Transcripts For CNBC Squawk 20240704

Crossed, it looked like a different picture. We had a reversal midday we saw stocks give up the ghost and treasury yields surge and 10year yield cross 4. 1. It was the reversal to watch i think it is because mary daly and San Francisco fed says there is more work to be done after the cpi number people thought it is not over yet. It aint over. A long slog here. The lady hasnt sung. You cant say which lady right on the squawk planner. More inflation data. Ppi is due at 8 30 a. M poll polled forecasters expect a tick higher of. 2 . This comes after the cpi data showing prices rose 3. 2 year on year which is below the forecast the Supreme Court blocked for now a multibillion dollar deal by Purdue Pharma from the opioid crisis. They will look to release the claims by nondebtors against nondebtor parties without the consent. The department of justice argued the release of civil liability is not authorized by the bankruptcy code. Purdue is optimistic the Supreme Court will agree which the case will be argued in december Sam Bankmanfried returning to new york city for the Court Hearing today to decide if he goes to jail while awaiting trial. They are looking to revoke his bail and harassment of a witness. He has been with his parents at their palo alto home since extradition from the bahamas they said he leaked information to the New York Times and that, unto itself, is witness tampering. That is the argument very fascinating argument. I would argue as a journalist, not in New York Times life, but broadly it is hard to see how witness tampering can take place through a thirdparty vehicle given the freedom of speech issues with people who have been charged with have by the way, i dont know whether anyone has said the information was actually i dont know if anyone confirmed the information was leaked or not. That is the argument that was put forward. It is i dont think we have ever seen this thing before where prosecutors say it is not just them remanding him to prison saying he is tampering. Usually you are going to someones home can you send messages via media which is a very interesting argument in terms of proving it was leaked by Sam Bankmanfried . That is the component here i would argue if it was, it would not matter you would have by the way, whether you are in prison or not in prison, you still have freedom of speech to say what you want about whomever you want and you should do that interesting element of this case hollywood will watch this today. After 101 days, thats been how long this has gone on. Writers guild and studios return to the bargaining table. Telling the membership it expects to hear responses from the negotiators. There was the mini meeting that happened last friday which was supposed to be a meeting about having more meetings it did not go well here we are. I think between all of the questions with Media Companies and what not, can these things get back together . What date . 11th of august the hope, i think, has always been hope was three months ago, labor day could you get a deal by labor day . More broadly than just the media industry, is the power of labor. Uaw strike going on right now. That date is september 14th when they are beyond the strike u. P. S. Union win, effectively, raising the drivers average salary to 107,000 a year. The sticky Wage Inflation is an issue for the fed in some respects. That is interesting you piece all these things together and it shows the force and power of the worker. Wage inflation is a serious issue. It is unclear whether the fed is the one that will tamp down the Wage Inflation. I angree very little power. The way they can do it is with the big stick. The big stick makes it easier for corporations to say to the employee, we cant do this. We dont have access to capital. You talk about it. You know, they say, okay. Unions, we will give you the raise. Six months down the line, they reduce the size of the work force. Right these things play out amazon is cutting private label brands as the effort to rein in costs. In the statement to cnbc, the executive in charge says they are looking to cut brands. Sales from private label represents 1 of the total retail sales it raises antitrust concerns. Sellers on the platform are selling and if it gave preferential treatment with advertising for the private label brands by getting rid of this, it solves problems. Streamlining product and removing one argument for antitrust regulators im curious about this one a big win for the Autonomous Car world in San Francisco the California Public Utilities Commission voted to allow gm cruze and waymo to expand in the city a lot of concern about deployment and some First Responders say the cars get in the way. After the vote, it would charge fares for riders for riders only trips in the coming weeks. The big debate has been if you have enough of these cars sitting or get stuck, fire trucks cannot get by it is not just when they get stuck, someone has to come in, physically, get the car. They have the situations with the cars stuck in the truth, in human being land a car gets stuck and someone gets the car. There are cars that get stuck. Do more cars get stuck that you cannot move . They become immovable without a human. When a car gets stuck, someone can roll it out of the way if it is a software issue, it might be unstuck remotely hopefully they will get there. Would wityou take one i would i would, too. Im all for science coming up, stock futures are muted with the ppi due at 8 30 a. M. We will have technicals after the break. On monday, Brian Sullivan will have an interview with president ial hopeful ron desantis on last call here at 7 00 squawk box will be right back. I love to help people understand the world through their lens and invest accordingly. You can call us Christmas Eve at four oclock in the morning. Were gonna always make sure that you have all of the financial tools and support to secure your financial future. That means a lot for my community and for every community. We earn your trust. Maintain our financial strength and stability. And deliver solutions that meet complex needs. Massmutual. Partnering with financial professionals, benefits brokers, and institutions. The biggest ideas inspire new ones. 30 years ago, state street created an etf that inspired the world to invest differently. It still does. What can you do with spy . Have fun, sis cant stop adding stuff to your cart . Get the bank of america customized cash rewards card, choose the Online Shopping category and earn 3 cash back. fan 1 there ya go thats what im talkin about choose the Online Shopping category josh allen is this your plan to watch the game today . hero fan uh, yea. I have to watch my neighbors nfl sunday ticket. josh allen its not your best plan. But you know what is . Myplan from verizon. Switch now and theyll give you nfl sunday ticket from youtubetv, on them. hero fan this plan is amazing josh allen another amazing plan, backing away from here very slowly. fan 1 that was josh allen. fan 2 mmhm. vo for a limited time get nfl sunday ticket from youtubetv on us. A 449 value. Plus, get a free Samsung Galaxy z flip5. Only on verizon. Wow, you get to watch all your favorite stuff. Its to die for. And its all right here. Streaming was never this easy, you know. This is the way. You really went all out didnt you . Um, its called commitment. Could you turn down the volume . Here, you can try. Get way more into what your into when you stream on the xfinity 10g network. The s p is up more than 16 this year. Some of the momentum has fallen off in august. The trends continues yes or no. Lets look at the technicals with the technical strategist. Todd, great to have you with us. What has happened since midjuly is that we lost leadership apparent an apple and microsoft down 12 from those highs. It is a great time to zoom out. Ten months off the lows. S p up 26 since then. Momentum has come out of the larger weightweights nowhere near in the oversold conditions from a week ago i would stay patient here. If things get rocky, look to 4,200 to 4,250 to add more exposure across the margin there are times in the corner with too much tech exposure. Look at Energy Energy hasnt worked for some time out flows in that space is taking a leadership space. I saw a nice performance of late you also cover etfs. In terms of the ownership of large cap tech, it is extreme across etf styles. I wonder how that factors into the potential momentum to the downside that can happen p and build because of mass ownership. What with is strange to me is the xlk has exposure to date russell 1000 is apple, amazon and microsoft, et cetera could you get a little bit of a avalanche the selling . That is possible i also am reminded that etfs is the underlining activity i think we are in a different cycle now than last year last year was a terrible year for tech with the inflation issue. I still think trends are stronger now than we have been used to and i would look to add exposure to the names. If you do not want apple and microsoft, look at nasdaq or equal weight tech so you are spread out when you say 5 of the underlining market activity, is that by volume etf has creation redemption unit to buy the underlining security there are underlining impacts which are impactful. You like energy this year you like leadership perks we have seen so far interesting stat from energy at the end of last year. Doubled in weight in the s p from 2 to 4 . That is rare even on a small base you spend the next 6 to 12 months going sideways. That is what oil has done. I like the outflows of energy in etf. It is the timely area in the market right now because tech has run. If you playing, take a look at the names. They spent a large part of the year doing nothing if you need to put fresh money to work, that is the place to be sdplchlt be there is an argument you see that energy recaptures half of the historical exposure. There is still upside here. Yeah. Over the last 50 years, average weight is 50 s p. 4 or 5 if you are optimistic in the energy renaissance, there is more runway. What are the sectors . Industrials are great machinery names are pausing like big tech the leadership from stindustria is fantastic with the cyclical bull market. Conversely, i would avoid the bond proxy 5 sort duration yields. Stables and utilities. There could be posturing, but why take the risk when i can go to a tbill and get a higher dividend yield than the entire sector i would avoid the bond proxy discretion has strong pockets. Look for the Home Builders retail names are starting to improve. Theres all different pockets outside of tech which are timely in the market sdp todd sohn, thank you. Coming up, the big business of popup stores with the founder of popup summer thats next. Tonight at 6 00 p. M. , dont miss a special taking stock with mike santoli and josh brown. Squawk box is returning after this to the chall today, when active investing and disciplined Risk Management are needed most. Drawing on deep expertise across the worlds public and private markets in pursuit of longterm returns. Pgim. Our investments shape tomorrow today. The citi custom cash℠ card automatically adjusts to earn you more cash back in your top eligible spend category. Hi. You dont have to keep tabs on rotating categories. This is the only rotating i care about. Or activate anything to earn. Your cash back automatically adjusts for you. Can i get a cucumber water . Earn 5 cash back that automatically adjusts to your top eligible spend category, up to 500 spent each billing cycle with the citi custom cash℠ card. I love it. [voice vibrating] the thought of getting screened for colon cancer made me queasy. But now ive found a way thats right for me. Feels more easy. My doc and i agreed. I pick the time. Todays a good day. I screened with cologuard and did it my way cologuard is a oneofa kind way to screen for colon cancer thats effective and noninvasive. Its for people 45 plus at average risk, not high risk. False positive and negative results may occur. Ask your provider for cologuard. I did it my way welcome back to squawk box. Its a barbie world and we are