the chosen one, thats a high rank hey, while were talking about tweets, let me read you a new one that literally just came out within the past minute, this from President Trump he says, germany sells 30year bonds offering negative yields germany competes with the usa. Our Federal Reserve does not allow us to do what we must do they put us at a additidisadvane against our competition. Strong dollar, no inflation, exclamation point. They move like quick sand. Fight or go home thoughts, mr. Cramer once again, i got to throw the flag hes down there giving them the business its really hard if youre jay powell and you read this in the end its like, could you stop already how much can they give him a beatdown the president has made his point. I dont think theres anyone in jackson hole who doesnt know the president s point. And yes, can they read german bonds . Yes, they know how i think its basically enough already. The chosen one has got to back down he the chosen one has made his statement. Did anyone else find that to be, i dont know, sacrilegious i thought it was a little what sacrilegious. I didnt you saw the whole clip when he said it, he said, you know, no one else has taken on china. Im the one chosen its weird he could have said, i choose to take on, instead of there was someone who chose him. I like what he said about the chinese, but there were people in my family who were not happy about the chosen one jim, thank you. Well see you in a couple minutes here when squawk returns. Good thursday morning. Welcome to squawk on the street. Futures bounce again after four days up out of five as we start prepping for jackson hole, powells speech tomorrow another day of pretty good results. Our road map begins with the feds annual meeting in jackson hole getting under way phillys Patrick Harker will join u