just living in it. Literally. Fans of the sensation can now step into the Mattels Barbie land through the popup experience at bloomingdales looking to cash in on the barbie mania. The popup economy generating 80 billion of reprevenue. Nearly half of popups costing less than 5,000 to launch it may be the next big thing noin the experience economy joining us is susan sandler. Good morning good morning. Can we talk about popups thats why youre here. I would love to when did this phenomenon begin, do you think . Has it been around forever and now were paying attention or is this Something Else . Really about 20 years ago i started noticing it first in london when i would go to town and look for the best restaurants and people say you have to go to the popup restaurant here is the address. It is a secret location. Then slowly brands got the idea and started popping up in the United States. What are the economics of popups . I ask because were a Business Program because ive always been shocked at the popups which are elab elaborate. You say this is a lot of capital costs to make this look as extraordinary and wonderful as it is. If this is really not supposed to be a permanent fixture, what are these people doing right popups really are designed for Brand Awareness and Customer Engagement and sales if you athink about the costs an advertising, it works out well i dont know few brands going into it just to do sales. Should we think of popups and the brands going to the popup space, should we this is of should we think of them more as lining up along madison avenue because there are a number of stores that are not necessarily Profit Centers so much as marketing vehicles even the folks, they would hate me for saying this, the beautiful tiffanys built on the corner of 5th and 59th i think the sense is that is a building that will eventually make money it is as much as making a profit at that store, i think, as sort of redefining the brand. Yeah, i think thats true most brands i work with want to cover expenses, at least very often it is a pathway to the permanent brick and mortar store or pathway to achieving wholesale retail space smaller independent brands with popups for stand alone for other shops. How easy is this now . The other thing we know over the last decade is the brick and mortar store retail front has diminished the value with rent has gone down or up. I thought you were going to say because we have vac vacancis with the economy, you have shortterm leases. We with wil with the economy, you have shortterm leases. We withl give you the amazing space for next to nothing. You think so. Not necessarily. Sometimes that space comes at a premium. It is a limited edition or special curation we ask branzds to be creative an where they can pop up. It is hard to think about the brand that is not planning to do a popup. We said 5,000. That seems too low to me to create a true instagramable experience which is half of what this is about. What is the true cost of these things well, in new york city or miami beach versus smaller markets, there is a huge range what is the most anybody has spent with you ive heard rumors about the barbie popup. With me personally more in the 50,000. Ill take the rumors about barbie. 500,000. It is not millions . It shouldnt be ill tell you why. In our experience, the timing should be somewhere between three days and three months. No longer. You want to be there long enough for people to know you are there and find you and check it out and think about a product and purchase something not so long that you tapped out resources. You want to get out before it starts to go down. What metrics do you look at in that popup life that will tell you or tell that retailer or designer or whoever there is legs to this and it is time to open up a brick and mortar that is a good example. This is a combination of engagement social media engagement with shares and likes and posts and sales. You know, feedback i think a lot of brands are doing this to test and learn testing new markets and products and price points. What is the most successful popup you have ever seen . Ever seen in your industry or business, what is the popup that every client walks in and says i want it to be i need to have that. The museum of ice cream, i think. So many people say to me, i want to do a popup like the museum of ice cream the museum of ice cream in my mind is more of an experience activation and certainly they sell merchandise, certainly. That is different than a brand presenting a full line of highly designed and curated merchandise. It is a flagship. Final question. I think we are looking at the image of that right now. How much do popups have to be not just for adults, but have to be about kids or family or Something Else how many . No,s that succeeded at the exceptional level. How much is strictly for adults or family or focused on children the larger popups bring in families and kids. Alexa meade did the popup in new york city with activities and events for kids and adults. If we wanted to do a squawk popup around the country, what would you recommend . What are you selling . Im selling you im selling you. Im not for sale. Joe and becky the people experience well talk. Well consult during the break and she can help us design the squawk popup. Go where your target customer is make it easy for them to find you. Dont expect them to travel too far or too long. Okay. Will you sit in that store . Absolutely. I think we should go to boca hamptons. Right for the audience. Thanks. Thank you very much. Coming up, Steve Liesman has been working to solve a mystery. He will join us to explain thats next. As we head to break, look at the s p 500 winners and losers from yesterday vo explore the world the viking way from the quiet comfort of elegant small ships with no children and no casinos. We actually have reinvented ocean voyages, designing allinclusive experiences for the thinking person. Viking voted worlds best by both travel leisure and conde nast traveler. Learn more at viking. Com. You got this. Lets go. Gobble gobble. Ive seen bigger legs on a turkey rude. Who are you . Im an investor in a fund that helps advance innovative sports tech like this Smart Fitness mirror. Im also mr. Leg day. 1989 anyone can become an agent of innovation with invesco qqq, a fund that gives you access to nasdaq100 innovations. I go through a lot of pants. Before investing carefully read and consider Fund Investment objectives, risks, charges, expenses and more in prospectus at invesco. Com. Good morning welcome back to squawk box on friday morning live at the Nasdaq Market site in times square. Dow at 18 points nasdaq off 23 points s p off a point right now. Ive been looking forward to this segment the wall street has job growth out stripping labor growth where are the bodies coming from this question persisted for months and months or years the one and only senior economics reporter Steve Liesman may have found them or at least some of them steve, you have the answer good morning, andrew. Yeah you found these people . You found what is happening . We have been out looking, andrew we have been searching i want to get to the answer. The fed thinks the job market is tight and potential source of inflation. What if it is not that tight economists of bank of america and the economists say the work from home phenomenon could provide the extra bodies this makes sense bank of america economist steve juneau wrote the rebound of labor supply in 2023 has been sharp and unexpected one argument is that increased work from home and Flexible Work arrangements pulled more worker into the work force. The prime age worker which is a full percentage point above the prepandemic period. Juneau says that is all from women and work from home which is a major role with higher wages. Economist steven davis found work from home strong with the Health Impaired into the labor force. His data showed people with Health Impairments work in greater percentages when they work from home the participation of those with the most Health Impairments in the survey is 2. 5 times higher when they work from home it goes further. Davis tells me work from home expands job options for remote and left from behind options with limited Job Opportunities work from home has gotten a bad wrap because of the concern workers can be less productivity that could, of course, hurt individual companies depending how they manage employees. The data suggests the broader economy benefits fuelling job growth that may not be as inflationary as the fed believes andrew okay. Why are you making a face, melissa lee . It is really, really interesting. If there are more bodies and more people able to participate, why are wages so sticky . Why are they going up . You know, i think thats part oftakes. It is not just the ability to work from home, but reserve wage of im not working unless i make x or y that is part of it i would not think of work intere from home as isolation. If you are a mother or parent and have child care costs. You dont want to go to work with the wage being the same as the child care cost. Who withsaid they would not out of bed for 10 grand . Kate moss steve, dont go anywhere. We want to continue this conversation former fed vice chairman Roger Ferguson who is a cnbc contributor. He doesnt get out of bed, i dont know what your number is these days, roger. Were glad to have you, ill tell you that. What do you make of what steve is saying and how do you think that play into the conversation around the table at the Federal Reserve . I think there is logic to it. Obviously, the notion that location is less important and you can still get a job is logical. To the point raised by me melis and the third thing is the ability and work from home world and work hours which are more flexible it is not just location, but time all of this is logical i think at the end of the day, what with the fed is also looking at here is the job openings and the larger labor force of force. That is where the Inflation Numbers point. It doesnt necessarily say the wage pressure is lessen quickly. Roger, my question is what do you do about that . Also, a correction it is not kate moss. It is evangelista who said that in her interview roger, given the blunt ind instrument of the fed, what can the fed do or not do about this . I dont think they can do much about it one way or the other. They can celebrate the fact we are getting more people in the labor force. There have been periods and they worried about disadvantaged groups not getting to the labor force and let the economy run hotter it is a general Overall Health of the economy which is a good thing. In terms of setting Monetary Policy is not relevant we want to see the labor force grow for sure. The supply demand imbalancing and there is imbalance they are worrying about. Is there more wood to chop for the fed given the numbers we have seen . I think the numbers have come in which is policl pleasing. Pleasing. Having said that, they may take a pause in september and decide to do one more move. We are on the cusp to decide if it is one more and done. As i say, they will be data depe dependent. The data is giving them a sigh of relief that the work is coming close to an end too early to say steve andrew, i dont like doing this i want t roger. If you look at wages, they have come down from much hotter numbers we had earlier this year there is still a little bit above from where the fed wants them to be whether that is inflationary depends on the productivity numbers. Andrew, since you are more of a tech expert than i am, i dont know what inning were in with the work from home we may have gotten to the point where people in the work force from work from home are already in the work force or maybe still more to go in the developing technology and management tech technique. I think there are Monetary Policy implications. We are in the middle of something extraordinary right now that defies explanation on the surface which is the richmond fed paper which said we brought down inflation for the first time in postwar history without an increase at least so far in the Unemployment Rate theres historic times and Interesting Times with different times. I think in part, they require different and interesting explanations. Roger if i could respond, it is okay to push back against me as long as you are polite and respectful the ultimate question has to do with Monetary Policy is two things one is the implication of produ productivity the thing which allows the economy to run hotter without increasing inflation is all about productivity we have to understand whether or not the folks work from home are as productive as coming into the office i think that question is still very much open the second thing, obviously, that drives the inflation question to the point that steve is making is the number of hours worked if you increase the number of hours worked, you have an economy larger without driving up inflation im not suggests having a larger labor force is irrelevant in terms of Monetary Policy, but it is important where at this stage, the question is supply and demand imbalance i think we can hope we can bring down inflation without dramatic increase of unemployment what powell said it is the number of job openings closer to the number of available workers. We will see how it plays out it is good news more people are working and good news to see disinflationary pressure coming into play. Real quick, andrew. Quickly. A bunch of tiny surveys show that the saved commute time and some going to labor. As roger suggests, some of it is going to work. That is something that employers are kind of noticing they may have less productivity at home, but they might be giving me more hours it is part of what we have to puzzle out here is what ill say. We have to thank roger and steve. To answer steves question on the tech side, it seems to me that, yes, the tech is Getting Better with the management of people remotely, but at the same time, the power that employees have and workers have relative to their employers is going down, not up as a result of that, it seems we are living more in a hybrid world. Not a fiveday world, but moving to a fourday inoffice world. You are seeing that pressure build up, i think, just given where the economy is well see how that shifts around or not thank you both, gentlemen. Coming up, new questions about the political future for senator joe manchin. That story is next later, do not miss the interview with alexis ohanian. He will talk x and a. I. And more get the best of squawk pod on your favorite podcast app and listen to us any time well be right back. Welcome back to squawk. Senator joe manchin will decide to leave the Democratic Party and become independent he said he cannot accept either party right now. He has not said if he will run for reelection next year, but will likely face a stiff challenge by republicans coming up, x Ceo Linda Yaccarino says advertisers are coming back to the platform. We will dig into the platform next you can watch us any time on the cnbc app how can you sleep on such a firm setting . Gab, mine is almost the same as yours. Almost is just another word for not as good as mine. Save 50 on the sleep Number Limited Edition smart bed. Plus, 36 month financing on select smart beds. Shop now only at sleep number. upbeat music woah. Constant Contact delivers the Marketing Tools your Small Business needs to keep up, excel, and grow. Constant contact. Helping the small stand tall. X ceo linda yakavaroina says they are having success. He is now, adam single. What do you think of his performance as ceo i think twitter needed a rebound and a new start. The point is not to bring back the 5 million it used to have. Its to create the type of wealth that google has. I dont know. The more you move to an adopting industry standards, do you lose the elon musk takeover . Do you bring it back to the center . You can do it with moderation and safety. I would think about the 80, 20 roll. Our student did a good job bringing it yesterday. Maybe hundreds of thousands of advertisers. You want to think big. If i am a flower shop and i give twitter money, can i get sales . Adam, there are two questions. One is why is it that advertisers have struggle is struggled so much . Elon musk in the last 10 years in terms of it being that interface, whatever it is has not been as an effective mouse trap for advertisers as for example instagram or facebook or google. What is it fundamentally about the products that needs to change . To me, thats the fundamental question, have they changed it . You are right. The only question that matters. Advertisers are not working with google and spacex because they love the brand. Reason is because it works. Have you seen any signs that they are doing that . As of right now . Yes. I see the way to bring in products to market would be to youve seen the pace in which products are coming to market so much faster. I like the products. I think the feature set for the consumer side has improved generally speaking. On the advertising front i have not seen a shift in terms of the ui on the way ads are served to me or the uniqueness of the ads. I heard kelly talking yesterday about how she was getting cheech and chong pot ads. I wonder to andrews point, if advertisers, even if they are lured back, if that flower shop gives them money again, will they get those sales . I think it will take time. The other piece of it linda mentioned that cocacola and allstate had come back and if you go on to twitter or x people are showing ads from cocacola and allstate that are literally next year stuff thats not kosher. At minimum. The question is whether those brands may be back on the platform, but how long do they stay . I am for free speech but the whole idea is that its free speech on one end and affect tivoli at odds with the idea of advertising. My opinion is those things will easily get sorted out. If there is a problem now it will get fixed tomorrow. Advertisers big and small are not afraid of the safety and branding of acts x. The question is, will it work . Is the only main question we have. The question is what will they do . Thank you. Coming up we will show you whats moving in the markets right now. Stuff to watch plus reddit cofounder joins us live. Has no a goldmine. Well she doesnto a know that if she owns a Life Insurance policy of 100,000 or more she can sell all or part of it to coventry for cash. Even a term policy. Even a term policy . Even a term policy find out if youre sitting on a goldmine. Call Coventry Direct today at the number on your screen, or visit coventrydirect. Com. The citi custom cash℠ card automatically adjusts to earn you more cash back in your top eligible spend category. Hi. You dont have to keep tabs on rotating categories. This is the only rotating i care about. Or activate anything to earn. Your cash back automatically adjusts for you. Can i get a cucumber water . Earn 5 cash back that automatically adjusts to your top eligible spend category, up to 500 spent each billing cycle with the citi custom cash℠ card. I love it. [voice vibrating] the first time you connected your godaddy website and your store was also the first time you realized. Well, we can do anything. Cheesecake cookies . The chookie manage all your sales from one place with a partner that always puts you first. we did it start today at godaddy. Com i need it cool at night. You trying to ice me out of the bed . we did it baby, only on game nights. You know you are retired right . Am i . Ya save 50 on the sleep Number Limited Edition smart bed. Plus, 36 month financing on select smart beds. Shop now only at sleep number. Good morning, inflation watched a two. More data following and what the economy is telling the market about the future of Interest Rates. Trucking breakdown. A Major Company goes bankrupt. Is the road ahead going to get worse before it gets better . And a venture capitalist and reddit cofounder have a discussion on how to get advertisers back on the platform. The second hour of squawk box begins right now. Good friday morning. Welcome to squawk box. Joe and becky are off today. We have a lot more going on. Inflation data today. Set your alarm or do what you have to do. 830 a. M. Eastern time expected to rise by point 2 . Right now going into that number dallas would open off of a hunch for now. We will see how this moves around. Lets take a look at this mornings premarket movers. A barrage. A couple of interesting analyst calls this morning and some interesting names. We will start with cisco systems. Right now their shares are just up affectionately. We are getting some positive comments from analysts. Cisco systems of about 2 10 of 1 . Theres also Stanley Black decker, the company known for outdoor tools, getting downgraded to and underperformed wilford search. They cited economic concerns. Stan and black decker are off on that tree. Speaking of housing, tools and et cetera. Have earning reports due out next week. I lot of the focus will be on what reports tell us about the consumer, the behavior in the face of inflation and what the outlook will be . Andrew, home depot and walmart. Thank you. I want to turn to the markets. David care. You seem more positive today. When it comes to Interest Rates with think the economy has been resilient enough that they can stay where they are. Why not take out some insurance when the Unemployment Rates only 3 1 2 percent . The economy is good enough no thanks to jobs and service consumption. We have a situation where the economy , Earnings Growth has been very stagnant in this quarter they will be down 4 year on year. This conversation has been going on for a long time. We still think we will see quarters of small groups. The bigger point would be there has been a lot of celebration about there not being a recession. I think what people will come to realize is the growth is also not that great. Many Equity Investors have forgotten about market. Dont think they will be up that from a year from now. What about kids watching . Take a look at fixed income. I do focus on equities and our equity active equity status. The main reason for the attack to the healthcare is because its a reasonable price. They are going through a hard patch in terms of earnings, but this is not a bad place to be. Big pharma somehow all of the people who are holding the magnificent seven. What about the great eight. The 10 Largest Companies in the s p which were just named almost a third of the s p 500 so if you owe the u. S. Equity market you the nature of the s p. This year we have been more cautious trying to find other sectors. I think the market does get the downward. People say, these Interest Rate like its not enough growth. These are great companies. It is the marketing that is overly demanding. We saw a change in leadership takeover. You need buoyancy and resilience in the market. The tech sector is the second largest. We will leave it there. Deadly wildfires in maui, hawaii. Want more from your vitamins . Get more with natures bounty. From the firstever triple action sleep supplement. To daily digestive support. To more Wellness Solutions every day. Get more with natures bounty. Squawk box weekdays 6 00 a. M. Eastern and streaming live on peacock. Your shining a spotlight on wall street downs. I want to do paint a different picture. A lack of diversity is a problem. Wow, you get to watch all your favorite stuff. Its to die for. And its all right here. Streaming was never this easy, you know. This is the way. You really went all out didnt you . Um, its called commitment. Could you turn down the volume . Here, you can try. Get way more into what your into when you stream on the xfinity 10g network. Welcome back squawk box. The wildfires in maui have left at least 55 people dead as well as the resort town of lahaina in ruins. Reporter this ranks as the deadliest u. S. Wildfire in five years since the camp fire in california killed 85 people. Crews are still searching for and what locals are saying happened, lahaina is just charcoal. Mick fleetwood of Fleetwood Mac owns a destination spot but there is a note on the website, closed until further noticed. What we need to realize is is the center of malley and in truth, i can mentioned that that is completely and utterly gutted. Its gone. Its literally god. Its very disturbing. There were pictures, before and after. We all have our own stories. My story is obviously steeped in not only the town but what happened over the last 10 years or so of running this crazy restaurant. That right now is a breath to take but also a breath to take and say we will rebuild this. Optimistic view this morning. Woodys Risk Management Services Reports 33 thousand acres gone. In central malley another 700 structures as up to half 1 billion potential exposure. By the way, fleetwood has a house in that particular area. Accuweather now was put out an estimate for the total cost of damage and economic loss. It is just devastating to see. And i think, melissa and andrew, this affects a lot of people who are not in hawaii because so many people have visited lahaina and you see it like that, it unrecognizable and heartbreaking. How are the Insurance Companies going to process these claims . Already theres an army of volunteer agents i talked to state farm late last night and they said they are starting to get hundreds of claims in. It doesnt seem like a lot but think about it, on this theres no communication so processing a claim is impossible right now. At last report they also do not have the fires completely contained. I talked to a state farm agent who said to state farm offices, you things in order to accommodate, he will have to put in his office to get the help he needs. Its remarkable. State farm by the way is the largest property insurer in hawaii. There will be a big insurance impact here. Thank you. Coming up, the Trucking Industry bank writedown. We will find out if there are more speed bumps ahead. For todays aflac trivia question. Which state is known as the snack food capital of the wod . Rl the answer gaaaaaaaaaaaap i think this goat is saying gap. must be talking about the Expenses Health insurance doesnt cover. So whos talking about the money aflac pays to help close that gap . Gaaaaaaaaaaaap aflac aflac gaaaaaaaaaaaap its about to go down, baby aflac aflac stop that goat get help with Expenses Health insurance doesnt cover at aflac. Com try the cn vc investing club with jim cramer. During the cnbc investing club with jim cramer. Go to cnbc. Com invest in club now. Now the answer to todays aflac trivia question. Which state is known as the snack food capital of the world . The answer . Pennsylvania. The state is one of the largest producers of canned fruit and vegetables salty snacks. The Trucking Industry has been detoxing since shipping rates and demands have soared during the pandemic. Will the road ahead get worse before it gets better . Ceo craig fuller. Great to have you with us. And we heard from u. P. S. That demand in north america was last. What do you see in the data so far . Been a really difficult start. We really saw a collapse in the goods demand for the goods shipping and supply chain largely related to inventory. Manufacturing is down significantly and this tells us we see the end of the covid cycle and we see a much more cautious economy. Is this a normalization there is some normalization but i think the big challenge for the Trucking Industry specifically is that there has been massive gross and capacity. If you go back and compare where we were in 2019 oh 2018 youre looking at levels that are certainly above in terms of volume. Approximately 92 on the level. That doesnt sound bad into you realize we have added 25 more capacity in that time. So we have a Massive Holding capacity. This has been an industry that offers a lot of opportunity and has no real barriers to entry. We are seeing in certain parts of the economy, particularly consumer discretionary, seems to be really struggling right now where is things like grocery is doing better generally. One of the interesting things we saw is that things are more exposed to things like infrastructure related to the infrastructure bill and it actually looks like its breaking out of seasonal norms ands probably related to all the government stimulus that was put in. That makes a lot of sense, craig. What sort of freight did yellow specialize in or what trucks did they really have and who has that sort of overlap with yellow . Ltl is the talent and one of the advantages of lto is is not easy to replace that capacity. Removing 9 of the capacity at the mark really helps. That really helps our company psych art fast. This bill needs to i think the industry will probably be right for the production but when we look at truckload and its anywhere from 15 to 18 times the size. Is an unfortunate reality but trucking like other commodities operates on the fundamentals of supply and demand and unfortunately we installed a massive increase in capacity in 2000 and 2021 that we are still dealing with. Craig, thank you. Thank you for having me. Reddit cofounder will join us. An latest push to win advertisers. The latest tax battle on capitol hill. All that and more. Stay tuned youre watching squawk box. A beautiful shot of the capital. A beauto shopify. Its thepital. Challenges that we dont expect, like a site going down or the checkout wouldnt work. Whats nice about shopify is when im with my family, when im taking time off, knowing that i have a site up and running and our business is moving forward because we have a platform that we can rely on. That is gold to us. Start your free trial at shopify today. School is back and Dicks Sporting Goods has everything you need to gear up so you can show up. With the widest selection of shoes from the hottest brands like nike, jordan, on, hoka and new balance. Plus, trending styles from crocs and adidas. When you cant make it to the store, dicks. Com is always an option. And, with our best price guarantee, if you find a lower price, well match it. With looks this good, its never been easier to sport your style. Cnbc, live ambitiously. Tomley on we are about one hour away. From the release of the Consumer Price index. Nasdaq off 10 points. Meantime, x corp. Formally known as twitter making a play to its great to see you. I am so curious to hear all of your views and hats happening in the x face and advertising and ai and everything else. Whether you think this changes the game will whether you think they can attract brand advertisers, where the free speech is at odds with advertising. I was going to say ama, but you have already begun. I feel like i can empathize quite a bit having come back to read it in 20 13. A big part of the work that i did with our sales teams was to basically let a lot and bring into the mainstream reddit as a platform and as a product and as a home for everyone including advertisers. And that met hard changes but important ones. Obviously a lot of success came from that. I think linda is a savvy ceo. I have to admit, and you had me on talking about the steer like one year ago dashed back i said dont bet against elon and the reality is maybe he has brought shipping cadence. To twitter or to x that is formidable. It is something that Great Software companies do relentlessly. I even told the team internally here this is something i wish we had done at reddit because its a way for advertisers to really choose their own adventure in terms of tolerance and whats also important is twitter realizing that there is no guarantees in our constitution for freedom of breach. The reason i thought this issue was interesting was because, you know, one of the things i think that elon has tried to do is this is a totally different platform. Before it was a freedom of breach issue. People might be posting which you are blacklisted and shadow band. And effectively linda is doing pretty explicitly. There is a certain amount of this that is marketing and the perception of at the end of the day every platform on any kind of skill has to do some amount of speech production. We can all agree that spam is something and you would think that would be pretty easy because no one likes spam even the definitions of that enter a gray area and thats for all these spend their time. It does feel like this is a paradox. It is a bit of a red herring. People want a platform where they can be a authentic version of themselves. Also pretty reasonable guidelines. I think its a never ending battle is probably part of the reason why elon hired someone like linda to have to handle it day to day, because these platforms have to at the end of the day, these are businesses that want to be approachable and successful to just about everyone in the good news is the vast majority of people is theres no the risk that platform . Just the association on the platform. I think 15 years ago these are the type of conversation we were having. Today i think we are in a very different culture. To use the grimace shake phenomenon on tick tock, if you had told me 15 years ago that a major brand like mcdonalds would want to even link to a campaign where one of their beloved characters is making a shake that murders people. Theres absurdity and weirdness and riskiness. I think that we have all i think as a society we have come to understand that just a part of being engaged with internet culture and again, there is a strong the problem is you will spend the vast majority of your time actually trying to walk that line and its an important one, but at the end of the day is this is where attention is and continues to be it continues to grow so solid there is attention twitter has gotten eyeballs for a very long time. The issue i think has been building a mouse trap, if you will, for advertisers that is effective. On a regular basis really breaks through. And that is something that for reasons that have been inexplicable to me relative to looking through instagram, that they have struggled and been challenged by. Whether you think that changes under this new regime . Or is there anything you have seen thus far that shows it changed . I have always felt like advertising was the least exciting way to monetize the website. I do think the recent changes for creators to be able to be paid out and the same people post the hundreds of dollars thousands of dollars that they are making. That will be a new narrative. I think if you can start to build more Business Models that are not reliant on purely heres an ad where you click on it and instead say this is a great benefit for our power users or when you start aligning the interests of users within the interests of the building i think really exciting stuff start to happen. Give me some ideas about that though. Maybe very explainable to you. It didnt seem to catch on the way that elon had hoped. Maybe you can make it up or make a lot more hrough financial payments. Selling advertising, she did that for this company Nbc Universal for a very long time remarkably. Assume that that directionally shows at least. Platforms like discord and twitch have done pretty well. I would not count out twitter x, x premium. It will take a minute for me to remember. I wouldnt count those out. Twitter is still a place for business. Its a place for people to actually build their back brand and the reputation. Folks in tech and business and you start looking in at a place. You hear these rumblings now. Theres an argument for the value of twitter as a business platform whether its for recruiting. Whether it for Building People relationships with folks who are looking to level up their career. Theres a whole another type of tools because that data and that social graph of followers as well as influence is really valuable in business and i would be surprised if they drink a little bit of lincolns milkshake over the coming year. And thats a business that can play better with its a very different relationship. Before you go i want to talk a little bit about ai. Im curious how ai is fact to your life on a daily basis. What do you actually see on the ground . I think you can put it into practical terms for us. Ive been doing these weekly updates around these breakthroughs. His new ones every week which is exciting. Its a great time to be a builder. We are incorporating this technology into the operating system so whether its helping us draft social media content or draft intro emails, we are using this technology and it is running off of chat gpt. There is definitely fools gold in the space and so we have been thoughtful about investments. This new tech is exciting and exhilarating. I still think the big winners will be big winners and i will actually be speaking at the j. P. Morgan robin had investors conference was someone very important in the ais base. Its an exciting time. The biggest winners right now are the builders. There are people posting on reddit about how everyone in the office inc. They are a superhero because they have this power of drafting memos 100 times faster. One thing, they read these and they are executed in a certain way and it doesnt sound like a human wrote it something about the language that think okay, maybe somethings going on here . The way we are solving for that now is we are generating the first 99 of the work with ai and the last 1 is being done by humans so the roll is getting good at everything. Tools are still pretty new and they will get much better and i think ironically 10 years from now inserting thoughtful typos will actually be the signal of humanity in a weird sort of way in terms of the way we perceive it. I do advise people against just going full ai. Much more ahead. A tax battle that could have a big impact on the gig economy. Brian sullivan will have a use of interview with florida gov. Ron desantis. fan 1 there ya go thats what im talkin about josh allen is this your plan to watch the game today . hero fan uh, yea. I have to watch my neighbors nfl sunday ticket. josh allen its not your best plan. But you know what is . Myplan from verizon. Switch now and theyll give you nfl sunday ticket from youtubetv, on them. hero fan this plan is amazing josh allen another amazing plan, backing away from here very slowly. fan 1 that was josh allen. fan 2 mmhm. vo for a limited time get nfl sunday ticket from youtubetv on us. A 449 value. Plus, get a free Samsung Galaxy z flip5. Only on verizon. You know doug, ever since switching to workday youve been a real rock star. Rock star . What do you know about rock stars . Billy idol . I mean wheres the skintight leather . My shoes are leather. Wheres the unnecessary zippers . That thing billy, rock star is just how doug feels when he uses workday. Thanks, rory. Ill show you rock star be a finance and hr rock star. Workday. For a changing world. Billy idol just stole your golf cart instability around the world. Market disruption. Today we face challenges never seen before but the solution has never been clearer. Out here an answer for a more stable world. Im here, new technology will drastically reduce admission. Out here Fast Solutions will power our i just want to break the door wide open for everyone that looks like me. A text badge or another hurdle for Small Business . That is the debate, after this. For the third Consecutive Year the number of hedge funds on Interactive Brokers platforms increased at a higher rate than any other leaning bank. Interactive brokers serves organizations and individual investors. Nice footwork. Man, youre lucky, watching live sports never used to be this easy. Now you can stream all your games like its nothing. Yes thats what im talking about. [ cheers ] running up and down that field looks tough. Its a pitch. Get way more into what youre into when you stream on the xfinity 10g network. Wow, you get to watch all your favorite stuff. Its to die for. And its all right here. Streaming was never this easy, you know. This is the way. You really went all out didnt you . Um, its called commitment. Could you turn down the volume . Here, you can try. Get way more into what your into when you stream on the xfinity 10g network. Welcome back to squawk box. The next big tax battle on capitol hill could impact side hustles and payment apps robert frank joins us with more. Whats going on here the House Committee recently enacted legislation that would require them to send 1099 form for anyone earning more than 600 a year. The irs postponed that rule until the 2024 tax year and thats this year it cited confusion and lack of gu guidance republicans are using the time to try to change it. They want to raise the 6,000 limit to 20,000 and saying a customer has to have over 200 transactions over the year and they say americans shouldnt be harassed for, say, selling a couch on e bay or buying concert tickets. And by the way, if you sell a couch or car for less than you paid for it, thats not taxed or reported because thats not a capital gain right now half the income that flows through the Third Party App is going unreported that has added to the 500 billion a year that goes uncollected by the irs. There are proposals to lift the threshold to 10,000 maybe they do a salt deal where the democrats get salt relief maybe up to 10 or 20,000, right now its a 20,000 cap in exchange for a 20,000 cap on the gift tax so this could be a good negotiation that also rolls in salt robert, stay where you are. Were going to bring in steve rosenthal. And erica from the Tax Foundation steve, you think this is a good idea and what do you think the limit should be . I dont think back sliding on information returns is a good e idea bad return its the foundation of our voluntary tax system our goal is to encourage a voluntary compliance and help the irs determine whether taxpayers have properly reported and we know, as robert said, that information returns dramatically boost compliance. Without information returns, more than half of income is not reported and let me just finish by saying information returns dont increase taxes, they only help determine taxes already owed and information can help both taxpayers and the irs properly determine the tax liability. Erika, i think youre on the other side of this what i dont understand is dont we care about accountability in this country dont we care about the rules and laws yeah, so i agree with steve going all the way back to 20,000 and 200 transactions isnt the right move we know when that was the status quo we had a problem of workers not understanding or having the information they need to meet their Tax Obligations. Just because the old status quo isnt the right answer i dont think going all the way down to 600 is the right answer either when we look at the compliance and Administrative Burden that it could create by capturing or bringing in activity that shouldnt actually be on those information returns thats not actually business income and it shouldnt apply to those categories, but if you set up a payment app incorrectly, if you check the box that its for a good or service when youre really just paying your friends and family, you could find yourself getting a 1099 in the mail for something that isnt actually business income it falls on you to contact that app and issue a correction to the irs and that delays when people can file their returns and see their tax return processed so i dont think 600 is the right answer. Thats one of my questions. Im all for everyone paying the taxes that they owe but thats based on the premise that the payment apps are going to be accurate if you have 20,000 are 30,000 at the end of the year because your roommate reimburses you the rent on your venmo or paypal and then they send you a document to report that income, thats going to be relying on the irs for what could be a major tax hit. Well, robert, i think the companies are pretty capable and erica and i agree on the value of information returns theyre really nonobtrusive in terms of a business filing them. Virtually negligible in cost you raise a good question, robert, on mistakes and the like but look atwhat we do with w2s and 1099s and necs we have a 600 threshold thats worked quite effectively for decades and decades. And so, yes, you raised some issues one of the problems with some of the 1099k forms, for instance, they are gross receipts. And so that puts a burden on the taxpayer to come up with deductions i think that the irs has made a big mistake by delaying on guidance to make life easier for both the reporting companies and the recipients its not that hard to do the irs could clarify that occasional sales are not subject to reporting, for instance, only commercial transactions, which is what congress directed the irs to do in the legislative history. And maybe if its still a problem, maybe you raise the threshold for sales of goods but not for services but heres the issue when you start having different reporting requirements, different from the uniform 600 for w2s, part of the proposal you did not mention is to increase the reporting threshold for 1099 to 5,000 and for 1099ks to 20,000. Similar transactions have different reporting, thats confusing and a problem on its own. Erika, what should the level be and where do you think it shakes out this may be the most hated tax change in america from what i can tell from the responses on the internet and twitter what do you think the right threshold should be . Id say somewhere in the range of lets say 5,000 to 10,000 ideally this is something Lawmakers Debate and they could get a study done on it in terms of wheres the sweet spot in terms of helping earners understand their Tax Obligations and meet them without putting the burden on everyone else. This shouldnt actually apply to them okay. We got to leave it there erika and steve, thank you robert, thank you. Happy friday squawk box will be right back. Big hour ahead we get that number at 8 30 sfx people celebrating sfx people celebrating sfx Stock Exchange bell ringing jack were standing up for our right to be lazy. jan sfx by sitting down. Ing ronald and reclining back lyn we work fulltime and parent fulltime. lyns husband we will be reclined until further notice. andi its our right to let the dishes soak overnight. rob and to mow the lawn. Tomorrowish. ben we proudly declare that yes, we are still watching that. ariel and no, we wont be cooking tonight. damon we, the lazy, are taking back lazy. doreen . By getting comfy on our lazboy furniture. vo lazboy. Long live the lazy. Good morning inflation data yup, its acoming on the way in less than half an hour from now. Meantime writers in hollywood heading to the negotiating table today on day 100 of the strike and well tell you coming up about an epic location for the fight between them the final hour of squawk box begins right now welcome back to squawk box right here on cnbc were live at the Nasdaq Market site in times square joe and becky are off today u. S. Equity futures have been moving around all morning. Up, down theres no like trend here to tell you about dow was just 5 points, now down 3 points, s p 500 off about 3 points as i said, were going to be getting some important numbers coming up in just about a half an hour that could switch this all around the 10year note at 4. 1, the 2year at 4. 823. Now forget the number, folks. This is the story weve been waiting for. Weve got an update. Are you ready are you sitting down we have got an update in the ongoing drama in the proposed cage match between elon musk and mark zuckerberg. Elon musk tweeting in just the last hour, the fight will be managed by my and dziuks foundations. I spoke to the minister of culture and they have agreed on an epic location everything will pay respect to the past and present of italy. He said he was having an mri this week to see if he needs surgery. An epic location would in fact be the coliseum. We get this important story in the morning it was the first story out of the gate, after the futures, the cage match i hope hes having the mri. I hope his back is okay to do this well see, well see. I dont know what to make of this we live in a Civilized Society have i twin boys who live up to both of these gentlemen. I would prefer they do this as a debate rather than a physical match. Why do we need to have the they think of these guys as heros. But this is very civilized. Its not just like a brawl on the street its in the coliseum. Its in the coliseum, they both agreed to it, both train for it properly. I think its just as civilized as a discourse in this particular instance because theyre both adults, consenting, et cetera. I dont know. I dont know i dont know how i feel about this actually, i do know how i feel about this i want to get over to our senior markets commentator mike santoli, our cage match specialist hes been doing some analysis of who might win that fight ill do my best to honor the culture of it live as well take a look at the s p 500 here. Kind of still in this stuck zone a lot of opposing currents keeping the s p right around or pee low this 4500 level. Its essentially making a little bit of a trip, maybe 1 above this 50day moving average some chop over the last four weeks, dealing with those higher treasury yields and people are rethinking what that means for higher for longer rates, oil perking up as well so right now it still seems were consolidating. This area almost exactly one year ago, its a year ago next week, it was jackson hole, that was the summertime peak of the market 4325 was the intra day high and that also brings you back to late june levels here. Some eyes on that as a potential place to sort of define if were still in the upper end of this range. Take a look at some of the big caps the two biggest stocks in the market relative to the s p 500 over the last year you see how the balanced portfolio has been very, very low drama really over the last year most of the down side happened in the first half of 2022. They then you have this overshoot by the big guys and now kind of reverted back toward the mean and no longer on a oneyear basis outperforming by that much this is part of what many people would have said needed to happen in the market, apple, nvidia, and i mentioned Oil Prices Also add an interesting spot on a twoyear chart in the low 80s for wti crude. It also takes you back to what i would call the preunkrainian invasion high. Also moving in favor as well, weather and natural gas surging. It seems in an acceptable zone with whats going on with wages. It complicates that goldilocks sweet spot tune in 6 p. M. Tonight. Maybe with the special, we can do it then we should promote that mike is going to be hanging out with josh brown tonight thats at 6 p. M. A cage match . I would give it to mike theres a size differential, though sort of a similar situation. Meantime back to business, whole sale Inflation Numbers, 8 30 eastern time with the july producer index joining us to talk inflation in the markets, the head of Market Strategy and fixed income at jpmorgan doesnt even know where she is at this point what are we talking about . Im ready to talk about the other epic match, between the inflationisters and recessionistas recessionistas are losing i guess. So far it really has not turned out to be the year of the bond, which was certainly our view coming into this year that the economy was going to prove to be stronger but most importantly in the absence of anything breaking down, the fed is not going to deliver these very aggressive cuts that were being priced in earlier in the year and i dont think its going to deliver them even possibly in 2024 because again, just because the fed at some point in the next few months, if its not already, will be done hiking, doesnt mean it transitions to cutting in the absence of something breaking down dramatically i think this is not being priced into markets the longrun is higher you do think that bond activity will be elevated, but within that band have we seen or are we close to the peak in rates . I think that theres going to be some chop here because nothing is ever up into the right or down to the right but i think that its very possible that a number of factors are coming together here to continue pushing the long end farther, which is really where the pain has been, right, because the short end has been kind of anchored pretty high for a while now and that is of course the fact that you have these treasury options the latest one was weak and we saw the effect yesterday pushing yields higher. Theres a tremendous amount of issuance thats been announced by the treasury and its not clear where the demand will come from to satisfy all that issuance either though year to day youve had record flows back to treasuries foreign buyers are not present in the same way. Banks are full and not adding to their treasury, et cetera. You also have this idea of possibly a higher longterm premium as necessitated by this latest downgrade and all this fiscal spending. You have a tremendous amount of data thats still to come. It is really not necessarily over as far as the inflation fight. Were seeing Oil Prices Tick up. Were seeing food prices move up and shelter is very sticky and Poor Services continues to be a very, very stubborn inflation point. And we know its focused on that, just not outside the realm of possibility that we will see a bounce off of the july number in inflation in august and we could kind of bounce around here for a while and the fed could, you know, try to declare victory around 3 as opposed to the 2 that they targeted historically. And finally, i think its also important to realize that this sort of soft landing, idea of a soft landing in the economy, it doesnt have a specific timeline where you can say, okay, this is soft landing now because the economy and business is always moving at what point do you declare that a victory i think were staring at an extended period of high rates and well live at volatility levels that encompass the previous times i guess its sort of a small increase but still an increase but knowing that the fed is closer ultimately to the end than to the beginning, does that mean that volatility gets dampened because of what the fed does at this point i think whats going to be driving now is not whether were closer to the end, because i think everyone understands were closer to the end than the beginning. Even if there are four more hi hikes. We got most of them in how long are we going to sit here the long run was around 5 maybe we dont get back there for an extended period of time but its no longer zero, its no longer one and its probably no longer two and if its in the threes and fours, what does that mean for an extended period of time in thats not priced in for information risk or credit risk. You see softness in equities . There is possibility that there could be softness in equities we the credit, were seeing defaults and that drum beat of defaults will continue and our view is that you can have that default cycle and credit and tremendous credit repricing, possibly even in the broader economic sessions. You can have a number of industries go through that so i this there will be very interesting opportunities for investors with liquidity, but right now you are still paid to wait because those cash yields continue to outperform for the third year in a row as far as bonds on concerned thank you coming up, thank you for all the fighting language. Were going to talk to policy analysts who is warning that business in china may be uninsurable. And coming up, well bring you the inflation data and the Market Reaction as it happens. Squawk box rolls on after this so why do we leave so much Untapped Potential on the table . This is a next level bed, for a next level you. My circadian rhythm is kicking your circadian rhythms butt its not a competition. I know, but im still winning so, it is a competition. Save 50 on the sleep Number Limited Edition smart bed. Plus, 36month financing on select smart beds. Shop now only at sleep number. fan 1 there ya go thats what im talkin about josh allen is this your plan to watch the game today . hero fan uh, yea. I have to watch my neighbors nfl sunday ticket. josh allen its not your best plan. But you know what is . Myplan from verizon. Switch now and theyll give you nfl sunday ticket from youtubetv, on them. hero fan this plan is amazing josh allen another amazing plan, backing away from here very slowly. fan 1 that was josh allen. fan 2 mmhm. vo for a limited time get nfl sunday ticket from youtubetv on us. A 449 value. Plus, get a free Samsung Galaxy z flip5. Only on verizon. Every business thats why comcast business de is launching theal. Mobile made free event. With our business internet, new and existing customers can get one year of unlimited mobile for free. Its our best internet. Powered by the next generation 10g network and with 99. 9 reliability. Plus one line of free mobile for an entire year. Its the mobile made free eventhappening now. Get started for just 49. 99 a month. Plus, ask how to get one free line of unlimited mobile. Comcast business, powering possibilities. President biden calling chinas economic problems a, quote, ticking time bomb for the world. He said chinas problems are worrisome because, quote, when bad folks have problems, they do bad things speaking of china, our next guest is out with a warning in a wall street journal oped saying your business in china might be uninsurable. Joining us is a senior fellow in policy at aei what do you mean by uninsurable sp. Literally what it says on the tin. So the insurance that these countries need in volatile countries is Political Risk insurance and thats what you buy when you operate in any country thats essentially not a western liberal democracy so Companies Want to buy that in china now because they feel china becoming less stable so last year 68 of companies bought Political Risk insurance in various companies, up from 25 three years ago. So they are feeling the world becoming less stable, but in china they are now struggling to buy Political Risk insurance because virtually nobody will offer it anymore very few insurance providers will offer it. So what do you do as a western company or any Company Operating in china the question i would ask is the Political Risk of doing business in china the function of the Chinese Government and the risks that the Chinese Government represents or presents or is the suggestion that actually the risk is actually the risk that the u. S. May present to a company doing business in china who says actually you got to get out of there . Its domestic Political Risk so the sort of risks, scenarios, that it covers is coups, political interference all the way up to war. Hope hopefully at this point there wont be a war involving china all the other things are scenarios that are increasing with chinese authorities interfering against western consultants and even against jack marr. So these are concerns or scenarios that would be covered by Political Risk insurance, which is why companies are keen to get it. What is the cost of this type of insurance how is it priced its priced according to what level of assets you want to insure and thats another absolutely fascinating development, recent development with regards to china. So whereas Political Risk insurance used to insure all the way up to 2 billion worth of assets, the few remaining ones that do offer the insurance now, the coverage now, only offer it up to 50 million, which is nothing, as you know, for companies. And then also with a lot of Strings Attached so it is a new reality for companies. Are there lots of examples where the Risk Insurance has paid off, meaning these Insurance Companies have actually had to pay out . So thats something thats confidential between the companies and the insurers and sometimes youll see things leak into the Public Domain but we really dont know what agreements they come to. I would be very keen to know what assurance they had and whether the chinese raids and the resulting losses, whether thats covered by their Political Risk insurance if they have Political Risk insurance. What is the difference in the price of Risk Insurance doing business in china than say in venezuela . In both cases you would be well viezed advised to have insurance. And so its priced according to well, the insurer and im just thinking venezuela would be a lot more expensive, the insurance would cost no yes, it would be compared to the size of the market but we should remember that companies in china have massive exposure to the market. Only a few years ago the country of china were a relatively safe company and many opted not to have Political Risk insurance and now they are discovering they need it and they cant get it its a fascinating unique corner of the world and speaks volumes about a lot more than just the insurance business. Elizabeth, thank you so much for joining us this morning. Coming up, hollywood writers and studios heading to the negotiating table today after more than 100 days on strike thats next. And you can get the best of squawk box in our daily podcast, squawkpod. Theres some movement in the standoff between the Writers Guild and studios as both sides head back to the table today je juli Julia Boorstin joins us. They are restarting negotiations since the first time the strike started on may 2in. A hundred days is how long the last strike started. And the statement says all of this comes as the strike has already cost the california economy an estimated 3 billion. Thats according to the professor of Entertainment Industry management at cal state northridge and there are other markets that have a big Production Base just this week the emmys announced they are delaying the show until january and the number of studios are considering delaying more releases from the fall to the spring because they wont have the benefit of actors to promote their film on wednesday bob iger struck a more conciliatory tone than last month. Take a difference. I have deep respect for all of those responsible for the engine that drives this company and this industry. It is my further hope that we further find solutions to the issues that have kept us apart the over the last two months well see if that puts pressure on the screen actors guild. Andrew so even if a deal gets struck, how long does it take just from a contractual standpoint, could a deal be reached in principle and gets papered up in lawyer speak how long does the papering part take i ask because a lot of people are thinking about this deadline even if you get a deal over the next week or two, does it really then get pushed out into september, maybe into october and they be also where do the actors fit into all of this . I do think just to start with the last part of your question first, i do think if the Writers Guild strikes a deal, that does in many ways create a template for some of the issues where there is overlap between actors and writers, specifically the issues of streaming residuals and also this question of how to handle a. I as to the timing, im not exactly sure how long it will take for a deal once it is agreed upon to be papered and people to get back at work, but one stat, one number i keep hearing a lot is once the deals are made, it takes about six weeks to ramp up production. Once you say were back to work, its going to take six weeks to be able to start shooting something again. Julia boorstin, tnkha you appreciate it. Stay tuned. Youre watching squawk box on cnbc opportunity is making the dream of Home Ownership a reality. And driving the world forward to a Greener Energy future. [applause] sometimes the only thing standing between you and opportunity is someone who can make the connection. At ice, we connect people to opportunity. Please dont go by harry casey, Richard Raymond finch sfx ping please dont go please dont go. Please dont go please dont go dont goooooo dont go away please dont go welcome back to squawk box. Rick santelli here, live at cmehq with important breaking news on this friday, Producer Price index for the month of july headline number expected up. 2 is up. 3, the hottest since may. Oh, excuse me, thats the hottest going all the way back to november when it was up. 4 of 1 so we want to pay particularly close attention to what the markets are doing. Rates just turned around strip out food and energy, up. 3. Strip out food, energy and trade, exactly as expected, up. 2. Before we go on, reobstetricians started coming in, last months headline at. 1 up zero yearoveryear final demand up. 8,. 1 better than expected and. 8 on year over year, its the hottest since may when it was up. 9. And food and energy, up 2. 4 ,. 1 better than expected, pretty much equal to the rear mirror, also up 2. 4, which was the lowest level since january when it was up. 9 and however, last month it was released at2. 6 and now becomes 2. 7. So we see that all of these metrics are a aboubit hotter bue progress is more substantial just consider the twoyear over year numbers have two handles, unlike what we observed yesterday in the Consumer Price index. We see that yields have jumped we were at 480 were now at 482 the 10year now down and theyre down about 38, 39, 40 points generically speaking, i would think after we see the volatility here, most likely were going to be going back to the mold that weve had all week, that is the longer maturities are a bit stubborn, short maturity are a bit more well behaved and just to throw this out there for those of a mind to remember the brexit days, todays preliminary gdp was up. 2, and it certainly seems as though the u. K. And the central bank has a lot more to contend with with inflation because their economy is doing better rick, stay with us. You mentioned the pop in yields. Were particularly seeing the impact on the nasdaq futures, which has doubled the losses premarket. Steve liesman and e. J. Antoni. Steve, what do you make of this data compared to what we saw yesterday . Its all coming from the service side, a lot of it coming from the trade Services Side this is a measure of margins that has generally been coming down as we have kind of exited the period of supply chain backups and those sorts of things theres a really weird line in this report that im hoping our panelists know what to do with this is your final demand for 40 of the july advance in the index for services can be traced to a 7. 6 , i guess thats monthly, rise in prices for Portfolio Management i dont know even know what that means im not sure how they measure the services for Portfolio Management somehow the price for managing peoples money went up im not sure why that would be the ppi has been a bit of a black box as to how its calculated and whats in it suns t since the new methodology. Im not going to be overly concerned about this being higher than expected if i big chunk had much of this comes from Portfolio Management. A lot of it has to do with the inherent volatility in the ppi. We should remember that unlike the the seasonally month to month number is revised for the next six months. However, at the same time we need to remember that other categories will likely be revised up so i wouldnt dismiss this as simply a oneoff and that prices are not rising as fast as indicated in terms of the aggregate level here stephanie, whats your take i think thats an unusual category to have driving so much of the increase for this month im not going to make too much out of this. I think steve is right i think the other guest is right. Were going to have to wait and see. Lets see what happens after the revisions come in but thats a very unusual thing to see. Steve, i want to go back to you because yesterday we really took a turn in terms of the gains we saw initially on the back of cpi. The markets thought that would be another reason for the fed to remain at bay or declare victory. Does this number today sort of underscore, though, that message, regardless of where the 40 of the increase is coming from, just underscores the message that the fed is not done and maybe thats something that the market has not really come to grifs ps with, that possibil. I think the market wants the inflation story to be this linear line down and what we hear from powell and others is that they expect the inflation story to be a bumpier story. Like this ppi report in general the belief, people like Ian Shepardson writing that they believe deflation is in the cards for next year but it would take time for stuff like that to develop. Its not going to be a straight shot down, even though the market wants it that way the other thing is the fed is not going to tell us its going to be reducing rates on these two months of good Inflation Numbers for a couple reasons first of all, they got burned last year when they got a little excited, everybody got a little excited about a decline in inflation that was revised away. The other thing is its not quite ready to say we want to loosen financial conditions on our own. I think the fed is going to get where it needs to against over a period of time when the data turn the way they turn and the market sort of gives fed leave to do, what it will do and thats to cut Interest Rates right now thats seven months in the market if we have a string of better data and better inflation data how many days, steve, till jackson hole are you already packing, getting ready . Im thinking a will the about jackson hole and whether the feds going to address the mistakes it made in missing the inflation on the way up and what were going to learn from rethinking about powells very force full speech last year on inflation and whether this is a year hes going to be backing off that and im getting my wardrobe, which is very important. What about the fishing . What about the fishing out there . It used to be a great fishing experience but now we start really hard there. There will be some fishing but nearly as much as there used to be thats a shame. Thats a shame stephanie, what should Jerome Powell aim to do at jackson hole well, i think hes probably going to do exactly what steve said, which is to continue to reaffirm the feds commitment to see inflation turn all the way down to 2 i hope that he will give indications that we have made enormous progress on the inflation front, how much of that progress is due to, you know, the policy tightening by the fed and how much it have is due just to, frankly, organic causes as the economy has shaken off the pandemic induced inflation. He can assert that the fed stands ready to continue to do more as necessary, data dependent and all the rest of it steve, if you want to come out and fish on long island, wed be happy to host you out here i want to pick up on stephanies idea stephanie, id be happy to fish with you out on long island i do a bit out there stephanie, you have written a tweet or two saying the feds Interest Rate hikes have had nothing to do with the decline in inflation i would like for you to explain yourself if. I dont think i went quite that far, steve. I said its hard to see how the rate hikes Jerome Powell has been very clear from the beginning, he was saying, look, our tools are designed to work on the demand side of the economy and most of what were witnessing is inflationary measures on the supply side. So you say we have about a year and a half of tightening our belts and you look at the economy, investment is in a kind of boom. Inflation has been coming down growth is up the atlanta feds real gdp is tracking 4. 1 for the Third Quarter of this year so if the rate hikes are in fact working as theyre supposed to do on the demand side of the economy, what im saying is i just dont see a whole lot of evidence for that. And let me just add that one of the things that the rate hikes do that doesnt i think get nearly enough attention is that they work in part through the fiscal side. So the rate hikes are pushing because rates go up and they pay more on interests on reserves and the government is paying more to bond holders so net interest expense is exploding guys, we are out of time but a great discussion thanks to you all for joining. Real quickly, Portfolio Management think Portfolio Management why was it up . The rate hikes think about the banks that went up Portfolio Management is dealing with the by the way, im starting to rethink inflation completely, just like the long end of the market. When i see ups 170,000 with their new contract after five years, i dont begrudge them that money but it is really starting to look like its a new chapter. Im done all right thank you. Thank you all. Okay. Coming up, paypal became the first major Financial Company to launch its only stable coin. That was announced earlier this week it comes amid calls for more crypto regulation. Ill talk to brian brooks. Well do that next and this sunday Brian Sullivan will have an interview on monday on last call at 7 p. M. , hell have a conversation with rgovernor ron desantis n help you be better prepared for unexpected events. For a brighter financial future. Thanks. Ahh, pretzel and mustard. Another great combo. Voya. Well planned. Well invested. Well protected. Let Innovation Refunds help with your erc tax refund so you can improve your business however you see fit. Rosie used part of her refund to build an outdoor patio. Clink dr. Marshall used part of his refund to give his practice a facelift. Emily used part of her refund to buy. I run a wax museum. Let Innovation Refunds help you get started on your erc tax refund. Stop waiting. Go to innovationrefunds. Com you really got the brows. Pano ai chooses tmobile for business for 5g solutions. Because tmobile helps pano ai innovate, so they can stop the spread of wildfires. Nows the time to see what americas largest 5g network can do for your business. Since the december extradition from the bahamas the House Financial Services committee announcing regulation to establish a regulatory outlet for stablecoins, saying stablecoins are at the heart of a dollarbased revolution. Joining us is the former binance ceo. This whole issue is a fascinating one. In terms of where we are right now, in terms of the regulatory landscape, where do you think the mindset is in washington around regulating and or effectively blessing these types of coins where do you think we really are . Andrew, i think its a great question and this is really, really important with paypals big announcement this week i think the Administration Made clear theyre opposed to stable coins penetrating the economy. Former chairwoman maxine water who led her democratic colleagues essentially in a walkouton a stable coin bill, its not clear why its so important to keep stable coins out of the discussion but thats their policy so what has to change or what do you hope to change if in fact there will be a change i see the debate happening but i dont know if theres going to be any Real Movement given the mindset that you just described. Andrew, i come back to your last segment where there was a debate about demand side versus supply side and the part in the oped in the wall street journal was to talk about the fact that theres really Strong Demand versus the supply side think about it, money is created by Government Credit operations, by Central Banks around the world including our Federal Reserve. But the demand for money comes from Economic Activity through people, people earning money through work and lending and doing other kinds of things and where do they want to keep their money . In the oped we talk about how citizens in countries with high inflation are really strongly demanding dollar denominated products to keep their money safe and in many countries where you cant get a stable bank account, stable coins are the best solution we talk about if only the u. S. Government would create a frame your that would allow dollars to back stable coins, that would be good but you have this pushpull phenomenons that follow. Now youre saying theres a real need for a stable coin pegged to the u. S. Dollar. Bitcoin was supposed to be the answer for exactly the case you laid out i would argue that bitcoin being the number one asset in 2023 might be the reason for that for some reason people keep declaring bitcoin dead when its ha more stable than money in the developing world, it matters a lot more in the u. S. , theres a demand for these products thats a way for us to make the dollar relevant again at a time when governments around the world are looking to decouple from the dollar. Thats really a pretty important policy issue. Its not about crypto. Its about the role that the United States plays in the Financial System right, but brian, maybe i misunderstand this, but in the world of crypto isnt the conundrum have been unwilling i keep using the word blessing it, even if they think they can regulate it here in the united coin, whatever, were to falter elsewhere, it would we would sneeze here and get the same cold i think that could be true, andrew, when you talk about crypto tokens. Certainly, we saw enough crypto scams blow up. You were just talking about Sam Bankmanfried a minute ago thats a legitimate point. Stablecoins are really different, though. Stablecoins are not different from a prepaid card, a travelers check or almost any Payment Innovation most viewers are familiar with over the last 50 years. The only difference being that those payment instruments travel on blockchains, so theres an underlying blockchain that is the network that allows those stablecoins to move freely and instantaneously. Thats really the only connection here. So, the question is, if youre skeptical about crypto, shouldnt you be less skeptical about stablecoins, which have a value that is backed by something, defying many peoples belief about crypto tokens and shouldnt you really care about the relevance of the dollar, which is under competition from other crypto tokens thats whats funny is that the people who oppose bitcoin are also opposed to stablecoins, even though, in some ways, the ideas behind them are intention. Hey, brian, before you go, can you speak to we just talked about Sam Bankmanfried can you speak to the investigation thats taking place at binance not binance u. S. , but binance cz i cant really talk about it other than its clear that governments want to have a position here and that company, among others, is clearly one thats being looked at other than that, i cant speak to that. Brian, we appreciate you joining us this morning. Thank you. Will the fed stick the soft landing for the economy . What would that mean for the markets . ltalehaquestion when squawk box returns this thing, its making me get an ice bath again. What do you mean . These straps are mindblowing they collect hundreds of data points like hrv and rem sleep, so you know all you need for recovery. And you are . Im an investor. In invesco qqq, a fund that gives me access to. Nasdaq 100 innovations like. Wearable training optimization tech. Uh, how long are you. Im done. Im okay. Dad, we got this. We got this. We got this. We got this. We got this. Yay we got this. We got this life is for living. We got this lets partner for all of it. Edward jones our next guest says Second Quarter earnings overall underscore the economy and add fuel to the idea were in the middle of a soft landing great to have you with us. I want to ask you what your opinion is on what were seeing so far today we saw the ppi numbers come in hotter than expected, most of that driven by an increase in the cost of Portfolio Management we saw yields on the tenyear pop higher, and were seeing the nasdaq under pressure, the most. Its now down a hundred points premarket, which is still less than a percent decline but it does seem to be worsening as we get closer to the opening bell whats your take on all this the ppi is not necessarily confirming, at least as strongly as folks would like, what we saw with the cpi yesterday and what we saw with the cpi in june. So, clearly, the market is trying to digest what the inflation picture is, but despite todays report, i think the Broad Strokes of the Inflation Movement is toward disinflation, which would suggest that this fight is at least nearing the later innings. So, i think that while this report isnt maybe what the market wants to see, i dont know if it really upends the disinflation narrative whats your take on sort of the higher multiple areas of the market what were seeing very clearly, and weve seen this in past sessions, but in particular this morning as well, tenyear goes above 4. 1 and weve got real pressure on some of the higher multiple areas of the market like semiconductors, which right now, down 1. 2 as measured by the smh, the semi etf. Tesla, down. Nvidia, of course, the high flyer, up 1. 3 roughly when were taking a look at the market overall, as we all know, the market is a forwardlooking mechanism, and so the Inflation Party or the goodbye Inflation Party that started in the Fourth Quarter of last year and has continued through the bulk of this year really benefitted those higher multiple stocks, so those companies are really at nosebleed valuations, and i think it takes any small disappointment to upend that kind of party theyve been having, so as were taking a look at the market today, were thinking more about rotation, moving away from some of these higher multiple areas of the market and looking toward some of these areas that havent participated quite as much so, that brings materials to mind it brings banks to mind. It brings some areas of Communication Services, which we think are a little bit better valued some areas like at t, for instance i mean, i im not sure if you can talk individual stocks, when you say other areas of Communication Services just wondering what you mean by that yep so, youre right Communication Services is a very broad sector its home to meta, alphabet, disney, netflix, but its also home to some of these Cable Companies so its a tale of a bunch of different types of markets. We really look across that whole breadth and think all of them are attractively valued. Meta, of course, suffered a terrible rout last year. Its had a great run this year, but that pullback that it saw last year gave us a little bit more breathing room to see some of the expansion we saw this year same with alphabet were looking both of those Cable Companies look attractively valued to us and some of the higher multiple stocks in that area. For the financials as part of that or as a big part of that, weve seen them perk up recently because of the steepening of the curve. You can call it whatever you want, bear steepening, whatever it is, but it is steepening, and that should help, in theory, financials with financials, of course, they suffered this tremendous selloff, and we are seeing some kind of rally back in recent weeks, in recent months, within the banks in particular, and i think they are kind of benefitting from this focus on a soft landing they are benefitting from the focus that potentially Interest Rates arent going to march ever higher but there are still concerns around banks and thats why when were entering that type of market, were doing it at piecemeal steps or just edging in because as we think about things like commercial real estate, as we think about the uncertainty that still exists around the inflation and rate narrative, we want to make sure we have room to add until we see continued selloff. You point out the discrepancy in valuations between u. S. And nonu. S. , and im wondering what nonu. S. Areas youre looking at i think thats an important question, melissa, because its not necessarily the whole broad nonu. S. Market. I think there are segments of outside stacks outside the u. S. That look attractive. Were looking at the uk. Were looking at germany and emerging markets broadly speaking those are some of the areas were focused on outside the u. S. Marta, great to speak with you, thank you marta norton of morningstar. Lets take a final check at markets before we hand it over to our friends on squawk on the street. Look at the futures now, dow off about 83 points. Nasdaq looking to open down close to 100 points. You were mentioning Nvidia Nvidia is down about 1. 5 were seeing the pressure of the, you know, the 4. 1 tenyear yield really on the higher multiple areas of the market thats what we should be watching today melissa, thank you for hanging out. Pleasure. She smiles. Thats great such sincerity join us next week. Squawk on the street begins right now. Have a great weekend good friday morning, welcome to squawk on the street, im Carl Quintanilla with sara eisen, mike santoli at post nine of the new york Stock Exchange jim and david have the morning off. Premarkets not thrilled with that macro data today. Uk gdp runs hot. Our own july Producer Prices run warm highest annual headline since may. Bonds under pressure yet again our road map begins with a slightly hotter than expected july ppi also ahead, the tech stocks are in the midst of its worst stretch since december will the pullback be short lived . President biden speaking out ab